The UAE and Israel are inching closer to a bilateral trade and economic co-operation agreement that could potentially propel Israel into the list of the UAE’s top 10 trading partners, according to a senior official.
“We understand that the governments are at very advanced negotiations about the free trade agreement, which we hope will be accomplished before the summer of this year,” Hamad Buamim, president and chief executive of Dubai Chambers, told the Dubai-Israel: Future Horizons Mission business forum on Tuesday.
“This will support investments and trade between both countries.”
The chamber has worked with the Ministry of Economy and the Ministry of Foreign Trade to support the ongoing discussions by submitting the business community’s views on trade relations between the two countries.
Israel and the UAE started negotiations for a trade and economic co-operation deal in November, a couple of months after the Emirates launched similar discussions with India.
Earlier this month, the UAE signed a Comprehensive Economic Partnership Agreement (CEPA) with India that is expected to boost non-oil trade between the two countries to $100 billion in five years, from $60bn currently.
“[The] Israel [deal] is much smaller, of course. We hope it will bring them to be in the top 10 trading partners [list],” Mr Buamim told The National on the sidelines of the event on Tuesday.
“What we are looking to do with Israel is [slightly] different than just pure trade. It is about transfer of technology, it’s more about collaborating in different [strategic areas].”
The UAE, the Arab world’s second-biggest economy, has made a strong recovery from the coronavirus-induced economic slowdown and has maintained strong trade momentum despite global travel uncertainty.
Its exports are projected to expand at an average annual rate of more than 6 per cent to Dh1.1 trillion ($299bn) by 2030, as the UAE continues to diversify its economy away from oil, Standard Chartered said in a report this month.
The country is further strengthening relations with key trading partners. It is currently negotiating a CEPA agreement with Indonesia, the biggest South-East Asian economy, and a similar deal is being negotiated with South Korea, which is expected to be finalised by the end of 2022. The agreement with South Korea aims to enhance the economic partnership between the two countries to a minimum of $20bn in the next three to five years.
“We see certain markets with certain potential,” Mr Buamim said.
Relations between the UAE and Israel have expanded since the two countries formally established diplomatic links through the Abraham Accords in September 2020.
Trade between the countries reached $700 million within a year of the major agreement as they expanded co-operation in sectors such as aviation and finance.
Dubai's non-oil trade with Israel reached nearly Dh2bn in the first half of 2021.
Dubai International Chamber, one of the three chambers operating under the restructured Dubai Chambers, is currently hosting some of the top Israeli companies across sectors such as aerospace and FinTech.
The delegation, led by Ittai Ben-Zeev, chief executive of the Tel Aviv Stock Exchange (Tase), held more than 200 meetings with UAE businesses.
“The UAE is known for its long-term planning and perspective and I am confident that the combination of Israel’s innovation and advanced industry with the UAE’s far-reaching perspective and vision will be a great strategic contribution to both countries,” he said.
In December 2020, Tase signed an agreement with the Abu Dhabi Securities Exchange, the second-largest stock market in the Arab region, to explore opportunities to further grow capital markets in the UAE and Israel.
Work on the initial agreement is continuing and the cross listing of securities and investor access to each other’s markets to tap into liquidity pools will happen once regulators amend rules and regulations, he told The National.
Mr Ben-Zeev does not expect the Israeli stock exchange or the equity markets across the broader Middle East to experience an impact from the Russia-Ukraine conflict that has roiled the global equities and commodities market.
“I don’t see any specific implication for Israel or for the Middle East because of the conflict,” he said.
If anything, the crisis presents an opportunity for global investors to invest in the region, he added.
Overall, he expects 2022 to be a “more volatile year” for global equities and said it would be difficult for the US Federal Reserve to increase rates at a rapid pace.
“I do believe that for years to come, equity will remain a preferred asset class because I don’t see interest rates going high so soon,” Mr Ben-Zeev said.
“What will happen because of the Ukraine crisis … it will be almost impossible to increase interest rates as people anticipated two months ago.”