As part of broader plans to expand and diversify its global trade partners and fulfil their respective national development strategies, the GCC has launched negotiations with the UK on a free trade agreement (FTA). This partnership is expected to strengthen the bloc’s economy, help attract investment and provide greater opportunities for local businesses. On June 22, 2022, the two parties signed a joint statement and officially launched talks on a comprehensive trade deal, with Anne-Marie Trevelyan, the then-UK secretary of trade, meeting with Nayef Falah Al Hajraf, the GCC secretary-general at the time, in Riyadh, before travelling to Dubai to meet with representatives from the six GCC countries: Bahrain, Kuwait, Qatar, Oman, Saudi Arabia and the UAE.
Partnership
GCC-UK negotiations are focused on securing an FTA that is expected to reduce or remove tariffs on a series of goods and services. The agreement would to be a substantial economic opportunity for the UK-GCC relationship, especially considering that in 2022 annual trade in goods between the GCC and the UK was valued at $42bn.
While there is no official timeline for the completion of the deal, negotiations are ongoing. The fourth round of talks was conducted in London in July 2023, and the fifth was held in Riyadh in November of that year in a hybrid fashion. The sixth round of negotiations between the entities was hosted in London between January and February 2024. A number of GCC negotiators travelled to London for in-person discussions while others attended remotely. Technical discussions covered 21 policy areas over 30 sessions.
In addition to the advancement of stronger ties with the UK, the GCC also has opportunities to deepen relations with the EU. In 2022 trade between the two blocs surpassed $183bn. As the EU is working to strengthen its engagement with the Gulf, GCC governments are encouraging swift, tangible action that goes beyond high-level visits, and are seeking assurances that this partnership extends beyond the EU’s immediate need for alternative energy sources to Russian fossil fuels.
Trade Footprint
The launch of free trade talks with the UK is a significant step for the GCC as the bloc seeks to diversify its trade partners and bolster its position in global trade. In addition to existing free trade deals with Singapore and the European Free Trade Association countries of Iceland, Liechtenstein, Norway and Switzerland, in September 2023 the GCC initialised an agreement with Pakistan. The bloc is also in trade talks with China, the EU, India, Japan, New Zealand, South Korea, Turkey and the Southern Common Market member countries of South America. Future agreements should play a key role in attracting foreign investment as GCC countries embark on transformation strategies to diversify their economies.
Bolstering Food Security
Free trade talks are expected to yield progress on agricultural imports and food security. Individuals involved in the discussions have flagged the possibility of the GCC reducing or removing tariffs on food and drink imports from the UK, which range from 5-25% for various products. In addition to supporting UK farmers, such a deal would help shore up food security in the GCC.
Following the disruption of global supply chains associated with the Covid-19 pandemic and Russia’s invasion of Ukraine in February 2022, food security has become a more pertinent issue for governments in the GCC – some of the world’s most import-dependent countries. At the start of the pandemic countries in the bloc imported around 85% of their food, and, according to a July 2023 report by Kuwait Financial Centre’s research subsidiary Marmore, the country imports around 95% of its food needs. GCC countries have reacted to recent events by increasing investment in agri-tech and improving efforts to bolster agricultural self-sufficiency, and any future agreement easing import food and drink imports from outside the GCC stands to benefit the bloc’s food security.
Read More from OBG
