A Chance for the GCC and ASEAN to ‘Re-Globalize’ the World

As leaders from Gulf Cooperation Council states and the Association of Southeast Asian Nations meet this week in Riyadh, all eyes will be on the GCC’s “look East” policy. After more than two decades of tepid cooperation, GCC-ASEAN ties are poised for a reboot.

At first glance, the GCC-ASEAN annual trade bill of about $110 billion might already seem robust. Behind China, India, and the European Union, the GCC is ASEAN’s fourth-largest trading partner.

But these figures pale compared to the potential. With a combined GDP of about $5.5 trillion, the blocs’ bilateral trade could grow considerably as economic diversification in both regions accelerates. 

The building blocks for this growth are already being laid. Comprehensive economic partnership agreements (CEPAs) have been inked between some member states, and future free trade agreements are possible. Taken together, the scope for collaboration is immense.

While oil will remain an important factor in the arrangement, GCC countries’ economic vision and diversification plans include many other sectors. The recently signed India-Middle East-Europe Economic Corridor will open new trading opportunities, strengthen energy resource pipelines, and improve digital connectivity. Similarly, the ASEAN Connectivity 2025 project aims to promote competitiveness, inclusiveness, and community within and beyond the bloc.

The GCC’s vibrant marketplace and members’ economic diplomacy gels with that of ASEAN states. This will enable new partnerships between sovereign wealth funds in both blocs. 

Still, hurdles remain; the historic inability to promote more meaningful institutional cooperation may be the biggest. While the blocs had their first formal contact in 1990, it wasn’t until 2009 that the inaugural ministerial meeting was held. The ASEAN-GCC Joint Vision on trade, which was adopted at that meeting, offered many promises but yielded lower-than-expected results. 

The summit in Riyadh is an opportunity to turn this around. 

Some GCC countries, particularly Saudi Arabia and the United Arab Emirates, have already begun to diversify their partnerships. Both have been invited to or have joined international forums, including the G20, the Shanghai Cooperation Organization, and the BRICS-plus. Foreign ministers of both blocs meet annually, and with GCC states growing in economic stature, a formal association with ASEAN is now a real possibility.

This in turn could enable new diplomatic and security cooperation. As tensions between the United States and China deepen, countries in both blocs are caught in the middle. This week’s summit may thus interlink economic, diplomatic, and security dynamics to give the GCC and ASEAN new outlets for engagement.

Bilaterally, this is already happening. Vietnam will be the next country, after Indonesia and Cambodia, to sign a CEPA with the UAE. Unlike free trade agreements, CEPAs include services, which fosters economic diversification. A year after the UAE and India signed a CEPA in 2022, trade between the two countries surged 6.9%.

Country-to-country deals could even pave the way for a broader GCC-ASEAN free trade agreement. In 2008, Singapore signed a free trade pact with Qatar, which was eventually expanded to the entire GCC. A similar expansion is possible with ASEAN.

Such a future is by no means guaranteed. The GCC is not a homogenous entity, and members’ interests are diverse, making the process of achieving consensus on economic issues difficult. Past attempts by the EU, the US, and India to sign a free trade deal with the GCC have failed, and the China-GCC free trade agreement remains stalled. 

And yet, in a post-COVID world, developing countries, like those in ASEAN, are looking to revive bilateral and multilateral engagements. Countries in the two blocs have competitive advantages, and this could add dynamism to the Global South’s push for South-South cooperation.

GCC states prioritize partnerships that contribute to their strategic goals – particularly the desire to reshape global supply chain routes. Aware of this, ASEAN countries should work to create conducive business environments that facilitate this objective. The two sides could link with China’s Belt and Road Initiative, for example, to broaden their engagement.

The GCC has been looking East for decades, seeking to build long-term trade relationships to diversify economic and political dependence away from the West. This process of “re-globalization” is accelerating, and as it does, the rules of economic diplomacy are being rewritten. 

This week’s summit in Saudi Arabia is the latest opportunity to ensure those rules favor emerging powers in Asia and the Middle East. 

Dr. Narayanappa Janardhan is director of research and analysis at the Anwar Gargash Diplomatic Academy in Abu Dhabi, and a nonresident fellow at the Arab Gulf States Institute in Washington.