EU clear on GCC free trade deal

Recently, there have been indications that the European Union might backtrack on its position for a free-trade agreement with Gulf countries after nearly 30 years of reluctance and mixing economic issues with political ones.

Such a confusion was not acceptable to the Gulf states, which went out of their way to try and meet the requirements of their EU counterparts but to no avail. It could not be otherwise given the intransigence of some EU members who insisted on intervening in the internal affairs of GCC states, thus wasting opportunities to develop commerce and investment ties between the sides.

What is new this time are statements by Walter Stevens, chairman of EU’s political and security committee, early this month, where he said negotiations are to be held to discuss the prospects of a free-trade agreement with the GCC. He added that EU members are ready for any additional discussions with regard to the matter. The Gulf’s response was swift and clear: “The GCC states would not resume negotiations on a free-trade agreement unless the negotiation circumstances are suitable for making an improvement”. This means the GCC is in no hurry to sign such an agreement. EU members do recognise the GCC’s message, which calls for making a clear separation between economic and trade issues and other demands that have nothing to do with the development of bilateral relations. But the question that arises is, why has the EU reversed a long-standing position that hindered the signing of the free trade agreement for three decades?

In fact, there are significant reasons behind such a step including radical changes in global trade relations, which has led to a downsizing of the EU’s share amid availability of several alternatives. Thirty years ago, it would have been difficult to replace European goods and services — but now there are so many options.

China’s trade volumes have exceeded those of all European countries and outpaced the EU in terms of trade with GCC states, thus becoming the single most important partner besides India. In the past, GCC states have signed free trade agreements with many countries and is about to do the same with China this year.

They are also conducting swift negotiations with the UK for such an agreement, a step that might have provoked the EU into its change in stance. A UK-GCC agreement have many implications given that the UK is deemed capable of providing many an alternatives to the other EU states.

These changes have indeed brought about a radical realignment in trade relations between countries. This has resulted in the EU reconsidering relations with other countries, particularly the GCC states, which have a growing role in international trade as well as in investment, financial services, transportation and tourism sectors. The Gulf needs to take advantage of the opportunities offered by the EU if the latter is indeed serious about overcoming previous differences. Boosting bilateral relations with the EU — on the condition that its call stems from a real approach and not subject to temporary considerations — will be an advantage to the GCC, opening up wider scope to enhance trade and investment with the EU, which is now suffering from chronic economic difficulties.