From Tariffs to Treaties: How GCC Member States Participate in Global Trade through Free Trade Agreements
Transport & Insurance Focus
In the early 20th century, global trade contracted due to the damaging effect of consecutive world wars and severe economic recessions, leading most countries to adopt protectionist measures through isolationism.
Law Update: Issue 376 – Transport & Insurance
Sakher AlaqailehSenior Counsel,Transport & Insurance
Bassam Al-AzzehSenior Associate,Transport & Insurance
Ameen KimAssociate,Transport & Insurance
In the early 20th century, global trade contracted due to the damaging effect of consecutive world wars and severe economic recessions, leading most countries to adopt protectionist measures through isolationism. However, as the world eased towards geo-political recovery in the latter half of the century, global markets began to flourish with countries increasingly seeking to reduce trade barriers through General Agreement on Tariffs and Trade (GATT) in 1947, which set the foundation for today’s global trade liberalization. GATT was later absorbed into the World Trade Organization (WTO) in 1995. Under the GATT, states began to enter into Free Trade Agreements (FTAs) and form economic blocs to promote mutual economic growth.
FTAs are strategic pacts between countries that not only reduce trade barriers and open markets but also strengthen economic ties and shape political alliances by way of trade exemptions and regulatory alignment. The Gulf Cooperation Council (GCC), as a unified economic bloc and key investment hub, has been leveraging its collective strength to influence negotiation since the early 1990s through its first FTA since in 2001 with the European Free Trade Association (EFTA).
This article explores how FTAs are negotiated in the context of the GCC—from initial feasibility studies to final ratification—highlighting the complexities involved. It also examines the current status of the GCC’s FTAs, assessing ongoing negotiations, existing agreements, and their broader economic and geopolitical implications.
GCC member states benefit significantly from FTAs. As implied in its name, the immediate benefit of consequence most understand to be under FTAs, is the “free trade” among the participating member states by way of reduced or exempted customs duties and tariffs. With such practical fiscal benefits (resulting potentially in millions of US dollars saved in a given financial year for an entity involved in cross-border trade activities), FTAs necessarily boost trade flows and expand market access, which ultimately fosters increased socio-economic stability through job creation and economic diversification. Additionally, these agreements provide added legal protections and security for investors and service providers, increasing the likelihood of continued economic return, fair treatment, and commercial transparency. Companies operating within FTA signatory states gain competitive advantages, including strengthened local production capabilities and improved market penetration opportunities.
GCC member states benefit significantly from FTAs. As implied in its name, the immediate benefit of consequence most understand to be under FTAs, is the “free trade” among the participating member states by way of reduced or exempted customs duties and tariffs.
FTA negotiations is a complex and lengthy process that often takes years. It first begins with a feasibility study to assess both economic and political implications, followed by identifying key themes and issues (see below non-exhaustive list). Once negotiations commence, parties exchange proposals, discuss key provisions, and determine transition periods before market liberalization. In the initial rounds, negotiators exchange offers and demands, gaining insight into each party’s willingness to open trade. Subsequent rounds focus on narrowing differences and drafting the agreement’s provisions. Once a draft is finalized, it undergoes legal review and is signed by the parties. The agreement is then submitted for legislative ratification before taking effect as per the agreed terms.
Main issues and themes covered by the FTA include the following:
Goods – Covers tariff reductions, elimination of import/export duties, and addressing non-tariff barriers (NTBs) like quotas and licensing.
Services – Regulates market access and liberalization for service sectors, including finance, telecommunications, and aviation.
Investment – Ensures fair treatment of foreign investors, protections against expropriation, and promotes cross-border investment.
Rules of Origin – Defines criteria for determining the national source of a product to qualify for preferential trade treatment.
Intellectual Property Rights (IPR) – Strengthens protections for patents, trademarks, copyrights, and trade secrets.
Dispute Settlement – Establishes mechanisms for resolving trade disputes between member states through arbitration or panels.
Government Procurement – Provides rules for fair and transparent access to government contracts among member countries.
Competition – Prevents anti-competitive practices such as monopolies and unfair subsidies that could distort trade.
Sanitary and Phytosanitary (SPS) Measures – Sets health and safety standards for food, animals, and plant imports to protect consumers and prevent the spread of diseases.
Technical Barriers to Trade (TBT) – Regulates product standards, labelling, and conformity assessments to ensure they do not create unnecessary obstacles to trade.
The GCC is actively engaged in various trade agreements to strengthen its economic ties globally. Below is a list of the FTAs currently in force and under negotiation:
In force:
EFTA [BA1] (Iceland, Liechtenstein, Norway, Switzerland) - GCC (effective 1 July 2014)
Singapore – GCC (effective 1 September 2013)
Under negotiation:
Australia (Since July 2007)
China (Since July 2004)
European Union (Since 1990)
Japan (Resumed July 2023)
Turkey (Since March 2024)
United Kingdom (Since June 2022)
FTAs are strategic agreements that not only reduce trade barriers but also foster political alliances, set labor and environmental standards, and shape global trade routes and regional power dynamics. Looking ahead to 2025, we expect trade negotiations to increasingly focus on the tourism sector, with key players like Saudi Arabia leading efforts to diversify their economies. In addition, the artificial intelligence (AI) infrastructure boom is poised to play a key role, as nations invest heavily in AI and forge global partnerships to establish leadership in this transformative field. As these new sectors gain momentum, FTAs in the GCC will continue to be essential in facilitating growth, driving innovation, and ensuring that countries remain competitive on the global stage, strengthening both their economic and geopolitical influence.
Our firm has extensive experience advising governmental entities on GCC laws and regulations related to trade negotiations, with our various branch offices located in Bahrain, Iraq, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, and UAE. In addition, we have rights of audience before the courts across in Bahrain, Egypt, Iraq, Jordan, Kuwait, Morocco, Oman, Qatar, Saudi Arabia, and UAE, as well as local insights have enabled us to represent clients in complex local and multi-jurisdictional claims, defences, and commercial transactions. For further information on this sector or for any inquiries for assistance, please contact our team (https://www.tamimi.com/client-services/sectors/transport-logistics/).
For further information,please contact Sakher Alaqaileh, Bassam Alazzeh and Ameen Kim.
Published in April 2025
