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Six GCC countries sign agreement with BusinessEurope – first step towards an FTA with EU

After several years, the six Arab countries of the Gulf Cooperation Council (GCC) signed an agreement with BusinessEurope, thereby taking the first step towards a free trade agreement with the EU. Trade serves as an icebreaker in a difficult region, and Danish companies can profitably sell renewable energy.

At the request of the Confederation of Danish Industry, BusinessEurope and the business organisation Gulf Cooperation Council (GCC) met in Riyadh on 9 January 2017, and signed an agreement that will lead to a free trade agreement between Bahrain, Kuwait, Saudi Arabia, Oman, Qatar, the United Arab Emirates and the EU.

“The cultural, religious and political conditions in the Gulf states have made in difficult to get the parties to move. In fact, it’s been several years since the EU and GCC countries last spoke together at this level, so it’s a bit of a breakthrough, and the hosts have been incredibly accommodating,” says Deputy Director Niels Kristensen Tanderup, DI International Business Development.

The meeting has led to negotiation of contracts

Among the participants at the meeting was Lene Grønning, director of Act NOW by Grundfos, a partnership between a number of Danish companies owned by Grundfos. The partnership promotes sustainable Danish solutions in the region.

“Papers like the ones that were signed at the meeting in Saudi Arabia mean a lot in this region, and we experienced very strong interest and curiosity among the participants. Just how much it will mean is hard to say, but since the meeting, we’ve received two enquiries regarding delivery for specific projects. This naturally bodes well,” says Lene Grønning.

She says that the otherwise oil-rich countries around the Gulf are further ahead in terms of sustainable transition than many other countries – including Denmark.

“They know better than anyone else that renewable energy is a major threat to their wealth, which largely comes from oil.  They are therefore set on becoming front-runners in the development of alternatives, and Danish companies can help them with that,” says the director of Act NOW by Grundfos.

Trade promotes dialogue

Luisa Santos, Director of BusinessEurope, cosigner of the final agreement believes that the EU-GCC meeting is a good example of how trade is a good way to promote dialogue between countries and cultures.

“Both regions can benefit from increased international trade. European companies become ambassadors and can show how Europe is able to contribute,” the director says.

She believes the meeting was a step in the right direction and that there will be more opportunities for increased trade in the future.

“The United States is also very eager to invest in the region, and when we have companies established there, we’ll have closer links and will be able to establish joint ventures. The possibilities are growing,” says Luisa Santos.

Negotiations with the GCC continue

In addition to the conference that the Confederation of Danish Industry organised, where over 250 business people from the EU and GCC countries participated and the EU’s Commissioner of Transport attended, the European Commission’s Vice President Jyrki Katainen will visit Saudi Arabia this week and meet with Prince Saud bin Khalid Al Faisal al Saud, Governor of SAGIA (Saudi Arabian General Investment Authority).

In order to get the negotiations rolling, DI is also facilitating a meeting in Brussels in March between the chief negotiators for the free trade agreement from the GCC countries and the EU respectively.

DI has also been appointed by the European Commission to create an EU-GCC Investment Report for 2017, which will partly follow up on a similar one from 2013, and partly describe European investment in the GCC countries, barriers to investment, but also opportunities for establishment and exports, through interviews of nearly 100 companies.

The report will be published later this year. DI will also organise a series of round table meetings in the next six months in the GCC region with a focus on the plastics industry, the fashion industry and halal certification.

Trade between parties:
The GCC is the EU’s fourth largest export market
EU is the GCC’s main trading partner with a trade turnover of 152 billion euro. This corresponds to 13 per cent of the GCC’s global trade.
In 2015, the EU exported goods to the GCC worth DKK 111.6 billion and imported goods worth 44 billion euro.
Denmark’s goods exports to the GCC amounted to DKK 9.6 billion in 2015.
Denmark’s export of services amounted to DKK 11 billion. Overall, Denmark’s trade with GCC countries makes up 3 per cent of Denmark’s total exports.

About GCC:
The six countries in the GCC (Gulf Cooperation Council) are Bahrain, Kuwait, Saudi Arabia, Oman, Qatar and the United Arab Emirates.

The council’s goal is to coordinate cooperation between the six countries, and citizens in the countries can travel without passports between the states. All of the countries are dependent on oil exports but are increasingly investing in new industries to help diversify their economies.

By Af Felix Bekkersgaard Stark

Source: DI

Image: Fotosearch