By Sameena Hamid
New Delhi, June 3: On Tuesday, another milestone, another historical event unfolded in the region as Israel and UAE signed a free trade agreement; Israel’s first within an Arab country.
Celebrated as an historic and important moment for the state of Israel, it is indeed the most important economic fallout since the normalisation of relations between the two countries, known for their antagonistic relations in the past, since September 2020.
The agreement was signed by Abdullah bin Touq Al Marri, UAE’s Minister of economy and his Israeli counterpart Orna Barbivai, Israeli Minister of Economy and industry in a ceremony held at the headquarters of the Ministry of Economy in Dubai.
The free trade agreement excludes 96 per cent of the goods that generate about 99 per cent of the export revenues from custom duties immediately or gradually, giving a significant boost to economic relations between the two signatories. It envisions stepping up non-oil trade to about US$ 10 billion in the next 5 years. The agreement tagged as the comprehensive economic partnership agreement is the second that the UAE has concluded, following a similar agreement that was signed with India that entered into force in early May.
UAE has been one of the most important investors in India and according to the statement minister of economy; has invested more than US$12 billion by the end of 2021. He added that India accounted for more than 25% of the total non- Arab Asian investment in the Emirates.
The Emirates seeks to become a global trade Centre. Consequently, it had announced in September last year a programme of 50 projects aimed at enhancing its global trade network with its major trading partners following a series of comprehensive economic partnership agreements with 8 countries of regional strategic importance. The goal is to double the national economy to reach 3 trillion Dirham (about US$ 810 billion) by 2030 and to stimulate post Covid economic recovery.
In the signing event, the Emirati minister said: “UAE and the State of Israel will create a new model for constructive cooperation between the countries of the region, based on the premise that building flexible and sustainable economies of growth requires cooperation, integration, partnership and openness in light of the challenges the world is currently witnessing.”
He further emphasised that, “This agreement also proves that cooperation and dialogue are the best way to turn challenges into opportunities, noting that trade and investment relations between the UAE and the State of Israel have witnessed rapid growth since the signing of the Abrahamic Peace Agreement in September 2020, as intra-non-oil trade recorded about $2.5 billion since then until the end of March 2022, while it recorded $1.06 billion during the first quarter of this year, which is 5 times what was recorded in the same period last year”.
The comprehensive economic partnership agreement underscores the Emirati vision to use trade and investment as the drivers for sustainable growth for the national economy as well as linchpin for forging robust foreign relations.
The agreement also provides a platform for small and medium industries in both the countries to expand their international presence through cooperation, client networks, and would enhance mutual trade flows in the backdrop of robust growth in both the economies.
Dubai, through which bulk of the UAE export and imports takes place had braced early on to benefit from the normalisation of ties with Israel.
Dubai Chamber of Commerce and Industry conducted a study, immediately after the signing of the Abraham Accord, estimating the value of potential trade between Dubai and Israel to touch US$ 4 billion. It identified metals, precious stones, plastics and its components, oils, mineral fuels, iron and steel, and machinery, electronics as among the top 10 listed items that Dubai and Israel export and import globally and could figure in bilateral trade.
There are as many as seven categories of products that could be re-exported from UAE to Israel. Dubai potentially constitutes a nodal centre for the Israeli exports to the Asian and African markets, while Israel can serve as a gateway for the Emirati exports to the European and American markets.
Food security, collaboration in hi-tech industry and logistics have been identified as important drivers of economic engagements that could bring immense benefit to the private sector and small and medium scale enterprises. Dubai Chamber of Commerce and Industry identified about 80 start-ups specialising in shipping technology in Israel that can enhance operations of UAE ports. The private sector in Dubai is looking to benefit from this collaboration given this strong presence in the food sector and is also the major partner in national space strategy.
Director General of the Dubai Chamber, Hamad Buamin talks of seeking to benefit from Israeli expertise in aeronautics and micro-space industries. The Emirate seeks to make forays into space industries (including space tourism) as a leading sector in the future economy.
The region with enduring conflicts grabbing the headlines has also begun to show its propensity to rapid change and seriousness in constructive engagements. The speed, the scale and the scope of events after the Abraham Accord are taking its sceptics by surprise. Noteworthy aspect of the Israel — UAE free trade agreement is that it is being tagged to a vision of promoting peace, progress and prosperity in the region.
(The content is being carried under an arrangement with indianarrative.com)