News Before It's News
About us | Ocnus? |

Front Page 
 Dark Side
 Defence & Arms
 Light Side

Business Last Updated: Aug 4, 2020 - 3:09:22 PM

How could a no-deal Brexit reap returns for the Gulf?
By Arabian Business 2/8/20
Aug 3, 2020 - 11:07:56 AM

Email this article
 Printer friendly page

Britain could turn to the Middle East to plug the gap in EU trade when the UK exits in 2021, according to experts

With just five months to go before the UK fully exits the EU, Gulf investors are keeping a watchful eye on whether a European trade deal is inked by the end of the year.

Britain officially left the bloc on 31 January 2020, but remains in the EU’s customs union and single market until the end of the year.

If no UK-EU trade deal has been agreed by 31 December 2020, Britain will face stiff tariffs on exports to the EU, which could conversely open up more bi-lateral trade opportunities for Gulf countries.

Outside the EU, the GCC is currently the UK’s second-largest export market behind the US. Last year the total trade in goods and services accounted for $54.8 billion, according to British government figures.


Strong historical ties

“The UK has longstanding historical links with Gulf countries, stretching back over 200 years, and maintains strong security and diplomatic cooperation with them,” Zak Hydari, CEO of Dubai-based Rasmala investment bank, told Arabian Business.

“The UK has also increased trade and investment flows in recent years and there are significant opportunities for further growth. Post-Brexit, we can expect more engagement from the UK in the region,” Hydari said.

The UAE, in particular, is one of the UK's most important trading partners and one of the fastest growing markets for its exports.

The UAE is Britain’s twelfth biggest trading partner globally and third outside EU. In 2019 the trade between the countries reached $9.9 billion, according to government date.

More than 200 UK firms have a presence in the UAE and around 120,000 British ex-pats call the country home.
Crash and earn

Should the UK crash out of the EU without a deal, there will be “significant interest” from Britain to bolster potential trade losses by forging trade deals with regions with which the UK has strong geopolitical ties, according to Wes Schwalje, COO of Dubai-based research firm Tahseen Consulting.

“Since the GCC is one of the UK’s largest export markets, bilateral discussions as well as multilateral GCC-wide discussions on free trade agreements, will certainly be accelerated in the event of a breakdown in talks with Europe,” Schwalje told Arabian Business.

The COO pointed to the fact that the EU has been attempting to ink a free trade agreement with the GCC since 1990 with” little progress”.

The government affairs expert said bilateral talks are currently progressing on free trade agreements that might see the UK “outmaneuver” its European neighbours.

“If there is agreement on a UK free trade agreement with the GCC, as a trade bloc or a series of bilateral agreements is signed, we are likely to see a significant increase in trade as well as in investment between the UK and GCC,” Schwalje said.

“In many ways, Britain’s ‘Brexiters’ might view such a win as a prime example of the type of flexibility, adaptability, and control needed to make Britain great again. The agreement might also be used a leverage on European negotiations.”
Tricky business

According to John Bryson, professor of enterprise and economic geography at The University of Birmingham, EU­­–Gulf have been historically protracted because of the inherent challenge presented by “two blocs trying to develop agreement within each bloc and then trying to negotiate common ground”.

“This has to be a two-way process in which the GCC members agree amongst themselves about the type of relationship they want to develop with the UK and vice versa,” Bryson told Arabian Business.

“Any negotiations between the GCC and the UK will benefit from the UK being able to develop and negotiate from a single country position. Perhaps, the key challenge is for the GCC to also develop a common perspective and to use this to enter into negotiations with the UK.”

The professor said the GCC would soon be able to negotiate with the UK as a sovereign state and this would remove the complexity related to trade negotiations with the EU.

“A UK-GCC dialogue would be completed much more rapidly than an EU-GCC dialogue,” he said.
Coronavirus concerns

Bryson said that the Covid-19 pandemic has presented an “immediate distraction” for ongoing talks, but the key is for the GCC to identify what it wants from any dialogue with the UK.

“The door is open within Whitehall for all types of negotiations,” the professor said. “Now is the time for the GCC to act and engage with the UK as the British government must be seen to be initiating and concluding trade agreements.”

According to Tahseen’s Schwalje, industry areas that could be on the table for cross-collaboration include healthcare, renewable energy, financial services, transportation, tourism, education, smart manufacturing and autonomous technologies.

“The bright spots for mutual trade and investment synergies remain rooted at the nexus of British competitive advantages and the ambitious development strategies of the GCC countries,” said Schwalje.

The COO also said he expects to see enhanced cooperation between London’s well-established fintech hub and emerging GCC fintech hubs, as the coronavirus pandemic has accelerated the global shift to technologies.

“With the acceleration of trends towards contactless payments and online shopping globally, the UK’s leadership in fintech offers some very interesting lessons for countries which had to make the transition to digital payments literally overnight,” Schwalje said.

Rasmala’s Hydari added that Brexit also opens the door to “much closer cooperation” between the City of London and Dubai International Financial Centre (DIFC) and Abu Dhabi Global Marketplace (ADGM) in the UAE.

However, investors still need to beware of “short-term” coronavirus headwinds, warned experts.

“The pandemic has reduced passenger flows dramatically between the UK and the GCC,” said Hydari. “With no air bridge in place numbers will remain subdued for the rest of the year.”

However, Amir Alizadeh, professor of shipping economics and finance at City’s Business School, predicted that the coronavirus pandemic would only affect UK–Gulf relations in the short-term.

“The pandemic has shaken the world in terms in lifestyle but less so in terms of trade,” Alizadeh commented. “In the short term, movement of human capital will be restricted and this will have some impact until a vaccine is found.”

“In the medium to long term everything should go back to normal – about six months to one year – we will bounce back and find a solution,” he said. “In the meantime, the global traveling ban could impact business deals, as well as investor uncertainty.”

Source:Ocnus.net 2020

Top of Page

Latest Headlines
Air Transportation: Ukrainian Last Chance
El Salvador’s President Bukele Linked to Venezuelan Money Laundering Scheme
Ammonia and Methanol are the Likeliest Future Fuels
'Colossal Backdoor Bailout': Outrage as Pentagon Funnels Hundreds of Millions Meant for Covid Supplies to Private Defense Contractors
Taliban's Expanding 'Financial Power' Could Make It 'Impervious' To Pressure, Confidential NATO Report Warns
Business Rather than Decoupling
US to remove tariffs on Canadian aluminum, Ottawa drops threat of retaliation
The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90%—And That's Made the U.S. Less Secure
China set to step in and hold down box line rates, with ocean freight 'a global mess'
Uganda, Tanzania Sign Deal For Construction Of Crude Oil Pipeline Project