JEDDAH, 4 January 2005 — Saudi Arabia said it would impose duties on foreign goods imported through Bahrain if the Gulf state pressed ahead with implementing a free trade agreement with the United States.
Finance Minister Dr. Ibrahim Al-Assaf said the Kingdom will be forced to take measures, including legal action, to protect its interests from being harmed by unilateral free trade agreements concluded by Gulf Cooperation Council states with other countries.
The Kingdom will return to imposing customs duties in trading with GCC member states which breach the GCC’s common tariff, he warned. “Foreign goods coming through these countries will be taxed,” the minister told a press conference in Riyadh.
Bahrain’s signing of a free trade agreement with the US angered the Kingdom ahead of the recent GCC summit held in December in Manama. The Kingdom criticized its neighbors for forging separate economic and security agreements with foreign powers, accusing them of weakening Gulf solidarity. It said such unilateral moves undermine the GCC’s economic integration efforts. The GCC groups Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates.
Foreign Minister Prince Saud Al-Faisal, speaking after the Manama summit, expressed alarm over some members entering into separate bilateral agreements with international powers instead of acting collectively. “These separate arrangements are not compatible with the spirit of the charter of the GCC. They diminish the collective bargaining power and weaken not only the solidarity of the GCC as a whole but also each of its members in both the intermediate and long terms,” Prince Saud said.
When ratified, the Bahrain-American trade agreement would have duties on 100 percent of consumer and industrial products and 81 percent of the American agricultural exports being lifted immediately.
Dr. Al-Assaf reiterated the same position saying unilateral preferential trade agreements signed by some GCC states with international powers would weaken the bloc’s negotiating position which took much time and effort to consolidate.
“The signing of unilateral free trade agreements on the part of any GCC member is in clear violation of the GCC economic pact ratified by all council members,” the minister said. He warned foreign goods coming from those countries will be screened to ensure their industrial components do not enjoy privileges exceeding those enjoyed by Saudi industries.
He said trade privileges contained in unilateral trade agreements between some GCC members and international powers sometimes surpass those provided by member states to each other.
“This is a clear violation of the GCC economic pact which states that no member country shall grant privileges to non-members exceeding those granted under the pact,” he explained.
His statements came one day after a long-awaited Arab free trade zone came into effect on Saturday, with the elimination of customs duties on inter-Arab trade in a bid to stimulate the region’s economy.
The free trade zone currently groups 17 Arab League member states, including both Saudi Arabia and Bahrain, whose trade represents 94 percent of all Arab trade.
Arab League Secretary-General Amr Moussa said he hoped the five other league members, Algeria, Mauritania, Somalia, Djibouti and the Union of the Comoros will soon join.
The objective of the zone is to increase inter-Arab trade as well as Arab and foreign investment in the region, which will increase growth rates and the standard of living of Arab citizens, Moussa said.
Dr. Al-Assaf said Saudi Arabia is not demanding Bahrain scrap the agreement with the US and it is not against these kinds of agreements being concluded with the US or any other country as long as they conform to the provisions of the GCC economic pact and the resolutions adopted by GCC leaders.
