RIA Submission to the Cooperation Council for the Arab States of the Gulf (GCC) trade consultation

RIA Submission: Trade with the Gulf Cooperation Council - Call for Input January 2022 1.

INTRODUCTION

1.1. This submission constitutes the response from the Railway Industry Association (RIA) to the Call for Input on Trade with the Gulf Cooperation Council, launched by the Department for International Trade.

2.

BACKGROUND TO RIA

2.1. RIA is the trade association for UK-based suppliers to the UK and world-wide railways. It has over 300 companies in membership covering all aspects of rolling stock and infrastructure supply and covering a diverse range of products and services. As well as most of the Tier 1 contractors and large, multi-national companies, over 60% of RIA’s membership base is comprised of Small and Medium-Sized Enterprises (SMEs).

2.2. RIA provides its members with extensive services, including: • Representation of the supply industry’s interests to Government, Network Rail, HS2, Transport for London, Transport Scotland and Transport for Wales, the Office of Rail and Road, RSSB, and other key clients and stakeholders; • Providing opportunities for dialogue and networking between members, including several Interest Groups; • Supply chain improvement initatives; • Provision of technical, commercial and political information every week; • Export promotional activity, through briefings, rail trade missions overseas, hosting inwards visits; and • Organising UK presence at rail exhibitions overseas on UK Pavilions.

3.

CONTEXT

3.1. In October 2021, the Department for International Trade launched a consultation on Trade with the Gulf Cooperation Council, seeking views on which aspects of the UK’s current trading arrangements with the Gulf Cooperation Council (GCC) they should look to improve or amend.

3.2. The GCC represent the countries Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

3.3. The call for input was in the form of a questionnaire, which RIA responded to. A summary of RIA’s submission is below.

4.

RIA TRADE ASKS

4.1. RIA has been actively engaging with the Department for International Trade (DIT) and Department for Transport (DfT) linked to FTA negotiations and we have some key asks for the rail sector for officials to consider during the various negotiations, namely: • Rail to be included in the negotiation of free trade deals – UK rail exports, currently worth some £800 million, are a real growth opportunity.

• Access to an appropriately skilled workforce and mobility for skilled UK workers – rail industry needs workers at all skills levels to support its ability to compete globally.

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5.

Consistent application of standards - RIA would want to see mutual recognition/ equivalence and non-discrimination as core principles in all UK trade agreements. This would support the competitiveness of the UK rail supply sector and ensure economies of scale.

Smooth cross border trade rules – which minimise cost and delay and avoid trade distortionary tariffs.

Public procurement – reciprocal rules on market access and domestic content. As rail is primarily funded by the public purse throughout the EU, this is a key concern for the UK rail supply chain.

RIA EXPORT ACTIVITY

5.1. The Middle East region is very much an area of high interest to the UK Railway Sector, the Railway Industry Association (RIA) and our members and UK suppliers, with many export opportunities currently and in the future. RIA’s export activity is open to members and nonmembers, and it includes export promotional activity through: • Briefings, Webinars, Seminars, Overseas Rail Trade Missions, hosting inwards visits; and • Organising UK presence at rail exhibitions overseas on Great branded UK Pavilions, which include networking and engagement opportunities.

6.

RIA’S PRESENCE AND ACTIVITY IN THE GCC

6.1. In the GCC, RIA - as a national rail trade body - is active in promoting the opportunities in the region and is proactive in taking forward export promotional activity. Open to all UK companies, we have organised a Great branded UK Pavilion at Middle East Rail Exhibition Dubai since 2012 on a yearly basis with our partner Intec, with the last edition in October 2021 for 20 UK Exhibitors.

6.2. At the October 2021 exhibition, RIA worked closely with the DfT and DIT ahead of the exhibition and had the full support and engagement of the UK Rail Minister, who we invited and who visited the exhibition, engaging with regional Infrastructure Ministers and promoting UK capability and expertise in general, whilst the British Embassy supported the UK companies by arranging a networking reception at the Ambassador’s Residence.

Additional support provided and working with RIA was a regional rail briefing for the UK companies provided by key local stakeholders. Currently we are planning and recruiting for a further UK Pavilion with Intec at the next edition of Middle East Rail being held in Abu Dhabi in May 2022.

6.3. Other past export promotion in the region has seen a Saudi Arabia and UAE webinar, which RIA jointly arranged with DIT in May 2021 with over 100 UK delegates registering to attend to hear from regional clients, officials, and experts. This follows on from various other export activity, including an outward rail trade mission to Saudi Arabia and supporting numerous inward visits by GCC officials to the UK, with RIA promoting key UK rail capability and expertise to the visiting clients.

6.4. UK companies are already winning work in the region or reporting the potential, such as: • Supplied from Derby, Alstom have a £1.7b Cairo Monorail order supported with a UKEF loan • XRAIL Group awarded a 7-year maintenance contract on the Saudi Arabia Haramain High Speed Railway

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One rail supplier recently reported a 1,200% growth in their business following Middle East Rail exhibition after receiving a TAP grant in March 2020 Another said it had seen £50 million in revenue generated in the Middle East, with the TAP grants contributing directly following Middle East Rail

6.5. More generally, in various exit polls RIA conducted with UK companies after exhibiting at Middle East Rail, British companies reported back that they expected to win the following values: • ME Rail 2017 - 8 companies reported potential business valued at £1.22m; • ME Rail 2019 – 5 companies reported potential business valued at £250k; • ME Rail 2020 – 6 companies reported potential business valued at £1.580m.

7.

THE RAILWAY INDUSTRY IN THE GCC

7.1. In 2018, a Rail Sector Deal was agreed, which set out a new approach for the UK rail industry and the Government working in partnership to transform the rail sector. The Deal includes taking actions to increase the use of digital technology, boost productivity, improve the service received by those who use the railways, and build the skills of the UK workforce to capitalise on these opportunities. At the outset, in December 2018, the Exports & Inward Investment industry goal for the Sector Deal was to double the value of exports by 2025. To achieve this, the industry’s supply chain agreed a number of Industry ‘Offers’ and Industry ‘Asks’ of Government, and with RIA’s assistance, this pillar is still active and helping Rail Exporters increase their exports. RIA is the delivery partner for the exports pillar of the Rail Sector Deal and a member of the Rail Supply Group.

7.2. The Rail Sector Deal UK Exports Survey Report, published in 2020, highlights that UAE and Saudi Arabia are current railway industry export markets and priority export markets for growth, where UK companies believe goods or services have the potential to increase more with assistance from the UK rail industry and Government.

7.3. As economies in the region have diversified and new sectors are developed, rail is an industry in which actual and proposed large scale investment across the GCC is occurring.

7.4. Within the Middle East, we have been seeing the easing of austerity with the relaxing of fiscal targets, less pressure on making budgets break-even and an increase in government spending, with high levels of expansionary budgets and stimulus packages that include direct spending on rail projects involving both Rail and Metros. As such, we see the region being an attractive export market for the UK Rail Sector now and in the future.

8.

RAILWAY IN THE GCC: OPPORTUNITIES

8.1. Rail is a clean mode of transport – in the UK it contributes just 1.4% of transport emissions despite carrying 10% of all journeys, and only 0.5% of total emissions. As countries look to decarbonise, and with transport continuing to contribute a significant proportion of emissions globally, rail has the potential to be a huge UK green export and investment success story.

8.2. UK rail suppliers have the capability to be world-leaders in developing both battery and hydrogen trains. This expertise will only become increasingly important, and thus, crucially, more in demand in the years to come. UK suppliers have developed battery-powered and hybrid trains which are ready to be deployed and with some due to enter service soon. This

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innovative technology is being shipped across the world, with the potential for more exports.

8.3. The GCC region has a lot of current and future rail and metro projects where our members could get involved given their innovative capabilities, and having an FTA in place with the GCC would allow our members to bid for these projects more easily. Some of these projects include: • Gulf Railway, also known as the GCC Railway, which is a proposed railway system to connect all six Gulf Cooperation Council member states in Eastern Arabia.

• Currently under construction, the Riyadh Metro project is one of the world’s most extensive public transit projects which will consist of six metro lines with a total length of 176km and 85 stations and represents the most extensive public transit project worldwide.

• The Saudi Railway Company signed a MoU with China Civil Engineering Construction Company (CCECC) to implement the £8.2bn Saudi Landbridge project linking Jeddah on the Red Sea with the capital Riyadh.

• Saudi Arabia have signed an MoU with a consortium for the $3.6bn second phase of the Haramain high-speed rail linking Mecca and Medina • Saudi Arabia may have other metro projects planned, which could be PPP or traditional build projects in Mecca, Jeddah, Medina and Dammam.

• Bahrain has sanctioned the commencement of its first phase of the £1.5bn Bahrain Metro Project.

• Kuwait national rail project and a possible metro, perhaps PPP. • Dubai design or studies on future metro extensions to Dubai metro being planned or considered.

• Etihad Rail phase 1 open, contracts for stage 2 awarded. _______________________ We hope this is a useful submission. RIA is happy to provide further information on any of the above issues, or to meet to discuss any matter associated with the Committee’s inquiry. Please do not hesitate to get in touch with Francesca Lentini, RIA Senior Policy Executive, if you have any further questions or would like us to arrange a meeting – she is contactable at francesca.lentini@riagb.org.uk or on 020 7201 0777 / 07904 991067.

Yours sincerely,

Kate Jennings Policy Director, Railway Industry Association

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