- | 9:00 am
Embrace digitalization and the potential of digital trade, says Thani Al Zeyoudi
In an exclusive interview, Dr Thani bin Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade, talks about the risk of deglobalization, enhanced regional cooperation and the potential of digital trade
Free trade works just as David Ricardo thought it would, but discussions around deglobalization are gaining ground among policymakers as major economies decouple and the global trading system shifts. Undoubtedly, the pandemic, followed by the Russia-Ukraine war, prompted isolationist foreign policy moves, revealing the fragility of supply chains. Countries in the Middle East see this and ask how they can adjust their defenses. A world less economically connected is one in which disruptions are more thinkable.
But as global interconnection unravels, countries could create more resilient trade pathways and better frameworks for cooperation. According to Dr Thani Al Zeyoudi, UAE Minister of State for Foreign Trade, there is an opportunity to disrupt and innovate as this shake-up happens. “We are entering an era of deglobalization – and the political and economic consequences of this can be already seen around the world. From food protectionism and inflation to sanctions and decentralized finance, a new global map is emerging. There is a gravitational shift in the trading system – supply chains are fast becoming regional, and emerging markets are building stronger, more sustainable regional production networks.”
As the geopolitical landscape changes, Dr Al Zeyoudi says the UAE is moving rapidly to build deeper ties with global partners and allies to promote peace, stability, and prosperity. “We are building transparent, predictable, and inclusive trading relationships with like-minded nations who share our values and aspirations. Our Comprehensive Economic Partnership Agreement (CEPA) model is essential to our goals of achieving these objectives.” Recently, the UAE signed CEPAs with India and Israel and will sign six more by the end of the year.
Globally, there’s a bit more inductive reasoning when thinking about the emerging economic order. Too often, countries tend to fall back on the old thinking because there isn’t yet a unified field theory for our new world. The minister says in his conversations with global partners at the World Economic Forum annual meeting at Davos last month, he found “remarkable confidence” in new economies. “New industries and new models for economic cooperation will get the world moving again. As we build a future-proof, innovation-based economy that’s open to new forms of capital, the UAE is already playing a major role in shaping what comes next – and many nations want to be part of that.”
But while this is a different situation, it isn’t all better.
TACKLING UNEVEN ECONOMIC RECOVERY
When it comes to the regional economy, the near future looks a tad uncertain. The Middle East and North Africa (MENA) region is expected to grow by 5.2% in 2022, according to the World Bank, the fastest rate since 2016, on the back of oil-price windfalls benefitting the region’s oil exporters, while the fragile countries lag weighed down by the risks of events like stagflation. The best way to guard against an uneven economic recovery and bring about an economic turnaround, Dr Al Zeyoudi says, is to open up. “To thrive and prosper in this region, we need each other. We welcome closer coordination with our friends across the region.”
Emphasizing enhanced regional cooperation is more important than ever, he says, “The $10 billion Industrial Partnership for Sustainable Economic Growth between Egypt, Jordan and the UAE, which we signed last month, reflects our commitment to enhancing cooperation.”
“UAE will continue,” he adds, “to explore opportunities for closer strategic cooperation from food security and space exploration to trade and investment.”
Recently, the GCC and the European Union adopted a strategic partnership to work more closely on global security threats, energy security, climate change and the green transition, digitalization, scientific research, and academic collaboration.
He imagines a smart embrace of new technologies and digital services and enhanced partnerships would allow countries the way forward. And crucially, it’s more of a reflection of realities on the ground. “Access to food, energy, and well-paid jobs around the world depend on strong, stable, and resilient supply chains. But the world’s busiest ports are now clogged up as demand for goods continues to outstrip supply speed. Throw in record-high container shipping freight rates, and it is clear that the current state of affairs is unsustainable. What we need to do is embrace digitalization and the potential of digital trade,” says Dr Al Zeyoudi. “Shifting to a paperless system with electronic documentation makes cargo movements faster, easier, and more efficient.”
The UAE advocates the interoperability of electronic documents such as waybills, invoices, and customs paperwork to provide businesses with quicker transactions. The World Economic Forum estimates that the global adoption of the electronic bill of lading alone could save the economy around $4 billion.
“We are focused on hyper-practical solutions to jump-start the supply chain. We are also taking steps to position the UAE as a trusted gateway for seamless cross-border data flows. By adopting transparent, facilitative rules to promote secure cross-border digital payments and minimize friction on international data flows, we want to be at the heart of a new digital environment. This must be carefully balanced with robust rules on data protection, filtration, and localization.”
As the world races towards the decentralized world of Web3.0, the UAE, he says, wants to be the center of business opportunity for the growth of digital assets. “We are positioning the UAE as a global, business-friendly hub for virtual assets and the Web3.0 ecosystem.”
“The Dubai Virtual Assets Regulatory Authority was set up to create an advanced legal framework for blockchain, NFTs, the metaverse, digital currencies, and other virtual assets, and our approach has clearly resonated with the private sector as the biggest tech names are looking to build their futures here with us.”
There’s no arguing that. Crypto.com serves over ten million customers and plans to open a regional headquarters in Dubai. Bybit, one of the world’s fastest-growing cryptocurrency exchanges with two million users, is relocating its headquarters to the UAE. Binance, Three Arrows, and Kraken are other crypto companies that are either relocating or setting up their headquarters in the country. “It is a global vote of confidence in our business-friendly economy,” adds Dr Al Zeyoudi.
Ultimately, despite the global uncertainties, for any economy to work, it has to serve domestic needs. The deglobalization we are going through today comes with challenges and opportunities. In the UAE, businesses are getting on with the new reality. The country’s policies are aiding in creating more resilient trade pathways and new development models, engaging with partners worldwide to accelerate trade and investment – to stimulate growth, create opportunity, and promote knowledge transfer. These goals are imperative, the minister says, as the world struggles to inject energy into a global recovery.
“We are positioning the UAE as a global gateway for trade and investment between Europe, Asia, and Africa. This is the future of trade in the Middle East, and we are at the heart of it.”