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Israel strikes a free trade deal with the UAE, the first of its kind in the Arab world

Signing ceremony between Isreal and UAE

On Tuesday, Israel signed its first free trade agreement with an Arab country, with the United Arab Emirates, following on their normalization of diplomatic relations in 2020, which was facilitated by the United States.

Amir Hayek, Israel’s ambassador to the oil-rich UAE, tweeted “mabruk” — Arabic for “congratulations” — alongside a photo of Emirati and Israeli officials clutching paperwork at a signing ceremony in Dubai.

The arrangement, which, according to the Israeli side, eliminates customs charges on 96 percent of all products handled, has been praised as a “exceptional triumph” by the Emirati envoy to Israel, Mohamed Al Khaja.

“As our nations work together to grow trade, create employment, encourage new skills, and deepen cooperation, businesses in both countries will profit from speedier access to markets and lower tariffs,” Khaja tweeted.

The 2020 agreement was part of the Abraham Accords, which were negotiated by the United States and saw Israel establish diplomatic connections with Bahrain and Morocco.

According to Israeli estimates, two-way trade between Israel and the UAE totaled $900 million last year.

Dorian Barak, president of the UAE-Israel Business Council, projected that trade between the two regional powerhouse economies would soon increase.

In a statement, he predicted that “UAE-Israel trade will top $2 billion in 2022, rising to about $5 billion in five years, backed by partnership in renewables, consumer products, tourism, and the life sciences sectors.”

“Dubai is quickly becoming a hub for Israeli enterprises looking to sell their goods and services in South Asia, the Middle East, and the Far East.”

By the end of the year, he estimates that about 1,000 Israeli enterprises would be operating in and via the UAE.

Trade Diplomacy

The United Arab Emirates was the first Gulf country to normalize relations with Israel, and only the third Arab country after Egypt and Jordan to do so.

Negotiations for a free trade agreement began in November and were completed after four rounds.

The most recent meeting took place in Egypt in March between Israeli Prime Minister Naftali Bennett and Sheikh Mohammed bin Zayed Al-Nahyan, the UAE’s long-time de facto ruler who took over as president last month when his half-brother Sheikh Khalifa died.

In March, Israel held a summit of top diplomats from the United States, the United Arab Emirates, Bahrain, and Morocco.

Sudan pledged to normalize relations with Israel in 2020, but the war-torn northeast African country has yet to reach an agreement.

Israel has already signed free trade agreements with the United States, the European Union, Canada, and Mexico, among others.

Israel and Rabat struck a trade agreement in February to create special industrial zones in Morocco.

Palestinan Issue

The Abraham Accords broke with a long-standing pan-Arab policy of isolating Israel until it leaves the occupied lands and embraces Palestinian statehood.

The accords reached under then-US President Donald Trump were denounced by Palestinians, and the crisis continues to exacerbate tensions, notably between Israel and the United Arab Emirates.

The signing took place just two days after tens of thousands of Israelis marched through Jerusalem’s Old City in a nationalist procession commemorating Israel’s 1967 takeover of east Jerusalem.

In 1980, Israel annexed east Jerusalem, a decision that was never acknowledged by the international community.

The United Arab Emirates (UAE) “strongly condemned” Israel’s “storming” of Jerusalem’s Al Aqsa mosque compound, one of Islam’s holiest sites, on Monday.

According to the official WAM news agency, the UAE “reiterated its clear position on the need to ensure full protection for Al Aqsa Mosque and cease significant and provocative violations taking place there.”

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