UAE at a Glance - UAE Interact

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UAE AT A GL ANCE 2008 @ www.uaeinteract.com/economy
The Arab World Competitiveness Report 2007, issued by the World Economic Forum (WEF),
ranks the UAE in top position among Arab countries and in twenty-ninth position among the 40
most advanced economies worldwide. It states that: 'Sound economic management has
contributed to stabilizing the macroeconomic environment and strengthening public institutions’.
It is not surprising, then, that foreign direct investment into the UAE has been increasing steadily
from the beginning of this decade. So much so that the United Nations Conference on Trade and
Development (UNCTAD) ranked the UAE twenty-fourth worldwide in terms of foreign direct
investment flowing into the country. According to UNCTAD, the volume of incoming direct
investment was estimated at Dh30.79 billion (US$8.39 billion) in 2006 compared with Dh40
billion (US$10.9 billion) in 2005 and nearly Dh36.7 billion (US$10 billion) in 2004.As far as foreign
investment emanating from the UAE is concerned, the UAE ranked twenty-fifth worldwide, with
UNCTAD estimating the volume of foreign direct investment outflows from the UAE to overseas
countries at Dh8.51 billion (US$2.32 billion) in 2006 compared with nearly Dh13.76 billion
(US$3.75 billion) in 2005 and Dh8.1 billion (US$2.21 billion) in 2004.
Trade
The UAE considers that free trade is a sine qua non for improving competitiveness and
productivity, and that high tariff barriers and technical barriers to trade would only result in a
stagnant and inefficient private sector. It is in this spirit that the UAE has signed several free trade
agreements (FTAs) and embarked on negotiations for others, either individually or through the
GCC. Bilateral preferential agreements signed with Syria, Jordan, Lebanon, Morocco and Iraq
accord both the UAE and its co-signatories preferential access for certain specified goods. The
FTA between the GCC and the EU, in final stages of negotiation during 2007, covers market
access for industrial and agricultural products, trade in services, intellectual property, rules of
origin, government procurement, investment and legal and institutional arrangements. It is
expected to boost trade between the two regions from its current level of 40 billion euro to
at least twice that figure.
A comprehensive FTA that had been under negotiation for over two years with the USA
stalled in March 2007. Whilst informal discussions were continuing, both sides acknowledged
there were some difficulties in reaching an agreement.
Goods imported into the UAE from countries with most favoured nations (MFN) status are
subject to the GCC Common External Tariff (CET), which averaged around 5 per cent in 2006.
Over 400 basic food items and pharmaceuticals are duty free. Tobacco products attract up to a
100 per cent tax rate, depending on the item.
With the exception of oil, gas and petrochemicals, the primary export centres in the UAE are
free zones that provide logistical, administrative and financial advantages for exporting or
re-exporting companies. These free zones are exempt from the licensing, agency, emiratisation,
and national majority-ownership obligations that apply in the domestic economy. There are many