Trade

UK election adds urgency to GCC trade talks

April 25, 2024, 8:55 AM

UK Business and Trade Secretary Kemi Badenoch attended the sixth round of UK-GCC trade talks in Riyadh in February — The UK's Kemi Badenoch attended the sixth round of UK-GCC trade talks in Riyadh in February

An imminent general election in the UK and a potential change of government has accelerated pressure on negotiators to resolve talks about a GCC trade deal.

Talks between the six countries of the Gulf Cooperation Council – the UAE, Saudi Arabia, Bahrain, Qatar, Oman and Kuwait – and the UK are almost two years old.

The sixth round of meetings, which was attended by UK secretary of state for business, energy and industrial strategy, Kemi Badenoch, took place in Riyadh in February.

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The next UK general election must be held no later than January 28, 2025, although Prime Minister Rishi Sunak has said he expects to go to the polls “in the second half” of 2024.

“I’ve been told that we should expect an acceleration process due to the upcoming elections in the UK,” said Paula Boast, vice chair of the British Chamber of Commerce Bahrain (BCCB).

BCCB currently has a membership of 363 businesses and individuals operating in the kingdom.

In charts: How UK-GCC trade has soared

The UK government forecasts that a trade deal with the GCC could be worth nearly $2 billion more a year to its economy.

Boast revealed from the initial consultation of BCCB members at the start of the free trade agreement (FTA) discussions highlighted 142 key access barriers over trade that were causing concern.

The negotiating team was unable to say how many of these have since been resolved.

“The majority of them are very similar issues that are being experienced in the other GCC countries,” Boast said.

Previously it had been reported that stumbling blocks existed over a number of issues, including differing net-zero targets, agri-food import controls and intellectual property provisions across the GCC.

Speaking at the BCCB annual general meeting in Manama on Tuesday, Boast said that the emphasis for a FTA would be on trade and investment opportunities for small and medium sized enterprises (SMEs).

She said this change was “really valuable at this stage of the game” given what she highlighted was the increasing number of SMEs joining the organisation.

Currently SMEs make up two-thirds of BCCB members.

Bahrain was the UK’s 89th largest trading partner in the four quarters to the end of Q3 2023, according to the latest figures from the UK’s Department for Business and Trade, accounting for 0.1 percent of total UK trade.

Total trade in goods and services (exports plus imports) between the UK and Bahrain was £1.1 billion over that period, a decrease of 23 percent or £314 million in current prices from the four quarters to the end of Q3 2022.

“Obviously it’s not as big as some of our neighbours, but I think for British companies looking to come into the Gulf for the first time, I really think Bahrain is the best soft landing zone.

“The big companies are in the region already. The companies coming in will be the smaller companies, SMEs, innovative companies. For them I really do think that Bahrain is the happy compromise, the happy consensus,” said Iain Lindsay, a former UK ambassador to Bahrain and current advisor to the Economic Development Board (EDB) of Bahrain.

In July last year, it was announced that Bahrain’s private sector planned to invest more than £1 billion ($1.26 billion) into the UK, with the aim of driving greater cooperation in clean technology, business services and manufacturing.

Investments as part of the Strategic Investment and Collaboration Partnership are to be made through the kingdom’s sovereign wealth fund Mumtalakat, along with Investcorp, GFH Financial Group and Osool Asset Management.