Over the summer, the government announced it was starting trade negotiations with the Gulf Cooperation Council (GCC), a political and economic union of six nations: Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates (UAE).
The International Trade Select Committee inquiry into negotiations with the GCC is ongoing, and I presented evidence recently, as part of a panel looking at the potential climate and environmental impacts of this deal.
The committee’s questions largely focused on how impacts of a deal might be mitigated through the provisions of a Free Trade Agreement (FTA), the challenges of including strong environmental provisions and how a deal could facilitate greater trade in environmental goods and services.
One of my main takeaways from this experience was that there seemed to be consensus on the panel that securing the environmental protections we expect from a modern comprehensive FTA will be no easy task.
I would go a step further to argue that pursuing a trade deal with this bloc in the first place runs directly counter to the UK’s stated ambition to be a world leader on climate change.
Putting aside their terrible human rights records, GCC economies are characterised by their overwhelming reliance on the extraction, refinement and export of fossil fuels. Three of them, Saudi Arabia, the UAE and Kuwait, remain among the top ten oil producing countries globally. Oil and gas revenues account for 70 per cent of Oman’s annual budget and 70 per cent of Bahrain’s export revenues.
This trade deal will block climate ambition
No surprise then that fossil fuels also make up the bulk of UK imports from the region. Some will argue that pursuing a deal with the GCC at this time is just realpolitik, the logical result of Russia’s invasion of Ukraine. But this is short-termism at best and obfuscates the government’s ability and responsibility to accelerate the renewable energy transition at home. The focus should be on insulating the UK from expensive and volatile fossil fuel markets in the first place.
The government’s own impact analysis states that a deal with the GCC will increase the risk of carbon leakage (where exporting production abroad can lead to an increase in greenhouse gas emissions). This means the UK would export its carbon footprint overseas, particularly in the short and medium term. This is because the UK is likely to move much faster in decarbonising and strengthening its climate and environmental protections than the GCC.
The government’s analysis identifies the UK chemicals, apparel, metals, plastics and electronics sectors as being the most at risk of carbon leakage. A deal is also likely to increase UK consumption emissions, due to the expected rise in imports, locking in higher levels of fossil fuel production as a result. A deal with the GCC could result in roughly two to five million more tonnes of CO2 emissions annually. Again, this is according to the government’s own analysis and is likely to be a conservative assessment.
Trade policy should be used to lead the global low carbon transition
Instead of prioritising a deal with countries with abysmal climate records, UK trade policy can and should play a central role in delivering on our stated priorities to tackle climate change and accelerate the transition to clean renewable energy. The UK, having just handed over the COP presidency, proclaims to be a world leader and, indeed, it has made good strides in decarbonising the energy system. But so much more could be done to align trade policy with nature recovery and net zero ambitions.
For a start, the government should produce a trade strategy to ensure cohesion across its trade negotiations and prevent cumulative negative impacts from undermining domestic environmental priorities.
Legally binding net zero commitments and decarbonisation strategies should be a red line in any trade negotiations. As part of any trade deal, the UK should insist that every GCC country submits its long term climate strategy to the UNFCCC. They signed up to this under the Paris Agreement, but so far none of them have done so.
Any UK-GCC trade deal should also include ambitious, enforceable, binding chapters on ‘Trade and sustainable development’ and ‘Environment and climate’. The government should also use this opportunity to make sure any existing agreements with GCC countries are also fit for purpose.
First and foremost, this means revisiting the Bilateral Investment Treaties the UK already has with five of the six GCC nations and removing harmful Investor-State Dispute Settlement (ISDS) provisions. ISDS allows corporations to sue governments for any policies they believe will harm their profits, and this should also be excluded from any GCC-wide trade deal. In fact, it should not be part of any future trade deals the UK negotiates.
Of course, it will not be easy to achieve but, if the government is serious about maintaining its international leadership status on climate change, it should reject trade deals that fail to meet these criteria.
