GCC & the International Economy: Private Sector Roles Abdel Aziz Abu Hamad Aluwaisheg Assistant Secretary-General for Foreign Affairs GULF ECONOMIC FORUM DOHA, QATAR 26 OCTOBER 2015
28-Oct-15 GCC Internal Dynamics & International Roles 2 GCC Private Sector: International Role Private sector figures prominently in GCC Strategic Objectives. During the current economic slowdown, private sector can play a significant role in mitigating the effects of low oil prices. Governments can play a larger role in facilitating overseas trade and investment.
GCC STRATEGIC OBJECTIVES & PRIVATE SECTOR ROLE
28-Oct-15 GCC Internal Dynamics & International Roles 4 Objectives: 1: Maintain Peace, Security and Stability Political coordination Coordinate development and humanitarian aid Crisis management Nuclear Proliferation Countering terrorism, piracy.
28-Oct-15 GCC Internal Dynamics & International Roles 5 2:Enhance regional integration A. Intra-GCC integration. B. GCC integration with the Rest of the World
28-Oct-15 GCC Internal Dynamics & International Roles Regional Integration as a Goal 6 From Article 4 of the Charter, GCC objectives include (1981): Coordination & Integration between member states in all fields, leading to their unity. Adoption of unified laws in all fields.
28-Oct-15 GCC Internal Dynamics & International Roles 7 Elements of GCC Integration Parallel Tracks: Economic & Social Integration Security Integration Military Integration Political Integration
28-Oct-15 GCC Internal Dynamics & International Roles 8 Economic Integration Mechanisms 10 mechanisms: 1. Economic Agreement (1981, 2001) 2. Free Trade Area (1983-2002) 3. Customs Union (2003-) 4. Common Market (2008-) 5. Monetary Union
28-Oct-15 GCC Internal Dynamics & International Roles 9 6. Common Strategies & Policies 7. Unified Laws & Regulations 8. Trade Negotiations & Neighborhood Policies 9. Integration of Basic Infrastructures 10. GCC Specialized Agencies
28-Oct-15 GCC Internal Dynamics & International Roles 10 Customs Union: January 2003 1. Uniform, simple & low CET. 2. Single entry point. 3. Elimination of internal tariffs. 4. Elimination of NTBs within the customs union. 5. Unified customs laws, regulations & documents.
28-Oct-15 GCC Internal Dynamics & International Roles Effects of the Customs Union 1. Intra-GCC trade growth: From $22 to $150 billion in 12 years Annual Growth in Trade 2003 15% 2004 28% 2005 38% 2006 14% 2007 25% 2008 29% 2009 20% 2010 25% 2011 24% 2012 22% 2013 21% 2014 20% 2. Markets efficiency: economies of scale, lower prices, integrated productio processes. 11
28-Oct-15 GCC Internal Dynamics & International Roles 12
28-Oct-15 GCC Internal Dynamics & International Roles 13 Scope of the Common Market 1. Free Movement & Residence 2. Work (private & government) 3. Social insurance & pensions 4. Education, health & social services 5. Exercise of all economic, investment and service activities.d service activities
28-Oct-15 GCC Internal Dynamics & International Roles 14 6. Exercise of professions and crafts 7. Real estate ownership 8.Movement of capital 9.Tax treatment 10. Capital Market Integration
28-Oct-15 GCC Internal Dynamics & International Roles 15 GCC Law Directives Unified or common laws Model laws (harmonization) Agreements or Treaties
28-Oct-15 GCC Internal Dynamics & International Roles 16 Common Strategies & Policies Development Industry Trade Agriculture Collective Trade Negotiations Common Neighborhood Policies Common Strategic Cooperation
28-Oct-15 GCC Internal Dynamics & International Roles 17 Infrastructure Integration Electric Grid Electric, water supply & municipal standards Railroad network Water desalination Port & airport compatibility Transport & communications compatibility
28-Oct-15 GCC Internal Dynamics & International Roles 18 3 rd Strategic Objective: Promote economic growth Mechamisms: Trade Investment B2B contacts, partnerships
28-Oct-15 GCC Internal Dynamics & International Roles 19 4. Promote sustainable development Protecting the environment Working together to face eco threats Developing energy renewable resources Water production and conservation.
28-Oct-15 GCC Internal Dynamics & International Roles 20 5:Mutual Understanding: P2P contacts Education Tourism (cultural and ecotourism) Cultural exchanges
28-Oct-15 GCC Internal Dynamics & International Roles 21 GDP Growth 1974-2013 GDP, $bn 1975 74 1980 232 214% 1985 156-33% 1990 181 16% 1995 222 23% 2000 324 46% 2005 482 49% 2010 1,050 118% 2014 1,800 74% Change 1975-2014 2300% Change 1981-2014 700%
28-Oct-15 GCC Internal Dynamics & International Roles 22 Top Trade Surplus Countries Surplus $bn Rank Country 2013 WTO * GCC 502 1 Saudi Arabia 253 2 Germany 220 3 Russia 199 4 China 155 5 UAE 80 6 Kuwait 73 7 Qatar 72 26 Oman 23 46 Bahrain 1
28-Oct-15 GCC Internal Dynamics & International Roles 23 Financial & Economic Hubs Largest share of sovereign wealth funds Largest petrochemical producers Largest semi-finished aluminum producers Infrastructure experts: port management, real estate Services leaders (Airlines) Stock markets: still small by international standards, but largest in the region
28-Oct-15 GCC Internal Dynamics & International Roles 24 Role of Oil & Gas 46% of the world s proven oil reserves (Between 35% and 50%). 21% of the world s proven natural gas reserves 20% of oil production; 10% of gas production 90% of world oil production excess capacity
28-Oct-15 GCC Internal Dynamics & International Roles 25 Oil & Gas - 2 Oil: Saudi Arabia is largest producers (some years, Russia) Saudi Arabia, UAE, Kuwait among top ten producers Qatar 13 Qatar has the third largest natural gas reserves and is the world s largest exporter of liquefied natural gas (LNG).
28-Oct-15 GCC Internal Dynamics & International Roles 26 Oil Prices Tumble 1987-2015 (Brent $ per barrel)
28-Oct-15 GCC Internal Dynamics & International Roles 27 Private Sector Role What the private sector role in oil-induced slowdowns?
GCC INTEGRATION WITH THE REST OF THE WORLD
28-Oct-15 GCC Internal Dynamics & International Roles 29 GCC Neighborhood Policies: Private Sector Role Yemen Jordan Morocco Sudan Iraq Pakistan Iran?
28-Oct-15 GCC Internal Dynamics & International Roles 30 GCC Neighborhood - Economic GAFTA Arab Integration (CU, CM) Yemen Jordan, Morocco
28-Oct-15 GCC Internal Dynamics & International Roles 31 GCC International Relations Strategic Partnerships Trade Negotiations Cooperation Agreements Action Plans/Programs MOUs on specific issues
28-Oct-15 GCC Internal Dynamics & International Roles 32 Strategic Cooperation United States China Turkey ASEAN Australia Russia - suspended Japan
28-Oct-15 GCC Internal Dynamics & International Roles 33 Trade Negotiations EFTA (European Free Trade Association) MERCOSUR Singapore New Zealand Turkey China Japan South Korea Malaysia India Pakistan Australia European Union
28-Oct-15 GCC Internal Dynamics & International Roles 34 Cooperation Agreements European Union United States China Turkey India Pakistan MERCOSUR Malaysia
GCC TURNS EAST?
28-Oct-15 GCC Internal Dynamics & International Roles 36 Economic shift to the east Since 1992: US share in GCC trade dropped from 15% to 8%. EU share dropped from 24% to 12% By contrast: China s share rose from 2% to 11% India s share rose from 3% to 11%.
28-Oct-15 GCC Internal Dynamics & International Roles 37 Trade Shares Until recently US was Number 2 GCC trading partner. Today it is 6 th after the EU, Japan, China, India, and South Korea Total EU & US share in GCC trade is 20%, compared to Asia s 60% share.