Dubai: Six Persian Gulf states negotiating a free trade agreement with the European Union (EU) must open their markets further to EU companies if they are to conclude the 15-year-old talks, EU Trade Commissioner Peter Mandelson said.
“I’m concerned about the cap on ownership of business here,” Mandelson said in an interview on 25 February in Abu Dhabi, United Arab Emirates. “You don’t want to bring a business here and find you can only own 49% of it.”
Free trade negotiations between the 27-nation EU and the Gulf Cooperation Council (GCC), which includes Saudi Arabia and the UAE, have gathered pace in 2006 as energy prices soared and trade between the two blocks went up. The EU had a $25 billion trade deficit with the GCC in 2005.
The EU has agreed to reduce import tariffs on aluminum and petrochemicals from the Gulf to zero in an attempt to conclude the negotiations. In return, the EU wants a limit on foreigners owning majority stakes in Gulf companies ended.
“This will take some time to evolve, and I accept that,” Mandelson said.“As long as we’re moving in the right direction, as long as I’m satisfied we are laying the foundations for an increasingly diverse economy to which we have free access on terms and conditions that we expect in other parts of the world, then I’ll be happy with the deal that we eventually negotiate,” he added.
Europe recorded a trade deficit of 8.2 billion euros ($10.8 billion) last year, compared with a surplus of 16.2 billion euros in 2005, led by surging gaps with China and Japan and soaring energy costs during the year. It was Europe’s first trade deficit in six years.
Europe’s deficit on energy products widened 25% to 227.5 billion euros in the 11 months through November. Crude oil futures traded in New York averaged $66.25 a barrel last year, 17% more than in 2005.
The US and UAE, the second-largest Arab economy, suspended negotiations for a free-trade agreement over differences on how the Gulf nation would open its market to US banks and other overseas investors, US officials said on 16 February.
The temporary halt in talks with a key US ally in the Middle East means the two sides will not meet a 31March deadline imposed by Congress if the deal is to be considered under President George W. Bush’s trade negotiating authority, which expires at the end of June.