Trade Horizons’ Market Entry Blog

Non-oil bilateral trade between UAE and South Korea has grown 19% in the first quarter of 2022 to $1.3 billion. The UAE is the only country in the Middle East which has a special strategic partnership with South Korea. South Korea invests $2 billion in the UAE and UAE invests $637 million in South Korea. The UAE has 100 double taxation treaties and 67 bilateral investment treaties and 40 freezones with benefits such as tax incentives and exemptions, 100 per cent business ownership without the need of a national agent and long-term visas.

China currently processes 90% of the world’s rare earths and 60% of lithium. Lithium is a crucial component in electric car battery manufacturing. Europe is implementing the European Critical Raw Materials Act to avoid falling into the oil & gas trap where it is completely dependent on other countries for its energy. But at the same time has decided to deem three lithium salts as “known human reproductive toxicants,” which makes things even more complicated. China dominates global lithium processing and therefore supply. Prices have risen 50-90% in the past year. Europe has decided to take action to diversify the supply chain away from China to avoid future reliance.

The UK has signed a free trade deal with Australia since leaving the European Union. It was the first free trade deal to be signed. It is expected to increase trade with Australia by 53% boosting the economy by £2.3 billion. Australian exports already support more than 100,000 UK jobs and demand is expected to grow by 30% over the next decade. UK food and drink exports to Australia will be tariff free. Biscuits, whisky, gin and cheese are expected to grow in demand due to high quality UK produce. Australia is already the 8th largest market for UK whisky exports.

The UK’s National Security and Investment (NSI) Act came into force in January of this year and has since blocked FDI not only to do with transactions but licensing, as in the case of a robotics technology developed by Manchester University and attempted licensing by Beijing Infinite Vision Technology. Business minister Kwasi Karteng issued a final order on the attempt by the Chinese company to license the sensing technology called SCAMP 5 and SCAMP 7 citing security risks. This was the first case of a blocking and did not apply to a transaction but licensing so the legislation has further reaching scope than one might think at first sight. It blocked the licensing stating that the technology could be used in defence applications although the Beijing company said it was to be used for children’s toys.

Investment Monitor says that FDI in the chemical sector is slow to recover after the pandemic with other sectors gaining pace back to pre-pandemic levels faster. The number of chemical projects in Asia Pacific dropped by 27% in 2020 compared to 2019 but regained in 2021, still slightly down on 2019 pre-pandemic levels. Western Europe and Asia-Pacific account for half of global chemical FDI. China overtook US as the leading country to attract inbound investment into chemical projects but UAE is the fastest growing region. Manufacturing sector accounts for two thirds of operations for chemical use.