How the Gulf is trading East for West

It has been a mixed week for FTA fans in the Gulf. quelle surprise, on Monday Anne-Marie Idrac, France's junior minister for trade, told reporters that it was unlikely the EU and the GCC would come to agreement - this after 17 years of fruitless to-and-fro.

Talks between the six Gulf states and the EU began in 1990 but were slowed by the GCC agreeing only in 1999 to move towards forming a customs union, and a new EU negotiating strategy adopted in 2001 to include the services sector in the talks.

As well as seeking to boost trade and investment, the agreement would also have covered political issues such as human rights, illegal immigration and the fight against terrorism.

In October, Idrac had suggested that it might be possible to sign an agreement this year; she now says "very annoying" protectionism was responsible for the failure of the two sides to come to terms.

Not that Gulf leaders would necessarily mourn the expiration of efforts to forge an EU-GCC pact. A few weeks ago Abdul-Rahman Al Attiyah, secretary general of the GCC, declared that the Council would examine a possible slowdown in free trade talks with foreign partners and "review the usefulness of such agreements", while US officials have said there are no plans to revive talks on a FTA with the GCC.

Instead, the Gulf's FTA focus has shifted to the East, where Singapore officials announced last week that an agreement had been inked with the GCC. The agreement will allow tariff-free access for 99 percent of Singapore's domestic exports, while all goods from the GCC will get free entry to Singapore.

The agreement also specifies that Singapore-based firms will be granted easier access to the UAE, Qatar and Saudi markets in certain sectors such as construction, IT, and environmental services.

Asia is easily the GCC's largest trading partner, and the integration of the two regions will continue over the next decade as Gulf states look to develop knowledge-based economies. Dubai is already the world's third largest re-export hub (behind Singapore and Hong Kong), and the existence of agreements such as the one signed last week can only help to smooth the paths of the 21st Century Silk Routes.

The Gulf will not forget its friends in Europe and the US - the region cannot afford to trade solely with Asia and will still expect its trade with the West to grow as healthily over the next decade as it has over the last.

However, as the new global economic landscape is shaped to fit Asia's emerging super economies, the Gulf is resetting its priorities accordingly, striking deals and developing strong partnerships with dynamic economies that will for many years be reliant on Gulf oil. Today, while all of our partners are equal, some are more equal than others.

Andrew White is the editor of Arabian Business English.

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