Gulf News | October 4, 2014
GCC builds up its Asia strategy
MoU with South Korea can be leveraged into something significant, including a free trade agreement
By Jasim Ali, Special to Gulf News
In what can be a significant development, the Gulf Cooperation Council (GCC) members and South Korea have agreed to hold what is termed a “regular strategic dialogue” on issues of interest and concerns to both sides. The memorandum of understanding was inked in New York on the sidelines of the recent UN General Assembly.
Interestingly enough, the MoU’s spheres of cooperation are extensive and involve commercial and other strategic fields, namely new and renewable energy, higher education, environment, information and communications technology, the defence industry, and power plants.
The two sides intend to continue talks that could culminate in a free trade agreement (FTA). However, the astonishing thing is the wide-ranging nature of the issues that would be within the purview of the bilateral talks.
In reality, the suggestion of renewed FTA talks with South Korea comes against the backdrop of GCC states deciding to curtail the drive to conclude such agreements with others. The GCC signed its first ever FTA as an entity with Singapore in late 2008. And in 2009, it signed another with the European Free Trade Association or EFTA, which comprises of Switzerland, Norway, Iceland and Liechtenstein.
Continuing the drive of clinching trade deals with other entities, in the first half of 2010 the GCC signed a MoU with the 19-member Common Market for Eastern and Southern Africa (or Comesa) and focusing on economic cooperation.
However, in late 2010 the GCC decided to halt the trend for pursuing fresh FTAs for the purpose of evaluating the pros and cons of existing deals. The strategic choice seems to be still holding, as the new MoU with South Korea is comprehensive and touches upon numerous matters including, but not solely confined to, trade talks.
Certainly, it makes sense for South Korea to enhance economic ties with the six-nation grouping with all its potential and given the existing trade volumes between the two sides. According to data available for 2013, South Korea’s exports have an 18 per cent surplus in bilateral trade with the GCC.
South Korea is second to Japan as a source of trade surplus with the GCC. In 2013, Japan accounted for 12 per cent of the total GCC trade, but contributed roughly 28 per cent of the surplus. Yet, South Korea accounts for only 8 per cent of the overall trading engaged by GCC countries.
For South Korea, the pact serves an opportunity to further strengthen already strong relations with GCC states, which are known for practicing free trade and allowing unhindered imports and exports rather than engage in protectionism.
In fact, South Korea stands out with regards to its ties with the GCC. Visiting South Korea in September, it was stunning to learn that Seoul attracts a large number of visitors from the GCC. Undoubtedly, Korea deserves to be commended for not requiring visas for holders of GCC passports.
No fees whatsoever are applied on the entry of GCC nationals to South Korea, while China and Japan do.
Undoubtedly, the timing of signing the pact is notable, with the GCC states in need of international support to deal with threats posed by the Islamic State of Iraq and Syria (ISIS). Hence, the mention of matters like defence in the MoU signed with South Korea.
It remains to be seen if the move heralds a new era in GCC’s external ties and entail strategic issues like finance, energy and defence. Unquestionably, GCC states need to consider similar MoUs with China and Japan.
The writer is a member of parliament in Bahrain