International Trade After the Abraham Accords between the UAE and Israel
The United Arab Emirates (UAE) and Israel signed the Abraham Accords Peace Agreement (Abraham Accords) on 15 September 2020 which have normalised relations between the two countries. The Abraham Accords is the first Middle East peace treaty since 1994 and makes the UAE one of only four, out of 22, Arab countries to have a normal relationship with Israel. Needless to say, these are historic times and present exciting opportunities for trade and commerce.
Following the announcement of the Abraham Accords, the UAE President, H.H. Sheikh Khalifa bin Zayed Al Nahyan, issued Federal Decree No. 04/2020, abolishing Federal Law No. 15/1972 (Israel Boycott Law). This was one of the first, and possibly the most important, steps to expand trade cooperation with Israel.
Prior to the Abraham Accords, UAE companies were prohibited from opening branches in Israel or conducting commercial activity in Israel. Moreover, UAE companies could not import goods from Israel or export goods to Israel. The Israel Boycott Law even prohibited UAE entities from importing any product that had a component manufactured in Israel and required UAE manufacturing companies label their products with a statement that the product had not been manufactured in Israel. UAE companies were also prohibited from transhipping goods through Israel.
Now, after abolishing the Israel Boycott Law, UAE companies are able to enter into commercial agreements with Israeli companies for any commercial operation. Moreover, companies are now able to import and export Israeli goods.
This has led to major developments in trade. For example, Dubai’s DP World and Israel’s Bank Leumi signed a Memorandum of Understanding to enhance trade, logistics and trade financing in Israel and promote the flow of trade between Israel and the wider region. Another major example is Maersk, the world’s largest container shipping line, will start shipping cargo between the UAE’s port of Jebel Ali and Israel’s ports of Haifa and Ashdod.
These developments also impact SMEs in both countries. Israel has a vibrant technology and research hub and the UAE has energy resources and transhipment ports. These provide for the two countries to mutually serve one another’s commercial trade interests. Furthermore, the UAE is developing a strong manufacturing capability, where it will be able to export locally manufactured goods to Israel. The UAE is also well-known for its large infrastructure projects, which Israeli entities could utilise to expand and gain economically from. These, among many others, provide for a broader global trading partnership with the UAE’s business-friendly culture.
The Israeli Ministry of Economy estimates that normalising relations between Israel and the UAE could lead to over USD 500 million in bilateral trade and investment.
This is an unmistakeably historic time for the two countries, not to mention the region. The Abraham Accords present significant opportunities for global trade.
In global trade and commerce, it is important to obtain legal advice from lawyers with extensive experience in detailed organisation and implementation of complex logistical operations. We have extensive experience in both contentious and non-contentious international trade matters and are recognised for providing commercially practical legal solutions to our clients. We regularly advise clients on global transport of goods and regularly advise on disputes in relation to handling, production, packaging, transport, warehousing and security.
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This article should not be treated nor relied upon as formal legal advice. Nor should it, in any circumstances, be treated as or regarded as being a binding legal opinion provided by Davidson & Co. It is intended to be used for informational purposes only. Any information provided has been prepared in line with what we understand to be current practice and such information is subject to change in accordance with the laws, rules, and regulations of the UAE. Please contact us for specific legal advice in relation to the subject matter of this article or if you wish to discuss your other legal requirements.