Britain is launching talks on Wednesday for a comprehensive free trade deal with Gulf Co-operation Council countries, aimed at boosting their economies and taking businesses to the next level.
UK Trade Secretary Anne-Marie Trevelyan is in the Saudi capital Riyadh to meet GCC Secretary General Dr Nayef Falah Al Hajraf.
The trade secretary expects the “hard yards of negotiations” to begin right away with the goal of striking a comprehensive free trade agreement with the GCC in sight.
Ms Trevelyan is then heading to Dubai on Thursday as she opens the initial talks to strike a deal with the six GGC countries, which follow months of exploratory discussions. The discussions have involved Downing Street and the Foreign Office, and the Department for International Trade has now put negotiations on a formal footing.
“We have done a lot of preparation work to get to this point so we are starting with a blank canvas,” said a British trade official. “The hard yards of negotiations will start now”.
It is expected that the bargaining for a deal that benefits both sides will be concluded within a year, the official said.
“The Secretary of State has been quite pragmatic on how long these negotiations will take. She's looking for a comprehensive, modern and forward leaning FTA [Free Trade Agreement] and she hopes that we can reach agreement quite quickly.”
No formal deadline has been set but both parties want to move quickly on a deal.
It is understood that the GCC countries are “really warm” to a deal and both sides are “pushing hard” to get an agreement signed by 2023.
A free trade deal would reduce or remove tariffs on UK food and drink exports. Current rates range from 5 per cent to 25 per cent on various food products.
An FTA would also boost investments in the renewable energy sector to help reduce carbon emissions.
The British official is planning to meet her counterparts from the other GCC countries; the UAE, Bahrain, Kuwait, Oman and Qatar.
The talks are expected to culminate in a trade deal worth an estimated $1.9 billion a year to the UK economy.
“From our fantastic British food and drink to our outstanding financial services, I’m excited to open up new markets for UK businesses large and small, and supporting the more than 10,000 SMEs [small and medium enterprises] already exporting to the region,” Mrs Trevelyan said.
The UK economy has been struggling with the global fallout from the Russian invasion of Ukraine in February. Inflation has hit a 40-year high of 9 per cent amid the rising cost of living, triggered in recent months by fuel and energy price rises.
Last week, sterling sank below $1.20 — its lowest level since the start of the pandemic in 2020.
The UK economy was slowly recovering from the shock of Covid-19 but other challenges including Brexit and global supply chain disruptions have taken their toll. Last February, the Office for National Statistics in the UK said the economy recorded its worst performance for more than 300 years in 2020.
A UK-GCC deal would mean significant benefits for British farmers and producers, as the Gulf is highly dependent on imported food, and would create more job opportunities as well as increase investment in the UK and GGC countries.
Gulf investments supported over 25,000 UK jobs in 2019 — three times the number of jobs a decade earlier, according the latest official UK data.
More joint projects would develop new technologies that increase energy efficiency in homes, buildings and businesses.
“It is also extremely helpful that the UK and GCC are committed to work towards seeking the opportunities from ‘green innovation’, which will bring significant opportunities for Britain’s innovative renewable energy companies which are already leading the way in this area of global concern,” said Stephen Phipson, chief executive of Make UK, an umbrella organisation which represents manufacturers across the UK.
“We look forward to working with government to make sure manufacturers large and small are able to benefit from the business possibilities this deal will open up.”
About 10,700 SMEs from the UK exported goods to the GCC in 2020, with SMEs accounting for more than 85 per cent of total UK goods exports to the UAE, Saudi Arabia and Qatar, according to official UK data.
Last month, the European Union unveiled a new overarching strategy for its future relationship with GCC states, covering everything from global security and trade to the green transition and digitalisation.
Andrea Matteo Fontana, the European bloc's ambassador to the UAE, told The National that the plan was the first strategy of its kind between the two groups.
The UK officially left the EU in 2020, four years after a public referendum on its membership of the bloc. It has started talks on free trade agreements with other countries, including the US, Australia and New Zealand.