The UAE–Israel CEPA at Three: What the Free Trade Agreement Has Actually Done
The UAE–Israel CEPA took effect April 1, 2023. Three years on, bilateral trade has crossed $3 billion. What worked, what didn't, the Bahrain and Morocco comparison, and whether Saudi Arabia follows the template.
The UAE–Israel Comprehensive Economic Partnership Agreement (CEPA) took effect on April 1, 2023.
Three years on, the bilateral trade data is in.
The agreement was the first free trade deal Israel signed with an Arab state.
It remains the only operational free trade framework between Israel and a Gulf country.
It has produced measurable trade growth — and revealed the structural limits of what an FTA can do without deeper integration.
The Agreement
CEPA was signed on May 31, 2022, in Dubai by Israeli economy minister Orna Barbivai and UAE economy minister Abdulla bin Touq Al Marri.
It entered into force April 1, 2023.
The framework 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.
It was Israel's first comprehensive FTA with a Gulf state.
Trade Volume
Bilateral UAE–Israel trade in goods has grown materially since the Abraham Accords.
Trade reached roughly $2.5 billion in 2022. By 2023, it crossed $3 billion. Growth continued through 2024 and into 2025 despite the regional pressures of the Gaza war.
Three sectors have driven the volume:
- 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 portion of headline volume, reflecting Israel's role as a global diamond center and Dubai's role as a regional diamond trading hub.
What Worked
CEPA's most visible impact has been on goods trade flow timing and predictability.
Customs procedures simplified. Tariff elimination removed friction at the margin. UAE-based importers gained price advantage versus competing suppliers from non-CEPA jurisdictions.
The agreement also catalyzed a wave of UAE investment into Israeli technology firms and Israeli investment into UAE-based logistics and real estate operations.
Family office movement between the two jurisdictions accelerated, supported by the new legal certainty CEPA created.
What It Did Not Do
CEPA did not transform regional trade.
The Gaza war suspended certain commercial activities. UAE retail chains paused stocking Israeli-origin products. UAE-based logistics infrastructure handling Israeli goods operated more discreetly.
Trade in services — banking, insurance, professional services — has grown more slowly than goods trade. The institutional integration required to support services trade at scale has lagged.
Investment flows have been concentrated. A relatively small number of UAE sovereign and family office entities account for the majority of UAE-to-Israel investment volume. Broad market depth has been slower to develop.
The Bahrain and Morocco Comparison
Israel signed a free trade agreement with Bahrain in 2022. Implementation has been slower than the UAE framework, with lower bilateral trade volume.
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 framework 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 structural integration is incomplete.
The next test is whether other Gulf states — Saudi Arabia in particular — pursue similar frameworks.
If they do, CEPA will be the template.
If they do not, CEPA will be the high-water mark.
Related dictionary entry: CEPA
