The Gulf Common Market (GCM) covers all economic and investment services, dealings in the stock market and setting up of companies in both public and private sectors.
Gulf Cooperation Council (GCC) countries are determined to achieve economic integration of the regional countries, as evident from the 34th summit held in Kuwait in December 2013. In particular, emphasis was rightly placed on continuing moves towards attaining goals of the Gulf Common Market (GCM) on one hand and completing the requirements of the customs union on the other.
An existing plan calls for ensuring comprehensive implementation of the customs union scheme by 2015. To be sure, the customs union needs to overcome a few lingering challenges of the likes of developing a formula for fair distribution of customs duties taking into account issues relating to port of entry and final destination of goods. Other issues concern bureaucratic obstacles, in turn a problem in some but not all GCC states.
For its part, the GCM project, which started in 2008, stresses free movement of factors of production amongst member states of Saudi Arabia, the UAE, Kuwait, Qatar, Oman and Bahrain. The project covers all economic and investment services, dealings in the stock market and setting up of companies in both public and private sectors besides social insurance among GCC citizens.
Increasing trade flow
Happily, statistics relating to movement of goods point out to increasing trade flows within GCC economies. According to the IMF, intra-GCC amounted for $8bn in 1980 or 3.8 per cent of total international trade. The figure rose to $67bn by 2008 or nearly six per cent of total trade flows with the rest of the world.
Still, based on statistics released by a governmental entity in Bahrain, the amount has reportedly jumped to just under $100bn by 2012 or eight per cent of total GCC trade worldwide. Undoubtedly, there is space for enhancing trade flows amongst member countries notably when compared to places like the EU.
What’s more, evidence shows that GCC countries are implementing earlier agreements granting GCC firms the right to open branches in member states and to be treated as local ones. Figures released on the sidelines of Kuwait summit give the UAE a leadership position in granting business licenses to fellow GCC nationals. The UAE alone accounted for 85 per cent of a total of 35,721 business licenses issued until 2012. Not surprisingly, Saudi nationals topped the list of license owners, all the more confirming attraction of the UAE for Saudi investors in particular. In fact, this fits the GCM’s value, which calls for finding a unified regional market through which nationals could benefit from available opportunities in member states.
In addition, GCC states are moving ahead with executing specific schemes deemed essential for day-to-day life. This is particularly true of the electricity grid, which dates back to 2009 with four member states. The scheme has proven exceptionally useful during the long summer months of the last few years, with countries of surplus of supply showing willingness to share with those in need; this has provided member states with insufficient electricity the opportunity to avoid possible discrepancies of power supply.
The drive now calls for working towards a rail network linking GCC countries, a novelty project and certainly past due. Still, other activities focus on adopting unified framework for water and environment
Such economic moves are essential for ensuring that GCC nationals experience benefits of projects at the heart of economic integration. Clearly, talk of ambitious projects like a single currency and a unified monetary union, let alone a political union, could not be serious in the absence of completion of vital economic projects, namely the customs union and common market.