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Gulf states urge UK to move forward on free trade talks

Forbes | 10 March 2021

Gulf states urge UK to move forward on free trade talks

by Dominic Dudley

Gulf states are pushing the U.K. to launch negotiations on a free trade deal but London is showing little interest in prioritizing the issue, despite the region accounting for a substantial chunk of total U.K. trade.

The idea of a free trade deal came up at a meeting between the U.K.’s Middle East minister James Cleverly, trade minister Ranil Jayawardena and representatives from the six Gulf Cooperation Council (GCC) states on 22 February, alongside other topics such as preparations for the COP26 environmental summit in Glasgow in November. Also on the agenda was the U.K.-GCC joint trade and investment review which began in November and which is expected to wrap up this summer.

The U.K.’s trade with the six GCC countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – is worth around £45 billion ($62.5 billion) a year. That makes them the fourth largest trading partner for the UK, after the U.S., the E.U. and China.

However, efforts by some Gulf countries to persuade Prime Minister Boris Johnson’s government to launch free trade talks in the near future appear to have met with some resistance.

“What we suggested was let’s work alongside the review. Let our negotiators start talking and by the time the review [is completed] you will have a clearer picture of what to expect,” said Bahrain’s ambassador to the U.K., Fawaz bin Mohammed Al Khalifa. “The U.K. made it clear that … they’re going to wait for the review to be completed by June.”

The Gulf countries may have to wait for longer than that though. London is still focused on rolling over trade deals which it had benefited from as a member of the E.U. but which have lapsed as a result of Brexit. A U.K. government source says other trade deals will follow “in due course” and indicates that a trade deal with the GCC is just one of a number of options it might explore, depending on the outcome of the joint review (the results of which seem unlikely to be published).

This represents a notably less enthusiastic tone than that adopted by Johnson’s predecessor Theresa May who said in December 2016, while on a trip to the Gulf, that she wanted to “forge a new trade arrangement for the whole of the Gulf area”.

In a further effort to push the process forward, Bahrain has drawn up a ‘white paper’ with its thoughts and expectations on what might be included in a free trade agreement (FTA). Others have not been quite so driven. “We’re still waiting for the other countries to do the same,” said Al Khalifa.

The GCC’s ability to act as a single unit is often questionable and there have been few instances where it has successfully concluded an FTA. Deals with the four countries of the European Free Trade Association (EFTA) and Singapore are among the few it has successfully concluded.

Others have failed over political considerations. Free trade talks between the GCC and the U.K.’s erstwhile partners in the E.U. were launched in 1990 but failed to progress due to Europe’s insistence on including human rights clauses; the talks ended in 2008 without a deal. Similarly, free trade talks with Australia began in July 2007 but ended two years later without an agreement.

In order to skirt thorny human rights issues, the GCC may try to sign a very limited FTA with the U.K. which can then be built on by individual countries in bilateral deals with London.

“I think there are different ways of doing an agreement,” said Al Khalifa. “One of the ways that wasn’t discussed is maybe a general sort of free trade agreement that will be acceptable to all. And then maybe a more bilateral agreement with countries that have an appetite to do more.”

It is not clear what attitude the U.K. will take to the issue of human rights in any free trade negotiations, but a limited deal is, by definition, likely to have limited appeal.

 source: Forbes