Hopes rise for EU free-trade deal with Gulf states

Date: 27/04/2000

By Simon Taylor

EUROPEAN Commission officials are optimistic about striking a free-trade deal with the six member countries of the Gulf Cooperation Council (GCC), although significant obstacles remain.

Sources say a special negotiating session to be held in June will be crucial to their efforts to get a deal. They add that hopes of progress have been boosted by a positive meeting in Saudi Arabia last week, but warn that the six countries' request for the Union to drop duties on imports of aluminium from the region will be a 'major sticking point'.

The Commission has been discussing a trade agreement with the six countries - Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain and Oman - for four years. The talks made little headway until the six decided last November to introduce common customs tariffs by 2005, paving the way for progress.

The GCC countries have called on the EU to scrap a 6% duty on imports of aluminium. But France has blocked attempts by the UK to end the levy, reportedly because of lobbying by large European aluminium producers which argue that lowering the duty would cost jobs in the Union. However, the Federation of Aluminium Consumers in Europe is supporting the GCC's call for the tariff to be scrapped in a bid to lower the price of raw material for the manufacturing industry.

The GCC countries export around half a million tonnes of aluminium to the EU each year, mainly from Dubai and Bahrain. They want to increase sales in order to close a 12-billion-euro trade deficit with the Union. Commission officials say the EU wants to keep the duty in place, but would be prepared to promise a review of the situation after five years. This approach has already been rejected by the GCC.

European Commission officials are optimistic about striking a free-trade deal with the six member countries of the Gulf Cooperation Council (GCC), although significant obstacles remain.