EU-GCC Free Trade Agreement: an Answer to Arab Frustrations?


In 2007, Peter Mandelson, then EU Trade Commissioner, gave a speech at the Jeddah Economic Forum, in which he underlined the importance of setting up the first ever region-to-region Free Trade Agreement (FTA) between the European Union (EU) and the Gulf Cooperation Council (GCC) to provide for greater economic diversification of the Gulf countries. Two characteristics of the Gulf countries are their lack of economic diversity and huge and fast-growing young population; as Mandelson says, “put those two facts together and you have a huge economic and human development challenge”.

Four years on, Mr Mandelson’s message could not have been more appropriate. It was the lack of employment opportunities and of basic democratic freedoms that had pushed Mohammed Bouazizi to immolate himself on 17 December 2010 in Tunisia, triggering the outbreak of demonstrations throughout the Arab World. Immediately, popular protests broke out in Tunisia and soon reached other countries of the region, all led by young men and women in the name of democracy. The countries of the Gulf have not been spared. Demonstrations have taken place in Bahrain, Oman and, to a lesser extent, Saudi Arabia. High rates of unemployment are part and parcel of the frustration of these young populations, alongside a severe lack of most social and political freedoms.

One solution should thus concentrate on the achievement of economic growth and development for greater prosperity of the young population. In the case of Gulf economies, excessively dependent upon its oil and gas markets, one objective must be greater economic diversification. The integration of Gulf economies through the framework of the Gulf Cooperation Council has set these countries on the right track. The GGC should aspire to achieve levels of integration reached over past decades by the European Union: in the European scenario, regional integration and cooperation has proven a successful – and unprecedented – experiment in providing economic prosperity and stability for its citizens.

Nonetheless, regional economic integration alone is not enough. This process must be coupled with greater economic integration with foreign markets, offering greater investment variety and economic diversification – provided parallel efforts are made to ensure necessary investments in people and appropriate wealth redistribution. It is in this context that the EU has a major role to play. In other parts of the world in which the EU has established FTAs, results have been mind-blowing (with Mexico and Chile for example). Trade liberalization, through the removal of trade barriers, has become a trademark of EU contribution to economic diversification, prosperity and poverty reduction on the international scene.

The EU and GCC enjoy close economic cooperation since the signing of the EU-GCC Cooperation Agreement in 1988 and the three-year Joint Action Programme launched in 2010. But, as the Gulf’s main economic partner, and in light of the extraordinary turn of events in the region, the EU can make an unprecedented contribution to the short-term prosperity of the region by breaking the deadlock which has left economic relations between the two regions so frustratingly short of a full-fledged FTA.

The moment is ripe for the EU to do what it does best: economic integration. The waves of frustrated youths protesting in Bahrain, Oman and other parts of the Gulf should outweigh the minor obstacles to finalizing FTA negotiations. It is a risk the EU must take, in the name of prosperity, stability…and democracy.


Andrew Bower