Reuters reported on Monday that Saudi Arabia has amended import rules from other member states of the Gulf Cooperation Council to exclude goods produced in free zones or that use Israeli components from preferential customs concessions.

The Reuters report considered this move as a challenge to the UAE.

The report says that despite the close relations between the two allies, Saudi Arabia and the UAE are competing in attracting investors and business.

The two countries' national interests have increasingly diverged in matters such as their relations with Israel and Turkey, according to the same report.

"From now on, Saudi Arabia will exclude goods produced by companies with a workforce of less than 25% of local employment and industrial products with less than 40% value added after the manufacturing process from the GCC customs agreement," Reuters said.

And the ministerial decision published in the Saudi Official Gazette - Umm Al-Qura - stated that all goods produced in the free zones of the region will not be considered locally manufactured.

Free zones, which are key drivers of the UAE's economy, are areas where foreign companies can operate under light regulations and where foreign investors are allowed to fully own companies.

Israeli production

According to the decision, the Gulf customs agreement will not apply to goods that include a component of Israeli production, or manufactured by companies wholly or partially owned by Israeli investors, or companies included in the Arab boycott agreement of Israel, Reuters reported.

The UAE and Israel signed a tax agreement last May as part of the two sides' efforts to stimulate business development after the normalization of


relations between them last year. Bahrain, a member of the Gulf Cooperation Council, also established normal relations with Israel.

"The idea was at one time to set up a market for the Gulf Cooperation Council, but now there is a realization that the priorities of Saudi Arabia and the UAE are very different," Reuters quoted Saudi National Bank economist Amir Khan as saying.

He added that the Saudi rules are an embodiment of these political differences.

And last February, the Saudi government said that it would refrain from awarding state contracts to companies that establish their business centers in the Middle East in any other country in the region.

It was another blow to Dubai, which has built its economy on its openness to business and the glamorous lifestyle of high-income expats.

The kingdom announced the latest rule changes, despite the UAE being Saudi Arabia's second largest trading partner after China in terms of the value of imports, based on Saudi trade data.

The UAE is also a major hub for the re-export of foreign products to Saudi Arabia, including Turkish goods that are subject to an unofficial embargo by Riyadh, according to a Reuters report.

contrast

The ministerial decision said that companies with local employment between 10% and 25% of the total number of workers can compensate for the difference by increasing the value of added manufacturing in their products and vice versa, according to Reuters.

He added that the added value may not be less than 15% in any case in order to benefit from the terms of the


preferential

customs agreement

.

There has also been a divergence in the positions of Saudi Arabia and the UAE in the past few days with regard to an agreement for the “OPEC Plus” group, as the UAE opposed an agreement that was voted on - last Friday - to increase oil production by about two million barrels per day, starting from next August until December The first is to extend the remaining production cuts until the end of 2022.