Looking to support its movement towards the non-oil export market, Oman has built strong economic partnerships. As a member of the World Trade Organisation, the Greater Arab Free Trade Area, the GCC, the Indian Ocean Rim Association (IORA) and the bilateral free trade agreement (FTA) with the US, Oman has developed a robust network that enables it to boost exports and limit its trading barriers.
Oman has profited from its founding membership in the GCC. This regional free trade vehicle takes in 60% of the country’s local exports, giving Oman access to a sustainable and barrier-free trading zone. In addition to a 10-year, $10bn GCC stimulus package, the sultanate stands to further benefit from potential FTAs between the GCC and the EU, the Association of South-East Asian Nations (ASEAN) and Singapore. The EU is currently the GCC’s largest individual trading partner. Negotiations took place in Bahrain in summer 2013 and were said to be in the final stages.
“The GCC is an increasingly important partner, not least because our bilateral trade has increased by 45% since 2010 to reach €145bn annually,” said Catherine Ashton, the EU High Representative for Foreign Affairs and Security Policy. “All issues regarding the EU-GCC FTA are done except the point on export duties, which is the only outstanding issue. It is a fantastic trade agreement.”
The GCC-Singapore FTA came into force on September 1, 2013, making Singapore the first non-Middle Eastern country to have an FTA with GCC states. Singapore granted a zero-tariff provision to all GCC imports to be in force immediately after the signing. Bilateral trade between Singapore and the GCC was nearly $70bn in 2012, up 62% since 2007, according to a joint press statement. While discussions have taken place over a GCC-ASEAN FTA, no agreement has materialised as yet.
Due to Oman’s location on the Arabian Sea, GCC officials announced in November 2013 that a $10bn GCC desalination network would be based in the sultanate, with pipelines linking two desalinisation plants in Sohar and Ashkhara to the other six member states, according to the Gulf Daily News.
Approximately $3bn is intended for the desalinisation plants, while $7bn would be used for pipelines connecting the GCC states. The project is expected to be completed within 10 years.
The US-Oman FTA came into force in 2009. In 2012 Oman exported some $1.35bn of goods to the US, while the US maintained a $325m trade balance. Mineral fuel, precious stones, plastic, fertilisers, and iron and steel products make up the five largest exports from Oman to the US.
As Oman rolls out a regulatory framework covering its newly discovered mineral deposits, exports of copper, ferrochrome and carbonate-based minerals are expected to rise significantly.
Oman’s membership in IORA, which consists of 20 member states surrounding the Indian Ocean, has also enabled the sultanate to take advantage of its location to promote its growing fisheries and ports industries through another liberalised trading body. IORA was established in 1995, but it was not until 2011 that the priority items were solidified: trade and investment facilitation; maritime safety and security; fisheries management; disaster risk management; academic and science & technology cooperation; and tourism and cultural exchanges.
India-Oman Strategic Partnership
The growth in bilateral trade and cultural exchange between Oman and India highlights the significance of the partnership. The volume of bilateral trade has reached OR1.92bn ($4.97bn) per year, and in 2012, “India became the top destination for non-oil Omani exports, which registered 48% growth in 2012 over 2011, reaching OR234m ($606m),” J S Mukul, the Indian Ambassador to Oman, told local media. There are already 1500 joint ventures between to the two states, with many more in the pipeline, Mukul said.
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