The US hopes free trade agreements with Bahrain and other neighbours of Saudi Arabia will strengthen the Gulf Co-operation Council - not break it up, a US trade official said late Friday. "We want the GCC to succeed. We have no interest in breaking up or breaking down the GCC," said Catherine Novelli, assistant US trade representative for Europe and the Mediterranean. "We think the GCC is a valuable thing."
The Gulf Co-operation Council is an economic customs union which includes Saudi Arabia, Bahrain, Kuwait, Qatar, Oman and United Arab Emirates. Goods are traded between the six countries without tariffs, while foreign products face a uniform five-percent duty.
A pact reached last year between the United States and Bahrain has upset oil-rich Saudi Arabia, the largest and least liberalised member of the GCC. It would eliminate duties on US exports to Bahrain, creating an economic opportunity for those lower-taxed goods to be reshipped to Saudi Arabia.
To stop that, Riyadh plans a five-percent duty on US goods that enter Saudi Arabia via Bahrain. The United States will begin free trade talks in March with two other GCC members - the United Arab Emirates and Oman.
Saudi Arabia's actions may reflect concern about being left behind, Novelli told reporters at a luncheon. "All of the countries in the Gulf, including Saudi Arabia, have told us they're interested in free trade agreement negotiations," she said. "Our goal is to include eventually all of the countries in the Middle East."
But before Riyadh can begin free trade talks with the United States, it must finish negotiations to join the World Trade Organisation, Novelli said. Saudi Arabia has made good progress recently toward that goal, but still has a lot of work to do, she said. Congress is expected to approve the free trade agreement with Bahrain this year. The pact was completed in a record four months in May 2004.
It's difficult to say if the UAE and Oman negotiations will go as quickly, but the United States hopes they can be completed in less than a year, Novelli said.