Bilateral trade between the Gulf Cooperation Council (GCC) countries and China has been expanding rapidly since the turn of the century. In 2016, China accounted for 12 percent of the GCC’s imports, which made it the largest exporter to the region. The GCC countries also heavily rely on China as one of their major exports markets. Still dominated by fuels, their exports to China are becoming increasingly diversified as the GCC producers strive to convert parts of their vast petroleum reserves into higher value added products. In particular, plastics currently amount to about 7 percent of total GCC’s exports to China, or to 30 percent of non-energy exports. Developing trade and investment ties between the GCC and China called for institutional arrangements beyond the WTO framework to further enhance economic cooperation. The Free Trade Agreement (FTA) negotiations had been launched as early as 2004 and after several years of suspension resumed again in 2015. One of the major stumbling blocks in the negotiation process has, reportedly, been the issue of liberalizing petrochemical trade. Protecting its domestic producers, China proved to be reluctant to set forth significant concessions on import duties. Conversely, the GCC countries sought the preferential trade regime, since the development of their petrochemical industry has been primarily driven by exports and China represented a major global demand destination.
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