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UK exports to Arab countries up 20% to $38bn in 2022

Simon Penney has been the UK's HM trade commissioner for the Middle East since 2018
Simon Penney has been the UK's HM trade commissioner for the Middle East since 2018
  • Simon Penney spoke at second Arab British Economic Summit
  • UK exports to Arab League reached £28bn in 2021
  • Negotiations for an FTA are ongoing

The UK’s exports to Arab countries have posted a 20 percent year-on-year increase, standing at £33.6 billion ($38.26 billion), and are expected to rebound to pre-pandemic levels.

“While exports have remained broadly flat between 2020 and 2021, we have seen a 20 percent recovery so far this year and we anticipate that our total trade this year should be bordering on the levels last seen in 2019,” Simon Penney, HM trade commissioner for the Middle East, told delegates while delivering the opening remarks at the second Arab British Economic Summit held in London on Wednesday.

“Our exports to the region were negatively impacted unsurprisingly by Covid – falling approximately 20 percent since 2019.”

UK exports to the Arab League totalled £28 billion last year. Of this, £22.4 billion of all UK exports went to the GCC.

“Trade is not one-way – it’s not about the UK trying to sell exclusively to consumer markets,” Penney said. “This is about both the UK and every country in the Arab world working to develop both of our economies in partnership.”

He added that total UK exports to non-GCC countries in the Arab world have declined over the last ten years, apart from Morocco and Jordan.

By contrast, the UK and GCC countries have been steadily bolstering trade ties.

The GCC currently ranks as the UK’s third-largest export market, after the US and China.

The GCC and UK are currently pursuing plans to sign a free trade agreement (FTA), with the first round of talks having been concluded at the end of September, which Penney said “went as well as we could have hoped for them to go”.

Prior to the talks, the UK government launched an official consultation process with both UK and Gulf companies, as well as all interested stakeholders, to give them the opportunity to provide their input.

“We’ve now got a fairly comprehensive database of what companies would like to see and what would benefit them,” Penney said. “So this is not something we’re developing in a vacuum – it remains an open process.”

Tom Wintle, the UK Department of International Trade’s chief negotiator for the UK-GCC FTA negotiations, was in Qatar last week and will be visiting Oman next week to continue discussions.

According to Penney, the second round of talks are expected to commence this year. However, he would not be drawn on whether the end of 2023 – the current targeted date for signing the FTA – is a realistic goal.

“I think it’s always dangerous to say ‘it’s going to be done by then’ because it’s an artificial line in the sand which doesn’t serve either side any real benefit, apart from providing a bit of motivational focus,” he said.

“So far, there’s been a fairly consistent Gulf-wide approach to the areas we discussed in round one. Really encouragingly, all of the Gulf countries see themselves as actors on a global stage.

“I can’t speak on their behalf, but I can speak on the UK government’s behalf, and we have the resources, the desire and the ambition to do it as quickly as possible.”

UK government analysis shows that an FTA with the GCC is expected to boost trade by at least 16 percent, add at least £1.6 billion a year to the British economy and contribute an additional £600 million or more to UK workers’ annual wages.

Penney highlighted technology as a potential growth area and noted how the prospects for UK companies operating in the health tech, fintech and ed (education) tech sectors were particularly promising.

Clean and renewable energy will also be a key area for partnership, with Penney believing that the current energy crisis strategies being put forward by the UK government – most notably an increased windfall tax and privatisations of energy companies – will not deter Arab investment in the UK’s energy sector.

“There’s now a much higher level of ambition to invest in tech and renewable industries that are going to fundamentally drive Gulf economies in the future,” Penney said.

“Indeed, we’ve seen this enshrined in the sovereign investment partnerships (SIPs) that GCC states have signed with the UK.

“These are industries that are in their infancy which means no one country has the answers or solutions.

“The UK holds a huge amount of R&D and intellectual property in relation to hydrogen, carbon capture, solar and wind industries.

“But the UAE and Gulf have a lot of answers to our problems as well. So we’re working jointly to solve global challenges – energy transition being one of them.

“The Gulf countries have a lot to help and teach us. It’s about partnership – not just selling and buying.”

Penney points to UK partnerships that have already been formed with the UAE’s Masdar, as well as through the Abu Dhabi National Oil Company’s (Adnoc) arrangements with BP.

“They’re looking to partner over the longer term,” he said. “The current challenges in the energy market are more short-term issues – the future fundamental need will override these.

“It’s a case of investing in the technologies that are going to drive both Gulf economies and the UK economy of the future.”

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