A full implementation of the customs union by the six Gulf Cooperation Council (GCC) countries would further push up inter-GCC trade to around 20 percent in 2015 and 25 percent in 2020, Emirates Industrial Bank (EIB) said in its July economic bulletin. Against a backdrop of surging oil prices, "GCC governments are expected to become more flexible in dealing with the customs revenue distribution and this will allow them to reach a final agreement," it said. However, it noted that despite a sharp rise over the past years, inter-GCC trade remains very low compared with commercial exchange within the European Union at nearly 70-76 percent in 2010. EIB figures showed an initial accord to unify GCC customs tariffs has already given rise to trade among member states, surging from around 6.5 percent of their total trade in 2001 to 11.5 percent in 2005 and 15 percent in 2010. The report said the GCC states – UAE, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman-have delayed the full enforcement of the customs union six times since they signed an initial pact in 2001 due to some unresolved issues, particularly the distribution of customs tariff revenue among members. "The surge in oil prices will contribute to removing this hurdle as it means much higher revenue for the GCC countries and consequently less reliance on tax revenue in most members," the study said. GCC Assistant Secretary-General for Economic Affairs Abdullah Bin Juma Al-Shibli said any multilateral economic action is supposed to progress at a steady and deliberate pace, adding that work is currently underway to complete the most important requirements of the customs union. "We are pursuing efforts to form a single customs territory with the outside world while member states will soon agree on some of the relevant requirements of the movement of goods between them," he said. GCC countries, which pump more than 17 percent of the world's oil supplies, agreed to unify their customs tariffs at five percent. "At the same time, a customs union means a single GCC bloc, which in turn will strengthen the bargaining position of member states in their negotiations for a free trade agreement with other blocs, mainly the EU," it said. "In other words, a single GCC economic entity will bring about massive trade and economic benefits to members, attract foreign investment into the region and open up new markets for their exports," the report added.
