This morning in Dubai, the Israeli Minister of Economic and Industry, Orna Barbivai, and the United Arab Emirates’ Minister of Economic, Abdulla bin Tou al-Marri, inked a free trade agreement between the two nations. The free trade agreement addresses rules and standards, excise, collaboration, government procurement, e-commerce, and the protection of intellectual property rights. The deal is anticipated to enhance exports and imports between Israel and the UAE. It would eliminate excise taxes on an estimated 96% of bilateral commerce between the two nations, including food, agriculture, cosmetics, medical equipment, medicines, etc.
This is the first free trade deal between Israel and an Arab state, and it was rushed through barely 20 months after establishing a full diplomatic tie. The UAE’s sole free trade agreements are with its Gulf neighbors and EFTA nations (Switzerland, Norway, Iceland, and Lichtenstein). The arrangement will allow Israel to conduct tariff-free commerce throughout the Gulf via the UAE.
Barbivai added, “This is a momentous occasion for the economic relations between the State of Israel and the UAE, as it is the first time an Arab nation has signed a free trade deal. The free trade agreement that we signed this morning will increase commerce between the two nations, remove barriers, and encourage the development of new business possibilities and collaborations, therefore providing a solid foundation for our joint journey.”
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Bin Touq al-Marri stated, “In accordance with the directives of our leadership, the United Arab Emirates (UAE) continues to take bold measures to advance our economy and enhance our standing as a regional trading hub for future investments and industry. The trade deal with Israel alters the regional paradigm. This agreement will accelerate economic development and reinforce our shared conviction that the best way to construct a robust and sustainable economy in a complicated environment is to work together. This pact also represents something larger than business: the significance of forming important alliances. Our agreement may demonstrate to the peoples and governments of the globe that collaboration and conversation are the most effective means of transforming difficulties into possibilities.”
Since the signing of the Abraham Accords in September 2021, bilateral commerce between Israel and the UAE has exceeded $1 billion, including $885 million in 2021. The administration of foreign trade anticipates that the free trade agreement will enhance yearly bilateral commerce by hundreds of millions of dollars.
Key benefits of the free trade agreement with the UAE
- The agreement is expected to increase trade between the two countries by millions of dollars
- Exports – Over 96% of the goods traded between the countries and exported by the UAE, will receive customs benefits. 82% of the goods will receive immediate reduction on all customs duties (6458 customs lines) and another 14% gradually to zero duties within 3 years (283 customs lines) or 5 years (824 customs lines). An additional 2% of the items (152) received a customs benefit. Among other things, the tariffs dropped on chemicals, fertilizers, cosmetics, plastic products, ceramic products, jewelry and diamonds, electronic machines and components, medical equipment as well as vegetables and fruits, juices, seeds, meat and fish and more (examples below).
- Imports – more than 96% of Israeli goods subject to customs duties (8602) received customs benefits. 72% immediately dropped to zero customs duties (6543 items) and another 21% will drop gradually to zero customs duties within 3 years (514) or 5 years (1345). Customs and quota discounts have been given to 3% of the items (290). Among the products which received significant customs benefits in imports from the UAE to Israel are: medications, plastic and rubber goods, ceramics, electronic machines and components, conductive cables, jewelry, vehicles and meat and meat products (examples below).
- Advancing bilateral trade in services by ensuring regulatory certainty in areas such as e-commerce, professional and commercial services, distribution services (wholesale), computing and more.
- Protection of intellectual property rights, patents and copyright – the two parties reached essential agreements for growth in various sectors such as agriculture and hi-tech in aspects related to patents and copyright. The parties also agreed to increase cooperation in the field, including enforcing rights.
- Government procurement – the parties mutually granted suppliers and companies access to the government procurement market and opened up the possibility of participating in government procurement tenders that government ministries publish in both countries. In certain tenders, suppliers from both countries can participate in government procurement tenders under equal conditions to those granted to local suppliers.
- Small and medium sized businesses. A new field included in modern free trade agreements. The parties agreed to advance cooperation including identifying ways in which to help small and medium business and exploiting commercial opportunities granted by the agreement.
- As part of the agreement, a joint committee will be established whereby continuous discussion can take place between the parties on economic issues. The committee will provide a platform for discussion of trade barriers and requests from industry.