UAE-Australia Cepa set to supercharge trade and bilateral investments

The UAE’s signing of a comprehensive economic partnership agreement with Australia will be a boon for internationally minded UAE businesses seeking diversified growth. While it may be another six months before the agreement comes into effect, the clock to start initiating plans to grab the opportunities on offer has already started ticking. The UAE is Australia's largest trade and investment partner in the Middle East, with bilateral trade worth $9.43 billion last year and two-way investment at $13.52 billion. Yet it only ranks 21st among Australia’s trade and investment partners, signalling strong growth potential. We expect the UAE-Australia Cepa to supercharge activity and reverse this trend as it streamlines trade processes, eliminates tariffs on a wide range of goods and services, creates investment opportunities and encourages private-sector collaboration in priority sectors. It comes as the UAE’s attractiveness as a business destination is rising. In line with the “We the UAE 2031" vision, the country is seeking to modernise and diversify its economy to achieve greater economic transformation and global integration. More specifically, the UAE has been rolling out a slew of policies to make inbound investment easy and attractive, including legal reforms around foreign ownership, tax incentives, and ease of business measures. Taken together, the reforms have propelled the UAE up the global trade and investment rankings, from 18th to 8th in Kearney's 2024 FDI Confidence Index. All of this means it is an opportune time for Australian companies to begin mapping plans to realise the potential, particularly for those sectors with the most unique offering – sustainability, agriculture and digital. The UAE, as a strategic gateway to the Middle East, Europe and Africa, offers Australian businesses unparalleled access to high-growth markets. Simultaneously, Australia’s robust economy and vast natural resources create reciprocal opportunities for UAE enterprises in sectors such as clean energy, mining, agriculture, education, and advanced manufacturing. Food exports will also benefit from the Cepa, with Australian farmers and producers being able to access the UAE’s affluent population and their growing preference for premium food. Australia’s reputation for high-quality produce, coupled with the likely tariff saving of A$50 million ($33 million) annually on food and agriculture exports, will place the country's farmers and food producers in the global box seat. Despite the Cepa, the UAE will still maintain tariff thresholds with Australia. Once these quotas are reached, higher tariffs will again apply to Australian producers, reducing profitability. To stay ahead, Australian agricultural producers should act swiftly to ensure their exports are among the early arrivals that fall within the initial (tariff-free) threshold. Practical steps can include deploying sales representatives to the UAE now to build relationships with buyers and provide samples. Additionally, suppliers must stay informed about traceability requirements, licensing and quality assurance to understand the UAE’s compliance requirements. Digital and e-commerce will be another winner under the new trade agreement. The UAE aims to double the contribution of the digital economy to its GDP from 9.7 per cent in 2022 to 19.4 per cent within 10 years, and the Cepa will further enhance opportunities for Australian tech companies to expand in the region. More broadly, areas such as cyber, payments, health care and education are emerging as key sector growth areas for the UAE, and are areas of technological competitiveness for many Australian firms. Despite the opportunities, it is important to note that Australia is not the only country being enticed by the UAE’s growth ambitions: the Emirates has signed similar agreements with at least 17 markets in the past 10 years. When put into this context, it is clear that UAE and Australian firms need to consider how they move to grab a slice of the economic pie. For growth-orientated companies that are looking for customer and revenue diversity, now is the time to start kicking the tyres across this expanding corridor. Mohamed Al Marzooqi is chief executive of UAE at HSBC Bank Middle East and Antony Shaw is chief executive of HSBC Australia and New Zealand