Trucks Stuck as #Saudi-#UAE Competition Spreads to Trade - Bloomberg

Trucks Stuck as Saudi-UAE Competition Spreads to Trade - Bloomberg

Trucks are lined up for hours at the border between Saudi Arabia and the United Arab Emirates as some international manufacturers find their goods snarled up in a deepening economic rivalry that’s raised the cost of doing business and complicated growth plans.

Saudi Arabia, the UAE’s fifth-largest trading partner, has imposed new rules excluding items made in free zones from preferential tariff arrangements meant to facilitate the free flow of goods within the six-member Gulf Cooperation Council.

The measures are having the greatest impact on some companies operating out of free zones in the UAE, home to Middle East business hub Dubai. They’re already affecting a bilateral trading relationship that was worth a total $15.26 billion last year.

Confusion over the rules means trucks have been delayed for clearance at the border since they came into effect on July 9, with some shipments already being turned away, the head of a regional haulage company and manager at an international freight forwarder said. The volumes of cargo heading into Saudi Arabia from the UAE have dropped significantly as a result, the haulage chief said, declining to be named because of the sensitivities over the new rules.

Saudi authorities are looking out for free zone for products that have a “Made in UAE” stamp on them but don’t have added UAE production value, they said. Firms must satisfy requirements including a workforce of 10%-25% citizens to avoid fees, which is particularly tough for any business in the UAE -- where 90% of the population are expatriates -- to fulfill.

While the Gulf neighbors have, for now, managed to end an impasse over oil policy that roiled global energy markets in recent weeks, the frictions over trade suggests their broader competition isn’t yet abating.