Trade

UK-GCC free trade deal is still best bet, says minister

November 22, 2023

GCC leaders gathered in Riyadh last month. Free trade talks with the UK are continuing

Talks began in July 2022
Stumbling blocks remain
Bilateral deals can follow

Britain’s investment minister has told AGBI he still supports a free trade agreement between the UK and the GCC, despite the protracted negotiations and calls for Gulf states to strike bilateral deals instead.

Speaking on the sidelines of the Arab British Economic Summit in London on Monday, Dominic Johnson, a minister of state in the UK’s Department for Business and Trade and a member of Britain’s House of Lords, said he believed a GCC-wide deal would be the “best approach”.

“What history has shown is that the bigger area that you can access, with the most reduced level of tariffs and the most commonised version of standards, the easier it is for companies to digest,” he added.

The UK-GCC free trade talks began in July 2022 and were due to be completed by the end of 2023, but stumbling blocks remain on a number of issues.

The fifth round of talks took place in Riyadh last week and more negotiations are expected.

Johnson said a GCC-wide agreement would “cover goods and services up to a certain point”, but should not prevent the UK and individual Gulf states from pursuing bilateral deals in parallel.

“Then yes, absolutely, specific country-by-country relationships – again where the strengths lie between our economies – is completely right to explore.”

He gave the example of how Saudi Arabia – a backer of UK football clubs, critical infrastructure and other sectors – is having “lots of good talks” with him about other investments.

Lord Johnson, pictured with business and trade secretary Kemi Badenoch, said he expected 'cool deals' at the UK's upcoming investment summit — Lord Johnson, pictured with business and trade secretary Kemi Badenoch, said he expected ‘cool deals’ at the UK’s upcoming investment summit

Johnson said the British government was “extremely keen” to sign a strategic investment partnership with the kingdom, as it has done with other Gulf states.

“I don’t know what structure it would take because each country has its own unique relationship with the UK. It’s not just a question of cranking out an MoU. It’s very specific.”

Total trade between the UK and GCC countries rose by more than 70 percent to £64.5 billion ($82.7 billion) in the year to the end of March.

Tom Wintle, the UK’s chief negotiator in the free trade talks with the GCC, told the London summit that demand for international goods and services was growing at a rapid pace in the Gulf. Demand is forecast to reach $1 trillion by 2035.

“So, the economic opportunity for businesses is absolutely clear and, in particular, the opportunity to grow transformational technologies like e-commerce and AI,” he said.

Wintle would not be drawn on a timeline for concluding the talks, however, saying: “It’s fundamentally about the deal, not the date.”

Gulf countries are also expected to play an important role at the Global Investment Summit to be hosted by the UK government on November 27.

Johnson said some “serious heavyweights” from the region were due to attend and “cool deals” related to areas such as manufacturing plants and pension funds were likely to be announced.

“It’s a huge honour for us, particularly in the case of the UAE as they’ll be hosting Cop28 two days later.”