The GCC is looking outwards as well as inwards: it is discussing the idea of a free-trade agreement with China, as well as working on one with the EU, its principal market and its second-largest supplier after Japan. The EU and the GCC signed a framework economic co-operation agreement in 1998, although successful completion of a free trade agreement has so far eluded them.
Middle-eastern and north African countries along the Mediterranean rim have come together with the EU in the Euro-Mediterranean Partnership, a pact between the EU on the one hand and Morocco, Algeria, Tunisia, Egypt, Israel, Jordan, the Palestinian Authority (PA), Lebanon, Syria, Turkey, Cyprus and Malta on the other. Cyprus and Malta have subsequently become EU members themselves. Under objectives defined at the 1995 Barcelona Conference, the members intend to set up a free-trade area by 2010.
The US already has free-trade agreements with Israel, Jordan, Morocco and Bahrain; the Bush administration has announced its intention to add the United Arab Emirates and Oman to that list. Egypt, Israel and the US signed a trade deal in December 2004. Eventually, so the plan goes, these bilateral agreements will be expanded into sub-regional agreements, and later into a pan-regional Middle East Free Trade Area.
In Africa, the US is negotiating a free trade agreement with the Southern African Customs Union (SACU), comprised of Botswana, Lesotho, Namibia, South Africa and Swaziland. The US African Growth and Opportunity Act (AGOA), which provides trade benefits to qualifying countries in sub-Saharan Africa, has been extended to 2015.
For its part, through its “Everything But Arms” (EBA) initiative in 2001, the EU opened its market to some of sub-Saharan Africa’s poorest countries. And it has launched economic partnership agreement negotiations with six different African regions.
Africa has been very proactive in multilateral trade liberalisation. SACU is the oldest customs union in the world, created in 1970. The Common Market for Eastern and Southern Africa (COMESA) was founded in 1993 as a successor to the Preferential Trade Area for Eastern and Southern Africa (PTA), which was founded in 1981. This was followed by the COMESA Free Trade Area, which now includes 20 countries.
COMESA is just one pillar of the African Economic Community, the others being the Southern African Development Community (SADC), Economic Community of West African States (ECOWAS), the Economic Community of Central African States (ECCAS/CEEAC), and the Arab Maghreb Union (AMU/UMA).
These efforts have had a positive impact on FDI flows. African inflows have regained momentum after a slump in 2002, growing by 28% to $15bn in 2003. According to the World Investment Report 2004 from the United Nations Conference on Trade and Development (Unctad), inflows as a percentage of gross fixed capital formation grew from 12% in 2002 to 14% in 2003, the second highest level in the past decade. And inflows were distributed more broadly than in any year since 1999, with 22 countries receiving more than $0.1bn, compared to 16 countries in 2001. Unctad attributes the rise to liberalised FDI policies, as well as the completion of 35 bilateral investment treaties and nine double-taxation treaties and free trade negotiations among both African countries and other countries and regions.