Israel has signed a free trade pact with the United Arab Emirates (UAE), an agreement expected to accelerate economic growth in the region during the coming years.
The deal was signed by UAE Minister of Economy Abdulla bin Touq Al Marri and Israel’s Minister of Economy and Industry Orna Barbivai on May 31 in Dubai after several months of negotiations.
The deal removes or reduces tariffs on 96 percent of goods traded between the two nations. In 2021, bilateral trade was at $1.2 billion. The free trade agreement is expected to push this to over $10 billion per year within the next five years. This is the first time Israel has signed a free trade agreement with an Arab state.
“With the #UAEIsraelCEPA signed, sealed, and delivered, we have written 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,” Thani Al Zeyoudi, the UAE Minister of State for Foreign Trade, said in a May 31 tweet.
Most duties on products that exist at present will be eliminated immediately, with some being removed over a period of three to five years. Some products will still continue to attract customs tariffs, but at a lower rate. Goods like food, medicine, jewelry, diamonds, chemicals, and fertilizers will see a reduction in tariffs.
According to Dorian Barak, president of the UAE–Israel Business Council, there will be almost 1,000 companies from Israel operating throughout the UAE by the year’s end.
“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,” he said to Reuters.
The deal expands on the Abraham Accords, which refers to the establishment of diplomatic relations between Israel and UAE in August 2020 during the Trump administration. Countries including Sudan, Bahrain, and Morocco soon followed by normalizing ties with Israel.
In the past week, Israel also signed agreements with Morocco on science and innovation initiatives and took steps to strengthen economic ties with Egypt.
Despite the free trade deal, UAE officials spoke out against Israeli forces on May 30.
“The UAE today strongly condemned the storming of Al Aqsa Mosque courtyard by extremist settlers under the protection of Israeli forces,” a statement by the Emirati Foreign Ministry said, according to The Jerusalem Post.
With the UAE deal, Israel has now committed to 19 free trade agreements. For the UAE, this was its second free trade pact.
In November 2021, UAE signed its first free trade agreement with India. UAE is also engaged in trade talks with other nations including South Korea and Indonesia.
Reuters contributed to this report.