Trade with the Gulf region is “vital” for the UK economy, according to a top official, as a Joint Trade and Investment Review (JTIR) gets under way to help establish a free trade agreement between the regions.
Simon Penny, a Department of Trade commissioner for the Middle East, said trade between the UK and the Gulf Co-operation Council (GCC) hit almost £45 billion ($60.42bn) last year, making it a key investment partner for post-Brexit Britain as the country nears its exit from the European Union.
“The Gulf is the UK's third largest export market outside of Europe, behind the US and China, so trade with the Gulf is vital to the success of the UK economy as it is for each member state," Mr Penny told delegates attending an Arab-British Chamber of Commerce (ABCC) webinar on Wednesday.
“Mutual investment is an important part of strategic collaboration. The UK is already a significant investor in the GCC and likewise the GCC is a key investor in the UK, with an estimated £125bn already invested in the United Kingdom from across the Gulf.”
The UK and GCC are now looking to build closer ties as the December 31 deadline for Britain's exit from the EU draws nearer. Earlier this month, UK Prime Minister Boris Johnson unveiled a new office for investment, led by Lord Gerry Grimstone, which aims to help the UK government land high-value opportunities.
These must align with key government priorities such as sustainable energy, advanced manufacturing, electric vehicles and major infrastructure projects, said Mr Penny.
Meanwhile, the recently set up JITR will help pave the way towards a free-trade agreement as the UK and GCC look to iron out any challenges.
“The JITR will elevate our engagement with the region and set out a road map for our future trade policy,” said Mr Penny. “Its conclusion is not the end goal but the start of us deepening our relationship.”
Mr Penny said the review is being led by the Gulf, and will stand as the starting point for discussions.
“The JTIR is very much a precursor to potential future trading policy arrangements that we may or may not proceed on,” he said. “It’s analytical and identifies many of the areas that you would look at for a free-trade agreement, but it is not at this stage a free-trade agreement discussion.”
Baroness Elizabeth Symons, a former UK trade minister and the chairwoman of the ABCC, said it can take years for trade agreements to be reached and advised that Memorandums of Understanding can be useful in the circumstances.
Last month, Ranil Jayawardena, the UK Minister for International Trade visited the UAE to lead the UK/UAE Joint Economic Committee as the two countries looked to forge closer links.
UAE Minister of Economy Abdulla bin Touq Al Marri said earlier this month that the committee allowed the two countries "to explore the development of a road map for enhancing co-operation across priority sectors, including trade investments".
Mr Jayawardena said on Wednesday that the UK was committed towards building “a deeper and more integrated relationship with the Gulf” as it looks to share “its world-class expertise with the region”.
However, he stressed that it was vital the UK government was alerted of any challenges businesses face in their trading relationship with the region as it undertakes the JITR to ensure they could be addressed. That way, the government can offer “confidence to British businesses” as the UK exits the EU, he said.