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Passport to purchase, Part II
Even as the financial crisis takes its toll, it looks like the Gulf states maybe looking to reclaim their place at the center of world trade, Part II.
January 26, 2009 8:49 by Ian Munroe
“A lot of recommendations from big multilateral institutions are recommending that whatever infrastructure developments are planned – not just in the GCC but all over – to go ahead with and not interrupt those because of what’s happening,” Makki says. “This is one of the ways we could dampen the effect of the economic crisis.”
The Gulf states, like most of the world’s countries, are also waiting to see if the World Trade Organization can salvage a new set of free trade agreements from the Doha round of negotiations. All six GCC members are now party to these talks, and each is heavily invested in promoting worldwide commerce (particularly between Asia and Europe).
If the seven-year-old Doha round evaporates, members of the WTO will have an easier time convincing themselves that putting up trade barriers is a reasonable way to cope with a recession at home. That would choke off the flow of crossborder goods even further.
Gulf states would also lose their most legally binding avenue for encouraging open markets. Although its six members have signed on to similar agreements, such as the GCC customs union and the Greater Arab Free Trade Area, these don’t have the same institutional mettle as the WTO treaties.
Yet the prospects of closing the Doha round successfully look slim. They pivot on heavily politicized areas such as industrial production and subsidized agriculture. The WTO hosted a meeting in July to settle key differences in these important areas, but failed to achieve a breakthrough.
With the global credit system adrift and most of the major Western economies in recession, Pascal Lamy, the WTO ‘s director-general, tried and failed to call an emergency meeting to conclude Doha in mid-December. He said that members he had spoken with didn’t seem ready to make the concessions needed to forge the crucial agreement.