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Israel and the United Arab Emirates signed a free trade agreement yesterday, aimed at boosting economic ties and increasing annual bilateral trade to more than $10B over the next five years. The deal is the first of its kind that Israel has struck with an Arab nation and marks another milestone after the two countries formally established relations in 2020 when signing the Trump-era Abraham Accords (see background). 

The agreement exempts or reduces roughly 96% of the trade between the two Middle Eastern countries from tariffs. Bilateral trade between Israel and the UAE reached $885M in 2021—almost three times the volume of Israel’s trade with Egypt last year, despite a peace agreement between the two in place since 1979. 

Observers say the UAE’s pact with Israel signals deepening ties over shared concerns about a nuclear Iran, rather than pressing Israel to end its conflict with Palestine, which has divided the Arab world (see 101).