Australia-Gulf Cooperation Council Free Trade Agreement

Gulf Cooperation Council market snapshot

  • GDP: US$1.642 trillion (2013)
  • GDP per capita: US$33.313 (2013)
  • Population: 49.3 million (2013)
  • Trade* with Australia: AU$12.307 billion (2013)

*Merchandise trade only

About the Australia-Gulf Cooperation Council Free Trade Agreement negotiations

Free Trade Agreement negotiations with the Gulf Cooperation Council (GCC), comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, commenced in July 2007.

Australia and the GCC share a significant economic relationship, encompassing trade and investment across a broad range of goods and services. For example, the GCC is an important market for exports of live animals and other agricultural and food products, valued at around A$2 billion in 2013, and passenger motor vehicles, taking 80 per cent of passenger vehicle exports or around A$1.4 billion. There are further opportunities in mineral commodities, and services (particularly education, engineering and construction).

With a large proportion of world petroleum resources and a rapidly growing population, the GCC’s prospects for continued economic growth are strong. This fact, along with a plurilateral FTA, will help sustain growth in Australia’s trade and investment relations with the region.

Australia is one of a number of countries negotiating FTAs with the GCC, however, the Council has paused its trade negotiations with all partners pending a review of its trade agreement policy. In March 2014, the GCC Ministerial Council approved the resumption of FTA negotiations, but made no announcement on when negotiations would resume and with which countries. The Australian Government is advocating strongly for a resumption of the Australia-GCC FTA negotiations.

Key interests and benefits

  • The GCC is a key market for agricultural exports such a livestock, meat, dairy products, vegetables, sugar, wheat and other grains. The agreement provides an opportunity to address a range of tariff and non-tariff barriers related to our food exports.
  • The negotiations can address market access barriers related to the provision of services, including in the areas of construction, engineering, architecture, health care, hospitality, education and financial services.
  • Provisions on investment would both encourage inward investment from the GCC, as well as enhancing security for Australian investments in GCC countries themselves, including in such areas as mining or the development of educational campuses.
  • Maintaining a level playing field for Australian passenger motor vehicle exports to the GCC market, including on GCC tariffs, will be important for the Australian automotive industry.

Map of the Gulf Cooperation Council - quick facts

Map of the Gulf Cooperation Council

Kuwait

The establishment of the Australian College of Kuwait in 2004 and Box Hill College of Kuwait in 2007 has helped expand educational links with Australia.

Saudi Arabia

Australia's biggest market for exports of passenger motor vehicles.

UAE

The Australian Embassy in Abu Dhabi estimates there are around 12,000-15,000 Australian nationals and over 300 Australian companies operating in the UAE.

News

State of Play

Australia commenced FTA negotiations with the GCC in 2007. These negotiations were preceded by bilateral FTA negotiations with the UAE, which were abandoned following a decision by GCC Ministers to only negotiate FTAs as a group. To date, there have been four rounds of GCC-Australia FTA negotiations, with the last one held in June 2009.

The last full round of FTA negotiations with the GCC was held 31 May to 2 June 2009 in Muscat, Oman (the 4th Round). Negotiations focused on services, investment, intellectual property, government procurement, competition policy, rules of origin as well as legal and institutional issues. Negotiations on other goods related aspects of the negotiations were deferred as the GCC was not able to exchange goods' tariff offers at that round.

The current delay in negotiations is due to the GCC's review of FTA negotiations with all FTA partners including Australia. One issue the GCC is considering is its position on automotive tariffs.

 In March 2014, the GCC Ministerial Council approved the resumption of FTA negotiations, but made no announcement on when negotiations would resume and with which countries. The Australian Government is advocating strongly for a resumption of the Australia-GCC FTA negotiations.

Update 5: Australia-GCC FTA negotiations

The Fourth Round of FTA negotiations with the Gulf Cooperation Council (GCC) was held in Muscat, Oman from 31 May to 2 June 2009.

Negotiations at this round focussed on services, investment, intellectual property, government procurement, competition policy, rules of origin as well as legal and institutional issues. Australia agreed in advance of the round to defer negotiations on other goods related aspects of the negotiations following advice from the GCC that it would not be in a position to table a goods market access offer at this round.

Only modest progress was achieved in the negotiation of services text. Both sides took the opportunity to further explain their respective positions and agreed to reflect further intersessionally on areas of possible convergence ahead of the next round of negotiations. Market access issues were also discussed by the parties, the first such discussion since 2007, and the parties agreed to table revised market access offers ahead of the next round of negotiations.

Progress on investment continued to be constrained by fundamental differences in the approach preferred by the parties. Both Australia and the GCC agreed to give further consideration to the other's preferred approach intersessionally, with a view to reengaging on investment at the next round of talks.

On government procurement good progress was made in advancing the text but a small number of key elements remain to be resolved before negotiations can move to the market access phase. A detailed exchange of views on how intellectual property rights should be reflected in the FTA revealed considerable differences in our respective approaches. On competition policy, negotiations focussed on creating a consolidated text.

While there were no negotiations on the goods text or on goods market access, both sides acknowledged that there was value in proceeding with negotiations on rules of origin, which still required a considerable amount of work, and which could be progressed independently of negotiations on other goods-related issues. Solid progress was made but negotiations revealed a number of fundamental differences.

On legal issues, good progress was made on the dispute settlement and institutional framework provisions and there are now consolidated texts on both issues. This positive progress notwithstanding, there are still a number of issues on which there is no agreement, such as how to address the question of an accession clause.

Both sides agreed to work intersessionally in a range of areas of the FTA in order to facilitate negotiations at the next round. The timing of the next round is yet to be determined and will depend largely on the ability of the GCC to table a comprehensive goods market access offer so that negotiations on goods, a key element of the negotiations, can resume.

Update 4: Australia-GCC FTA negotiations

After an extended pause, initially due to scheduling problems and then a temporary suspension of FTA negotiations by the GCC, the third round of our FTA negotiations with the Gulf Cooperation Council (GCC) was held in Canberra from 24 to 26 February 2009.

Negotiations at this round were broad-ranging and built on the progress made at the second round (November 2007 in Riyadh). The issues covered included trade in goods and services, investment, government procurement, rules of origin (ROO), sanitary and phytosanitary measures (SPS), technical barriers to trade (TBT), customs procedures, movement of natural persons (MNP), education services, telecommunications, e-commerce, intellectual property, dispute settlement, institutional provisions and competition policy.

Despite the long break between negotiating rounds, both sides were well-prepared and ready to re-commence negotiations with a view to concluding the agreement as soon as possible. There were productive discussions across most issues.

While we were able to narrow our differences on the goods and services texts, there were no substantive discussions on goods or services market access. There was also solid progress on SPS, customs procedures and rules of origin. Both Parties agreed to consider further how TBT provisions would be incorporated into the FTA.

In terms of services, there was good progress on financial services and in support of an education chapter an agreement to hold an education workshop in Dubai ahead of the next round to exchange information. We exchanged views on MNP, telecommunications, e-commerce, with agreement to work intersessionally in advance of the next round to narrow differences. On investment, the scope and coverage of the chapter was the focus of discussions during this round.

On legal issues, there was some progress on dispute settlement and, to a lesser extent, on institutional provisions. We also exchanged information on our respective domestic arrangements concerning intellectual property.

Both sides agreed to undertake work intersessionally on all areas of the FTA in order to facilitate negotiations at the next round. The timing of a fourth round is yet to be confirmed but is expected to be around mid-year.

Update 3: Australia-GCC FTA negotiations

The second round of negotiations for a free-trade agreement with the Gulf Cooperation Council was held in Riyadh on 20-22 November 2007. The first round of negotiations was held in Canberra 30 July-1 August 2007.

The second round aimed to capitalise on our earlier progress across the scope of the agreement and to push forward, particularly on issues where we had achieved some common ground. Discussions were assisted by the extensive intersessional work that Australia had undertaken since the first round and the varied information gathering and representations made, particularly on services issues, by Australian Posts in the Gulf. The GCC used the meeting to respond on many of the issues we had raised.

We made useful progress in a number of important areas across the agreement. We concentrated on goods and on services/investment but also held sessions on government procurement, sanitary and phytosanitary measures (SPS), Rules of Origin, intellectual property (IP) and framework issues.

We had an extensive exchange on our respective approaches to market access for goods. We continue to work with the GCC on principles to ensure that our goods agreement will provide the best possible outcome for Australia.

Discussions on services and investment were constructive, with the GCC following up on its services offer from the last meeting by tabling services requests. The GCC also made both an investment offer and a request.

We are currently working with the GCC on arrangements, including timing for the third round.

Your views on the Australia-GCC FTA negotiations are welcome at any time.

Update 2: First round of Australia-GCC FTA negotiations – a positive start

The first substantive round of negotiations for a free trade agreement with the Gulf Cooperation Council (GCC) was held in Canberra from 30 July to 1 August 2007. This meeting was the next step agreed at our preparatory meeting in the Gulf in May, which was covered in the last update.

The GCC sent a large delegation to Canberra, with representatives from a number of Ministries in all GCC member states. The delegation was well prepared to engage constructively in the negotiations.

Overall, we made solid progress in the first round of negotiations. Our talks covered all likely components of an FTA including goods (rules of origin, government procurement, customs procedures, technical barriers to trade and sanitary and phytosanitary measures), services (including cross border trade, education, movement of natural persons, e-commerce, telecommunications and financial services), investment, intellectual property, competition policy, institutional and framework provisions and dispute settlement.

On goods, we had detailed talks with the GCC on market access and on draft chapter texts. While it was disappointing not to be able to exchange initial tariff offers at the first round, we had a constructive discussion with the GCC about what each side might be prepared to offer on tariffs and on how to ensure that initial offers kick the negotiating process along at a good pace. We have encouraged the GCC to agree to exchange high-quality tariff offers before the next round of negotiations; we will be following this up with representations in GCC capitals over coming weeks.

We raised with the GCC the range of non-tariff barriers identified by Australian industry, including the obligation to pay fees to GCC embassies, short shelf-life requirements, inconsistent standards and other issues. We will pursue these in further negotiating rounds.

On two issues of particular importance to some Australian industries – intellectual property rights protection and government procurement – we explained at some length our approach to the negotiations, and gave the GCC side text for it to consider. The GCC has agreed that the FTA will cover both issues, but we will need to do more work to ensure that commitments in these areas are commercially meaningful.

We made reasonable progress in the services negotiations. We exchanged initial offers and spent some time discussing these with the GCC. In some sectors the GCC offers were useful, going beyond WTO commitments, but in others there is a long way to go. Overall, the atmosphere was positive. Australia and the GCC also tabled and discussed draft services chapters texts and conducted a useful information exchange on the regulatory environments in our various services sectors. The GCC agreed to consider the FTA including separate chapters covering regulatory and other issues in financial services, telecommunications, e-commerce and education.

Not surprisingly, investment negotiations proved challenging, as the GCC’s ambition on the scope of commitments is significantly lower than ours. Both the GCC and Australia tabled draft investment chapter texts. Both sides agreed to look for common ground in the texts before the next meeting.

Australia and the GCC agreed in principle that the second round of negotiations will be held in Riyadh, Saudi Arabia in the third week of November (week beginning 17 November). Both sides have much work to do before the second round of negotiations, and undertaking that work expeditiously will be important to the success of that round.

I would like to thank the Federal Chamber of Automotive Industries for hosting a reception for the GCC negotiating team, to which it also invited representatives from other Australian industries. Discussion with industry representatives underlined to the GCC the range of Australia’s commercial interests in Gulf markets.

Your views on the Australia-GCC FTA negotiations are always welcome.

Update 1: Preparatory meeting, 2 May 2007

The preparatory meeting on an Australia-Gulf Cooperation Council (GCC) free trade agreement (FTA) was held in Riyadh, Saudi Arabia on 2 May 2007.

The discussions, which were conducted in a positive atmosphere, covered the overall approach to, and timeframes for, the negotiations. The talks also covered approaches to the negotiations for goods, services and investment, and institutional and legal issues. Other issues including intellectual property and government procurement were also covered.

Both parties acknowledged the benefits of an ambitious FTA which is comprehensive, has WTO-plus outcomes for goods and services, and is completed as a single undertaking within a reasonable timeframe.

It was agreed that the first round of substantive negotiations for an Australia-GCC FTA will take place in Australia in July. Negotiations will cover issues including market access for goods and services in the first round.

For business

Business guides to the Arab Gulf

For more information on doing business in the GCC region and about specific export opportunities, go to the Austrade website. As well as country-specific information, the Austrade website also has a database that can be searched by industry.

Contact us

  • Phone: +61 2 6261 2545 or +61 2 6261 3678
  • Fax: +61 2 6112 3678
  • Mail:
    GCC FTA Team
    Office of Trade Negotiations
    Department of Foreign Affairs and Trade
    RG Casey Building
    John McEwen Crescent
    Barton  ACT  0221