GCC, EU to Sign Free-Trade Deal by Yearend

JEDDAH, 6 April 2005 — GCC and EU foreign ministers yesterday agreed to sign a free-trade agreement by the end of this year, according to Sheikh Muhammad ibn Mubarak Al-Khalifa, deputy premier and foreign minister of Bahrain.

Speaking to reporters at the end of a joint meeting in Manama, he said the two sides also agreed to hold the final round of negotiations in Brussels from June 7 to 9.

“The meeting also discussed a number of political, social and cultural issues apart from free-trade zone,” the Saudi Press Agency quoted Sheikh Muhammad as saying. The GCC groups Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates.

European Trade Commissioner Peter Mandelson, who attended the talks along with External Relations Commissioner Benita Ferrero-Waldner, said he saw no real obstacles to the conclusion of the pact.

The EU side was led by Luxembourg Foreign Minister Jean Asselborn, whose country holds the EU’s rotating presidency. The GCC and the EU signed a framework economic cooperation agreement in 1988. The GCC states met one of the EU requirements when they launched a customs union in January 2003, but implementation has hit serious snags. In principle, the GCC plans a common market in 2007 and a monetary union and single currency by the start of 2010.

The GCC is critical of high taxes levied by the EU on its refined oil products and aluminum, as well as its massive trade deficit with Europe, which Sheikh Mohammad said reached $17 billion.

“We in the GCC states feel that petrochemicals and aluminum should get a different (preferential) treatment because they are important to us,” the Bahraini minister said.

GCC Secretary General Abdul Rahman Al-Attiyah said the GCC was currently the EU’s fifth largest export market, while the EU ranked as the main trade partner of the six Gulf states collectively. During the meeting, Mandelson criticized bilateral free trade deals between GCC members and the United States, said a participant who requested anonymity.

“The European Union conveyed its deep concern regarding bilateral free trade agreements by individual GCC members with other third countries,” Mandelson said. “The Union underlined that these agreements risk undermining the proper functioning of the GCC customs union and hence the EU-GCC free trade agreement negotiations,” he said, according to the source. — With input from agencies