Estimated reading time: 4 minutes
At the European Bank for Reconstruction and Development’s (EBRD) Trade Facilitation Program (TFP) Forum in Istanbul, TFG spoke with Vincent O’Brien, director of the International Chamber of Commerce (ICC) in the United Arab Emirates (UAE) and associate director of the Institute of International Banking Law and Practice.
Current stature of trade in the UAE
According to O’Brien, the best way to describe trade in the UAE is up and increasing.
Many factors are creating this encouraging trade environment, one of which is the country’s geographic location.
Within a four-hour flight from Dubai, there are 2.5 billion people. Double the radius to an eight hours flight distance, and traders are within reach of 5 billion people.
This excellent geographic positioning contributes to the thriving logistics industry in the UAE, which accounts for nearly 15% of its gross domestic product (GDP).
Dubai is also home to the Port of Jebel Ali, which is the world’s ninth busiest port, the largest artificial harbour, and the biggest and busiest port in the Middle East, with over 15 million TEU of container volume each year.
Jebel Ali is also the showcase port for Dubai-based DP World, which operates in over 80 port terminals across all six major continents.
Another reason for the nation’s international trade success is its level of diversity.
“The UAE is the most open country in the world – there are 10 million people and nearly 80% are expatriates,” O’Brien said.
“This means we have 200 nationalities working harmoniously developing business and trade in the UAE.”
This diversity, coupled with a centralised location that has spokes reaching out to major global markets, has made the UAE a key player in trade and supply chain.
Confronting macroeconomic disruptions
While the UAE is positioned well in the global trade ecosystem, it has faced macroeconomic shocks since the outset of the COVID-19 pandemic.
“Like every part of the world, the pandemic lockdowns caused problems, but the lockdowns in UAE were minimal compared to the rest of the world,” O’Brien said.
“This was driven by the highest level of vaccinations in the world.”
Fast forward to today, when the world’s main challenges are the conflict in Ukraine, supply chain disruptions, and food shortages.
“For me, the biggest challenges for the UAE are not direct but indirect ones,” O’Brien said.
“It’s where our friends, brothers, sisters, and other countries are struggling.”
For example, Egypt, a close economic partner of the UAE, is one of the world’s largest wheat importers, 40% of which comes from Russia and Ukraine.
As a result, the food crisis has been complicated in Egypt, which has had spillover effects on the UAE.
Thankfully for Egypt, it has received support from multilateral organisations like the EBRD.
“When you have imports coming into Egypt and exporters are looking to cover their risk, the EBRD Trade Facilitation Program (TFP) is the perfect model,” O’Brien said.
The ICC supports EBRD’s TFP
As the world’s business organisation, the ICC has a pivotal role in developing trade rules and practices to help facilitate trade and make it easier for businesses to conduct.
“I call the ICC the international connected community of trade professionals,” O’Brien said.
“In each of our national committees, we have commissions, and the Commission on Banking is the one that develops policy, procedures, standards, and rules.”
Many of these rules, like the Uniform Customs and Practice for Documentary Credit (UCP), the Uniform Rules for Demand Guarantees (URDG), or the Uniform Rules for Digital Trade Transactions (URDTT), play critical roles in facilitating trade. They also help lay the groundwork for multilateral support programs like the EBRD’s TFP.
“In my view, the biggest part of the TFP is based on standby letters of credit (SBLCs) covering transactions in and out of all their countries of operation,” O’Brien said.
“The ICC plays a crucial role here because SBLCs are subject to ICC rules.”
This is a beautiful example of the harmonious relationship between the many multinational organisations in helping to promote trade worldwide.