The UK has agreed an “historic multibillion-pound trade deal” with the Gulf Cooperation Council (GCC).
The agreement – with the group consisting of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – will boost the UK economy by an estimated £3.7bn a year and remove £580m in duties annually, representing a removal of 93% of GCC duties on UK exports to the region.
The government says £360m of duties will be removed on day one, with the remainder removed once the deal is fully implemented. Food exports, medical equipment and advanced manufacturing were highlighted as product-types that the deal will most benefit.
The deal also includes “the most ambitious commitments on customs procedures the GCC has ever signed up to”, with clearance to be completed on goods within 48 hours and shipments of perishable items cleared in under six hours when requirements are met.
There are also “first-of-its-kind” commitments on the free flow of data and easements for services firms, “making it easier for UK companies to expand and partner” in the region.
Deal welcomed by PM and industry
Prime minister Sir Keir Starmer praised the deal, saying “the Gulf states are valued economic partners and this agreement deepens that relationship, building trust and unlocking new possibilities for trade and investment”.
Marco Forgione, the director general of the Chartered Institute of Export & International Trade, also welcomed the deal.
“By reducing tariffs, streamlining regulations, and enhancing cooperation on standards and investment, the deal will drive sustainable growth, create high-value jobs across the UK, and strengthen supply chain resilience for both sides.”
You can read his full response here.
Human rights and environmental concerns
The deal has its critics, however, with the Trade Justice Movement telling the BBC that it "poses serious risks to human rights, labour protections and climate action".
The campaign group raised concerns about the GCC’s use of the death penalty, its high greenhouse gas emissions and press restrictions.
The deal "locks the UK into deeper commercial ties with some of the most repressive governments in the world, for economic gains so marginal they barely register,” the group said.
Sanctions latest
In other trade news, the British government has been criticised for its decision to ease sanctions on jet fuel and diesel made using Russian crude oil, Politico reports.
The decision has been made in the wake of the disruption caused to the energy market by the closure of the Strait of Hormuz and the wider conflict in the Middle East. The easement was not formally announced by the government and Ukraine was not warned about it, an anonymous source told Politico.
“We’ve handled this clumsily and that is entirely my fault and I apologise,” trade minister Sir Chris Bryant said yesterday. “We could definitely have communicated this better.”
Bryant said that the UK’s wider ban on refined products made with Russian crude oil would “strengthen” the country’s sanctions regime, however.
The leader of the opposition, Kemi Badenoch, said the move was “insane” at yesterday’s Prime Minister’s Questions (PMQs).
Starmer, in response, said that the “two targeted, short-term licences” would “protect UK consumers”.
The debate comes shortly after the Office of Financial Sanctions Implementation (OFSI) posted a notice confirming that Deutsche Bank AG London Branch had been given a £165,000 fine for breaching financial sanctions imposed on Russia.
Food tariff cuts part of chancellor’s ‘GB summer savings scheme’
Chancellor Rachel Reeves is set to launch the ‘Great British summer savings scheme’ to cushion the blow that consumers could face later this year because of inflation stemming from the Iran war.
The Guardian reports that the package will include plans to remove tariffs on imports of various food products, including “biscuits, chocolates and dried fruits”. The Treasury will consult on the details of this list, it adds.
Reeves has stepped back from plans to persuade supermarkets to set cheaper prices on basic foods following criticism from the industry.
The package comes shortly after Starmer confirmed that the government will again postpone the hike to fuel duty that had been slated for September and that it will give hauliers a one-year “vehicle tax holiday”.
“We are giving our hauliers a 12-month vehicle tax holiday, helping to keep prices down, and we are backing drivers by extending the freeze in fuel duty for the rest of the year,” he said at PMQs.
Also in the trade news
· Iran is consolidating control of the Strait of Hormuz and enforcing a “multi-tiered system for clearing vessels” transiting the passage, Reuters reports
· UK business activity fell in May – the first monthly fall in over a year – due to uncertainty in the Middle East, according to the FT
· The EU is racing to finalise a revamped trade deal with Mexico ahead of a summit in Mexico City that’s starting tomorrow, Euractiv reports
Yesterday in trade
· EU institutions agreed to implement the EU-US trade deal
· UK inflation fell in the month of April
· Andy Burnham was confirmed as the Labour Party’s candidate in the upcoming Makerfield by-election
You can read yesterday’s trade news here.
