Prospects for an EU-Gulf Cooperation Council Free Trade Area: The World’s First Region-to-Region FTA?

The EU and the GCC have seemed close to an agreement on a region-to-region Free Trade Agreement (FTA) - possibly the first in the world between customs unions - for the last two years. The EU seems keener on an agreement than the GCC.

An FTA is an element in the EU's Global Europe trade policy strategy and is explicitly linked to energy security concerns.

The EU is the GCC's main supplier of goods and services, and since the completion of the GCC Customs Union tariffs are low and the economic effects of an FTA are likely to be small, on goods at least.

There may be economic barriers to the final signing of an FTA on both sides: resistance by GCC states to services and investment liberalization; and resistance in the EU over access for GCC refinery products and chemicals.

Commentary from the Gulf itself suggests that the EU practice of including clauses on human rights and labour market and environmental regulation may be at the heart of the slow progress from the GCC side.