LONDON - With the United Kingdom finally exiting the European Union, many in Britain are looking to the Middle East and North Africa as a potential arena for much-needed trade but how viable would such trade deals be and how could this affect Britain’s wider foreign policy in the region?
“The UK will want and need to deepen its commercial relationships in the Gulf and the wider region, especially in those countries where it has strong cultural and historic ties,” said Paul McGrade, a former EU policy adviser to former British Prime Minister Theresa May.
Writing for the Arabian Business website, McGrade singled out Saudi Arabia and the United Arab Emirates as Gulf Cooperation Council (GCC) countries that would see quick trade overtures from the United Kingdom.
British government figures stated that the Gulf region accounts for $50.8 billion of the United Kingdom’s $57.2 billion trade with the Middle East. Those figures could rise sharply after Brexit, with the United Kingdom intent on pursuing independent trade deals.
Attempts to draw up a GCC-EU free trade deal have faltered since negotiations began more than 20 years ago. The British government must hope that its own attempts, freed from EU bureaucratic logjams, will prove more fruitful. Even so, free trade agreements take years to negotiate, which Emirati Minister of Economy Sultan bin Saeed al-Mansouri noted last year at the World Government Summit in Dubai.
Even without a free trade agreement, the Arab Gulf region represents an attractive forum for increased investment. The United Kingdom reportedly identified $38 billion worth of new opportunities annually for British businesses in the GCC by 2021, with focus on the health-care and defence sectors.
“After Brexit, the [Arab Gulf] region will be a key market for UK companies seeking to maintain their position as world-class leaders in health care, medical devices and digital technologies,” McGrade said.
The Healthcare Investment Forum, at the Arab Health 2020 exhibition January 30 in Dubai, saw strong interest from UK companies.
Speaking at the conference, Jad Bitar, a managing director at the Boston Consulting Group, a management consulting firm, said the GCC was only spending around half what mature markets spend on health care.
“As such, there are several factors creating investible opportunities in health care in the region including underperforming systems and players, shifts in strategic focus such as disease burden and geographic footprint [and] the outsourcing of manufacturing and supply chain,” he said.
The United Kingdom will be looking to the Gulf’s defence sector where it already enjoys a strong presence. A 2017 report by Strategy&, a global strategy consulting firm, titled “The Emerging GCC Defence Market: The $30 Billion Opportunity” outlined huge investment opportunities available in the Arab Gulf.
“The prospect of a free trade agreement with the GCC, a rise in defence spending in the Gulf and the reaffirming of bilateral ties with a number of GCC countries all underscore the UK’s renewed devotion to its regional presence,” a report from France’s Foundation for Strategic Research said.
However, hopes for increased trade will likely be accompanied by expectations of a shift in British foreign policy, something that British politicians acknowledged.
A 2017 parliamentary report by the Select Committee on International Relations titled “The Middle East: Time for New Realism” acknowledged that Britain must follow a more flexible foreign policy in a post-Brexit world, especially if it wants to reap economic dividends from new markets.
“There is a shared desire and scope for significant growth in services between the UK and Gulf states,” the report said, “which have been developing their non-oil economies and building capacity in health care, education and financial services.”
“The accelerated diversification of economies across the Gulf represents a significant opportunity for British companies,” the report added.