- Talks kick off in Riyadh to strike a trade deal with countries covering £33.1bn of trade
- UK food and drink, manufacturing and renewable energy sectors would benefit from a new deal between the UK and the Gulf Cooperation Council
- Landmark deal would add at least £1.6bn a year to the UK economy and support new jobs in key industries
Trade Secretary Anne-Marie Trevelyan is today (Wednesday 22 June) launching free trade talks between the UK and the Gulf Cooperation Council (GCC), made up of Bahrain, Kuwait, Oman, from Qatar, Saudi Arabia and the United Arab Emirates.
Equivalent to the UK’s seventh-largest export market, the GCC bloc’s demand for international goods and services is expected to grow rapidly to reach £800 billion by 2035, an increase of 35%, opening up huge new opportunities for UK businesses.
A free trade agreement would also open the door to increased investment from the Gulf, supporting and creating jobs across the country.
During a visit to Riyadh, Saudi Arabia, the Secretary of State will meet with the Secretary General of the GCC, Dr. Nayef Falah M. Al-Hajraf, and his counterparts from the six GCC countries, to launch talks which are expected to reach a conclusion. to a trade deal worth £1.6bn a year more to the UK economy.
This is the fourth major round of free trade agreement (FTA) negotiations launched by the Commerce Secretary this year, following visits to start talks in India in January, Canada in March and the launch of negotiations with Mexico last month.
UK Trade Secretary Anne-Marie Trevelyan said:
Today marks the next important milestone in our 5-star business year as we strengthen the close relationship between the UK and the Gulf.
Our current trading relationship was worth £33.1 billion last year alone. From our fantastic British food and drink to our exceptional financial services, I am delighted to open up new markets for British businesses large and small, and to support the over ten thousand SMEs already exporting to the region.
This trade deal has the potential to support jobs from Dover to Doha, grow our national economy, create vital green industries and deliver innovative services to the Gulf.
A deal between the UK and the GCC would mean significant benefits for UK farmers and producers, as the Gulf relies heavily on imported food. UK food and drink exports to GCC countries were worth £625million last year, and a deal could significantly reduce or remove tariffs on UK food and drink exports.
Tariffs that could be reduced include cereals, which are currently subject to a tariff of up to 25%; chocolate, up to 15%; bakery products, up to 12%; sweet cookies, up to 10%; and smoked salmon, which is currently subject to a 5% tariff.
With nearly £30 billion already invested in everyone’s savings, this deal would also help open up even more investment opportunities between the UK and GCC countries.
Gulf investments supported more than 25,000 jobs in the UK in 2019 – a number which has tripled over the previous decade – and analysis shows that the East Midlands, West Midlands, North East and Yorkshire and the Humber will be in line for the biggest proportional gains when the ink dries on a new deal. The deal is also estimated to boost the economies of Scotland, Wales and Northern Ireland by almost £500m collectively.
Stephen Phipson, CEO of Make UK, the manufacturers’ organisation, said:
We welcome the launch of free trade negotiations with the Gulf Cooperation Council, bolstering trade opportunities that will ensure that UK industry benefits from future positive flows of goods and services into the Gulf region.
It is also extremely helpful that the UK and the GCC are committed to pursuing the opportunities of ‘green innovation’, which will provide significant opportunities for innovative UK renewable energy companies that are already leading the way in this area of global concern. We look forward to working with the government to ensure that manufacturers large and small can benefit from the commercial opportunities this agreement will open up.
Around 10,700 small and medium enterprises from all countries and regions of the UK exported goods to the GCC in 2020, with SMEs accounting for over 85% of total UK goods exporters to Qatar, the Saudi Arabia and the United Arab Emirates.
Co-founder and director of Spice Kitchen, an SME exporter based in Liverpool, Sanjay Aggarwal said:
We went to Gulfood with DIT on a research mission and from there we know there is a huge market for our products like our spice boxes and unique spice blends in the gift space top of the line.
It is so important for our business to be connected to the GCC and it allows us to grow rapidly in exciting ways that we never thought possible. We are in the process of identifying retailers in the Gulf, including the United Arab Emirates, Saudi Arabia and Qatar.
A strong trading relationship would allow the UK to capitalize on our strengths as a manufacturing powerhouse and global leader in technology, cybersecurity, life sciences, creative industries, education, AI, financial services and renewable energies.
UK companies in these industries will also play a role in supporting GCC countries as they diversify their economies away from dependence on oil and towards other sectors. The United Arab Emirates, for example, has set a target to produce 50% of its electricity from renewable sources by 2050. Exports of wind turbine parts from the UK are currently subject to tariffs of up to 15% .
RenewableUK CEO Dan McGrail said:
The global transition to clean energy includes countries in the Middle East looking to make the most of their excellent renewable resources such as solar and wind power.
As the world leader in wind, ocean and green hydrogen, we are uniquely positioned to help other countries accelerate their efforts to decarbonize their energy systems – and to boost our own economy by exporting all over the world.