Includes the barriers (tariff and non-tariff) that U.S. companies face when exporting to this country.
Having A Sponsor, An Agent or A Distributor
In order to do business in the UAE, outside one of the free zones, a foreign business must have a UAE national sponsor and its ownership limited to 49 percent unless its business can be found on the UAE Government “positive sectors” list where up to 100 percent foreign ownership is allowed. The main objective of the positive sectors exception is to motivate major global corporations to invest in the UAE's markets, especially in the fields of innovation, technology, space, renewable energy, and artificial intelligence, thus supporting the goals and objectives of UAE Vision 2021.
In order to sell in the UAE an agent or a distributor is mandatory. Once chosen, sponsors, sales agents, or distributors are given exclusive rights for non-food products only – Agency law does not pertain to food products. Terminating a non-performing agent, or a distributor, is extremely difficult in the UAE. In March 2010, the UAE issued Federal Law No. 2 of 2010 amending certain provisions of the Commercial Agency Law; later revised in 2015. The amendments prevent the termination, or non-renewal, of a commercial agency unless the principal has a material reason to justify the termination or non-renewal. Further, a principal may not re-register the commercial agency in the name of another agent even if the previous agency was for a fixed term unless: (i) it is amicably terminated by the principal and the agent; (ii) termination or non-renewal is for justifiable reasons that are satisfactory to the Commercial Agencies Committee; or (iii) a final judicial judgment is issued ordering the termination of the agency. The 2010 Amendments also reinstate the specialized Commercial Agencies Committee which had been revoked in 2006. The Commercial Agencies Committee has original jurisdiction over disputes involving registered commercial agents. Any commercial dispute should be referred first to the Commercial Agencies Committee.
In 2011, the UAE Cabinet issued Resolution No. 3 of 2011, “Concerning the Commercial Agency Committee”. The Committee is responsible for receiving applications for settling agency disputes and for cancelling registered agencies. The Committee is permitted to abstain from settling a dispute referred to it and can advise the parties to refer the matter to litigation.
Participation in Tenders
UAE Government entities follow a transparent system for tendering and awarding contracts. All invitations to bid are made public and are accompanied by a clear set of guidelines that bidders must follow. In order to be able to bid for government contracts, all bidders must register on the respective eProcurement system. For Federal Entities, the Ministry of Finance (MoF) has an advanced procurement system for all federal entities through which it announces purchases related to MoF or other ministries and federal entities. Through this system, it also invites tenders and announces the contracts.
To bid for contracts of local entities in Abu Dhabi, the Abu Dhabi Government requires that contractors and suppliers must have an established presence in Abu Dhabi and must possess the licenses needed to carry on business activities in Abu Dhabi.
To bid for contacts of local entities in Dubai, the Dubai Government utilizes the online eSupply portal operated by Dubai eGovernment and Tejari. The eSupply portal has created an official eSupply procurement portal for Dubai Government and the online destination for all suppliers interested in dealing with Dubai government entities.
To bid for contracts of local entities in Sharjah, the Sharjah Government follows a similar procedure to register contractors and issue contracts. The government bodies will verify the company that applied for registration and on successful verification, the company will appear in its 'list of approved suppliers'. This will entitle contractors to bid for tenders.
UAE Federal Law sets out preferences for hiring UAE nationals and, for some administrative positions, requires that only UAE nationals be employed. If a non-free zone company has more than 50 employees, it must employ a minimum percentage of UAE nationals in accordance with the “Emiratization” policy of the UAE Federal Government. The Emiratization policy applies to both the public and the private sector, and both local and international companies operating in the UAE are subject to the Emiratization policy in the sectors for which such guidelines have been formulated.
In the past in a number of the emirates, some American companies were asked to sign a document that proves that they actively boycott the State of Israel and are not doing any business there. This violates the U.S. Export Administration Act (50 U.S.C. §§2401-2420 (2000)) and Export Administration Regulations (15 C.F.R. Parts 730-774 (2014)).
For more information and help with trade barriers please contact:
International Trade Administration
Enforcement and Compliance
Phone: (202) 482-0063