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Israel-UAE Free Trade Deal

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Israel-UAE Free Trade Deal

On May 31, Israel signed a big free trade agreement with the United Arab Emirates (UAE), the first of its kind with an Arab country, according to the Israeli Embassy in the UAE. Under the deal, customs duties between Israel and the UAE will be eliminated on 96% of products, including food, agriculture, cosmetics, medical equipment and medicine, the statement said. The pact was signed in Dubai by Israel’s Minister for Economy and Industry, Orna Barbivai, and her counterpart, UAE Minister for Economy, Abdulla bin Touq al-Marri, after months of negotiations.
Background
In September 2020, the UAE and Israel signed a US-sponsored deal, ‘The Abraham Accord’ to normalize their relations. Since then, the two countries exchanged official visits by senior officials and have signed dozens of bilateral agreements in various fields, including investment, banking services and tourism.
Key Highlights
Trade between the Two Countries
In comparison to 2020, Israel’s Central Bureau of Statistics recorded more than a 30% increase in import and export of goods, excluding diamonds, to and from the United Arab Emirates.
· Two-way trade in 2021 totalled some USD 900 million.
· Non-oil trade surpassed reached USD 1.06 billion in the first three months of 2022 – a five-fold increase from the same period last year.
Significance
1. Builds on the US-brokered Normalisation of Relations
· The deal shows the durability of a series of diplomatic deals in 2020 known as the Abraham Accords, which normalized relations between Israel and four Muslim countries—the UAE, Bahrain, Morocco and Sudan.
2. Great Economic Potential
· Israel’s relationship with the UAE has great economic potential due to the geographic and cultural proximity between the peoples, as well as the UAE’s unique characteristics.
· The UAE is the second largest economy in the Arab world (after Saudi Arabia), with significant weight placed on technology products and advanced solutions, where Israel holds a relative advantage.
3. Faster Access to Markets and Lower Tariffs
· Businesses in both countries will benefit from faster access to markets and lower tariffs as these nations work together to increase trade, create jobs, promote new skills and deepen cooperation.
· The accord would remove tariffs on 96% of goods, including food, agriculture, cosmetics, medical equipment and medicine.
· The agreement also relates to regulatory and standardization issues, customs, collaboration, government procurement, e-commerce and intellectual property rights.
4. Boost up Trade
· This deal will push the value of non-oil bilateral trade between Israel and the UAE beyond $10 billion.
· UAE-Israel trade will exceed $2 billion in 2022, rising to around $5 billion in five years, bolstered by collaboration in renewables, consumer goods, tourism and the life sciences sectors.
5. Israel can Gain Foothold in International Market
· The agreement defines tax rates, imports and intellectual property, which would encourage more Israeli companies to set up offices in the UAE, particularly in Dubai, which serves as a hub for the Middle East, Asia and Africa—markets where Israel has struggled to gain a foothold.
· The UAE predicts that the Comprehensive Economic Partnership Agreement, as the accord is known, would boost bilateral trade to more than $10bn a year within five years.
· The UAE-Israel Business Council predicts there will be almost 1,000 Israeli companies working in or through the UAE by the end of the year, doing business with South Asia, the Far East and the Middle East.

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