UAE and Japan sign deals to boost trade and strengthen partnerships

UAE and Japan Sign Agreements to Strengthen Bilateral Trade and Strategic Partnerships

The UAE and Japan have signed various preliminary agreements to boost bilateral business ties and strategic partnerships during a visit by the UAE delegation led by Dr. Sultan Al Jaber, Minister of Industry and Advanced Technology, to Tokyo. These agreements reflect the commitment of both nations to deepen their economic and strategic relations, leveraging each other’s strengths in various sectors.

During this visit, Abu Dhabi-based energy giant Adnoc partnered with the Japan Bank for International Cooperation (JBIC) for green financing worth $3 billion. This significant financial agreement aims to support Adnoc’s initiatives towards reducing carbon emissions and incorporating low-carbon solutions within its operations. The partnership underscores the commitment of both the UAE and Japan to address global environmental challenges and promote sustainable energy practices.

In addition to the green financing deal, Adnoc signed another memorandum of cooperation with the Japanese Agency for Natural Resources and Energy. This agreement focuses on strategic reserves and aims to enhance collaboration in the energy sector, ensuring security and sustainability. The strategic reserves agreement is designed to bolster the Japanese economy by providing a safety net that can help mitigate the impact of energy price shocks, which are often influenced by market and supply chain fluctuations. An official statement highlighted that this agreement is crucial for maintaining stable energy supplies and economic growth.

The discussions during the visit also covered potential opportunities in several strategic sectors, including energy, technology, digital transformation, advanced industries, and finance. Dr. Al Jaber’s meeting with Japanese Prime Minister Fumio Kishida reaffirmed the deep and longstanding ties between the UAE and Japan. Both leaders expressed their commitment to elevating the bilateral relationship to new heights, emphasizing the importance of cooperation in various fields. Dr. Al Jaber also highlighted the significance of securing energy supplies and leveraging artificial intelligence (AI) tools and solutions to enhance the performance and efficiency of the energy sector. The integration of AI is expected to bring about significant improvements in operational efficiency and energy management.

The recent agreements and discussions are set against the backdrop of booming UAE-Japan bilateral trade in recent years. The total trade exchange between the two countries reached approximately $47.4 billion in 2023, including petroleum products. The non-oil trade exchange alone stood at nearly $15.6 billion last year, marking a growth of 6.1 percent compared to 2022. Official figures underscore the UAE’s position as Japan’s top trading partner among the Gulf Cooperation Council (GCC) countries, receiving 47 percent of Japan’s total exports to the region.

Foreign direct investment (FDI) flows from the UAE to Japan have also been substantial. Last year, the UAE accounted for about 60 percent of FDI from the Middle East into Japan. Furthermore, the UAE attracted nearly 82 percent of Japanese investments in the Middle East during the same period. This represents an annual increase of almost 71 percent, with investments spanning diverse sectors such as technology, renewable energy, and transportation. Dr. Thani Al Zeyoudi, UAE’s Minister of State for Foreign Trade, emphasized that Japan is one of the UAE’s most important trading partners globally. Japan is the ninth largest trading partner of the UAE worldwide, while the UAE is the largest trading partner of Japan among the GCC countries.

Dr. Al Zeyoudi highlighted that the UAE delegation’s visit was aimed at strengthening bilateral relations, accelerating growth in sectors of common interest, enhancing trade exchanges, and exploring new investment opportunities. The UAE is also the largest supplier of oil to Japan, with oil exports amounting to about 35.8 million barrels in April alone, accounting for more than 45 percent of Japan’s imports during that month. Last year, the UAE’s oil exports represented 44.7 percent of Japan’s total oil imports.

In a notable advancement in clean energy collaboration, the UAE exported the world’s first certified shipment of low-carbon ammonia to Japan. This ammonia was produced using carbon capture and storage technology through a partnership between Vertiglobe and Japan’s Mitsui. This shipment is part of Adnoc’s broader efforts to develop global value chains for low-carbon hydrogen and ammonia, demonstrating the UAE’s leadership in pioneering sustainable energy solutions.

The visit and agreements follow a series of high-level engagements between the two countries. In July of the previous year, Japanese Prime Minister Fumio Kishida visited Abu Dhabi, during which the UAE and Japan signed 23 agreements and memorandums of understanding at the UAE-Japan Business Forum. These agreements covered a wide range of areas, further solidifying the robust economic and strategic partnership between the two nations.

Overall, the recent agreements and continued high-level engagements underscore the UAE and Japan’s shared vision of fostering strong economic ties, driving sustainable development, and exploring new frontiers in technology and energy. These partnerships are expected to yield significant benefits for both countries, contributing to economic growth, energy security, and environmental sustainability.