DUBAI: Saudi Arabia has amended its rules on imports from other Gulf Cooperation Council countries to exclude goods made in free zones or using Israeli input from preferential tariff concessions, in a bid to challenge the United Arab Emirates’ status as the region’s trade and business hub.
Despite being close allies, Saudi Arabia and the neighbouring UAE are competing to attract investors and businesses.
Saudi Arabia - the biggest importer in the region - is trying to diversify its economy and reduce its dependence on oil, while providing more jobs for its own citizens, a point also covered by the rule changes announced at the weekend.
The two countries’ national interests have increasingly diverged, such as in their relations with Israel and Turkey. They have also faced off in the last few days about a proposed OPEC+ deal to raise oil output.
Saudi Arabia will henceforth exclude from the GCC tariff agreement goods made by companies with a workforce made up of less than 25% of local people and industrial products with less than 40% of added value after their transformation process.
The ministerial decree published on the Saudi official gazette Umm al-Qura said all goods made in free zones in the region will not be considered locally made.
Free zones, a major driver of the UAE’s economy, are areas in which foreign companies can operate under light regulation, and where foreign investors are allowed to take 100% ownership in companies.
According to the decree, goods that contain a component made or produced in Israel or manufactured by companies owned fully or partially by Israeli investors or by companies listed in the Arab boycott agreement regarding Israel, will be disqualified.
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