Gulf Cooperation Council and Singapore Complete FTA
SINGAPORE – On January 1, 2015, the Free Trade Agreement (FTA) between the Gulf Cooperation Council (GCC) and Singapore entered into force in Dubai. The FTA covers trade in goods and services, customs procedures, e-commerce, economic cooperation, government procurement, rules of origin and other matters.
The GCC, which comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, jointly announced the beginning of negotiations in November 2006, and the FTA was signed in December 2008. Singapore ratified all tenets of the FTA in 2013.
The FTA grants 93.9 percent of tariff lines for Singaporean goods exported to the GCC tariff-free concessions, with a further 2.7 percent to qualify for such concessions in 2018. The GCC has a standard five percent common customs tariff on foreign goods, and other variable tariffs. All GCC imports to Singapore will now have zero-tariffs.
The agreement provides advance rulings on customs procedures, allowing for effective budgeting of applicable import duties. The rules of origin brought in a lower value-added content (VA) threshold for Singaporean manufacturers to meet and qualify for preferential market access.
Additionally, Kuwait, Oman, Qatar, and the UAE have all committed to recognizing Singapore’s Halal Certification Standards and Halal Mark, and Bahrain and Saudi Arabia have committed to talks on carrying out the same action at a later date.
Director of Dubai Customs Ahmed Mahboob Musabih has described the FTA as a “milestone agreement in strengthening ties and promoting trade between the GCC countries and Singapore.”
For the first three quarters of 2014, Dubai-Singapore trade reached AED9.2 billion (US$2.5bn), including AED5.2bn (US$1.4bn) in imports, AED1.15bn ($US0.3bn) in exports, and AED2.86bn (US$0.8bn) in re-exports. The GCC accounts for close to a third of Singapore’s oil imports.
Singapore was the first non-Middle Eastern country to have an FTA with the GCC. It is Singapore’s second Middle Eastern FTA, following the Singapore-Jordan agreement of 2004. The GCC launched FTA negotiations with China and India in 2004, yet concerns of low-cost Gulf petrochemicals and byproducts appear to have stalled negotiations.
Despite FTA negotiation setbacks with China and India, GCC trade is forecast to continue its eastern expansion. In a recent Economist Intelligence Unit report GCC Trade and Investment Flows, China was predicted to be the GCC’s biggest export market by 2020, reaching around US$160bn in exports mostly due to wholesale and retail trade. China is predicted to provide around $US135bn of imports to the GCC, dominating the import market.
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