The finance and economy ministers from six Gulf oil producers will begin emergency talks in Saudi Arabia on Monday in a bid to iron out differences that have blocked the implementation of their historic customs union.
The Ministers from the Gulf Cooperation Council (GCC), gathering for their latest round of marathon meetings ahead of the upcoming annual summit of their heads of state, will discuss a host of issues that have held up the enforcement of the customs union nearly seven years after it was launched.
The meeting in the Red Sea port of Jeddah will focus on such thorny topics as the distribution of customs tariff revenue among member states, enforcement of a five-per cent common tariff duty, facilitation of movement of individuals and goods, and tearing down of border customs points.
All relevant committees formed over the past few years to complete the customs union, the first in the Middle East, will be present at the meeting that will try to make final proposals for the GCC summit in Abu Dhabi late this year.
“The ultimate issue at these emergency talks is to complete all requirements of the customs union before putting it into its final status that involves ending the customs role of border points within the GCC,” the Saudi Arabia language newspaper Alriyadh said in a report from Jeddah on Monday.
The talks are the latest in a series of meetings by the six members seeking to put the customs union on track after launching a common market in early 2008 and to support plans by four GCC nations to launch a monetary union in 2010.
GCC states—the UAE, Kuwait, Saudi Arabia, Qatar, Bahrain and Oman—launched the long-awaited customs union at the start of 2003 and set a transitional period of three years for the full enforcement of the project.
But rifts over tax revenue, border delays and other issues have blocked the implementation of the customs union, forcing the six members to extend the transitional period until the start of 2008 to coincide with the common market.
In 2009, the GCC finance ministries said they had charged a consultancy firm with preparing a study on the best way for customs revenue distribution.
The study recommends that the revenues should be distributed proportionately among members, considering their population, economy and size of imports.
It proposes that Saudi Arabia, by far the largest economy in the region, should get 42.77 per cent of the customs earnings while 25.75 per cent should go to the UAE. The rest is to be shared by Kuwait 10.92 per cent, Oman 9.52 per cent, Qatar 7.9 per cent and Bahrain 3.15 per cent.
Apart from the customs revenue and agencies rift, GCC countries are still haggling on how to tackle persistent delays at border points, which businessmen say have inflicted heavy losses on them over the past few years.
A single GCC market would give birth to the world’s largest oil bloc, with proven crude resources of more than 480 billion barrels, nearly 45 per cent of the global proven oil wealth. Their gas reserves of around 40 trillion cubic metres also account for more than a fifth of the world’s gas deposits.
In 2008, the GCC’s combined gross domestic product hit an all time high of around $1,033 billion in current prices, more than half the total Arab economy. But it plunged by at least $250 billion last year because of a sharp decline in oil prices and production.