The United Kingdom has formally launched free trade agreement negotiations with the nations of the Gulf Cooperation Council. The move could test Britain’s commitment to using trade agreements as a tool to push for higher labour and human rights standards.
Following a lengthy internal consultation process, the government announced the commencement of free trade talks with the GCC.
The two sides have said they will “endeavour to launch the first round of negotiations in summer 2022”.
In a joint statement with GCC Secretary-General Nayef Falah Al-Hajraf, London’s international trade secretary Anne-Marie Trevelyan said the FTA would be “an ambitious, comprehensive and modern agreement fit for the 21st century.”
The six GCC members – Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Bahrain and Oman – are important trading partners for Britain, between them constituting the UK’s fifth largest trading market after the EU, the US, China and Switzerland.
Total bilateral trade stood at £44.6 bn (€ 51.8 bn) in 2019 – before falling to £32.4 bn (€37.6 bn) in 2020 as the pandemic led to a collapse in services trade and tourism.
The UK ‘will speak frankly’ about human rights issues
However, the FTA negotiations are likely to be controversial in British public opinion. This is not least because of the GCC countries’ poor record on labour standards and other human rights, and their still-heavy reliance on hydrocarbon exports.
Last year, the GCC’s two largest member countries – Saudi Arabia and the UAE – came respectively 155th and 122nd in the world on a human rights index published by the Cato Institute.
“The government also takes seriously its international obligations and commitments, including on human rights,” the UK government’s ‘Strategic Approach’ document says, by way of acknowledgement of the issue.
“The UK encourages all states to uphold international human rights obligations, and will continue to speak frankly about these issues with our GCC partners through ministerial and diplomatic channels.
“The Government’s policy is to engage countries whose human rights record falls short, as opposed to isolation and removing our ability to support higher standards.”
But Tom Wills, Trade project manager at the advocacy group Business & Human Rights Resource Centre, expressed scepticism about the UK government’s plans
“We’re none the wiser about how a UK-Gulf deal will uphold human rights in the region,” Wills said in a statement.
“The UK should not be signing any trade deal with the Gulf countries unless it contains clear and enforceable commitments to human rights.”
Wills noted that the GCC’s trade negotiations with the EU, launched in 1990, had faltered precisely because of the human rights conditionality applied by the EU.
“It seems that the UK will be happy to abandon these basic human rights standards in pursuit of a quick deal,” he claimed.
Benefits seen for UK goods and services exports
The UK government noted in its strategic approach document that average GCC tariffs in UK exports were not particularly high – at a simple average of 5.5% – although there is a wide gap between bound and applied tariffs in the Gulf states, and the UK sees business value in securing a commitment to either reducing or eliminating these tariffs.
The automotive, manufactured goods, and food and drink sectors all stand to gain from tariff reductions, and the British government also believes it is well placed to export renewable energy equipment, as the Gulf countries embark on a long-term process of decarbonising their economies.
Another priority will be scaling back technical barriers to trade and improving regulatory transparency in this area – something which UK firms have identified as an important obstacle to doing business in the region.
Services will be another priority focus area.
“In 2020, UK service exports to the GCC was worth £12.2 bn (€ 14.2 bn), roughly equivalent to UK exports to France,” the report notes.
“The UK will seek to use an FTA to encourage the liberalisation of trade in services for key UK export sectors such as financial and professional and business services.”
Challenges for digital trade, government procurement, climate change and gender equality
The digital trade chapter will however be a challenge for London’s negotiators, with data localisation requirements and other restrictions to data flows seen as representing a barrier to trade, especially in countries like Saudi Arabia.
Similar difficulties are likely to be encountered in the area of government procurement – with none of the GCC member countries yet being party to the WTO’s government procurement agreement.
The UK is also pressing for a chapter in the FTA on the environment and climate change which would “reaffirm commitments to multilateral environmental agreements such as … the Paris Agreement”.
The government will “seek appropriate mechanisms for the implementation, monitoring and dispute resolution of environment provisions”.
Another delicate issue could be the UK’s call for a chapter on trade and gender equality.
“The UK is committed to ensuring that our trade policy supports women’s economic empowerment and furthers our efforts to promote gender equality,” the government report said.
“The government will explore opportunities, in partnership with the GCC, to reflect this in our FTA.”
The GCC is the fourth trade partner with which the UK is currently conducting FTA negotiations, after India, Canada and Mexico – all of whom kicked off talks with the UK earlier this year.
In addition, the UK is still conducting both bilateral and multilateral negotiations with the 11 member countries of the Comprehensive and Progressive Agreement on Trans-Pacific Partnership, with the aim of wrapping up CPTPP accession talks by the end of this year.