Tariff & Non-Tariff Barriers


The United Arab Emirates (UAE) maintains a free exchange and liberal trade system. The Gulf Cooperation Council (GCC), consisting of the UAE, Saudi Arabia, Kuwait, Bahrain, Qatar and Oman, has been discussing a common external tariff for some years. As a result of these efforts, on January 1, 2003, the GCC states agreed to harmonize its import duties to five percent.

In advance of the GCC Customs Union agreement, the UAE government created the UAE Customs Authority. The Customs Authority's main priority is to create a customs union within the UAE to unify Customs rules, regulations, procedures and documentation.

Only firms with the appropriate trade license can engage in importation. Documentation requirements follow international standards and delays in custom clearance have been infrequent. The competition for business between the port facilities of the different emirates has kept user rates at a minimum and put a premium on services. There are no duties on exports. For religious and security reasons, there are various restrictions on import of alcohol, tobacco, firearms, and pork products.

The UAE maintains non-tariff barriers to trade and investment in the form of restrictive agency/sponsorship/distributorship requirements and restrictive shelf-life requirements for foodstuffs. Since June 1996, the UAE Federal Government elected not to register new food agency agreements. Food agency agreements prior to June 1996 are still operational.

In order to do business in the UAE outside of one of the free zones, a foreign business must have a UAE national sponsor, agent, or distributor. Once chosen, sponsors, agents, or distributors have exclusive rights for non-food products only. Agency law does not pertain to food products. Agents and distributors cannot be easily replaced without their agreement. To bid on federal projects, a supplier or contractor must either be a UAE national or a company in which UAE nationals own at least 51 percent of the share capital. Federal tenders must be accompanied by a bid bond in the form of an unconditional bank guarantee for five percent of the value of the bid.

The UAE has no formal requirement that a portion of any government tender be subcontracted to local firms, but local companies clearly enjoy a competitive advantage. The UAE requires a company to be registered in order to be invited to receive government tender documents. To be registered, a company must have 51 percent UAE ownership. However, these rules do not apply to major project awards or defense contracts, where there is no local company that can provide the goods or services required.

As part and parcel of its development into a regional trading center, the UAE government has made the protection of intellectual property a priority in recent years. New copyright, trademark and patent laws, passed in 2002, provide high levels of protection for U.S. intellectual property. The UAE is party to the Paris Convention for the Protection of Industrial Property, and a member of the World Intellectual Property Organization (WIPO) and World Trade Organization (WTO).

Agricultural Trade Barriers
Food products face relatively minor trade barriers. GCC-mandated shelf life requirements for close to 100 products requires that all processed products carry both production and expiration dates on the original manufactured applied label. In addition, all imported food products must have one-half or more of their shelf life in effect at the time of import in order for import clearance to be granted.

Customs Valuation
Effective January 1, 2003, the UAE acceded to the GCC Customs Union that equalizes the duties paid upon entry of an item to any member state, regardless of the country of destination within the GCC. For example, an item imported into the UAE destined for the Saudi market is subject to the 5 percent duty once it enters the UAE proper. However, some problems were reported during the transition period of the GCC member countries are working to resolve these issues.

The Customs duty for most items is calculated on CIF value at the rate of five percent. Imports of liquor are subject to a 70 percent customs duty on their CIF value while imports of tobacco products face a 100 percent on their CIF value. Many essential items, including staple foodstuffs and pharmaceuticals are allowed duty free status.

Import Licenses
Importers are allowed only to import goods which are related to the activities permitted by the Trade License, which is issued by the local government authority.

All food imports, including beef and poultry products, require a health certificate from the country of origin and a halal slaughter certificate issued by an approved Islamic center in the country of origin.

Export Controls
All goods exported to or re-exported from the UAE must have proper documentation issued by the Ministry of Economy and Commerce and the various Chambers of Commerce in the respective individual emirates.

Import / Export Documentation
The consignee/agent should obtain a delivery order from the Shipping Agent and submit original standard trade documentation, including certificates of origin, bills of lading, commercial invoice, export declaration and various government/embassy attestations. These documents must be presented for all imports and exports. Various free guides to doing business in the UAE are available from accounting and law firms located in the UAE.

Temporary Entry
As a general rule, imports of goods into the UAE for the purpose of re-export within six months are exempt from customs duty. However, a deposit or submission of a bank guarantee in lieu of duty is required by Customs. The deposit or bank guarantee is refunded/released by the local Custom authority on proof of re-export. Goods remaining in the UAE after six months are liable for customs duty.

Goods may be imported duty free and stored in any of several free zones in the UAE. Goods, which enter the UAE from these free zones, must pay the duty noted previously. There is no provision for duty free entry of parts or components intended for the manufacture of goods to subsequently be exported. As duties are already so low, this has not been a major impediment to manufacturing industries in the UAE.