GCC countries urged to stick together for UK trade deal

UK Department for International Trade

• Trade commissioner Simon Penney says GCC should seek joint deal
• Other attempts, such as GCC-India, have stalled
• UK believes multiple bilateral agreements is way forward

GCC countries negotiating with the UK for a free trade agreement must stick together as one rather than seeking individual national deals, according to the outgoing UK Middle East trade commissioner.

Trade talks between the six countries in the Gulf bloc – Saudi Arabia, the UAE, Kuwait, Qatar, Oman and Bahrain – and the UK are set to enter their fourth round in London next month.

Negotiations were launched in July last year and are scheduled to complete by the end of the year.

However, the UK’s International Trade Committee has voiced doubts about the ability to strike a deal with the alliance.

• UK debates merits of GCC bloc trade versus separate deals
• Andy Sambidge: GCC joint trade deals risk untenable delays
• UK-GCC trade in numbers: relationship set for new era

The committee ran from 2016 through to April this year. It was appointed by the UK’s House of Commons to scrutinise the spending, administration and policy of the then Department for International Trade.

“We question whether the UK should pursue a free trade agreement with the GCC as a bloc, or whether it would be more efficient, effective and in the interests of the UK to pursue tailored bilateral agreements with the individual GCC states,” the committee said in a report.

But Simon Penney, who is set to relinquish his role as trade commissioner to the Middle East in the summer, told AGBI: “Certainly all the businesses we talk to are strongly advocating for a GCC agreement, quite simply because it would reduce or eliminate all barriers to doing business across the Gulf.

“Bilateral agreements potentially introduce frictions that aren’t there today for companies that are exporting goods.”

During his tenure Penney has welcomed the UAE’s commitment to invest £10 billion via the UAE-UK sovereign investment package (SIP), overseen by the UK’s Office for Investment and Abu Dhabi-based sovereign investor Mubadala.

A five-year SIP with Qatar for another £10 billion investment into the UK was also agreed.

Business groups in the region are persisting even as they await news of Penney’s successor.

John Martin St Valery, board director for government relations at British Business Group Dubai and Northern Emirates, said: “Our relationship with the Department for Business and Trade is strong and we will continue to work closely for the benefit of our members while Simon’s replacement is in progress.”

Potential gains

The UK government forecasts that a trade deal with the GCC could be worth £1.6 billion ($1.99 billion) more a year to its economy.

Stumbling blocks remain over a number of issues, including differing net-zero targets, agri-food import controls and intellectual property provisions across the GCC. The Trade Committee also highlighted concerns over human rights, weak environmental standards and the absence of a uniform policy on services.

Joe Hepworth, CEO of trade support company British Centres for Business, conceded that progress on the signing of the GCC-UK FTA had been “limited”, although he stressed “FTAs are detailed and deliberate by nature” and so take a lot of time to work through.

Beyond GCC joint agreements, the UAE in particular has negotiated bilateral trade deals with 26 different countries.

A comprehensive economic partnership agreement with India was signed last year, and trade between the two countries increased to more than $84 billion from April 2022 to March 2023.

Meanwhile, free trade talks between the GCC bloc and India – first opened back in 2004 – remain stalled after two rounds of negotiations, the last in 2008.

UK secretary of state for business, energy and industrial strategy, Kemi Badenoch, visited the Gulf last month, joined by her counterparts from Saudi Arabia, the UAE and Qatar.

“There was a lot of optimism particularly from the secretary general and Saudi about the Gulf’s ability to get a GCC agreement done,” said Penney, who is standing down from his position after five years and moving into private equity for an unnamed UK fund that is looking to set up a capability in the Middle East.