ABSTRACT
Existing economic studies of regional and bilateral trading agreements have highlighted the costs and benefits involved, but have not effectively considered the geopolitical rationales behind trade agreements. This chapter argues that in addition to economic considerations, preferential trading arrangements have strategic and geopolitical rationales that further shape the emergence and trajectory of these agreements. The Unified Economic Agreement (UEA) envisages a free trade area (FTA) among the six member-states of the Gulf Cooperation Council (GCC), which started to coalesce in the spring of 1983. Despite the formal inauguration of the regional customs union, several Gulf Arab governments have continued to impose substantial tariffs on local goods. The influx of American goods into the GCC countries has largely entered through Bahrain, and to a lesser extent through Oman. Bilateral free trade agreements with the United States have had harmful strategic consequences for the GCC as a whole, as well as for those GCC states that have refrained from signing such pacts.
