Economic milestone:Japan-UAE relations set to hit new peak

Japan and the UAE bilateral relations look set to scale new peak as both the nations are ready to conclude negotiations on Comprehensive Economic Partnership Agreement (CEPA) soon. This landmark agreement aims to eliminate trade barriers, enhance market access, and unlock new opportunities for businesses across sectors.

The UAE-Japan CEPA aligns with the UAE’s ambitious goal of achieving Dh4 trillion ($1.1 trillion) in foreign trade by 2031, while supporting Japan’s efforts to diversify its economic partnerships and secure sustainable energy supplies. This step aims to open new avenues for trade and investment relations, strengthen economic ties, and enhance development partnerships in a way that supports economic prosperity and creates more opportunities for business communities.

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Both countries’ recently convened the third round of the subcommittee on political diplomacy and international cooperation under the Comprehensive Strategic Partnership Initiative (CSPI) in Tokyo. The meeting reaffirmed the strength of UAE-Japan relations, grounded in shared strategic interests, longstanding ties, and reinforced by regular high-level visits and engagements. In a statement to Wam recently, UAE Minister of Foreign Trade Dr Thani bin Ahmed Al Zeyoudi disclosed that negotiations on CEPAs between the UAE and both Japan and the EU have reached advanced stages.

“The Japanese and UAE governments are currently negotiating the Japan-UAE Economic Partnership Agreement (EPA), which is key to enhancing our economic ties,” said Jun Imanishi, Consul-General of Japan in Dubai and the Northern Emirates.

Analysts and executives said the outlook for UAE-Japan relations is extremely positive, focusing on deepening economic ties through a new CEPA for sustainable growth, expanding clean energy (hydrogen), advanced tech (AI, robotics), and logistics. It will be leveraging strong existing trade (UAE is Japan's top Arab partner) and cultural links (anime, arts), aiming for innovation-led partnership beyond oil.

Relations Beyond CEPA

Jun Imanishi said the Japanese government is targeting an increase in direct investment to ¥120 trillion ($810 billion) by 2030, through Programme for Promotion of Foreign Direct Investment in Japan 2025. By the end of 2024, direct investment reached ¥53.3 trillion, more than doubling since 2014.

“Japan is a global hub for cutting-edge technological development and presents attractive investment opportunities in safe and secure environment. Japan’s workforce is skilled, process driven, and quality-oriented.”

Japan offers a diverse and strategically aligned range of opportunities for UAE investors across innovation, sustainability, advanced industries, and healthcare — supported by robust institutional frameworks that facilitate market entry and long-term collaboration.

Japan and the UAE share a distinguished history of strategic cooperation dating back to the 1970s, when their partnership was primarily anchored in energy trade. Today, these relations are rapidly expanding into technology, clean energy, space exploration, finance, and cultural exchange as both nations are working toward deeper economic collaboration through initiatives such as the CEPA negotiations, with a shared goal of achieving sustainable growth and diversifying beyond oil.

The visionary leadership of both the countries is committed  to deepen cooperation across key strategic sectors, including the economy, space, advanced technology, artificial intelligence, and digital transformation, as well as enhanced collaboration within multilateral fora in support of stability, prosperity, and sustainable development for both countries and their peoples.

UAE investors in Japan

Nobuyuki Nakajima, Managing Director, JETRO Dubai, Middle East and North Africa, said the UAE investors are increasingly drawn to Japan’s stable and innovation-driven economy, with several sectors offering promising opportunities for collaboration and growth.

“Japan and the UAE are deepening their investment ties, driven by shared goals in sustainability, innovation, and economic diversification. Their partnership is evolving from traditional energy trade to advanced industries and technology,” according to Nakajima.

He said Japan’s national priorities such as digital transformation, green growth and healthcare innovation, among others, mirror the UAE’s diversification goals and provide fertile ground for co-investment in cutting-edge sectors.

“Bilateral investment between Japan and the UAE has grown steadily, driven by mutual interests in, technology, innovation, healthcare, food and beverages. However, investors from both countries face several challenges when entering each other’s markets. JETRO plays a central role in addressing these obstacles and deepening economic ties,” Nakajima said.

Bilateral Relations at a Glance

Energy & Economy: The UAE is a major supplier of oil and gas to Japan, while Japanese investment in UAE infrastructure especially in healthcare, aviation, and tech is significant with over 400 Japanese companies operating in the country.

Strategic Partnership: Both nations are formally linked through initiatives like the Comprehensive Strategic Partnership Initiative (CSPI), fostering cooperation in new areas. They are expected to conclude CEPA talks soon.

Diversification: Both countries are moving beyond oil into renewable energy, space, AI, robotics, medical services, and e-sports.

Space Collaboration: Joint efforts, including the launch of the UAE's ‘Hope Probe’ and ‘KhalifaSat’ from Japan are prime example of space collaboration.

Trade and Investment: Bilateral trade is growing, with UAE investment in Japan increasing, and non-oil trade expanding.

People-to-People contacts: A large Japanese community resides in the UAE, with growing cultural and youth exchanges.

Diplomacy: Regular high-level meetings and subcommittee sessions reinforce commitments to peace, security, and economic growth.

Tourism gains momentum

There is no second opinion that Japan National Tourism Organization (JNTO) has been promoting tourism inflows to the country from the UAE since its Dubai office opening in 2021. JNTO Dubai Office is confident of sustaining the tourism momentum generated by the Expo 2025 Osaka, Kansai.

Daisuke Kobayashi, Executive Director, JNTO Dubai Office, said Japan offers countless hidden gems, including many in rural areas that are less known in the Middle East.

“By promoting these local regions, we aim to distribute visitor traffic more evenly across the country, allowing travellers to enjoy authentic experiences while supporting sustainable tourism development nationwide,” he said.

Since the pandemic, he said Japan has welcomed a record number of visitors, with 2024 marking an all-time high and 2025 continuing to grow at an even faster pace. “In 2025, we expect the number of visitors from the GCC to nearly double compared to pre-pandemic levels,” he said.

Model of Strategic Cooperation

As Japan and the UAE look to the future, their partnership stands as a model of strategic cooperation — anchored in shared values, mutual respect, and a common vision for sustainable growth and economic diversification. Both nations will continue to explore new horizons, foster innovation, and create opportunities that benefit not only their peoples but also the global economy.

The bilateral trade between the two countries remains robust, chracterised by an asymmetrical balance favouring the UAE. By September 2025, Japan's exports to the UAE reached ¥177B, up 24.8 per cent year-on-year basis, driven by cars and commodities, whereas imports stood at ¥385B, down 8.83 per cent due to declines in raw aluminium and petroleum gas. Over the past five years, bilateral trade has grown at an annualised rate of 33.2 per cent, according to the Obervatory of Economic Complexity (OEC), an online data visualisation and distribution platform.

Looking ahead, the outlook for bilateral trade in 2026 is optimistic, with CEPA completion expected soon to eliminate tariffs and spur non-oil trade growth, potentially exceeding Dh200 billion. Amid GCC-Japan FTA progress, bilateral ties could drive 10-15 annual growth in AI, clean energy, and infrastructure, despite global volatility.

For Japan, despite broader export weaknesses and yen volatility in Q4 2025, a CEPA could enhance market access, potentially accelerating growth in automotive and energy sectors. Globally, WTO forecasts 2.4% merchandise trade growth in 2025, supporting positive momentum for UAE-Japan relations amid geopolitical shifts and diversification efforts.

Muzaffar Rizvi

muzaffarrizvi@khaleejtimes.com

Muzaffar Rizvi is an accomplished financial journalist with more than 25 years of experience in the UAE and Pakistan. He has good writing skills, strong grip on production and an excellent news sense.