On July 19, 2024, ASEAN Secretary-General Kao Kim Hourn conveyed that ASEAN might pursue a free trade agreement (FTA) with the Gulf Cooperation Council (GCC). This potential FTA between the two blocs is very likely, as ASEAN seeks to diversify its trade beyond the current trading partners. The proposed FTA is a key component of the ASEAN-GCC Framework of Economic Cooperation for 2024-2028, although specific details and schedules for negotiations have yet to be finalized.
The idea of trade agreement between ASEAN and the GCC has been raised by some ASEAN leaders during the inaugural ASEAN-GCC Summit on October 20, 2023 in Saudi Arabia. This initiative reflects ASEAN countries’ growing engagement with individual GCC countries, driven by factors such as diaspora communities, remittances, and Hajj quotas. In 2022, bilateral trade between two blocs reached approximately USD110 billion, and GCC investments in ASEAN countries, mainly to Indonesia, Malaysia, and Singapore, totaled around USD13.4 billion between 2016-2021. This FTA promises new markets and investment avenues for U.S. companies. This strategic partnership between ASEAN and the GCC holds the promise of unlocking new markets and investment avenues, which U.S. companies are well-positioned to capitalize on. The anticipated reduction in trade barriers and tariffs will streamline supply chains and reduce operational costs for U.S. firms engaged in these regions. Additionally, increased GCC investments in ASEAN countries will create favourable business environments for U.S. firms seeking to expand their footprint. This agreement diversifies ASEAN's trade partnerships and stabilizes global trade networks, enhancing economic resilience. Ultimately, the ASEAN-GCC FTA could drive economic growth and improve U.S. companies' competitiveness in these dynamic markets.
