After five months of negotiations, Israel and the United Arab Emirates signed a free trade agreement between the two countries on Friday, hailed as a “significant and historic milestone.”
On Tuesday, Economy Minister Orna Barbivai met in Jerusalem with Thani bin Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade, for the fourth and final round of talks.
The two signed the agreement at the David Citadel Hotel in Jerusalem on Friday.
“Since the establishment of the Abraham Accords, the Ministry of Economy and Industry has been working to expand economic relations between Israel and the United Arab Emirates and realize their economic potential,” Barbivai said.
“The completion of the negotiations is a significant and historic milestone in the relationship between the countries and we will continue to assist the Israeli business community in establishing business relations with the United Arab Emirates,” he added.
The agreement will officially enter into force after a ratification process in both countries. Government lawyers are currently drafting the detailed documents necessary to implement the agreements.
The “comprehensive” agreement covers regulation, customs, services, public procurement, electronic commerce and protection of intellectual property rights, the Economy Ministry said in a statement.
About 95% of products traded between the countries, including food, agriculture, cosmetics, medical equipment and medicine, will be exempt from customs duties, according to the statement. A number of products will be exempted immediately, while others will be gradually granted exemptions.
The United Arab Emirates and Israel signed a normalization agreement in 2020 as part of the US-backed Abraham Accords.
Foreign Minister Yair Lapid, who discussed the free trade deal with UAE Foreign Minister Abdullah Bin Zayed at this week’s Negev Summit in Sde Boker, said the pact “will bring benefits tangible to the citizens of Israel and the nations of the region.
Free trade negotiations began in November 2021. During his december visit In Abu Dhabi, Prime Minister Naftali Bennett discussed free trade talks with Crown Prince Sheikh Mohammed bin Zayed Al Nahyan (MBZ), the country’s de facto ruler. The two leaders agreed to move faster in the talks.
At the trilateral summit in Egypt last week between Bennett, MBZ and Egypt’s Abdel Fattah el-Sissi, Israeli and Emirati leaders agreed to conclude the talks within days.
It is a great privilege to conclude negotiations today to formulate a full and comprehensive free trade agreement with the United Arab Emirates, a ground-breaking agreement, the first of its kind with an Arab state. 95% of the products traded between the countries are included in the agreement and will be tax-free. Thanks to the Prime Minister and the Foreign Minister for concentrating their joint efforts to reach an agreement. @naftalibennett @yairlapid pic.twitter.com/m6IkHjyBKl
– Orna Barbivay Orna Barbivay (@OrnaBarbivay) April 1, 2022
Bennett said in a statement that “the good relations that have already been created between the countries are being strengthened today in the form of a free trade agreement, which will significantly enhance economic cooperation for the benefit of the citizens of the two countries.”
For the Israeli political bureaucracy, the five-month process to conclude such an agreement was relatively quick. The pace underscored to the Emiratis the seriousness of the Israeli side regarding the relationship, diplomatic sources told The Times of Israel.
For the UAE, the agreement is a significant step in creating tangible benefits for its citizens from the Abraham Accords. Emirati leaders regularly speak of the importance of ensuring that their people understand and feel the effects of the 2020 deal.
Diplomatic sources said that access to goods coming from the United Arab Emirates could have a notable effect in reducing the cost of living in Israel.
Israeli exports of agricultural products and other food products will be totally free of tariffs. This is an indication of the priorities of both countries, diplomatic sources told The Times of Israel. The war between Russia and Ukraine has disrupted important European export markets for Israeli producers, while the United Arab Emirates is always focused on ensuring food security for its 10 million residents and world-class dining for the millions of tourists who They arrive in Dubai and Abu Dhabi.
Trade between the countries reached $900 million in 2021, the first full year after the Abraham Accords were signed. That figure is expected to grow significantly.
“We seek to create more than a trillion dollars of economic activity with Israel over the next decade,” said Emirati Economy Minister Abdulla bin Touq Al-Marri. said in September during a virtual event marking the first anniversary of the Abraham Accords.
In January, Israel’s cabinet passed a joint R&D fund between Israel and the United Arab Emirates to support technology projects involving Israeli and Emirati companies.
The fund, which was proposed by Lapid and Science, Technology and Innovation Minister Orit Farkash-Hacohen, will allocate NIS 15 million a year for the next decade. The UAE will provide matching funds, totaling NIS 300 million over the life of the fund.
The fund is part of a wave of investment between the countries in the wake of the Abraham Accords. The previous week, The Wall Street Journal reported that the United Arab Emirates’ sovereign wealth fund, Mubadala Investment, invested $100 million in six Israeli venture capital firms.