The latest Gulf Cooperation Council summit, named after King Fahd, has ended on a noticeably higher note than in recent years because it is clear that there was substantial agreement on key issues. The meeting, held this year in Abu Dhabi, was unified in its concerns over nuclear weapons and called for the Gulf to become a nuclear-free zone. It also demanded that Israel open up its nuclear program to international inspection. In the case of Iran, concern was voiced over the safety of the Bushehr nuclear reactor on Iran’s Gulf coast. Saudi Arabia also received backing for its Peninsula Shield proposal in order to produce a coordinated GCC military defense force.
The core of the meeting, however, focused on trade and economics. However well individual economies may be doing in the current oil-price boom, it was clear to everyone that long-term prosperity can only be maintained through greater economic integration. The economic clout of a unified six-nation GCC trading bloc would be greater than the strength of the individual parts. The region now has the opportunity and the resources to turn itself into an economic powerhouse. It was thus agreed that a binding unified trade policy would be hammered out over the next two years. This is an ambitious target.
The GCC Customs Union, slated for 2006 has been put back until 2007 because it has proven harder than anticipated to establish an effective regime. Though the business of harmonizing customs duties and procedures across member countries on a myriad of different products is technically complex, some would argue that it is as nothing, compared to the unification of trade policy. This will require a sophisticated secretariat and probably a dedicated forum in which policy and the occasional inevitable exceptions will need to be reviewed. A unified trading bloc that does not function effectively is arguably less desirable than having no trading bloc at all. The officials charged with making a reality out of this important initiative have a considerable responsibility.
Much of what was agreed on trade this week in Abu Dhabi is a logical development of the GCC’s original Unified Economic Agreement signed in November 1981. That development has, however, taken a long time. Twenty-four years ago, member economies were still coping with the impact of realistic oil pricing. Their ability to implement a trading union has since been transformed. All GCC member countries now boast sophisticated economies with fast developing financial markets and growing manufacturing and commercial sectors.
Saudi Arabia’s accession to the WTO is only the latest evidence of this maturing process. Coupled with the necessary political will, economic integration can now take place. One clear task for the GCC is to raise its international profile. An effective unified trading bloc in the Gulf ought to be important and significant news for world business. Proposals such as the Turkish and Chinese GCC free trade zones ought to be making banner headlines for international investors and businessmen.
