Abdulrahman Al Ansari discusses the United Arab Emirates’ (UAE) recent decision to ratify a major global trade agreement, explaining how this could benefit the country’s economy.
The agreement is the brainchild of the World Trade Organisation (WTO), of which the UAE has been a member since 1996. The WTO is an intergovernmental body which seeks to regulate and promote global trade through a multilateral trade system. The WTO’s latest initiative is The Trade Facilitation Agreement; the first treaty to be added to the multilateral trade system in 18 years.
This Agreement “contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area.” The initiative is seen by many as a “driver for the future of WTO’s multilateral trade system.”
The Trade Facilitation Agreement must be ratified by two thirds of WTO member states before it comes into effect. Regional portal Gulf News reports that according to Minister of Economy Bin Saeed Al Mansouri, the UAE has become the first Arab country to ratify the treaty.
The Minister of Economy did not say when the Agreement would come into effect in the UAE. However, Al Mansouri did reveal that it was in line with the country’s aims to facilitate cross-border trade by reducing red tape and simplifying procedures at national borders. He added that Emirati small to medium sized-enterprises (SMEs) would particularly benefit from the unified standards and simplified procedures the WTO’s Agreement would bring. Once it comes into force, this initiative will allow SMEs to raise their trade and investment activities, according to Al Mansouri.
Advantageous for the UAE? The UAE achieved top rankings in the WTO’s 2015 global trade statistics. For example, it was named 16th globally for commodity exports and 20th internationally for commodity imports. Commenting on this news, Al Mansouri said: “The figures and data contained in the WTO International Trade Statistics 2015 are promising, and reflect the continued success of the UAE’s economic policies year after year. This success has boosted the UAE’s position on the global trade arena.”
Meanwhile Undersecretary for Foreign Trade Affairs at the UAE Ministry of Economy, Abdullah Al Saleh, has said that The Trade Facilitation Agreement will bring $1 trillion into the economy. Al Saleh also said that it will reduce the cost of international trade for UAE businesses. This should prove particularly beneficial for SMES, which make up 60% of the country’s Gross Domestic Product.
Start-up costs in the UAE have fallen significantly in recent years. If this Agreement makes the costs associated with global trade more manageable, it could potentially allow Emirati SMEs to reduce operating costs even further. Considering the fact that SMEs are the major driver of Emirati economic activity, if the Agreement makes it easier for SMEs to take advantage of the UAE’s favourable trading environment, it could boost the country’s economic growth going forward.
Abdulrahman Al Ansari has more than 18 years of experience in the global financial services industry. He serves as the chairman of a number of reputable financial firms including AMA Investment Holding and Bid Capital Management Consultancy.
Abdulrahman’s professional portfolio encompasses a diverse range of sectors from commodities and natural resources to education, healthcare, oil & gas and investment banking. He has earned a reputation as an innovator, who consistently develops new ideas and solutions to address the complex and demanding challenges which confront his clients every day. Over the years, Abdulrahman has cultivated a special interest in the continued economic and community development of the UAE.