September 16, 2020
This week leaders from Israel, the United Arab Emirates (UAE), and Bahrain came to the White House to sign the Abraham Accords, a historic agreement normalizing relations between the three countries. This agreement will unlock tremendous business potential between these economies and create new opportunities for trade and investment across the Middle East.
“The great economic benefits of our partnerships will be felt throughout our region,” said Israeli Prime Minister Benjamin Netanyahu at the signing ceremony.
In advance of the historic signings this week, the Chamber hosted His Excellency Abdulla bin Touq Al Mari, UAE Cabinet Minister and Minister of Economy, where we led productive discussions around the economic potential flowing from this new pact.
“This agreement will pave the way for greater trade and investment – a peace dividend – and as more trade is conducted, this relationship with strengthen. More business means more people- to-people connections, more understanding, and more shared interests,” said Minister Al Mari. He also noted that the two governments are already negotiating 8 separate economic-related pacts, including a UAE-Israel free trade agreement.
Israel’s Ministry of Economy has estimated that the normalization of ties could be worth as much as $500M in the coming years in bilateral trade and investment.
A More Connected Region for U.S. Business
American business will also benefit greatly from this agreement. Israel and the UAE are the U.S.’s two largest trading partners in the Middle East with two-way trade between Israel reaching nearly $50B and $25B with the UAE in 2018. Both countries invest tens of billions of dollars in the U.S. economy and support jobs across the country and are also global hubs for innovation, with hundreds of the leading American companies in a wide range of sectors having a home base in either country.
The Middle East has had the lowest rate of intra-regional trade in the world, with just 5% of exports from Middle East and North Africa (MENA) countries going to their regional neighbors. And there is no broad regional framework in the Middle East to foster economic cooperation. For U.S. companies, this has meant disconnected logistics and supply chains, high trade and investment barriers, and lack of consistent regulatory frameworks between countries in the region.
Minister Al Mari highlighted a range of areas, including trade and investment, renewable energy, water and agritech, space exploration, and health care where there will be bourgeoning UAE-Israel ties and that will benefit American companies operating in the region as well.
New Possibilities for the Movement of People and Goods
One of the biggest impacts from this agreement is the ability for goods and people to move more freely throughout the region.
“The biggest winner will be passengers with more options for direct routes all across the world,” said Minister Al Mari, noting Dubai International Airport is one of the busiest airports in the world for both passengers and cargo. Israeli air carrier El Al made the first commercial flight between Israel and the UAE on August 31 and notably flew over Saudi Arabian airspace.
The UAE also has the busiest air and seaports in the region and is a critical logistics hub for American companies. Earlier this year, the Israeli Government also announced plans to privatize, upgrade, and expand Israel’s largest port in Haifa which is also an important trade center to Europe and beyond.
“Prospects for the region have never looked better. To realize the full potential of this moment, we need our American friends and partners, to join us. Together, we can help grow our economies and create new prosperity for ourselves and our neighbors,” concluded Al-Mari.
The U.S. Chamber of Commerce is home to the U.S.-UAE Business Program and U.S.-Israel Business Initiative which work to advance trade, investment, and innovation relations with these two leading economies in the Middle East. For more information, click here.
About the authors
Vice President, Middle East Affairs
Steve Lutes is executive director Middle East Affairs at the U.S. Chamber of Commerce. He is responsible for managing the U.S.-Egypt Business Council, U.S.-Iraq Business Initiative, the U.S.-GCC Business Initiative, and serves as executive director for each.
Executive Director, Middle East Affairs
Joshua M. Kram is executive director for Middle East Affairs at the U.S. Chamber of Commerce, where he oversees programs and policy initiatives to broaden commercial relationships between the United States and markets in the Middle East.