The United Arab Emirates and Israel ratified a comprehensive economic partnership agreement on Sunday, UAE Foreign Trade Minister Thani bin Ahmed Al Zeyoudi announced.
The agreement was first signed in May and marks yet another stepping stone of progress for the Abraham Accords.
"Another major step in our foreign trade agenda: The UAE-Israel Comprehensive Partnership Agreement has now been ratified by both governments. This deal will eliminate or reduce tariffs on 96% of products, providing a major boost to our industrial and service sectors," he stated.
"Non-oil trade between UAE and Israel hit $2 billion in the first nine months of 2022, up 114% from the same period in 2021... [The agreement] will accelerate this progress as we create opportunities in key sectors such as advanced technology, renewable energy and food security," Al Zeyoudi said regarding the deal which was also mentioned in UAE-based media.
With the ratifications of the Comprehensive Partnership Agreement, tariffs should be reduced on 96% of products.
"The UAE-Israel CEPA will have far-reaching effects on trade between the countries, which has already reached an annualized rate of about $3 billion, including goods and services. By eliminating or reducing tariffs on nearly all products, CEPA builds on the unprecedented interest among Emiratis and Israelis in taking this relationship to new levels," said Dorian Barak, co-founder of the UAE-Israel Business Council.
This fall marked the second anniversary of the accords, for which the UAE hosted a reception in Herzliya. In early December, the UAE also hosted National Day celebrations in Tel Aviv that featured a statement by the UAE ambassador to Israel and incoming prime minister Benjamin Netanyahu.
In May, the Israeli Economy Ministry put out a statement about the agreement. "The agreement, which is comprehensive, significant, and ground-breaking, is expected to increase bilateral trade in goods and services, increase Israeli exports to the United Arab Emirates and provide customs exemption immediately or gradually on 96% of trade between the countries: food, agriculture, cosmetics, medical equipment, medication and more."
The agreement is important and comes amid a number of important developments between the UAE and Israel and other peace partners including Bahrain, Morocco, Egypt and Jordan. In late November, the Dubai Multi-Commodities Centre held an event at the Tel Aviv Stock Exchange to discuss the growing business partnerships between Israel and the UAE.
"The UAE-Israel Business Council predicts trade will reach $3.5 to $4 billion in 2023, and will exceed $5 billion in 2025. The UAE has become the most important hub for Israeli businesses that are focused on the markets of the Greater Middle East, India and Asia. In economic terms, it represents a seismic shift in Israel's position in the region," Barak said.
Paving the way for more trade between Israel and the UAE
As Israel and the UAE move into the third year of the Accords, these kinds of agreements will help pave the way for more trade and increased diversity in that trade.
The initial business rush in the fall of 2020 was part of the enthusiasm that marked the Accords. However, many people noted at the time, especially in the UAE, that it would take time for the hopes and dreams that were let loose in the fall of 2020 to mature.
The pace of this agreement is evidence of that. Details and government approvals take time but the overall trend, with high-level visits by both countries, and other regional groupings such as the Negev Summit and the India-Israel-US-UAE partnership called I2U2, show that progress is being made on multiple levels.
Seth Frantzman is a Ginsburg-Milstein Writing Fellow at the Middle East Forum and senior Middle East correspondent at the Jerusalem Post.