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

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.

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.

—issacjohn@khaleejtimes.com