LONDON: Brexit will pave the way for deeper commercial links between Britain and Saudi Arabia with a possible bilateral free trade deal on the table as Vision 2030 gathers pace, said speakers at a conference organized by the Arab-British Chambers of Commerce.
In an interview with Arab News on the sidelines of the forum, Liam Smith, a director at the British Chambers of Commerce, said: “Thanks to the Vision 2030 program that seeks to diversify the Saudi economy and increase the country’s clout as an exporter of goods and services, the potential is there for Saudi to become an even more important trading partner for the UK than it already is.
“We have enjoyed many decades of exporting services, equipment and aircraft to Saudi Arabia. The point of a free trade agreement is that it could be reciprocated in some form and I feel confident that Saudi will become a major exporter of goods and services. It is already making major strides in the area of ‘ease of doing business.’”
Smith said that the UK would be ready to discuss a free trade agreement (FTA) either multilaterally with the GCC as a trading bloc, or bilaterally with KSA or other individual countries in the Middle East.
The conference heard from Charlie Morris, head of public engagement for trade-agreement continuity at the UK’s Department of International Trade, that Britain viewed the GCC as an “incredibly important trading partner … in leaving the EU we would look to develop that partnership even further.”
He added that doing business with the GCC is not wholly dependent on having an FTA in place. British companies already do a lot of trade with GCC countries without any such agreement. “But of course we would want to make that much easier which is why a working group has been set up to explore ways to make it happen,” said Smith.
He added that in leaving the EU, you have the opportunity that you didn’t have before to tweak standards. “However, the position of the government is that in any future trade agreements, those standards would be as good as they are now.
Victoria Hewson of the UK’s Institute of Economic Affairs said that British membership of the EU had meant it had not been able to strike trade deals in “its own name.”
She added: “Of course, it’s much harder to negotiate with 27 countries with each claiming exemptions on certain goods.
“(Acting on its own) the UK could be much quicker and more open to trade deals in the Middle East. I think there are grounds to conclude that we could be nimbler and more liberalising when it comes to trade deals with other nations after Brexit,” said Hewson.
Britain is seeking an advantage in the knowledge that the EU and GCC launched negotiations for an FTA in 1990, but an agreement has never been struck. In fact, talks were broken off in 2008 when the GCC countries suspended contact amid accusations that the EU had sought to interfere in the bloc’s internal affairs.
A recent European Commission paper on the issue said: “While periodic informal contacts have taken place since then (2008) to test whether a basis might be found to resume and conclude negotiations, these have not been successful. In parallel with the negotiations, the prospective EU-GCC FTA was subject to a sustainability impact assessment,” said the Commission.
UK exports to Arab states in 2017 was £20.9 billion. In 2016, the equivalent was £18.6 billion, according to official UK government data.
Brexit opens way for closer Saudi-British trade ties
Brexit opens way for closer Saudi-British trade ties
- UK open to deal with Kingdom and GCC
- UK exports to Arab states in 2017 was £20.9 billion
Global brands shut Middle East stores as conflict causes chaos
- Luxury brands and retailers close stores in Middle East
- Conflict threatens the region that has been luxury’s fastest growing
- Mass-market retailers monitor situation, adjust operations in region
PARIS: In Dubai and other major Middle Eastern shopping hubs, many stores are closed or operating with a skeleton staff as the escalating conflict in the region causes chaos for businesses and travel.
The US-Israeli air war against Iran expanded on Monday with no end in sight, with Tehran firing missiles and drones at Gulf states as it retaliates for a weekend of bombing that killed Iran’s supreme leader and reportedly killed scores of Iranian civilians, including a strike on a girls’ primary school.
Chalhoub Group, which runs 900 stores for brands from Versace and Jimmy Choo to Sephora across the region, said its stores in Bahrain were closed, while other markets, including the UAE, Saudi Arabia, and Jordan remained open though staff attendance was “voluntary.”
“We operate with a lean team formed of members who volunteered and feel comfortable to come to the store,” Chalhoub’s Vice President of Communications Lynn al Khatib told Reuters, adding that the company’s leadership team personally visited Dubai Mall and Mall of the Emirates on Monday morning to check in with workers.
E-commerce giant Amazon closed its fulfillment center operations in Abu Dhabi, suspended deliveries across the region and instructed its employees in Saudi Arabia and Jordan to remain indoors, Business Insider reported on Monday, citing an internal memo.
Gucci-owner Kering said its stores were temporarily closed in the UAE, Kuwait, Bahrain and Qatar and it has suspended travel to the Middle East.
Luxury growth engine under threat
Shares in luxury groups LVMH, Hermes, and Cartier-owner Richemont were down 4 percent to 5.7 percent on Monday afternoon as investors digested the knock-on impacts of the conflict.
The Middle East still accounts for a small share of global spending on luxury — between 5 percent and 10 percent, according to RBC analyst Piral Dadhania. But the region was “luxury’s brightest performer” last year, according to consultancy Bain, while sales of expensive handbags have stalled in the rest of the world.
Now, shuttered airports have put an abrupt stop to tourism flows into the region and missile strikes — including one that damaged Dubai’s five-star Fairmont Palm hotel — are likely to dissuade travelers, particularly if the conflict drags on.
“If you assume that it’s a $5 billion to $6 billion (travel retail) market and let’s say it’s going to be shut down for a month, we are talking about hundreds of millions of dollars that are definitely at risk,” said Victor Dijon, senior partner at consultancy Kearney.
If Middle Eastern shoppers cannot travel to Paris or Milan, that could also hurt luxury sales in Europe, he added.
Luxury brands have been investing in lavish new stores and exclusive events across the region. Cartier unveiled a “high-jewelry” exhibition in Dubai’s Keturah Park just days before the conflict started.
Cartier and Richemont did not reply to requests for comment.
Luxury conglomerate LVMH has also bet big on the region. Last month, its flagship brand Louis Vuitton staged an exhibition at the Jumeirah Marsa Al Arab hotel, and beauty retailer Sephora launched its first Saudi beauty brand.
LVMH does not report specific figures for the region, but in January Chief Financial Officer Cecile Cabanis said the Middle East has been “displaying significant growth.” LVMH did not reply to a request for comment on how its business may be impacted by the conflict.
The Middle East has also attracted new investment from mass-market players. Budget fashion retailer Primark said in January that it plans to open three stores in Dubai in March, April and May, followed by stores in Bahrain and Qatar by the end of the year.
“Primark is set to open its first store in Dubai at the end of March but clearly this is a fast-moving situation which we are monitoring closely,” a spokesperson for Primark-owner Associated British Foods said.
Apple stores in Dubai will remain closed until Thursday morning, the company’s website showed, while Swedish fast-fashion retailer H&M said its stores in Bahrain and Israel are closed.
Consumer goods group Reckitt has told all employees in the Middle East to work from home, temporarily closed its Bahrain manufacturing site and suspended all business travel to the region until further notice.
