The GCC as an Effort to Unite Six Countries in the Gulf Region - Term Paper Example

The GCC  was expected to promote regional stability and security while protecting the energy infrastructure and enhance influence and bargaining power for the countries in the region, vis-a-vis the international stage.  According to Looney (2003), defense of the region was the original objective of the GCC, as it was formed in response to the instability of the region that was the result of the Iran-Iraq war. Therefore, according to Looney, the first concern of the GCC was security, while economics was secondary.

However, the GCC did set a number of different economic goals. In addition to the goals set forth below, the GCC decided to adopt a common oil policy; coordinate industrial policy; promote joint projects by coordinating production chains; adopt a common legal framework to aid in regional investment and trade, and link transportation networks. Previous to the GCC, the Arab world, similar to other developing countries, has had high tariffs, heavy state intervention in production and industries that were uncompetitive.

  The previous attempts to liberalize capital, trade and labor flows were implemented inconsistently and did not have implementation or follow-up. Part of the reason for this is because the countries in the Arab world wanted to protect their domestic industries from competition from other countries that had similar products and services to offer, and each country wanted a discretionary trade policy.  Therefore, previous attempts to integrate the economies of the countries in the Arab world were modest and unsuccessful, as they focused mostly on tariff reduction while ignoring regional trade in services and cross-border investments.

The regional integration that was the GCC’s objectives consisted of many different prongs.  First, in 1983, the GCC pledged to establish a free trade area (FTA). Under the FTA, the GCC eliminated tariffs on goods of national origins, while the countries in the GCC were able to keep their own external tariffs.  While this is a positive measure, in that it encourages trade within the countries of the GCC, there is also a drawback.  The drawback is that other countries will export to the country in the GCC that has the lowest external tariffs in order to access all the markets within that region.