DUBAI, 4 May — Customs chiefs from the six-nation Gulf Cooperation Council states will meet in Riyadh early next month to discuss a mechanism for tariff revenue distribution and two other issues that could block the implementation of ambitious plans to set up a customs union on time.
Officials have already spoken about an initial agreement to proportionately share the returns from customs tariffs on foreign imports, with Saudi Arabia set to get just below half and the UAE to receive nearly a fifth of the revenues. The two other hurdles include unification of the list of banned imported products and exclusive trade agents who could lose their prerogative in an open common market.
The meeting of the GCC customs chiefs will take place in the first week of June and it will cover ways to eliminate such obstacles and make recommendations to the finance and economy ministers ahead of the GCC summit later this year.
"There is a proposal to distribute customs revenues proportionately, ranging between 45 and 47 percent for Saudi Arabia and 20 to 23 percent for the UAE," Gulf News daily quoted Abdullah Sultan Al-Owais, secretary general of the UAE Customs Council, as saying yesterday.
"The rest will be shared proportionately by Kuwait, Bahrain, Qatar and Oman...there is another proposal to retain part of those revenues for the joint entry point."
Official sources said the revenue distribution formula is based on the size of each member’s population, gross domestic product, imports and domestic needs.
As the six members have agreed to levy 5 percent in customs duty on most imported product, total tariff returns could exceed $4 billion a year considering that the combined GCC imports stood at around $82 billion last year and are growing steadily every year.
This means Saudi Arabia could get at least $1.8 billion from the revenues while the UAE’s share could reach $1 billion. Kuwait is expected to receive the third biggest share of those returns given its relatively large economy and imports.
"The mechanism will also take into consideration the economic situation in some members and their losses from lowering customs tariffs," one source said.
He cited Bahrain, which stands to lose customs revenue as it heavily relies on taxes given its relatively limited oil resources and its duties on imports are much higher than the planned collective 5 percent.
Owais said tariff losses by some members would largely be offset by long-term benefits. "The economic and commercial gains and benefits to be reaped by the GCC countries from the customs union will far surpass all losses," said Owais, who will attend the Riyadh talks.
GCC heads of state meeting by the year-end are expected to give the final go-ahead for the long-sought customs union, which is scheduled to be enforced at the beginning of 2003, two years ahead of its original schedule in 2005.
Economists believe the customs union, which will pave the way for a common Gulf market, will spur growth as it will expand inter-GCC trade and investment and facilitate the signing of the much-delayed free trade zone accord with the EU.
