The landmark free-trade agreement that the UAE and Israel enforced from April 1, 2023 following the signing of the Customs Cooperation Agreement two weeks ago has set the stage for a spectacular boom in the two-way trade and economic cooperation by unlocking immense market opportunities.

The Customs Cooperation Agreement, which followed the Comprehensive Economic Partnership Agreement (Cepa) signed between the two countries in May 2022, will reduce customs duties on 96 per cent of products, resulting in an unprecedented jump in bilateral trade which more than doubled last year, positioning the UAE among the top 20 trading partners of Israel.

According to Amir Hayek, Israel’s ambassador to the UAE, bilateral trade, excluding software, jumped 109.7 per cent to $2.56 billion in 2022 as compared to $1.22 billion in the previous year, subsequent to the watershed Abraham Accord inked by the two nations in September 2020. The UAE is now Israel’s 16th largest trading partner out of 126 countries.

At the current pace of growth, the value of bilateral trade and economic activities is expected to exceed $10 billion by 2026, trade analysts said. Georgia is the fifth country after India, Indonesia, Israel and Turkey to sign Cepa with the UAE, which is also in the process of concluding such agreements with 22 more countries within years as part of its goal to become a Dh3 trillion economy by 2030.

The UAE-Israel Cepa ensures greater market access across multiple sectors for both trade in goods and services. With over 96 per cent of tariffs that covers 99 per cent of the UAE’s trade with Israel removed or reduced effective April 1 2023, vital sectors such as agriculture and pharmaceuticals stand to benefit enormously, trade analysts said.

During the signing of the fourth Cepa with Türkiye on March 3, 2023, Dr. Thani bin Ahmed Al Zeyoudi, UAE’s Minister of State for Foreign Trade, said the four agreements will contribute to an over 2.4 per cent increase in the country’s GDP by 2031, further driving UAE exports by adding $120 billion over the next 10 years. The UAE expects the agreement with Türkiye alone to boost non-oil bilateral trade to $40 billion annually within five years, while also creating 25,000 new job opportunities by 2031.

According to legal consultants, the removal of trade barriers through these bilateral deals unlocks new markets for the UAE and its products. While some tariff lines will access complete customs duty elimination immediately upon entry into force, others will be eliminated over a period of up to 3-5 years, and the rest will be reduced.

The Cepa also provides access to Israel’s domestic services market for UAE businesses including financial services, communications, tourism, transportation and distribution.

Trade consultants said the game-changing free trade pact, in addition to tariffs elimination and reduction, includes other key provisions that will benefit exporters and importers both from the UAE and Israel, as well as service providers. Some of these benefits include further cooperation in relation to the Agreement on Technical Barriers to Trade such as conformity arrangements between assessment bodies, firm use of international TBT standards, cooperation between authorities on sanitary and phytosanitary measures; cooperation on information exchange between the two tax authorities; promotion of trade opportunities for small and medium-sized enterprises such as promotion of digital trade and ease of access of information for SMEs, and collaboration to identify new commercial opportunities; and agreement on transparency and impartiality on government procurement.

Dr. Al Zeyoudi has said that the UAE aims to utilise Cepas to expand its partnerships with countries in the Association of Southeast Asian Nations, with negotiations already under way with Thailand and Vietnam. There are also plans to expand in Africa and South America, which would reflect positively on the UAE’s trade growth.

He said the UAE is also working on comprehensive economic partnership agreements with two economic blocs in the Eurasian region, with negotiations to begin next week and be completed within six months, while Cepa negotiations with Ukraine will begin in April.

Source: Khaleej Times