In an extension of the Abraham Accords, Israel and the United Arab Emirates (UAE) made history on Friday when the two nations concluded their negotiations on a bilateral free trade agreement. If signed, the agreement will make the UAE the first Arab nation to have a full and comprehensive free trade agreement with Israel.
Israel’s Minister of the Economy and Industry Orna Barbivai and the UAE Minister of State for Foreign Trade Dr. Thani bin Ahmed Al Zeyoudi concluded their fourth and final round of negations over the treaty Friday morning. The agreement, which is both significant and comprehensive, will include – inter alia – issues regarding trade in goods such as regulation, standards, customs, trade in services, cooperation, government procurement, electronic trade and trademarks.
The main advantages of the agreement are:
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The scope of the reciprocal benefits on goods that was agreed to between the sides covers over 95% of both sides’ customs lists and includes – inter alia – reduced customs duties on almost all industrial goods as well as benefits on food and agricultural products.
The agreement also advances bilateral trade in services between Israel and the UAE by assuring regulatory certainty in fields such as electronic trade, professional and business services, distribution services (wholesale and retail) and computers.
Upon the conclusion of the negotiations, the agreement will be evaluated from a legal perspective. It will then be signed by the ministers and be ratified by each country, after which it will take effect. It is expected to assist in increasing the scope of bilateral trade, expand economic links between the countries and realize the latent potential for trade between Israel and the UAE.
The Abraham Accords, which were signed in September 2020, are the basis for diplomatic relations between the State of Israel and the UAE. One year later, in November 2021, negotiations began on a bilateral free trade agreement between the two countries.
The matter was discussed by Prime Minister Bennett and Crown Prince Mohammed bin Zayed in Abu Dhabi last December, when it was agreed to accelerate contacts ahead of the signing, and at their meeting in Egypt last week, where the leaders agreed on to complete the agreement within days.
The discussions continued for five months and included four rounds of negotiations and expedited work by both sides’ negotiating teams in order to complete the discussions as quickly as possible.
Relations between Israel and the UAE have great economic potential in a range of areas due to – inter alia – the geographic and cultural proximity between the peoples and the unique characteristics of the UAE, which has the second largest economy in the Arab world after Saudi Arabia and an import market worth hundreds of billions of dollars with technology goods and advanced solutions in which Israel has a comparative advantage constituting a considerable share.
Since the advent of the Abraham Accords, trade between the UAE and Israel has grown significantly and reached a scope of almost $900 million in 2021. The potential for trade between the two economies is much greater and includes many fields such as energy, health, digitization, medical equipment, water (desalination, purification, conservation and smart management), agriculture, cyber, Fintech and diamond exports.
Prime Minister of Israel Naftali Bennett commented, “This is an important moment in relations between the State of Israel and the UAE. Today the good relations that have already been forged between the two countries are being strengthened in the form of a free trade agreement that will significantly upgrade economic cooperation for the benefit of the citizens of both countries. There will be more trade, more jobs and good products at lower prices. At my last meeting with the Crown Prince, Sheikh Mohammed bin Zayed, in Sharm El-Sheikh, we agreed to accelerate the process and bring it to conclusion within days, and so it was.”