22 years! 22 years have passed since the launch of negotiations for a Free Trade Agreement (FTA) between the European Union (EU) and the Gulf Cooperation Council (GCC). Bolstered by the prospects of a first inter-regional trade agreement of its kind, both parties entered negotiations in 1991 with great aspirations. Needless to say, both sides saw in this agreement invaluable economic opportunities; in a nutshell: Gulf countries looked to the EU as a major actor in international trade characterized by its strong and attractive common market with dollar-billed eyes; Europeans saw in the GCC a grouping of six Gulf countries so rich in energy reserves to make energy supply concerns a bad dream of the past.
Early on, however, hurdles had begun emerging on both sides. Progress towards an Agreement were tarred by strong divergences over the sensitive issue of human rights, the reciprocity of visa facilitation, as well as various trade discrepancies over, inter alia, export duties. Following a rollercoaster ride of a negotiation process, negotiating parties ultimately reached a deadlock in 2010 with the walk-out of GCC negotiators; a status-quo that has dragged on until today…
Moving on, regardless…
Optimists may insist that the EU and GCC have moved forward regardless. Cooperating ties in an number of areas, ranging from counter-terrorism to higher education have seen the light. EU-GCC Joint Councils have been held on a regular basis, a new EU-GCC Action Plan has been implemented for the 2010-2013 period, while (limited) collaborative mediating efforts between both parties have been visible in conflicts across the Middle Eastern and Mediterranean region (Libya is an example).
So too often, however, questions over the blocked FTA negotiations resurge to haunt interested parties on both ends. In the latest Joint Council held in Luxembourg in June 2012, Commissioner for Trade Karel de Gucht reiterated that ‘political willingness’ on both ends remained alive. Wishful thinking? It is indeed tempting to say so. Critics maintain that meager political will and growing economic pressures on both sides, a future for integrated trade relations with the Gulf seems unlikely.
GSP: window of opportunity?
Could a ray of hope lie in the EU’s own trade policies? Since 1999, Gulf countries have been beneficiaries of the Generalised System of Preferences (GSP), through which the EU aims at promoting the sustainable development of developing economies by providing preferential access to its internal market. With the application of a new GSP coming into force on 1 January 2014, countries of the Gulf will be seeing trade privileges under the former GSP removed due to their improved status of Medium and High Income economies. While, at first hand, this appears to confirm that EU trade relations with the Gulf are seemingly doomed to grim days, this may well represent the necessary step back for the long-sought two steps forward towards greater inter-regional economic integration. Indeed, as Gulf states will see their preferential access to the EU market under the GSP come to an abrupt end, revamping FTA talks may well reemerge as a plausible alternative.
One may label this naïve optimism coupled with excessive speculation. Maybe. But if the political will is as strong as both sides claim it to be, this clearly appears to be the next of a scarce list of windows of opportunity.