AGCC and EU to sign FTA soon

Khaleej Times

AGCC and EU to sign FTA soon

BY ISAAC JOHN

1 April 2005

DUBAI - The long-standing row over European duty on aluminium imports from the Gulf, a major irritant in EU-AGCC trade relations, is likely to be resolved this year with both sides gearing up for the final round of talks to seal a free trade agreement.

The visit of Peter Mandelson, European Commission’s Trade Commissioner, who is arriving today in the UAE as part of a Gulf tour, is expected to give the long-stalled free-trade agreement talks a new impetus, said Bernard Savage, who is heading European Commission in the Gulf.

Savage, who is based in Riyadh, said the six per cent aluminium duty currently being imposed on European imports from the Gulf countries, including the UAE, would be dealt within the framework of the FTA which is expected to be signed this year. The UAE and other AGCC partners believe that the duty on aluminium is unfair and have been campaigning to stop it. Mandelson, who is arriving in Abu Dhabi today, will visit Dubai this afternoon before proceeding to Qatar, Saudi Arabia and Bahrain for talks focused on FTA and WTO issues. On April 5, he will attend AGCC-EU Joint Ministerial Council meeting in Bahrain, where both sides would be represented by foreign ministers of member countries.

Savage said the 25-nation EU, the biggest trading partner of the AGCC and its second supplier after Japan, is keen to foster economic integration with the Gulf with a view to diversifying and increasing the mutual trade in a sustainable way. "A free trade agreement between both sides would be a start for political, economical and inter governmental dialogues." Under the new EU negotiating directives, the proposed FTA would provide for a progressive and reciprocal liberalisation of trade aiming at assuring a comparable level of market access opportunities, consistent with the relevant provisions of the WTO and taking into account the level of development of the AGCC countries. "The FTA ultimately aims at fostering economic integration between the parties, with a view to diversifying and increasing the mutual trade in a sustainable manner," he pointed out.

The last meeting on the EU-FTA negotiations took place in January last year. The current round of talks are being headed by EC’s Director General of Trade Peter Morgans’ Carl. In 2003, Abdulrahman bin Hamad Al-Attiya, AGCC Secretary-General, and former Trade Commissioner Pascal Lamy, held an important meeting in Brussels. The EU and the AGCC signed a framework economic cooperation agreement in 1998 but have failed to strike a free-trade pact. Differences exist between the two blocs over several issues. However, the AGCC met one of the EU requirements when it launched a customs union in January 2003 and is now set to establish a monetary union next year, a common market in 2007 and a single currency by 2010. Savage said the EU exports to the AGCC, currently its fifth largest export market, have been increasing since the 80s. Since then, the AGCC imports from the EU have risen to Euro 36 billion whereas the EU imports from the AGCC amounted to around Euro18 billion.

The AGCC-EU Free Trade Agreement negotiations were initiated in 1990 but reached a standstill. In 1999, the AGCC made a significant gesture to unblock the negotiations by presenting its negotiating mandate as it announced its decision to create a Customs Union by March 2005.

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source: Khaleej Times