In February 1997, the League decided to create, by 2008, an Arab free trade area, also known as the Arab Arabia Free Trade Area or the Pan-Arab Free Trade Area. This would be achieved through a 10% annual reduction in tariffs and the phasing out of trade barriers. 18 of the 22 Arab League states signed the agreement, which came into force on 1 January 1998. The agreement aims to create a free trade area between The Member States, in addition to the increase in internal trade on the one hand, and the European Union on the other. In addition, industrial integration between the countries of the Arab Mediterranean will be improved by the implementation of the pan-Euro-Mediterranean rules of origin and by the application of the principle of origin. This will increase Member States` export capacity to the EU market and increase the attractiveness of foreign and European direct investment. The creation of this region supports the Arab business environment and the intra-Arab Arab trade movement, thus expanding the possibilities for integration between Arab markets. It is thus an advanced step towards Arab economic cooperation and investment in the trade opportunities available in Arab markets. The region should also insist on a cleaner investment environment to attract investment and joint ventures and improve the competitiveness of Arab products, as tariffs will be abolished, many procedures and charges of similar effect will be removed and non-tariff barriers will be minimized, the Arab intermediate. The region has been designated as a large-scale Free Trade Area (GAFTA) to distinguish it from country-based free trade zones. In 1981, an agreement was signed to facilitate and promote inter-arabian trade, but it had little effect.
The Arab League has a long history of trying to promote trade and economic cooperation between its member states, with several initiatives taken in the 1950s and 1960s. The Greater Arab Free Trade Area (GAFTA) is a panaraabe free trade area that was established in 1997. It was founded by 14 countries: Bahrain, Egypt, Iraq, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Sudan, Syria, Tunisia and the United Arab Emirates.   GAFTA was established following the adoption by the Arab League Economic and Social Council (ESC) of the “Agreement for facilitation and development of trade between Arab countries” (1981) and the agreement of seventeen Arab League member states at a summit in Amman, Jordan, on the “Great Arab Free Trade Agreement” (1997).