In a workshop organized yesterday by Asharqia Chamber and the Federation of GCC Chambers, Customs Union contributed to the increase of intra-GCC trade by 8.2% annually.
According to a study prepared by the Federation of Chambers of the Gulf Cooperation Council (GCC), intra-GCC trade has grown significantly after the formation of the Customs Union by about 8.2% annually during the period 2003-2016. It is contributing 8.9% in 2016 compared to 5.8% in 2003.
A workshop was held by Asharqia Chamber and the Federation of GCC Chambers at Asharqia Chamber's headquarters on Thursday, 1 March 2018, under the title, "Efforts to Complete Customs Union Requirements between the GCC Countries: the Process, the Challenges and the Proposed Solutions."
During the workshop, a study explained that the volume of foreign trade increased by 9.3% 2001 to 2016. The total foreign trade of the Gulf in 2016 was about $ 894.5 billion, which was about $ 234.2 billion in 2001. The volume of exports to the Gulf was about 474 billion dollars; while the bilateral trade amounted was about 79.3 billion dollars to in 2016, compared with 13.7 billion dollars in 2001.
The study, which was presented by economist, Dr. Mohammed bin Abdullah Al-Shouha, explained that the Supreme Council of the Gulf Cooperation Council (GCC) at its 23rd session approved in 2003 the entry into force of the Customs Union after the establishment of the Free Zone. This would be followed by the common market sequence, monetary union, and the economic integration between the GCC countries. In the customs union phase, customs duties, regulations and, procedures restricting trade between member countries are excluded. However, customs duties, uniform trade, and customs regulations are applied to the outside world.
The study highlighted the main advantages of the Customs Union, especially reducing the difficulties and the restrictions facing the movement of national and foreign goods and increasing the volume of intra-GCC trade. The study is considering the Customs Union as a step to support the negotiating powers of the GCC countries combined to obtain better terms with their trading partners in the areas of trade and investment.
According to the study (which is under the preparation and the review of the concerned parties, mostly representatives of the private sector), the customs union is based on several foundations, notably the movement of goods between the GCC countries without customs and non-customs restrictions, and a unified customs law and a tariff of 5% on all imported foreign goods. However, there are some exceptions to the number of goods, including 800 items, e.g., live animals, books, magazines, ships, aircraft, vegetables, fruits and medicines.
The study pointed out to the GCC countries have made efforts to apply the customs union, including: allowing the goods produced in the GCC countries to move freely among the member countries, exempting the industrial establishments of the GCC countries from customs duties on their imports of machinery, equipment, spare parts, raw materials, and etc., and agreeing on a mechanism to settle customs revenues among member states. It clarified that the GCC countries in the Customs Union is considered as one economic group dealing with transit with other countries.
The study mentioned that the customs law is clear in all of GCC countries. Therefore, advanced inspection systems for containers, intelligent inspection system, smart phone and so on have been implemented.
The study (dealt with the issue of customs union and the private sector) argued that there are advantages and benefits for the sector from the customs union applications such as equal opportunity, and free movement of goods and benefit from the relative and competitive advantages, which is provided by commercial and regional sites.
On the difficulties and obstacles, the study stressed that the most prominent difficulties are when some industrialists import more than their need and obtain exemptions, the differences in specifications and standards adopted by the member countries, the length of the inspection procedures, the high costs of maritime transportation, and the agreement on collective protection lists on all goods.
The study emphasized the keenness of the secretariat of the Federation of Chambers of the Cooperation Council to take the views of the private sector, which focused on the length of customs clearance procedures and the multiplicity of documents required, the lack of customs cadres at the border posts, the failure to practice some land customs outlets for 24 hours, and the lack of awareness regarding standards and standards and Gulf transport requirements.
The study called for a periodic evaluation of the qualified customs outlets as the first typical ports in the customs union to identify their basic environment and determine their suitability for the size of work. It also called for a focus on the development and rehabilitation of the rest of the first border crossings and the provision of all customs services facilities.
In addition, the study recommended that following: the provision of transportation networks of the Gulf, which reduces transport costs and supports the stability of the market as it provides an effective network of transportation between the GCC States; following the policy of preferential government procurement of Gulf products while working to find controls and incentives to improve quality and quantity; the continuance to develop the Gulf database; increasing the areas allocated for security inspection with the provision of detection devices to apply all procedures at the same time in the same port; finding an effective system of work to control the communication and provide a qualified cadre to ensure faster solution of problems that arise during the movement of goods between the GCC States; and the establishment of more joint national exhibitions to introduce the Gulf industries and services that contributes to enhance the consumers' confidence in the Gulf industries.
The workshop had a number of discussions and dialogues. The Secretary General of Asharqia Chamber, Abdulrahman Al-Wabel, Secretary General of Gulf Chambers Union, Abdul Rahim Naqi, and a number of businessmen in the Eastern Region attended the workshop.
Regarding the development of non-oil industrial exports in the GCC countries, the study showed that they face several challenges, e.g., non-oil exports focus on limited products, non-oil exports are concentrated geographically, weak contribution of foreign investment in non-oil exports in the GCC countries, and the weak industrial coordination among GCC states.
It stressed the adoption of policies for financing, insurance, marketing, logistics and, information services to serve industrial exports, the development of mechanisms to increase the level of coordination and cooperation in terms of exchange of expertise and competencies among the GCC States, the development of investment strategies that reflect the geographical and sectorial investment trends at the level of the GCC, and continuing to facilitate the procedures required of exporters through the development of information systems and electronic governments.
It pointed out that the challenges facing the development of exports of small and medium industries is the competition between imported products with similar local products, which is due to the opening of markets and the dumping policy practiced by some foreign companies as well as the preference of local consumers for foreign products.
Moreover, Mazen Al-Hammad, Director General of the Export Environment of the Saudi Export Development Authority, said that the Authority is moving to increase the volume of Saudi exports to 2500 billion riyals in 2030 compared to 330 billion currently. He also mentioned that the Authority is currently working to increase the volume of exports to 50% of the national product by 2030 compared to 16% currently. He pointed out that raising the total Saudi exports means increasing the exports of non-oil goods, strengthen the capacities, infrastructure, and procedures for exporters, and promoting access to the market and promotion in the strategic markets. He added that the Authority is moving to reduce the period of completion of the container for export to 7 days, compared to 3 weeks. He also stressed that the Authority is keen to reduce the duration for less than 7 days.
He pointed out that the Authority is working to provide evaluation services for registered and non-registered customers in order to identify the strengths and weaknesses of the establishment and to provide services and recommendations appropriate to the level of readiness for export.
He added that the Authority has evaluated 1108 establishments, as the evaluation revealed the readiness of more than 1300 enterprises for export. He stressed that the Authority is working to improve the efficiency of the export environment by solving the internal and external challenges of export, which face exporters in cooperation with the relevant authorities.
In addition, he said that the Authority is working with the relevant authorities to complete the formal procedures for the establishment of the Bank of Import and Export.
He argued that the Bank's objectives are to provide export-financing opportunities to exporters and importers, to provide training services and advisory services to exporters in cooperation with "Saudi Exports," to complement the activities of the financial services provided to the import and export sector for commercial banks rather than compete with them, and to ensure compliance with appropriate regulations while adhering to a greater level of flexibility than local banks. In short, he said that the Bank of Import and Export would provide direct and indirect financing and insurance.
