The greater interconnectedness of the global economy has recast the relationship between nation states. While progress towards free, untrammelled trade on a multilateral basis has stalled, bilateral and, increasingly, regional, economic, and political groupings have become more prevalent as a means to reap the gains of free trade. The Gulf Cooperation Council (GCC) is such a group, and one whose importance extends far beyond the Gulf. Its membership includes some of the world's fastest growing economies, which together possess a significant share of the globe's oil and gas reserves.

This report looks at the structure and evolution of the GCC from an ASEAN perspective. It sets out the group's membership, as well as its strategic and economic importance. From there, it traces the organization's evolution before assessing its progress towards a customs union, common market, and monetary union. It then maps out the key challenges facing the Council's progress towards economic integration, before concluding with lessons that are applicable to ASEAN and its members.

Despite its small population of forty million people, the Council's six members — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates — have a combined GDP of more than US$1.1 trillion and possess more than half of OPEC's oil reserves. However, in spite of high levels of per capita income, the member states are quite poorly diversified, relying excessively on hydrocarbon resources. Established in the wake of the 1970s oil crisis, the Iranian Revolution, and various regional conflicts, the GCC aimed to promote economic integration among member states and promote several social and political initiatives as a means of contributing to greater stability in the region. Since its inception in 1981, the Council has adopted a steady, albeit gradual, pace towards economic integration.

Originally conceived as a free trade area, the GCC has expanded its aims to encompass a common market and monetary union. In its pursuit of these goals, the Council has had to manage a range of issues that are familiar to the ASEAN region. These include: reconciling tensions between complementarity and competition among member states; articulating the group's collective identity; encouraging member states to engage in free trade negotiations as a collective entity; developing crisis management mechanisms; encouraging job creation and human resources development; and fostering science and innovation.