Saudi imports from UAE drop 33% in July after new trade rule
The value of Saudi Arabia's imports from the United Arab Emirates (UAE) in July fell by 33 percent month on month, official data showed on Wednesday, after the kingdom imposed new rules in July on imports from other Gulf countries.
Imports from neighbouring UAE fell to 3.1 billion riyals ($827 million) in July from 4.6 billion riyals in June, according to data from the General Authority for Statistics. On an annual basis, UAE imports declined by about six percent.
In July, Saudi Arabia amended its rules on imports from other Gulf Cooperation Council (GCC) countries to exclude goods made in free zones or using Israeli input from preferential tariff concessions, a move seen as a challenge the UAE's status as the region's trade and business hub.
Despite being close allies, Saudi Arabia and the UAE are competing to attract investors and businesses.
In Dubai on Wednesday, electronic signs celebrated UAE-Saudi friendship ahead of the Saudi national day on Thursday, but the two countries' national interests have increasingly diverged, including in their relations with Israel and Turkey.
Saudi Arabia's new trade rules excluded from the GCC tariff agreement goods made by companies with a workforce made up of less than 25 percent of local people - a problem for a country like the UAE where the population is mostly made up of foreigners.
It also said all goods made in free zones in the region would not be considered locally made - a blow to the UAE where free zones are a major driver of the economy.
The monthly drop in UAE import value was by far the sharpest decline this year, the statistics authority data showed.
The UAE slipped to third-main import country in July after China and the United States, while it was second in June.
"The July data might have been particularly volatile with regards to creating the required paperwork ... The upcoming months might provide a clearer indication of the new Saudi regulations on UAE exports," said Monica Malik, chief economist at Abu Dhabi Commercial Bank.
The value of Saudi Arabia's overall exports jumped 79.6 percent compared with July 2020 when international trade was hit by the Covid-19 pandemic.
The increase was mainly because of higher oil exports, which increased 112.1 percent year on year, the authority said.