Today I am formally launching free trade negotiations between the UK and the Gulf Co-operation Council (GCC) from Riyadh, Saudi Arabia, where I am meeting the GCC Secretary General, His Excellency Dr Nayef Falah M. Al-Hajraf, and Ministers from the six GCC member states.
In line with our commitments to scrutiny and transparency, the Department for International Trade has published, and placed in the House Libraries, more information on these negotiations. This includes:
The UK’s strategic case for a UK-GCC Free Trade Agreement (FTA).
Our objectives for the negotiations.
A summary of the UK’s public consultation on trade with the GCC.
A scoping assessment, providing a preliminary economic assessment of the impact of the agreement.
The Gulf Co-operation Council represents Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE). These six countries are home to 54 million people and have a collective economy of £1.2 trillion.[1]
The GCC is equivalent to the UK’s seventh largest export market, and total trade was worth £33.1 billion in 2021. An FTA would be a substantial opportunity for both our economies and a significant moment in the UK-GCC relationship. It will grow the economy, support jobs and the levelling up agenda.
Government analysis shows that an FTA is expected to increase trade by at least 16%, add at least £1.6 billion a year to the UK economy and contribute an additional £600 million or more to annual UK workers’ wages.
All regions and nations of the UK are set to benefit from a trade deal with the GCC, supporting the Government’s levelling up agenda. Industries outside of London are expected to benefit most, with the east midlands, west midlands, north-east and Yorkshire and the Humber in line for the greatest proportional gains.[2]
The GCC countries are undergoing a period of economic change and they all have ambitious vision strategies, which highlight areas for future economic growth and development. Demand for international products and services is expected to grow rapidly to £800 billion by 2035, a 35% increase, which will create significant opportunities for UK firms. Now is the time to strike an ambitious and modern trade deal.
A strong trading relationship will allow the UK to play to our strengths as a manufacturing powerhouse and a world leader in technology, cyber, life sciences, creative industries, education, Al, financial services and renewable energy.
UK businesses in these industries have a role to play in supporting the GCC countries as they diversify their economies to move away from a reliance on fossil fuels and towards knowledge-based and green economies. The UAE, for example, has set a target of generating 50% of its electricity from renewable sources by 2050.
UK goods exporters could benefit from reduced or zero tariffs, making their products more competitive in the GCC market. For example, UK clothing, ceramics and wind turbine parts currently face tariffs of up to 15%. British farmers and food and drink producers can also benefit from new export opportunities for products, including cereals—up to 25% tariff—and chocolate—up to 15% tariff—since the GCC countries import virtually all of their food.[3]
The UK and GCC countries share an important investment partnership, with at least £30 billion already invested in each other’s economies, and an FTA will help to strengthen this even further. This will support jobs throughout the UK and the GCC countries.
The UK will continue to uphold our high environmental, labour, food safety and animal welfare standards in our trade agreement with the GCC.
The first round of FTA negotiations will take place over the summer. As negotiations progress, I will ensure that parliamentarians, UK citizens and businesses are provided with regular updates.
[1] IMF estimate for 2021, World Economic Outlook April 2022.
[2] Based on the percentage increases in the scoping assessment.
[3] Tariffs in these sectors are mostly 5% across the GCC where in some cases individual countries charge higher tariffs on specific products. Note that tariffs on chocolate does not include products containing alcohol.
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