WT/REG276/2  
 
21 March 2018  
(18-1727) Page: 1/3 
Committee on Regional Trade Agreements    
 
GCC CUSTOMS UNION  
GENERAL INCIDENCE CA LCULATION  
Note by the Secretariat  
1.1.  In the context of "[t]he evaluation under paragraph 5(a) of Article XXIV of the general 
incidence of the duties and other regulations of commerce applicable before and after the 
formation of a customs union", paragraph 2 of the Understanding on the Interpr etation of 
Article  XXIV of the GATT  1994 (the Understanding) directs the Secretariat to calculate "the 
weighted average tariff rates and customs duties collected" and elaborates on the approach to be 
used.  
1.2.  As applied to the case of the Gulf Cooperation Cou ncil (GCC) Customs Union  (CU), the 
outcome of the mandated calculations will consist of two sets of comparable figures:  
 Import -weighted average tariff rates: one reflecting the pre -CU situation and 
another reflecting the post -CU situation.  
 The correspondin g estimated values of customs duties collected.  
1.3.  The Committee on Regional Trade Agreements, through its Chairman, has instructed the 
Secretariat to perform those calculations, on the basis of information provided by the parties or 
available otherwise and a ccording to the methodology described below.  
Data and methodology used in the calculations  
 
1.4.  The following data were used in the calculations:  
a. several  sets of tariff rates, as follows:  
i. Pre-CU situation in 2002:  
 Tariff in 2002, as reported to the WTO -IDB by the Kingdom of Saudi Arabia and 
the Kingdom of Bahrain, taken from the IDB database and worked at the tariff 
line level;  
 Tariffs for the State of Kuwait, Qatar and Oman in 2002 were taken from the 
Camad -UNCTAD database, at the HS six digit level, as no dat a was reported to 
the WTO -IDB; 
 Neither the WTO -IDB nor the UNSD -COMTRADE database have tariff line level 
data for the United Arab Emirates ( UAE) before 2003.  The tariff for 2002 was 
taken from tariff reported to the IDB in 2003, modifying its standard lev el (5% in 
2003 was converted to 4% in 2002).  
ii. Post-CU situation in 2007:  
 CET as reported by the Kingdom of Saudi Arabia to the IDB in 2007, at tariff line 
level.  WT/REG276/2  
 
- 2 - 
 
  b. The required data for obtaining the mandated calculation is average imports during the 
2000-2002 period, in value and quantity and by tariff line, by the GCC countries, from 
WTO partners (as of January 2003) (except those with which there were contractual 
preferences):  other GCC countries and trade covered by the Pan Arab Free Trade Area.1 
Data used  were:  
i. For the Kingdom of Saudi Arabia, 2001 -2002 imports at the tariff line level, available 
in the IDB;  
ii. For Qatar and Oman, 2000 -2002 imports in the UNSD -Comtrade database which are 
available at the HS six -digit level. Issues arising from transpositions  between the 
Harmonized Systems, or differences between the data sources, were resolved by 
taking the minimum value instead of the average value (for the pre -CU situation);  
iii. For the State of Kuwait and the Kingdom of Bahrain, mirror imports from the 
UNSD -Comtrade database had to be used2, for the period 2000 -2002 at the 
HS six-digit level with the same principle of aggregation by minimum values used as 
in (ii) above;  
iv. In the case of the UAE, for which imports are  only available at the HS four -digit level 
for this period, 75% of the weighted average is due t o imports at the HS four -digit 
level and is therefore calculated exactly.  For the remaining 25%, minimum four 
values were used w hen aggregating data at the HS four -digit level;  
v. The same import data set w as used for producing the CET weighted average 
(post-CU situation), but using maximum values instead of averages, when needed.  
c. No concordance tables were provided.  Standard World Customs Organization correlation 
tables at the HS six -digit level were used w hen needed.3 
1.5.  The calculations followed to the greatest extent possible "the methodology used in the 
assessment of tariff offers in the Uruguay Round" (see paragraph 2 of the Understanding) .4 
However, most of the calculation was performed at the HS six -digit level and with data from four 
successive Harmonized Systems.  Therefore, some approximations were needed.  In order to deal 
with problems generated by the approximations, in the pre -CU situation, the minimum tariff rate 
was used while in the post -CU situat ion the maximum tariff rate was used.  The calculation is thus 
robust in the face of the approximation needed to obtain the final result.  
a. Average tariff rates  
i. Pre-CU situation : average of six GCC country MFN applied tariff rates in 2002, 
weighted by aggrega ted 2000 -2002 import values of the parties.  
ii. Post-CU situation:  Common external tariff (CET) in 2007, weighted by the same  
aggregated 2000 -2002 import values of the parties.  
b. Customs duties collected : estimates derived from the average tariff rates obtained under 
(a) and annual average import values in 2000 -2002.  
                                                
1 WTO Members that were a party to the PAFTA (excluding GCC members) are: Egypt, Jordan, Morocco 
and Tunisia.  
2 Imports reported by the State of Kuwait and the Kingdom of Bahrain to UNSD -Comtrade and WTO -IDB 
lacked allocation by partner in more than one thi rd of cases; results from a proportional allocation (following 
the distribution of remaining alloc ated trade) could not be used. Thus exports to the Kingdom of Bahrain and 
the State of Kuwait reported by other countries to UNSD -Comtrade (mirror imports) we re used.  
3 Data were available in Harmonized Systems versions 2007 , 2002, 1996 and 1992, but the output is 
shown in HS -2002. A simplified version of WCO standard correlation tables were used to convert trade values 
and tariff rates into the selected nomen clature;  when converting to HS -2002, any aggregation that was 
needed was based on minimum values (pre -CU) or maximum values (post -CU) instead of average values.  
4 The ad valorem  component on lines with mixed duties were used; prohibited and special goods  were 
excluded from the calculation.  WT/REG276/2  
 
- 3 - 
 
  Results of the calculations  
 
1.6.  Major parameters underlying the results are shown below:  
Participants  Average 
imports in 
2000 -02* 
(US$ million)  National weighted 
average tariff rates**  Estimated customs  
duties collected *** 
(US$ million)  
Initial 
duties  Final 
duties  At initial rates  At final rates  
Kingdom of Bahrain  4,414  5.5 4.9 241 218 
Kingdom of Saudi Arabia  27,722  6.3 4.9 1,755  1,369  
State of Kuwait  6,376  4.1 4.9 260 315 
Oman  3,331  6.5 4.9 217 165 
Qatar  2,996  4.4 4.9 131 148 
United Arab Emirates  24,281  4.0 4.9 978 1,199  
GCC countries  69,120  5.2 4.9 3,582  3,414  
* Total imports (incl. petroleum), annual averages. (See paragraph 5(b) above.)  
** Based on rates described in paragraph 5(a) above and 2000 -2002 import weights.  
*** Annual averages.  Estimated on the basis of 2000 -02 import values and average tariff rates.  
 
1.7.  The mandated calculations for the GCC Customs Union, according to the described 
methodology and on the basis of available data, br ought out the following results:  
 Pre-Custom Union  Post-Custom Union  
Weighted average tariff rates  5.2% 4.9% 
Average customs duties collected  US$3,582 million  US$3,414 million  
 
__________