The UAE-Israel Comprehensive Economic Partnership Agreement (UAE-Israel Cepa), which was signed on Tuesday, is expected to push bilateral trade to more than $10 billion within five years —more than seven times an increase compared to $1.4 billion worth of trade in 2021.
Abdulla bin Touq Al Marri, the UAE’s Minister of Economy and his Israeli counterpart, Major General (Retd) Orna Barbivay, signed the agreement in Dubai, marking a new era of cooperation between the two nations that established diplomatic ties in September 2020.
The deal is aimed at advancing bilateral trade, and is expected to add $1.9 billion to the UAE’s GDP within the same time period.
Al Marri said the UAE continues to take bold steps to advance the economy and enhance the country’s status as a regional hub for trade, investment, and the industries of the future. “This agreement will create a new paradigm for the region. It will accelerate growth and underscores a shared belief that the only way to build resilient and sustainable economies in a complex world is by doing so together,” he said.
He further said: “The agreement also symbolises something greater than business: the importance of building meaningful partnerships. Our agreement can demonstrate to nations and governments around the world that cooperation and dialogue are the best ways to transform challenges into opportunities.”
Israel’s Minister Barbivai said her visit is of strategic importance for economic relations between Israel and the UAE.
“Together, we will break down obstacles and we will advance comprehensive trade and new technologies that will serve as a basis for our shared path, contribute to the benefit of our citizens and make it easier to do business. This is the first full free trade agreement made with an Arab state, that is happening such a short time after the establishment of diplomatic relations,” said Barbivai.
Barbivay said the agreement aims to provide long-term certainty for businesses and service providers, establishing mechanisms for cooperation and reducing barriers to trade in services. “Several sectors are covered, enabling market access in various fields such as business and professional services, research and development, computer-related services, and environmental services,” she said.
The agreement builds on the exponential growth in trade and investment the UAE and Israel have enjoyed since the signing of the Abraham Accords. From September 2020 to March 2022, non-oil trade surpassed $2.5 billion, while it reached $1.06 billion in the first three months of 2022 – five times the total from the same period in 2021.
New Doors Opened
Dr. Thani Al Zeyoudi, UAE Minister of State for Foreign Trade, said the agreement will also open the doors to new export opportunities in the services and services-related sectors.
He said the second bilateral trade agreement signed by the UAE, offers unprecedented economic benefits for both parties by lowering or eliminating tariffs on more than 96% of tariff lines and 99% value of trade, enhancing market access for exporters, attracting new investment, and creating opportunities in key industries, including energy, environment, and digital trade. The deal will also support service sectors such as hospitality, financial services, distribution, and construction and provide a platform for SMEs in both countries to expand internationally.
The UAE-Israel CEPA is part of a series of bold initiatives that the UAE has launched to build a stronger, more resilient economic future and drive the global post-Covid-19 recovery. In 2021, as part of its Projects of the 50 initiative, the UAE embarked upon a program of enhancing bilateral trade relations with key partners around the world. The UAE-Israel CEPA is the second bilateral trade accord concluded by the UAE following the UAE-India CEPA, which entered into force on May 1.
The minister said he is confident that “this will have a major catalysing effect on mutual investment flows, which is one of the principal objectives of our Cepa agenda.”
Abraham Accords already kick-started mutual investment platforms, including Abraham Fund, which will mobilise $3 billion in private sector-led investment and development initiatives, he noted.
The Abu Dhabi Investment Office’s (ADIO) first-ever overseas office in Tel Aviv, and the Dubai Investment Development Agency’s MoU with the Manufacturers’ Association of Israel to explore investment opportunities are similar initiatives in this direction, Al Zeyoudi pointed out.