WORLD TRADE  
ORGANIZATION  WT/TPR/M/162 
2 June 2006 
 (06-2640) 
Trade Policy Review Body 
  
 
 
 
TRADE POLICY REVIEW 
 
UNITED ARAB EMIRATES 
 
Minutes of Meeting  
 
Chairperson:  H.E. Mrs. Claudia Uribe (Colombia) 
 
   Page 
 
I.
 INTRODUCTORY REMARKS BY THE CHAIRPERSON 3  
II. OPENING STATEMENT BY THE REPRESENTATIVE OF THE UNITED 
ARAB EMIRATES  4  
III. STATEMENT BY THE DISCUSSANT 6  
IV. STATEMENTS BY MEMBERS 9  
V. REPLIES BY THE REPRESENTATIVE OF THE UNITED ARAB EMIRATES AND ADDITIONAL COMMENTS 19
 
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 23  
 
 
Note:   Advance written questions by WTO Memb ers and the replies provided by the United Arab 
Emirates are reproduced in document WT/TPR/M /162/Add.1 and will be available online at 
http://www.wto.org/english/tr atop_e/tpr_e/tp_rep_e.htm.  
   WT/TPR/M/162 
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  I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The first Trade Policy Review of the United Arab Emirates was held on 24 and 26 April 
2006.  The Chairperson (H.E. Mrs. Claudia Uribe) welcomed the delegation of the United Arab Emirates, headed by H.E. Ms. Sheikha Lubna Bint Khalid Al Qasimi, Minister of Economy, and the 
discussant Dr. Alexander Gross (Germany).  As us ual, the discussant would speak in his personal 
capacity and, in accordance with established proce dures, had made available in advance a broad 
outline of the themes he intended to raise (document WT/TPR/D/138). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
the procedures of the meeting.  The Report by the United Arab Emirates was contained in document 
WT/TPR/G/162 and that of the Secretariat in document WT/TPR/S/162.  As indicated in document 
WT/TPR/6/Rev.1, the Member under review should pr ovide written answers, by the beginning of the 
review meeting, to questions submitted at least two weeks before the meeting.  Questions posed 
subsequently should be answered, to the extent possi ble, before the start of the second session of the 
meeting.  Questions left unanswered at the end of the second session should be answered in writing no 
later than one month after the meeting.  Questions by the following delegati ons had been submitted in 
writing at least two weeks in advance of the meeti ng and had been transmitted to the delegation of the 
UAE:  Canada and the Separate Customs Territory of  Taiwan, Penghu, Kinmen and Matsu.  Copies of 
these questions and of the answers provided by th e delegation of the United Arab Emirates were 
available in the meeting room.  Australia;  Turk ey;  Hong Kong, China;  the European Communities; 
Argentina;  the United States;  and Korea had submitted written questions after the two-week 
deadline.  Copies of all advance questions, as well as  the responses received from the delegation of 
the United Arab Emirates, are reprodu ced in document WT/TPR/162/Add.1. 
3. The Chairperson observed that the documentation for this Review highlighted the impressive 
economic achievements of the United Arab Emirates  since the 1970s, and particularly over the last 
few years.  This had been the result partly of the b oom in its oil and natural gas subsectors but also, to 
a large extent of its diversification strategy impl emented since the mid 1980s.  This strategy had been 
based on largely open markets for goods, labour , and capital, while a number of services sectors 
remained state-controlled or reserved for nationa ls.  The UAE was envisaging steps to liberalize 
foreign direct investment inflows, and to  privatize some state-owned companies.  
4. Both reports emphasized the UAE's commitment to the WTO.  As noted, the UAE's market 
for all products was quite open, and the bulk of its trade had ta ken place on an MFN basis.  
Nevertheless, increasingly, a key element in the re form process related to full economic integration 
under the Gulf Cooperation Council (GCC), of which the customs union component became effective 
on 1 January 2003.  
5. In the light of the reports, the Chairperson was su re that Members would be interested to learn 
more about the steps to be taken by the UAE at th e multilateral level due to the envisaged reforms.   WT/TPR/M/162 
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  II. OPENING STATEMENT BY THE REPR ESENTATIVE OF THE UNITED ARAB
 EMIRATES 
6. The representative of the United Arab Emirates
 stated that the Trade Policy Review process 
was an essential element in the WT O's effort to enhance transparency, and an excellent opportunity to 
foster a better understanding of Members' trade and economic policies.  During this first review, the 
UAE Government agencies anticipated constructiv e questions and comments from Members, which it 
could consider in further refining its policies and practices.  
7. An examination of the macro-picture reflected a substantial increase in economic growth 
during the last few years.  Nominal GDP had risen by more than 14% annually over the past two years 
and this was expected to continue.  
8. The emphasis of the UAE Government was to di versify its economy to lessen its dependence 
upon oil and gas.  This was evidenced by the export mix of the UAE.  Non-oil exports were 52.3% of 
total exports in the past five years compared w ith 29.5% in 1980 and 31.9% in 1990.  Growth of 
services was expected to contribute significantly to  diversification.  The UAE's high ratio of 
merchandise trade to GDP, at approximately 145%, was encouraging. 
9. The UAE maintained that the key driver to su stainable development was the private sector.  
One of the many advantages of foreign direct inv estment (FDI) was the transfer of knowledge and 
expertise in areas where other countries excel.  Th e UAE had 32 free zones, and their success formula 
comprised 100% foreign ownership, corporate tax ho lidays, zero income tax, freedom to repatriate 
capital and profits, and no import duties or currenc y restrictions.  The UAE was re-examining the 
Federal Commercial Law to increase the share of fore ign ownership in firms established outside the 
free zones.  
10. Public revenues had increased significantly in r ecent years, yet total public expenditure  had 
increased by only 4.3% in 2004 over 2003;  the public deficit represented less than 1% of total public 
expenditures.   
11. The population in the UAE had increased, at approximately 7% annually over the last few 
years, to reach 4.32 million in 2004.  Approximately  85% of UAE's residents were expatriates, and 
unemployment was stable at approximately 4%.  Qu alified foreigners dominated employment in the 
private sector whereas in most other countries foreigne rs were only allowed to take up jobs when it 
could be proved that qualified nati onals were not available.  The Government recognized that while 
foreign talent would continue to play a vital role in strengthening competitiveness, the UAE had 
initiated policies to integrate nationals in the work force. 
12. In view of an increasingly liberalized and diversified economy, the UAE was in favour of  
multilateral, regional, and bilatera l cooperation and integration:  it was one of the advocates of 
multilateralism.  As a developing economy that thrived on free trade, the UAE believed it was 
essential to have a strengthened system that was fu lly legitimate and laid down the principles and 
rules for promoting international trade liberalizati on.  The WTO occupied a unique position to fulfil 
that role that no other forum could equal.  
13. The UAE’s focus for the Doha Development Ag enda (DDA) was on non-agricultural market 
access (NAMA), as well as on services.  The UAE's objective was to improve market-access opportunities for goods through subs tantially reducing tariff peaks and eliminating tariff escalation 
while observing the principle of less than full reci procity to genuinely safeguard the interests of 
developing countries.  Concerning the sectoral co mponent, the UAE suggested the inclusion of the 
raw materials sector, with primary aluminium as its strategic priority.  WT/TPR/M/162 
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  14. While the UAE had no significant agriculture sector, it recognized that the agriculture 
negotiations were the centrepiece of the DDA  and therefore tried to play a constructive and 
facilitating role. 
15. The UAE was taking progressive steps towards liberalization in a wide range of services 
sectors.  This was especially important given that  services now made up over 50% of its GDP.  The 
UAE had submitted its initial offer, which was in  line with the policy objectives set by the 
Government and its reform process currently under way.  New collective requests recently received 
from certain WTO Members were under consideration. 
16. The UAE firmly supported further liberaliza tion of trade in services, and was actively 
involved in the current WTO negotiations with the aim of reaching meaningful results, especially in 
the context of the persistence of certain protectioni st practices in certain countries.  Quite recently, 
Dubai Ports World had been denied, on a discriminator y basis, the opportunity to expand its container 
terminal management services in some markets. 
17. The UAE's intellectual property rights laws comp lied fully with the international standards 
laid down in the Agreement on Trade-Related Aspect s of Intellectual Property Rights (TRIPS).  These 
laws were under constant review to ensure that they evolved as necessary.  Furthermore, the UAE was 
one of the few developing WTO Members to declare that it would not avail itself of the paragraph 6 
solution of the Doha Declaration on TRIPS and Public  Health, except in nati onal emergencies or other 
circumstances of extreme urgency.  The UAE was committed to working towards a favourable 
outcome of the DDA by the end of 2006.   
18. Notwithstanding its commitment to multilatera lism, the UAE had adopted a more open-
minded approach in pursuing high-standard, WTO-c onsistent FTAs with its trading partners, in 
recognition of the potential of such agreements to reinforce global trade liberalization.   
19. The UAE was a founding member of the Gulf Cooperation Council (GCC) established on 
25 May 1981.  Furthermore, the GCC Customs Union had been operative since the beginning 
of January 2003.  Future plans included the applica tion of the common external tariff to all items and 
steps towards a common market with a common cu rrency.  Also, the UAE was a member of the 
Greater Arab Free Trade Area (GAFTA), which entered into force on 1 January 1998.  
20. The UAE, either individually or collectively with other GCC members, had begun 
negotiations to establish FTAs;  these discussions were still in progress.  The rationale behind the 
ongoing individual FTA negotiations with the United States and Australia was the open regionalism 
approach, which had demonstrated its efficiency in  other regional groupings, such as the ASEAN, and 
led the advantage of not altering the credibility and cohesion of regional constructions.  For the 
ongoing FTAs, conducted on an individual basis, th e GCC States were currently considering the 
appropriate mechanisms to address FTAs in progr ess within the collective agenda of the GCC. 
21. Although oil and gas resources were presently the mainstay of the UAE economy, the 
Government was working diligently to accelerate polic ies towards further diversification.  The UAE's 
position was that the multilateral trading system, as embodied in the WTO, was crucial to the 
continued growth of the economy.  In this regard, the UAE assured Members that it would continue to 
fulfil its obligations, and to participat e actively to strengthen the WTO.   WT/TPR/M/162 
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  III. STATEMENT BY THE DISCUSSANT 
22. The discussant
 complimented the United Arab Emirates for its impressive economic 
performance. 
23. Over recent decades, the UAE had developed a un ique recipe for economic success with three 
essential ingredients:  oil, creativity, and openness.   The UAE ranked among the world's ten largest 
producers of oil and gas.  The income stream from these energy resources provided a sound financial 
background for the rapid development and diversifica tion of the economy.  Creativity was reflected in 
the successful process of diversification:  the importance of oil and gas in the UAE's economic activity had declined from almost 75% of GDP in the 1980s to around only one third.  A booming service sector including transport, finance, and tour ism had become a major driving force of economic 
expansion, especially in Dubai.  Openness  was reflected not only in intern ational trade, as exports and 
imports together accounted for almost 150% of GDP, but  also in the strong inflow of foreign labour, 
which was an essential source of growth in the UAE. 
24. These ingredients wisely combined by the Gove rnment had resulted in one of the fastest 
growing economies in the world with one of th e highest per capita incomes.  An excellent 
infrastructure had been created providing a strong foundation for further growth. 
(1) Macroeconomics 
25. Over the past three years strong domestic de mand and a booming oil market had led to 
impressive growth of around 9% on average.  As a consequence, however, there had been signs of 
overheating and accelerating inflationary pressure.  Th e inflation rate increased continuously between 
2002 and 2005, stabilizing at 6% in 2005.  Though this rate seemed rather modest, the official index 
focused primarily on consumer prices for nationa ls, who were only 20% of the population and in 
many areas highly subsidized (e.g. water, electric ity, housing), and thus might underestimate actual 
price increases.  Some broader estimates reached tw o-digit inflation figures, and some forecasts for 
2006 reached as high as 20%.  Given this boom-scena rio, he asked for the UAE's view on overheating 
as well as the need for political action to curb de mand.  He asked whether the UAE shared his 
impression that actual inflation might be underestimated by the official index. 
26. The "natural instrument" to control inflation and demand pressure would be monetary policy.  
But in the UAE's case, monetary policy was bloc ked because the Central Bank had to guarantee the 
fixed exchange rate with the U.S. dollar and keep do mestic interest rates in line with the relatively low 
rates of the U.S.  The UAE's fixed exchange rate  system had served as an anchor for stability and 
creating confidence in the domestic currency.  Nevert heless, in view of recent developments, the UAE 
might consider a more flexible exchange rate system  in order to enhance the efficiency of monetary 
policy in controlling inflation.  He noted that th e UAE was preparing for monetary union in the Gulf 
cooperation countries by 2010, and asked about the kind of exchange rate system the UAE would 
consider adequate in this new framework. 
27. The limited effectiveness of monetary polic y increased the importance of fiscal policy in 
achieving sustainable and stable economic growth. 
28. Although the Government had progressed in consol idating the budget over the last years, the 
non-oil budget deficit was still high (around 15% of  GDP in 2004), which indicated the need for 
further consolidation and structural changes.  He highlighted the strong increase in Government 
salaries in 2005, and sought clarification as to the level of these increases which he believed were 
25% for nationals and 15% for non-nationals.    WT/TPR/M/162 
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  29. The UAE appeared to have a dualistic economy.  On the one hand there was a very high 
degree of openness, as seen in the free-trade zones an d in the inflow of labour and border regulations 
in trade.  On the other hand, however, there were a number of rules and practices that tended to limit 
competition behind the border and seemed to be aimed at strengthening the economic position of 
nationals.  
30. One of the most quoted impediments to more competition was the Agency Law, under which 
practically all imports required the involvement of a designated national agent;  this was equivalent to 
granting a large number of regional monopolies for specific products to Emirati nationals or 
companies.  Market segmentation, higher prices, and limited efficiency in the distribution of goods 
and services were likely consequences of this regulation.  
31. State-owned enterprises had a dominant position in the UAE economy.  Electricity, gas, and 
water services were provided exclusively by state monopolies, and many larger enterprises engaged in 
international trade were still state-owned and profited from favourable financing conditions.  
However, steps had been taken recently, especially in  Abu Dhabi but also Dubai, to reorganize these 
sectors (e.g. electricity and telecom). 
32. A new company law that would end the sole agency provision was under consideration.  He 
asked for more information about the Government's plans, and whether stronger participation by new 
competitors could be expected, for example in telecom.  
33. Public utilities were not only considered as pr oviders for efficient and demand-driven services 
but also as an instrument of social policy.  A cons iderable degree of income support in favour of UAE 
nationals was taking place through state-owned utilities.  In the UAE, electricity and water prices 
were three times higher for non-nationa ls than for nationals.  In order to allow companies to act on the 
basis of real costs and prices, he suggested replacing such indirect subsidies by direct income transfers to UAE nationals. 
34. More leeway for  foreign investment might also increase the chances for privatization and 
raising productivity in the economy.  Foreign owners hip in companies in general was limited to 49%, 
which reduced the attractiveness for foreign entrep reneurial engagement.  He asked for further 
elaboration on the UAE's indication that there might  be some positive changes with regard to the 
restrictive foreign ownership regulation. 
35. All of these instruments limited competition a nd had a strong tendency to reserve business 
opportunities for nationals.  He wondered whether the real reason behind these regulations was the 
specific situation in the labour market.  UAE nationa ls accounted for only a very small part of the 
active labour force (around 9%) and unemployment or non-employment among nationals was three to 
four times as high as the overall unemployment rate of 4%. 
36. The Government had used a number of instruments to improve employment opportunities for 
nationals, some of which were strongly regulato ry in nature, for example employment quotas for 
private companies, called "emiratization".  This  quota policy had become more widespread and 
stricter, covering the banking and insurance sector  as well as distributional and professional services. 
As it was not always easy to find adequately qualified nationals to fill the quotas (and quota increases), emiratization had become a real impediment for business. 
37. He stated that, generally the UAE Governme nt artificially increased demand in order to 
address growing unemployment.  He wondered whethe r it would be more appropriate to address the 
problem from the supply side:  targeted educa tion measures could increase employment opportunities 
for nationals in the private sector;  similarly, the very generous employment conditions in the public 
sector, where most nationals were employed, could be  brought closer to those in the private sector.  WT/TPR/M/162 
Page 8  
 
  Another measure could be to replace the large benef its that could be obtained without working with 
an adequate general social system that might also increase incentives to employ more nationals in the 
private sector.   
(2) Trade policy 
38. The UAE's overall trade regime was relatively li beral.  This was certainly true for the free 
trade zones, which had been central to the econo mic upswing.  Almost 80% of non-oil exports were 
from these zones.   
39. In addition, the general tariff system for th e mainland was quite simple and created few 
impediments to trade.  It was based on the GCC co mmon external tariff, which basically comprised an 
across-the-board rate of 5% with some exceptions.  
40. The majority of tariff lines however were bound at a much higher rate of 15% and the 
discussant wondered whether this significant diffe rence between applied and bound rates was still 
necessary for an open and competitive trader like the UAE.  
41. In services, while the degree of liberalization already achieved in many areas was higher than 
what had been bound or offered in the WTO context, he thought there might be room for 
improvement.  He was be interested in  hearing more in this connection. 
42. The UAE excelled in trade facilitation.  The time  needed for customs declaration, for example 
in Dubai, was reported to be amongst the shortest in the world.  
43. The high quality infrastructure, the efficient ports and airports, and the slim administrative 
procedures were a big contribution to the attractiven ess of the Emirates as a major trading hub in the 
region.  WT/TPR/M/162 
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  IV. STATEMENTS BY MEMBERS 
44. Members welcomed the delegation of the Unite d Arab Emirates led by H.E. Ms. Sheikha 
Lubna Bint Khalid Al Qasimi.  They congratulat ed the UAE on its recent economic performance.  
Many Members appreciated its open trade environm ent and efforts to diversify the economy.   
45. The representative of Canada  stated that trade and economic relations with the UAE had 
expanded rapidly in recent years, including a 39% increase in merchandise trade during 2005.  Since 
2001, Canada's exports to the UAE had risen by a steady 25% annual average;  the UAE had become Canada's largest export market in the Middle East.  The three main drivers of this impressive growth 
were the construction sector, oil and gas equipment,  and services.  There had been additional growth 
in other major areas such as education, and information and communications technology, as well as 
agriculture and agri-food.  She noted that there was significant opportunity for additional growth in 
bilateral trade. 
46. Canada applauded the UAE for its strong su pport of the multilateral trading system, for 
implementing trade and economic policies that had fostered a quite open trade and economic 
environment, and for its significant steps to enhance the role of the private sector in the development 
process.  She noted in particular the UAE's strong co mmitment to trade liberalization, diversification, 
and promotion of the role of the private sect or. Canada looked forward to the continued 
implementation of reforms by the UAE, particularly re garding tariffs and priva tization, and to further 
improvement of its multilateral commitments on goods and services.  Canada encouraged the UAE to 
participate even more actively in the Doha R ound negotiations.  Canada especially commended the 
UAE's leading role in the NAMA negotiations in pr omoting a sectoral initiative to liberalize trade in 
"raw materials".  Sectoral tariff initiatives were a key component to fully deliver the Doha mandate 
with respect to non-agricultural market access by  allowing the reduction and appropriate elimination 
of tariffs, especially on products of export interest to developing c ountries, over and above what could 
be achieved solely by the formula. 
47. The services sector, which was a crucial component of the UAE's policy of economic 
diversification, offered significant potential for expa nsion in the UAE in the near future.  This was 
particularly true in view of its ambitions to b ecome a regional hub for private commerce, including 
specific services such as health, education,  tourism, finance, and air transport. 
48. Canada appreciated the UAE's pr ogressive efforts on trade facilitation.  The development of 
free-trade zones, catering increasingly to services sectors and in which, inter alia , 100% foreign 
ownership and the freedom to re patriate capital and profits were  permitted, were especially 
noteworthy.  Canada looked forward to the elim ination of restrictions on foreign ownership of 
property outside the free-trade zones. 
49. The representative requested information on th e UAE's steps to encourage private sector 
participation in services by removing obstacles to fo reign investment.  She hoped that opportunities 
for enhanced foreign investment in the UAE would be expanded to include additional subsectors such 
as banking, insurance, and commercial representation.   She encouraged the UAE to pursue greater 
private sector participation in telecom and postal services, and to work towards eliminating minimum 
quotas for nationals in services sectors. 
50. Canada continued to follow with interest th e UAE's market liberalization and investment 
promotion policies.  She encouraged the UAE to continue its progressive economic reform strategy 
and its efforts to promote stability and transparency  in the country's trade and investment regime. 
51. The representative of the Separate Customs Te rritory of Taiwan, Penghu, Kinmen and Matsu
 
(Chinese Taipei) noted that over the past decade, th e UAE had maintained average growth of 6% per WT/TPR/M/162 
Page 10  
 
  year, and the current trend was in the general dir ection of growth.  The UAE had made substantial 
efforts to strengthen its trade regime through po licies that further liberalized the economy. He 
congratulated the UAE for having one of the world' s highest rates of GDP per capita, at almost 
US$24,000, up from US$18,000 in 1995. 
52. Chinese Taipei had very close and long-standing economic ties with the UAE.  The UAE was 
its fourth largest trading partner in the Middle East, with total two-way trade at around 
US$2.75 billion in 2005.  A large proportion of imports from the UAE was crude oil and aluminium, and exports to the UAE comprised high quality electr ical machinery and equipment, and mechanical 
appliances.  There was great potential for expandi ng the volume of bilateral trade, specially in 
petrochemicals. 
53. The UAE's internal barriers to trade resu lted mainly from the apparent absence of a 
competition policy, and restrictions on foreign par ticipation under the investment regime.  While 
bilateral trade had grown strongly in recent years, the trend in investment had been extremely weak, 
thus limiting the potential for greater economic coope ration.  Both stood to benefit enormously from 
bilateral investment, particularly in petrochemicals. 
54. Commercial presence of hotels and restaurants was permitted in the UAE, with a maximum 
foreign equity participation of 49%.  He asked wh ether the UAE planned to ease this limitation in the 
near future.  In addition, every commercial bank,  including branches of foreign banks, were required 
to have minimum paid-up capital of Dh 40 million or 10% of risk-weighted assets.  Chinese Taipei 
believed that the quality of the parent bank's as sets, the commitment and the financial support from 
the parent bank to its branches, and the close c ooperation between the supervisors of home and host 
countries were more important than the capital requi rements.  He suggested that the UAE might like 
to review the need for such high capita l requirements for foreign bank branches. 
55. The representative of Australia
 noted the strong and expa nding commercial relationship 
between the UAE and Australia, enhanced by th e increasingly complementary nature of their 
economies.  The UAE was Au stralia's second largest trading partne r in the Middle East, and there was 
great potential for further growth.  The UAE was an important market for Australia's elaborately 
transformed manufactures, particularly passenger motor vehicles, as well as for primary products;  
two-way investment and services exports from the UA E had expanded considerably in recent years.  
The strength of the Australia-UAE relationship an d their shared commitmen t to increase investment 
flows and to reduce the barriers to trade in goods and services was reinforced by a decision to launch 
negotiations on a comprehensive free-trade agreement in 2005. 
56. The UAE's rapidly progressing transformation into a services-based economy had been 
characterised by an openness to foreign participati on, reform of internal sy stems and regulations, and 
increasing exposure to international market forces.  As the UAE expected to rely less on petroleum 
exports and moved towards a services-based economy, Australia would welcome ambitious 
commitments on services from the UAE in the current Doha Round. 
57. The UAE was committed to an open rules-based multilateral trading system. It was 
progressively opening up its economy, and Australia belie ved that its future growth would be assisted 
by decisions to address regulatory impediments to  trade and investment, and by improving the 
transparency of judicial institutions and legal processes.  Australia welcomed the UAE's progress in 
liberalizing investment regulations and looked forward to the UAE bolstering these regulations with strong commitments in the WTO.  Australia al so welcomed the significant regional economic 
integration achieved by the Gulf Cooperati on Council, of which the UAE was a member. 
58. The representative of Hong Kong, China
 noted that the UAE and Hong Kong, China, 
maintained very good trade relations.  Accordi ng to the IMF, in 2004 Hong Kong, China was the  WT/TPR/M/162 
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  UAE's eleventh largest trading partner;  between 2001 and 2005, total trade between them increased at 
an annual average rate of 15.7%.  In 2005, the ma jor export to the UAE was jewellery and imports 
included pearls, precious and semi-precious stones.   He hoped that the growth momentum would 
continue. 
59. Hong Kong, China commended the UAE for its low and simple tariff regime.  It encouraged 
the UAE to continue in trade liberalization efforts by:  (i) narrowing the gap between bound and 
applied tariff rates so as to enhance predictability  of its tariff regime, and (ii) bringing down the 
applied rates of 33 tariff lines that exceed their corresponding zero bound rates. 
60. The UAE's customs procedures were simple and la rgely computerized to facilitate trade.  He 
noted that as a result of computerization, customs clearance times in Dubai were reported to be the 
shortest worldwide.  While each Emirate had its ow n customs authority, customs procedures were the 
same throughout the UAE, and customs requirements were kept to a minimum. 
61. He noted that on import prohibition, licensing, and controls the UAE was working with other 
Gulf Cooperation Council States on a common list of prohi bited or restricted products;  he hoped that 
the list would be published soon as it would fac ilitate trade.  Hong Kong, China commended the 
UAE's continued efforts in harmoni zing its national standards with in ternational ones:  the Emirates 
Authority for Standardization and Metrology ha d 1,810 standards in place, of which 95% were 
generally based on internat ionally accepted standards. 
62. Hong Kong, China congratulated the UAE for the fa st growth of its services sector in recent 
years;  the sector now accounted for a dominant share of its GDP.  Continued liberalization of trade in services would be crucial for further economic deve lopment of the UAE.  In its GATS initial services 
offer, tabled in 2005, the UAE had proposed to make some new commitments, notably on 
infrastructural sectors including telecom and insu rance services.  He hoped that the UAE would 
participate more actively in the ongoing services ne gotiations.  To increase the predictability of its 
trade regime, he encouraged the UAE to further im prove its commitments by binding its more liberal 
de facto regime, particularly that of transport services and banking services, in this round of services 
negotiations. 
63. The representative of the European Communities
 said that the UAE was a major player in 
world energy markets with nearly 10% of the world' s proven oil reserves and the fifth largest natural 
gas reserves.  The UAE had grown into one of th e most dynamic and fastest growing economies in the 
world during the last 30 years, with an optimistic ou tlook for the coming years.  This growth had been 
attributable to a positive external environment an d in particular to the favourable conditions of 
increasing oil prices.  However, the UAE had undertak en tremendous efforts to diversify the industry 
and improve the business environment. 
64. The EC congratulated the UAE on its liberalization steps, including several projects to 
diversify its economy in order to reduce its depe ndence on oil and natural gas revenues, increased 
investment on job creation and infrastructure expans ion, and opening up its utilities to greater private 
sector involvement.  The key question now was what the UAE should do to ensure continued growth 
and sustainable development;  trade policies and me asures had a very important role in this.  The 
ongoing DDA negotiations, which were of crucial impor tance, offered a unique chance to boost the 
development of the UAE through further market opening and yet stronger rules, and the EC encouraged the UAE to be ac tively involved in all areas. 
65. Domestic reform in the UAE needed to continue and be reinforced to reap the most benefits 
from WTO membership and increased trading opportuniti es.  This would include continuing efforts to 
introduce a competition policy, as well as private sector  reforms, also for transport, finance, and 
telecommunications, which were all core sectors in te rms of development.  In addition, a framework WT/TPR/M/162 
Page 12  
 
  was needed to facilitate and increase direct invest ment as well as market opening for foreign services 
providers.  This would assist the UAE's economic de velopment and, indirectly, help it to diversify 
more its exports base from the oil and gas activ ities.  A transparent and open Government 
procurement system, providing for stronger participation of foreign companies, would also assist development. 
66. Increased integration into the global trading sy stem needed to be firmly anchored in the 
regional context.  The UAE was a member of the GCC, which aimed to establish a sustainable regional market.  The EC was negotiating closer trading links with the GCC.  The UAE was also engaged in various bilateral ne gotiations.  There was a great need for complementarity between 
multilateral, regional and b ilateral liberalization. 
67. Many WTO Members placed great emphasis on the need to address the link between trade 
and sustainable development.  In this respect, all three pillars of sustainable development – economic, 
social, and environmental – needed to be fully integr ated in any national strategy.  She requested more 
information on how the UAE assessed the potential for ensuring strong synergy between trade and 
sustainable development. 
68. The representative of Argentina
 observed that since its establishment in 1971, the UAE had 
evolved, from a relatively under-developed region into  a very modern State.  Life expectancy was 
high and the economy was integrated into the world economy:  it was an example of what could be 
achieved by liberalizing the economy and creating conducive conditions for private sector activity, 
and maintaining political and social stability.  The UA E's success was due to its policy of diversifying 
the sources of investment, encouraging developmen t in sectors other than oil, and encouraging 
investment, both national and international, in the private sector.  This had made the UAE well known 
worldwide as an international trad ing, financial, and services centre. 
69. The UAE still had to meet major challenges, in  areas like as investment, competition, and the 
labour market.  The lack of competition policy, the in stitutional deficiencies in several sectors, and the 
restrictions on foreign equity participation contrasted  with the relatively low level of obstacles to trade 
at border, and had made it difficult for the UAE to  benefit fully from the advantages of a liberal 
economy. 
70. In the area of competition policy, inflationary  pressures had led the UAE to exclude basic 
food products from the Commercial Agencies Law.  U nder that law, the import and distribution, as 
well as the sale and exhibiting of products and the provision of servi ces were reserved to exclusive 
agents.  He wondered whether the UAE intended to  introduce greater flexibility into this law. 
71. Argentina's commercial and trade relations w ith GCC members were important, and the UAE 
was the main destination for Argentina's imports in  the region.  He hoped that these relations would 
become even stronger as a result of the initiativ es undertaken by MERCOSUR and the GCC through 
the cooperation agreement signe d in Brasilia in May 2005. 
72. The representative of the United States  stated that the United States and the UAE enjoyed a 
very strong and positive relationship, with coopera tion spanning many of the economic and security 
issues that were so important to the world and to the Middle East.  
73. The depth of their relationship could be seen ea sily in the statistics:  two-way trade in goods 
had topped US$10 billion in 2005, and foreign direct and portfolio investment was in billions of 
dollars.  It was also apparent in specific initiatives,  such as the Container Secu rity Initiative, where the 
UAE had joined in the urgent and essential effort to protect trade cargos transiting major ports and 
allowing legitimate trade to flow smoothly.   WT/TPR/M/162 
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  74. This review had several positive themes.  Firs t, in the 35 years since its independence, the 
UAE had grown from a small fisheries-based economy in to a modern, prosperous, and tolerant State.  
It was an important global centre for trade and i nvestment, with the world's ninth-busiest container 
port and an airport that had become a major regi onal and international transit hub for passengers and 
cargo.  Many companies, including hundreds of Amer ican firms, had made the UAE their regional 
headquarters.  Per capita GDP was robust at aroun d US$24,000 (one of the highest levels in the 
world), and entrepreneurial projects were innovati ve and ambitious, such as the undersea Hydropolis 
hotel and the Ski Dubai indoor snow resort.  
75. The United States was interested in hearing mo re about the UAE's experience in diversifying 
its economy away from dependence on oil and gas activ ities.  The challenge of diversification was a 
common theme in many reviews, particularly when energy played a big role in the economy, and the 
UAE seemed to be managing it successfully.  The UAE 's Report, for example, showed the increasing 
importance of non-oil exports as a share of total ex ports (from 30% in 1970-80 to more than 50% in 
2006).  In addition, the United States welcomed the Government's statement that it considered the 
private sector to be the primary engine of future  growth: it was interested in the UAE's plans for 
sustaining diversification, through the reform of  state enterprises, the liberalization of foreign 
investment restrictions, and the further development of the services sector. 
76. The United States had submitted specific questions on standards, on the role of the State in 
economic activities as well as import licensing,  Government procurement, and IPRs. 
77. The representative of Korea  noted the increasing trade relationship between Korea and the 
UAE.  The UAE was Korea's second provider of crude o il and the first destination in the Middle East 
for Korean products.  Bilateral trade and investment had increased yearly to reach around 
US$12 billion in 2005.  Korea hoped that mutual cooperation would continue  to be enhanced by 
taking advantage of business opportunities in sectors of mutual interest, such as construction, general 
trading, private investment, and natural resources. 
78. The UAE's economy had done well over the past d ecade, recording an impressive growth rate 
of 9% in 2003-05.  There had been increasing di versification away from dependence upon oil and gas 
to non-oil industries.  Korea applauded the UAE Government for successfully stewarding its economy 
into sustainable and diversified development.  Ho wever, there might be greater economic potential if 
the UAE pursued a more liberalized trade and investment regime. 
79. Despite the UAE's generally liberal and increasi ngly diversified economy, its internal barriers 
to trade, largely resulting from the lack of comp etition policy, institutional weakness in several 
sectors, and restrictions on foreign participa tion, precluded it from benefiting fully from the 
advantages of a liberal economy.  Korea hoped that, by addressing these challenges, the UAE would 
continue to sustain economic growth.  
80. Three issues were of interest to Korea.  Firstly, the "emiratization program", which aimed to 
provide employment opportunities for UAE nationals, could eventually become an impediment to 
doing business in the UAE.  Foreign companies with more than 100 employees were required to hire 
Emirati public relations officials (PROs), while t hose with less than 100 employees were required to 
hire PROs regardless of their nationality.  Korea w as concerned that due to the difference of fee to 
obtain a PRO licence depending on the applicant's na tionality, foreign companies hired Emirati PROs 
instead of foreigners.  The representative asked whether the Government had plans to address this 
discriminatory regime on PRO employment. 
81. Secondly, while Korea recognized that the UAE protected IPRs, including trade marks, it was 
concerned that there were a number of cases of piracy  of trade marks.  Korea therefore requested the 
UAE Government to step up its efforts to reinforce the protection of IPRs. WT/TPR/M/162 
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  82. Thirdly, UAE customs procedures required comm ercial invoices to be certified by the UAE 
embassy in the country of origin, and the fees ch arged in some of the embassies were sometimes 
unreasonably high and burdensome.  Korea requested the UAE delegation to elaborate on the relevant 
laws and regulations along with any plans to revise the current certification system. 
83. The representative of Japan
 regretted that Japan's written questions had not reached the 
Secretariat within the two-week d eadline even though they had been prepared in advance.  He hoped 
that in spite of this delay, the UAE woul d answer Japan's questions as far as possible. 
84. The UAE's economy was highly dependent on the export of crude oil and natural gas but 
other sectors, as the services sector, were becomi ng increasingly significant.  Japan, as the largest 
destination of the UAE's crude oil exports, ha d close economic ties with the UAE;  many Japanese 
private companies were doing business in the UAE.  The successful free zones and relatively 
liberalized trade and transport services had made th e UAE a business centre in th e Gulf region.  Japan 
hoped that the UAE would continue efforts to provide foreign investors with a sound business 
environment. 
85. Japan appreciated the UAE's efforts in this re gard but believed it was important for the UAE 
to achieve sustainable growth by strengthening th e market-based economy.  Japan encouraged the 
UAE to further accelerate the economic reforms through libe ralization and privatization, 
including in services, such as financial and te lecommunications services.  Japan was very 
interested in the enhancement of the investment environment in the UAE.  It welcomed the progress 
regarding foreign ownership of stock share and real estate, although it was limited and further 
relaxation was needed.  Japan also appreciated the progress in liberalization and privatization through 
the restructuring of Governmental organizations. 
86. However, foreign companies investing in the UAE still faced some difficulties.  A foreign 
company planning to open a branch in the UAE was required to designate either a UAE citizen or a 
company 100% owned by a UAE citizen as a local s ponsor;  there were also enormous procedural 
difficulties in changing business partners or local sp onsorships.  Individual emirates levied taxes on 
foreign banks in a discriminatory manner, and la ws and regulations imposing such taxes on foreign 
banks were not clear. 
87. Japan believed that it was essential to improve  the investment environment, including 
transparency, particularly on the aforementioned is sues, not only to facilitate activities of foreign 
companies invested in the UAE but  also for further development of the UAE economy.  Japan hoped 
that the UAE would endeavour to enhance the reli ability and predictability of its trade and invest 
regimes.   
88. The UAE was a member of the Gulf Coope ration Council (GCC), which was working to 
realize economic integration.  The GCC was negotia ting bilateral free-trade agreements with the EU 
and was ready to negotiate with China, I ndia, EFTA, and MERCOSUR under the framework 
agreements;  the GCC's FTAs were promoting regiona l stability and liberalization in the Gulf region.  
He noted that Japan had decided to start nego tiations for an FTA with the GCC this summer. 
89. Japan firmly believed that FTAs/EPAs were not  a substitute for the multilateral trading 
system but a complement to it and, in this respect , appreciated that the UAE put high priorities in the 
DDA and sought better synergy between multilateralis m and bilateralism.  The UAE was a leading 
country to promote trade, foreign investment , and economic reform in the Gulf region. 
90. The representative of Singapore  noted that the UAE and Singapore shared long-standing 
and good bilateral economic relations.  The UAE was Singapore's second largest trading partner in the 
Middle East;  total trade in 2005 was US$10.4 b illion, representing a 58.8% increase over 2004. She 
also noted that Singapore was one of the UAE's main trading partners in Asia.  Their relationship was  WT/TPR/M/162 
 Page 15 
 
 
  equally close in the area of investments, as the UAE was Singapore's second largest Middle Eastern 
investor and Singapore's largest investment destinat ion in the Middle East.  The vast majority of 
Singapore-based companies with physical presence in  the Middle East were located in the UAE.  
With its excellent infrastructure and business-friendl y Government policies, the UAE continued to be 
a preferred destination for Singapore companies a nd she hoped that the UAE would remain receptive 
to foreign investment. 
91. Singapore commended and supported the UAE's pursuit of a progressive economic agenda 
focused around economic liberalization, diversification,  and promotion of the private sector.  It shared 
the UAE's belief in and advocacy of the multila teral trading system and lauded its positive 
contributions towards the DDA negotiations.  As tr ading countries strongly depending on free and 
open international trade, both the UAE and Singapore had a keen interest to see the successful and 
timely conclusion of the DDA. 
92. Beyond the exchange of goods and services a nd cooperation on the multilateral front, the 
UAE and Singapore had various bilateral mechanisms  to enhance their economic cooperation.  These 
included an agreement on economic, trade and t echnical co-operation (ETTC), which provided the 
basis to develop and strengthen ec onomic cooperation in various fields , including trade, investments, 
industry, transport, and logistics services, infrastru cture development, oil and gas services, education, 
tourism and investment. 
93. The representative of Tunisia  (speaking on behalf of the Arab Group) congratulated the UAE 
for its efforts since accession to the WTO to pursu e economic and trade liberalization, strengthen the 
opening process, institute an environment to favour  investment, diversify its economy to reduce 
dependency on the oil and gas trade, and diversif y its economic and commercial relations through 
free-trade agreements.  These measures had permitted the UAE's economy to record impressive growth rates and to increase the Emirates' reputation in terms of financial and other services.  The UAE was a major player on the world capital market through its various conglomerates, and its trade 
balance had been positive since its independence.  The UAE's free trade zones were devoted to 
services and industries. 
94. As part of its global policy to promote market  opening and liberalization, the UAE had signed 
bilateral free-trade agreements with Syria, Jo rdan, Lebanon, Morocco, and Iraq, and intended to 
conclude further such agreements.  At the regiona l level, the UAE was a founding member of the Gulf 
Cooperation Council and as such, it applied the common external tariff;  the UAE was also an active 
member of the Greater Arab Free Trade Area.  The Arab Group congratulated the UAE for its trade 
policy aimed at becoming a major hub of entrepreneur ship in several areas of industrial and services 
activities.  He congratulated the UAE for its comm itment to the multilateral trading system and for 
applying and endorsing its principles and rules. 
95. The representative of Bahrain
 (on behalf of the WTO Members of the Gulf Cooperation 
Council (GCC)) noted the recent developments in the UAE's trade sector and expressed full support for the recent trade policies adopted in the UAE.  Since joining the WTO the UAE had adopted liberal 
trade policies that had helped it to maintain stable economic growth.  The UAE's policies and 
measures were designed to promote investment and attr act foreign direct investment, to reduce tariffs, 
and to remove trade barriers and tariff restrictions.  The GCC members appreciated the UAE's efforts to reduce the public sector in the economy, and en courage the private sector, as well as to privatize 
and diversify its economic base;  these effort s demonstrated a strong commitment to an open 
multilateral trading system.  Its GCC membership enabled the UAE to achieve a high GDP growth 
rate and its economy to compete efficiently. 
96. The representative of Jordan
 noted that the UAE had managed to successfully integrate itself 
in the world trading system through bilateral a nd regional trade agreements, as well as through its 
active participation in the WTO negotiations and the DDA, which would enhance its economic policy WT/TPR/M/162 
Page 16  
 
  objectives.  This integration, which was in line w ith all the requirements of Article XXIV of GATT 
1994 and Article V of GATS, had resulted in increased competitiveness and productivity in the UAE's industries.  He applauded the UAE for the effo rts to fulfill its commitments under different WTO 
Agreements and strongly agreed that the UAE de monstrated a model to be emulated.  Jordan 
appreciated the UAE's initial offer in services and the sectoral proposal for tariff elimination under 
NAMA.  It congratulated the UAE for its overall effo rts in trade facilitation and in offering improved 
market access for products throug h binding generally low tariff rates. 
97. Successive developments in the economy and th e adoption of the free market policies and 
regulations had enabled the UAE to achieve impressi ve growth rates as well as a solid jump towards 
sustainable and diversified development.  The UAE's  status as an international centre for trade, 
finance and services was an evidence of its success  in creating an enabling business environment.  
Another aspect of trade liberalization was the in creasing role of the private sector in the UAE's 
economic activity, particularly as it was a major trading hub in the region. 
98. The dividends of the UAE's liberal economy were evident in the improvement of trade 
between the UAE and its trading partners, including Jordan;  this viable trade policy had led to 
substantial economic growth and the steady increase of the UAE's GDP for several years.  The UAE 
also vitally participated in global capital markets and applied a sound policy to attract FDI to its open 
economy;  this had led to the further modernizati on of local production standards and improvement of 
its management systems. 
99. The representative of Morocco
 expressed appreciation for the trade and economic reforms 
that had led to the UAE's current status as one of the strongest and fastest growing economies in the 
world.  The UAE had an open economy with a hi gh per capita income and a sizeable annual trade 
surplus.  Its wealth was based on oil and gas output .  It had undertaken various important measures to 
diversify its economy and reduce its dependence on o il and natural gas revenues.  It had invested 
heavily in sectors such as tourism, aviation, re-export trade, and telecommunications, and had 
encouraged privatization and foreign investment. 
100. As a generally liberal and increasingly divers ified economy relying much on trade, the UAE 
had undertaken measures to ensure that its legi slation complied with WTO rules and had set up 
relevant institutions to m onitor this legislation. 
101. The UAE's internal barriers to trade due to the absence of a competition policy and 
restrictions on foreign participation under the invest ment regime, were still in contrast to its relatively 
low border barriers to trade, and precluded it from taking full advantage of a liberal economy. 
102. The UAE's export policy relied on free zones,  and it was a fervent supporter of the 
multilateral trading system that had contributed to  the stable and continued economic growth of 
nations.  The UAE also pursued efficient policies for local and foreign investments, and Dubai was 
taking the lead in this regard. 
103. The UAE was a strong supporter of regionalism ma inly through its participation in the GCC 
and the GAFTA, aimed at building and advancing multila teral liberalization.  On the bilateral level, 
the UAE had signed bilateral agreements w ith many countries, including Morocco. 
104. The UAE was a valuable trading partner for Moro cco.  Since the signature of a bilateral free-
trade agreement on 17 March 2002, overall trad e between the two countries had increased 
continuously.  The prospects were very promisi ng:  the number of Moroccan companies operating in 
Dubai rose to 53 in 2005, and was expected to rise fu rther together with the investment exchanges.  
Moreover, Morocco enjoyed a very important inflow  of investment, mainly in the tourism industry 
and infrastructure.    WT/TPR/M/162 
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  105. The representative of Pakistan  was impressed by the UAE's booming economic and financial 
achievements.  The UAE was one of the strongest and fastest growing economies of the world, where 
a total population of only 4.3 million was able to ge nerate a trade surplus of some US$40 billion and 
absorb FDI to the tune of US$11 billion in 2005. 
106. The annual growth of around 9%, based on the adoption of laissez faire  policies and guided 
diversification had led to investor confidence.   Foreigners constitute d about 85% of the UAE 
population, and its openness to multi-culturalism and favourable trade and investment regimes had 
turned the UAE into a traders' and investors' para dise, and a hub for regional transit, trans-shipment, 
and re-exports.  The UAE had also started to attract a large number of tourists. 
107. The UAE's success in liberalizing trade and opening up its goods and services market served 
as a role model for the rest of the world.  The MFN rate on goods was low, imports of basic food items and pharmaceuticals were duty-free, oil-sale savings were invested in manufacturing sector, and 
there were various investment incentives;  all th ese helped to expand financial and economic base. 
108. Pakistan and the UAE enjoyed close relations, based on common faith, cultural affinities, and 
geographic proximity.  There was an encouraging trend in their bilateral trade, a consistent flow of 
foreign direct investment from the UAE to Pa kistan, and UAE-bound movement of labour.  The UAE 
was one of Pakistan's three most important trad ing partners and the second largest source of home 
remittances from expatriates.  Bilateral trad e had grown from around US$1.4 billion in 2001 to 
US$2.8 in the last financial year, depicting an annu al growth of 20%;  added to Pakistan-related re-
exports through Dubai, the figure exceeded US$5 billion per year.  The UAE and Pakistan were 
engaged to establish a free-trade area.  Pakistan th anked the UAE for having encouraged its financial 
and telecommunication giants to invest in  Pakistan during the past few years. 
109. The representative of Brazil
 congratulated the UAE for its efforts in adopting policies and 
regulations that had led to growth  rates and diversified development.  He noted the increase in GDP 
during recent years and the steady high per capita income, notwithstanding the growth of the 
population.  Economic activity had expanded into manufacturing and services, an important element 
in securing sustainability for the future.  The devel opment of the services sector, which accounted for 
55% of GDP, was an example of the benefits a Me mber could reap from diversifying its economy.  
The consolidation of the UAE as a major hub for in tercontinental routes had led to exponential growth 
in passenger and cargo flows further encouraging th e development of tourism, construction, and 
telecommunications, among other activities. 
110. The UAE had made efforts to promote trade liberalization by lowering import duties and 
reducing non-tariff measures.  In recent years it had become an important market for Brazilian 
agricultural and industrial products ranging from sugar to airplanes, with total imports of more than 
US$700 million in 2005;  exports from the UAE to Br azil had more than doubled since its accession 
to the WTO in 1996. 
111. Further steps to increase transpar ency in customs procedures and other trade-related issues 
would allow the UAE and its partners to make better use of the opportunities offered by trade 
liberalization.  Brazil welcomed the UAE's actions to re-examine regulations  on foreign investment, 
with a view to making it more attractive to foreign direct investment. 
112. Brazil noted the UAE's role in the ongoi ng DDA negotiations and its proposals regarding 
non-agricultural market access and services.  It also  noted the UAE's participation in the Summit of 
South American-Arab Countries in 2005. 
113. The representative of Nigeria  noted the UAE's various achievements, especially in the area of 
free market policies and regulations, which had led to a rapid increase of growth, and a trend toward 
sustainable and diversified development.  She co mmended the UAE for its strategy in creating an WT/TPR/M/162 
Page 18  
 
  enabling business environment conducive to economic  growth in which finance and services had 
attracted reputable global companies that had contribut ed to its status as an international centre for 
trade.  The UAE trade practice emulated patterns of economic development and modernization in the 
area of trade:  economic growth had increased yearly, not only in oil and gas but also in non-oil industries.  The UAE's policy on tourism had been extremely successful as thousands of tourists 
visited the country.  It had boosted hotels bus inesses as another economic growth opportunity and 
tourism was among the UAE's strategic sectors to advance economic viability.  WT/TPR/M/162 
 Page 19 
 
 
  V. REPLIES BY THE REPRESENTATIVE OF THE UNITED ARAB EMIRATES AND 
 ADDITIONAL COMMENTS 
114. The representative of the United Arab Emirates  thanked the WTO Members for their valuable 
comments and questions about the UAE trade policy.   
115. The UAE believed in an open and pro-business economic environment.  Its growth and 
continued success was heavily dependent on embrac ing the global community.  The UAE strived to 
evolve constantly and grow either by employing best practices, or learning from other countries as 
they managed their own growth, or inves ting in future developing industries.  
116. In 35 years of existence as a nation, the UAE  had recorded impressive growth, but this 
performance did not make it complacent.  She welcomed and appreciated the recommendations 
received from this global forum;  the UAE would inte grate them, to the extent possible, with what it 
hoped would make it a stronger pa rtner and a better nation.  
117. The UAE's present challenges were in managing th e growth it had generated.  The UAE had 
found that this was best accomplished through th e creation of stronger sustainable institutions and 
more rigorous trade policies, as well as ensuring that  the UAE was an inviting market for investment.  
Thus, the UAE had welcomed trade ag reements with several countries.  
(1) The economic environment 
118. Overheating had been a recent phenomenon in the UAE, as evidenced by a slightly increased 
inflation rate of around 6% in 2005.  The major causes behind inflation over the last few years had been exogenous, and included the international incr ease in the price of construction materials (steel, 
cement, etc.), which had led to increased rental pr ices;  higher domestic dema nd generated by regional 
infrastructure projects;  and the increased inflows of  national, regional and inte rnational capital, due to 
the higher attractiveness of the UAE economy had le d to a large increase in money supply.  These 
inflationary pressures were expected to dissipate in the near future, and the Government did not 
envisage the need for political action to curb demand.  
119. Some endogenous factors had also contributed to inflation, and the UAE was currently 
considering several actions.  These included introduc ing any future fuel price increases incrementally;  
rent restriction laws to prevent property owners from excessive rent increases;  and drafting a competition law.  The UAE also used certificates of deposit as a monetary tool to curb money supply.   
120. While the depreciation of the U.S. dollar vis-à-vis  other world currencies over the last few 
years had led to imported inflation, the debate on ch anging the exchange rate system was irrelevant to 
the UAE because all GCC countries were pegged to the U.S. dollar and the GCC was working 
towards a unified currency by 2010.  
121. Many state-owned companies had grown large a nd efficient enough to compete effectively on 
world markets.  The Government was moving towa rds privatization of its state-owned utilities, 
specifically, water and electricity.  
122. The Government was looking into state-owned enterprises where the operators were also 
regulators.  Historically, the UAE Government had financially supported specific sectors that required 
massive capital investments with the intenti on of spurring economic growth and generating 
Government revenues.  The UAE had now created independent regulatory authorities in different 
sectors, for example, the Telecommunications Regul atory Authority, which was totally independent. WT/TPR/M/162 
Page 20  
 
  123. The Government supported the concept of a public-private partnership by engaging 
periodically in consultations with the private sector concerning, for example, proposed economic 
legislation, negotiating positions in the WTO, a nd private-sector priorities for potential FTAs.  
124. The Government was currently drafting a competiti on law, in line with its strategy to create 
an enabling business environment conducive to economic growth.
  Various laws were being 
considered.  Notwithstanding the absence of a competition law in the UAE, sector-specific 
competition policies existed and were enforced, as in the telecom sector. 
125. The Federal Law concerning Commercial Agenci es did not require that importing activities, 
wholesale and retail distribution services must be unde rtaken by UAE national exclusive agents;  in 
the absence of a registered agency, there were no re strictions for importation.  Article 23 of the Law 
had been amended recently to specify that, for certain  products liberalized by a Cabinet decision, an 
exclusive agency was prohibited an d existing agencies of such products must be cancelled.  An 
amendment was under consideration that a commercial agency contact should lapse upon expiry of its initial term unless renewed by the mutual agreement of the parties.  
126. The UAE was in the process of amending the Federal Companies Law.  The main 
amendments pertained to the removal of the nationa l equity capital restriction, presently at 51% for a 
number of sectors, and increasing the percentage of foreign equity participa tion in others.  These 
amendments would also streamline the authenticati on procedures by giving investors several options 
to attest through public notaries or registered law firms. 
127. The obligations of local sponsors in the UAE were confined to rendering services, such as 
issuing licences;  they did not require a share in  the capital or the ability to interfere in the 
management of the company.  Furthermore, a fore ign company could change its service agent at any 
time.   
128. In its GATS initial offer, the UAE proposed to a llow foreign companies authorized to operate 
in the UAE to own land and real estate to the exte nt necessary to conduct thei r activities in accordance 
with Emirate laws and regulations go verning ownership of real estate.  Ownership of interests in land 
in the free zone areas had already been guaranteed by all the Emirates subject to the free zone area 
internal rules and regulations.  In addition, under Emirate of Dubai Law No. 7 of 2006, non-nationals 
could acquire and register interests in land by freehold, 99-year leasehol d, or otherwise.   
129. Regarding the rights guaranteed to foreign em ployees and employers, the UAE Constitution 
stated:  "… foreigners present in the UAE are entitle d to the rights and freedoms and are subject to the 
correlative duties provided for under the respective international instruments or under conventions 
and treaties to which the UAE is a party."  Fees fo r the appointment of a public relations officer were 
the same whether the employer was a UAE or foreign-owned company.   
130. During 2005, Government salaries had increased in  order to bridge the gap between salaries 
of professionals in the Government and those in th e private sector.  The increase was overdue after a 
seven-year salary freeze and was intended to bring about a structural adjustment and harmonization 
between the public and private sectors.   
131. The UAE was keen to ensure that its Emiratization programme did not impede businesses.  
However, while the UAE population comprised 85% expatriates and only 15% nationals, the work 
force was further skewed to the expatriates with a ratio of 91% foreign workers and 9% nationals. 
132. The situation in the UAE was unique in that it imported its work force while it had 20,000 
unemployed nationals;  as a small nation this creat ed a serious problem.  The UAE was open to the 
movement of labour or mode 4, whereas in other me mbers this was largely rest ricted.  To simplify the  WT/TPR/M/162 
 Page 21 
 
 
  administration of recruiting UAE nationals for the private sector, a nationwide database had been put 
in place to provide details of nationals, including  their qualifications.  The UAE was addressing the 
supply side of Emiratization by expanding educa tion opportunities, vocational training, and matching 
education output with private-sector need s in terms of curriculum and soft skills. 
133. The UAE was actively participating in the DDA  negotiations, and was working closely with 
other Members to reach the objectives agreed in the Hong Kong, China Conference.  In the NAMA 
negotiations, the UAE would be part of the forthcom ing intensive process;  it expected to meet the 
July deadline and, consequently, be able to table the draft schedules of concessions.  UAE 
participation would be commensurate with the objec tives of the Government to augment the current 
liberal policy on trade in goods.  On services, the UAE had already submitted an initial offer in line 
with the ongoing reform process.  New collective requests had been received recently from certain 
WTO Members and were under consideration. 
134. The discussant  thanked the UAE for the answers provide d to all questions; he appreciated the 
answers provided on the points that he raised in hi s introductory statement, especially on competition.  
135. The representative of Canada  appreciated that foreigners might be licensed to carry out legal 
consultancy work, subject to  certain qualifications. 
(2) Trade policies 
136. Since the inception of the Federation of the United Arab Emirates in 1971, intellectual 
property rights (IPRs) had been protected.  From 1992,  specific legislation had been enacted with the 
aim of further strengthening and en forcing protection.  The UAE was amongst the leading countries in 
IPRs protection, as confirmed by recent internati onal reports, and was firmly committed to ensuring 
the enforcement of IPRs.   
137. The Emirates Authority for Standardizati on and Metrology (ESMA) was continuously 
working to update UAE standards and ensure their harmonization with international standards;  most 
UAE standards were identical to or based on international standards. 
138. The representative of the United States  noted the UAE's progress in recent years on many 
issues, including diversification, and the impressive ec onomic results that had been achieved.  He also 
noted that the UAE continued to develop policies to  ensure that it met the evolving needs of its 
economy and its obligations in trading system.  Rega rding the UAE's notifications on state trading and 
import licensing, it had informed the WTO that it ma intained no practices that need to be notified.  
However, the Secretariat Report suggested otherwise, and the United States encouraged the UAE to continue to develop its policies and to take anothe r look at these notifications and the need to notify 
just to assure all Members that they were complete and up to date. 
(3) Sectoral policies 
139. The UAE had further liberalized a strategic sect or in its economy related to the financial 
services.  The UAE had submitted an initial offe r on the insurance services sector, which was 
currently excluded from the UAE GATS commitment s, allowing the establishment of 100% foreign 
branches in life and non-life insurance services. This  offer included additional commitments related to 
re-insurance and retrocession and auxiliary insurance services.  
140. The Government of Dubai had established the D ubai International Financial Centre (DIFC), 
which encompassed comprehensive international financial functions incl uding institutional and 
investment banking, asset management, insurance a nd re-insurance, Islamic finance, and the Dubai 
International Financial Exchange (DIFX).  The DIFX  was an international exchange that would trade WT/TPR/M/162 
Page 22  
 
  a full range of financial instruments; operations be gan in September 2005 with about 20-25 firms.  A 
number of major international firms had announced plans to participate in the DIFC and some key 
bond issuers, including the World Bank, had committed to listing issues on the DIFC. 
141. The UAE had issued a Federal Law (Teleco m Law) in 2003 creating an independent 
Telecommunications Regulatory Authority. The TRA was competent to oversee the 
telecommunications sector in the UAE and all licensees;   it had already taken the first step towards 
market liberalization by introducing competition to the UAE
. 
142. The issuance of the national telecom policy al so functioned as a catalyst to accelerate the 
growth and development of the telecom sector.  In  addition to the GATS and the Telecom Reference 
Paper, the UAE had submitted its Schedule of Co mmitments regarding market access and national 
treatment. 
143. The representative re-iterated the UAE's commitm ent to WTO principles.  She noted that 
globalization affected and shaped all nations a nd unless a nation recognized these global trends and 
paid attention to their direction, that nation would be left behind, eventually becoming marginalized.  
144. The representative of the European Communities  thanked the UAE for the additional 
information provided particularly on competition law, the changes to the exclusive rights on 
wholesale and distribution services, and the info rmation about its financial services offers. 
145. The representative of Japan  appreciated the UAE's responses to his delegation's questions.  
Japan hoped that the UAE would continue to partic ipate actively in the WTO including in the DDA, 
in NAMA and the subsidies negotiations.   
146. The representative of the Chinese Taipei  thanked the UAE for its responses and information.  
He observed that there was a great potential for e xpending cooperation between their countries in the 
future.  WT/TPR/M/162 
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  VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
147. This first Trade Policy Review of the United Arab Emirates has given us a very much better 
grasp of UAE trade policies and practices and of the challenges that it faces.  Our discussions have greatly benefited from the full engagement of th e UAE delegation led by Her Excellency Sheikha 
Lubna Al Qasimi, Minister of Economy, the insightful contributions by the discussant, Dr A. Gross, 
and the comments by a large number of participants. 
148. Members commended the UAE for its strong economi c expansion over the past decade.  This 
was the result of the exceptional performance of th e hydrocarbon subsector, but also of a successful 
diversification strategy partly supported by a larg e influx of foreign labour, and a generally open and 
business-oriented environment.  Some concerns we re expressed about the UAE's recent inflationary 
pressures, its limits on foreign equity participation,  and its "emiratization" policy.  Information was 
sought about the type of exchange rate system envisaged by the Gulf Cooperation Council (GCC), of 
which the UAE is a member. Memb ers asked about the schedule for full harmonization of policies 
under the GCC, and how the UAE reconciles its bila teral FTA negotiations with its GCC membership. 
149. The UAE's applied tariff, based on the GCC common external tariff, is low, at an average of 
some 5%;  most of the UAE's applied MFN tariffs (except on alcohol and tobacco) are zero or 5%.  
The entire tariff is bound but some 30 applied rates exceed bindings.  Customs procedures are simple, 
facilitating trade.  Most of the UAE's trade tak es place on an MFN basis, lending added emphasis to 
the importance of the multilateral system to the UAE 's trade performance and th erefore to the need for 
the UAE's further active participation in the WT O.  Several participants noted the absence of 
competition legislation, that importing activities and distribution services can be reserved for 
exclusive national agents, and that branches of foreig n companies are obliged to recruit a local agent.  
In these areas relevant laws are being considered  for adoption or amendment.  Clarification was 
sought about the procurement regime of non-federa l public bodies, including state-owned enterprises 
and municipalities, and about the UAE Offsets Group.   
150. Many Members sought information on UAE standa rds and technical regulations, including its 
conformity assessment and accreditation systems, and invited it to add to its TBT notification.  
Further clarification was sought about the UAE's  32 free zones, its protection of geographical 
indications, well-known marks, and confidential in formation, and about the enforcement of its 
legislation on intellectual property. 
151. In services, a vibrant, growing sector of the ec onomy, certain Members noted that the emirate 
Governments retain control over certa in activities, and asked whether, as part of its economic reforms, 
the UAE intends to separate the regulatory functi ons of state enterprises from their commercial 
activities.  Information was sought about the end of the State monopoly in telecommunications.  Given that the UAE is a "world-class" supplier of  key services, such as maritime transport and 
tourism, some Members invited it to undertake further commitments in the ongoing services 
negotiations. 
152. Members very much appreciated the responses provided by the UAE delegation to all 
questions. 
153. In conclusion, I congratulate the UAE on the ope nness of its trade regime and encourage it to 
pursue its reforms, including further improvement of its multilateral commitments, with a view to 
enhancing the transparency and predictability of  its trade regime, and its adherence to WTO 
principles.  I invite Members to assist the UAE  by keeping their markets open for products and 
services of interest to it. 
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