'Global Britain' could usher in new era of trade with the Middle East
A partnership with the Gulf states could as much as double trade volume, one analyst predicts
As ‘Global Britain’ sets itself up to capitalise on post-Brexit economic freedom, historic links with the Middle East could propel forward a new era of trade.
Westminster’s MPs find themselves at war with one another, each with their own particular vision of what post-Brexit Britain should look like.
By shaking off the shackles of an overbearing EU, Britain stands ready to reap the rewards of free trade with whoever they wish – at least, so goes the pro-Leave line.
The Gulf is in a different category. “It’s all a question of relationships and the UK, whatever anyone says, has got excellent relationships (with the region),” said Michael Thomas, Chairman of Pathfinders Trade and Invest.
M R Raghu, head of research at Kuwaiti Financial Centre, echoed the thought while conceding the EU-UK deadlock in Brexit negotiations was unhelpful.
He predicted a positive outlook for relations with the GCC moving forward and said a partnership with the wealthy Gulf states could as much as double existing trade volume.
For decades the 28-country EU has tried and failed to hammer out a free trade deal with the Gulf.
Mr Raghu argued that Britain’s new found independence characterised by a “more open economic policy” and couple with “historically good relations with Gulf countries” could likely push an agreement over the line.
Chris Beauchamp, an analyst at online trading company IG, said previous major deals with Aramco and Saudi Arabia’s defence ministry were just two example of an already prosperous relationship.
In particular, he said Riyadh was crucial given its heavyweight stature in the region, who would likely be interested in Britain’s financial services expertise and advanced supply chain structure.
Britain’s post-Brexit trade deal future represents opportunity to bring actual affinity with the Gulf
Chris Beauchamp, analyst, IG
“Turning to the GCC and the Middle East generally makes sense for the UK, especially with historic ties and strategic locations,” he said.
“Britain’s post-Brexit trade deal future represents opportunity to bring actual affinity with the Gulf. Trade and security ties in with ‘global Britain’ vision,” added Mr Beauchamp.
International trade minister Liam Fox recently visited the UAE and Bahrain, where he voiced his desire for closer economic ties. In 2017, trade between the UK and UAE totalled £17.5 billion – up 12.3 per cent from 2016. Britain has set its sights on increasing that number to £25 billion by 2020.
Experts have warned, however, that the ongoing spat within the Gulf Cooperation Council could dampen the positive mood - with the UK urged to make its play now or risk years of wrangling over free trade deals after leaving the European Union.
For Mr Thomas, who has spent decades dealing with Middle East trade and believes Brexit remains an exciting opportunity, Britain needed to show its commitment to the region.
“I think the British government needs to do much more in promoting the Middle East. What we need to do is actually improve on (the attitude to the Middle East) – I think we’ve been resting on our laurels The minute you start to relax business starts to crumble.” There remained “huge opportunities for inward and outward investment,” he said.
He described the GCC as a “much more important market” compared to Japan, where the UK has struggled to hammer out a trade deal.
The divided country finds itself at an uncomfortable time, ready to leave the EU but unsure how, with minimal progress on major trade deals and facing the prospect of a catastrophic no deal Brexit with little to show going forward – leaving it in a precarious situation and set to leave the EU on March 29.
“The UK is going to be desperate for deals, they always take a long time. There are costs and benefits, countries see the costs clearly,” said Alessandro Mennuni, an economics lecturer at the University of Southampton.
There is some appetite for a so-called ‘pivot to the East’ from Gulf officials, who have welcomed Britain’s engagement – the issue, however, is time, with the UAE’s economy minister Sultan al-Mansouri recently warning an economic agreement could take years.
Still, the freedom from the EU’s political infighting to pursue negotiations with blocs such as the GCC or its individual members still had huge benefits according to Sir Alan Munro, a former ambassador to Saudi Arabia.
He was party to discussions decades ago that sought to broker economic alignment between the GCC and the EU. Sir Alan spoke of the immense difficulties that popped up when a huge number of countries inside a bloc, such as the EU, have their own concerns and priorities moving forward: “One country’s need is another country’s poison.”
The GCC spat could also render serious discussions impossible. “It’s a fraught affair. The GCC is not speaking with one voice,” he said.
The veteran diplomat said deals would be very unlikely to emerged between the UK and individual Gulf countries in the absence of a GCC free trade agreement.
“I would think that GCC-wise there’ll be quite a pressure to say no, you can’t have unilateral deals, the GCC is a formal trade outfit. Mr Fox (the trade minister) is talking to the UAE – well, he’s actually talking to a UAE voice within the GCC,” said Sir Alan.
Updated: March 4, 2019 02:58 AM