Saudi Arabia amends import rules on Israel-linked products

The move is a Saudi bid to challenge the UAE's status as the region's trade and business hub.

Ben Ariel ,

Riyadh, Saudi Arabia
Riyadh, Saudi Arabia

Saudi Arabia has amended its rules on imports from other Gulf Cooperation Council countries to exclude goods made in free zones or using Israeli input from preferential tariff concessions, Reuters reported.

The move is a Saudi bid to challenge the United Arab Emirates' status as the region's trade and business hub, according to the report.

Despite being close allies, Saudi Arabia and neighboring UAE are competing to attract investors and businesses. Saudi Arabia - the biggest importer in the region - 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 at the weekend.

The two countries' national interests have increasingly diverged, such as in their relations with Israel and Turkey, Reuters noted.

According to the amendment, Saudi Arabia will henceforth exclude from the GCC tariff agreement goods made by companies with a workforce made up of less than 25% of local people and industrial products with less than 40% of added value after their transformation process.

The decree states that goods that contain a component made or produced in Israel or manufactured by companies owned fully or partially by Israeli investors or by companies listed in the Arab boycott agreement regarding Israel, will be disqualified.

Israel signed normalization agreements with both Bahrain and the UAE last year, as part of the Abraham Accords initiated by the administration of former US President Donald Trump. Following the agreement, the UAE and Israel signed a tax treaty.

Saudi Arabia does not have formal relations with Israel despite reports of a possible rapprochement between the countries in recent years.

Saudi officials have repeatedly stressed that while the country backs full normalization with Israel, a peace deal with the Palestinian Authority that results in a Palestinian state must come first.

Then-Prime Minister Benjamin Netanyahu and Saudi Crown Prince Mohammed bin Salman reportedly held a secret meeting last November in which they discussed the possibility of normalizing relations between their two countries.

Subsequent reports said the Crown Prince pulled back from a normalization deal with Israel largely because of the US election result. Riyadh denied the meeting had even taken place.