Israel and the United Arab Emirates signed a free trade agreement on Tuesday in Dubai, Israel's ambassador to the Gulf state said.
Amir Hayek said on Twitter the move is aimed at boosting trade between the two countries. The trade deal is Israel's first with an Arab country.
"Done," the diplomat said on Twitter, replying to another tweet he posted earlier saying "the UAE and Israel will sign FTA in the next hour."
President of the UAE-Israel Business Council Dorian Barak said the trade agreement defined tax rates, imports and intellectual property, which would encourage more Israeli companies to set up offices in the UAE, particularly in Dubai. The council predicts there will be almost 1,000 Israeli companies working in or through the UAE by the end of the year doing business with South Asia, the Far East and Middle East.
"The domestic market doesn't represent the entirety of the opportunity. The opportunity is really setting up in Dubai, as many companies have, in order to target the broader region," Barak said.
Ahead of the signing, Israel's economy ministry had said the accord would remove tariffs on food, agriculture, cosmetics, medical equipment and medicine.
"Together we will remove barriers and promote comprehensive trade and new technologies, which will form a solid foundation for our common path, will contribute to the well-being of citizens and make it easier to do business," Economy and Industry Minister Orna Barbivai said on Monday.
The UAE and Israel formally established relations in 2020 as part of the U.S.-brokered Abraham Accords that also included Bahrain and Morocco.
For oil-rich UAE, the deal with Israel is its second bilateral free trade agreement after signing a similar accord with India in February. It is in bilateral trade talks with several other countries, including Indonesia and South Korea.
The UAE has been aggressively pursuing these deals in a bid to strengthen its economy following the hit it took from the coronavirus pandemic.