An empirical analysis of the effect of the Gulf Co-operation Council (GCC) reginal integration process on agriculture-food trade
Author
Al-Shidhani, Jamal Nasser Salim.
English abstract
The last decade has witnessed a surge in Regional Trade Arrangements (RTA) among nations despite the increasing role of the World Trade Organization ( WTO) in strengthening the multilateral trading system. This global phenomenon has also been witnessed in the Middle East and North African region (MENA) with the formation of new RTA's or the reinvigoration of the existing ones. The objective of this thesis is to assess and evaluate the trade potential of the Gulf Co-operation Council (GCC) as a Regional Trade Arrangement with countries or groups of countries with which a preferential trade agreement is signed or still in negotiation. The study used disaggregated data and estimated gravity equations for total exports, total agricultural food exports and seven agri-food commodities according to the Standard International Trade Classification (SITC), covering the period 1993-2004.
Results indicated that the GCC as a regional trade arrangement has actually promoted trade integration significantly between the member countries in total agri-food exports as opposed to total aggregate trade. Trade integration is highest in cereal and cereal-preparation products where GCC intra-trade is 10 times more than what would be predicted by the basic model, followed by sugar and fish-preparation products. The GCC intra-trade did not seem however to change significantly over the years and had probably reached its full potential during the 1993-1996 period. The newly created GCC Custom Union is therefore promising in enhancing new opportunities for trade as it goes beyond the removal of tariffs to the elimination of non tariff barriers. Except with the Mashreq countries, trade of GCC with other regional groups and sub-groups is less than expected in all commodities suggesting that there is untapped trade potential which can be enhanced by negotiating a freer trade arrangements between these groups and the GCC region.
