PRC Economic Penetration of the GCC

This brochure tells the story.

June 8-10 Dubai.  1,300 firms.  6 product categories.  One stop shopping.

And note this is part of a well organized trade promotion effort - not just in the GCC.  There'll be a fair in Miami in 2011.

To update Chairman Mao:  While power may come from the barrel of a gun, a country's economy is the basis for all power.

GCC Refuses to Revive Free Trade Agreement Talks With EU

AlQabas reports that the GCC has rejected recent European attempts to revive the trade talks.  The key issue is the right of states to impose export duties.  And the key focus is the petrochemical industry where the GCC have a cost advantage - not only in terms of low feedstock costs but also newer technology.

The GCC has rejected the latest European proposals stating that while both sides recognize the right to impose export duties, the GCC wants that right constrained by WTO regulations and agreements.

Free trade negotiations have been going on for some 20 years and were suspended late 2008 over this issue.

The GCC did sign a free trade agreement with the much smaller four member European Free Trade  Association (Iceland, Liechtenstein, Norway and Switzerland)  in 2009.

GCC Secretary General Update: GCC Central Bank & EU-GCC Free Trade

Asharq AlAwsat reports on comments by Abdulrahman Hamad AlAttiyah, the Secretary General of the GCC, from a Qatari-Saudi business conference this Saturday.

1. The first meeting of the GCC Central Bank is scheduled for 30 March in Riyad.  The Governors of the Central Banks of Bahrain, Kuwait, Qatar and Saudi will attend.  Discussions will focus on legislative, institutional, and procedural aspects related to the currency union and the single currency.  More technical meetings will follow to continue the steps necessary to launch the single currency.
2. He remains optimistic that the UAE will join the single currency project and will be able to quickly catch up.
3. The EU has presented some new proposals in a bid to reinvigorate the stalled EU-GCC Free Trade negotiations (which began in 2008).  Their proposals have to do with a more flexible less time bound approach to the issue of customs duties, including those on exports.  The GCC is studying and will revert.

There were also some points on the GCC railway:

1. Project is in the detailed study/technical drawings after having obtained agreement in principle.
2. HQ for the organization to supervise the railway has not yet been chosen.  

And some news from the Qatar-Saudi businessmen's conference which 300 businessmen attended:

1. 2008 trade between Qatar and KSA was some SAR6.2 billion (US$1.65 billion).
2. The number of joint Q-KSA projects in the Kingdom through June 2009 was 16 with capital of SAR6.1 billion.
3. Various speakers called for increased co-operation.
4. Ahmad Al San'i (Saudi businessman) called for creation of a joint company in which the two governments should invest to promote business in Qatar and Saudi.
5. Picking up on that theme, Khalid AlMuqayrin, (another Saudi businessman) called on the SWFs of the two countries to invest at least 5% of the value of their holdings in the two countries so that "there would be a direct return to the two countries and their citizens rather than having all their investments far from the region which don't have a direct impact on citizens".

IMF Analysis: MENA Foreign Trade Constrained by Transport and Customs Clearance Problems

Rina Bhattacharya and Hirut Wolde of the IMF have analyzed MENA foreign trade and come to the conclusion that trade is some 86% below what would be expected given the characteristics of these countries' economies.  The non-oil exports of the MENA countries are significantly lower as a share of GDP compared to all other developing regions of the world.  Imports are also lower as a share of GDP compared to the same regions, with the exception of sub-Saharan Africa. This is documented in Figures 1-6 of the study.

The conclusion is that two factors are primarily responsible for trade under performance:

1. Transportation problems 
2. Customs clearance "inefficiencies"

While one might quibble about just how precise the conclusions are (Is it really 86%?  Or is it 83%?), the bigger picture of under performance is less subject to debate.   

And that really is the central message from the study - quite a disturbing one for an area facing a demographic "explosion" and the need to create new jobs.