UAE is boosting trade through Comprehensive Economic Partnership Agreements

Two years after the launch of the first Comprehensive Economic Partnership Agreement (CEPA) with India, the United Arab Emirates (UAE) has been actively working toward boosting trade through partnering with multiple countries. This initiative aligns with the country's vision and roadmap, unveiled in the "Projects of the 50" in 2021, which aims to foster a new phase of growth for the UAE, both domestically and internationally.

Overview of first CEPA entered into force: UAE-India CEPA

The UAE-India CEPA has significantly contributed to the advancement of trade, with bilateral exchanges increasing from US$73b (April 2021 to March 2022) to US$84b (April 2022 to March 2023), registering a year-on-year increase of 16%.

Multiple sectors have witnessed substantial growth. For instance, gems and jewelry exports to the UAE expanded by almost 64% in just two years. Additionally, the drugs and pharmaceuticals industry, as well as the horticulture (fruits and vegetables) industry, have also experienced considerable growth.

The UAE-India CEPA has paved the way for multiple investment opportunities by UAE entities in India and has driven notable Indian investments in the UAE, including one of the largest marketplaces for international buyers and sellers to trade locally and globally.

CEPAs currently in force: Israel, Indonesia, Turkey and Cambodia

Following the first CEPA the UAE signed with India in 2022, four more CEPAs have been concluded and entered into force.

Following the CEPA with India, the UAE concluded its second CEPA with Israel, which entered into force on 1 April 2023. The agreement includes the removal or reduction of tariffs on 96% of goods traded between the nations. The UAE-Indonesia CEPA, which focused on attracting investment in the energy, logistics, agriculture and infrastructure sectors, was concluded next. A key element of the UAE-Indonesia CEPA is its inclusion of provisions on digital trade, streamlining customs procedures and trade facilitation as well as Islamic economics. The agreement came into force on 1 September 2023, along with the UAE-Turkey CEPA.

Trade between the UAE and Turkey jumped 40% in 2022, the fastest rate of growth among the UAE's top 10 export markets. The UAE-Turkey CEPA is expected to boost the value of non-oil bilateral trade between the two countries to US$40b in the five-year period from the effective date of the CEPA with Turkey, eliminating or reducing customs duties on 82% of goods.

The most recent CEPA, which entered into force on 31 January 2024, is with Cambodia. The agreement removes or reduces tariffs on more than 92% of product lines, eliminating unnecessary barriers to trade and improving market access for service exports. Non-oil trade between the UAE and Cambodia reached US$407m in 2022, marking a 33% growth from 2021. The UAE-Cambodia CEPA is aimed at pushing this growth beyond US$1b by 2030.

CEPAs currently under discussion: Philippines, Kenya, Chile, Ukraine and New Zealand

Discussions have been concluded and terms finalized for four more CEPAs since the beginning of 2024. The UAE-Philippines CEPA is expected to focus on the aerospace sector, as helicopters and aerospace parts are the Philippine's top exports to the UAE. Both the UAE and the Philippines are aiming at concluding the agreement within 2024, in time for the 50th anniversary of diplomatic relations between the Philippines and the UAE. One of the notable elements of the UAE-Philippines CEPA is the focus on e-commerce.

Kenya was the first African country with which the UAE began CEPA negotiations, in 2022, as part of a strategy to diversify its oil-based economy. The objective of the UAE-Kenya CEPA is to foster innovation and sustainable growth in key sectors such as agriculture, technology and tourism. The negotiations were concluded and the terms of the agreement finalized in February 2024.

The UAE-Chile CEPA, concluded in April 2024, is intended to provide UAE companies and exporters with greater access to the fast-growing economies of Chile and Latin America. The agreement will improve mutual trade by allowing broad access to goods, services and government procurement and marks a significant step toward a more interconnected global economy.

The UAE-Ukraine CEPA, also concluded in April this year, will support Ukraine in rebuilding some of the key sectors and industries, and will focus on strengthening major exports such as grains, machinery and metals.

The most recent discussions have been between the UAE and New Zealand, with the two countries concluding a joint declaration of intent in May 2024. The UAE is New Zealand's largest trade partner in the Middle East. The UAE-New Zealand CEPA will seek to remove or reduce tariffs and trade barriers in key sectors such as agriculture, renewable energy, logistics, education and health care.

Overall, these CEPAs should present new opportunities in the UAE that are hoped to open further commercial opportunities that will improve domestic incomes and reduce the cost of living.