Free Trade Agreements [FTA] between the United Kingdom [UK] and the Gulf Cooperation Council [GCC] will benefit the parties whenever they come into force. Such deals either remove or reduce tariffs, catalyse investments, and flatten speed humps that impede the smooth flow of goods and services between countries.
Trade pacts will spur the Gulf nations’ plans to diversify their respective economies from their reliance on oil and gas. Such two-way trade pacts, besides giving access to markets, create jobs, transfer of new technology, boost national goods and services, and increase foreign direct investments.
UK manufacturers, producers and service providers will benefit from access to Arab markets and consumer-friendly tariffs as well as two-way tourism. British Members of Parliament from the ruling and opposition parties know well the importance of closing free trade deals with global markets, specifically the GCC.
Free trade pacts with countries from untapped markets will help revive Britain’s economy that now shows recovery. The UK’s gross domestic product grew by 0.1 per cent in February 2022, following 0.8pc growth in January 2022. The services sector, with 0.2pc growth, was the main contributor to February's growth in GDP. However, production dropped by 0.6pc and construction by 0.1pc, according to data released by the UK’s Office of National Statistics.
Free trade pacts are important for another reason – Brexit. UK has completed two years and three months after exiting Europe’s single market and customs union on January 31, 2020. British economists continue to express concern over the pros and cons of the decision. Prime Minister Boris Johnson, under whose watch the UK exited the European Union, hails the decision.
In his article, marking the second anniversary of Brexit, published by the Daily Mail, Johnson writes, “We have all kinds of reasons to celebrate our new freedoms.” Pointing out the “very big things” the UK has achieved since leaving the bloc, he writes, “We have taken back control of our money, our borders, and our laws. We have done more than 60 free trade deals.”
While UK lawmakers, trade bodies and experts count the profit, loss, and sovereignty gains of Brexit, the untapped potential of free trade with Gulf markets beckons. Trade deals with the GCC will not compromise UK’s sovereignty unlike EU membership that took control of some domestic affairs. Trade ties with the GCC will not drain power from British Parliament that EU institutions gorged.
From the GCC, the Sultanate of Oman has taken the lead in pushing two-way trade with Britain. On January 12 this year, the two countries signed a Sovereign Investment Partnership deal. The signatories will work on increasing high-value investment into both countries as the UK draws nearer to a trade deal with the GCC.
The UK Minister for Investment, Lord Gerry Grimstone, and Oman Investment Authority President AbdulSalam al Murshidi signed the new pact in London on behalf of the UK’s Office for Investment and OIA respectively. The pact strengthens two-way economic ties between the UK and the Sultanate of Oman.
The partnership will identify and support commercial investments in clean energy and technology - a key part of the nations' £1 billion-a-year trading.
A couple of existing GCC trade pacts are good benchmarks. For example, the pacts between the United States and Oman and Bahrain. The US-Oman pact came into force on January 1, 2009. The rules promote economic reforms, transparency, spurs investment and safeguards intellectual property rights and monitoring.
Media reports show India’s federal Ministry of Commerce and Industry’s interest in negotiating and signing an FTA with Oman. India is pushing trade deals in the GCC. On February 18 this year, India signed an FTA with the United Arab Emirates. Last Sunday [May 1] Commerce Department Secretary B V R Subrahmanyam flagged off India’s first consignment of goods under the India-UAE Comprehensive Economic Partnership Agreement [CEPA].
FTAs are the booster dose countries need to revive their economies in the post-Covid 19 years.
[Sudeep Sonawane, an India-based journalist, has worked in five countries in the Middle East and Asia. Email: [sudeep.sonawane@gmail.com]
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