Israel and the United Arab Emirates are working on a free trade agreement that would reduce tariffs and introduce other economic benefits, facilitate trade and strengthen cooperation between them. This is yet another sign of the rapid development of the bonds born of the Abrahamic accords.
The news was somewhat startling when Israel’s Ambassador to the United Arab Emirates, Amir Hayek, announced it on October 17 at a business conference in Abu Dhabi that brought together business leaders and entrepreneurs from two Middle Eastern countries.
“Our ambassador was actually addressing the crowd and also addressing the UAE Minister of Commerce, saying, ‘We need to work on the free trade agreement, and we need to do it quickly”, ” Dan Catarivas, director general of foreign trade and international relations at the Israel Manufacturing Association, told JNS. “So he did reveal – he disclosed – that there were various discussions on both sides about concluding an FTA between Israel and the UAE. “
The FTA’s greatest value will be in its symbolism, Catarivas said, noting that the UAE’s tariffs are relatively low to begin with, set at 5%. “An FTA shows that countries have good relations; that all is for the good, ”he said.
Despite the Ambassador’s remarks, an FTA will not take place right away; various actions need to be taken first. Usually there is a feasibility study, then a joint study to judge “the profitability of such an agreement for both parties”, followed by more negotiations, Catarivas explained, although “it could be relatively short. In the short term, I mean in a year or two.
Ze’ev Lavie, director of the international trade relations division at the Federation of Israeli Chambers of Commerce, agreed that the FTA would not happen overnight. “It takes time,” he told JNS. “I think the most important aspect is for both governments to understand that once you have a free trade agreement, it ties the tie together even more.”
Even without the FTA, business is growing rapidly between Israel and the United Arab Emirates. As of July 29, trade had reached $ 675 million, according to figures released by the Federation of Israeli Chambers of Commerce. Trade is expected to reach $ 1.5 billion by the end of the year, a scale equivalent to that between Israel and Russia.
Mutual trade could reach $ 5 billion in a few years, according to reports. “Definitely we’re talking billions of dollars, both import and export,” Catarivas said.
This number not only includes the United Arab Emirates, which is a relatively small market with a population of around 10 million, but also the greater potential of the surrounding markets for which the United Arab Emirates serves as a hub in the global logistics supply chain.
“What’s really interesting is that the UAE could serve as a platform, a springboard, for Israeli export out of the UAE. … The UAE is therefore a gateway to other markets, ”said Catarivas.
“The Gulf is a commercial hub for many European and Asian companies,” he stressed. Israel can use UAE ports to “store and repackage cargo,” thereby reducing transit time to other markets, including India and Africa.
Lavie agreed, saying “The UAE has an amazing port system. They have Jebel Ali Port which is one of the largest and busiest in the world. You have the Emirates and Etihad [airlines], which can reach hundreds of destinations with a huge fleet of hundreds of flights.
Indeed, the stepping stone works both ways as Lavie noted that the UAE can use Israeli ports to connect to the North American market – “a market with which they only have 4% of their world trade.” .
Catarivas warned that FTA negotiators must ensure that the deal does not become a loophole for other countries to bypass Israeli customs by passing through the United Arab Emirates before reaching Israel. The mutual trade deal should only cover Israeli and Emirati products, he said.
He added that the agreement should also include a mechanism to resolve NTBs (non-tariff barriers), such as quotas and levies; it “needs the right kind of framework to ensure that it is truly a positive, vibrant and effective platform for solving the economic problems between the two countries.”
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