DUBAI (REUTERS) – Israel signed a free trade agreement with the United Arab Emirates on Tuesday (May 31), its first big trade accord with an Arab state that reduces or removes tariffs and over time targets lifting annual bilateral trade to more than US$10 billion (S$13.7 billion).
The pact was signed in Dubai by Israel’s Minister of Economy and Industry Orna Barbivai and her counterpart, UAE Minister of Economy Abdulla bin Touq Al Marri, after months of negotiations.
Tariffs will be eliminated on 96 per cent of goods with the UAE predicting the Comprehensive Economic Partnership Agreement would boost bilateral trade to more than US$10 billion a year within five years.
Emirati trade minister Thani Al Zeyoudi said the trade deal wrote “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,” he wrote on Twitter.
The agreement has been signed amid escalating Israeli-Palestinian violence.
The UAE foreign ministry on Monday condemned what it called a “storming” of Al Aqsa compound in Jerusalem by “extremist settlers under the protection of Israeli forces”. That appeared to refer to visits by thousands of Jews, who revere the site as vestige of their two ancient temples, on the day marking Israel’s capture of Jerusalem’s Old City in a 1967 war. Some of the visitors prayed and held up Israeli flags – resulting, police said, in their removal.
Al Aqsa, also the third holiest site in Islam, is situated in East Jerusalem’s Old City that Israel has annexed but is not recognised internationally.
The foreign ministry, in the written statement, also asked “Israeli authorities to take responsibility for reducing escalation and ending all attacks and practices that lead to the continuation of tensions while underscoring the need to exercise maximum restraint to avoid further instability”.
The same day invited media were told they could no longer attend the signing of the trade deal. No reason was given for the sudden change.
Israel’s Barbivai told Israeli radio on Tuesday she had heard “nothing out of the ordinary” about the Al Aqsa violence so far during her visit to the UAE.
President of the UAE-Israel Business Council Dorian Barak said the trade agreement defined tax rates, imports and intellectual property, which would encourage more Israeli companies to set up offices in the UAE, particularly in Dubai.
The council predicts there will be almost 1,000 Israeli companies working in or through the UAE by the end of the year doing business with South Asia, the Far East and Middle East.
“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,” Barak told Reuters by phone.
Emirati-Israeli trade reached US$1.2 billion in 2021, according to official Israeli data.