UAE-Israel trade poised to exceed $10b in 5 years

Abdulla bin Touq Al Marri, Orna Barbivay, and Dr Thani bin Ahmed Al Zeyoudi,,  along with other senior officials during signing ceremony of  Comprehensive Economic Partnership Agreement between UAE-Israel in Dubai  on Tuesday. — Wam
Abdulla bin Touq Al Marri, Orna Barbivay, and Dr Thani bin Ahmed Al Zeyoudi,, along with other senior officials during signing ceremony of Comprehensive Economic Partnership Agreement between UAE-Israel in Dubai on Tuesday. — Wam

The deal is aimed at advancing bilateral trade, and is expected to add $1.9 billion to the UAE’s GDP within the same time period.



by

Issac John

Published: Wed 1 Jun 2022, 4:22 AM

Last updated: Wed 1 Jun 2022, 4:25 AM

The historic UAE-Israel Comprehensive Economic Partnership Agreement (UAE-Israel Cepa), which was signed on Tuesday, is expected to push bilateral trade to more than $10 billion within five years ---more than seven times an increase compared to $1.4 billion worth of trade in 2021.

Abdulla bin Touq Al Marri, Minister of Economy of the UAE; and Major General (Retd) Orna Barbivay, Minister of Economy and Industry of Israel, have signed the UAE-Israel CEPA in Dubai, marking a new era of cooperation between the two nations that established diplomatic ties in September 2020.

The deal is aimed at advancing bilateral trade, and is expected to add $1.9 billion to the UAE’s GDP within the same time period.

Al Marri said under the directives of the UAE leadership, the nation continues to take bold steps to advance the economy and enhance the country’s status as a regional hub for trade, investment, and the industries of the future. “This Cepa with Israel will create a new paradigm for the region. It will accelerate growth and underscores a shared belief that the only way to build resilient and sustainable economies in a complex world is by doing so together,” said the minister.

"The Cepa also symbolises something greater than business: the importance of building meaningful partnerships. Our agreement can demonstrate to nations and governments around the world that cooperation and dialogue are the best ways to transform challenges into opportunities," said Al Marri.

Israel’s Minister Barbivai her visit is of strategic importance for economic relations between Israel and the UAE. “Today we have signed a CEPA and advanced a series of economic partnerships. Together, we will break down obstacles and we will advance comprehensive trade and new technologies that will serve as a basis for our shared path, contribute to the benefit of our citizens and make it easier to do business. This is the first full free trade agreement made with an Arab state, that is happening such a short time after the establishment of diplomatic relations," said Barbivai.

Barbivay said the agreement aims to provide long-term certainty for businesses and service providers, establishing mechanisms for cooperation and reducing barriers to trade in services. "Several sectors are covered, enabling market access in various fields such as business and professional services, research and development, computer-related services, and environmental services," she said.

"The Cepa will have cross sectoral impact, with significant impact on the sectors that are in core interest and strategic plans of both countries such as Water, Energy, Healthcare, Education, FinTech and Cyber," Barbivay said, adding that it will also create a framework of collaboration that will be promoted through the Israel-UAE R&D fund that was recently launched, business delegations and seminars, and the exchange of expertise and know-how.

"It also lays the foundation for enhanced collaboration between the private sectors and entrepreneurs from both sides. These collaborations hold great potential in further expanding bilateral trade in all sectors, setting a foundation for future initiatives and utilisation of the opportunities the CEPA presents," Barbivay said.

The agreement builds on the exponential growth in trade and investment the UAE and Israel have enjoyed since the signing of the Abraham Accords. From September 2020 to March 2022, non-oil trade surpassed $ 2.5 billion, while it reached $1.06 billion in the first three months of 2022 – five times the total from the same period in 2021.

Dr. Thani Al Zeyoudi, UAE Minister of State for Foreign Trade, said the agreement will also open the doors to new export opportunities in the services and services-related sectors.

He said the latest Cepa, the second bilateral trade agreement signed by the UAE, offers unprecedented economic benefits for both parties by lowering or eliminating tariffs on more than 96 per cent of tariff lines and 99 per cent value of trade, enhancing market access for exporters, attracting new investment, and creating opportunities in key industries, including energy, environment, and digital trade.

“The deal will also support service sectors such as hospitality, financial services, distribution, and construction and provide a platform for SMEs in both countries to expand internationally.”

"By establishing diplomatic ties in 2020, the UAE and Israel embarked on a new era of regional trade, investment, and exchange. The UAE-Israel Comprehensive Economic Partnership Agreement will further catalyze economic activity and, importantly, create new research and investment opportunities in agri-tech, renewable energy, and advanced technology, which are priority sectors for both countries,” said Al Zeyoudi.

"Over the past 18 months, our nations have demonstrated what can be achieved when we cast aside our differences and, as we emerge from the challenges of the global pandemic, the UAE and Israel believe that multilateral approaches are needed to rebuild supply chains, reinvigorate economies, and restore confidence. We are confident this deal will pave the way for a new era of regional economic success," said Al Zeyoudi.

The UAE-Israel CEPA is part of a series of bold initiatives that the UAE has launched to build a stronger, more resilient economic future and drive the global post-Covid-19 recovery. In 2021, as part of its Projects of the 50 initiative, the UAE embarked upon a program of enhancing bilateral trade relations with key partners around the world. The UAE-Israel CEPA is the second bilateral trade accord concluded by the UAE following the UAE-India CEPA, which entered into force on May 1.

"This CEPA comes at a critical time for the global economy. The world is beginning to emerge from the global pandemic, but challenges remain, not least as conflict and inflation threaten to stall the global recovery," said Al Zeyoudi.

"The landmark agreement will help facilitate global supply chain efficiency, including for agriculture and food products, which would have an impact on food security. It would also help facilitate the movement of natural persons, especially the business community," the minister explained.

"The UAE and Israel are now ready to build on the solid foundations [of the diplomatic relations based on the Abraham Accords signed in 2020] to deliver a new era of opportunity and enterprise for our people – and establish a model of mutual respect, tolerance, open and candid discourse, and unity of thought and action," Al Zeyoudi said.

He said the agreement will also open the doors to new export opportunities in the services and services-related sectors, he said.

The Cepa provides better market access for key UAE products to Israel, such as aluminium, petrochemicals, and polymers such as ethylene and propylene. The deal also secures more favourable access for UAE companies to Israel’s market in services, such as business services, communications services, distribution services, environmental services, financial services, tourism and travel-related services, and transport services, Al Zeyoudi said.

"Israel won’t offer an export subsidy on products destined to UAE to ensure fair competition with UAE products. Israel will offer the UAE additional distribution services, which it has not offered to other trade partners," Al Zeyoudi revealed.

The minister said he is confident that "this will have a major catalysing effect on mutual investment flows, which is one of the principal objectives of our Cepa agenda."

Abraham Accords already kick-started mutual investment platforms, including Abraham Fund, which will mobilise $3 billion in private sector-led investment and development initiatives, he noted. The Abu Dhabi Investment Office’s (ADIO) first-ever overseas office in Tel Aviv, and the Dubai Investment Development Agency’s MoU with the Manufacturers’ Association of Israel to explore investment opportunities are similar initiatives in this direction, Al Zeyoudi pointed out.

The CEPA will also enable investment flows into tourism infrastructure projects and opening more flights between both countries, Al Zeyoudi said, adding that daily flights between Dubai and Tel Aviv will start next month.

The CEPA also offers greater market access for UAE services exports, of which travel and aviation will be the major beneficiaries, he said.

"Business travel will accelerate as more Israeli businesses open up here and Israeli companies participate in conferences and events – which began with Expo 2020 Dubai. Obviously, in terms of visitor numbers, the Abraham Accords created the biggest single change the UAE has welcomed more than 250,000 Israeli visitors by the end of 2021, and that figure will only climb once we fully emerge from Covid," said Al Zeyoudi.

Visa-free entry for all UAE nationals to Israel, the beginning of daily Emirates flights between Dubai and Tel Aviv in June, Etihad Airways and Wizz Air offering direct flights from Abu Dhabi to Tel Aviv-Yafo also help boost the tourist traffic between both countries, the minister said.

The minister said the CEPA is a broad-based deal that is designed to elevate all industry sectors – this is clear from the near-uniformity of the tariff reduction.

However, it is clear that both economies have similar priorities such as renewable energy, healthcare, advanced technology, water and food security, logistics and transport, and space sciences.

Since the signing of the Abraham Accords, there has been a series of important MoUs and investments in these sectors, Al Zeyoudi said.

—issacjohn@khaleejtimes.com


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