Trade Barriers in UAE

A Hot Tip about Trade Policy and Regulations in the United Arab Emirates

Posted on: 6 Jan 2010

The United Arab Emirates (UAE) maintains a free exchange and liberal trading system. The Gulf Cooperation Council (GCC), consisting of the UAE, Saudi Arabia, Kuwait, Bahrain, Qatar and Oman, has been discussing a common external tariff for some years. As a result of these efforts, on January 1, 2003, the GCC states agreed to harmonize their import duties to five percent. In advance of the GCC Customs Union agreement, the UAE created the UAE Customs Authority. The Customs Authority’s main priority is to create a customs union within the UAE to unify Customs rules, regulations, procedures and documentation.

 

Only firms with the appropriate trade license can engage in importation. Documentation requirements follow international standards and delays in custom clearance have been infrequent. The competition for business between the port facilities of the different emirates has kept user rates at a minimum and put a premium on services. There are no duties on exports. For religious and security reasons, there are various restrictions on the import of alcohol, tobacco, firearms, and pork products.

 

The UAE maintains non-tariff barriers to trade and investment in the form of restrictive agency/sponsorship/distributorship requirements and restrictive shelf-life requirements for foodstuffs. Since June 1996, the UAE Federal Government elected not to register new food agency agreements. Food agency agreements prior to June 1996 are still operational.

In order to do business in the UAE outside of one of the free zones, a foreign business must have a UAE national sponsor, agent, or distributor. Once chosen, sponsors, agents, or distributors have exclusive rights for non-food products only. Agency law does not pertain to food products. Agents and distributors cannot be easily replaced without their agreement. The UAE requires a company to be registered in order to be invited to receive government tender documents. Government tendering is not conducted according to generally accepted international standards. Re-tendering is the norm, often as many as three or four times. To bid on federal projects, a supplier or contractor must either be a UAE national or a company in which UAE nationals own at least 51 percent of the share capital. Federal tenders must be accompanied by a bid bond in the form of an unconditional bank guarantee for five percent of the value of the bid. However, these rules do not apply to major project awards or defense contracts, where there is no local company that can provide the goods or services required. The UAE has no formal requirement that a portion of any government tender be subcontracted to local firms, but local companies clearly enjoy a competitive advantage.

As part and parcel of its development into a regional trading center, the UAE government has made the protection of intellectual property a priority in recent years. New copyright, trademark and patent laws, passed in 2002, provide high levels of protection for U.S. intellectual property. The UAE is party to the Paris Convention for the Protection of Industrial Property, and a member of the World Intellectual Property Organization (WIPO) and World Trade Organization (WTO).

 

 

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Posted: 06 January 2010

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