RIYADH (Dispatches) – Saudi Arabia has changed its rules on imports from other Persian Gulf Cooperation Council (GCC) countries to exclude goods made in free zones or using input in the Zionist regime-occupied territories from preferential tariff concessions – in a challenge to the United Arab Emirates (UAE).
Saudi Arabia and the neighboring UAE are competing to attract investors and businesses. Their national interests have also increasingly diverged, such as in their relations with the Zionist regime and Turkey.
Furthermore, Saudi Arabia – hit hard by the coronavirus pandemic and a yawning budget deficit – is trying to diversify its economy and reduce its dependence on oil, while providing more jobs for its own citizens, a point also covered by the rule changes announced over the weekend.
Saudi Arabia will henceforth exclude from the GCC tariff agreement goods made by companies with a workforce made up of less than 25 percent of local people and industrial products with less than 40 percent of added value after their transformation process.
The ministerial decree published on the Saudi official gazette Umm al-Qura said all goods made in free zones in the region will not be considered locally made.
Free zones, a major driver of the UAE’s economy, are areas in which foreign companies can operate under light regulation, and where foreign investors are allowed to take 100 percent ownership in companies.
According to the decree, goods that contain a component made or produced in the occupied territories or manufactured by companies owned fully or partially by Zionist investors or by companies listed in the Arab boycott agreement regarding the Zionist regime, will be disqualified.
The UAE and the occupying regime signed a tax treaty last May as both sides work to spur on business development after normalizing relations last year. Bahrain, another GCC member, has also normalized ties with the occupying regime.
“The idea once was to create a GCC market, but now there’s the realization that the priorities of Saudi Arabia and the UAE are very different,” said Amir Khan, senior economist at Saudi National Bank.
“This regulation is putting flesh on the bone of these political divergences,” he said.