$900 million of trade between the countries in 2021

‘A historic milestone’: Israel and UAE sign free trade agreement

Officials in Jerusalem moved quickly to conclude the four rounds of talks, as Emiratis look to produce tangible results from the Abraham Accords

Lazar Berman is The Times of Israel's diplomatic reporter

File: Then-economy minister Orna Barbivai (r) signs the Israel-UAE free trade agreement in Jerusalem with Thani bin Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade (Gideon Sharon/GPO)
File: Then-economy minister Orna Barbivai (r) signs the Israel-UAE free trade agreement in Jerusalem with Thani bin Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade (Gideon Sharon/GPO)

After five months of negotiations, Israel and the United Arab Emirates signed on Friday a free trade agreement between the two countries, 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 Economy and Industry Ministry has been working to expand economic relations between Israel and the United Arab Emirates and to realize its economic potential,” said Barbivai.

“The finalization 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 trade relations in the United Arab Emirates,” she added.

The agreement will officially take effect following a ratification process in both countries. Government lawyers are currently drawing up the detailed documents needed to put the agreements into practice.

The “comprehensive” agreement covers regulation, customs, services, government procurement, e-commerce and protection of intellectual property rights, the Economy Ministry said in a statement.

Foreign Minister Yair Lapid (R) welcomes his Emirati counterpart Sheikh Abdullah bin Zayed al-Nahyan at Sde Boker in southern Israel on March 27, 2022, ahead of the Negev Summit. (Jack Guez/ AFP)

Some 95% of products traded between the countries, including food, agriculture, cosmetics, medical equipment and medication, will be exempt from customs duty, according to the statement. A number of products will be exempt immediately, while others will gradually be granted exemptions.

The UAE 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 agreement with Emirati Foreign Minister Abdullah Bin Zayed at this week’s Negev Summit in Sde Boker, said the pact would “bring tangible benefits to citizens of Israel and of the region’s nations.”

Free trade talks kicked off in November 2021. During his December visit to Abu Dhabi, Prime Minister Naftali Bennett discussed the 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 more quickly in the talks.

Abu Dhabi Crown Prince Mohammed bin Zayed al-Nahyan (R), Egyptian President Abdel-Fattah el-Sissi (C) and Prime Minister Naftali Bennett meet in Sharm el-Sheikh, March 22, 2022 (Spokesman of the Egyptian Presidency)

In the trilateral summit in Egypt last week between Bennett, MBZ and Egypt’s Abdel Fattah el-Sissi, the Israeli and Emirati leaders agreed to conclude the talks within a matter of days.

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 meaningfully enhance the 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 how serious the Israeli side was about the relationship, diplomatic sources told The Times of Israel.

On the UAE side, the agreement is a meaningful 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 accord.

Economy Minister Orna Barbivai at the Knesset in Jerusalem on October 6, 2021. (Yonatan Sindel/Flash90)

Diplomatic sources said that access to goods coming from the UAE could have a noticeable effect on lowering the cost of living in Israel.

Israeli exports on agricultural and other foods products will be entirely free from tariffs. This is an indication of the priorities of both countries, diplomatic sources told The Times of Israel. The Russia-Ukraine war has disrupted important European export markets for Israeli producers, while the UAE is always focused on ensuring food security for its 10 million residents, and world-class dining for the millions of tourists coming through Dubai and Abu Dhabi.

Trade between the countries reached $900 million in 2021, the first full year after the signing of the Abraham Accords. That figure is expected to grow significantly.

Israeli farmers plant za’atar plants in fields in the Jezreel Valley, northern Israel, on November 19, 2019. (Anat Hermony/Flash90)

“We’re looking to create over a trillion dollars of economic activity with Israel over the next decade,” 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 approved a joint Israel-UAE R&D fund to support tech 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 over the next decade. The UAE will provide matching funds, for a total of NIS 300 million for 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 week before, The Wall Street Journal reported that the UAE sovereign wealth fund Mubadala Investment invested $100 million in six Israeli venture capital firms.

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