The UAE–Israel CEPA at Three: What the Free Trade Agreement Has Actually Produced
UAE–Israel trade has grown from $2.5B in 2022 to north of $3B by 2023 — running on CEPA, signed May 31, 2022 in Dubai. Three years on: what kind of trade, which sectors, and where the framework's limits sit.
UAE–Israel trade in goods has grown from roughly $2.5 billion in 2022 to north of $3 billion by 2023, and held through 2024 and 2025 despite the Gaza war.
That growth runs on a single piece of legal infrastructure: the Comprehensive Economic Partnership Agreement (CEPA), signed May 31, 2022 in Dubai and effective April 1, 2023.
It was Israel's first free trade deal with an Arab state. It remains the only operational FTA between Israel and a Gulf country.
Three years on, the question is no longer whether CEPA produces trade. It does. The question is what kind, in which sectors, and where the framework's limits sit.
The Agreement, Briefly
CEPA eliminated tariffs on roughly 96 percent of bilateral trade in goods.
It included provisions on services, investment protection, customs procedures, intellectual property, and dispute resolution.
The signing ministers were Israeli economy minister Orna Barbivai and UAE economy minister Abdulla bin Touq Al Marri.
That is the diplomatic record. The commercial record is what matters.
Goods Trade
Three sectors drive the trade flow:
- Diamonds and precious stones (the largest single category by value)
- Technology and electronics
- Agricultural and food products
The diamond trade alone accounts for a substantial share of headline volume, reflecting Israel's role as a global diamond center and Dubai's role as a regional diamond trading hub.
Customs procedures simplified. Tariff elimination removed friction at the margin. UAE-based importers gained price advantage versus competing suppliers from non-CEPA jurisdictions.
The goods trade flow ran more or less continuously through the Gaza war. UAE retail chains paused stocking Israeli-origin products visibly. UAE-based logistics infrastructure handling Israeli goods operated more discreetly. The trade itself did not stop.
Investment Flows
The investment side of CEPA has run heavier than headlines suggest.
UAE sovereign and family office capital has moved into Israeli technology firms in volume since CEPA took effect. Mubadala, ADQ, and adjacent UAE institutional investors have built positions across Israeli AI, cybersecurity, and biotech.
Israeli operators have moved capital the other direction into UAE-based logistics, real estate, and asset management vehicles.
The investment flows have been concentrated. A relatively small number of UAE sovereign and family office entities account for the majority of UAE-to-Israel volume. Broad market depth has been slower to develop.
That concentration is a structural feature, not a temporary one.
Tourism
Direct flights between Tel Aviv and Dubai run multiple times daily. El Al, Emirates, Etihad, and flydubai all serve the route.
Tourism volume between Israel and the UAE has exceeded pre-Accords expectations and held — at reduced volume — through the Gaza war.
The UAE has become the most-traveled Arab destination for Israeli passport holders. Israel has become a more accessible source market for UAE inbound business travel than at any prior point.
That tourism flow is itself a commercial outcome. Hotel revenue, restaurant revenue, retail and luxury sales, business travel infrastructure — all material.
Capital Movement and Family Offices
The most under-reported commercial outcome of CEPA is family office movement.
UHNW capital — Israeli, Emirati, and diaspora — has used CEPA's legal certainty to build bridges between Tel Aviv, Dubai, and Abu Dhabi.
UAE-domiciled holding structures servicing Israeli operating businesses became commercially routine. Israeli-domiciled holdings with UAE underlying investments became routine in the other direction.
The DIFC and ADGM in the UAE — both common-law free zones with English-language commercial courts — have become natural neutral ground for cross-border structures touching Israeli capital.
That structural change predates CEPA but accelerated under it.
What CEPA Did Not Do
Services trade — banking, insurance, professional services — has grown more slowly than goods trade. The institutional integration required to support services trade at scale has lagged the framework.
Israeli banks have limited direct presence in the UAE. UAE banks have limited direct presence in Israel. Correspondent banking relationships handle the volume in both directions, with the operational complexity that implies.
CEPA's services provisions exist. The institutional buildout has not yet matched the legal framework.
The Bahrain and Morocco Comparison
Israel signed a free trade agreement with Bahrain in 2022. Implementation has been slower than the UAE framework. Bilateral trade volume is lower.
Israel's economic relationship with Morocco — following the December 2020 Abraham Accords normalization — has grown along defense, technology, and tourism lines but without a comprehensive FTA comparable to CEPA.
The UAE remains the deepest Abraham Accords economic relationship. CEPA is the structural reason.
What Three Years Has Shown
A free trade agreement accelerates existing commercial logic. It does not create commercial logic that would not otherwise exist.
UAE–Israel trade grew because UAE-based capital wanted access to Israeli technology, Israeli diamond trading, and Israeli industrial goods — and Israeli operators wanted access to the UAE as a regional commercial hub.
CEPA made that flow easier. It did not invent it.
The next phase of UAE–Israel commercial integration — services, banking, deeper investment, joint infrastructure — will require institutional steps beyond what CEPA provides.
What This Means
CEPA validates the Abraham Accords economic case at the margin.
It does not yet validate the maximalist case for full regional economic integration.
The trade growth is real. The investment flows are real. The services-side integration is incomplete.
The next test is whether other Gulf states — Saudi Arabia in particular — pursue similar frameworks.
If they do, CEPA is the template.
If they do not, CEPA is the high-water mark.
Related dictionary entry: CEPA