UAE and Ukraine Continue Expanding a Bi-Lateral Trade Agreement in the Wake of Geopolitical Instability

In a major strategic step of changing landscape of the global economy, the United Arab Emirates and Ukraine have signed the Comprehensive Economic Partnership Agreement to increase trade relations and economic cooperation in the two countries. In particular, the presented agreement is crucial for Ukraine at the present stage of unfavorable bilateral trade since the beginning of Russia’s invasion in 2022.

The CEPA between the UAE and Ukraine, further envisages the bilateral elimination or slashing of tariffs within the commodities and services; liberalizing the restrictive affairs in the market and opening up the exports for the sellers from the two nations. Discussions were launched in November 2022, and after having agreed upon the terms and conditions for cooperation, both parties signed the deal in December 2022, which will help Ukraine restore the economy and reconstruct the industries and facilities that were damaged in the conflict.
For Ukraine the accord has more strategic importance as it will enhance the country’s export of grains, machinery, metals and other key products to the ME and N A region through the UAE which is commonly recognized as a global city and more particularly Dubai.There are expectations that the CEPA will have a positive economic carry, estimated to enhance the economy by a magnitude 0. To estimate our long-term impacts on Ukraine, we expressed all the project costs in terms of the proportion of Ukraine’s GDP, which came to 0.24% of GDP in the first year, and 1% of GDP in the medium to long term.This analysis implies that, from the point of view of the UAE, the establishment of more profound economic relations with Ukraine falls into the context of the country’s non-oil diversification policy. This has recently been in the quest of CEPA’s with various countries worldwide including with Israel, India and Turkey to name but a few. Such measures stand in accordance with the UAE’s vision on enhancing its role on the global stage as an economic powerhouse and diversifying its revenues.It is noteworthy that the UAE and Ukraine have a trade balance of $386m in 2023, despite its decline from over $800m before the invasion; under the new agreement, this segment can reach its potential. Thus, the UAE being characterized as a country with a sound infrastructure and a strategic geographical location are a vital link for Ukrainian exporters to the global economy.Incorporating further the current shift in geopolitical landscape, the UAE, while being occupied geopolitically by Russia, steadily supports Ukraine and western allies. CEPA with Ukraine can be considered as simultaneously diplomatic and economic in nature for the UAE, while seeking to respond simultaneously to trends on the world stage, to promote the diversification of the UAE economy and to strengthen its cooperation with partners around the world.The UAE-Ukraine CEPA is a representative milestone in the spheres to develop more economic integration cooperation with each other and in the context of changing the global economic landscapes.