The mission of Arabian Gulf cooperation council - Essay Example

THE MISSIONOF THE ARABIAN GULF COOPERATION COUNCIL (AGCC) Introduction In the modern world, there has been a lean on formation of trade blocks. Many countries in the world have come together to form trading blocks which acts as a platform for negotiation on matters concerning trade. Individual countries have found it difficult to air their voices in the world on matters concerning trade and trade blocks have been found to be more influential in making trade agreements. In Europe there it the EU, in America there is NAFTA, in Latin America there is the MERCOSUR, and in the Middle East there is the AGCC. The Arabian Gulf Cooperation Council is the economic and political forum that coordinates policy making for at least six member states including the states of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. This council was crated in May 19981 with an objective of coordinating, integrating and interconnecting the member states to work together in all fields. It was also formed with an intention of strengthening the ties between the member states and their people, formulating and regulating rules and regulating in economic fields. In this mandate the council was formed with an aim of putting in place regulation on economy, finance, trade, customs, tourism, legislation, administration, research and development, mining, agriculture, water and animal resources, and coordinating scientific research centers with the input of the private sector. The council does not impose trade policies upon its member states but each state put in place its own trade laws. Of recent past there is growing need for the member states to cooperate with each other on matters concerning customs duties, intellectual property, and setting of standards and coordination of intra states investments. Under the guidance of the AGCC, member states have implemented a customs union since 2003 which seeks to unify tariffs among the member states. This means at the member states have adopted some common customs laws and procedures in the trade. It also shows that the member states have adopted a single point of entry in the region fro all international trade. It also seeks to move toward treatment of goods as national origin for member states within the GCC. This means that they would have same origin as a member block rather than indicating the origin of goods to be a particular country. After arriving at an agreement for a common market, the council is now moving towards establishing a monetary union. The country is expected to come up with a monetary union by 2010. In coming up with a common monetary union, the council expects that the economy of the region will improve and at the same time there will be increased trade with the outside world. The council has been representing the member state making trade agreements with other trade block in the world like the EU and others. It has been negotiating for free and fair trade agreements with other trade block. In particular, the council has been negotiating with the EU on harmonizing the trade between the two states with the understanding that Gulf region is home to more than 38% of the world crude reserves. (EU External Relations, 2007) The proposed work by the council One of the most important works that has been accomplished by the council is setting up of a common market. The common was launched on January 2008 and is expected to increase the trade among the countries by 25 percent by 2010 from the current 10 percent for all the foreign trade. With a combined economy of more than 700 billion US dollars, this market is expected to attract other international traders into the region. One of the proposed works by the council is the achievement of a common currency by 2010. This is expected to stir trade in the region and bring about equality among the market members. The common market aims at achieving not only free movement of goods in the region but also movement of labor and capital. Free movement of labor will even involve the right for individuals to work in other states even in government institutions and the private institutions. Free movement of labor will see member states mover unobstructed from one member state to another in a bid to find employment and residence. Individuals will enjoy basic government provisions like health and education access in all the states that they move to. This will be enabled by enactment of common rules for labor markets which will help in coordination of the labor industry in the region. (Dargin, 2006) The free market initiative is also expected to improve investment by member in other member states. This will involve buying and selling of real estates and investing in long term investment like real estates in member states. Free movement of capital will seek better investment opportunities which come along with better returns on investment. This will involve change of rules and regulations on external investment in a country. This will be in line with the aim of seeking to have free movement of capital in order to raise the production efficiency from resources. Currently it has been documented that only 333,000 of the GCC citizens owns real estates in other member states out of the total population of 35 millions people in the region. (IMF, 2006) The council also seeks at providing members states with bargaining powers from international traders. This will help the member state get the maximum from their resources like oil which has seen increased international trade in the region in recent times. International agreement will see some sectors like real estate, banking, and logistics reap huge benefits from improved international trade. The stock market is also expected to benefit from the move of creating a common market, negotiating international trade and achievement of a common market. This will be in line with increase intra-regional trade, logistics and other important sectors of the economy. In implementing a common market, I would prioritize harmonizing of trade agreements between the member states. In this regard the council should look first at ensuring that that there are fair trade terms between the countries and there is protection of weak sectors of the economy the member states. Then this would be followed by opening the borders of the member state first for free trade and later for free movement of capital. After this has been achieved, there should be free movement of labor among the member states but on permanent residential bases. The council would then seek to have a common currency after the trade links have been established. This would be followed by free movement of residents even on residential bases. One of the challenges that the council will face in achieving this would be the difference in economic levels of the member sates. This would be a challenge since each country will be protecting its infant industries. Already there is recorded slow implementation of legal requirements for trade because each country will take time to calculate the benefits and loses from such block. There will also be a challenge in creating common labor laws, sponsorship system, stock markets, and other economic sectors. Development time line With the need to create a free market with free movement of goods and capital, there is need to give time to the development of three sectors necessary for this. One is the creating of legal framework for trade agreement. The second one is creation opening up of borders for free movement of goods and capital. The third one is opening borders fro free movement o f people, and the fourth one is attaining a common currency for the region. These cannot be achieved at once and there is need to have a 5 years allowance for each step before the other one is entered into. References Dargin, J. (2006). Gulf Gas Initiative. Retrieved from, http://www.oxfordenergy.org/htm on 15th February 2008 EU External Relations (2007). The EU and the Gulf Cooperation Council. European Union External Relations Issue 4. Global Economic View Point: Positive economic implication to GCC Common Market decision. Report by Global Investment House IMF (2006). Most Active Region Blocs. CIA World Fact book, 2005 Read More