It is against this tense international geopolitical and economic backdrop that the countries of the Arab League are reviving an old ambition: that of a customs union. Meeting in Cairo on April 7 for an extraordinary session of the Economic and Social Council, representatives of the member states discussed a project which, if implemented, could redefine trade balances in the region. A decisive step before the Arab Summit for Economic and Social Development, scheduled for May in Iraq. This initiative follows on from the Greater Arab Free Trade Area (GAFTA), which has been in force since 2005, but which is struggling to move beyond the stage of political intentions.
More than twenty years after the Greater Arab Free Trade Area (GZALE) came into force, the countries of the Arab League are reviving the idea of a customs union. While this ambitious regional integration project is fraught with legal, economic and political pitfalls, overcoming… pic.twitter.com/6P06jwQe9n
– TelQuel (@TelQuelOfficiel) April 18, 2025
Back to the origins of an old project
The idea of an Arab economic union is not new. A first attempt was made as early as 1953 in Cairo, with a treaty on commercial transit between seven member states – without Morocco – which did not join the Arab League until 1958.
In 1964, 14 Arab countries signed a convention to create an Arab Economic Market. Its aim: the free movement of people, currency and goods. But the idea of an economic union was already provoking reluctance, particularly from Lebanon, which feared that the market would « degenerate » into further integration. The backdrop is the divergence between liberal (Morocco, Lebanon) and dirigiste (Syria, Iraq) economic models.
The first version of the GZALE came into being in 1981, when the Arab League initiated the Trade Facilitation and Development Agreement, which provided for the progressive dismantling of tariffs over ten years. But it wasn’t until 1998 that the agreement was implemented, and 2005 that the total abolition of customs duties between member countries made GZALE fully operational.
Free trade area VS customs union
But why consider a customs union when a free trade zone has existed for twenty years? Because it’s a higher level of economic integration. The GZALE eliminates customs duties between member countries, but does not harmonize tariff barriers or impose a common customs tariff on third countries. As a result, a product can bypass the high tariffs of country A by transiting through country B – where tariffs are low – a practice known as « tariff forum shopping ».
The customs union would prevent this by establishing a common external tariff. On the other hand, member states would be able to negotiate their trade agreements with other blocs, such as the European Union or China, strengthening their negotiating leverage.
The obstacles: legal, economic, political
Contacted by TelQuel, Mohamed Badine El Yattioui, Professor of Strategic Studies at the United Arab Emirates Defense College in Abu Dhabi, believes that the establishment of a customs union between the countries of the Arab League faces a number of legal, economic and geopolitical challenges.
« In the short term, the establishment of a customs union seems rather difficult, since it would require the removal of numerous legal barriers as well as a very strong political will to stimulate growth and economic development in the 22 countries of the Arab League », he explains. He adds that « in the long term, it would above all make it possible to generate both a free-trade zone and a common external tariff, i.e. common protective barriers. »
As for the necessary reforms, Mohamed Badine El Yattioui points to « several legal mechanisms in need of reform, notably in business law and everything related to the liberalization of the services sector in the various Arab countries ». El Yattioui points out that Arab countries are at different stages of liberalization.
The same applies to business law: we need to « encourage foreign investment. » However, some countries severely restrict foreign investment by requiring the establishment of partnerships with local companies. » I’m thinking in particular of Algeria and certain Gulf countries », explains El Yattioui. « The Emirates, for example, have made great strides on this issue to attract investment, but other Gulf countries continue to maintain a form of national preference, which would obviously pose quite a few problems. »
The thorniest issue, however, is governance, according to this expert. » Even if we manage to remove all these barriers, we need to create governance mechanisms to manage this customs union in order to make it effective, to enable trade liberalization and to have governance with common mechanisms to manage relations with the outside world as a result of the common tariff, » he argues.
This raises a number of questions: « Who will manage this union? And above all, how will it be managed? Will it be inter-governmental? And by what mechanism, and with what power for the commission, committee or council that will be responsible for it? »
Globalization in crisis, regionalism in ambush
The international geopolitical context is also influencing regional dynamics. For El Yattioui, current geopolitical tensions – notably between the United States, China and the European Union – and the multiplication of protection mechanisms could paradoxically accelerate the Arab customs union project.
« Trump sees Americans as the losers in the globalization process » that they themselves initiated with Ronald Reagan and his successors, he observes. However, this dynamic « of fragmentation risks encouraging regionalization; and here, the Arab world – i.e. the 22 countries of the Arab League – is lagging behind« .
Our interlocutor is therefore « skeptical » about any real, concrete implementation of an Arab customs union in the short or even medium term: « Only a complete fragmentation of globalization and a global, widespread economic crisis would perhaps allow this initiative to be accelerated »
On the specific mechanisms of the customs union, economist Nabil Adel, contacted by TelQuel, explains that « the customs union is based on negotiations to define a common external tariff ». An example? « If I want to strongly encourage the production of a local industry, such as milk, but Jordan isn’t interested because it would rather protect its sector, we agree, through negotiations, to establish a common tariff. »
First and foremost, this measure strengthens intra-community trade between Arab countries and protects the market from outside intervention. The harmonization of customs systems – information system, nomenclature, tariff rules, calculation rules, etc. – remain essential to ensure uniform application, according to the economist.
High-potential markets
« If the political will is there, the idea of an Arab customs union would be a very good thing for Morocco »
And the geopolitical and economic stakes represented by this step are crucial: « If the political will is there, the idea of an Arab customs union would be a very good thing for Morocco. It would be even more promising than African expansion, because these are extremely important markets », he points out. Markets such as the Gulf, Egypt (with its 100 million consumers) and Jordan offer considerable potential, both in terms of population and their place in the global economic balance.
« From a purely mercantile point of view, these are markets with significant purchasing power. We’re talking about 22 countries with a significant weight in foreign trade », he believes. He adds that access to the Gulf « could generate 2 to 3 additional GDP points for Morocco, which is not negligible ».
However, El Yattioui reminds us that there are major differences between the economic structures of the various Arab countries. Some base their economies on their natural resources, others have chosen to focus on the tertiary economy via services and tourism, and still others have relied, for example, on agriculture. » What complementarities and efficiencies already exist internally to be able to create free-trade mechanisms even before creating a customs union? » he asks.
He continues with a new question: « Should we make our free-trade area a reality, in order to move towards a customs union, or should we start with a customs union by protecting ourselves, since we’re in an era of protectionism, in order to develop efficient industries in the Arab world, internally and well distributed, to promote the development of all countries? » Between regional utopia and economic necessity, the Arab customs union remains dependent on political will.
Written in French by ElMehdi El Azhary; edited in English by AngloMedia Group.
