Merchandise Trade

• Qatar has been a member of the World Trade Organization (WTO) since January 13, 1996, and a member of the General Agreement on Tariffs and Trade since April 7, 1994.
  
  
• Qatar is a member of the GCC, which consists of Saudi Arabia, Kuwait, Oman, the United Arab Emirates (UAE), Bahrain and Qatar. GCC membership means that Qatar is part of a single market and customs union with a common external tariff. Under the accord, goods imported into the GCC area can be freely transported throughout the region without paying additional tariffs.
  
  
• The standard rate of external tariff is 5% (ad valorem) in accordance with the GCC customs union. According to the WTO, Qatar's simple average most favoured nation applied tariff was set at 5.7% for agricultural goods and 4.6% for non-agricultural goods in 2016.
  
  
• VAT of 5% will likely be introduced in 2020 in accordance with the GCC's harmonisation policies.
  
  
• The average applied import tariff for goods entering Qatar is 3.36%.
  
  
• For cultural and religious reasons, import tariffs of 100% are levied on alcoholic drinks, and import tariffs of 200% are levied on tobacco products (GCC tariff). The Qatar Distribution Company, a subsidiary of the national air carrier Qatar Airways, has the sole authority to import alcoholic products.
  
  
• Even before the blockade, importers to Qatar have faced, on average, the highest tariff rates out of all six GCC member states. The country imposes additional tariffs beyond the common external tariff on a wide range of products and has a stringent import-licensing regime.
  
  
• Non-Qataris are barred from engaging in distribution activities in Qatar. Importers, who must be Qatari nationals, have to register in the Importers Register and be approved by the Qatar Chamber of Commerce and Industry.
  
  
• Certain local manufacturers are protected by a higher customs duty. For example, Qatar has a 15% tariff on records and musical instruments, 20% on steel and cement and 30% on urea. Imports of pork and pork products are prohibited. With the approval of the Director General of Customs, some categories of goods may be allowed to be imported temporarily without collection of customs duties. These include heavy machinery and equipment for project execution, semi-finished products, use in exhibitions and temporary events, machinery and commercial samples. This approval is normally valid for a period of six months but may be extended by another six months.
  
  
• Sanctions were imposed on June 5, 2017, by Saudi Arabia, the UAE, Bahrain, Egypt, Yemen and the Maldives, among others, which cut diplomatic and transport ties with Qatar, accusing it of supporting terrorism. Modest price pressures associated with higher import costs from the ongoing diplomatic crisis in the Gulf – and resultant restrictions on intra-regional cross-border movements – appear mostly transitory, and are fading with the government-led (and partly government-funded) development of new supply chains.
  
  
• There are additional import requirements for meat and meat products to ensure that they are halal-compliant.
  

Sources: WTO – Trade Policy Review, Fitch Solutions

Trade Updates

• The Saudi-led land, air and sea blockade has made exporting and importing products to and from Qatar far costlier and more difficult. Because the only land border with Saudi Arabia has been closed, ships destined for Qatar cannot dock at certain ports and its aircraft are not allowed to use certain airspace. However, Qatar has mostly proved resilient and has found ways to work around the barriers imposed by its neighbours.
  
  
• Negotiations for a free trade agreement between the European Union (EU) and the Gulf Cooperation Council started in 1990 but were suspended in 2008. The region represents an important export market for the EU and ongoing co-operation between the two led to a more structured informal dialogue on trade and investment being launched in May 2017.
  

Multinational Trade Agreements

Active

1. GCC Customs Union: This customs union, which entered into force on January 1, 2003, seeks to enhance ties between member countries and allows the free movement of local goods among member states. Members of the GCC are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. This agreement helps member states to leverage one another's industrial capacity and logistics networks. The geographic proximity of these countries and their general adoption of free trade economic policies are factors that foster a competitive business environment. Only imports on certain sensitive goods from GCC countries face tariffs, and there is freedom of movement between GCC countries without customs or non-customs restrictions. All members benefit from having common regulations and procedures and unified standards and specifications for all products. There is freedom of movement between GCC countries for the vast majority of goods without restrictions, reducing the overall time and cost burdens for supply chains.
   
   
2. GCC-Singapore Free Trade Agreement (FTA): The GCC-Singapore FTA (GSFTA) applies to the trade in goods and services and became effective on September 1, 2013. The GSFTA eliminates most tariffs (99%) on Singapore's exports to the GCC. This is a comprehensive agreement covering trade in goods, rules of origin, customs procedures, trade in services and government procurement, among others. Key sectors benefitting include telecommunications, electrical and electronic equipment, petrochemicals, jewellery, machinery, and iron and steel-related industry. The recognition of the halal certification of Singapore's Majlis Ugama Islam Singapura will also pave the way for trade in halal-certified products to gain faster access to the GCC countries.
   
   
3. The Pan-Arab Free Trade Area (PAFTA): PAFTA was established in order to create an Arab economic bloc that could effectively compete with other countries while ensuring that member countries increased trade with each other. PAFTA entered into force on January 1, 1998. The most important aspect of the agreement was that over the next decade (to 2008), each member country would seek to reduce customs fees by 10% per annum as well as gradually eliminate trade barriers. In March 2001, the member countries decided to reduce the period over which the reductions in tariffs could be made so as to speed up the process and in January 2005 the elimination of most tariffs among PAFTA members was enforced. Parties to PAFTA include Algeria and the Palestinian Authority as well as the original signatories: Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, the UAE and Yemen.
   

Signed But Not Yet In Effect

The Trade Preferential System of the Organization of the Islamic Conference (OIC): The agreement would see the promotion of trade between member states by including most-favoured-nation principles, harmonising policy on rules of origin, exchanging trade preferences among member states, promoting equal treatment of member states and special treatment for the least developed member states, and providing for regional economic bodies made up of OIC nations to participate as a block. The agreement will cover all commodities groups. The OIC comprises 57 members, which means fully realising such an agreement would be highly impactful, encompassing approximately 1.8 billion people. Although the framework agreement, the protocol on preferential tariff scheme and the rules of origin have all been agreed on, a minimum of 10 members are required to update and submit their concessions list for the agreements to come into effect. 

Under Negotiation

1. Australia-GCC: Australia and the GCC share a significant economic relationship, encompassing trade and investment across a broad range of goods and services. The GCC is a key market for agricultural exports such as livestock, meat, dairy products, vegetables, sugar, wheat and other grains. The agreement provides an opportunity to address a range of tariff and non-tariff barriers related to food exports that will benefit the GCC. To date, there have been four rounds of Australia-GCC FTA negotiations, with the last one held in June 2009. An Australia-GCC FTA would provide an opportunity to reduce barriers to trade in mineral commodities and automotive parts. Provisions on investment would both encourage inward investment from the GCC as well as enhance security for Australian investments in GCC countries themselves, including in such areas as mining or the development of educational campuses. No progress is expected on an FTA with the GCC while the intra-Gulf tensions, which commenced in June 2017, remain unresolved.
   
   
2. GCC-Mainland China: The first-round negotiations of the GCC-Mainland China FTA commenced on April 27, 2005. Greater trade liberalisation will help develop the industrial and service sectors. Trade liberalisation with the GCC will help the group integrate and grow with mutual co-operation and comprehensive tariff reduction. In 2018 Mainland China accounted for around 14% of the GCC's total imports. Thus far, the two parties have held nine rounds of negotiations and have reached an agreement on the majority of issues concerning trade in goods.
   
   
3. India-GCC: India and the GCC are negotiating an FTA. The agreement is expected to remove restrictive duties, push down tariffs on goods and pave the way for more intensive economic engagement between the nations. More than 50% of India's oil and gas comes from the GCC countries.
   
   
4. Japan-GCC: Japan and the GCC are negotiating an FTA. This agreement will seek to reduce tariffs and liberalise services, trade and investment. Japan mainly imports aluminium, natural gas, liquid natural gas and petroleum products from the GCC, while Japan mainly exports electronics, vehicles, machinery and other industrial products to the GCC.
   
   
5. GCC-Pakistan FTA: Negotiations are currently ongoing between the GCC and Pakistan for the conclusion of an FTA between them (the third round of negotiations was held in August 2017). While in 2016 Pakistan accounted only for an estimated 1.2% of Qatari exports (mostly liquefied natural gas and a small amount of crude) and around only 0.3% of Qatari imports, there has been a recent shift in these dynamics brought on by the GCC diplomatic crisis. Since June 2017, when the Saudi-led bloc severed all diplomatic and transport ties with Qatar, Qatar has been required to diversify its import partner portfolio (especially for foodstuffs). Therefore, in August 2017, a new direct shipping route was launched between Qatar's Port of Hamad and Pakistan's Port of Karachi (with shipping times estimated at taking around four days). Qatar Airways has also reportedly strengthened its air operations to Pakistan, and it is now much easier for Pakistani citizens to obtain visas to work in Qatar. Since the blockade was imposed in 2017, trade flows between Qatar and Pakistan have received a significant boost.
   
   
6. Other: A number of other GCC FTAs are currently under negotiation. The countries engaged in negotiations include New Zealand, South Korea, the Mercosur bloc and Turkey.
   

Sources: WTO Regional Trade Agreements database, European Commission, Australian Government Department of Foreign Affairs and Trade, Fitch Solutions

Foreign Direct Investment

• Value Added Tax: 0%
• Corporate Income Tax: 10%

Source: Qatar General Tax Authority

Localisation Requirements

Developing human capital and increasing nationals' workforce participation constitute key elements of the GCC member states' economic diversification plans and will continue to drive labour market policies across the region over the coming decade. Localisation policies have been devised to promote the employment of Qatari nationals in the private and public sectors. Therefore, quotas for the mandatory employment of Qatari nationals exist in certain sectors, such as banking and insurance.

'Kafala' System and New Immigration Law

Typically, as a result of relatively small domestic populations and the fact that a large portion of the domestic working-age population is employed by the public sector in all six of the GCC states, employing foreign workers to fill low-skilled and high-skilled positions for the private sector has been relatively easy. The large presence of migrant workers in Qatar is attributed to the 'kafala' (sponsorship) system, which emerged in many GCC states in order to regulate the relationship between employers and migrant workers in these countries. The employer is seen as the foreign worker's sponsor and is entirely responsible for their visa and legal status. A downside risk is that some foreign workers have had their passports and wages illegally withheld by GCC employers, and some risk not being allowed to leave the country or change employers without their current employer's permission.

The main commercial objective of the 'kafala' system is to facilitate the steady supply of temporary and rotating labour rapidly to such countries during times of economic boom – a labour force that could then be expelled fairly easily in less prosperous periods. However, owing to increasing pressure on GCC states from human rights groups about the exploitation of foreign workers under this system (specifically in relation to the treatment of foreign workers on various construction projects for FIFA 2022 projects), paired with rising economic pressures in GCC states owing to the 2015/2016 global slump in oil prices, the ease and costs of hiring foreign workers in Qatar is expected to become more difficult over the medium term. From December 2016, the Qatari government announced the coming into force of its New Immigration Law. Under this law, the Qatari government plans to change the sponsorship relationship, which forms the basis of the 'kafala' system, to one of an employment contract.

Furthermore, migrant workers employed under the 'kafala' system will no longer require their employer's permission to leave the country, but are instead required to apply to the Ministry of Interior which will in turn inform the employer. Migrant workers who have completed their fixed-term contracts will no longer need their employer's permission to take another job. In April 2019 the Qatari authorities announced that by the end of 2019 exit visas for all foreign workers, irrespective of the work sector, would be abolished. The death knell for the entire system may well have been sounded with the announcement in October 2019 that Qatar will reform and dismantle the 'kafala' scheme from 2020.

Obtaining Foreign Worker Permits for Skilled Workers

Under Qatar's New Immigration Law (which came into force in late 2016), a foreign worker may only apply for a work permit if they have an offer of employment from a Qatari national, a business registered as a legal entity or a resident family member on whom the individual is dependent.
Once the employer has made the application to the relevant Qatari labour authority, the expatriate employee will be issued their residence permit (if granted) within 30 days.

​​​​​​​ Visa/Travel Restrictions

In a bid to make Qatar a more attractive international tourist and business destination for countries outside the Gulf region, in early August 2017 the Qatari government announced the launch of its new visa-free programme for more than 80 countries worldwide. Nationals from more than 33 countries will be allowed to enter and stay in Qatar for up to 180 days without a visa (only a valid passport is required), and citizens of another 47 countries will be permitted to stay in Qatar for up to 30 days without a visa. This will make business travel to the country far easier for a wide range of international companies. Citizens of GCC states and Turkey do not require a visa. Citizens from a wide array of countries (the main eurozone states, the United States, various Central Asian states, Japan and Malaysia) may apply for a 30-day visa on arrival.

Sources: Visit Qatar, State of Qatar Ministry of Interior, Fitch Solutions

Sovereign Credit Ratings

Sources: Moody's, Standard & Poor's, Fitch Ratings

Hong Kong’s Trade with Qatar

Export Commodity	Commodity Detail	Value (US$ million)
Commodity 1	Miscellaneous manufactured articles	118.6
Commodity 2	Telecommunications and sound recording and reproducing apparatus and equipment	115.5
Commodity 3	Power generating machinery and equipment	73.1
Commodity 4	Articles of apparel and clothing accessories	10.1
Commodity 5	Photographic apparatus, equipment and supplies and optical goods; watches and clocks	10.1

Import Commodity	Commodity Detail	Value (US$ million)
Commodity 1	Iron and steel	277.7
Commodity 2	Petroleum, petroleum products and related materials	229.4
Commodity 3	Miscellaneous manufactured articles.	51.2
Commodity 4	Plastics in primary forms	14.1
Commodity 5	Power generating machinery and equipment	8.3