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Delay to EU-GCC FTA hurting UK firms

The UK is losing out to the US on valuable Gulf export opportunities because it is taking so long for the EU to negotiate a free trade agreement (FTA) with the region's key states, UK law firm Trowers & Hamlins said on Wednesday.

Martin Amison, head of International at Trowers & Hamlins described the delay in getting a deal hammered out as “very disappointing” for British business and said an FTA should be a top priority for the EU.

“While the EU's negotiations with the GCC seem to have run into all sorts of hold-ups, the Americans are seizing the opportunity to improve trade relations with these oil-rich, economically vibrant states,” Amison said.

The US secured FTAs with Oman last year and Bahrain in 2004 as part of its plan to establish a Middle East Free Trade Area by 2013. It is currently in negotiations with both the UAE and Saudi Arabia.

Amison said the delay was increasingly putting the UK at a major disadvantage in maintaining and strengthening its position in the highly profitable Gulf export market.

“British companies have invested a lot of effort into becoming leading exporters to countries such as Oman. However, the lack of a comprehensive FTA is beginning to undermine that position,” he added.

British exports to the Middle East were worth more than £10bn last year, according to estimates from UK Trade & Investment (UKTI).

Further negotiations between the EU and GCC are expected in July and Amison said he hoped the EU could finally push through a deal by the end of the year.

“Ratifying a Free Trade Agreement with the buoyant economies of the GCC region, which is a major world economic player, should really be a top trade priority,” he said.

The GCC and the EU signed a framework economic co-operation agreement in 1988 but have been unable to agree a free trade deal, due to outstanding issues such as market access, government procurement rules and intellectual property rights.

In May Austrian foreign minister Ursula Plassnik said the EU was keen to reach an agreement before the end of Germany’s presidency of the EU at the end of June, but that passed with no resolution.

US talks with Saudi Arabia and the UAE have hit a stumbling block when the Trade Promotion Authority (TPA), which allowed the Bush administration to negotiate trade agreements that cannot be amended by Congress, expired on June 30.

Negotiations had stalled on issues including US demands for UAE labour market reforms and the opening of the services sector. The US also asked the UAE to change the Companies Law to allow 100% foreign ownership across the whole country, not just in the free zones.

On Wednesday the GCC opened up the first round of talks with New Zealand over a free trade agreement (FTA) in the country’s capital of Wellington.

However, it is likely that rules on company ownership and foreign investment in many GCC countries will also be a point of contention.

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