GCC-EU free trade talks make progress on issues

Gulf Daily News - 27th October 2005

GCC-EU free trade talks make progress on issues

ABU DHABI: The European Union and the GCC wound up talks on a long stalled free trade deal yesterday without agreement on opening up the region’s lucrative services sector.

Gulf and EU officials "concluded two days of talks ... and succeeded in reaching agreements on most issues", with outstanding points to be tackled in a meeting next month, said the state news agency Wam.

Hamad Al Baazi, head of the GCC delegation, noted progress in the talks, but said "some points still need to be discussed ... in the next round of talks which will be held in Brussels in November."

"Al Baazi hoped that the next round would be the final round, ahead of the signing of a free trade agreement between the two parties at the end of the year," said the agency.

Earlier yesterday, Al Baazi told reporters that "as far as political issues are concerned, we are almost done, but there are economic issues that have to be resolved."

"The EU wants the GCC to open up the services sector, an issue that was not discussed until last June. This is a vast subject and we have managed to determine the differences. They also want access to investments in some key sectors."

Taking part in the talks were deputy ministers as well as other trade and economy officials from the GCC.

Al Baazi said the GCC wants duty free access to European markets for aluminium and refined oil products.

The GCC and the EU signed a framework economic co-operation agreement in 1988 but have so far failed to agree a free trade deal.

However, in April the two sides held talks in Bahrain after which officials said they expected the deal to be concluded by the end of the year.

But an EU official taking part in the Abu Dhabi talks cautioned that it might take more time to nail down a deal given the "thorny" issues that both sides have to tackle like market access, government procurement rules and intellectual property rights.

The official, who did not wish to be identified due to the sensitivity of the talks, said the EU was unhappy with the bilateral free trade agreements that GCC member states were signing individually and not as a bloc with the US.

"That is an issue for the GCC to look at but we are concerned about (the pace) of regional integration," he said.

The GCC states met one of the EU requirements when they launched a customs union in January 2003 but implementation has hit serious snags.

In principle, the GCC plans a common market in 2007 and a monetary union and single currency by the start of 2010.

The GCC is critical of the high taxes levied by the EU on its refined oil products and aluminium, as well as its own massive trade deficit with Europe, which is estimated at about $17 billion.

GCC figures show that the Gulf is currently the EU’s fifth largest export market, while the EU ranked as the main trade partner of the Gulf states collectively.

"The commission ... is now looking at possibilities for promoting domestic reforms through an enhanced co-operation, including on areas such as education or human rights," said a statement about the GCC talks on the commission’s website.

The EU has signed a number of association agreements covering political, social and economic ties with Arab countries on the Mediterranean littoral as part of the Euro-Mediterranean Partnership launched 10 years ago.

source: Gulf Daily News