On 29/10, the United Arab Emirates (UAE) and Vietnam inked a comprehensive economic partnership agreement (CEPA), marking Vietnam’s first free-trade deal with a Middle Eastern nation.
The CEPA stipulates that the UAE will eliminate tariffs on 99% of Vietnamese exports, while Vietnam has agreed to abolish tariffs on 98.5% of UAE exports.
In this context, Vingroup JSC, a prominent private company in Vietnam, alongside AD Ports Group, a global leader in trade, transport, and logistics, entered into a Memorandum of Understanding (MoU) to explore collaborative efforts in enhancing and expanding port, logistics, and maritime infrastructure across Vietnam.
However, this deal is part of a broader UAE maritime strategy designed to assert its influence as a major maritime force.
The maritime sector in the UAE and the wider Middle East is rapidly evolving, characterized by regulatory advancements, market growth, and strategic alliances.
As ISPI analysis points out, the UAE stands out as the most proactive among Middle Eastern countries in the Aden regional security complex, effectively merging commercial interests with military objectives.
By 2024, the UAE has positioned itself as a central player in global maritime trade by capitalizing on its strategic location and robust regulatory environment.
Abu Dhabi has orchestrated an ambitious maritime strategy reminiscent of China’s OBOR initiative, focusing on port developments across Southern Yemen and the Horn of Africa.
Gulf port geopolitics are shifting, moving from a dominant single port to a more competitive environment with several significant players.
Jebel Ali remains a leading hub, but in the long term, other Gulf ports like Jeddah and King Abdullah Port in Saudi Arabia, Khalifa Port in Abu Dhabi, and ports in Oman are expected to close the gap in terms of capacity, market share, and international trade links.
This pact is integral to the UAE’s comprehensive strategy to extend its influence with Vietnam, an emerging Asian powerhouse. It also comes at a time when businesses in Vietnam might reconsider their supply chain strategies due to ongoing disruptions, potentially exploring more secure but expensive trade routes.
This could lead to a shift towards near-shoring or re-shoring to bring production closer to major markets, despite the challenges and elevated costs associated with such transitions.
Furthermore, the Vietnam Maritime Corporation anticipates a challenging shipping market in 2024, with ongoing difficulties in container shipping.
Thus, the agreement represents a mutually beneficial scenario, uniting two rising trade powers to tackle prevalent trade obstacles while supporting the UAE’s broader strategic ambitions.
