Sept. 5 – Earlier this week, the Gulf Cooperation Council-Singapore FTA (GSFTA) finally came into effect after somewhat lengthy negotiations that began after the agreement was previously negotiated on and signed in Doha, Qatar, in 2008.
This is the first FTA signed by the Gulf Cooperation Council (GCC) and Singapore, and only the second FTA in the Middle East for Singapore (the first one being signed with Jordan). The GCC is a political and economic union of Arab states bordering the Persian Gulf, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
The Singaporean government has called this FTA with the GCC a “milestone agreement in strengthening ties between the GCC countries and Singapore,” and will cover the following areas:
- Trade in goods;
- Rules of origin;
- Customs procedures;
- Trade in services; and
- Government procurement.
The FTA will also officially recognize the Halal certification of Singapore’s Majlis Ugama Islam Singapura – or the Islamic Religious Council of Singapore – which will allow Singapore to export more Halal products to the primarily Islamic Middle East region.
The Singapore Ministry of Trade and Investment (MTI) has also stated that S$3.98 billion worth of Singaporean goods will now qualify for immediate tariff-free treatment after the passage of the GSFTA, and an additional S$49.1 million of Singapore goods will qualify starting 2018. Essentially, what this means is that about 97.7 percent of all GCC tariff lines will qualify for tariff-free concessions once the GSFTA is in full effect.
In return, Singapore will immediately grant zero-tariff restrictions on all GCC imports.
According to the MTI, the sectors most likely to benefit from the GSFTA are telecommunications, electrical and electronic equipment, petrochemicals, jewelry, machinery and iron and steel-related industries.
The GCC is Singapore’s fifth largest trading partner and provides 35 percent of the country’s oil. In 2012, trade between the two areas reached a record high of US$53.8 billion.