The Kingdom of Saudi Arabia and the other countries of the Gulf have a region to region relationship with the European Union through the Cooperation Council for the Arab States of the Gulf (GCC). The GCC is a regional organisation founded in May 1981 by Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates. Its members cooperate in areas including the economy, politics, security, energy, industry, agriculture, health, education and culture. Its main objectives are to enhance coordination, integration and inter-connection among its Member States in different spheres. The six GCC nations are all members of the Arab League.
The relationship between the GCC and the EU is governed by a Cooperation Agreement signed in 1988. A Joint Action Programme was implemented from 2010 to 2013. Both sides are committed to negotiations towards a Free Trade Agreement which were initiated in 1990.
Saudi Arabia’s capital Riyadh, hosts the Delegation of the EU to Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and to the Secretariat of the GCC.
Political and Economic Relations
The EU and its member states have a long established historical relationship with Saudi Arabia and the countries of the Gulf which continues to the present day and forms the foundations of the political dialogue between the two regions.
Formal bilateral relations between the EU and the GCC countries were first established through the Cooperation Agreement signed in 1988. The objective of the agreement is to contribute towards strengthening stability in a region of strategic importance and to facilitate political, trade and economic relations. It aims to broaden economic and technical cooperation as well as cooperation in the fields of energy, industry, trade and services, agriculture, fisheries, investment, science, technology and the environment.
Under this Cooperation Agreement a framework was established under which annual Joint Council/Ministerial Meetings between EU and GCC foreign ministers, as well as between senior officials at a Joint Cooperation Committee, are held. In addition, working groups have been established in the fields of industrial cooperation, energy and environment and in 1996 decentralised cooperation (university, business and media cooperation) was added to the agenda.
Since 2003 there has been an EU-GCC Economic Dialogue where topics such as: unified trade policy; the fiscal aspects of a single currency and the move from the customs union to a single market have been covered.
At the 2010 Joint Council, an EU-GCC Joint Action Programme for the years 2010-2013, was agreed. This programme envisaged increased cooperation in an array of areas and was initially proposed by the GCC members and later adopted in June 2010. This joint programme has led to greater cooperation between the two blocs.
Saudi Arabia is a member of the World Trade Organisation (WTO). Since the 1980s European Union exports to Saudi Arabia and the GCC have been increasing. The GCC is currently the EU’s fifth largest export market and the EU is GCC’s second trading partner (Japan being the first).
In 2014 Saudi Arabian imports from the EU amounted to €35.1 billion with exports from the Kingdom to the EU totalling to €28.7 billion. Saudi exports to the EU consist primarily of fuels and derivatives which made up almost 85% of total EU imports from the region in 2014. EU imports to Saudi Arabia are diverse but are mainly focused on machinery and transport materials for example, power generation plants, railway locomotives and aircraft as well as electrical machinery and mechanical appliances.
Since 2003, EU policymakers have been sharing their experience of economic unification with policymakers from the Gulf, which is undergoing a similar process. Topics have included common trade policy, fiscal aspects of a single currency and moving from a customs union to a single market.
Saudi Arabia and the other GCC countries currently benefit from preferential access to the EU market under the Generalised System of Preferences (GSP), a system which provides preferential access to 176 countries and territories in the form of reduced tariffs for goods entering the EU market.
The current framework for economic cooperation is the 1988 EU-GCC Cooperation Agreement although negotiations to agree a Free Trade Agreement (FTA) have been ongoing since 1990.
Industrialised and High-Income Countries Instrument (ICI)
The financing instrument for cooperation with industrialised and other high-income countries and territories (ICI) entered into force on 1 January 2007. It is the framework for financial cooperation activities between the EU and the Gulf region. For more information please see The EU & The Gulf; Economic Cooperation.
The EU-GCC Sustainability Impact Assessment (SIA)
A Sustainability Impact Assessment Study (SIA) on the EU-GCC Free Trade Agreement negotiations has been carried out by an independent consultant, under the initiative of the EU Commission. The SIA aims to inform policy-makers of possible impacts on economic, social and environmental aspects linked to the FTA. It also aims to ensure that future implementation of the agreement will be compatible with sustainable development and proposes measures to mitigate any possible adverse effects and amplify the benefits of the agreement.
GCC-EU Joint Ministerial Council
The annual meeting of foreign ministers from both regional blocs oversees the implementation of the Cooperation Agreement. As well as fostering a robust economic dialogue between the GCC and the EU, the annual meeting is supported by several working groups in the fields of political dialogue, energy, trade and investment, education and the environment.
Objectives of Saudi Arabia-EU cooperation
Through closer dialogue and strategic planning the Kingdom of Saudi Arabia and other GCC countries aim to:
– strengthen relations between the European Economic Community and the GCC countries by placing them in an institutional and contractual framework and
– broaden and consolidate the economic and technical cooperation between the European Community and the GCC countries as well as cooperation in energy, industry, trade, services, agriculture, fisheries, investment, science, technology and environment, on mutually advantageous terms, taking into account the differences in levels of development of the Parties.