The United Arab Emirates (UAE) has reached a significant milestone in its trade figures, with the release of data on February 4, 2025, indicating that trade levels for 2024 have hit $800 billion. This marks an all-time high for the country, which has experienced steady but slowing growth in recent years. The UAE’s trade success can be attributed to the Comprehensive Economic Partnership Agreements (CEPAs) it has signed with six countries, ranging from India to Israel, which have contributed to boosting growth and expanding trading partners and revenue sources.
CEPAs play a vital role in the UAE’s strategy to enhance its foreign trade and position itself as a key trading hub for both emerging and developed economies. The terms of these agreements vary from country to country, with some involving the elimination of tariffs on bilateral trade, such as the CEPA with Israel signed in 2023, while others focus on investment in non-oil sectors and the removal of trade barriers, as seen in the agreement with Indonesia. Recently, the UAE announced the signing of a CEPA with Kenya in January 2025, aimed at streamlining customs procedures and promoting innovation and digital trade, with similar agreements with Australia and New Zealand in progress.
Following the establishment of CEPAs, countries typically experience a significant increase in trade with the UAE, up to 40%, and a diversification of their own exports as Emirati companies forge trade relationships and expand their supply chains. The UAE saw a notable 42% rise in non-oil trade in the last year, largely attributed to the reduction in tariffs and trade barriers facilitated by CEPAs with key trading partners.
The UAE’s focus on diversifying its exports and trade partners has proven successful, with the country setting a goal in 2021 to increase foreign trade to $1.1 trillion by 2031. The latest trade figures indicate that the UAE is well on its way to achieving this goal, showcasing the effectiveness of efforts to diversify its economic activities away from reliance on oil revenues.
In a rapidly changing global landscape, diversification is crucial for oil-rich countries like the UAE as they navigate volatile oil prices and geopolitical uncertainties. With many developed nations transitioning to green energy sources and reducing their reliance on fossil fuels, the UAE has shifted its focus to sectors such as tourism, logistics, and services to drive sustainable growth and reduce dependence on oil.
The UAE’s commitment to attracting foreign imports and fostering strong trade relationships is expected to further boost its trade prospects. While global trade saw modest growth of 2% in 2024, the UAE’s impressive 14% year-on-year rise indicates a promising outlook for the country’s economy. The UAE’s success serves as a reminder of the benefits of lowering trade barriers and fostering international collaboration, especially in the face of challenges like tariff hikes imposed by certain nations.
Overall, the UAE’s trade achievements underscore the potential for economic growth through strategic partnerships and diversification, setting a positive example for other nations seeking to expand their trade networks and drive sustainable economic development.
