The US banking crisis and credit crunch reeled economies globally, with cross-border trade only showing signs of recovery several years later.
The WTO Doha Development Round pertaining the lowering of trade barriers multilaterally remains unyielding, though.
Moreover, a usually free trade minded US trade policy saw a reversal when President Donald Trump slapped import tariffs in an attempt to prevent a further deterioration in strengths eroded economic sectors.
But the European Union is now using its leverage as the world’s largest trader to undo the trend.
Indeed, the Comprehensive Economic and Trade Agreement with Canada and the Economic Partnership Agreement with Japan may be seen as a clear yes we can resist free trade proponents to the protectionist, and trade deals discarding cards, played by Trump.
Inclusive trade packages, the question arises whether the concluded bilateral trade pacts might work inspiring, and create common ground sufficiently strong to justify resumption of negotiations for a bloc-to-bloc free trade agreement with GCC.
Reducing or eliminating tariff and non-tariff barriers on trade, a free trade pact strengthens commercial ties, and builds closer economic relations between the signatory parties.
Depending on their economic weight and/or financial strength, countries and regional blocs can, however, afford themselves firm positions in the negotiation process.
To rule out trade diversion from GCC states with higher customs duties to those with lower ones, the EU made the formation of a GCC customs union a pre-condition before negotiations, with an attached political dialogue could begin. Similarly, the GCC states appeared inflexible on certain trade devices.
The ability to impose restrictions upon exports to protect or promote a domestic industry, whether by affording a price advantage to that industry for the purchase of its materials, or by reducing the supply of such materials to foreign competitors, or by other means, is an important issue for countries with narrow, nearly identical economic bases, and eventually depleted hydrocarbon deposits.
The freedom for dual energy pricing and/or export duties is of concern.
Finding ways to keep their oil-reliant heavy and downstream industries globally competitive under changing market conditions, and looking for markets for those goods their knowledge-based sectors are projected to manufacture, the GCC states are conscious that a far-reaching trade pact with the EU will (further) impose limitations in the framing and implementation of GCC trade policies.
A customs union fully implemented, the GCC states are faced with the institutional requirement that trade agreements with non-members are to be negotiated and concluded under a GCC trade policy.
Following Brexit, the UK will re-possess full autonomy in the conduct of its external trade relations post-EU membership.
Facilitated by longstanding ties, the UK will be warmly open, and better placed than the EU to clinch a trade pact with the GCC.
At a moment protectionism is looming yet key international trade actors are trying to compensate a backsliding on (further) multilateral trade liberalisation by embarking upon bilateral market access enhancing trade pacts with interested parties, the GCC states – who are in no hurry due to commercial opportunities elsewhere – can thus decide to negotiate and conclude a bloc-to-country trade pact with the UK, or patiently wait until the EU interferes less in domestic affairs, compromises on reciprocity, and offers more generous market access concessions.
Possibly seizing the momentum, the ongoing diplomatic row involving Qatar is likely to hinder the GCC to clinch any prospective trade pact.
The author consults on trade policies and relations between the GCC and the EU