As part of the normalization of their relations mediated by the United States in 2020, Israel and the United Arab Emirates signed their first free trade agreement on Tuesday.
The deal will help get rid of most of the existing tariffs with annual bilateral trade between the two countries expected to reach more than $10 billion in five years.
Some of the goods expected to see reduced tariffs of up to 96% include medicine, diamonds, food, chemicals, jewelry and more.
The elimination of most duties will begin immediately, while others will take place over the next three to five years. Customs tariffs will still apply to some products, but at a lower rate.
Israeli economy minister Orna Barbivay signed the deal with her counterpart in the United Arab Emirates.
PM Naftali Bennett described the signing of the FTA as “historic” and the quickest in Israel’s history. He expressed his gratitude to the Crown Prince of Abu Dhabi, Mohamed Bin Zayed, who accelerated the process. “We are continuing to warm the peace between the countries,” Bennett added in a tweet.
Mohamed Al Khaja, Ambassador of the UAE to Israel also hailed the deal adding, “businesses in both countries will benefit from faster access to markets and lower tariffs as our nations work together to increase trade, create jobs, promote new skills and deepen cooperation.”
The trade agreement defined tax rates, imports and intellectual property, which would encourage more Israeli companies to set up offices in the UAE, particularly in Dubai, said Dorian Barak, president of the UAE-Israel Business Council as reported by Reuters.
After the Abraham Accords were signed in August 2020, Israel and the UAE established full diplomatic relations. Morocco, Iran, Bahrain and Sudan followed soon after.
Since the signing of the accords, trade between Israel and the UAE has increased dramatically. This figure increased from $125 million in 2020 to nearly $500 million in 2021. According to some estimates, trade will reach $1 billion this year and $3 billion in three years.