UAE Specific Trade Agreements
The UAE has become a very ineresting trading zone in the world. In order to ensure that there is peaceful and fair business practices, the UAE has employed the use of Trade agreements. The Gulf Cooperation Council (GCC) is the first one. Its main goal was to build on achievements made as well as make stronger the ties among its participant countries which further sort to harmonize their economic, financial, monetary policies, their commercial and industrial legislation and custom laws (Dubaided, 2016). It is applicable to the following trade zones; Bahrain; Kuwait; Oman; Qatar; Saudi Arabia; UAE.
Greater Arab Free Trade Area (GAFTA) is the second one and was formed so as to establish an Arab monetary block that could efficiently contend with added states while ensuring that there is a trade increase among the member states (Dubaided, 2016). It is applicable to the following trade zones; Jordan; Saudi Arabia; Sudan ;Kuwait; Lebanon; Libyan Arab Jamahiriya; Morocco; Oman; Qatar; Syrian Arab Republic; Tunisia; UAE; Yemen; Algeria; Palestine; Bahrain; Egypt; Iran (Dubaided, 2016).
The GAFTA Gulf Cooperation Council and the European Free Trade Area is the third one and was made in order to seek to liberalize their market so as to achieve compliance of the general agreements on tariffs and trade. And it is applicable to the following states; UAER; Kuwait; EFTA Countries which include; Norway, Switzerland, Iceland and Liechtenstein; Egypt; Bahrain; Iran (Dubaided, 2016).
Gulf Cooperation Council Singapore Free Trade Area (GCCSFTA) is the fourth and is applicable only to GCC countries and Singapore. It was established to nurture bigger investment between the parties.
Analysis of Whole Foods' competitors in UAE's food retail industry
The whole food industry in the UAE is a multibillion dollar sector (Murray, 2015). There are many competitors that seek to dominate this market in order to maximize on the billions of profits waiting to be grabbed. Some of the main competitors include the LuLu group, Carrefour, spinneys and Al Maya among others. These giants have seen a great opportunity to capitalize on. However, they are also greatly challenged by hypermarkets (Heron, 2014).
Advantages of the Trade Agreements on the UAE Market
Advantages of the GCC Agreement
The GCC led to a mutual external customs tariff and collective customs regulations and procedures (Dubaided, 2016). It also led to the introduction of Single entry point where customs duty were collected. In addition, there was the Removal of tariff and non-tariff barriers, while considering deliberation laws of farmed and veterinarian and isolation, and rules regarding prohibited and limited goods (Dubaided, 2016). Finally, it led to the acceptance of unified standards and specifications for all products in accordance to the charter of the GCC standardization (Dubaided, 2016).
Advantages of the Greater Arab Free Trade Area Agreement
Greater Arab Free Trade Area Agreement has several strengths, some of them include, the removal of all non-tariff barriers for member country products (Dubaided, 2016). It has also led to the ability to facilitate the inter-Arab trade and settlement of payments resulting from such trade
Advantages of the Gulf Cooperation Council and the European Free Trade Area
The agreement provides that, companies in the signatory countries shall be liable to all laws, regulations, procedures and practices regarding government procurement and national entities (Dubaided, 2016). It bans new customs duties introduced in trade between the IFTA states and GCC, except for those contained in the agreement. It allows both parties that are the GCC and the IFTA countries to abolish all customs duties on imports of originating products from the other party country (Dubaided, 2016).
Advantages of Gulf Cooperation Council Singapore Free Trade Area Agreement
The signatories to this agreement sort to provide adequate, effective and nondiscriminatory protection of intellectual property rights (Murray, 2015). No new customs duties shall be introduced in trade between the GCC states and Singapore except for those contained in the agreement (Dubaided, 2016). The agreement provides that countries do not treat companies on an equal basis as far as government procurement is concerned. Singapore shall on entry into force of this agreement abolish all customs duties on imports of originating products from the GCC(Dubaided, 2016).
Disadvantages of the Trade Agreement on the UAE Market
This agreement down sets the UAE market as follows: The market faces forecast of declining income in the future because of depleting oil reserves as well as rising competition from alternative energy sources (Dubaided, 2016). The region’s economy suffers from being poorly diversified resulting from its historical dependence on a single industry i.e. oil. In addition, the small size of the individual economies means that they less attractive for international businesses such as multinationals involved in manufacturing. Finally it leads to environmental destruction i.e. free trade deals can cause environmental damages by allowing companies to shift their manufacturing facilities to nations with few or no environmental regulation thus increasing access to natural resources in those nations (Dubaided, 2016).
Impact of Trade Agreements on the industries in which Whole Foods operate
Trade agreements have led food safety and food standards have increased seeing as the trade zones’ respective health departments are responsible for enforcing the federal food standards (Dubaided, 2016). They have also led to customs duty on food and food products being reduced or waived off for countries within the Free Trade Area. Last but not least UAE’s food sector has had a tremendous growth as more large type stores are being built (Heron, 2014).
Advantages of Foreign Trade Zones on the UAE Market
The foreign trade zones have led to a diverse economy that is continually growing and expanding. In addition, the trade barriers between UAE and the countries have been lifted and this has facilitated export of goods and services to the UAE market. Finally, UAE has enhanced their competitiveness in regards to their exports (Dubaided, 2016).
Disadvantages of Foreign Trade Zones in the UAE Market
The shortcomings of foreign trade zones include, restriction of company ownership by non-GCC nationals and environmental damage, as foreign companies are allowed to set up their manufacturing plants in countries that have fewer or no environmental regulations, there is a risk exhaustion of natural resources (Murray, 2015).
Impact of Foreign Trade Zones on UAE
It has led to English being widely spoken and accepted as the language of business. Secondly, the UAE Market is ranked 31st overall in World Bank’s Ease of Doing Business report, but 1st in North Africa and the Middle East and lastly the UAE Market has become an important market for re-export into other countries (Heron, 2014).
Overall competitiveness of UAE as a Global Market – particularly food Market
UAE is the eight most attractive market in the world and stands first in the in the Middle East in food and beverage retailers. This is due to a strong economic environment and infrastructure.
Open Market success – the government has taken many steps to create an open market environment that is suitable for foreign investors, being that the UAE is a member of the World Trade Organization, the GCC and a signatory to the GAFTA (Heron, 2014).
The food retail industry is also attractive to foreign investment because of their economy indicators as per 2015; average consumer price change is 1.585%; constant prices and national currency (GDP growth) is 3.13%; the population has reached 5.7 million.
In 2015, according to World Competitiveness Yearbook the UAE’s ownership of food retail industry a 4.3% and was worth an impressive $79.1 Billion, making this regions food retail industry the second fastest growing in the world after Asia – Pacific
REFERRENCES
Heron, T. (2014). Trading in development: norms and institutions in the making/ unmaking of European Union – African, Caribbean and Pacific trade and development cooperation. Contemporary Politics , 20(1), 10-22.
Murray-Evans, P. (2015). Regionalism and African Agency: negotiating an Economic Partnership Agreement between the European Union and SADC-Minus. Third World Quarterly, 36(10), 1845-1865.
Dubaided (2016). Dubaided.gov.ae. Retrieved 23 April 2016, from http://www.dubaided.gov.ae/StudiesandResearchDocumentsinArabic/Free_Trade_Agreements_Briefing_Paper_Ver1_2.pdf?
