JEDDAH, 13 March — The Gulf states have cleared the last snag for the creation of the customs union within ten months by agreeing on a mechanism for the collective distribution of import duties and a possible compensation fund.
Ministers of the economy and finance of the six-nation Gulf Cooperation Council announced the agreement after talks in Oman on Saturday and experts said the accord could mean that the customs union will materialize on schedule.
“We have reached agreement on the distribution of customs revenues among member states after the customs union is set up,” Omani Minister of National Economy Ahmad ibn Abdulnabo Macki said after chairing the 56th meeting of the GCC Economic and Financial Committee.
He gave no details of the distribution mechanism but said revenues would be shared proportionately on the basis of the size of imports, GDP and the population of each member country.
Officials said the draft agreement would be presented to the cabinets in each member state for approval before the end of the year.
“It is a very important agreement as it removes the final obstacle for the establishment of the customs union on time early next year after their agreement on a uniform tariff of five percent,” said Dr. Muhammad Al-Asumi, a Bahrain-based economist and financial consultant.
“This means GCC countries are moving on the right track toward the customs union. There is no way back and the project cannot afford to be delayed further because this will hurt their collective interests,” Gulf News quoted Al-Asumi as saying.
Meanwhile, the ministers refused to increase customs duty on tobacco and related products, as requested by Qatar, saying such a move would backfire.
“There was an agreement among the GCC states on the tariff rates imposed on tobacco and cigarettes,” said Macki. “GCC states have decided not to raise these rates because such a step may lead the products to enter those countries illegally.”
He said the meeting has evolved the customs revenue distribution ratios which will be submitted to the member states for approval before the end of the year.
“The ratios were determined in accordance with certain criteria, such as the average revenue, national income and the population size,” said Macki, who is also deputy chairman of the Financial Affairs and Energy Resources Council.
He said the meeting reviewed at length discussions going on with the European Union, noting that there was tangible progress following the decision by the last GCC summit in Muscat to form a customs union by January 2003, two years ahead of schedule.
Jameel Al-Hujailan, outgoing GCC secretary-general who is to be replaced on April 1 by Qatar’s Abdul Rahman ibn Hamad Al-Attiya, welcomed the outcome of the meeting, saying it also reviewed a report by the GCC finance and economic undersecretaries designed to create a mechanism to identify goods of Arab origin.
The summit granted industrial installations in the member states exemption from customs duties on imports of raw material and equipment. It was also decided to peg the GCC currencies to the dollar by the end of the year.
GCC leaders had also approved the formation of a Supreme Defense Council in accordance with the decision taken at the previous summit in Manama, and allowed Yemen partial membership.
