RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/162 
20 March 2006  
 
(06-1185) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
UNITED ARAB EMIRATES  
 
  
 
This report, prepared for the first Trade Policy Review of the 
United Arab Emirates, has been drawn up by the WTO Secretariat on its own 
responsibility.  The Secretariat has, as required by the Agreement establishing 
the Trade Policy Review Mechanism (A nnex 3 of the Marrakesh Agreement 
Establishing the World Trade Organization), sought clarification from the 
United Arab Emirates on its trade policies and practices. 
 
Any technical questions arising from this report may be addressed to 
Mrs. Catherine Hennis-Pierre (tel: 022/739 5640;  fax:  022/739 5765) or 
Mr. Jacques Degbelo (tel:  022/739 5583). 
 
Document WT/TPR/G/162 contains the policy statement submitted by the 
United Arab Emirates . 
 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Revi ew Body on the United Arab Emirates . United Arab Emirates  WT/TPR/S/162 
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CONTENTS 
 
  Page 
SUMMARY OBSERVATIONS vii 
 (1) T HE ECONOMIC ENVIRONMENT  vii 
 (2) I NSTITUTIONAL FRAMEWORK  vii 
 (3) T RADE POLICY INSTRUMENTS  viii 
 (4) S ECTORAL POLICIES  ix 
 (5) T RADE POLICY AND TRADING PARTNERS  ix 
I. ECONOMIC ENVIRONMENT 1 
(1) M AJOR FEATURES OF THE ECONOMY  1 
(2) R ECENT ECONOMIC DEVELOPMENTS  4 
(3) T RADE PERFORMANCE AND INVESTMENT  6 
(4) O UTLOOK  9 
II. TRADE AND INVESTMENT REGIMES 10 
(1) T HE INSTITUTIONAL FRAMEWORK  10 
(2) T RADE POLICY FORMULATION AND IMPLEMENTATION  12 
(3) P OLICY OBJECTIVES  13 
(4) T RADE AGREEMENTS  14 
(i) WTO 14 
(ii) Regional agreements 16 (iii) Bilateral agreements 17 
(iv) Other preferential arrangements 17 
(5) I
NVESTMENT FRAMEWORK  17 
III. TRADE POLICIES AND PRACTICES BY MEASURE 21 
(1) I NTRODUCTION  21 
(2) M EASURES DIRECTLY AFFECTING IMPORTS  21 
(i) Registration, and exclusive distribution rights 21 
(ii) Customs procedures 23 
(iii) Rules of origin 24 (iv) Tariffs, other duties, and taxes 25 
(v) Import prohibitions, licensing and controls 27 
(vi) Contingency trade remedies 29 (vii) Standards and other technical requirements 30 
(viii) Government procurement 33 
(ix) Local-content requirements 36 (x) Other measures 36 
(3) M
EASURES DIRECTLY AFFECTING EXPORTS  36 
(i) Registration and documentation 36 
(ii) Export duties and taxes 36 
(iii) Export prohibitions and restrictions 36 (iv) Export subsidies, finance, insurance, and assistance 37 
(v) Free zones 37 WT/TPR/S/162 Trade Policy Review 
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  Page 
(4) M EASURES AFFECTING PRODUCTION AND TRADE  38 
(i) Incentives 38 
(ii) State-owned enterprises, st ate trading, and privatization 39 
(iii) Competition policy and price controls 40 
(iv) Intellectual property (IP) rights 40 
IV. TRADE POLICIES BY SECTOR 44 
(1) I NTRODUCTION  44 
(2) A GRICULTURE AND RELATED ACTIVITIES  44 
(i) Main features 44 (ii) Main policy instruments 47 
(iii) Developments regarding selected products 50 
(3) M
INING , ENERGY , AND WATER  51 
(i) Overview 51 
(ii) Petroleum, and gas 52 
(iii) Electricity, water, and utilities 55 
(4) M ANUFACTURING  57 
(i) Main features 57 
(ii) Policy framework 58 
(iii) Policies in selected industries 59 
(5) S ERVICES  61 
(i) Construction 61 
(ii) Transport 62 
(iii) Telecommunications 69 (iv) Tourism services 71 
(v) Financial services 73 
(vi) Trade in business an d professional services 78 
REFERENCES   81 
APPENDIX TABLES  83 
 
 
 United Arab Emirates  WT/TPR/S/162 
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CHARTS 
Page 
I. ECONOMIC ENVIRONMENT 
I.1 Real GDP and population, 1975-04 3 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
III.1 Tariff escalation by ISIC 2-digit industry, 2005 26 IV. TRADE POLICIES BY SECTOR 
IV.1 Agri-food trade, by HS section, 2003 46 
IV.2 Abu Dhabi electricity and water sector, January 2006 56 
TABLES 
I. ECONOMIC ENVIRONMENT  
I.1 The United Arab Emirates at  a glance, 1995 and 2004   1 
I.2 Main economic indicators, 1999-05 5 
I.3 Balance of payments, 2000-05 8 
II. TRADE AND INVESTMENT REGIMES  II.1 Main federal trade-re lated laws in the UAE 13 
II.2 UAE's selected notifications to the WTO, as of November 2005 15 
II.3
 Bilateral investment treaty  20 
III. TRADE POLICIES AND PRACTICES BY MEASURES 
III.1 Commercial agencies by type of activity 22 
III.2 Structure of the MFN tariffs, 2005 25 
III.3  Prohibited products, 2005 28 
III.4 Projects implemented by the UAE Offsets Group, 2005 35 
IV. TRADE POLICIES BY SECTOR  
IV.1 Main agricultural products, 1998-04 45 
IV.2 Abu Dhabi development expenditures, 2000-04 49 IV.3 Domestic agricultural support measures, 2000 and 2001 49 
IV.4 Reserves, production and exports of oil and natural gas, 1990-04 52 
IV.5 Activities of the Abu Dhabi National Oil Company (ADNOC), 2005 53 IV.6 Electricity and water charges, January 2006 57 
IV.7 Trade in manufactured products, 2003 58 
IV.8 Telecommunications indicators, 2000-04 70 IV.9 Hotel indicators, 1995, 2000, and 2003 72 
IV.10 Insurance premiums and claims paid, 2003 74 
IV.11 Selected monetary and banking indicators, 2000-04 76 WT/TPR/S/162 Trade Policy Review 
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Page 
APPENDIX TABLES 
I. ECONOMIC ENVIRONMENT 
AI.1 Structure of exports (including re-exports), 2000-04 85 
AI.2 Destination of exports (including re-exports), 2000-04 86 
AI.3 Structure of imports, 2000-04 87 
AI.4 Origin of imports, 2000-04 88 
III. TRADE POLICIES AND PRACTICES BY MEASURES 
AIII.1 Applied MFN tariff averages by HS2, 2005 89 
AIII.2 Restricted imports, 2005 92  
 United Arab Emirates  WT/TPR/S/162 
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SUMMARY OBSERVATIONS 
 
(1) T HE ECONOMIC ENVIRONMENT  
1. The economy of the United Arab 
Emirates (UAE) has grow n by 6% per year on 
average over the past decade;  in 2003-05, the growth rate rose to 9% per year, partly due to the rising price of hydrocarbons.  Investment of hydrocarbon income surpluses into 
infrastructure and large projects, together 
with influx of foreign labour, has contributed to a slight diversification of the UAE's economy:  petroleum and natural gas now account for about one third of the UAE's GDP (down from 74% in 1980), behind the services 
sector (55% of GDP).  The UAE's per capita 
GDP is now one of the world's highest, at close to US$24,000.   
2. With the rise in hydrocarbon 
revenues, the UAE's fiscal deficit, which was 
relatively large in the past, moved into a 
surplus of 4.5% of GDP in 2004.  The current account is in constant surplus, at an estimated 19% of GDP in 2005.  The UAE's external debt is exclusively private;  it declined from over 25% of GDP in 2000-01 to 12.5% by the 
end of 2005.  However, driven by rising 
private consumption and construction expenditures financed by large revenue from 
hydrocarbons, inflation is on the rise, from an annual average of 3% during 2001-03 to 
above 10% in 2005.   
3. The UAE's economic environment is 
relatively liberal despite  state ownership in 
certain sectors, restrictions on foreign participation in the economy through capital 
ownership limitations, and an obligation for 
branches of foreign companies to recruit UAE agents.  To provide employment opportunities for nationals in private business, an "emiratization programme" has introduced minimum quotas of Emirati staff in banking, 
insurance, professional, and distribution 
services.  This policy could eventually become an impediment to doing business in the UAE, essentially because of the lack of skilled UAE nationals in some professions;  it could further 
increase the relative attractiveness of operating in the free zones, where these 
provisions do not apply. 
4. The UAE dihram, the national 
currency, is pegged to the U.S. dollar.  The  
exchange system is generally free of 
restrictions.  The UAE's high ratio of merchandise trade to GDP (some 145% in 2005) reflects the particular importance of trade to its economy.  Merchandise exports, 
aside from oil and gas, consist of machinery 
and appliances, including computers and other consumer electronics, and of a substantial re-export activit y.  While exports of 
crude oil are mainly to East-Asian countries, the main destinations of non-oil exports are 
India, Arab countries, and Europe.  Re-exports 
are destined to Iran and India, and other Gulf Cooperation Council (GCC) countries.  The UAE's imports are diversified both in terms of products and origin.  The UAE is a net 
services importer;  its services sector, which is 
dominated by state-owned companies, is expanding dynamically both at home and abroad. 
(2) I
NSTITUTIONAL FRAMEWORK  
5. The Ministry of Economy and 
Planning formulates, administers, and 
coordinates the UAE's trade policies under the leadership of the Federal Supreme Council.  The Council consists of the Rulers of the seven emirates composing the UAE federation.  In 
general, each emirate largely retains direct 
control over its economy, and owns or controls a significant share of business.  Moreover, in several sub sectors, the operators 
are also the regulators.  
6. A contracting party to the GATT since 
8 March 1994, the UAE became an original Member of the WTO on 10 April 1996.  It grants at least MFN treatment to all its trading partners, except Israel.  The UAE has never been involved in any dispute under the 
WTO Dispute Settlement Mechanism.  Once 
ratified, treaties/international agreements prevail over domestic legal instruments.  These comprise the Constitution, followed by laws, decree-laws, ordinary decrees, and WT/TPR/S/162 Trade Policy Review 
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regulations.  The Commercial Companies Law 
and the Trade Agencies Law are the main federal legal instruments on investment in the UAE;  they contain provisions that limit the 
participation of foreigners in the economy.   
7. The UAE is a member of the Gulf 
Cooperation Council (GCC), of which the customs union component became effective on 1 January 2003. The GCC is negotiating 
bilateral trade agreements with China, the 
European Union (EU), and Turkey, and is considering negotiations with EFTA, MERCOSUR, India, and Pakistan.  The UAE is considering negotiations on bilateral agreements with Australia and the 
United States.  To avoid conflicts between 
bilateral undertakings and commitments as a GCC member, the GCC Heads of States have agreed that any new preferential agreement concluded by one of its members will apply 
"pari passu" to all members, except for 
agreements with the United States.  The UAE is also a member of the Greater Arab Free-Trade Area (GAFTA) in which all GCC States participate.    
(3) T
RADE POLICY INSTRUMENTS  
8. The UAE's MFN tariff is based on the 
GCC Common External Tariff (CET);  its average applied MFN tariff rate was 5.1% in 2005, with the majority of rates at 5% and 420 duty-free tariff lines covering mostly basic 
food items and pharmaceuticals. Exceptions to 
the CET are spirits (50%), and tobacco products (the higher of 100% or a specific rate).  All tariffs except on tobacco are ad valorem.  MFN applied tariffs average 6.2% 
on agricultural products  (WTO definition), 
and 4.8% on non-agricultural products.  Using the ISIC (Revision 2) definition, average tariff protection is 5.3% for manufacturing activities, 5% for mining and quarrying, and 3.3% for agriculture.  All of the UAE's tariff 
lines are bound, with an average final rate of 
15%.  Some 33 tariff lines at the HS eight-digit level carry applied MFN tariff rates that exceed the final bound rate as of April 2006. 9. Under the Trade Agencies Law, 
importing and distribution activities can be reserved for exclusive UAE "agents".  This law leads to market segmentation, constitutes a 
barrier to full GCC integration, and 
contributes to high prices for branded products;  following price increases in 2005, a list for basic items was exempted from its coverage.  Customs procedures are simple in 
order to facilitate the flow of trade, which 
includes a large re-export activity.  The UAE has implemented the WTO Agreement on Customs Valuation;  the UAE has requested technical assistance to familiarize its customs administration and economic operators with 
the provisions of the Agreement.  There are 
few technical regulations;  these are generally based on internationally accepted standards. The Emirates Authority for Standardization and Metrology, established in 2001, 
encompasses the Emirates Conformity 
Assessment Scheme, as well as the Emirates National Accreditation System.   Import controls are applied on, inter alia, sanitary, phytosanitary, and Islamic grounds, by means of prior authorizations.  
10. The UAE's export policy on goods and 
services relies on free zones, wherefrom most non-oil exports take place.  Its free zones (22 in late 2005) are exempt from the licensing, agency, emiratization, and national 
majority-ownership obligations that apply in 
the domestic economy.  The UAE does not have export finance, insurance, guarantee, or promotion programmes;  and no export subsidies have been notified to the WTO.  As a 
result of large public investments, generally in 
partnership with foreign enterprises that bring in their technologies, many state-owned companies have grown large and efficient enough to compete effectively on world markets.    
11. The UAE is neither a member of nor 
an observer to the WTO Plurilateral Agreement on Government Procurement.  It relies largely on foreign companies for public procurement, particularly to realize major 
projects.  Its procurem ent provisions tend to 
vary from contract to contract.  Defence United Arab Emirates  WT/TPR/S/162 
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purchases are carried out by the UAE Offsets 
Group (UOG), through direct negotiation with contractors generally subject to offset obligations.  Spurred by WTO provisions, the 
UAE enacted new laws, in 2002, on patents, 
copyrights and trade marks.  The UAE has no competition, anti-dumping, subsidies, countervailing or safeguards legislation.    
(4) S
ECTORAL POLICIES  
12. Over the past 30 years, the Emirates 
Governments have invested large amounts of revenue from oil sales to diversify their economies. These were initially directed towards the creation of state-owned companies in the manufacturing sector, in 
particular oil- and gas-intensive industries 
such as aluminium and petrochemicals.   
13. Manufacturing is now evolving 
rapidly into high-technology and capital-intensive products, exported increasingly by 
private companies in the free zones.  
Nevertheless, the UAE s till depends on crude 
oil and gas exports for a significant share of its national income.  The entire oil and gas sector, as well as electricity and water utilities, remains state controlled, with foreign 
participation generally in the form of minority 
partnerships. 
14. Services, mainly transport, have 
rapidly become a strategic priority.  The objective is to make the UAE a major 
transport hub between Europe and South-East 
Asia.  Accordingly, public funds were invested in developing port and airport infrastructure, airlines, and shipping companies and agencies.  In parallel, tourism, which is 
targeted as a major source of future growth in 
the UAE, is now among the fastest growing activities.  The financial subsector is also developing rapidly, in part through the creation of the Dubai International Financial Centre, a financial free zone regulated at the 
Dubai Emirate level.  The telecommunication 
subsector remains state-controlled, but changes are under way.   15. Remarkable advances have been made 
in the agriculture sector, albeit at high costs in terms of financial assistance and water depletion;  the fisheries subsector suffers from 
the consequences of past over-fishing.   
(5) T
RADE POLICY AND TRADING 
 P ARTNERS  
16. The UAE's generally liberal and 
increasingly diversified economy, the 
importance of trade for its economic 
performance, and its growing economic power make it an increasingly important supporter of the multilateral trading system.  Nonetheless, the UAE's internal barri ers to trade, resulting 
largely from the absence of a competition 
policy, institutional weaknesses (in several 
sectors), and restrictions on foreign participation under the investment regime, contrast with its relatively low border barriers to trade and preclude it from benefiting fully 
from the advantages of a liberal economy.   
17. Recent inflationary pressures have 
increased the UAE's awareness of the pernicious effects of anti-competitive practices and have led to the exemption of basic food items from the scope of the Trade Agency Law.  
Further steps, including abolishing this Law, 
adopting competition legislation, structural reforms, and further liberalizing the services sector (to be bound through multilateral commitments) would improve resource 
allocation and the UAE's economic 
performance.  Moreover, tariff reforms – likely at the regional level (the UAE is implementing the GCC's CET) – or renegotiation of the UAE's tariff commitments would consolidate 
its adherence to the WTO principles.  Trading 
partners could help the UAE in its reform efforts by providing extended market access for  its goods and services.