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Sharm Al Shaikh: The European Union and the six-nation Gulf Cooperation Council may complete a free trade agreement that they have been negotiating for more than a decade by the end of this year, EU trade chief Peter Mandelson said.
The two parties "can close a deal this year," Mandelson said in an interview in Sharm Al Shaikh, Egypt, at the annual World Economic Forum on the Middle East yesterday. The EU and GCC "are now boiling down the issues between us," he said.
Free trade negotiations between the 27-nation EU and the Gulf Cooperation Council, which includes Saudi Arabia and the UAE, have intensified in the last two years as energy prices soared and trade between the two blocks rose. The EU had a $22.4 billion trade deficit with the GCC in 2006.
The EU has agreed to eliminate import tariffs on aluminium and petrochemicals from the Gulf in an attempt to conclude the negotiations. In return, the EU wants an end to limits on foreigners owning majority stakes in Gulf companies.
GCC states must open their markets further to EU companies if they are to conclude the 15-year-old talks, Mandelson said in February 2007.
Talks to complete a free trade agreement between the US and the UAE, the second-largest Arab economy, collapsed last year over differences on how the Gulf nation would open its market to US banks and other overseas investors.
Global pact
Mandelson said he saw the makings of a global trade agreement in new proposals drafted to save the World Trade Organisation's Doha round.
As part of a new push for a breakthrough in the long-delayed negotiations, WTO mediators are expected to issue revised compromise texts early this week which could pave the way for talks by senior officials and by trade ministers within a month.
Mandelson told Reuters: "They contain significant new elements reflecting the substantial progress that we have made in negotiations over the recent period. I think that what we have on the table already is an outline deal which is worth at least two to three times in value to the global economy what was provided by the previous Uruguay round. I think the key trade-offs are there for us to make."
The Doha round is now in its seventh year having floundered on issues such as finding a compromise between poor and rich countries on how to lower border protection for farmers.
Many developing countries are also concerned about opening up their economies to more manufactured goods and services provided by powerful corporations in rich countries.
Without a breakthrough soon, the round risks further years of delay as the US heads into a presidential election. "I do understand the political difficulties and problems that we will still face," said Mandelson.
These include the chronic dispute over US domestic subsidies to farmers, which make food from other countries less competitive, and how far China, Brazil and India will go on cutting tariffs on industrial goods, he added.
Mandelson criticised an earlier version of the WTO mediators' proposals for allowing big developing countries to shield manufactured goods, such as chemicals, cars or textiles.
Food crisis
Mandelson also said the Doha round was an essential part of solving the food supply problems which have come to light in sharp recent rises in grain prices.
"If we want to tackle the underlying causes of the food crisis, then we have to bring about a fundamental reform of agricultural trade in the world. The vehicle for doing that is the Doha talks," he said. "If we fail in those talks then we will have missed a major opportunity to bring about that fundamental reform."
Answering demands for a ban on the production of fuels from agricultural products, Mandelson said biofuels had their place in reducing the carbon emissions which arise from burning traditional fossil fuels.
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