Trade in United Arab Emirates
The United Arab Emirates has been a center of trade since ancient times, copper, pearls and oil being some of its most precious commercial commodities. Today, trade is still a central cornerstone of the economy, oil and gas exports remaining an important component as far as exports are concerned. The UAE exports 62 per cent of its crude oil to Japan and gas exports are almost entirely to Japan.
Despite the predominant role played by oil and gas, the numerous free trade zones established in the country are also contributing enormously to the value of exports and the UAE has become the third most important re-export center in the world (after Hong Kong and Singapore). In fact re-export trade provides a substantial one-third of the entire trading sector in the UAE. In Dubai, where a large part of the re-export trade is concentrated, it forms an even greater proportion of that emirate's total income. Although Iran and India feature prominently as destination countries there is a fairly even spread of re-exports across at least 35 countries.
Because of the population increase in the UAE, a higher demand for imports to meet re-export requirements and an increasing level of individual expenditure, there have also been rises in both the value of and volume of imports into the UAE. Low commodity prices caused by fierce competition among Asian countries eager to maintain external markets has also had an upward effect on volume.
As far as geographical distribution based on import value is concerned, Asian countries have the greatest share of the market, European countries are next with the US in third place.
Preliminary data analyzed by the Central Bank indicate a decrease, for the second consecutive year, in the trade balance surplus, which reached Dh 11.6 billion in 1998, as compared with Dh 27.2 billion in 1997 (-57.5 per cent). The contraction was mainly attributed to a decline in the value of oil exports (-27.3 per cent) and liquefied gas exports (-23.5 per cent). Despite the increase in values of commodity exports and exports by 3.8 per cent and 2.4 per cent respectively in 1998, compared with 1997 levels the total value of exports (oil, gas and other) and re-exports dropped from Dh 124.9 billion in 1997 to Dh 111. 5 billion in 1998 (-10.7 per cent). In trustingly, the value of exports from the Free Zones maintained its upward trend to reach Dh 16.5 billion in 1998, an increase of 12.9 per cent over 1997 levels, while the value of commodity exports dropped by 5.6 per cent as a result of the drop in the value of petroleum product exports whose prices are closely linked with oil prices. The value of imports, however, registered a new record level of Dh 99.9 billion in 1998, compared with Dh 97.7 billion in 1997. This was mainly attributable to population increase, higher demand for imports to meet re-export requirements and a higher level of individual expenditure partly due to the increased commercial activity associated with the shopping festivals held throughout the year. The increase in value of imports also involved an increase in volume resulting from appreciation of the US dollar and hence the UAE dirham against most major currencies and also against the currencies of the UAE’s trade partners in Asia. Low commodity prices caused by fierce competition among Asian countries eager to maintain external markets also had an upward effect on volume. Data on imports classified by major groups of commodities show that in 1998 consumer goods had a 52.1 per cent share of the market, capital goods 35.6 per cent and intermediate goods 12.3 per cent, these percentages being identical to the 1997 figures. With regarded to geographical distribution based on import value, European countries had a 35 per cent share of the market, up from 33.8 per cent in 1997. Within this group the UK’s share remained the highest, although it fell from 8.6 per cent to 7.5 percent. Asian countries increased their overall market share by half a percentage point to 45 per cent, however, the US’s share decreased from 13 per cent in 1997 to a low of 11.2 per cent in 1998.
Rr-Exports
A report by Emirates Industrial Bank (EIB) issued in May 1999 ranks the UAE as the third most important re-export center in the world (after Hong Kong and Singapore respectively). Re-export trade forms a substantial one-third of the entire trading sector in the UAE. In Dubai, where a large part of the re-export trade is concentrated, it forms an even greater proportion of that emirate’s total income. The re export strength of the UAE lies in bulk purchases, low taxes, good infrastructure and an historical concentration of traders. Reduced delivery lead times are also a major reason for the success of the trade. Although Iran (machinery, textiles, vehicles) and India (silver, silver jewellery) feature prominently as destination countries there is a fairly even spread of re-exports across at least 35 countries. After expanding very rapidly in the mid-1990s, there has been a slowed own in the growth of re-export trade in recent years, due in part to an economic decline in key destination countries. Overall re-exports in the 1990s have grown at a much faster rate than imports. Currently more than 25 per cent of imports are for re-export, compared with less than 17 per cent as recently as 1994.
Northern Emirates
The Northern Emirates’ contribution to the UAE's total non-oil foreign trade has increased by over 59 per cent in the four years from 1993 to 1997. Statistics released by Dubai Chamber of Commerce and Industry indicated that the combined foreign on oil trade of four emirates (Sharjah, Ras al-Khaimah, Fujairah and Umm al-Qaiwain) was Dh 9.29 billion in 1993, rising to Dh 14.79 billion at the end of 1997. During the corresponding period the UAE's total foreign non-oil trade was Dh 94.21 billion in 1993, rising to Dh 118 billion four years later. Of the four emirates the highest cumulative growth was achieved by Fujairah (219.2 per cent), where trade was Dh 968 million in 1993, rising to Dh 3.09 billion in 1997. This was primarily due to increased industrial activity. Fujairah is one of the world's largest bunkering ports and being on the Arabian Sea, it is emerging as a popular port for ships plying between Europe and East Asia. During the same period Ras al-Khaimah showed a growth of 86.3 per cent from Dh 1.4 billion to Dh 2.6 billion, Sharjah 38.2 per cent (Dh 6.8 billion to Dh 9.06 billion) and Umm al-Qaiwain 34.2 per cent (Dh 35 million to Dh 47 million).
Dubai
Major categories of imports into Dubai in 1998 were machinery, audio equipment, TVs and videos (Dh 3.8 billion); textiles and textile articles (Dh 2.8 billion); vehicles, aircraft, vessels, etc. (Dh 1.6 billion); and, base metals and articles of base metal (Dh 1.32 billion). The major categories of exports were base metals and articles of base metal (Dh 573.3 million) and textile and textile articles (Dh 233.8 million). As far re-exports were concerned, the major items we re textile and textile articles (Dh 875.2 million), machinery, audio equipment, TVs, etc. (Dh 792.4 million); and vegetable products (Dh 355.42 million). Of Dubai's direct trade (non-oil) by regions, the highest exports were to east and southeast Asia, followed by western Europe and south and west Asia. For imports, east and southeast Asia led the segment, followed by western Europe.
Gold Trade
In 1998 Dubai’s gold imports plunged 45.6 per cent to 359.8 tones from a record 660 tones in 1997. The first five months of 1999 (219.8 tones) showed a further decline on the 1997 figures (261.7 tones), although July and August figures are much more promising. According to Dubai Department of Ports and Customs (DP&C), several factors contributed to the slump in gold bullion imports. These include the drop in value of the Indian rupee against the dollar affecting the Indian demand for gold bullion re-exported from Dubai. India has been the top market for Dubai's gold for decades. Another factor behind the decline in imports from Dubai is the Indian Government's new policy allowing local banks to directly import gold bullion from European countries such as Switzerland (the main exporter) the UK and South Africa, South Korea and Russia. Although bullion trade was poor, demand for gold jewellery was stimulated by the Dubai City of Gold promotion during the Shopping Festival and other promotional activities such as the World's Longest Gold Chain. The Gold Festival held during the Abu Dhabi Festival of Sales in combination with bargain priced gold, also contributed to higher consumer purchases.
Customs
UAE Customs Council
Agreement has been reached between Abu Dhabi, Dubai and Sharjah customs departments for a series of joint measures to be undertaken as part of the process of streamlining customs procedures. Although each emirate operates customs procedures independently, they meet and discuss federal and AGCC issues under the auspices of the UAE Customs Council.
Abu Dhabi Customs
Abu Dhabi Customs Department plays a vital role in the national economy by providing rapid procedures to expedite trade movement. In the past few years a comprehensive development plan has been implemented which seeks to modernize all the department’s custom posts. The department has been provided with advanced computer systems to further facilitate customs procedures. It has also installed a shared database for taxed or exempted commodities which can be accessed by the customs departments of other emirates. New advanced equipment has also been introduced at the Ghuwaifat border crossing point. The equipment, the first of its kind in the Middle East, helps to accelerate custom procedures by allowing inspection of trucks and containers without having to unload them. In addition, the Customs Department is implementing a number of programmes to improve work practices. Nationals are offered training course opportunities at home and abroad as a positive step towards implementation of GATT.
Statistics issued by the department reflect the progress made in Abu Dhabi’s trade. Total import volumes of non-oil products reached 1,656,338 tons in the first five months of 1999, compared with 1,405,046 tons during the same period last year, an increase of 17.8 per cent. Total imports in the first five months of 1999 were valued at Dh 9.1 billion compared with Dh 7 billion during the same period last year, an increase of 30 per cent.
AGCC Customs Unification
Until 1994, the customs tariff was fixed at 1 per cent, with basic products, food items and building materials being exempted from custom duties. At present a tariff of 4 per cent applies to basic goods, with 6 per cent being levied on other goods. However, discussions have been under way for some time on the standardization of customs tariffs for all AGCC states. This would involve an increase in customs duties to 6 per cent on basic goods and 9 per cent on other goods. Negotiations are also taking place on whether to add spare parts and automobiles to the ‘others’ category. The UAE is reluctant to increase customs duties because of the potential impact on business and has proposed a more detailed study on the issue with the assistance of the World Bank and Maxwell Stamp, a UK consultancy. The deadline for agreement on the new tariffs is December 1999.
Dubai Customs
Dubai Customs has contracted with the US-based Cisco Systems to market the trademark- registered Mirsal throughout the Middle East and with the potential to target other international markets. Mirsal, a tailor-made system developed after a thorough study of customs clearance systems, links customs online with cargo and clearing agents for speedy, secured and efficient movement of shipments among the system members in the cargo community.
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