GCC Launches Customs Union

by Lorys Charalambous, Tax-News.com, Cyprus

02 January 2003

The unified customs area of the Gulf Co-operation Council (GCC) came into effect yesterday as planned. It covers Kuwait, Qatar, Oman, Saudi Arabia, Bahrain, and the United Arab Emirates (including Dubai). The launch of the GCC customs union, which applies to more than 1,500 imported items signals the birth of the Middle East's biggest economic bloc, with a GDP of nearly $320 billion in 2001, around 45% of the combined Arab economy.

GCC states are confident the launch of their customs union today will be smooth despite a number of outstanding technical issues. "We are confident and determined and have the political will to implement the customs union," GCC Assistant Under-Secretary for Economic Affairs Mohammed Al Mazruwi said. "I don't believe that problems will hinder the progress of the union ... It is a great challenge and we must overcome any obstacles."

GCC leaders made the decision to go ahead with the customs union at their two-day annual summit in Doha which ended on December 22. The GCC agreement is being put in place for three years, at the end of which it will be re-evaluated by GCC members. Member states of the GCC are also planning to establish monetary union by 2005, and a single currency five years after that.

The GCC will now step up the pressure on the EU for a free-trade agreement. The EU has been insisting that the GCC states should first unify their customs tariffs in order to be treated as one group instead of six scattered economic entities. However, the EU is still hanging back, saying that there are remaining human rights and other issues that need to be tackled.

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