UAE Seeks Solo Trade Agreements as Intra-Gulf Rivalry Heats Up
The UAE is increasingly looking to set up trade agreements independent of the GCC. Is prodding Saudi Arabia in such a way a wise move? The United Arab Emirates (UAE), the Arab world’s second-largest economy, is increasingly pursuing independent bilateral trade agreements, bypassing the Gulf Cooperation Council (GCC), the Saudi Arabia-led regional political and trade
These independent bilateral agreements seek to attract inward foreign direct investment (FDI) into the UAE, which is looking to maintain its status as a regional financial and trade hub, as well as diversify its economy. The UAE has principally been competing with Saudi Arabia when it comes to attracting both FDI and tourism to the Gulf, while the GCC has been negotiating many free-trade agreements (FTAs) with major global economies such as China.
Since late 2021, the UAE has aggressively pursued its own bilateral trade agreements. Termed comprehensive economic partnership agreements (CEPAs), these treaties seek to strengthen the UAE’s international strategic relations as well as improve its position as a global trade and logistics hub. The CEPAs are a key part of the UAE’s global economic partnerships strategy, which aims to increase the size of the national economy from Dh1.4 trillion ($380 billion) to Dh3 trillion over the next decade.
The UAE signed its first CEPA with India in February 2022, after launching negotiations in August 2021. The agreement enables greater access for UAE exports by reducing or removing tariffs on more than 80% of products. The pact aims to generate $100 billion of bilateral trade within five years.
The UAE has signed similar CEPAs with Israel and Indonesia and ratified its latest one with Turkey in May 2023. Under its agreement with Turkey, both sides hope to increase bilateral trade to $40 billion in the next five years. More negotiations are in the pipeline with countries including Thailand and Malaysia.
These bilateral trade deals are taking place despite the UAE being a member of the GCC, the six-member bloc. The other members are Saudi Arabia, Bahrain, Qatar, Oman and Kuwait. The Riyadh-headquartered entity, which has a collective population of 56 million and a combined gross domestic product of $1.6 trillion, is negotiating its own FTAs with major trade partners such as China, South Korea and the UK.
Robert Mason, a non-resident fellow at the Arab Gulf States Institute in Washington, DC, says CEPAs are much quicker for the UAE to negotiate and work out than FTAs that are done through the GCC, which can take decades to conclude. “Because [CEPAs] are comprehensive, they will boost the UAE economy in a number of ways, including enhancing market access through preferential tariffs, and in some cases, such as the UAE-Israel CEPA, establishing rules for digital trade and the protection of intellectual property rights,” he says.
