RIYADH, 6 June — Member states of the Gulf Cooperation Council yesterday cleared the biggest stumbling block to their customs union due in January 2003 by approving a mechanism for distributing customs revenue, Oman’s finance minister said.
Ahmad Makki, whose country currently holds the GCC presidency, told reporters at the end of a meeting here of GCC finance ministers that the ministers decided to distribute the revenues on the basis of the final destination of imports.
"The ministers approved the customs one-point entry and the distribution of revenue on the basis of the final destination of imports," he said.
The agreement means the six-nation alliance has ruled out a distribution of revenue based on percentages, which was unacceptable to some members.
Makki said the agreement would be implemented for a period of three years before being reviewed for possible changes.
The distribution of customs revenue had been the main bone of contention among the GCC states in the application of the customs union.
GCC leaders approved at a summit in Muscat last December a common customs duty of five percent, which will be implemented next January. The ministers reiterated their resolve to set up the proposed customs union by next year.
The move to step up efforts to set up the customs union follows a report presented by Prince Abdullah, the regent, containing ideas to unify diverse positions of Gulf states on various issues involved. "The formation of the GCC customs union is a priority for the policy planners of the Gulf countries," said the Omani minister.
GCC Secretary-General Abdulrahman Al-Atiyya called on the Gulf states to study Prince Abdullah’s report and formulate their strategies within its framework. The details of the document were not immediately known.
Makki said the ministers also reviewed recommendations made by central bank governors on the decision to establish a monetary union in 2005 and a single currency by 2010.
A GCC official said the members made good progress toward unifying their financial and monetary policies, an essential condition for monetary union.
The US dollar was approved at Muscat as the yardstick for the GCC single currency. All GCC states except Kuwait have their currencies pegged to the dollar. The Kuwaiti dinar is pegged to a basket of currencies, mainly the dollar.
The GCC states, which depend heavily on oil revenues, signed in 1981 a unified economic agreement calling for full economic and financial integration of member states.
Foreign economic blocs, especially the European Union, have urged the GCC states to establish a customs union before reaching a free trade agreement.
