GCC and US make up for lost time
Last week, the GCC hosted the first meeting ever of the newly established GCC-US Trade and Investment Forum. For three days (June 3-5), scores of GCC and US officials and experts deliberated about ways to anchor the newly founded economic relationship between the United States and the Gulf Cooperation Council.
While the US has enjoyed strong bilateral relationship with individual GCC member states, its economic relationship with the organization is fairly new, especially.
In addition to strategic goals the two sides are trying to achieve, the US is also trying to recapture some of the GCC trade it had lost to China and other Asian partners.
The GCC and US have remained strategic allies, as they have always been. But trade (and economic cooperation in general) had not grown in recent years in comparison with GCC trade and economic cooperation with other partners.
Consider what has happened to their trade during the past two decades. In 1992, GCC trade with the US accounted for (15) percent of its total trade. Today, it is less than (8) percent, or nearly half what it was then. By contrast, GCC trade with China accounted for less than two percent in 1992. Over the same period, China”s share has multiplied nearly six times. China”s share of GCC trade, as well those of Japan, India, and Korea have all surpassed the United States as key trading partners of the GCC.
The US understandably wants to make up for lost time and re-establish itself as a key partner of the GCC. It has discovered that one way to achieve that is by recognizing the new realities in the region. Chief among them is the fact that the six GCC member states have forged together a unified economic zone with a customs union, common market and integrated trading and investment environment.
In recognition of those new facts, the US approached the GCC with a view to enter into a new, all-encompassing, strategic relationship. That seemed to be part of the new vision of the Obama Administration for the region. While that attention was focused initially on strategic, political and security aspects of the relationship, trade and investment soon followed. In addition, work is under way to engage in other areas as well, such as health, education and scientific research.
In the trade and investment, the GCC and US signed last September in New York a “Framework Agreement for Economic, Trade, Investment and Technical Cooperation.” That document was the first agreement signed between the US and the GCC as a group.
The forum in Riyadh last week approached trade and investment between the two sides with a view to increase trade and two-way investment. It took a fresh look at the changing landscape around the two partners and came up with new suggestions to restore their previously solid economic ties. The forum tasked the GCC Secretariat with drafting an action plan for the next three years, within the general framework of ideas discussed over the three-day event. The plan would set forth a general outline for areas of potential cooperation, interim goals and suggested activities and target dates to achieve them.
The forum was the first of its kind between the GCC as a group and the United States. Although the United States has always enjoyed close relations with each GCC member state, its relationship with the GCC as group is only a few years old. But even when the US dealt with the GCC as a group in the past, it was only in political and security areas.
The GCC Secretariat hosted the forum. Some (85) experts and high to mid-level officials from the two sides took part in the meeting, from many disciplines. From the US, participants from State, Commerce, USTR and other departments participated. Their GCC counterparts came ministries of foreign affairs, trade and finance, among others, as well as customs officials from both sides. The GCC Standardization Organization, GCC Patent Office and GCC Intellectual Property Training Center were also well represented.
Building on the success of this first meeting of the forum, it was agreed to hold a similar meeting once a year. Equally important, the two sides will convene smaller working groups of specialists, experts and officials in each area under the joint action program.
Also among the key issues discussed were ways to enhance coordination between the GCC and US in the World Trade Organization, and capacity building in the areas of patenting and intellectual property protection.
During the three days of the forum deliberations, experts and officials from the two sides discovered that there were many opportunities, but they also had to deal with some difficult issues as well.
So far, the GCC-US economic engagement has been characterized by candor, transparency and determination to establish that relationship on firm footing. The proposed joint action plan, with agreed goals, practical steps and target dates, should chart a clear path towards a solid economic partnership.
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