How will the FTA impact trade volume between Asean and GCC countries?

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The ASEAN-GCC FTA is poised to significantly enhance bilateral trade, targeting a substantial increase in volume by 2032.

The proposed Free Trade Agreement (FTA) between the Association of Southeast Asian Nations (Asean) and the Gulf Cooperation Council (GCC) is designed to foster a more robust economic relationship, with a clear objective to elevate the total trade value. Kuwait's Crown Prince Sheikh Sabah Khaled Al-Hamad Al-Sabah articulated this ambition, stating that the current trade volume of US$130.7 billion in 2023 is targeted to reach US$180 billion by 2032, signalling a significant growth trajectory. This initiative aims to unlock the considerable untapped potential that exists within the bilateral trade and investment landscape between the two blocs.
Expansion of Trade Targets

The strategic aim to increase trade between Asean and the GCC is a central tenet of the developing FTA. In 2023, the total trade between these regions reached US$130.7 billion, establishing the GCC as Asean's seventh-largest trading partner. The ambitious goal set for 2032 is to see this figure climb to US$180 billion, reflecting a projected increase driven by enhanced economic cooperation and the removal of trade impediments.
Malaysia-GCC Free Trade Agreement as a Precedent

Malaysia has taken a concrete step towards this broader objective by signing a joint statement to commence negotiations for a Malaysia-GCC Free Trade Agreement (MGFTA). This bilateral agreement is anticipated to lay the groundwork for the wider Asean-GCC framework. The MGFTA is expected to facilitate increased trade by addressing key obstacles.
Mechanisms for Trade Enhancement

The intended impact of the FTA on trade volume will be achieved through several key mechanisms. These include the reduction of both tariffs and non-tariff barriers, which historically can impede the flow of goods and services. Furthermore, the agreement is set to promote greater business mobility, making it easier for companies to operate and invest across both regions. Improved regulatory cooperation is also a crucial element, aiming to streamline processes and create a more predictable and favourable environment for trade and investment.

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How will the FTA impact trade volume between Asean and GCC countries?

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