Why the US should help the Gulf states negotiate a trade deal with the UK
The political and economic returns to closer ties among the GCC countries will let them more fully participate in the global economy.
In September, the United Kingdom (UK) and the Gulf Cooperation Council (GCC) wrapped up the first round of negotiations on a free trade agreement. A deal promises economic gains for both sides. More importantly, it would help the GCC reinvent itself following the trade embargo of Qatar that nearly ripped it apart. This would be good for the Middle East and the United States.
Formed in 1981, the GCC includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates (UAE). Its Charter calls for “coordination, cooperation, and integration” among the six countries on everything from science to economic regulations. The GCC has also sought closer ties with third markets, signing trade deals with Singapore, the European Free Trade Association and New Zealand, and launching talks with Australia, China, the European Union (EU) and others.
Fast forward to June 2017. Bahrain, Egypt, Saudi Arabia and the UAE cut diplomatic ties with Qatar, which they accused of sponsoring terrorism, cozying up to Iran and meddling in their own affairs. Other countries joined the bandwagon. A trade embargo followed. Qatar fought back by suing Bahrain, Saudi Arabia twice and the UAE at the World Trade Organization. Things looked bleak for the GCC.
In January 2021, with COVID-19 raging and Qatar proving itself to be rather resilient, a deal was brokered to restore diplomatic relations and end the embargo. Now, the GCC must reinvent itself. Reaching a trade deal with the UK, if done right, could go a long way in this regard.
Commercially, the GCC lacks depth. It has few incentives to promote regulatory cooperation, let alone harmonization. This is a problem because the UK identifies technical trade barriers and health and safety standards as being among the foremost obstacles to getting a deal done.
There’s more. The UK is sticking close to Brussels on its approach to regulatory issues, not least because all but two of its trade deals are copies of EU texts. London nods to the importance of following international standards, but likes to tell Brits that it will “defend” its “high” standards at all costs. The wrinkle is that some of these standards, like on “chlorinated chicken,” are more grounded in politics than science. The GCC countries lack the bureaucratic capacity to engage in these negotiations.
This is where the U.S. can help.
Washington should give technical assistance to the GCC, particularly on regulatory issues. These are key to the economic well-being of the six countries, and would give the GCC secretariat a formal role for itself.
A “modern” trade deal would also serve as a useful template for future pacts in the region, and help the U.S. upgrade existing trade deals with Bahrain and Oman, both of which are members of the GCC.
There’s a lesson in this for the global economy: "Weaponizing" trade is easier said than done. The Saudi-led coalition had to exempt liquified natural gas from its embargo of Qatar, and generally found the sanctions difficult to work. In contrast, the political and economic returns to closer ties among the GCC countries will let them more fully participate in the global economy.
Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service at Georgetown University. Follow him on Twitter @marclbusch.