UK investment minister: GCC trade deal would develop AI, fintech sectors

A free trade agreement (FTA) between the United Kingdom and the Gulf Cooporation Council (GCC) should help promote innovation and develop new industries like fintech and artificial intelligence (AI), Britain’s Investment Minister Dominic Johnson has told Al-Monitor. 

Kemi Badenoch, secretary of state for the Department for Business and Trade, visited the Gulf in May to discuss a trade deal with the GCC, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. Badenoch met with the new Secretary-General of the GCC Jasem Al-Budaiwi during the visit. Since leaving the European Union at the beginning of 2020, the United Kingdom has been pursuing new trade deals in the Middle East, including with the GCC and Turkey. Britain began trade talks with the GCC in 2022, and there are more negotiations due to take place later this year.

For the year ending March 2023, trade between the United Kingdom and GCC countries amounted to 65.2 billion pounds ($83.8 million). The Gulf is Britain’s seventh-largest export market and demand for UK goods and services is expected to reach almost 1 trillion pounds ($1.3 trillion) by 2035.

Johnson, minister of state for investment, said there was “strong political will on both sides” to negotiate a trade deal.

“We’ve made significant progress for such an early stage of negotiations and have discussed every policy area in negotiations so far,” he told Al-Monitor.

A general election is likely to take place next year but Johnson’s ruling Conservative party is trailing in the polls to the left-leaning Labor party amid an economic downturn and high inflation. 

Asked whether a UK-GCC free trade agreement was likely to be announced before the general election, Johnson said, “We have always been clear that negotiating such a deal is more important than any particular deadline. We want to ensure our FTA reflects the realities of modern trade to help promote innovation and develop new industries like fintech and AI.”

The UK AI market is worth more than 16.9 billion pounds ($21.7 billion) and is expected to grow to $803.7 billion pounds (roughly $1 trillion) by 2035.

A GCC free trade agreement is also expected to boost British renewable energy, manufacturing and food and drink industries. 

“Our analysis shows a deal is expected to increase trade between the UK and the GCC by at least 16%,” Johnson said. “A highly ambitious FTA, which the UK is pushing for, could deliver even greater gains. So the more ambitious we are in negotiations, the greater the gains for everyone. It is a win-win scenario.”