In June 2022 the UK and the GCC officially launched negotiations for a comprehensive trade deal to reduce or remove tariffs on a series of goods and services. Anne-Marie Trevelyan, former UK secretary of trade, met with Nayef Falah Al Hajraf, the GCC secretary-general, and representatives from the six GCC countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.
The deal is expected to have a significant impact, helping Gulf countries diversify their energy sectors and reduce their reliance on hydrocarbons. GCC countries would benefit from the removal of tariffs on renewable energy infrastructure and having more access to UK clean energy technology, such as innovations that improve energy efficiency in homes, buildings and businesses.
Gulf countries have made considerable commitments to expand the role of renewables in their domestic energy mixes as part of wider efforts to forge a more sustainable economic model. Saudi Arabia has pledged to derive 50% of its energy needs from renewables by 2050 – up from just 0.1% when the commitment was first made in 2016 – and has pledged to reach net-zero carbon emissions by 2060. The Kingdom’s National Renewable Energy Programme aims to add 27.3 GW of renewable capacity by 2023 and 58.7 GW by 2030.
Gulf countries are highly import dependent when it comes to food. At the beginning of the pandemic countries in the bloc imported around 85% of their food. Almost all rice consumed in the region was imported, as well as some 93% of cereals, approximately 62% of meat and 56% of vegetables. While countries in the region have reacted to recent events by increasing investment in agri-tech and improving efforts to bolster agricultural self-sufficiency, any agreement to alleviate the import of food and drink products could benefit the bloc’s food security. Among the items being discussed is the reduction or removal of GCC tariffs on food and drink imports from the UK which currently range from 5 to 25%.
Aside from individual sectors, the free trade talks seek to help the GCC diversify its trade partners and improve its position in global trade. On top of existing free trade deals with New Zealand, Singapore, and the European Free Trade Area countries of Iceland, Liechtenstein, Norway and Switzerland, the GCC is in trade negotiations with the EU, Japan, China, South Korea, Australia, Pakistan, India, Turkey and the Mercosur member countries of South America.
These agreements are expected to attract foreign investment as GCC countries embark on broad transformation strategies to diversify their economies. For example, Saudi Arabia has launched a series of mega-projects to stimulate economic activity in non-oil sectors. These include the $500bn NEOM smart city, which operates as a high-tech city for residents and businesses, and functions as a tourist destination; the $8bn Qiddiya entertainment city outside Riyadh; and The Red Sea Project, a 34,000-sq-km luxury tourism development along the Kingdom’s western coast.
The trade talks reflect an increase in cooperation between the UK and individual GCC countries. In March 2022 Saudi Arabia and the UK signed a memorandum of understanding to form a strategic partnership council to bolster bilateral investment and cooperation. With $13.2bn in bilateral trade in 2021, an increase of 3.9% from 2020, Saudi Arabia is the UK’s largest trading partner in the GCC, accounting for one-third of its business with the bloc.
This was followed by the announcement in March 2022 that Qatar would invest $12bn in the UK’s economy over the next five years. The agreement comes on the heels of a similar agreement struck in March 2021 between the UK and the UAE, which will see Mubadala Investment Company, Abu Dhabi’s private investment vehicle, invest £800m in UK life sciences over five years. The partnership was expanded in September 2021, with Mubadala committing to invest another £10bn in technology, infrastructure and the energy transition.
You have reached the limit of premium articles you can view for free.
Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.
If you have already purchased this Report or have a website subscription, please login to continue.
Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.
Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.
Register Here×
