Scotland eyes big export boost from UK-Gulf trade talks

Creative Commons/Ian Dick

• Scottish businesses have high hopes for free trade deal with GCC
• Food, financial services and renewables among key export sectors
• Scotland aims ‘to be one of Europe’s leading hydrogen nations’

Just under $1 billion (about £800 million) of Scottish goods were sold to the GCC in 2021, with exports led by beverages, industrial machinery, financial services and technical services.

So, talks for a free trade deal between the UK and the Gulf countries – which began on June 22 – offer “massive potential”, according to Malcolm Offord, minister for Scotland in the UK government.

An agreement with the GCC could boost the Scottish economy by more than £270 million, the UK government estimates.

“Reduced tariffs could help us export more great Scottish produce, getting beef reared in Aberdeenshire onto supermarket shelves in Abu Dhabi,” Offord said.

Tariffs that could be slashed include cereals, currently up to 25 percent; chocolate, up to 15 percent; baking products, up to 12 percent; sweet biscuits, up to 10 percent; and smoked salmon, which has a five percent tariff.

“Our world-class services sector and thriving digital businesses would also stand to benefit, helping grow our economy and support Scottish jobs,” Lord Offord added.

Dr Liz Cameron, chief executive of the Scottish Chambers of Commerce, also pointed to the potential for a trade deal “to significantly boost Scottish exports, particularly in services and emerging technology”.

She told AGBI: “Many of the Gulf states are already large markets for Scottish exporters and if a comprehensive free trade agreement covering all six Gulf states can be reached, it could be a great success for the Scottish economy and create opportunities for growth and inward investment.”

Cameron, who also serves as a GlobalScot trade ambassador, added: “Stronger foundations for access to Gulf product markets, more predictable regulatory practices, and lower tariffs would also benefit Scottish machinery, automotive and food exporters.”  

Yes to salmon and shortbread, but finance and tech too

A UK-GCC deal could bring significant benefits for farmers and producers, as the Gulf is highly dependent on imported food. 

British food and drink exports to GCC countries were worth £625 million last year, and a deal could significantly reduce or remove tariffs on those exports.

One Scottish company that is set to benefit is Walker’s Shortbread, an Aberlour-based business that already exports to all six member states of the GCC.

Alastair Walker, head of international sales at Walker’s Shortbread, said: “Walker’s Shortbread has been exporting to GCC countries since the 1970s. Our business has steadily grown, particularly in the UAE, Qatar and Kuwait.

“We have a diverse product range across grocery, retail, global travel retail and food service. This region is integral to Walker’s plans for future growth.”

In 2021, 300 Scottish businesses exported goods to Qatar alone and it is hoped that a deal could allow more companies to start trading in the region.

Financial and insurance activities account for about 35 percent of Scotland’s services exports, so a deal with the GCC could open doors for Edinburgh and Glasgow’s thriving tech and digital hubs.

Scottish Chambers of Commerce has recently appointed a new international trade director to drive expansion across the world, including the Gulf region.

Seona Shand will lead on the production of a new model of trade support services, maximising international relationships with the global Chambers of Commerce network.

World-leading expertise in wind power

Scottish renewable energy businesses will also play a role in supporting GCC countries as they seek to diversify away from a reliance on oil.

The UAE, for example, has set a target of generating 50 percent of its electricity from renewable sources by 2050. Exports of UK wind turbine parts currently face tariffs of up to 15 percent.

RenewableUK’s CEO Dan McGrail said: “The global transition to clean energy includes countries throughout the Middle East, which are seeking to make the most of their excellent renewable resources such as solar and wind. The UK is already exporting goods and services to the region – providing, for example, expertise in onshore wind.

“As a global leader in wind, marine energy and green hydrogen, we’re perfectly placed to help other countries to accelerate their efforts to decarbonise their energy systems – and to boost our own economy by exporting around the world.”

Expo 2020 springboard

Scotland recently used the platform of Expo 2020 Dubai to build on bilateral relations. The UAE is currently Scotland’s 12th biggest export market, not including oil and gas, centred predominantly on tourism, food and drink, engineering and manufacturing. 

The trade talks with the GCC are the preserve of the UK government rather than the devolved administration in Edinburgh, but Ivan McKee, minister for business, trade, tourism and enterprise in the Scottish government, was part of Expo discussions on sectors where Scotland is a global leader.

These include space, digital health, renewable energy, life sciences, food and drink and technology.

McKee said: “Scotland is home to companies and academics with the ambition and capability to capitalise on global opportunities.

“At Expo, we showcased our world-leading potential in the fields of space, digital health and wellbeing, and the race to net zero via hydrogen and climate tech innovations.”

On the journey to net zero, he added: “We have the ambition, skills and talent to be one of Europe’s leading hydrogen nations and a world-class energy supply chain to deliver that potential.” 

Scotland’s international trade and investment agency, Scottish Development International, has offices in more than 30 locations around the world, including Abu Dhabi and Dubai.

Last year, Seafood Scotland, which also has a dedicated Dubai office, said it was looking to expand trade links with the Middle East following the UK’s departure from the European Union.

The organisation added that it was in talks with Edinburgh airport to leverage growing freight links between Scotland and Gulf countries.

Adam Wing, head of trade marketing for the UK, Americas and new markets at Seafood Scotland, said: “Historically, our focus for quality Scottish seafood exports to the Gulf has been the UAE due to the sheer array of premium foodservice offerings and straightforward supply chain.

“But with a trade deal and other factors including the growth of the travel and leisure market in Saudi Arabia, we see a lot of potential for future partnerships in the region.

“Gulf consumers demand quality and that’s why Scottish food and drink is such an easy sell in the region.

“We would very much welcome a GCC-UK trade deal and will be working in partnership with Scottish Development International and the [Department for International Trade] to support exporters to reach their full potential in the Gulf.” 

India, Canada, Mexico … and now the Gulf

The UK’s trade secretary, Anne-Marie Trevelyan, officially launched the UK-GCC negotiations in Riyadh, which are expected to culminate in a deal worth £1.6 billion more a year to the UK economy as a whole.

It is the fourth major free trade agreement launched by Trevelyan this year, following India in January, Canada in March and Mexico last month.

The UK’s trading relationship with the Gulf was worth £33.1 billion last year alone. The UAE was the UK’s 24th largest trading partner, accounting for 1 percent of total UK trade.