The GCC Customs Union (CU) was officially launched on 1 January 2003, based on the following principles:

1. • a Common External Tariff (CET) for products imported from outside the GCC;

2. • a Common Customs Law (effective since 2002) and unified customs regulations and procedures;

3. • a single entry point where customs duties are to be collected;

4. • elimination of all tariff and non-tariff barriers on intra-GCC movement of goods; and

5. • National treatment of goods produced in any of the GCC states.

From gradual to full implementation by 2010, the GCC CU has set a CET of 5 per cent applicable to all imported foreign goods. About 939 commodities (live animals; fresh and chilled meat and fish; fresh vegetables and fruit and cereals; medicine and medical supplies; books; newspapers and magazines; and vessels and commercial aircraft) are exempted from this list. Meanwhile, a 100 percent duty rate is imposed on tobacco products and special goods whose importation is prohibited in some, but permitted in other member states. Individual customs administrations apply a common customs law, implementation rules, and explanatory notes. The customs law unifies customs, financial, and administrative regulations on importation, exportation, and re-exportation, and covers exempted goods and principles to determine the value for customs purposes.

In 2008, the 45th meeting of the GCC Customs Union Committee assessed the obstacles to the full implementation of a Customs Union. A key challenge identified was the lack of proper procedures and mechanisms in customs revenue collection and distribution. The meeting found that current GCC customs inspection procedures were below the level required to move forward to the next stage (i.e. a Common Market). A study by the Secretariat General put forward a controversial proposal to distribute customs revenue collected by a single entry point according to the final destination of the goods, within a three-year transition time frame. However, the GCC Customs Federation asked the Secretariat General to conduct another study.