GCC Customs Distribution Agreement Brings Union One Step Closer

by Lorys Charalambous, Tax-News.com, Cyprus

10 June 2002

It emerged last week that the six GCC (Gulf Cooperation Council) states have reached an agreement on the distribution of customs revenue, bringing the planned 2003 customs union one step nearer.

The distribution of customs revenue between the six member nations - Bahrain, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates - has traditionally been a sticking point in negotiations, and several possibilities have been discussed, including a distribution of revenue based on percentages.

However, following a meeting of GCC Finance Ministers in Riyadh last week, it was announced that an agreement had been reached:

'The ministers approved the customs one-point entry and the distribution of revenue on the basis of the final destination of imports,' Bahrain's Finance and Economy Minister, Abdulla Saif revealed.

Speaking to the Gulf Daily News last week, Omani Finance Minister, Ahmad Makki said that the agreement would be put in place for three years, at the end of which it would be re-evaluated by GCC members. He also told the newspaper that the finance ministers had reviewed Central Bank proposals to establish monetary union by 2005, and a single currency five years after that.

However, detail was not given as to whether any progress had been made on those issues further to agreements reached at a previous summit in Muscat.

The six oil-rich nations are keen to put customs union in place as quickly and efficiently as possible, now that agreement on several contentious issues has been reached. For many years, GCC members have wanted to address the high taxes imposed by the EU on Gulf petrochemical and aluminium products, but progress in negotiations has always been stalled by the absence of a GCC customs accord, which the European Union has always insisted upon as a pre-condition to serious free trade agreement talks.

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