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More United Under Abraham

On September 15 at the White House, the United Arab Emirates (UAE), Bahrain and Israel signed the Abraham Accords to normalize relations. It had been more than 25 years since Israel signed a peace deal with a major Arab country, the previous being Jordan in 1994 and Egypt before that back in 1979. One diplomatic breakthrough can beget others. Sudan followed on October 23. Oman and Qatar are reportedly in discussions.

These agreements – and those that may follow – could portend a significant turning point for the Middle East and North Africa region. Greater regional economic integration would be a stabilizing force for peaceful relations. It would enable broader-based prosperity for struggling economies in the region and could become a key ingredient of post-COVID growth that is less dependent on oil as a driver for Gulf state economies (and for Israel to rely less on oil that transits Turkey from Iraq). As European and American companies offer a natural bridge to commercial ties with Israel, Gulf states could reduce their reliance on China.

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Through the Abraham Accords, commercial, cultural and personal relationships can take root and blossom. In anticipation of its signing, delegations from the UAE and Israel were deployed to establish direct flights and sign bilateral deals to promote infrastructure and technology investments, tourism, educational and scientific exchange, and to collaborate in advanced healthcare-focused most immediately on coronavirus treatments and vaccination.

The UAE, with its concentration of logistics infrastructure, financial expertise and venture capital, is a good match with Israel, renowned for technological invention and entrepreneurship. Their economies have complementary economic strengths. Speaking at a September 16 Atlantic Council event, UAE Minister of Economy Abdulla bin Touq Al Mari said the agreement could lead to as much as $500 million in new bilateral trade and investment, growing to $4 billion a year.

Science Nerds, Students and Traders as Peacemakers

Scientific inquiry is a common human denominator. The Middle East Desalination Research Center based in Oman was an outgrowth of the 1996 Middle East Peace Process and continues today as a model of cooperation in shared research and capacity-building on transboundary water projects between Israel and Arab states.

The Abraham Accords are likely to yield a more significant surge in joint research in areas such as space exploration, technologies to address common food security challenges in the region, renewable energy, and advances in computing. The Accord opens the door to freer travel by scientists and exchanges of scientific samples and research equipment. Already, the Mohamed bin Zayed University of Artificial Intelligence and the Weizmann Institute of Science signed an agreement to create a joint institute for artificial intelligence.

After prohibitions on travel, the UAE could become an attractive destination for Israelis to experience Arabian culture in a Persian Gulf country. UAE airlines Emirates and Etihad will begin flights to Tel Aviv. Observers think these airlines’ existing connections to global destinations through Dubai and Abu Dhabi could be enticing to Israeli tourists but also for business travelers to deliver professional services.

Another important way to foment integration and understanding is through student exchange. Arab students accounted for 16.1% of undergraduate students in Israeli universities in 2018. The Abraham Accord and diplomatic efforts to implement them will focus on greater student exchange.

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Set for Takeoff from Free Zones

Intraregional trade throughout the Middle East – North Africa (MENA) region is today fairly insignificant. The U.S. Chamber of Commerce estimates just 5 percent of exports from MENA countries go to regional neighbors, the lowest rate in the world. It’s difficult to know exactly how much of Israel’s trade is intertwined with Gulf states since trade is transacted through subsidies outside the Middle East. The Tony Blair Institute for Global Change calculates it may be only about $1 billion.

One of the important and relatively quiet ways that more direct trade relations have been established is through free trade zones. As Arab Gulf States Institute scholar Robert Mogielnicki has put it, special economic zones in the Middle East have served as “politically neutral commercial gateways,” a way of dipping a toe in diplomatic relations.

In 1996, the U.S. Congress authorized a Qualifying Industrial Zone (QIZ) program to extend the benefits of the U.S.-Israel Free Trade Agreement. Firms operating in QIZs located in Egypt and Jordan could export to the United States duty-free if the exported products contained inputs from Israel. The opportunity to do so created foundational commercial partnerships among Israeli firms and those in neighboring Arab countries with which Israel had signed peace agreements and provided the basis for extending benefits for those countries to the U.S. market.

As the ink dried on the Abraham Accords, Dubai-based logistics firm, DP World, entered into a partnership with a major Israeli port operator to assess free zone opportunities in Israel and possible direct shipping routes between Eilat and Jebel Ali ports. The Federation of Israeli Chambers of Commerce is also moving quickly to work with major free zone operators in Dubai.

Mogielnicki says the QIZs not only became commercial incubators, they “started to act as bellwethers for the geopolitical and economic reconfigurations underway across the broader Middle East”. Perhaps the flurry of new zones under the Abraham Accord will send similar signals across the region.

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And What of Palestine?

Critics of the Abraham Accords cite concerns that Palestine is left out in the cold. Supporters believe the Abraham Accords are a road that leads back to Palestine in a more constructive way.

As the White House recognizes in its seminal proposal from January 2020, Peace to Prosperity: A Vision to Improve the Lives of the Palestinian and Israeli People, “the conflict between the State of Israel and the Palestinians has kept other Arab countries from normalizing their relationships and jointly pursuing a stable, secure, and prosperous region.”

A deeply complex set of issues to resolve, the Trump administration writes that durable solutions must combine political agreements with an “economic vision for investments and government reforms” to create jobs, reduce poverty and create conditions for growth of the Palestinian economy. The administration’s proposal offers support to Palestine to develop property and contract rights (fundamental growth drivers), to put in place anti-corruption measures and infrastructure for capital markets, and to implement a low-tariff scheme for Palestine to make it more attractive to traders.

The plan proposes coupling policy reforms with strategic infrastructure investments to help hospitals, schools, homes and businesses secure reliable access to affordable electricity, clean water, and digital services. Businesses in the West Bank and Gaza should be better connected with key trading partners in Egypt, Israel, Jordan, and Lebanon – including through free zone arrangements. The plan even proposes a U.S. free trade agreement with Palestine to solidify the continuation of duty-free treatment but also undergird economic reforms; it encourages countries in Europe, the Middle East and elsewhere to pursue its own free trade agreements with Palestine.

There’s a lot to be worked out. For example, Palestine doesn’t have direct access to key ports and must enter into more expansive arrangements with Israel regarding use of port facilities. A focus on these kinds of economic details is a good way to keep the conversation going.

A Strategic Agenda

As part of the Abraham Accords, the Parties agreed “to join with the United States to develop and launch a ‘Strategic Agenda for the Middle East’ in order to expand regional diplomatic, trade, stability and other cooperation.” The language is vague but future looking. It’s broad but opens the door to more specific initiatives. Following the October 23 joint statement, Sudan and Israel plan to exchange delegations to negotiate cooperative agreements in agriculture technology and aviation.

Even Saudi Arabia, which is not ready to sign the Abraham Accord, was supportive of the UAE and Bahrain in their decisions to do so and will directly support commercial relations by allowing Israel commercial flights to UAE to cross Saudi airspace. It becomes harder to turn back on peace when relationships begin to proliferate among individuals, companies, universities, institutes, and other entities outside of governments. Economic insecurity is destabilizing. Stronger economic ties induce cooperation. The Abraham Accords will be much more than symbolic if they produce a swell of private commercial activity and stronger trade relations.


Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fifteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.


How Manufacturers Save Money Through Mexico’s IMMEX Program

The IMMEX maquiladora program combined with the available VAT certification offers one of the top cost-savings benefits for companies that implement nearshore manufacturing in Mexico. It offers a 16 percent VAT tax exemption for all temporary imported materials, equipment, and tools. Manufacturers that have previously expanded operations internationally may compare this benefit to what’s normally referred to as a “free trade zone.” Although tax-wise the IMMEX program is similar, the extra advantage is that it’s not centric to any one geographical location.

When added to access to a competitive, cost-effective workforce, close proximity to the U.S., and favorable trade relations through the USMCA, an operational transition from China to Mexico is a viable option for a growing number of manufacturers. Numerous global brands across multiple sectors have already experienced success over the years through Mexico manufacturing, and the benefits continue to entice new companies to explore their options closer to home.

Working with Mexico Shelter Companies to Ensure VAT Tax Exemption

To receive tax benefits through the IMMEX maquiladora program, manufacturers can either apply and become IMMEX program approved and then get their VAT certification on their own or operate under a shelter umbrella that already has both permits in place.

The timeline of being accepted into the IMMEX maquiladora program often takes several months due to the complexity of what’s necessary to meet the criteria. Plus, if there are any discrepancies in the application and a company is denied, they must start the process again. This impacts Mexico manufacturing costs since companies can’t import any components, materials, or equipment without having their IMMEX program.

Once they have it or work with a shelter to use the shelter’s program, manufacturers are able to initiate their equipment and materials imports and start the setup process on their current Mexico facility. As you can imagine, not doing this right and as fast as possible will present delays on your project. Mexico shelter companies allow manufacturers to receive VAT tax benefits automatically when working under the shelter’s IMMEX licenses since a VAT certification is already in place.

This is in addition to other advantages, such as lower customs broker fees and the use of special compliance software that tracks the timeframe of all temporary imported materials that exempt VAT payment at customs. Companies that wish to apply for the program on their own must hire a U.S. and a Mexico customs broker, since these are the representatives that process and transmit to customs all the documentation required to move materials and finish goods
through the US / Mexico border. Also if you select this operating option, you must absorb all compliance software fees.

Additionally, once approved, a manufacturer can lose VAT certification at any time if criteria is not met at the time of renewal or during an inspection from the Ministry of the Economy. Manufacturers who partner with a shelter company often benefit from decades of expertise, experience minimizing red lights at customs, and a history of optimizing operations.

Explore Cost-Saving Solutions When Manufacturing in Mexico

The fiscal benefit of Mexico’s IMMEX maquiladora program is significant but comes with strict guidelines and great responsibility. Although starting from scratch is an option when nearshore manufacturing in Mexico, it increases costs and extends operational set up times that can lead to bigger challenges down the road.

In addition to working under a shelter’s IMMEX license, a shelter provider can create a customized cost analysis that explores additional ways to save money and get operations up and running efficiently and on schedule.

Overall, the IMMEX maquiladora program provides a good avenue for manufacturers looking to get operations up and running quickly and smoothly.


Sergio Tagliapietra has spent his entire career pioneering administrative service solutions in Mexico. He works with government in all parts of Mexico and he is one of the country’s most respected business leaders in the field. He is president and founder of IVEMSA, a full shelter services provider and partner to manufacturing companies expanding to Mexico.

Qatar Trade Summit

Qatar Trade Summit: Innovation and Disruption Revolutionising the Logistics Industry in Qatar.

Valuable insights into the future of Qatar’s Trade and investments sector aligned with logistics and supply chain in the region will be showcased at the exclusive Qatar Trade Summit scheduled to take place from 25th to 27th November 2019 in Doha, Qatar, The summit is Qatar’s only event focusing on the nation’s economic diversification plans and progress with strategic plans on becoming the regions logistics hub. 

The summit will strive to examine the nation’s potential on becoming the region’s economic powerhouse via 3 days of deliberations on sea ports development, Shipping and Air Cargo industry, future of logistics and supply chain as well as a final day dedicated to engage in interactive sessions on Qatar’s trade and investment prospects. Attending delegates and partners will get a first-hand knowledge of Qatar’s logistics and supply chain industry, the planned development of sea ports to support regional growth, the influence of shipping air cargo and the free zones in opening up opportunities for regional and foreign companies to invest and do business in Qatar” stated Allan Martin, Communications Director, Qatar Trade Summit. 

All aspects of the shipping industry, port development, air cargo, supply chain and logistics and trade and investments will be discussed at this summit. The event will engage the entire ecosystem of the logistics business in Qatar focusing on procurement, forwarding, planning, new business, infrastructure and investments. The theme of the summit is to explore the scale of innovation and disruption which is revolutionizing the logistics industry in Qatar and the nation’s keen intent on diversifying into a thriving economy prior to the prestigious FIFA 2022 football world cup taking place in Qatar. Qatar Trade Summit will directly impact a comprehensive range of sectors in the region and will cover solutions and products to uplift these sectors. The areas covered will be Ship building, Port management, Port Infrastructure development, Air Cargo expansion, Logistics and supply chain solutions and the investments and business opportunities in Qatar. 

The summit’s profile includes key dignitaries such as H.E. Akbar Al Baker, Group CEO, Qatar Airways, Capt. Abdulla Al-Khanji, CEO, Mwani Qatar, Qatar, Mr. Abdulrahman Essa Al-Mannai, President & CEO, MILAHA, Qatar, Mr. Lim Meng Hui, CEO, Qatar Free Zones Authority (QFZA), Mr. James Baker, Editor, Lloyd’s List Containers, UK, Mr. Glyn Hughes, Global Head of IATA Cargo, Switzerland, Mr. Turhan Özen, Chief Cargo Officer, Turkish Airlines, Mr. Amadou Diallo, CEO, DHL Global Forwarding, Middle East & Africa, Mr. Bertrand Maltaverne, Solutions Consultant, Ivalua, Austria, Mr. Fikret Ersoy, MD, BDP International, Middle East, Turkey & Africa from Qatar and across the globe who will be presenting at the conference and the summit will also host some of the world’s best solution providers and also invite attendees from leading government and private entities from Qatar. 

The Qatar Trade Summit will also feature one of the most exhaustive and inclusive knowledge sessions seen at a national summit. The conference will include 19 topics spread across 4 sessions, and two key workshops all scheduled over 3 days of high level networking and interaction. Qatar Trade Summit will assist in realising Qatar’s ambitions to become the logistics and trade leader in the Middle East. 


About Organizer: © Qatar Trade Summit | Allan Martin | Email: | | UK Tel: +44 20 3807 8492 | India Mobile: +91 96061 70760 Qatar Contact: Saf | Tel: +974 33834548 | +974 66947607 | LinkedIn: Qatar Trade Summit | twitter: @tradeqatar 

How global traders in UAE Free Zones can avoid the new Value Added Tax

The recent imposition of a value-added tax (VAT) by the UAE raised concerns amongst global traders that the Gulf country was moving away from its traditional role of drawing in multinational investors, particularly those who use the region as a transfer hub for goods being re-exported to other destinations in the Middle East and beyond. The VAT would, after all, increase landed costs and in turn, generate a price spike for the end consumer, making products less competitive.

To ease investors’ fears, the UAE’s government has established a new, albeit complex, regime to allow global traders to continue to take advantage of the UAE’s traditional Free Trade Zones or FTZs where imports have not been traditionally subject to duties and taxes.

A Critical Region

The United Arab Emirates (UAE), by its location, has served as a centre for trade for centuries. In recent times, Free Trade Zones (FTZs) in the UAE have helped global enterprises to serve a market size of approximately two billion people who live within a four-hour flying distance from the UAE. The UAE’s considerable investments in FTZ infrastructure that support imports and re-exports through air, land and sea modes, have contributed in making the country a global logistics hub.

As with most FTZs, imported goods are not subject to import or export duties. Thus, goods meant for regional markets are imported in bulk into UAE FTZs from production facilities around the world and then redistributed after additional processing, packaging or having been broken down to market-determined transaction quantities. According to the UAE Central Bank, a total of $61.2 billion was exported from UAE FTZs in 2017, accounting for nearly 20 percent of the country’s exports that year.

Designated Free Zones

The new VAT regime implemented in 2018 applies a consumption tax on the supply of goods and services which take place within the territory of the UAE. Historically, FTZs have been considered outside the UAE territory for the application of import duty. However, for the purposes of VAT, the UAE has not extended a similar treatment to FTZs and they are deemed a part of the UAE territory for the purposes of VAT.

The UAE Cabinet has identified certain free trade zones, called Designated Zones, in which certain transactions are considered as being completed outside the UAE and, in turn, not subject to the VAT. However, businesses registered in Designated Zones have the same VAT obligations as non-Designated Zone businesses and must register, report and account for VAT under the VAT rules.

The Rules
Following are the main scenarios and the VAT treatment that applies to them from Designated Zones

Services rendered from within a Designated Zone to a UAE or Gulf Cooperation Council (GCC) consumer will have the VAT applied, while all services rendered to a consumer outside the GCC will not.

Goods sold within the Designated Zones are subject to VAT only if the goods are consumed within the same Designated Zone. If they are being purchased for the purposes of producing, modifying or forming a part of another good located in the same Designated Zone, they are not subject to the VAT.

Goods from outside the UAE to a Designated Zone are not subject to the VAT. However, it is expected that once VATs are applied by other GCC countries, goods entering UAE Designated Zones from those GCC countries will be subject to VAT.

Goods from within the UAE into Designated Zones are treated as being made in UAE territory and are not considered as an export from the UAE and, therefore, will be subject to the VAT.

A sale or movement of goods between Designated Zones will not have the VAT applied. However, the goods being transferred must not be released in whole or in part into domestic circulation during the transfer, and must not be used or altered in any way during the transfer between Designated Zones. The goods must also comply with the rules of Customs duty suspension (Goods in Transit) as per the Gulf Cooperation Council Common Customs Law.

Goods from Designated Zones to a buyer onshore in the UAE are subject to the VAT, because they are treated as an import into the UAE. It must also be noted that VAT could be charged again on a subsequent sale of the goods within the mainland if it is being made by a person subject to the VAT.

Goods in a Designated Zone on which VAT has not been paid and consumed by the owner of the goods will be treated as having been imported into the UAE and VAT will be applied accordingly.

The table below provides a high-level picture of the applicability of VAT on different types of transactions.

In short, with the introduction of Designated Zones, the UAE government has aimed to ensure that businesses based in these zones are not subject to VAT if the goods being traded are meant for markets outside the Gulf Cooperation Council countries.

JC Pachakkil is a senior consultant in Global Trade Management at trade services firm Livingston International.

China Proposes Three New Foreign Trade Zones

Los Angeles, CA – Beijing has announced its given the go-ahead to the construction of three new foreign trade zones in Guangdong, Fujian and Tianjin, all modeled on the zone set-up in Shanghai last year.

Officials said the new FTZ will apply “replicable” practice from Shanghai in investment, trade and financial services to the rest of the country and shorten the “negative list” – the sectors where foreign investment is banned or restricted, the cabinet said.

Announcement of the new FTZs comes on the heels of Beijing’s proposed cutting from 79 to 35 the number of sectors restricted or off limits to foreign investors.

After one month for soliciting opinions, the new guidelines will be submitted to the State Council and are expected to come into force by the end of the year.

Sectors with reduced restrictions include steel, ethylene, refining, papermaking, coal chemical equipment, automotive electronics, lifting appliances, electric transmission and transformation equipment, branch railway lines, subways, international ocean shipping, e-commerce, finance companies and chain stores, according to government sources in Beijing.

In addition, the number of sectors currently limited to joint ventures and partnerships has been cut from 43 to 11, while those requiring a majority Chinese investment have been cut from 44 to 22.

Agriculture, high technology, advanced manufacturing, energy efficiency and environmental protection, new energy and modern service industries are encouraged, the sources said.

From January to September of this year, the value of China’s foreign direct investment decreased by 1.4 per cent to $87.3 billion from the same period the year before.