Yet another free trade agreement on 1 July: GCC

On 1 July 2014, a free trade agreement between the members of EFTA and the Gulf Cooperation Council (GCC) will also enter into force. The agreement covers trade and industrial products as well as, among others, the trade in services and government procurement.

This comprehensive free trade agreement with the GCC (Bahrain, Qatar, Kuwait, Oman, Saudi Arabia and the United Arab Emirates) was signed on 22 June 2006 in Hamar, Norway. After the ratification of the agreement by all of the states, it will now enter into force on 1 July 2014. The EFTA member states will remove all remaining customs duties on industrial products. The GCC member states will remove immediately the customs duties on most of the tariff lines. Duties on certain sensitive products will be removed five years after the entry into force of the agreement.

The EUR.1 form will serve as the certificate of origin until further notice. For goods in transit at the date of the entry into force of the agreement, the certificate of origin may be submitted to the importing country by the end of October 2014 in order to benefit from the reduction in customs duties. The option of placing an origin declaration on invoices (or other business documentation used to identify the goods) will only be applicable once the GCC signs an agreement with another free trade partner that envisages the use of such invoice-based declarations.

For goods to be designated as originating from one of the countries covered by the agreement, the usual rules of origin apply. The list rules for specific product categories follow the current trend and are correspondingly lean, usually permitting a tariff alternation or a value criterion that often allows the use of up to 60% of material not originating in a country covered by the agreement. Cumulative rules of origin are possible between the countries covered by the agreement. As the GCC is a customs union, products are not issued with a declaration of origin for each member country but are designated as originating from the GCC. The agreement also allows deliveries to be split up under the customs’ control for various delivery locations and countries without losing their preferential status.

It is recommended that businesses involved in trade between the various countries study the corresponding requirements and take the required action sooner rather than later in order to benefit from the advantages of this free trade agreement from 1 July 2014.

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