Middle East & Africa
GCC Chief Hails Improving Inter-Korea Relations
According to a report issued by Dubai Chamber of Commerce and Industry (DCCI) in October 2005, the two parties' latest negotiations round in Abu Dhabi (UAE) unveiled the possibility of finally concluding the agreement early next year.Why the EU is so interested in the GCC countries? Latest observed steps and policies of the GCC countries are characterised by one main aspect: opening up their economies to international competition. Perhaps, the FTA negotiations with the USA are a good example in this context. Given the significant economic relationship between the EU and GCC, the former is aware of the on-going liberalisation aimed by GCC countries and wishes to play a major role in it. The on-going negotiations between the GCC and EU reveal that the latter is targeting three major issues, among others: trade in goods and services, foreign direct investment (FDI) and government procurement.Average import tariff rates on goods in GCC were considerably higher than those in the EU but with the establishment of the Customs Union in 2003 -which encompasses the introduction of a 5 percent Common External Tariff -this disparity is reduced substantially. Of course, the elimination of these tariffs on goods traded between the EU and GCC after according a FTA would impact trade in goods between the two involved parties.According to the most recent data available about GCC countries, their exports to the EU stood at $11,649 million in 2002, representing 11percent of GCC total exports to the whole world. On the other hand, GCC imports from the EU surpass exports by around two times and half ($29,100 million). The latter figure corresponds to one third of GCC total imports from the world. This fact reflects the high dependence of GCC countries on the EU as a source of their imports.It is well known that one of the main reasons behind complex trade negotiations is the demand of the GCC to eliminate import tariffs on primary aluminum and petrochemicals. Both products are crucial for GCC economy. Despite this fact, the GCC is not dependent on the EU as regards exports of these two products as they are highly demanded. This reality gave the GCC an additional pressure tool in the negotiations with the EU.On the other hand, the size of the GCC services sectors is relatively smaller and less developed than in the EU. The EU instead performs well in the services sector, being one of the world's largest exporters of services. In this context, the EU will unambiguously benefit from the forthcoming FTA with the GCC as the latter is an importer of services. However, the GCC could enhance their services sectors by taking advantage of the FTA in a number of areas where services liberalization in the GCC could have a direct impact on economic, environmental and social sustainability as for example through consumer protection standards, consumer security and safety, pricing levels, professional training and education, environmental standards, consumer relevant quality, diversity of choices and cultural diversity.Statistics published by EUROSTAT show that the Gulf investments in EU increased from $ 585 million in 1999 to $1,394 million in 2001. At the same time, the EU investment flows to the Gulf region have been increasing in the recent years and were of $ 1,264 million in 2001. The same applies to the outward stocks. EU capital employed in the Gulf has increased from 0.3 percent of total EU outward stock in 1999 to 0.4 percent in 2001. The latter modest ratio is expected to grow remarkably if the GCC accept the EU request of opening the investment door in GCC companies by the ratio of 100 percent.
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Mr. Min Byung-Il serves as editorial director and senior writer for The Seoul Times. He was former managing editor and executive director of the Korea Herald. Min is also serving as correspondent for Emirates News Agency (WAM) of the United Arab Emirates and web editor for ArabAfrica.Net.
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