On Tuesday, in a significant development Israel has signed a free trade agreement (FTA) with the United Arab Emirates marking its first big trade accord with an Arab state.
The agreement sees removal of tariffs as well as a boost to annual bilateral trade to more than $10 billion.
The accord was signed in Dubai by Israel’s Minister of Economy and Industry Orna Barbivai and her counterpart, UAE Minister of Economy Abdulla bin Touq Al Marri, following months of negotiations.
Tariffs will be eliminated on 96% of goods with the UAE predicting that the Comprehensive Economic Partnership Agreement would boost bilateral trade to more than $10 billion a year within five years.
In a tweet Emirati trade minister Thani Al Zeyoudi said, the trade deal wrote “a new chapter in the history of the Middle East. Our agreement will accelerate growth, create jobs and lead to a new era of peace, stability, and prosperity across the region”.
According to Dorian Barak, the president of the UAE-Israel Business Council, the trade agreement defined tax rates, imports and intellectual property, which would encourage more Israeli companies to set up offices in the UAE, especially in Dubai.
The council has predicted that there will thousands of Israeli companies working in or through the UAE by the end of the year.
“The domestic market doesn’t represent the entirety of the opportunity. The opportunity is really setting up in Dubai, as many companies have, in order to target the broader region,” said Barak.
According to official Israeli data, Emirati-Israeli trade touched $1.2 billion in 2021.
Ahead of the signing, Israel’s economy ministry had said the accord would remove tariffs on food, agriculture, cosmetics, medical equipment and medicine.
“Together we will remove barriers and promote comprehensive trade and new technologies, which will form a solid foundation for our common path, will contribute to the well-being of citizens and make it easier to do business,” said Barbivai.
For the UAE, the accord is its second bilateral free trade agreement (FTA) after signing a similar deal with India in February. It is also in bilateral trade talks with several other countries, including South Korea and Indonesia.