Israel-UAE Free Trade Deal

Israel-UAE Free Trade Deal

News: Recently, Israel signed a free trade deal with the United Arab Emirates, its first with an Arab country, building on their US-brokered normalization of relations in 2020.

Significance of FTA:
• It is a step forward on the deal brokered by US – The Abraham Accords, normalized relations between Israel and four Muslim countries – The UAE, Bahrain, Morocco and Sudan.
• Access to Markets and Lower Tariffs - Businesses in both countries will benefit from faster access to markets and lower tariffs as these nations work together to increase trade, create jobs, promote new skills and deepen cooperation. The deal abolishes customs duties on 96% of the products exchanged between the two sides. The agreement also relates to regulatory and standardisation issues, customs, collaboration, government procurement, e-commerce and intellectual property rights.
• Economic Potential - Israel's relationship with the UAE has great economic potential due to the geographic and cultural proximity between the peoples, as well as the UAE’s unique characteristics. The UAE is the second largest economy in the Arab world (after Saudi Arabia), with significant weight placed on technology products and advanced solutions, where Israel holds a relative advantage.
• Improve Trade - This deal will push the value of non-oil bilateral trade between Israel and the UAE beyond $10 billion. UAE-Israel trade will exceed $2 billion in 2022, rising to around $5 billion in five years, bolstered by collaboration in renewables, consumer goods, tourism and the life sciences sectors.

How does it help India?
• India recently has signed the Comprehensive Economic Partnership Agreement (CEPA) with the UAE. It has the potential for extensive trilateral cooperation and business partnership.
• It has also further created opportunities for collaborations in different fields with the US. These were made possible by the Abraham Accords, which have been a significant turning point in promoting peace and prosperity for all.
• Israel, India, the UAE, and the US are also part of a new grouping, West Asian Quad which was established as a forum for economic cooperation. They are pursuing a constructive agenda focused on the economy, especially infrastructure projects.

Way Forward
• Traditionally, the Gulf Countries have maintained distance with Israel owing to their infamous historic past. This trade agreement is a shift from the past which brings a new paradigm for the West Asian region, and represents the importance of building significant partnerships.
• It not only offers significant diplomatic ties in the near future but also helps in overcoming the long term conflicts in the Middle-east region between Israel and many countries of West Asia.