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Sunday, 23 January 2022

What lies ahead for “Global Britain” and Gulf trade?

What lies ahead for “Global Britain” and Gulf trade?
Ian Black
Earlier this month the British government initiated a process of consultation with the Gulf Cooperation Council (GCC). The plan is to hold talks with GCC member countries to explore the possibilities of boosting trade and investment with what Conservative Prime Minister Boris Johnson has described as “Global Britain.”

The UK trade minister, Anne-Marie Trevelyan, is hoping to secure a deal with the GCC – comprising Saudi Arabia, the United Arab Emirates, Oman, Qatar, Kuwait and Bahrain - as she looks to build new ties around the world following Britain's departure from the European Union. Johnson won general elections in December 2019 on the punchy slogan of “Get Brexit Done.”

Trevelyan, who succeeded now-Foreign Secretary Liz Truss after a recent cabinet reshuffle, called on British businesses to share their views on what a deal should look like. "We want a modern, comprehensive agreement that breaks down trade barriers to a huge food and drink market and in areas like digital trade and renewable energy which will deliver well-paid jobs in all parts of the UK,” she said in a statement.

An agreement would be an advance on the relations Britain had as an EU member: the EU meets the GCC annually to build economic cooperation and develop closer trade and investment ties, but 18-year-long negotiations over an agreement have been stalled since 2008. The GCC has not implemented a free trade deal since 2015 and Britain has not set out a timetable for these new negotiations.
The EU vice-president, Josep Borrell, admitted on a recent visit to Qatar that Brussels needs to pay more attention to its own strategic interest in engaging with Gulf states.

By contrast, the UK already has close strategic and military ties with GCC members, and trade with the region was worth more than £30 billion in 2020. However, the pursuit of a formal deal could reignite domestic political concerns over which countries post-Brexit Britain is seeking to do more business with. The British government has faced long-running criticism from opposition MPS and campaigners who say billions of pounds of arms exports to Saudi Arabia are being used to breach human rights in Yemen. The sensitivity of this issue was underlined earlier this month when the Saudi-backed £305m takeover of Newcastle United went ahead despite Riyadh being accused of “sports-washing.”

And in a recent poll released on demand from Labour, the Department of International Trade revealed that just 27% of the British public would support a trade deal with the Saudi Arabia. That compared with 64% for both Australia and New Zealand, for example, and 57% for the US.

In mid-September the UAE’s Crown Prince Sheikh Mohamed bin Zayed visited the UK and met Boris Johnson and launched what they called a “Partnership for the Future” between their countries. The prime minister described them as “natural partners and allies, with a shared belief in harnessing the technologies of the future to address climate change, solve global issues and deliver prosperity for our people.”

The UAE, the Middle East’s second-largest economy, is already a key partner for the UK, with total trade between the two countries worth £12 billion in 2020. The message from Abu Dhabi is that it will continue to work through the GCC on trade talks but it is clear that it would also pursue its own negotiations to expand business with the UK. “Either track, the GCC track or the UAE track, is going to be started as early as 2022,” said Khaldoon al-Mubarak, the chief executive of Mubadala, the UAE’s sovereign wealth fund.

But in the big picture, the UK’s departure from the EU after 47 years is unlikely to have a dramatic impact on British economic ties to the Middle East and North Africa. In the majority of markets in the region, Britain has a long-established presence and links are maintained through active engagement by chambers of commerce, trade and investment bodies and embassies.

In a vivid indication of the British government’s view the Gulf is presented as a crucial element of post-Brexit commercial strategy. Saudi Arabia, the UAE and Qatar are expected to continue to be the main attractions, by virtue of their market size and their dominant positions in the oil and gas sector, which should enable them increase their market share even as decarbonization advances.

Another critical element is the Gulf’s diversification strategy so as a global centre for financial, legal and consultancy services the UK should be in a position to take full advantage of the ramping-up of institutions like the Saudi Public Investment Fund and UAE’s Mubadala – provided Brexit does not seriously impair the UK’s financial services sector.

“The nations forming the Gulf Cooperation Council are, together, one of our biggest trading and investment partners and are home to over 50 million people,” International Trade Minister Ranil Jayawardena said: “From exports of Welsh lamb and Scotch beef, to biscuits from Belfast and financial services from the City of London, we are determined to strike a deal that will further cement our relationships, attract investment, promote trade opportunities and provide significant benefits for British business, creating jobs in communities across the country.”
Let’s hope Jayawardena is not exaggerating the post-Brexit opportunities of “Global Britain” - or indulging in wishful thinking!