• UAE agrees 4 bilateral commerce offers, talks for extra
• FTA negotiations with GCC can take years
• Financial competitors heating up amongst Gulf states

DUBAI, Could 25 (Reuters) – The United Arab Emirates is more and more pursuing bilateral commerce offers exterior of the Saudi-headquartered regional Gulf Cooperation Council (GCC), as competitors with Riyadh intensifies for financial dominance within the oil-rich area.

Since 2021, the UAE has initiated a raft of commerce, funding and cooperation offers on it personal – known as Complete Financial Partnership Agreements (CEPAs) – bypassing the GCC, a customs union, widespread market and negotiating bloc.

Abu Dhabi and Riyadh are each accelerating their post-oil economic system plans to scale back their dependence on fossil fuels, however the UAE has first mover benefit over its greater neighbour because the Center East’s present enterprise and tourism hub. Constructing on its present commerce infrastructure, it now needs to turn into a world provide chain chief.

The GCC has concurrently stepped up its recreation, holding new rounds of Free Commerce Settlement (FTA) talks with main buying and selling companions together with China, South Korea, and post-Brexit Britain. The GCC Secretariat additionally appointed a lead commerce negotiator in 2022.

Gulf affairs specialist at Waseda College, Abdullah Baabood, stated the UAE’s unilateral commerce push signifies some members aren’t essentially proud of the best way the GCC handles FTA negotiations.

“There’s now rising competitors between Saudi and UAE particularly in financial phrases. The UAE… needs to be extra free when it comes to its negotiations of FTAs and it needs to be forward of everyone,” Baabood stated.

The Saudi authorities, the UAE international ministry, and GCC officers didn’t reply to requests for remark.

When requested about competitors with the UAE, Saudi Funding Minister Khalid al-Falih on Tuesday advised a convention: “Inside the GCC we see ourselves as a typical market… however the mixture of dimension, imaginative and prescient and high quality issues, and Riyadh has the entire above and extra.”

PRIORITIES

Negotiating bilaterally, the UAE can advance its financial and political priorities quicker.

From earlier political foes Israel and Turkey, to Asian giants India and Indonesia, the UAE has thus far signed 4 CEPAs and says it negotiates historically laborious commerce offers in a mean of six months.

Few GCC FTAs have been signed and negotiations, similar to talks with China which started in 2004, can languish for years because the bloc navigates competing inner priorities and simmering political feuds.

Some earlier Saudi strikes have additionally been seen as direct challenges to the UAE, similar to telling international corporations in 2021 to arrange regional headquarters within the kingdom or threat shedding authorities contracts.

In 2021, Riyadh unilaterally modified import guidelines from GCC international locations to exclude items made in free zones or utilizing Israeli enter from preferential tariff concessions, regardless of the customs union.

For the UAE, which has its main safety ties with the West, Asia is a specific focus of the CEPA technique. Talks with Malaysia and Thailand had been introduced this month.

UAE non-oil international commerce hit 2.2 trillion dirhams ($599 billion) in 2022, up 17% year-on-year, with re-exports up 21% over 2021, and exports up over 50% from pre-pandemic 2019, authorities knowledge reveals.

The CEPA with India, one of many UAE’s largest buying and selling companions, decreased or eradicated tariffs on greater than 80% of merchandise, and foresees commerce hitting $100 billion inside 5 years.

Bilateral non-oil commerce within the 11 months for the reason that CEPA’s implementation in Could 2022 was $45.5 billion, up 6.9% yr on yr, UAE International Commerce Minister Thani al-Zeyoudi has stated.

The UAE and India are very near agreeing to the settlement of some non-oil commodity commerce in rupees, two sources advised Reuters.

Dubai-based economist Nasser Saidi stated CEPAs might be a “stepping stone” into monetary markets, facilitating firm cross-listings, and cooperation in new sectors similar to clear vitality. “They sign a call to interact on a wider diplomatic entrance.”

UAE LIMITS

The UAE has greater than 10 CEPAs within the works, however some main companions like China, Britain and South Korea want FTA talks with the six-member GCC which has a inhabitants of 56 million and in 2021 stated it had a mixed GDP of $1.6 trillion.

“Negotiating a GCC-wide FTA might make it simpler…to function between jurisdictions inside the GCC and will facilitate broader geopolitical goals of encouraging larger financial integration inside the Center East,” Freddie Neve of Asia Home stated.

Relations between Saudi Arabia, beneath Crown Prince Mohammed bin Salman, and China have strengthened in recent times, giving new momentum to China-GCC FTA negotiations and bilateral investments.

Some analysts see a GCC-China FTA being finalised in 2024.

South Korea was one of many first international locations to launch CEPA talks. Three months later nevertheless it restarted dormant GCC FTA talks.

“We ask the person international locations to decide on the monitor they’re comfy negotiating in,” UAE minister Zeyoudi advised Reuters.

There’s regional precedent: Bahrain and Oman signed bilateral FTAs with the US in 2006 and 2009.

The British Embassy in Dubai, nevertheless, stated Britain was dedicated to a GCC FTA with “the best financial and strategic worth for each side”.

Zeyoudi stated whereas CEPA agreements needs to be in line with the GCC customs union, particular person international locations can go bilateral if phrases are much less beneficial than with the GCC bloc.

The GCC declined to remark.

Reporting by Rachna Uppal and Lisa Barrington; Extra reporting by Aziz El Yaakoubi in Riyadh; Modifying by Elaine Hardcastle

Our Requirements: The Thomson Reuters Belief Ideas.