Sustainability Impact Assessment (SIA) of the negotiations of the trade agreement between the European Community and the Countries of the Cooperation Council for the Arab States of the Gulf (GCC)
30 May 2004
The liberalisation of the trade in goods under the Free Trade Agreement (FTA) leads to
increased economic welfare in the Cooperation Council for the Arab States of the Gulf
(GCC) and has negligible overall welfare effects on the European Union (EU). Winners
in the GCC are the labour-intensive sectors such as clothing and textiles and more energy
intensive sectors that require skilled labour such as petrochemicals and metal products.
This will lead to increased environmental pressure within the GCC that can be mitigated
through enhanced environmental regulation and enforcement. Even though employment
in the industry sectors will probably increase due to the FTA in the GCC, this will not be
sufficient to compensate for increases in the workforce in the GCC over the coming
There seems to be ample opportunities to liberalise the trade in Service within the GCC.
Regretfully almost no data was available to quantify these opportunities. Nevertheless
there is also an emerging consensus that links services to sustainable economic growth.
Even a scenario whereby the FTA would go further than the existing agreements under
the World Trade Organisation, there is considerable flexibility for national governments
to vary the level of obligation they will assume in a particular service sector to
accommodate local concerns. Furthermore both the environmental and social impact
assessment highlighted the positive impacts a further enhancement of the services sector
might have on a sustainable growth within the GCC through better environmental
management capacities and increased job opportunities for GCC citizens.
In order to attain a successful FTA, Foreign Direct Investment and in particular
ownership rules need to be relaxed in the GCC. Furthermore government procurement
procedures need to be established in such a way that they lead to reciprocal and
progressive liberalisation of public procurement aimed at ensuring comparable and
effective access to their procurement markets. This will not only increase opportunities
for EU companies but could lead to an improvement of the economic performance within
the GCC leading to an increased capacity to absorb new entrants in the job market, crucial
for the GCC.