Customs union is a measured step forward

The new push toward a customs union for the GCC is both good news and bad. A deal would help the economies of the member states, but this proposal would not be necessary except for the imminent failure of the World Trade Organisation's effort at a global trade deal, ironically known as the 'Doha round'.

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The Gulf Cooperation Council's decision to push towards a customs union by 2015 is a welcome development, one which shows just the right amount of ambition - if it can be achieved.

The tendency has been to think big before starting small. The proposed GCC monetary union, while still backed by four member states, has stalled since the UAE joined Oman in opting out for the time being. But a common trade policy is possible, and would liberate the dynamism of free markets from the shackles of tariffs and quotas. That would benefit all GCC member states, and not the least the UAE.

A decade ago, there was optimism that new World Trade Organisation talks would lead to a comprehensive trade accord for all 153 WTO members. That effort suffocated under the weight of rival interests and complex exceptions. In light of this week's GCC news, there's a sad irony in the fact that those WTO talks are known as the "Doha round", after Qatar's capital where the first of the meetings were held.

A narrowly focused GCC customs union, on the other hand, would help to unify a market for just six countries that have overlapping interests and backgrounds.

In recent months, the GCC has shown increasing signs of unity, in foreign policy matters at least. Just as important, if not more, would be an economic bloc that could combine the countries' economic power to speak with one voice on trade matters as well.

To be sure, the road to a customs union is long and convoluted, as the early history of what is now the European Union reveals.

It's hard enough to standardise tariffs, but a customs union could also involve, to name a few issues, cross-border trade in legal services, banking and insurance - all tricky to engineer. Consumer-protection rules, existing trade accords with outside states, cultural policy and disparate regulations all must be reviewed and harmonised.

And there can be some losers as economic friction is reduced. Special interests will fight to retain their privileges. Untrained workers and inefficient firms may be at risk; in some cases transitional remedies may be required.

So negotiators will have to get busy if they are to meet the target date of January 1, 2015.

But the effort is well worth making.Economies of scale, efficiency of production, political stability, the spread of best practices, the growth of regional champion companies - all these are encouraged by freer trade. Knocking down protectionist barriers means building up prosperity.