Which six Gulf states are a 'definite target' for the UK's next deal, according to Liz Truss?

Thu 27 May 2021
Posted by: Noelle McElhatton
Trade News

The UK is targeting Gulf states in “phase two” of its trade strategy after leaving the EU’s customs union and single market in December last year.

As trade deals with Australia and New Zealand are underway, the UK is looking to a deal with the six oil-rich nations that make up the Gulf Cooperation Council (GCC), trade minister Liz Truss told the Telegraph.

The GCC is a “definite target” for a UK trade deal, she said. “We are in discussions with the GCC and I hope that we'll be able to say more about that soon.” 

Review underway

In November, the government announced a Joint Trade and Investment Review (JTIR) between the UK and the Gulf Cooperation Council (GCC). This followed several months of working groups over the summer.

Bilateral trade with the GCC – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – was worth almost £45 billion in 2019 making it one of the UK’s largest trading partners. 

Faster resolution

The review is expected to be completed by June, but according to Forbes Gulf states have been pushing for a faster resolution – something the UK seemed less keen on a few months ago.

“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,” Bahrain’s ambassador to the UK, Fawaz bin Mohammed Al Khalifa, told Forbes. “The UK made it clear that … they're going to wait for the review to be completed by June.”

Bahrain has drawn up a white paper with its thoughts and expectations on what might be included in a free trade agreement (FTA), but other states have been less progressive, said Al Khalifa.

According to the European Commission, the GCC countries have formed their own customs union and are working towards the goal of completing an internal market. The EU kicked off its own dialogue with the GCC on trade and investment in May 2017.

Some concerns

Striking a deal with the Gulf monarchies would not be without controversy given the region’s reputation for human rights abuses and draconian laws.

A review of human rights in the Gulf and North Africa in 2020 by Amnesty International highlights a range of concerns as states have used the pandemic to declare “states of emergency or passing legislation with excessive restrictions on freedom of expression”.

In January, MEPs issued a letter urging Bahraini authorities to abide by the country’s commitment and release prisoners of conscience, Aljazeera reports.

Parliamentarians drew attention to what they called the kingdom’s de facto suspension in 2017 of a moratorium on the death penalty, highlighting that five of six executions that have taken place were deemed arbitrary by the UN special rapporteur on extrajudicial executions.

Abu Dhabi deal

City AM reports that Truss’s GCC pitch comes as the UK closes in on a deal with Abu Dhabi-based sovereign wealth fund Mubadala, which could open up as much as £5bn investment into the UK from the Middle East.

The sovereign wealth fund is said to targeting investment in health, clean energy, infrastructure and technology in what will be a huge boost post-Brexit.

According to Arabian News, UAE and Saudi Arabian trade agreements could be “hammered out” this year.

Deals this year

Referring to the £800m UAE life sciences commitment to the UK’s Sovereign Investment Partnership (SIP) in March and the confirmation of upcoming "billion dollar deals" in clean energy, Wes Schwalje, a Gulf-government advisor and COO of research firm Tahseen Consulting, said:

“It seems likely that free trade agreements will be hammered out by the end of the year with both the UAE and Saudi Arabia. There is a lot of political capital being spent now on getting to the finish line on a free-trade agreement.”

The Middle East is an increasing focus for UK trade efforts.

Liz Truss was in the UAE and Saudi Arabia last month to work on the JTIR, following the launch of the Egypt-UK Association Agreement in December 2020 and The Jordan-UK Association Agreement on 1 May this year.