UAE and Vietnam Forge Comprehensive Economic Partnership Agreement

 In a significant step towards enhancing bilateral relations, the UAE and Vietnam have successfully concluded negotiations on a Comprehensive Economic Partnership Agreement (CEPA). This agreement marks a pivotal moment in the Gulf state's broader strategy to establish strong global economic partnerships, aligning with its ambitious foreign trade goals.

Strengthening Economic Ties

Dr. Thani bin Ahmed Al Zeyoudi, the UAE Minister of State for Foreign Trade, emphasized that the CEPA with Vietnam is a crucial component of the UAE's overarching foreign trade strategy. The nation aims to increase its non-oil trade to AED 4 trillion (approximately $1.1 trillion) and boost non-oil exports to over AED 800 billion (around $217 billion) by 2031. The agreement solidifies Vietnam's position as the UAE’s largest non-oil trading partner within the ASEAN region.

This bilateral trade pact is poised to unlock new avenues of cooperation in key sectors, including food production, apparel, textiles, machinery, and metals. In the first half of 2024, non-oil bilateral trade between the UAE and Vietnam surged by 8.7%, reaching $6.1 billion, with non-oil exports soaring an impressive 58.4% year-on-year.

Tariff Reductions and Market Access

Under the terms of the CEPA, the UAE has committed to phasing out tariffs on 99% of exports from Vietnam. In return, Vietnam has pledged to eliminate tariffs on 98.5% of the UAE’s exports. Mohamed Hadi Al Hussaini, Minister of State for Financial Affairs, stated, “With the signing of the CEPA between the UAE and Vietnam, we are opening new paths for economic cooperation that will benefit both countries. By removing trade barriers and improving market access, this agreement will not only boost bilateral trade but also create new investment opportunities, supporting growth and diversification.”

A Broader Trade Strategy

The UAE's CEPA program aims to elevate the country's non-oil foreign trade to AED 4 trillion by expanding relations with strategically important markets globally. This agreement with Vietnam complements existing CEPA agreements with other ASEAN nations, including Indonesia and Cambodia, which have also contributed to accelerating bilateral trade.

In the first half of 2024, the UAE's non-oil trade reached a record AED 1.4 trillion, marking an 11.2% increase in foreign trade compared to the same period last year. Earlier this month, the Gulf state signed CEPA agreements with Serbia, Malaysia, and Jordan, alongside bilateral trade agreements with Australia and New Zealand.

Since 2021, the UAE has launched a series of bilateral trade, investment, and cooperation deals aimed at diversifying income sources and economic sectors. To date, it has ratified five CEPAs with India, Israel, Indonesia, Türkiye, Cambodia, and Georgia, reflecting its commitment to expanding its global economic footprint.

The CEPA between the UAE and Vietnam represents a significant milestone in enhancing trade relations between the two nations. By fostering cooperation in key sectors and reducing trade barriers, both countries are well-positioned to benefit from increased economic collaboration, paving the way for future growth and prosperity.