GCC-EU Free Trade Agreement must be saved

Posted in Broader Middle East | 10-Jul-08 | Author: Christian Koch| Source: FT.com

GCC general secretary Abdul Rahman al-Attiyah.

At a news conference in June, Abdulrahman Al-Attiyah, the secretary-general of the Gulf Co-operation Council, threatened that the Gulf states might pull out of the long negotiations over a free trade agreement with the European Union if the outstanding issues were not resolved quickly.

He also said that there were “some issues being put on the table that are not relevant to the Free Trade Agreement”. This was a reference to clauses dealing with democracy and human rights which, in their current wording in the draft treaty text, the GCC countries view as interference in their domestic affairs and as indirect criticisms of their ruling systems.

Pundits often criticise the EU and the GCC for negotiating an FTA for almost 20 years to date – without result. While real negotiations only began following a GCC announcement in 2001 on forming a customs union, it is nevertheless the case that the talks have dragged on for far too long. The inability to come to a conclusion has today become a symbol of an EU-GCC relationship that is failing to live up to expectations in spite of geographical proximity and many common political, economic and strategic interests.

Given the current climate, the entire exercise now threatens to unravel. This should not be allowed to happen.

A successful FTA has wide-ranging implications. The GCC is Europe’s sixth largest export market and the EU is the GCC’s first trading partner. Given the Gulf’s current and near-term growth potential, the GCC is significantly more important than the rest of the Middle East. Trade volumes between the two sides have doubled in the past five years and stand at slightly more than €90bn ($141bn).

Success would also mean the first ever region-to-region FTA in the global trading system.

Because the EU insists on references to good governance and human rights, it is clear the FTA has significance beyond trade. There is a political component that cannot be ignored. Alongside the fact that the GCC is the only successful regional organisation in the Arab world, the Gulf’s overall strategic significance cannot be overlooked.

A comprehensive agreement on free trade would extend much needed legitimacy and purpose to countries that have a stake in the stability of their own neighbourhood. When it comes to promoting security, the EU has a natural partner in the GCC states, a fact underlined by Qatar’s recent successful mediation of the Lebanon crisis.

It is therefore imperative that both sides begin to comprehend the broader consequences of failure. On the debate over the human rights and governance clauses, the GCC should understand that these are by statute part of any EU trade talks and thus part and parcel of all FTAs that the EU negotiates. The EU cannot in this context apply different standards to the GCC than those it would in the case of other FTAs.

On the other hand, the EU has to stop trying to impose wording in the treaty’s clauses that ignores political realities on the ground. Far from the images floating around Europe’s bureaucratic corridors, all Gulf societies are transforming themselves politically. These developments should be encouraged rather than hindered by references to suspension clauses.

Both sides must thus come to their senses and not let misperceptions rule the day. If cooler heads do not prevail there is a distinct danger of the FTA negotiations coming to a halt.

As such, clear thinking and political will at the highest level are necessary if a great opportunity is not to turn into a disaster. France, which currently holds the EU presidency, has to exert the necessary pressure to maintain dialogue and compromise in the negotiations. In particular, it should not ignore the delicate stage of the negotiations or downplay the significance of the present impasse.

The GCC states can send a clear signal through their foreign ministers that they stand behind a successful conclusion to the talks.

While the EU is understandably preoccupied with the repercussions of the Irish No to the Lisbon treaty, it should not lose sight of the medium- to long-term damage for relations with the GCC states if the FTA negotiations are allowed to fail.

Christian Koch is director of International Studies, Gulf Research Centre