WT/TPR/S/262 Trade Policy Review 
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II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 
(1) INTRODUCTION  
1. The UAE conducts an open trade policy and has a relatively liberal trade regime, although a 
number of limitations and conditions are set on foreign investment.  In broad terms, its foreign trade 
strategy aims at promoting trade relations, increasing the contribution of foreign trade to GDP, and 
fostering foreign investment flows.  Improved market access for its products through multilateral trade liberalization and bilateral and regional trade agreements is a main trade policy objective. 
2. The UAE has been an active pa rticipant in the DDA, presenting proposals to eliminate tariffs 
and non-tariff barriers (NTBs) on raw materials, and submitting an initial offer in the area of trade in 
services.  During the period under review, the UAE advanced in the process of regional integration, 
through its participation in the GCC.  However, the full consolidation of the GCC's customs union 
was still pending in mid-2011, and was expected for th e end of the year.  Free-trade agreements have 
been signed between the GCC and EFTA, and the G CC and Singapore, but in late 2011, were still 
awaiting implementation. 
3. The UAE's open trade regime contrasts with its re latively more closed investment regime.  An 
important change during the period under review was the initiation of the drafting of a new 
Investment Law to expand foreign participation and foster foreign investment and transfer of know-
how.  However, foreign investment continues to be  subject to limitations, and all investment projects 
must have 51% domestic capital.  Also, the use of  local agents to conduct business continues to be 
mandatory, and although legislation to enforce ag ency contracts was amended during the review 
period, it is still skewed in favour of the agent, ma king the termination of a contract by the investor 
rather difficult. 
(2) G
ENERAL CONSTITUTIONAL AND LEGAL FRAMEWORK  
4. The United Arab Emirates (UAE) was establishe d in 1971 as a federal state comprising seven 
emirates:  Abu Dhabi, Dubai, Sharjah, Fujairah, Umm al Qaiwian, Ajman, and Ra's al Khaimah.1  
According to the Federal Constitution, which w as provisional until 1996, each emirate has its own 
jurisdiction and local government, but the fe deral authority has overall responsibility for, inter alia , 
foreign affairs, foreign trade, security and defen ce, nationality and immigration issues, education, 
public health, currency issues, banking, Cust oms, postal services,  telephone and other 
communications services, air-traffic control and licensing of aircraft, and labour issues.  All responsibilities not granted to the federal governme nt are reserved to the local governments.
2 
5. The federal system comprises five separate authorities represented in:  the Federal Supreme 
Council, the President and the Vice President, the Council of Ministers, the National Council, and the 
Federal Judiciary.  These authorities may fall under th e Executive, the Legislative, and the Judiciary. 
(a) Executive 
6. The Executive branch consists of the Prime Minister, and a Council of Ministers 
(the Cabinet).  The Federal Supreme Council is composed  of the rulers or emirs of the seven emirates.  
The Supreme Council elects and appoints the President, the Vice President and the judges of the Federal Supreme Court.  The Supreme Council also formulates government policy at the federal level, 
                                                      
1 Ra's al Khaimah formally acceded to the federation in 1972. 
2 Articles 120 and 121 of the Federal Constitution stipulate the responsibilities of the federal authority.  
Articles 116 and 122 state the responsibilities at emirate level.  United Arab Emirates WT/TPR/S/262 
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proposes and ratifies federal laws, and ratifies intern ational treaties.  The President, elected by the 
Board of Rulers, exercises a range of powers, and has the right to convene and preside over meetings 
of the Supreme Council.  The President is also responsible for signing laws, decrees and decisions 
sanctioned by the Supreme Council.  The Cabinet is the Executive authority for the Government, 
overseeing the enforcement of legislation and regulat ions.  Currently, the Ruler of Abu Dhabi holds 
the presidency, and the Ruler of Dubai is the Vice President and Prime Minister.3 
(b) Legislative 
7. The Federal National Council (FNC) is entrusted with legislative powers.  The FNC consists 
of 40 members drawn from the 7 emirates.4  While traditionally directly appointed, a process of 
electing FNC members was established in 2006, with the aim of eventually having a wholly-elected 
Council.  As a result, half of the FNC members are elected to serve four-year terms and the other half 
are appointed by the rulers  of the constituent emirates.5  The FNC plays the role of a consultative 
assembly and has both legislative and supervisory responsibility, as provided by the Constitution.  
The FNC functions more as a review body of national legislation than as a legislative body.  Laws are 
prepared by ministries and approved by the Suprem e Council.  The main tasks of the FNC are to, 
inter alia :  (i) discuss constitutional amendments and draf t laws, which may be approved, amended or 
rejected;  (ii) review the annual draft budget of the Federation;  (iii) debate international treaties and 
conventions;  and (iv) influence the Government ’s work through discussion, question and answer 
sessions, recommendations and follow-up on complaints. 
8. Each Ministry negotiates international agreements  within its own jurisdiction, as per Federal 
Law No. 1 of 1972.  However, only the Ministry of  Foreign Affairs is authorized to sign such 
agreements;  and it may delegate its authority to other ministries.6  The Supreme Council is 
responsible for ratifying and e ndorsing international agreements.7  The Government is obliged, under 
the Constitution, to notify  the FNC of internationa l agreements as decided by the President, and to 
present them to the FNC for discussions prior to ratif ication.  International treaties and agreements, 
once ratified, prevail over domestic legal instrument s.  In descending legal order, the Constitution is 
followed by laws, decree-laws, ordinary decrees, and regulations. 
9. Policies, including trade policy are formulated and implemented by means of legislation.  
Bills are proposed by the relevant ministries;  they are presented first to the Cabinet, then to the FNC, 
and finally to the President for approval.8  Upon ratification by the Federal Supreme Council, the bills 
are signed by the President and proclaimed  as federal laws through publication in the Official Gazette .  
                                                      
3 Sheikh Zayed bin Sultan Al Nahyan was the first President of the UAE and Ruler of Abu Dhabi until 
his death in November 2004.  His son, Sheikh Khalifa bin Zayed Al Nahyan was elected by Members of the Supreme Council as the new President on 3 November 2004.  Sheikh Mohamed bin Rashid Al Maktoum, has 
been the Ruler of Dubai, Vice Pr esident, and Prime Minister of the UAE since January 2006.  
4 Article 68 of the Constitution.  Article 71 prohibits  any member of the FNC from holding any other 
post in the Federal Government, including ministerial positions.  
5 The number of seats assigned to each emirate is based on its population;  Abu Dhabi and Dubai hold 
the largest number, w ith eight seats each. 
6 Articles 47/4, 60/7, and 91 of the Constitution treat the same issue. 
7 Article 47 of the Constitution.  Under Article 49 of the Constitution, substantive decisions by the 
Supreme Council must be taken by a majority of five of the seven members, and include the votes of Abu Dhabi 
and Dubai.  Decisions relating to procedur al matters are taken by simple majority. 
8 Chapter 1, part 5 of the UAE Constitution (Articles 100-115), regulates the legislative procedures at 
the federal level. WT/TPR/S/262 Trade Policy Review 
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(c) Judiciary 
10. The judiciary in the UAE comprises a federal and a local judiciary.9  The Federal Judiciary, 
which is accorded independence under the Constitution, in cludes the courts of first instance, courts of 
appeal and the Federal Supreme Court.  Traditional Sharia courts are separate from this hierarchy.  
Cases are first taken to the courts of first instance,  which comprise a body of judges.  Criminal, civil, 
and commercial cases are heard by a single judge and a decision is taken unless the law stipulates 
otherwise.10  The Court of Appeal comprises a panel of three judges whose decisions become final.  
The Federal Supreme Court comprises five judg es appointed by the Supreme Council.  The judges 
decide on the constitutionality of federal laws, a nd arbitrate on inter-emirate disputes between the 
Federal Government and the emirates.  They may al so enquire into the role of public officials in 
governance in cases of corruption and fraud.11 
11. There are no specialized courts in economic/c ommercial matters at the federal level.  
However, Law No. 338 of 2009, issued by the Mini ster of Justice, established a specialized 
department at the courts of first instance to deal with consumer protection cases.  Abu Dhabi is the only emirate to have a commercial court.  Establishe d in May 2008, the court is specialized in trade 
and investment-related cases.  Commercial disput es are increasingly being handled in traditional 
Sharia courts based on Islamic law.
12 
12. Each of the seven emirates has its own local ex ecutive council that functions in parallel and in 
coordination with the federal government.  The emirate of Abu Dhabi has an Executive Council, 
which oversees separate departments that function like  ministries.  It also has several autonomous 
agencies and a 60-member National Consultative Council with a role similar to that of the FNC.  
Dubai and Sharjah also have an Executive C ouncil.  In other emirates, the Ruler has a diwan  (office) 
through which the concerns of citizens may be directed to the Government. 
(3) DEVELOPMENT AND ADMINISTRATION OF TRADE POLICY  
(i) Agencies involved in trade policy implementation 
13. Since 2008, the development and administration of trade policy has been under the 
responsibility of the Ministry of Foreign Trade (pre viously the Ministry of Economy and Planning), in 
coordination with other ministries at the federal le vel and trade-related bodies and local departments.  
These include , inter alia , the Ministry of Economy, Ministry of Finance, Federal Customs Authority, 
Ministry of Environment and Water, Emirates Au thority for Standardization and Metrology (ESMA), 
Ministry of Labour and Social Affairs, Ministry of  Justice and Islamic Affairs, Ministry of Public 
Health, Ministry of Energy, and the municipalities of Abu Dhabi and Dubai.  
14. Private-sector participation in trade policy fo rmulation is through the Federation of UAE 
Chambers of Commerce and Industry (FCCI).  A draft law is sent to the FCCI, and is forwarded to the 
                                                      
9 At the time of unification under the Federation, the emirates were accorded the constitutional right of 
joining the federal judicial system or retaining their independent systems.  Four of the emirates opted to join the 
federal system;  Abu Dhabi, Dubai, and Ras-al  Khaimah maintained their local judiciary. 
10 Article 116 of the Constitution states that all ma tters not specifically stipulated as falling within 
federal jurisdiction may be considered within the emirate concerned. 
11 Litigation in Ras-al Khaimah remains at the two le vels: Court of First Instance and Court of Appeal.  
Abu Dhabi and Dubai both have three levels of litigation:  Court of First Instance, Court of Appeal, and Court of 
Cassation (highest court of appeal). 
12 For further information see emirate of Abu Dhabi – Judicial Department online information.  
Viewed at:  www.adjd.ae. United Arab Emirates WT/TPR/S/262 
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chambers in each emirate for comments.  Prior to trade negotiations, the private sector is consulted 
and its interests are taken on board by the Ministry of Foreign Trade. 
15. After the launch of the Doha Development Agenda, a National Committee (NC) was set up 
(in 2002) to deal with WTO matters.  Under the superv ision of the Ministry of Foreign Trade, the NC 
acts as an advisory body to the UAE negotiating te am.  The NC is supported by five sub-committees, 
covering market access for non-agricultural produc ts, intellectual property rights, protection of 
domestic production, trade in services, and trade facilitation.  
(ii) Main trade laws 
16. The main trade-related laws are the GCC Co mmon External Customs Tariff (2007) and GCC 
Common Customs Law (2007);  Federal Commercial Companies Law No. 8 of 1984 and 
amendments;  and Federal Commercial Agencies La w No. 18 of 1981 and amendments.  The main 
trade-related laws and re gulations of the UAE are presented in Table II.1. 
Table II.1 
Main federal trade-related laws in the UAE, 2011 
Area Legislation 
Tariff GCC Common External Customs Tariff 
Customs regulations; impor t and export procedures; 
rules of origin GCC Common Customs Law of 1 January 2007 
(Decision of the Supreme Council of the GCC regulating the customs 
procedures for the establishment of the customs union; 21-22 December 2002)   
Commercial companies law  Federal Company Law No. 8 of 1984 concerning commercial companies and 
the amending laws and decrees thereof 
Regulation of commercial agencies (exclusive distribution rights) Federal Law No. 18 of 1981 concerning the organization of commercial 
agencies, as amended by Federal Act No. 14 of 1988; No.13 of 2006 and No.2 
of 2010. 
Commercial register Federal Law No. 5 of 1975 
Trade Federal Law No. 13 of 2007 on Co mmodities subject to Import and Export 
Control Procedures 
Civil transactions (Civil Code ) Federal Law No. 5 of 1985 
Commercial transactions  Federal Law No. 18 of 1993  
Contingency trade measures Federal Law No.7 of 2005 promulgating the GCC Common Law on Anti-
Dumping, Countervailing Meas ures and Safeguards.  
Government procurement  UAE Federal Orde r No. 16 of 1975 (the public tenders law) 
 Ministerial Decision No. 20 of 2000 on Administration of Contracts System 
 Federal Law No. 7 of 1976 estab lishing the State Audit Institution 
Regulation of industrial affairs  Federal Law No. 1 of 1979 organizing industrial affairs   
Intellectual property rights Federal Law No. 7 of 200 2 concerning copyrights and neighbouring rights as 
amended by Law no. 32 of 2006 
 Federal Law No 37 of 1992 on trade marks as amended by Law No. 8 of 2002  
 Federal Law No. 17 of 2002 on the in dustrial regulation and protection of 
patents, industrial drawings and desi gns as amended by Law no. 31 of 2006 
Pharmaceutical profession and pharmaceutical 
companies Federal Law No. 4 of 1983 on the Pharmaceutical Profession and 
Pharmaceutical companies 
Financial services Federal Law No.8 of  2004 regarding Financial Free Zones 
 Federal Law No. 10 of 1980 concerning the Central Bank, the monetary system 
and organization of banking 
 Federal Law No. 4 of 2000 (S tocks and Commodities Authority) 
Federal law No. 6 of 2010 regarding the Credit Information 
Table II.1 (cont'd) WT/TPR/S/262 Trade Policy Review 
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Area Legislation 
Insurance services  Federal Insurance Law No. 6 of 2007  
Telecommunications Federal Law by Decree No. 3 of 2003 regarding the organization of the 
telecommunication sector, the amended Federal Law of 1991, and the Executive Order of the Supreme Committee No. 3 of 2004 
Postal services Federal Law No. 4 of 1985 and Federal Law No. 8 of 2001 
Legal services Federal Law No. 23 of 1991 con cerning the practice of th e advocate profession 
and amending laws, respectively, No. 20 of 1987 1997 and No. 5 of 2002 
Information technology Federal Law No.1 of 2006 c oncerning Electronic Transactions and E-Commerce 
Consumer Protection Federal Law No.24 of 2006 concerning Consumer Protection 
 
Source: Information provided by the UAE authorities. 
(4) TRADE POLICY OBJECTIVES  
(i) General trade policy objectives 
17. The UAE has a relatively liberal trade re gime, although a number of limitations and 
conditions are set on foreign investment.  The broad strategy set by the Ministry of Foreign Trade 
aims to, inter alia , promote the UAE's trade relations with its trading partners;  increase the 
contribution of foreign trade to GDP;  maintain the commercial and investment interests of the 
country; and increase foreign investment flows to its markets.13  Improved market access for its 
products through multilateral trade liber alization and bilateral and regiona l trade agreements is a main 
trade policy objective.  The UAE coordinates its engagement in regional agreements with its 
participation at the multilateral le vel through relevant committees, which hold regular meetings.  For 
example, GCC trade and customs officials conduc t regular meetings in Geneva to discuss and 
coordinate their trade policies and negot iating positions at the WTO level.   
18. As part of its Vision 2021 strategy, the UAE is striving for sustainable development by 
moving towards economic diversification away from oil.14  In order to achieve this long-term vision, a 
tri-annual government strategy is im plemented;  the current strategy is for 2011-13.  The UAE aims to 
transform its economy into one that is knowledge-b ased, highly productive, and competitive.  It aims 
to do so by upgrading the regulatory framework of existing key sectors, while supporting the development of new ones, mainly high value-added industrial sectors, as well as by empowering 
nationals to take the lead in developing the economy.   Trade will be a key component of this strategy, 
as it will help expand the UAE's diversified exports. 
19. The Federal Government is res ponsible for the broad framework of policymaking in the UAE.  
Each emirate, however, sets its own strategy, which is integrated into the overall federal plan.  The 
emirates of Abu Dhabi and Dubai have formulat ed long-term development plans, Abu Dhabi 
Economic Vision 2030 and Dubai St rategic Plan 2015, each providing a roadmap to modernize and 
diversify their economies.  The future strategic grow th of Dubai is based on six key economic sectors:  
tourism, trade, transportation, finance, constr uction, and professional services.  To achieve its 
Vision 2030 objectives, Abu Dhabi will continue to  diversify its economy, investing in capital-
intensive, export-oriented sectors in which it has or  can build a competitive advantage in regional and 
international trade.  Abu Dhabi also plans to set  up an export promotion agency.  Abu Dhabi's 
economic vision focuses also on a number of strategic sectors, inter alia :  oil and gas;  
                                                      
13 The Ministry of Foreign Trade, in coordination with the Ministry of Foreign Affairs, has set up 
commercial offices for the UAE in China, German y, India, Switzerland, and the United States. 
14 See UAE 2021 online information.  Viewed at:  http://w ww.vision2021.ae United Arab Emirates WT/TPR/S/262 
 Page 19 
 
 
petrochemicals;  metals;  aviation, aerospace, a nd defence;  pharmaceuticals and biotechnology;  
tourism;  transportation;  and telecommunications. 
(5) TRADE AGREEMENTS AND ARRANGEMENTS  
(i) Participation in the WTO 
20. A contracting party to the GATT sin ce 8 March 1994 and a WTO Member since 
10 April 1996, the UAE is a strong supporter of the multilateral trading system.  The UAE grants at 
least MFN treatment to all WTO trading partners , except Israel.  The GCC customs tariff does not 
discriminate between WTO Members and non-members;  MFN treatment is granted to all.  The UAE does not participate in any of the WTO plurilateral agreements, with the excep tion of the Information 
Technology Agreement.  The UAE has not been i nvolved in any WTO dispute settlement cases since 
it became a WTO Member in 1996. 
21. In the current Doha Round of multilateral ne gotiations, the UAE is seeking meaningful 
liberalization in the area of industrial products under the non-agricultural market access (NAMA) 
negotiations, and further liberalization of trade in  services.  In NAMA, the UAE sponsored a proposal 
in 2003 to eliminate tariffs and non-tariff barriers (NTBs) on raw materials, mainly primary 
aluminium.
15  In March 2009, Australia co-sponsored the UAE's proposal16, and in January 2011, both 
Members tabled a proposal on draft modalities for sectoral tariff elimination for raw materials.17  The 
UAE also submitted its initial offer on trade in services.18  The UAE is an active participant in the 
Arab Group.  
22. The UAE's notifications to the WTO between January 2005 and October 2011 are listed in 
Table II.2. 
Table II.2 
UAE's notifications to the WTO, January 2005 to October 2011 
WTO Agreement Description of 
requirement Most recent notification Comment 
Agreement on Implementation of GATT Article VI (Anti-dumping)  
Article 16.4 Anti-Dumping G/ADP/N/209/Add.1 
26 April 2011 
 No AD actions taken during 1 July-
31 December 2010  
Article 16.5 Competent 
authority G/ADP/N/14/Add.30 
22 October 2010 Anti-dumping, subsidies & 
countervailing dutie s and safeguards 
Agreement on Sanitary and Phytosanitary Measures  
Article 7, Annex B Sanitary and 
phytosanitary 
Measures G/SPS/N/ARE/13-21 
 Emergency measures 
Agreement on Subsidies a nd Countervailing Measures  
Article 25.11 Countervailing 
measures G/SCM/N/219/Add.1 
26 April 2011 
 No countervailing action during 1 July-
31 December 2010 
Article 25.12 Competent 
authority G/SCM/N/18/Add.30 
22 October 2010 Anti-dumping, subsidies and 
countervailing duties,  and safeguards 
Table II.2 (cont'd) 
                                                      
15 WTO document TN/MA/W/37, 20 May 2003, and Adds.1, 2, 3, 4, and 5. 
16 WTO document TN/MA/W/37/Add.6, 23 March 2009. 
17 WTO document TN/MA/W/37/Add.7, 7 January 2011. 
18 WTO document TN/S/O/ARE, 4 July 2005. WT/TPR/S/262 Trade Policy Review 
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WTO Agreement Description of 
requirement Most recent notification Comment 
Agreement on Technical Barriers to Trade  
Article 2.9 Proposed and 
adopted technical 
regulations 59 notifications made during period 
28 February 2006-8 March 2011  
Article 5.6 Conformity 
assessment  G/TBT/N/ARE/14 
G/TBT/N/ARE/16 
G/TBT/N/ARE/53 1 November 2011 
  
Article 15.2 Implementation 
and administration 
of Agreement 
 G/TBT/2/Add.96 
11 September 2007  
Annex 3C Code of Good 
Practice G/TBT/CS/N/166  
Agreement on Trade-Related In vestment Measures (TRIMs)  
Article 6.2 Laws and 
regulations G/TRIMS/N/2/Rev.20/Add.3 
18 January 2011  
 
Source: WTO Secretariat. 
23. Notifications in a number of areas were pending as at end-October 2011, including:  
agriculture (export subsidies and domestic support, fo r which the last notifications to the WTO date 
from 2002), subsidies (new and full notification due in 2009), intellectual property, import licensing, 
and services. 
(ii) Preferential trade agreements 
24. The UAE attaches great importance to regional trade agreements as a valuable complement 
to, though not a substitute for, a rule-based and non-discriminatory multilateral trade system.  The 
UAE is a founding member of the Gulf Cooperation Council (GCC).  In addition, through its participation in the GCC, the UAE has signed pref erential trade agreements with Singapore and the 
European Free Trade Association (EFTA).  The UAE  is part of the Pan Arab Free Trade Agreement 
(PAFTA).  In 2010, the UAE's total preferential trade amounted to US$ 38,531.5 million (18.8% of 
the UAE's total trade), of which almost 73% was with PAFTA (Table II.3). 
Table II.3 
Trade under preferential agreements, 2010 
(US$ million) 
FTA Exports Imports Total Percentage of 
total FTAs Percentage of 
total trade 
PAFTAa 16,441.7 11,657.1 28,098.7 72.9 13.7 
GCC 8,812.8 6,082.1 14,894.9 38.7 7.3 
GCC-EFTA 5,143.1 3,329.7 8,472.8 22.0 4.1 
GCC-Singapore 578.6 1,381.3 1,960.0 5.1 1.0 
Total preferential agreements 22,163.4 16,368.1 38,531.5 100.0 18.8 
UAE total trade 73,231.0 132,175.3 205,406.3 .. 100.0 
 
.. Not available. 
 a Includes GCC members. 
 
Source: UNSD, Comtrade  database. United Arab Emirates WT/TPR/S/262 
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(a) Gulf Cooperation Council (GCC) 
25. The Gulf Cooperation Council (GCC) is a politi cal and economic union of six Arab Gulf 
states:  Bahrain, Kuwait, Oman, Qatar, Saudi Ar abia, and the UAE.  Established in May 1981, its 
main objectives are regional cooperation and integra tion in areas such as economy, finance, trade, 
investment, Customs, tourism, and transport.  In  2006, the GCC Agreement was notified to the WTO 
under Article XXIV of GATT 1994, and in March 2008 a notification was ma de under paragraph 4 
(a) of the Enabling Clause.  In November 2009, a nother notification was made pursuant to Article 
XXIV: 7(a) of GATT 1994.19 
26. The GCC member states set up a free-trade area in 1983, whereby originating goods were 
exempt from customs tariffs.  Since January 2003 , the GCC states have been applying a common 
external tariff (CET) of 5% across the board on mo st products, and have followed common customs 
regulations and procedures based on the GCC Co mmon Customs Law of 2003 and 2007.  However, 
some products, for example alcoholic beverages, are prohibited for import in some GCC countries, 
(Chapter III(2)(vi)). 
27. In January 2008, the GCC liberalized the fl ow of services, allowing their free movement 
between the members.  The services component of the GCC Agreement is yet to be notified to the 
WTO.  In addition, customs controls between G CC members have been maintained for security and 
other reasons (e.g. statistics, and to avoid piracy and commercial cheating). 
28. Under the GCC Agreement, each member stat e has its own shortlist of restricted and 
prohibited products.  Restricted products may trans it the territory of members who restrict their 
importation but with the required documentation.  Customs duties on goods imported into the UAE 
and destined for another GCC market are collected at the first point of entry only.  However, GCC 
members are still in the process of reaching a formal  agreement on how to allocate customs revenues 
from applied tariffs.  Currently, customs revenue is distributed among the GCC states through a new 
Electronic Clearing Customs System.  The GCC ai ms to achieve a common market, with equal 
treatment of GCC citizens in each member state with respect to freedom of movement, work, 
residence, ownership of real estate, and moveme nt of capital, as well as financial and monetary 
coordination. 
29. In December 2005, an initiative was launched for the adoption of a common currency by 
2010.  The five macroeconomic and convergence criter ia were:  a limit on budget deficits as a share of 
GDP;  a limit on public debt as a share of GDP;  ade quacy levels for foreign exchange reserves;  and 
convergence criteria on inflation;  and on interest ra tes.  However, in May 2009, the UAE announced 
its withdrawal from the monetary union project.20  In December 2009, Bahrain, Kuwait, Qatar, and 
Saudi Arabia ratified an agreement to establish a monetary union.  In mid 2011, the common currency 
project had not yet been implemented and the date to achieve a single currency was to be 
determined.21 
30. The GCC, as a group is quite an open economy, with trade (imports and exports) representing 
some 48% of GDP in 2010.  However, intra-regional trade among GCC countries is fairly low, 
                                                      
19 WTO documents WT/REG222/N/1, 20 November 2006, and Corr.1, 31 March 2008;  
WT/COMTD/N/25, 31 March 2008;  and WT/REG276/N/1/Rev.1, 17 November 2009. 
20 Oman had already announced in D ecember 2006 that it would not be able to meet the target date. 
21 Khaleeji  has been proposed as a name for this currency.  If realized, the GCC monetary union would 
be the second most important supranational monetary union in the world in terms of GDP, after the euro area. WT/TPR/S/262 Trade Policy Review 
Page 22 
  
accounting for an average of about 5% of exports and 6% of imports.  This is partly explained by the 
similar factor endowment of the members.22 
31. As a group, the GCC signed free-trade agreements  with Singapore in December 2008, and the 
EFTA states in June 2009. 
32. The GCC-EFTA FTA covers trade in goods  and services, investment, competition, 
government procurement, and inte llectual property rights.  The ag reement covers practically all 
products in HS Chapters 25 to 97, with a few exceptions.   As part of the general FTA framework, the 
GCC and each EFTA State have conc luded agreements on trade in ag ricultural products on a bilateral 
basis.  Most customs duties on originating goods w ithin HS Chapters 25-97 will be abolished by the 
GCC at the date of entry into force of th e agreement, except those listed in Annex VI.23  The GCC is 
to eliminate duties after a five-year transition period on 37 lines at the HS 8-digit level (category B);  
another 11 lines are not covered by the Agreement ( category X, mostly restricted goods in the GCC 
countries:  mixtures of odoriferous substances, retrea ded or used pneumatic tyres of rubber, and hides 
and skins of swine);  while the importation of 7 HS lines is prohibited (category P, mainly cocaine and 
crocidolite, and materials containing asbestos).24 
33. The chapter on services contains lists of specifi c commitments tailored after the GATS.  The 
GCC countries' list includes concessions in 11 GA TS sectors.  Although the coverage is broad, 
investment limitations are inscribed.  Also, the agreement does not contain specific provisions on 
investment in other sectors.  Parties agreed to  negotiate on business esta blishment in non-services 
sectors within two years after the entry into force of the agreement.  Although growing, trade between 
EFTA and the GCC countries remains small, representi ng only some 4% of GCC trade.  In October 
2011, the EFTA-GCC FTA had not yet entered into force;  it had not been ratified yet. 
34. The GCC-Singapore FTA covers trade in goods, customs procedures, rules of origin, 
government procurement, and trade in services.  Under the agreement, the GCC countries committed 
to eliminate customs duties on products under 99% of HS headings originating in Singapore, either 
immediately after the entry into force of the ag reement (Group A products), or after a five-year 
transition period (Group B products).   Goods originating in Singapore classified under Group C will 
not be subject to any elimination or reduc tion of WTO bound rates under this agreement.25 
35. The GCC and Singapore agreed to liberali ze various services sectors beyond their WTO 
commitments;  in particular, Singapore service s uppliers will benefit from preferential access in 
professional services, for example legal, accountin g, and engineering services, as well as business 
services, such as construction, dist ribution, and hospital services. 
36. Negotiations for an FTA between the G CC and New Zealand were concluded on 
31 October 2009, but in late October 2011, the agre ement had not yet been signed.  The agreement 
covers nearly 95% of the tariff lines of the Ha rmonized System (HS), including agricultural products, 
                                                      
22 Sturm and Siegfried (2005).  
23 Under the agreement, origin is conferred on wholly produced goods or on manufactures in which the 
value of non-originating materials does not, in general, exceed 60% of the ex-works price of the product;  for the products set out in Appendix 2 of the agreement, the percentages are specified for the maximum value of non-
originating materials. 
24 For more information on this agreement see EFTA online information.  Viewed at:  
http://www.efta.int/free-trade/fr ee-trade-agreements/gcc.aspx. 
25 This includes, for example, poultry meat, some fish and seafood, used tyres, ammonium products, 
alcoholic beverages, and beer).  Singapore Ministry of Foreign Affairs online information.  Viewed at:  http://www.fta.gov.sg/ft a_C_gsfta.asp?hl=30. United Arab Emirates WT/TPR/S/262 
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with a few exceptions (mostly restricted goods in the GCC countries:  mixtures of odoriferous 
substances, retreaded or used pneumatic tyres of r ubber, and hides and skins of swine).  Most customs 
duties on originating goods will be abolished by the GCC and by New Zealand on the date of entry 
into force of the agreement, except for a limite d number of items on which they will be abolished 
within 4-7 years.  The GCC states are currently  negotiating FTAs with Australia, China, the EU, 
India, Japan, Korea, MERCOSUR, Pakistan, and Turk ey.  In addition, the GCC has received requests 
for FTA negotiations from the Association of Southe ast Asian Nations (ASEAN); Azerbaijan;  Chile;  
the Common Market for Eastern and Southern A frica (COMESA);  Georgia;  Hong Kong, China;  
Malaysia;  Peru;  and Ukraine. 
(b) The Pan Arab Free Trade Area Agreement (PAFTA) (also referred to as GAFTA) 
37. The Pan Arab Free Trade Area Agreement (PAFTA), signed on 19 February 1997 to 
implement the Agreement on Facilitation and Development of Trade among Arab Countries26, entered 
into force on 1 January 1998.  This agreemen t encompasses all the members of the Arab League27, 
and had as an objective to create a free-trade area by 2007 by dismantling customs tariffs by 10% annually over a decade.  On 1 January 2005, all tariffs were eliminated among its members.  
Therefore, originating goods, including agricu ltural goods are traded duty free under PAFTA.  
However, non-tariff barriers, such as customs and ad ministrative procedures and transit fees, still have 
a negative impact on intra-regional trade.  For products imported from PAFTA countries, local value-
added of at least 40% is required in order to qualify for preferentia l treatment.  The principal entity 
responsible for implementing the agreement is the Economic and Social Council of the Arab League.  
In addition, the Union of Arab Chambers of Co mmerce has been tasked to produce a half-yearly 
report on the difficulties encountered by traders with the customs administration and regulatory agencies of individual member countries.  Cu rrently, 17 members are implementing the Agreement.
28  
The PAFTA was notified to the WTO under GATT Article XXIV.29 
(c) Bilateral agreements 
38. The UAE has signed bilateral trade agreements  with Syria, Jordan, Lebanon, Morocco, and 
Iraq.  All tariffs are eliminated for all agricultural and industrial goods traded under the ambit of these 
agreements.  The agreements were made to acceler ate the conclusion of PAFTA.  The UAE also has a 
Trade Investment Framework Agreement (TIFA) w ith the United States. Negotiations to establish a 
free-trade agreement between the UAE and the Unit ed States were launched in 2005 but came to a 
halt in 2006 and have not resumed.  The UAE has bilateral economic agreements with 
50 countries/territories. 
(d) Other preferential arrangements 
39. The UAE does not grant or receive autonomous preferences under the Generalized System of 
Preferences (GSP) and does not participate in the Global System of Trade Preferences (GSTP) among developing countries. 
                                                      
26 This agreement dates from 27 February 1981. 
27 The 22 members are:  Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, 
Libyan Arab Jamahiriya, Mauritania, Morocco, Oman, Palestinian Authority, Qatar, Saudi Arabia, Somalia, 
Sudan, Syrian Arab Republic, Tunisia, United Arab Emirates, and Yemen. 
28 Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libyan Arab Jamahiriya, Morocco, Oman, 
Palestinian Authority, Qatar, Saudi Arabia, Sudan, Syri an Arab Republic, Tunisia, United Arab Emirates, and 
Yemen. 
29 WTO document WT/REG223/N/1, 20 November 2006. WT/TPR/S/262 Trade Policy Review 
Page 24 
  
(6) FOREIGN INVESTMENT REGIME  
40. The UAE's economic environment is generally liberal and business-oriented and its trade 
regime open.  However, despite some modifications in its regulations, its investment policy continues 
to limit foreign investment and competition between local and foreign investors, except in the Free 
Zones, where 100% foreign ownership is allowed.  Outside free zones, industrial licences are granted 
only to domestic companies that are majority-owned  by UAE nationals (at least 51%-owned by UAE 
nationals), or by 100% foreign-owned branches that appoint a local services agent or "sponsor".  The 
purpose of the UAE's investment policy is to ma intain a balance of preserving business opportunities 
for UAE citizens while receiving foreign investme nt and know-how and promoting dynamism in 
specific areas.  Although FDI flows have been substa ntial, despite the ownership rules (see Chapter I), 
the effects of the global financial cr isis have been felt in terms of a decrease in investment flows, 
especially in Dubai, and the Government is curr ently intent on revising the foreign investment 
framework (see below). 
41. Investment policy is coordinated between the Federal Government and the respective 
emirates.  The Federal Department for Investment, established in 2008 at the Ministry of Economy, is 
the government entity responsible for assisting bot h foreign and domestic investors and promoting 
investment.  The Department conducts its main task  of promoting foreign investment in coordination 
with the competent authority at emirate level.30  It provides advice and technical support regarding the 
application of the investment regulations, includi ng for the registration and licensing of foreign 
investment projects, and settles any disputes betwee n the investor and the competent authority with 
regard to registration, licensing, and th e operations of the investment project. 
42. Licences are the basic requirement to engage in any kind of business in the UAE.  Procedures 
for local and foreign companies are generally the same, except in the case of branches of a foreign 
company, for which specific rules apply.  Licences may be granted at the federal or at the emirate 
level, depending on the type of activity.  Licensing pr ocedures may vary from emirate to emirate.  For 
example, in Dubai there are three categories of  licences for all business activity:  (i) commercial 
licences covering trading activities;  (ii) industria l licences, covering an industrial or manufacturing 
activity;  and (iii) professional licences to provide professional services, and for craftsmen and artisans.  To obtain a licence, official approval from the Ministry of Economy and the local authority is required. 
43. Under the Federal Commercial Companies Law (No. 8 of 1984) and its amendments, UAE 
nationals must hold at least 51% of the capital of any company established in the UAE.
31  Exceptions 
to this provision include:  (i) nationals of othe r GCC countries who are granted national treatment and 
may have up to 100% ownershi p in most activities;  (ii) investment  in companies located in free zones 
(Chapter III(3)(iv)), where up to 100% foreign owners hip is allowed;  and (iii) companies registered 
as branches or representative offices of foreign comp anies established in Dubai.  Under Cabinet 
Resolution Number No. 4 of 2008, five activities re quire majority 51% UAE ownership, and may not 
be carried out by other GCC nationals:  Haj and Umra services, commercial agencies, social services, 
                                                      
30 In Abu Dhabi, the authority in charge of foreign investment is the Department of Economic 
Development.  For more information see:  http://www.a deconomy.ae/english/pages/home.aspx.  In Dubai, the 
competent entity regarding foreign investment is the Department of Economic Development.  For more 
information see:  http://www.dubaided .gov.ae/english/pages/default.aspx. 
31 Article 22 of Federal Company Law No.8 of 1984. United Arab Emirates WT/TPR/S/262 
 Page 25 
 
 
cultural activities, and importing labour.  The Fe deral Commercial Companies Law sets out the 
regulations governing the operations of a forei gn business and defines seven types of companies.32 
44. Under the Federal Commercial Companies Law, foreign companies may also exercise their 
main activity in the UAE by opening a branch or a representative office.  A foreign branch may 
exercise only the activities for which it is licensed by each emirate.  The company must apply to the 
Ministry of the Economy for this licence, and once approved by the Ministry, the application goes to the economic department of each emirate in wh ich the business is to be undertaken.  Some 
3,788 branches of foreign companies operate in the UAE, mostly in construction, petroleum, insurance, accounting, tourism, courier, and air transport services. 
45. In order to open a representative office or br anch of a foreign company in the UAE, a local 
services agent or "sponsor" must be appointed, which must be a UAE national or company.  Regulated by Federal Trade Agencies Law No. 18 of 1981 and its amendments, the local service 
agent has no capital share or management power but is  paid a lump sum and/or share of profits.  The 
agent helps to obtain the required licences and author izations but is not responsible for any of the 
financial obligations of the company's branch or  representative office within the UAE or abroad. 
46. Foreigners may form sole proprietorships to practice certain activities in some emirates in 
some professional services, such as medical services,  engineering consultancies, legal consultants, 
computer consultants, and non-trading activities.  A foreign sole proprietor is required to appoint a 
local services agent. 
47. Changes were introduced in 2009 to Federa l Law No. 13 of 2006 (Commercial Agencies 
Law), which previously restricted the number of agents a foreign principal could appoint, as well as 
the terms of the agency relationship.  The amen dment, among other things, introduced modifications 
to make contracts more easily enforceable for exampl e, it:  (a) limited an agency contract to a fixed 
time period;  (b) required mutual consent to renew an  agency agreement;  (c) allowed either party to 
file for damages;  (d) allowed the importation of lib eralized goods (not subject to restrictions) without 
the agent's approval;  (e) eliminated the Minist ry of Economy’s Trade Ag encies Committee, which 
handled agency disputes;  (f) required that a commerc ial agency may only be deregistered by mutual 
agreement or pursuant to a court order;  and (g) dete rmined that either party (not only the agent) may 
request compensation for prejudice caused by the termination of the agency contract.  The 
amendments sought to balance the relationship betw een the parties to an agency contract, as the 
situation was unbalanced in favour of the agent.  Once an agency agreement had been registered, it 
could not be terminated, under any circumstances,  without the agent's approval (except after a 
decision by the Commercial Agencies Committee of the MOE), even if the agreement was for a 
limited time-period. 
48. Federal Law No. 2 of 2010 introduced further am endments to the Comme rcial Agencies Law, 
which seem to have partly reverted changes introd uced in 2009.  The new amendment stipulates that, 
a client (i.e. foreign investor) may terminate an agen cy contract or fail to renew it, only if there is a 
fundamental reason that would justify its termin ation or non-renewal.  Additionally, under the 
amendment, it is not permissible for a company to re gister a new agent contract in the Registry of 
Commercial Agents even if the previous agent had a fixed-term contract, unless it was cancelled 
through mutual consent between the agent and the client , or if there were substa ntial grounds to justify 
the termination of the services of the agency, or not renewing it, or if there was a judicial verdict for 
its cancellation.  Cabinet Resolution No. 3 of 2011  established a Commercial Agencies Committee to 
be formed by Ministerial Council, to review disputes that may arise relating to an agency registered 
                                                      
32 A general partnership, limited partnership, joint-venture, public shareholding (joint stock), private 
shareholding (joint stock), limited liability, and limited share partnership company. WT/TPR/S/262 Trade Policy Review 
Page 26 
  
with the Ministry.  Parties to the dispute may not go to court before first presenting it to the 
Committee, which must examine it within 60 da ys.  Only the Committee's decisions may be 
challenged at the relevant court, within 30 days of notification of the decision.  If not challenged 
within this period, the decision would be final and cannot be appealed. 
49. The UAE's hydrocarbon industry is specifically excluded from the provisions of the Federal 
Commercial Companies Law.  The industry is owne d and controlled by the respective emirates, and 
foreign participation must take the form of joint- ventures.  Similarly, electricity, gas, and water 
utilities are supplied by state monopolies, although the Emirate of Abu Dhabi has announced the 
partial privatization of several electricity and water plants. 
50. Investment in the industrial sector, other than in  free zones, is governed by Federal Law No. 1 
of 1979 organizing industrial affairs.  This law regulates the establishment of all industrial 
undertakings in the UAE and the incentives provided for industrial undertakings.  It requires a prior 
industrial licence to be obtained in order to engage in any industrial activity in the country.  Investors 
are expected to fulfil three conditions to obtain th e industrial licence:  (a) a national entity must hold 
at least 51% of the shares of the company;  (b) the company must have at least 10 employees;  and 
(c) the invested capital must be at least AED 250,000.  All companies licensed as industrial 
companies enjoy duty-free importation of materials needed for the industrial project's licensed production (versus a general tariff rate of 5%).  Th is duty exemption is gran ted automatically to all 
companies licenced as industrial companies in the UAE.  On 1 June 2009, the Federal Company Law 
No. 8 of 1984 was amended to a llow business partners seeking to es tablish a limited liability company 
to determine freely the capital requirements of thei r new company;  previously, there was a minimum 
capital requirement of AED 150,000for the establishm ent of such companies.  The authorities noted 
that in mid 2011, Federal Law No. 1 of 1979 was be ing reviewed, to streamline the licensing process 
and encourage investment. 
51. Certain economic activities are reserved for UAE nationals:  (a) Agriculture services;  (b) 
Audio-visual services;  (c) Car rental/leasing services;  (d) Commercial agencies;  (e) Hunting and 
forestry-related services;  (f) Fishing services;  (g ) Investigation and security services;  (h) Natural 
resources, including oil and gas, electricity, water tr eatment and distribution;  (i) Real estate services;  
(j) Recreational, cultural and sporting services;  (k) Passenger and freight road transport;  (l) 
Pharmacies;  (m) Travel agencies and tour opera tor services;  (n) Warehouses for medicines and 
preventative medicine centres. 
52. Foreign suppliers can provide studios for artistic and cinematographic production and 
photography, theatrical troupes, movie halls, theatr es, halls for artistic exhibitions, and sporting 
activities. 
53. Land ownership and property-relate d transactions in the UAE are in general restricted to UAE 
nationals, with some exceptions for GCC nationa ls depending on the emirate.  In Dubai, the 
registration of real estate is regulated under Pr operty Law No. 7 of 2006, under which UAE and GCC 
nationals are allowed to own freehold property in  Dubai.  Non-UAE nationals however, are only 
allowed to hold an interest over land in designated ar eas;  and this may take the form of a freehold or 
a 99-year leasehold interest.  There are currently over 30 designated zones in Dubai in which foreign 
ownership is permitted. 
54. In Abu Dhabi, Law No. 19 of 2005 allows UAE  nationals to own a freehold title to land 
anywhere in Abu Dhabi, while GCC nationals may only own land in certain areas designated by the 
Government known as "investment areas".  In Fe bruary 2007, the law was amended to permit non-
UAE nationals to own floors (excluding the land) of buildings situated  in any of the investment zones.  United Arab Emirates WT/TPR/S/262 
 Page 27 
 
 
The law also permits non-UAE nationals a right to a 99- year usufruct (similar to a lease) or a 50-year 
renewable right of musataha  (right to build) in respect of land situ ated within the investments zones.  
There are currently three inv estment areas in Abu Dhabi. 
55. Other emirates have their own regulations a nd decisions governing la nd/property ownership, 
some more liberal than others.  For example, R as Al-Khaimah offers freehold property ownership 
rights allowing expatriates to purchase in selected de velopments.  In Sharjah, on the other hand, the 
owner of a property is not permitted to sell it to non-GCC citizens without approval by the Ruler of 
the Emirate.  
56. Since the last review of the UAE in 2006, the Ministry of Economy has been mandated by the 
UAE Cabinet to implement a National Investment Reform Process aimed at making the UAE more 
conducive to investments.  The authorities indicated that in mid 2011, the Ministry of Economy was preparing a federal law on foreign investment, to  serve as a one-stop-shop law reflecting government 
policies on foreign investment.  The new law will regulate foreign investors’ rights, protect and 
promote foreign investments, and give national treatme nt to foreigners.  According to the authorities, 
the new investment law will also provide incentiv es for foreign investors, including allowing an 
investment with 100% foreign equity.  The proposed  law is aimed at creating favourable conditions 
for foreign investment and transfer of know-how. 
57. Other measures to facilitate FDI will include th e registration and licensing of projects within 
14 days, and issuance of visas and permanent reside ncy approvals for invest ors and foreign labour 
needed for the project. 
58. In May 2011, the UAE had signed 39 bilateral investment agreements
33, and 58 treaties on 
avoidance of double taxation.34  In 2004, the UAE signed a bilate ral trade and investment framework 
agreement (TIFA) with the United States.  The UAE is a member of the Multilateral Investment 
Guarantee Agency (MIGA). 
                                                      
33 Algeria, Armenia, Austria, Azerbaijan, Banglad esh, Belarus, Belgium, China, Czech Republic, 
Egypt, Estonia, Finland, France, Germany, Italy, Jordan, Lebanon, Malaysia, Mongolia, Morocco, Pakistan, Poland, Republic of Korea, Romania, Russian Federa tion, Singapore, Sudan, Sw eden, Switzerland, Syria, 
Tajikistan, Tunisia, Turkey, Turkmenistan, Ukraine, United Kingdom, Uzbekistan, Viet Nam and Yemen.  
See Ministry of Finance online information.  View ed at:  http://www.mof.gov.ae/En/Publication/Pages/ 
encourageinvestment.aspx. 
34 Algeria, Armenia, Austria, Azerbaijan, Bangladesh, Belarus, Belgium, Bosnia and Herzegovina, 
Bulgaria, Canada, China, Cyprus, Czech  Republic, Egypt, Estonia, Finland,  France, Georgia, Germany, Greece, 
India, Indonesia, Ireland, Italy, Kazakhstan, Lebanon, Luxembourg, Ma laysia, Malta, Mauritius, Mongolia, 
Morocco, Mozambique, the Netherlands, New Zealand, Pakistan, Philippines, Poland, Portugal, Republic of Korea, Romania, Seychelles, Singapor e, Spain, Sri Lanka, Su dan, Switzerland, Syria, Tajikistan, Thailand, 
Tunisia, Turkey, Turkmenistan, Ukraine, Uzbekistan, Venezuela, Viet Nam and Yemen.  See Ministry of 
Finance online information.  Viewed at:  http://www.m of.gov.ae/En/Publication/Pages/doubletaxationavoidance 
agreements.aspx.