Gulf states launch GCC common market
AFP | 1 Jan 2008
Gulf states launch GCC common market
RIYADH: The six oil-rich Gulf monarchies ushered in the New Year on Tuesday by setting up a common market with a combined economy of 715 billion dollars.
The new regional economic grouping should ensure economic equality for Gulf Cooperation Council citizens, GCC Secretary General Abdulraham al-Attiyah said.
He described the launch as "historic" 26 years after the common market was first announced as an objective when the GCC was established in 1981.
In addition to allowing the free flow of capital, the common market should give GCC nationals freedom of movement, residency and employment - in both the private and public sectors - in any of the six countries.
"The common market... will allow the citizens of GCC member states to benefit from opportunities offered by the Gulf economy and will open important areas to common and foreign investments," Attiyah told a GCC summit ahead of the launch.
The initiative "will increase investments and common trade between members," GCC economic chief Mohammad al-Mazroui told, adding that it will also "strengthen the position of member states in free-trade talks," mainly with the European Union.
Some 35.1 million people live in the GCC, although citizens of the member states represent around only 60 per cent of the total population, with the remainder foreign expatriates working there.
Kuwaiti economist Hajjaj Bukhbur said the common market would boost GCC negotiating power.
"This will place the Gulf states as one of the largest global economies," he told.
It would "facilitate establishing economic agreements between GCC countries and the rest of the world and give the GCC stronger negotiating power in those deals."
The GCC groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, which together account for a total surface area of 2.6 million square kilometres (1.04 million square miles).
Sitting on 484 billion barrels of oil, they also represent more than half of the oil reserves of the Organisation of Petroleum Exporting Countries (OPEC).
The six formed a customs union agreement in 2003, a condition set by the European Union, the GCC’s main trading partner, for a free trade agreement between the two blocs.
Trade between GCC member states currently represents just around 10 percent of overall foreign trade.
However this should increase to 25 per cent over the next two years, said Issam Fakhrou, president of Bahrain’s chamber of commerce and industry, in a statement on Monday.
According to statistics posted on the organisation’s website, GCC foreign trade was 282.8 billion dollars in 2005, a figure predating the sharp surge in oil prices which greatly boosted revenues for the six.
The GCC also plans to achieve monetary union by 2010. This deadline appears increasingly unattainable, however, because some members have high inflation and the US dollar, to which most GCC currencies are pegged, continues to fall in value.
