The 16th EU-GCC Joint Council and Ministerial Meeting, held in Brussels on Monday, proved to be yet another disappointment. The expectation was the negotiations over the long-awaited EU-GCC Free Trade Agreement (FTA) would finally be completed at this meeting. EU Trade Commissioner Peter Mandelson had stated a year ago that there are “no fundamental obstacles to overcome” and it was agreed then that “final” negotiations would take place in June 2005. Even in January this year, statements indicated that a signing of the FTA by the time of the Ministerial Meeting would still be possible. After that, however, the pronouncements vanished only to reappear in recent days with the curt declarations by officials from both sides that there is no agreement and that instead negotiations are continuing. Such news can only be considered a setback in the overall development and status of GCC-EU relations.
What one is left with are once again general statements that negotiations are making good progress and that an agreement could be possible within the coming months. The joint communiqué of the Ministerial Meeting only mentions that both sides will take stock of the status of the FTA negotiations in September 2006 before deciding on what the next steps should be. EU Commissioner for External Relations Benita Ferrero-Waldner, meanwhile, has used the all-too-often phrase of an agreement “by the end of the year.” Significantly, only five lines out of the eight-page joint communiqué refer to the FTA negotiations with no reference to what the status of the negotiations actually is or what the points of contention still to be resolved are. The simple conclusion that can be drawn from this is that another year has been wasted and that the negotiations are basically at the same point where they were last year. On the other hand, maybe the progress had never been as substantive as had previously been suggested.
What the exact obstacles to an agreement are remains unclear. With regard to technical issues such as differential pricing on gas exports, access by European companies to the GCC services sector, relevant concerns of the EU petrochemical industry about GCC products flooding the EU market, greater transparency about the GCC government procurement regulations, or point of origin for goods coming through the Gulf region, it should have been possible to resolve differences over the past years of negotiations. It would be hard to imagine that any one of these items is responsible for the lack of progress.
Meanwhile, the political basket of the FTA including political reform, human rights and freedom of expression was said to have been defined by end-2005. With political development continuing to evolve within the GCC countries, there would appear to be no reason to reopen this basket. The only new areas of concern relate to the Iranian nuclear crisis and the EU’s policy toward the Palestinians following the election victory of Hamas, in particular its decision to stop financial assistance. But these regional items should not be part of the FTA negotiations in the first place and any difference of opinion here should be handled in separate channels.
What is clearly missing at this stage is the political will to have an agreement and to finally remove the shadow of the prolonged FTA negotiations from the overall development of GCC-EU relations. Two points stand out in particular. One, the EU has put forward the FTA as the conglomerate framework for its overall policy toward the Gulf region in an attempt to bring all relevant issues under one umbrella. It has often been the complaint from the GCC side that the EU keeps bringing up new issues and making new demands. Even at this late stage of the game, it was Omani Minister for Economy and Commerce Magbool bin Ali Sultan who mentioned that the EU submitted new demands in March which delayed a final agreement. But continuing to insist on changes and seeking an all— inclusive agreement not only is beyond the scope of the FTA but has also proven counterproductive in that the failure to reach agreement has become a political liability.
Second, the GCC-EU relationship has still not reached priority status within the EU with little consensus about the ways that the relationship could be enhanced and little movement to further integrate the Gulf into the broader aspects of European policy-making. Official pronouncements aside, the political will is simply absent.
In relation to the above, the overall value of a GCC-EU FTA beyond its pure economic context appears to have also been lost. As part of its approach to the Gulf region but also the wider Middle East, the EU has sought to foster regional integration efforts as a means to focus on the interrelated issues of stability, security and economic development. With the GCC approaching projects such as the Common Market in 2007 and a Common Currency in 2010, the pressure for greater integration is as intense as ever. Certainly, a GCC-EU multilateral FTA would be a powerful message that would assist the Gulf in its integration efforts with the GCC as the catalyst for continued development and cooperation. This is in addition to concrete economic benefits, for example, in the further expansion of the trade volume between the two sides and greater access to their respective markets. A study commissioned by the EU in 2004, for example, suggested a 0.4 percent addition to the GCC’s overall GDP as a result of the FTA.
The failure to conclude the GCC-EU FTA is a symbol of the stagnant relationship between the two sides. There are numerous areas in which the EU and the GCC can achieve concrete progress including energy relations, education, environmental issues, as well as regional security concerns. These areas are too important to be held hostage to a failure of political will that has so far prevented an FTA from coming to fruition. How to bring that message across, however, remains the big question of the day.
— Dr. Christian Koch is the director of the GCC-EU Relations Research Program at the Gulf Research Center in Dubai.
