A GCC-EU Free Trade Deal Looks Just As Unlikely

The movement of goods, services and trade-related investments across borders is governed by the agreements of the World Trade Organisation (WTO).

Some WTO members — for example the European Union (EU), the US and the Gulf Cooperation Council (GCC) states — sometimes appear willing to go further in their market access commitments. And, when the occasion arises, seek WTO-compatible bilateral trade agreements with one another.

The single market of the EU is generally credited as one of the major contributors to the global economy when it comes to import and export of goods and services, while also playing a significant role in the domain of attracting direct foreign investment.

The EU employs its trade policy to secure long-term access to resources subject to scarcity, exhaustion or depletion. These imported raw materials and energy resources are turned into value-added end products. In line with changing domestic market conditions and external economic forces brought on by market liberalisation and accelerated technological progress, the EU has engaged successfully in trade deals with a variety of parties. But it is yet to conclude deals with the GCC and the US.

Although the EU and the US — after years of speculation — bit the bullet to engage in negotiations for the Transatlantic Trade and Investment Partnership (TTIP), the agreement might be put on hold, possibly unilaterally discarded, by either the US President-elect Donald Trump or the by his designated US trade representative. This follows the unabashedly vitriolic rhetoric for better trade deals — namely “America First” — throughout his election campaign. It is a promise that is the most likely to be kept.

There is also the EU-GCC trade dialogue, reportedly the longest running trade-specific negotiations in contemporary international relations. It has now been on hold for seven years since the GCC unilaterally — and pointedly — suspended the talks in late 2008.

Despite this, the EU stays committed to the conclusion of a free-trade agreement between the two regional blocs.

A Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU had been under negotiations since 2009. It was only after the European Commission assigned special status — usually only allowed for EU member states — that the deal could be concluded by the ministerial council. But not before a last-minute turmoil caused by the regional government of Wallonia in Belgium.

Signed at the EU-Canada Summit in late October, the deal will offer EU businesses more opportunities in Canada and support jobs in Europe. But with the European Parliament yet to give its consent before the agreement can be applied, it remains to be seen to what extent the unprecedented political bargaining of Wallonia might inspire the national parliaments of EU member-states to block ratification. Any such move could create ramifications for the EU trade deal-making capabilities in the future.

Moreover, there is growing public opposition to both CETA and TTIP given their far-reaching implications for the European consumer, while the departure of the UK — following Brexit — and rising populism in some of the EU member-states add to the volatility.

Yet another year has nearly gone without an inch of forward movement for a GCC-EU trade deal re-engagement. More than ever before, it seems unlikely that removing the few remaining obstacles reportedly in the way of a deal between the GCC and the EU is a priority.

source : gulfnews