UK And GCC Conclude First-Of-Its Kind Free Trade Agreement

On 20 May 2026, a landmark free trade agreement (“FTA”) was concluded between the UK and the Gulf Cooperation Council (“GCC”), a trade bloc comprising of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (“UAE”). As the first comprehensive FTA between the GCC and a G7 country, the agreement marks a strategic step for both parties with the aim to strengthen commercial ties across key sectors, including petrochemicals, advanced manufacturing, services including banking and insurance, and digital trade.

The GCC is the UK’s 10th-largest trading partner, with total UK-GCC trade reaching £53 billion in 2025. The UK is also a top destination for GCC exports, and the UK government estimates that the FTA could increase trade between the UK and the GCC by nearly 20%. Specifically, the FTA is expected to:

• Secure long-term market access for goods and key services sectors;
• Reduce tariffs and non-tariff barriers affecting goods trade;
• Strengthen supply chain resilience; and
• Unlock and protect investment flows, including from GCC sovereign wealth funds.

The agreement will create significant opportunities for businesses across the UK and GCC by deepening trade and investment and supporting economic diversification.

The text of the FTA must still be finalised; however, a summary of the FTA chapters has been released. Key chapters of the FTA are outlined below.

Market Access For Goods

Under the agreement, the GCC will fully liberalise 90% of its tariff lines on UK goods within 10 years after entry into force. For UK exports:

• Tariffs will be eliminated on around 93% of current UK exports to the GCC, worth an estimated £580 million per year;
• £360 million of estimated duties will be removed immediately upon entry into force; and
• For products with phased-in liberalisation (5- or 10-year timelines), the FTA prevents tariff increases before removal of the tariffs.

Key UK sectors benefiting from tariff liberalisation include advanced manufacturing, with immediate tariff-free access for turbojets and aerospace parts, as well as the removal of tariffs on machinery and electronics at entry into force. UK car manufacturers will also benefit from full tariff elimination on all UK exports of passenger cars, with duties removed on 90% of current UK car exports to the GCC on entry into force. In addition, the healthcare and life sciences sector will gain improved market access through the elimination of tariffs on medical devices, surgical instruments, and radiological devices. Certain agri-food exports will also benefit from immediate tariff removal.

All existing GCC exports to the UK will be liberalised from day one of the agreement. The FTA excludes pork, chicken, and eggs from tariff liberalisation.

Cross-Border Trade In Services And Financial Services

The FTA builds on services trade between the UK and the GCC across a range of sectors, including financial, legal, engineering, and construction.

For cross-border trade in services, the agreement:

• Provides legal guarantees that constrain the implementation of new restrictions on UK businesses in sectors where the GCC makes commitments, such as limitations on foreign ownership or requirements to set up a base in the GCC to supply services in the region;
• Secures non-discriminatory treatment vis-à-vis domestic suppliers in many areas; and
• Establishes commitments on authorisation and licensing processes, including fairness, proportionality of fees, and online availability of rules in English.

For financial services, this deal is described as the most ambitious that the GCC has agreed to date and includes several key elements:

• Binding commitments to protect the free flow of financial data and to allow UK financial institutions to store and process financial data outside the region, prohibiting “unjustified and disproportionate” data localisation requirements;
• Commitments to treat UK financial service suppliers on terms comparable to domestic providers in many sub-sectors, limiting scope for discriminatory future regulations;
• Improvements over WTO-level equity caps in certain circumstances, enhancing security for UK investors in GCC financial entities;
• The right for UK firms to supply certain services across borders without establishing a local presence; and
• Enhanced regulatory transparency and opportunities for engagement on proposed new measures, supporting predictable market access and implementation.

Investment Protections

The agreement includes modern, comprehensive investment commitments designed to provide investors in both regions with greater legal certainty and support long-term two-way capital flows. Specifically, investors are guaranteed fair and non-discriminatory treatment and protection against expropriation without compensation. In addition, the FTA will include an investor-state dispute settlement (“ISDS”) mechanism, which will provide recourse where treaty obligations are breached, with express measures to dismiss frivolous claims and enhance procedural transparency.

Upon entry into force, the UK will terminate its existing bilateral investment treaties (“BITs”) with Oman and Bahrain; however, its BIT with the UAE will remain in place.

Digital Trade

The FTA will remove digital trade barriers and facilitate the free flow of data between the UK and the GCC, while maintaining standards for personal data protection. Notably, for the first time in any GCC trade agreement, the bloc has committed to prohibit “unjustified” data localisation requirements, meaning technology and financial firms can store and process data without being required to establish local data centers.

In addition, under the digital trade chapter, the UK and GCC commit to:

• Accepting electronic trade documents and promoting paperless trading, including e-Bills of Lading, with a view to reducing transaction costs and delays;
• Protecting open internet access and restricting discriminatory practices, such as blocking or throttling content;
• Prohibiting forced disclosure of source code and cryptographic information;
• Extending consumer protection standards to online commerce, including commitments for cooperation between enforcement authorities;
• A permanent ban on customs duties on electronic transmissions; and
• Establishing a framework to create cooperation on emerging technologies, including artificial intelligence (“AI”) and “responsible innovation.”

Business Mobility and Professional Business Services

The deal provides the most ambitious mobility commitments ever granted by the GCC to a trading partner, guaranteeing visa access for a wide range of business persons, improved length-of-stay terms, and a freeze on new economic needs tests or numerical visa restrictions. The deal also includes specific reductions in administrative burdens for contract-based professionals in the UAE. In addition, the FTA contains an annex in which the UK and the GCC commit to identifying and encouraging their respective relevant bodies to enter discussions on the recognition of professional qualifications.

Collectively, these provisions reduce costs and administrative burdens for professionals seeking to travel, work, and operate in both regions. 

Intellectual Property

The FTA covers all major categories of intellectual property (“IP”) rights, including copyright, trademarks, designs, patents, trade secrets, and geographical indications. The agreement reinforces the UK’s and GCC’s commitments under a range of international IP treaties, including the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”). The FTA will expand on these IP treaties with certain “TRIPS-plus” protections, such as patent term extensions for pharmaceuticals and exclusive use of pharmaceutical test data. Notably, the FTA includes 32 detailed enforcement provisions covering civil, criminal, border, and digital enforcement, which enhance protection of IP rights, including the ability of businesses to act against online infringement.

Other Key Chapters Of The FTA

The FTA includes chapters on several key trade areas including:

• Rules Of Origin. The agreement’s rules of origin provide that goods must be either wholly obtained or sufficiently transformed in the UK or GCC to qualify as “originating.” Producers may source certain inputs from third countries and still qualify for preferences, subject to product-specific rules, which are tailored to support sectors such as automotive, chemicals, machinery, and electronics. Qualifying products will be subject to robust verification mechanisms. UK exporters will be able to self-certify their own documentation after initial registration, reducing costs for businesses.
  
  
• Customs and Trade Facilitation. The agreement establishes simplified customs procedures, ensuring clearance within 48 hours (6 hours for perishable goods)—provided that all requirements are met—and the adoption of digital customs procedures. In addition, businesses will have the right to request advanced rulings for tariff classification, valuation, and origin.
  
  
• Telecommunications. The agreement includes certain telecoms commitments, including fair access to telecoms networks and services; clear rules governing licensing, interconnection, and allocation of scarce resources; benefits to consumers through number portability; transparency on roaming rates; and stronger data protection guarantees.
  
  
• Government Procurement. The agreement establishes legally binding commitments with Bahrain and the UAE, providing UK businesses with guaranteed access to their public procurement markets under fair, transparent, and non-discriminatory conditions. The remaining GCC member states are required to assess their participation in the chapter within two years, with a view to future negotiations.
  
  
• Sustainability, Labour, and Inclusion. The agreement will contain a “General Collaboration and Sustainable Development” chapter, which includes cooperation between the UK and GCC on anti-corruption; consumer protection; animal welfare and anti-microbial resistance; environment; innovation; labour; women’s economic empowerment; and gold trade. The UAE has not taken commitments on labour and environment in the FTA, but the UK will continue bilateral discussions with the UAE on these issues.

Next Steps

With negotiations concluded, the UK and the GCC will work together to finalise the legal text of the FTA. Following the completion of the legal review of the FTA text, each party will initiate its respective domestic ratification procedures. The FTA will enter into force upon the conclusion of the ratification processes by both the UK and all GCC member states.

Impact On Businesses

The FTA is a significant development for businesses operating in, exporting to, or investing across the UK and the GCC. Once finalized, the FTA will reduce tariff and non-tariff barriers, enhancing market access for exporters in both regions. Under the agreement, UK services—which account for around 80% of the British economy and around half of UK exports to the GCC—will benefit from greater legal certainty, more transparent licensing and authorisation procedures, and fewer restrictions on cross-border supply.

Importantly, the agreement’s restrictions on unjustified data localisation requirements will reduce compliance costs for businesses that rely on cross-border data flows, including companies in financial services, technology, professional services, and e-commerce. The digital trade provisions will also promote growth in emerging sectors such as AI, fintech, and clean technology.

The investment protections are also notable given that the GCC consists of four of the world’s top sovereign wealth funds, representing over $3.4 trillion of capital, and investment between the UK and Gulf Arab states amounted to £485 billion in 2024. The FTA will reinforce protections for investors and support stable conditions for cross-border capital flows, providing opportunities for additional investment between the UK and the GCC. This will be relevant not only to institutional investors, including sovereign wealth funds, but also to companies considering long-term commitments in sectors such as energy, infrastructure, manufacturing, and technology.

The agreement also has broader economic significance for the Gulf Arab countries as they seek to diversify their economies. The FTA will support GCC diversification strategies, such as Saudi Arabia’s Vision 2030 and the UAE’s Centennial Plan 2017, by facilitating investment, expanding access to specialised services, and encouraging technology transfer and commercial collaboration. At the same time, UK businesses will gain improved access to fast-growing Gulf markets that continue to invest heavily in infrastructure, digitalisation, energy transition, advanced industry, and high-value consumer sectors.

With offices in London, Riyadh, Abu Dhabi, and Dubai, King & Spalding is well positioned to advise on the opportunities and risks arising under the UK-GCC FTA. Our international trade team has extensive experience advising clients on cross-border activity in the Gulf region and will continue to closely monitor the finalization of the UK-GCC FTA.