Could the GCC replace the EU as a British trade partner?

With the clock ticking towards Brexit, the UK government is under pressure to spell out its vision for future trade deals. While the UK cannot officially sign any trade agreements as an EU member state, it can engage in preparatory talks and preliminary agreements.

The GCC (Gulf Cooperation Council) immediately emerged as a potential candidate for a post-Brexit free trade agreement following the decision on the 23rd June 2016 for Britain to exit from the European Union.

The GCC consists of 6 nation states: Qatar, Saudi Arabia, the United Arab Emirates, Kuwait, Oman and Bahrain. The UK has long maintained a strong diplomatic and military relationship with the region, with these ties strengthening in recent years. A free trade deal may well suit both parties, due to the Gulf states’ attempts to diversify their economy away from oil and gas dependency; and the potential benefits to the UK of developing trade deals with some of the world’s biggest economies.

Furthermore, Prince Mohammed bin Salman’s regular discussions with Theresa May could be reflective of a growing rift between Qatar and its other GCC neighbours.

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Looking at the figures, it is no surprise that the government is prioritising the economic potential of the region in a post-EU climate. Trade between the UK and the Gulf is already significant, having increased exponentially since 1999.[i] Annually, trade between the UK and the Gulf is around £30 billion – that is, more than its trade figures with both India and China.[ii] The United Arab Emirates alone is Britain’s 4th biggest export market outside of the EU.[iii]

The UK’s Secretary of State for International Trade, Liam Fox, and other trade ministers have spent time visiting member countries of the GCC as part of a trade offensive, signalling the importance placed on economic ties between the UK and the oil wealthy region. Alongside this, Theresa May became the first woman and British Prime Minister to attend and address the 37th Gulf Cooperation Council Summit in Manama, Bahrain, a former British colony.

She spoke about how the UK will step up its relationship with the GCC countries.

The UK has also been seeking a boost in investment from countries including Saudi Arabia and Qatar, both of which have increased their investment in areas including education and technology.

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Last month, it was revealed that the UK and Saudi Arabia had announced an ambitious plan to build 65 billion pounds of trade and investment in the coming years. The government hopes that money pouring in from the Gulf will signal trust in the UK as an economic hub and will serve to encourage investment from other countries.

In spite of this, many British residents are concerned with the normalising of relationships with a region with financial links to Wahhabism – a direct or indirect motivator of ISIS terrorism. Some Arab residents are equally concerned with Saudi Arabia prioritising its relationship with a historical regional coloniser.

The government’s eagerness to pursue a free trade agreement with the GCC has therefore not been without its critics, whose views can be summarised as a concern for the prioritisation of trade deals at the expense of human rights.

Before Liam Fox’s visit to Kuwait last year, Labour’s Shadow International Trade Secretary, Barry Gardiner, said:

In Kuwait we trust that Liam Fox will use this opportunity to set out how any future trade agreement must respect human rights, and raise social and environmental standards to the highest level in both our countries.[iv]

Despite assurances given by Theresa May that human rights issues will be raised with states where there are legitimate concerns,[v] it is possible that the UK may have to make concessions and turn a blind eye to human rights violations given the importance of securing trade agreements. The question remains for both states: to what extent do their ends justify their means?

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References

[i] Robert John Tasker, “UK-GCC trade deal would be beneficial,” Khaleej Times, July 15, 2017, https://www.khaleejtimes.com/editorials-columns/uk-gcc-trade-deal-would-be-beneficial

[ii] Tom Finn, “Gulf Arab states push for UK free trade deal after Brexit: officials,” Reuters, March 26, 2017,

https://www.reuters.com/article/us-britain-gulf-brexit/gulf-arab-states-push-for-uk-free-trade-deal-after-brexit-officials-idUSKBN16X0TS

[iii] British Chambers of Commerce, “Market Snapshots,” Export Britain, http://exportbritain.org.uk/market-snapshots/uae.html

[iv] Tom Batchelor, “Brexit: UK Government ‘prioritising trade over human rights’ in pursuit of Middle East deals,” Independent, January 24, 2017, https://www.independent.co.uk/news/uk/politics/brexit-latest-theresa-may-liam-fox-middle-east-trade-deals-human-rights-a7543751.html

[v] Tom Batchelor, “Brexit: UK Government ‘prioritising trade over human rights’ in pursuit of Middle East deals,”

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