What's going on with the China-GCC FTA?
Alex Cornwell at Reuters had an interesting piece out this week on the stalled China-GCC FTA that’s worth a read, as is all his work - he’s really been filing some great stuff on the GCC political beat lately.
For context, negotiations in the China-GCC FTA have been dragging on since 2004. There were 4 rounds of talks between then and 2006 before fizzling out. In 2010 the China-GCC Strategic Dialogue was established, and during the second one held in Abu Dhabi in 2011 they committed to getting the FTA done as soon as possible. And then they said the same thing during the 2014 dialogue. When Xi Jinping made his first state visit to Saudi in 2016, one of the agenda items was an accelerated path to getting the FTA done within a year, and they held four rounds of talks: Riyadh in February, Guangzhou in May, Beijing in October, and Riyadh again in December. It didn’t get done.
In June 2017, the Qatar crisis erupted and the GCC went on an effective hiatus until it was resolved at the GCC Al Ula summit in January 2021. Shortly after, Yang Jiechi visited Doha and announced that China wanted to get the FTA back on the agenda. In March 2021 FM Wang Yi met with GCC Secretary General Nayef bin Falah Al-Hajraf and said China wanted the FTA as soon as possible. In January 2022 Wang met with a delegation from the GCC and said China wanted the FTA done as soon as possible. In September 2022 he met with the GCC foreign ministers and said China wanted the FTA done as soon as possible. I was expecting an announcement of a completed FTA when Xi visited Saudi for the series of summits in December 2022, but nope, no FTA. In August 2023 Wang reiterated the need to get the FTA done as soon as possible in a call with UAE FM Sheikh Abdulla. You get the picture. China wants the FTA.
According to Alex’s story, talks have stalled “over concerns by Saudi Arabia that cheap Chinese imports could undermine its ambitions to transform the kingdom into an industrial powerhouse.” The Saudi Vision 2030 is driving everything in the Kingdom, with the government trying to develop its domestic industrial capacity to diversify from an economy dominated by oil. The sticking point for the Saudi side, according to the article, is a list of import-exempt goods that China wants included in the FTA: “Saudi Arabia is worried that a wave of lower cost Chinese versions of products that it hopes to manufacture domestically would be damaging to its industrial agenda, the sources said.”
The GCC did sign an FTA with South Korea in December 2023 so there is an appetite for trade agreements. Case in point: since signing a comprehensive economic partnership agreement (CEPA) with India in February 2022, the UAE established CEPAs with Israel, Indonesia, Turkey, and Cambodia, with 5 more under development and several under negotiation.
So trade agreements aren’t the issue here. The article ends elliptically noting that the US has pressured GCC countries on tech, but I don’t think great power competition is what’s keeping the FTA from getting done, at least not directly. I suspect the potential impact on nascent indigenous industries is the biggest part of the equation.