Activating the Greater Arab Free Trade Area One of the levels of Arab economic integration
Activating the Greater Arab Free Trade Area One of the levels of Arab economic integration
Prof. Dr. Moustafa El-Abdallah Al Kafry
In recent years, there have been positive signs with regard to the activation of joint Arab economic action and the development of intra-Arab trade exchanges, as evidenced by the establishment of the Arab Free Trade Area. It has become necessary for the free trade area to develop in the future to higher levels of Arab economic cooperation, such as the customs union, the Arab common market and economic unity. The Greater Arab Free Trade Area is an important step to activate joint Arab economic action and intra-Arab trade, and is necessary in a world dominated by regional economic blocs. But this goal can only be achieved if member States in the region implement their commitments. [1]
I – Levels of economic cooperation between States:
Economic cooperation is defined as coordination between two countries or a group of countries based on the principles of eliminating the disparity and differentiation between the economic units and the agglomeration of economic activity of these countries. Cooperation and economic integration between two countries or a group of countries has many levels and stages, the most important of which are: [2]
1 – Partial preference:
Partial preference refers to a set of actions taken by two countries to ease restrictions on the exchange of products among themselves, such as when the countries of a certain region agree to abolish the quota system to which trade between them is subject, while maintaining customs duties, or that certain countries agree to give each other reciprocal customs privileges.
2. Free Trade Area:
A free trade area is an agreement between two or more countries whereby foreign trade is liberalized and customs duties on trade between them are eliminated, with each country retaining its freedom to impose restrictions or tariffs in its trade relations with the rest of the world (not members of the free trade area agreement). The free trade area is one of the levels of economic cooperation and a prominent example of a free trade area is the European Free Trade Area.
3. Customs Union:
An agreement between two countries or a group of countries on the abolition of customs duties on goods exchanged between the countries of the agreement. This means that the member States of the Customs Union liberalize foreign trade, remove customs restrictions on trade between them, and apply a common common customs tariff on goods imported into the Union from non-Union States. Among the most important advantages of the Customs Union:[3]
- Helps to expand the market for goods and products of the Member States of the Union.
- It helps to divide labour among the member states of the Union, so that each country specializes in the production of goods that have a comparative advantage in their production.
The Customs Union is one form of economic cooperation and is a prominent example of a customs union (the European Common Market).
The Customs Union shall facilitate trade between Member States and shall not lead to obstacles to the trade of non-Member States. TheCustoms Union requires agreement on a common customs schedule applicable to goods of non-member countries. How can this unified schedule be reached so that the trade of others is not harmed? In most cases, it is difficult to reconcile these two matters due to the large difference in the customs tariffs of Arab countries. The standardization of scales necessarily presupposes reliance on the national scales prevailing before the establishment of the Union, and then a specialized committee determines the average tariff, the average is the unified scale, and this determination results from economic and financial studies and from the reconciliation ofconflicting interests. [4]
4. Common Market
The Common Market is an agreement between two States or a group of States through which restrictions on the movement of elements of production, such as labour and capital, and the movement of products and goods between the States of the Market, are eliminated, thus establishing a single market in which goods, persons and capital are freely moved. It is one of the high levels of economic cooperation. A notable example of a single market is the European Common Market.
5. Economic Union:
An economic union is an agreement between two States or groups of States in which economic cooperation measures, together with the advantages of the common market among the member States of the Agreement, extend to the coordination of economic, financial, monetary, social, labour and tax legislation.
6. Economic integration:
Economic integration is the highest stage of economic cooperation, and it includes, in addition to what was stipulated in the Economic Union and the Common Market Agreement in the previous stages, the unification of all economic policies, the creation of a higher regional authority and an administrative body responsible for implementing these policies. At this stage of economic cooperation, each member State agrees to reduce its own executive powers and subordinate them in many areas to the highest regional authority, which means reaching full economic integration. Among the most important benefits of integration andeconomic agglomeration:
1 – Increasing the production capacity of the countries of the bloc.
2- Opening wider and larger markets leads to:
- increased competition,
- Incite producers to increase productivity,
- Inciting producers to improve the quality of production.
3 – Encouraging and increasing investment.
4 – Increasing investor interest in the bloc countries.
5 – Achieve economies of scale.
As for the Arab countries, the benefits of economic bloc are more:
6 – socio-economic benefits (mentioned above).
7 – Achieving economic and political stability.
8 – Economic bloc can be a way to achieve the desired Arab unity.
Intra-Arab trade is weak compared to intra-Arab trade in other regions of the world, whether it is industrial countries such as the European Union or developing countries such as Latin America and Southeast Asia. Weak intra-regional trade means weaker common interests and thus the absence of unified positions in international forums, including the World Trade Organization. The absence of these positions among regional economic blocs leads to bearing the disadvantages of the new regulation of global trade without making the most of its positives. The Arab countries have expressed their desire to establish a customs union through the Agreement on the Facilitation and Development of Trade Exchange of 1981, article eight of which stipulates the following: “Negotiations shall be held between the parties concerned to impose a uniform and appropriate minimum level of customs duties, taxes and restrictions of similar effect on goods imported from non-Arab countries that are competitive or substitute for Arab goods.”[5]
Between 1980 and 1998, global foreign trade (merchandise exports and imports) increased from $ 3802 billion to $ 10635 billion, or 180%, while Arab foreign trade fell during the same period from $ 347 billion to $ 290 billion, a negative rate of 16%. This slowdown occurred despite the liberalization of world trade from quantitative restrictions and tariffs and despite preferential agreements in the nineties. This decline is due to many factors, the most important of which are:
- European, American and Asian trade flourished at very high rates, while real oil prices deteriorated, severely affecting oil countries’ exports and imports.
- Arab countries have also been plagued by violent military conflicts that have led to the deterioration of their production apparatus, which has reflected on their foreign trade and exacerbated their indebtedness.
- In addition, intra-regional trade has improved, while intra-Arab trade has stagnated.
While the volume of Arab trade rose to about 639.5 billion dollars in 2004 and the volume of intra-Arab trade by about 64.5 billion dollars, or only about 10.0% of the total Arab foreign trade.
Activating the Greater Arab Free Trade Area One of the levels of Arab economic integration
Prof. Dr. Moustafa El-Abdallah Al Kafry
In recent years, there have been positive signs with regard to the activation of joint Arab economic action and the development of intra-Arab trade exchanges, as evidenced by the establishment of the Arab Free Trade Area. It has become necessary for the free trade area to develop in the future to higher levels of Arab economic cooperation, such as the customs union, the Arab common market and economic unity. The Greater Arab Free Trade Area is an important step to activate joint Arab economic action and intra-Arab trade, and is necessary in a world dominated by regional economic blocs. But this goal can only be achieved if member States in the region implement their commitments.
[1] – Dr. Sabah Naoush, Research on the liberalization of inter-Arab trade, Al Jazeera Net.
[2] – Unified Guide to Planning Concepts and Terminology in the Gulf Cooperation Council (GCC), Arab Planning Institute in Kuwait, Kuwait, 1996, pp. 9-10.
[3] – Ibid., p. ص 176 – 188.
[4] – Dr. Sabah Naoush, reference former.
[5] – Dr. Sabah Naoush, reference Former.
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Activating The Greater Arab Free Trade Area one of the levels of Arab economic integration
Activating the Greater Arab Free Trade Area One of the levels of Arab economic integration
Contents
I – Levels of economic cooperation between States: 3
II – Greater Arab Free Trade Area Agreement: 8
1 – Announcement of the establishment of theGreater Arab Free Trade Area: 9
2- Rules and principles of Greater Arab Free Trade Area: 11
- Liberalization of trade exchange among States Parties: 13
- non-tariff restrictions: 14
- Rules of Origin: 15
6- Exchange of information and data: 15
7- Special treatment for Arab least developed countries: 15
2 – Value Added Calculation: 21
3 – Secondary manufacturing processes: 24
5 – Arab Certificate of Origin Form: 27
7 – Settlement of disputes resulting from the application of Arab rules of origin: 29
IV – Results of the Greater Arab Free Trade Area 30
V – Restrictions and difficulties facing the Greater Arab Free Trade Area 32
2 – Delay in approving detailed rules of origin for Arab goods: 35
3 – The problem of visas and obstacles to the movement of persons, businessmen and investors: 35
VI – Activation of the Greater Arab Free Trade Area 37