STUDIES &
African
Perspectives
ARTICLES
The Greater Arab Free Trade Area (GAFTA)
and
Its Role in the Arab Regional Integration
Dr. Reem Mohammed Musa
University of Bahri - Sudan
Introduction
Nowadays, the world tends to establish regional blocs to liberalize
trade. And thus, there is a new tendency towards regionalism with
an economic nature or what is called the "New Regionalism". This
is in order to face the slow process of liberalization within
the multilateral framework under the umbrella of the World
Trade Organization WTO, This is called the 'Second best solution'.
Among the most prominent features of this new regionalism is that it allocates resources within the regional organization through the market forces
and the leadership of
the private sector in the development processes
within the Member States of the regional grouping, besides it deepens the
integration between the Union States through coordination between the fiscal
and economic policies, also it provides a greater freedom of movement and
flow of labor as well as capital, in addition to an equal treatment among all
parties within the organization, and it adopts the export policy rather than
the policy of import substitution.
In the framework of achieving regional integration among the countries of
the Arab region, the Greater Arab Free Trade Area (GAFTA) has been established and entered into force in 1998, which will have a great impact in
pushing the wheels of economic integration of the Arab region.
The Concept of Regional Integration and the Ways of its Achievement:
The School of Integration is one of the leading schools of thought that
have emerged to respond to most of the ideas expressed by the proponents of
the realist school such as Hans Morgenthau, Raymond Aaron, Morton Kaplan and others; which were pessimistic as
a result of the Second World
War. Most of these thinkers focused on power as the basis for international
relations; besides the claim that the State is the main actor and the basic unit
of analysis, while the other international actors are 'international organizations or multinational companies" that are, only, an extension of the wills of
nation-states.
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And thus, regional integration
means "to achieve coordination of
attitudes, policies and practices on
all different levels between countries
that are, to a large extent, so contiguous that it may, eventually, result in the creation of a regional political identity that overrides the national loyalties of the States involved
in the integration process."
Accordingly, such regional integration process is "a voluntary process based on the will of countries to
achieve their common interests despite their diversity due to the inability of each country to achieve
these interests individually, and the
desire to have, as a group, an active
role in the international arena, and
thus be willing to cede part of sovereignty in return."
There are general agreements on
a group of conditions without which
the integration process will become
elusive, namely:
• Geographic proximity.
• Similarities in political systems.
• A public opinion that encourages
the integration process.
• Cultural homogeneity or Social
Assimilation, which is known as
the social engine or cause.
• Political Stability.
• A close level of military and economic capabilities.
• Collaborative efforts and mutual
benefits
• Convergence in Administrative
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Institutions
• Sharing values among the elites to
enhance the integration process.
The Greater Arab Free Trade Area
(GAFTA)... Establishment and objectives
A - Establishment:
Since the early fifties, Arab countries sought to find different forms
of economic integration in order to
protect their resources, develop their
economies, achieve common interests, and benefit from the advantages accomplished by the expansion
of the market within the Arab region for the integrated marketing of
their products.However, all these
attempts failed to achieve the needed
goals for the development of intraregional trade because of many reasons. Some of these reasons are political, others are due to the lack of
harmony and attention to regional
integration.
As a result of the enormous developments in the field of foreign
trade during the recent decades, the
value of global trade exchange increased; especially from 1990 to
1998. And within the trend towards
trade openness, the Greater Arab
Free Trade Area was established as
a first step towards the Arab economic integration in response to the
decision of the Cairo Summit in
1996, where the Economic and Social Council approved, in 1997, the
Convention on the executive pro-
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gram of the Greater Arab Free
Trade Area.
GAFTA is based on a number of
legal documents that organize the
framework of its work. These are:
1. The Agreement to Facilitate and
Develop Trade among Arab
States
2. The Executive Program of the
Agreement to Facilitate and Develop Trade Exchange between
Arab Countries.
3. The Regulation of Dispute Resolution
4. Detailed Rules of Origin for Arab
Goods.
The number of Arab States that
are members of GAFTA and committed to the complete liberalization
of tariffs are seventeen states,
namely: Saudi Arabia, Jordan, Morocco, Bahrain, Oman, UAE, Qatar,
Kuwait, Palestine , Egypt, the Sudan, Syria, Iraq, Lebanon, Libya,
Tunisia, and Yemen. However, both
Yemen and the Sudan could not
continue to lower tariffs due to its
negative impact on customs revenue.
Algeria has acceded to the
GAFTA recently, and informed
Mauritania Secretariat that it ratified the Convention, Algeria but has
not yet completed formal procedures for the deposit of the instruments of ratification
It's notable that Arab countries
have been keen to join the GAFTA
since the early months of the pro-
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gram implementation, specifically
since 1998, due to the desire to join
an Arab regional integration that
saves the states its economic interests in the light of international
changes and because joining early
makes it easier for the state to fulfill
its obligations towards the Member
States, in addition to the early use of
the advantages of the vast market of
the Arab countries and the gradual
adaptation to the competition resulting from the gradual reduction of
customs duties.
B - Objectives:
Article II of the Convention
stipulated the following objectives:
1. The development of economic and
trade relations between the Arab
countries.
2. Enhance joint economic gains of
the Arab countries.
3. Maintain the economic interests of
the Arab countries.
4. Take advantage of the changes in
the global trading system.
5. The development of economic and
trade relations with the outside
world.
6. Lay the foundation for the establishment of an Arab economic
bloc.
The executive program has identified the regulations and provisions
of trade liberalization in the framework of the Greater Arab Free
Trade Area stipulating that the
gradual reduction of customs duties,
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fees and taxes of similar effect by
10% per year shall come into force
starting from January 1998, besides
the abolition of all customs restrictions including administrative,
quantitative and monetary restrictions.
The Role of GAFTA in achieving
Arab Regional Integration ...Future
Vision
To activate the process of economic integration among Arab
countries, the trade exchange and
Intra-regional Trade among Arab
Countries should be promoted. This
depends on a number of factors, salient of which are:
Tariff and Non-Tariff Trade Barriers:
Intra-regional trade between
Member States is, to a large extent,
affected by the existence of trade
barriers that hinder the flow of
goods between them, and most of
these barriers were, in the past, customs tariffs. However, new nontariff barriers have emerged in the
recent decades. These are represented in the import quota system ,
restrictions on exports, export subsidies , technical specifications, environmental requirements, and health
standards.
2. Different Economic Structures of
Countries:
The different structures of production among member states has a
positive impact on intra-regional
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trade as it reflects the diversity of
products that could be exchanged
and satisfy the different needs of the
citizens of these countries.
3. Trade Agreements and Preferential Treatment:
Free trade agreements is enhanced by the easy flow of intratrade between Member States
through including a number of components and mechanisms such as
providing preferential treatment for
goods and services produced in the
Member States, determining the
rights and obligations of members,
setting mechanisms to resolve trade
disputes, and harmonizing technical
standards for exports.
4. Comparative Advantage:
This means the ability of a certain state to carry out a particular
economic activity such as making a
specific product and services more
efficiently than others. Comparative
advantage is based on how much
this state is rich in its economic resources, whether human or natural,
in a way that enables it to be specialized in carrying out such economic
activity and thus export it.
5. Infrastructure:
The exchange of goods between
Member States need an advanced
infrastructure that can be relied on
in the processes of importing, exporting, transporting, and storing.
This advanced infrastructure includes land transport networks, air-
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ports, ports, electricity and water
networks.
6. Transport, Distribution and Marketing Networks
Some of the things that hinder
international trade exchange are the
inefficient systems of internal transportation, distribution and marketing in the importing countries, since
entering goods within the geographical boundaries of the importing
country does not necessarily guarantee their reach to consumers with
the appropriate speed, quantity and
price. Therefore, there is a significant role for local distributors.
Consequently, there are future
aspirations that the GAFTA aim to
achieve through regional economic
integration, which are:
The establishment of an Arab
Common Market:
The Arab peoples eagerly look
forward to having an Arab Common
market, which they expect to make a
quantum leap in joint Arab action
as it will contribute greatly to the
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achievement of convergence between
the Arab countries, and thus lead to
a better utilization of natural, financial and human resources in the
Arab countries in a way that contributes to raising the standard of
living for the Arab citizen.
The Establishment of an Arab
Monetary Union:
The Arab States have always
dreamed of having a unified Arab
currency used by all Arab citizens.
This will make them feel proud and
regain part of the Arab glories. Also,
this will reduce the Arab frustration
and on the economic level, the existence of a unified Arab currency as
well as a unified monetary policy
will, undoubtedly, contribute greatly
to the increase in the volume of
trade exchange and joint investments besides the reduce in the
negative phenomena such as inflation, imbalance of payments and
fluctuations in currency exchange
rates.
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