UK-GCC pact to boost trade by a fifth, officials say

• Deal concludes four years of talks
• Helps states diversifying past oil and gas
• Agreement also covers data flows

The UK and Gulf Cooperation Council finalised a long-delayed free trade agreement on Wednesday, concluding four years of negotiations and putting in place a framework which the parties hope will bolster trade and protect investments.

Annual bilateral trade between the UK and the six GCC states — Saudi Arabia, the UAE, Qatar, Kuwait, Bahrain and Oman — stands at more than £53 billion ($71 billion), according to the UK’s Department for Business and Trade (DBT).

That figure is expected to increase by around 20 percent annually as a result of the FTA, the department said. The deal, trailed earlier this week, is also projected to boost the UK economy by £3.7 billion each year.

For the GCC, it is expected to open the UK market further to member states diversifying their export base beyond hydrocarbons and reducing dependence on imports at a time of geopolitical and economic uncertainty.

The Gulf imports around 85 percent of its food supply, according to the World Economic Forum. UK exports to the bloc account for two-thirds of the £53 billion bilateral trade figure, the DBT said.

GCC sovereign and state‑linked investors play a major role in UK assets, with leading players including the Saudi Public Investment Fund and the Qatar Investment Authority, each with significant stakes in Heathrow Airport; and major Abu Dhabi funds including Mubadala and ADQ.

“This is a great deal for the UK and Gulf,” said Edward Udny-Lister, UK co-chair of the UAE-UK Business Council. “It breaks the mould of traditional FTAs with commitments in areas such as data flows, and is designed to accelerate investment flows.”

The agreement is a “significant milestone” for UK-GCC relations, said Alana Li, Middle East associate at global think tank Asia House. It also suggests “a commitment to deepen UK engagement with high-growth markets as global trade fragments and supply chains realign”, she added.

According to the DBT, the roughly 2,000-page FTA will eliminate trade tariffs worth an estimated £580 million on UK goods exported to the GCC, based on existing trade once the pact is fully implemented.

Both sides also pledge to clear customs within 48 hours and release shipments, including perishable goods, in under six hours.

The deal will enable UK companies in the GCC to store and process data outside the region for the first time, “saving businesses money setting up costly data centres in the Gulf”, the DBT said.

The pact also extends investment protections to three member states that do not already have longstanding investment treaties with the UK.

Oman, Bahrain and the UAE have done so since the mid-1990s, including investor-state dispute settlements — a mechanism that allows an investor to bring arbitration proceedings against the country in which it has invested, in a neutral jurisdiction rather than domestic courts.

Under the pact, the protections will extend to Saudi Arabia, Kuwait and Qatar. Oman and Bahrain will terminate existing treaties to be part of the FTA one, while the UAE is understood to be keeping its current treaty.

Further reading:

• Conflict pushes Omani-Saudi border trade to record levels
• US-Gulf trade rose pre-war despite Trump tariffs
• Trump’s Gulf trade gamble: the numbers don’t add up

UK-GCC bilateral investments stood at £18 billion in 2024, according to the DBT.

The UK is the first G7 country to agree a trade deal with the Gulf. GCC secretary-general Jassim Mohammed Al Budaiwi said the signing reflects a “shared commitment to strengthening the strategic GCC-UK partnership and expanding economic, trade and investment cooperation”.

Last year, AGBI reported on calls for the UK to seek standalone trade deals with Gulf states — either instead of or as well as a bloc pact.

A DBT spokesperson did not directly state whether it is pursuing such deals, saying: “We remain committed to deepening cooperation with the entire Gulf, including strengthening our trade and investment relationship with the UAE.”