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GCC plans customs union by 2015

posted on 08/05/2011: 1085 views

Gulf Arab countries plan to resolve all outstanding issues about their customs union over the next three years in order to have it fully operational by 2015, a top UAE official said on Saturday.

"What we have agreed upon, that in the next three years, meaning 2011 to 2014, we should complete all the pending issues in regard to the customs union,” UAE Minister of State for Financial Affairs Obaid Humaid Al Tayer told a news conference.

"We hope... it becomes effective January 1, 2015,” he said after a Gulf finance ministers' meeting in Abu Dhabi.

The Gulf Cooperation Council (GCC) Finance Ministers, who met under the chairmanship of Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance, discussed the UAE's proposals to develop the GCC common market and to document the basic principles of the VAT system.

The meeting also discussed the Qatar initiative regarding the WTO natural gas and the functioning of the Customs Information Centre as well as establishing the GCC development programme.

Bahrain's proposal to establish a GCC fund, and the latest developments in the GCC countries' economic relations with international groups, were also discussed during the 90th regular meeting of the GCC financial and economic cooperation committee.

"We are looking forward to further supporting the integration process in the Gulf economies, and to focus more on full application of the customs union, to take advantage of the opportunities offered by a GCC common market, which will reflect positively on all sectors of the economy and achieve the aspirations of the citizens of the GCC countries,” Sheikh Hamdan bin Rashid Al Maktoum, said in an e-mail statement to Khaleej Times.

Dr Abdullatif Al Zayani, GCC Secretary-General, highlighted the role played by the GCC in following all stages of economic integration, in order to fully leverage the achievements made and to maximise benefits for citizens' of GCC countries and deepen and strengthen the integration among all GCC countries.

"The GCC has made a long march towards achieving objectives set by the founders, a number of achievements have been achieved at various levels, particularly in the area of economic integration,” Dr Al Zayani said.

Dr Al Zayani said the upcoming GCC consultation summit, scheduled on Tuesday in Riyadh, will discuss a number of economic issues, including the customs union and joint development programme.

The introduction of the customs union in 2003 had been hailed by officials as a major achievement countering criticism that the Gulf Arab bloc would be unable to realise economic integration in the world's top oil exporting region. But differences have delayed an agreement on how to introduce a permanent system to distribute customs receipts among six members of the GCC, which besides the UAE also includes Saudi Arabia, Kuwait, Qatar, Oman and Bahrain.

In March, a top GCC official said the pending issues need to be resolved to reach a final deal on the customs union in line with an agreed timetable this year.

Al Tayer said the Gulf finance ministers' meeting did not discuss the issue of the UAE rejoining a planned Gulf monetary union, as the UAE's position on the union is "clear and for reasons previously announced.”

The UAE pulled out of the monetary union in 2009, believed partly to be due to a decision to base the monetary council in Saudi Arabia's capital, Riyadh.

Bond issuance

The UAE federal government is pressing ahead with implementation of this year's budget according to the schedule, and could issue sovereign bonds next year if necessary, Al Tayer said.

"The federal government will issue sovereign bonds if that was deemed as necessary, he said.

Al Tayer said the UAE and other GCC countries witnessed no irregular financial flows from the Arab countries facing political turmoil.

In reply to a question about higher oil prices, he said oil prices rose three years after the global financial crisis and consequently, would have little or no effect at all on the inflation rates, expected to remain this year within the two per cent mark.

Younis Al Khouri, Undersecretary and Director-General at the ministry, said the authority will assess demands to raise federal budget spending at the end of May or in early June.

"We have been receiving some of the ministries' and government entities' requirements and we are studying supporting them in the extra budget requirement,” he said.

Al Tayer also said the UAE is proceeding with a spending programme despite a small budget deficit forecast for this year, and the budget is so far on target.

"Although we have announced that we will have a deficit, we will continue with all of our programmes, including infrastructure,” the minister said. "Up to now, I am happy that in the first quarter we are on target...we will deal with the budget deficit as we go, in the financial year,” Al Tayer said.

The 91st GCC financial and economic cooperation committee meeting will be held in the UAE in October 2011. – Khaleej Times


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