Riyadh Summit: Arab free trade zone begins with laws' amendment
RIYADH – Arab leaders pledged to remove obstacles to finalising a free trade zone this year and agreed to facilitate capital flows, as they wrapped up an economic summit in Riyadh on Tuesday.
"We stress our determination to complete all the prerequisites of (forming) the free trade area before the end of this year," Arab League chief Nabil al-Arabi said at the end of the third Arab Economic and Social Summit.
The leaders, he added, were determined to clear obstacles to "achieve the Arab customs union fully by 2015."
Saudi Finance Minister Ibrahim al-Assaf said officials working to facilitate a customs union were struggling to sort out rules on the origin of goods.
"We still have problems with the issue of country of origin... in order to establish which goods are from Arab countries and the percentage of foreign components," he told reporters.
The regulations of the customs union stipulate that exempted goods should have at least 40 percent local components.
Meanwhile, Arab leaders agreed amendments proposed to strengthen the flow of capital and investments between countries, Arabi said.
The Arab League leader's assistant for economic affairs, Mohammed al-Tuwaijri, had described investment laws in Arab countries as a "repellent for investments".
He also highlighted "significant deficiencies" in the 1980 common agreement over capital movement.
"We should achieve an Arab common market," said Egyptian President Mohamed Morsi at the opening of the third Arab Economic and Social Development summit, urging Arab nations to "catch up" in the realm of free trade.
"Very little has been done to improve trade between Arab countries," which reportedly comprises no more than 10 percent of total Arab commerce.
Saudi Crown Prince Salman bin Abdul Aziz, who stood in for ailing King Abdullah in hosting the summit, highlighted economic and social challenges facing the region and also pointed to weak inter-Arab trade.
"The urgent development issues that face our countries are very difficult, including poverty, unemployment and disease. Efforts must be made to confront and eliminate them," he said.
"The level of trade between us does not match our ambitions."
The 22 Arab states have a total population of more than 367 million, but total Arab gross domestic product represents no more than three percent of global gross domestic product.
The Arab region sits on 62 percent of the world's crude oil reserves and its oil-producing nations export 32 percent of total global exports.
The area is also home to 24 percent of the world's natural gas reserves. But Arab gas exports represented only 5.8 percent of global exports in 2010.