7th APRIL 2015 - Vol.XXXVIII No.018
Business News

Gulf customs union 'is in final stages'

DUBAI: Gulf oil producing countries are in the final stages of reaching a deal on how to distribute revenues from customs duties, a senior official at the UAE finance ministry said yesterday.

The introduction of a customs union in 2003 had been hailed by officials as a major achievement countering critics' claims that the GCC states would be unable to realise economic integration in the world's biggest oil exporting region.

But differences have delayed an agreement on how to introduce a permanent system to distribute custom receipts among six members of the GCC.

"The customs were unified in 2003 at five per cent and a common market would require the customs barriers to be removed," said Younis Al Khouri, under secretary and director-general at the UAE finance ministry. "We are still in the final stages of agreeing on how to distribute the amount received from the customs," he said on the sidelines of a conference about the GCC common market in Dubai.

In September, Kuwait's finance minister said the GCC members have made much progress to clear the last obstacles for the agreement but total completion of the customs union would take two to three years.

"There are so many alternatives on the table, most of the countries have accepted one of the thoughts that will reflect the gross domestic product of each," Al Khouri said.

"The last formula that will add how much of the customs was received already from each country," he said.

In May, GCC officials said the UAE, the region's trade hub and the second-largest Arab economy, was unhappy with a quota of receipts proposed by the GCC secretariat but some said that a bigger issue would be to scrap red tape at border crossings.

Trucks transporting goods had been held up for days mainly at the Saudi Arabia-UAE border earlier this year, casting doubts about the efficiency of the plan.

GCC officials see the current customs system as temporary as it is expensive to run. The tariff is collected at the first entry point and the revenue is shared according to a final destination of the product.

Intra-GCC trade has jumped to over $70 billion, from less than $30bn ahead of the customs union in 2003, an official at the GCC Secretariat-General said.

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