Clever policy is often a vitally important facet in developing deeper political and economic ties with different countries. As a country that enjoys nearly perfect international relations, Oman can and […]
Clever policy is often a vitally important facet in developing deeper political and economic ties with different countries. As a country that enjoys nearly perfect international relations, Oman can and does use its position to achieve economic gains. Capitalizing on efforts, Oman has made some significant decisions that have set the country on a new political and economic path. As of now, Oman has made five different FTAs. One of these is at the bilateral level with the US. The other four FTAs are regional agreements made by the member states of the GCC and include the Greater Arab Free Trade Area (GAFTA), GCC Common Market, EFTA (comprised of Iceland, Liechtenstein, Norway, and Switzerland), and Singapore.
The FTA with the US, implemented in 2009, effectively removed non-tariff barriers and customs between the two nations. As a unique addition to this agreement, the FTA also allows US businesses to get around the foreign capital investment law and open a 100% foreign-owned company in Oman. Highly interesting for Omani businesses, the same rule allowing for total foreign ownership of a business applies to Omani businesses that wish to operate in the US. This has the capacity to increase economic and political ties between Oman and the Americas, as close cooperation in business often leads respective governments toward future collaborative efforts. This FTA has resulted in the US becoming an important trading partner of Oman, with total bilateral trade almost reaching USD3 billion. Aided by the incentives of the FTA, Omani investments in the US have grown to over USD1 billion. The trade agreement has already done much to improve bilateral relations, with Oman recently signing an agreement with the US for cooperation in science and technology at the World Economic Forum in Davos.
Oman’s FTAs also hold broader, politically important implications. For example, neighboring Iran could use Oman to send goods to the US and thus enjoy the same benefits and exempt itself from customs tariffs and taxes. In effect, Oman can employ its FTA relationships as a gateway for trade among interested countries. Oman’s FTA with Singapore comes as part of a regional 2013 FTA that includes the entire GCC. As a result, trade between Singapore and Oman has experienced substantial growth. The GCC Common Market is another regional FTA. The GCC recently created an Economic and Development Affairs Authority, which is designed to assist in the coordination and integration of member states in both economic affairs and in other sectors like healthcare. The vision envisages a customs union within the GCC as well, which will lead to a tighter Omani relationship with the region. China is also holding talks with the block to propose an FTA of its own.
The GAFTA, reached in 2005, is a behemoth of an FTA in its own right. It contains 17 member countries and connects over 300 million people. The GAFTA fully liberalized the trading of goods by removing customs duties and taxes between its members. The agreement also calls for the removal of non-trade barriers. The EFTA agreement is also a GCC-wide deal, signed in 2009 and ratified by Oman in a royal decree in 2010. According to this agreement, Omani goods enjoy most-favored nation status within EFTA countries. More importantly, all industrial and fish products can be sent duty-free to all markets. This has big potential for Oman, as the country is home to an advanced fisheries industry that can benefit from this unique access.