Chapter-II

REVIEW OF LITERATURE

The present study is designed to examine India’s trade

relationship with United Arab Emirates in the post-liberalization

period. A comprehensive review of literature relevant to the area of

research is essential as it places the research study in its proper

perspective by indicating the amount of work already done. This

would help in deriving intellectual and practical solutions to the

problem through the application of scientific methods and

understanding of the work done so far. As a researcher it is

important to be familiar with and aware of the work done in the

related areas to get right approach of the issues. Review of

literature provides the background information to aid the researcher

in designing and analyzing the research work. The reviews throw

light on different angles of India’s trade relationship with United

Arab Emirates in the post-liberalization period.

Sujit Chatterjee (1987) in his article “India’s Trade with the

Emirates” has observed that the upward evaluation of Japanese Yen

along with the West German Mark and other European currencies

from 1985 has provided a good opportunity for India to enlarge its

exports of industrial products to the United Arab Emirates.

However, the author has expressed the view that the UAE like the

Middle East as a whole is no longer on easy market and demands a

high level of sophistication in marketing and selling.

24

The author has observed further that for the Indian exporter

and manufacturer UAE presents a test field for the competitive

ability of their products both in terms of price and quality against

international competition. It may be interesting to note, says the

author, that besides the developing nations China has a strong

presence in the market and Poland has lately made an entry to earn

foreign exchange.

Sushma Ramachandran (1996) in her article “Keeping

Pace with the World” has referred to the new approach of ‘product

country matrix’ proposed by P. Chidambaram – the country’s

Minister of Commerce in 1996. The matrix approach is based on the

assessment that 15 destinations account for nearly $ 20 billion of

India’s total exports of $ 26.2 billion. Similarly 15 products account

for $ 17 billion of total products. The first conclusion arrived at by

the ministry through the matrix approach is that India should focus

on markets with per capita income of over $ 20,000. The second

conclusion is that India’s share in the world market should be

increased where it already has a presence. M/s Sushma

Ramachandran has observed “A more detailed look at the matrix

shows where the new products have the greatest potential. For

instance 46 percent of silk readymade garments are being sold in

United States, which is also the largest market for woolen

garments. On the other hand Russia is the biggest destination for

cosmetics and toiletries, while UAE imports the largest amount of

25

fruits and vegetables from here. The UK and US are emerging as a

destination for sports goods but Australia and Germany also show

considerable potential. Similarly one of the new markets Australia

seems to have a stable potential market for cotton yarn, fabrics and

made ups as well as cotton readymade garments. Nigeria is also

becoming a big importer of drugs and pharmaceuticals, while meat

and meat products appear a prospective area in Malaysia. A detailed

analysis of the matrix can thus prove a fruitful study for exporters

to enable them to plan their market strategies”.

Vimala Vasan (2000) in her article “Indian Companies

Warm up to UAE Free Zones” has mentioned that nearly 600 Indian

companies are operating out of UAE free zones forming a majority

country-wise, in some of the zones, situated mainly in the Northern

Emirates. The major incentive in the free zones is 100 percent

ownership by the foreign company. Indian companies have been

motivated to move into the free zones in view of the cent percent

ownership facility coupled with the tax-free regime. Proximity to

ports and airports – a major factor for firms involved in the re-

export business, import/export duty exemption, capital and profit

repatriation, sound infrastructural facilities, cheaper labour and

other costs, exposure to the international market, place and ability

to network easily with the rest of the world are other factors that

have made the free zones attractive.

26

C. Ranga Rajan (2001) in his article “Saga of Paradigm

Shifts” has observed that import substitution constituted the major

plank of India’s foreign trade policy and the planners almost chose

to ignore the option of foreign trade as an engine of economic

growth. This was mainly due to highly pessimistic view taken on the

potential for export earnings. A further impetus to the inward

orientation was provided by the existence of vast domestic market.

In retrospect the author feels it is clear that the policy makers not

only underestimated the export possibilities but also the import

intensity of the import substitution process itself.

R.K. Rana and Kuldeep Singh (2001) in their article

“India’s Trade under the WTO – An Empirical Analysis” have tried to

ascertain the trade deficit of the Indian economy by adopting a

variety of methods and using time series data. The impact of WTO

on the trade deficit of the economy has also been analysed. In both

the export and import functions the relationship between these

variables and foreign and home tariffs (Before and during WTO) is

found negative. The authors have argued that to promote exports it

is necessary that foreign tariffs be lowered keeping other things

constant. They have further suggested that besides gauging

through the impact of the WTO on trade deficit we must

simultaneously improve the internal position of the economy. It is

because the two kinds of balances are not substitutes but are

complementary to each other, indeed one reinforces the other.

27

Somasri Mukhopadhyaya (2001) in his paper “Uruguay

Round and India’s Export Response” has tried to analyse whether

Uruguay Round has been a success story for international trade with

particular reference to India. He has mentioned that since 1997

there has been a tremendous drop in the growth of world trade. He

has cited the two international developments – the currency crisis of

1997 in SE Asian Nations and the introduction of Euro currency. He

mentions the non-materialization of the obligations that were

accepted by developed countries especially in the agricultural

sector. Another factor cited by the author pertains to the textile

sector in the context of MFA phasing out. In case of India too, our

export growth dropped to 5 percent in the post Uruguay Round

period and then became negative in dollar terms. Hence India has

not achieved what we have expected while signing the Uruguay

Round Agreement. Our attitude towards exports has changed. We

have continued our process of global integration keeping in mind

our obligations and commitments to the World Trade Organization.

The author perceives that we are now gradually moving towards a

competitive market scenario rather than a protected one. The

author has suggested that India must look at new pastures for

which she has adequate domestic capabilities and promising export

expansion.

Sushma Ramachandran (2001) in her article “Revamping

Export Strategy” has observed that success in global trade in any

28

area will depend largely on the extent to which Indian exports are

able to remain competitive in world markets. The author has opined

that prospects of India raising its share in world trade seem to be

receding despite a buoyant 20 percent rise in exports during 2000-

01. She has opined further that the global economic slow down has

come in the way with the country’s two largest markets, the US and

Japan slowing down on the economic front. The dip in the consumer

demand is also affecting exports though it is not yet clear how far

exports growth will be affected. M/s Sushma has referred to the

new export strategy of the government, which envisages replacing

the existing incentive schemes with new schemes wherever

necessary and reducing all indirect taxes affecting exports.

Elaborating the government policy for the promotion of Indian

exports the author has mentioned the proposals for entering into

suitable free trade area agreements and memorandum of

understanding for specific products with select countries. Such

agreements will be entered into where complementarity exists. A

proactive approach for promoting services exports along with efforts

to develop export potentials of the hardware sector has been

envisaged. Making a dent in the hardware sector is expected to

sustain the momentum already achieved in the software sector. The

author has stressed the need for promoting exports from farm

sector and setting up of Special Economic Zones (SEZs) only for

exports.

29

Azhar Muhammad (2003) in his analysis of “Economic

Co-operation between India and the United Arab Emirates in the

1990s” has observed that trade and other forms of economic

co-operation between India and the United Arab Emirates are

sizeable. The author has mentioned that empirically it has been

observed that Indo-UAE trade during the period of analysis

increased faster than the increase in both UAE and Indian trade with

the world. Further Indian exports during the period to UAE grew

rapidly compared with the growth in Indian global exports. Despite

these positive trends India has had a persistent balance of trade

deficit with the UAE. However UAE is a host to over 0.4 million

Indian expatriates who are an important source of foreign exchange

earnings for India. UAE is important as far as remittances inflow is

concerned. UAE extended financial aid to India during massive oil

revenue in 1970s and 1980s though financial aid ceased when oil

revenues declined. India and the UAE have excelled in establishing

joint ventures. The overall performance of Indo-UAE economic

co-operation during the study period has been found satisfactory

according to the author. However the author perceives that India

has to make further efforts to enhance its exports and other areas

of trade to improve economic co-operation between the two

countries.

Chawla R.L. (2003) in the article “India and WTO” has

affirmed that India’s liberalizing policy as well as significant

30

structural and trade reforms have clearly paid off as India’s

economic performances are distinctly impressive in these days. The

average annual growth rate of GDP was 6% despite the recent

increase in international petroleum prices. GDP growth for 2006-07

was 9% services continued to be the largest contributor to GDP

(54%) while share of manufactures remained stable at around 16%

of GDP. Agriculture’s share declined to around 18.3% of GDP in

2006. These results are impressive, and are due to important

unilateral reforms aimed at opening up Indian economy and trade.

Chaisse J. (2005) in the article “Ensuring the Conformity of

Domestic Law with WTO Law in India – A Case Study” has observed

that India is a part of key international conventions. It has

progressively made its domestic legislation conform to the WTO

Agreement on Trade Related Aspects of Intellectual Property Rights

(TRIPS) while enjoying a longer period of implementation by virtue

of being a developing country. The 1970 Patents Act was amended

in 1999, 2002 and 2005 with this aim revisions are partly the

consequence of the WTO.

A.K. Pasha (2005) in his article “Trade Energy and Labour

Dominate GCC – India Ties” has observed that GCC – India relations

have continued to expand in new areas, while the consolidation

process in other areas accelerated. India’s largest trading partner in

the GCC has been the UAE. In order to expand the range of

products that India can export, the second Amazing India – 2005

31

exhibition – a show case of products and services from India opened

in Dubai. The author has further observed that the earlier trade

exhibitions have been quite successful in strengthening trade and

economic ties between the two countries. It is interesting to note

that growth in the field of information technology exports has also

been significant. The author has predicted great strides in the

growth of trade in services like shipping, air services and in gas

supply from Qatar to India and in banking, etc.

L. Ganesh (2005) in his article “Free Trade Agreement –

Growth or Distortion?” has emphasized that Free Trade Agreements

are essentially bilateral agreements or multilateral agreements

among a group of countries as against universal agreements

envisages by WTO among all members. Free Trade Agreement

championed by the US and Europe through the WTO have been

facing a number of obstacles for the following reasons.

The so called developed countries, push agenda that suit their

particular economic interests in the name of free trade.

Developing countries like India have recently united to jointly

oppose such moves.

The author says that in a bilateral situation unless the

economies of the two countries complement each other it can never

work for the benefit of both. Further the two markets have to be

nearly equal and preferably complementary to benefit from a

mutual FTA. The FTA regime warrants a minimum value addition

32

within the two countries to be eligible for concessional or nil tariff.

The concept of Rules of Origin is used to ensure this. The author

suggests that to prevent misuse of products being made elsewhere

and then packaged in one of the FTA countries needs transparent

and honest governance resulting in strict enforcement of rules. The

author has referred to the views of Bhagawati and Paagariya that

trade creation is unlikely if members of Regional Trade Agreement

are small in relation to the outside world. Consequently trade

diversion is likely to be more dominant effect. The author has

suggested for gradual reduction of all import tariff to a reasonable

and comparable levels with other similarly developed countries. This

will also avoid the retrograde movement to era of special

concessions, dispensations and quantitative restrictions.

Mukherjee I.N. (2005) in his paper “South Asia Free Trade

Area and Indo-Pakistan Trade” has referred to the declining trade

relations between India and Pakistan. He has mentioned in his

paper that Pakistan accounts for less than 1 percent of India’s trade

and India accounts for under 5 percent of Pakistan’s trade

compared with very large trade shares prior to independence of the

two countries in 1947. In 1948-49, 70% Pakistan’s trading

transactions were with India, while 63% of Indian exports went to

Pakistan. Estimates from gravity model suggest that trade between

the two countries could be 5 to 10 times larger than the present $ 2

billion a year, thereby raising GDP and household incomes in both

33

countries. Informal trade via third country (such as the UAE

specifically Dubai) is estimated some $ 2 billion to $ 3 billion per

year.

Samir Ranjan Pradhan (2006) in his report “India’s Export

Potential to the Gulf Cooperation Council (GCC) Countries : A

Gravity Model Analysis” has provided some significant trends

regarding India’s export potentials in the GCC countries. The author

says that his workhorse (augmented) gravity model shows that the

magnitude of India’s export potential is highest with Oman, followed

by Qatar, Bahrain and Kuwait. He further says that all the model

specifications consistently show no export potential with UAE and

Saudi Arabia. This implies that currently India is overtraded with

UAE and Saudi Arabia as they are the largest two trading partners

of India in the GCC and India’s export trade is not diversified and

confined to limited number of items. Moreover the results show

sharp increase in the magnitude of India’s export potentials to

Oman, Qatar, Bahrain and Kuwait. In addition the study shows

similar trends of India’s export potentials to the GCC countries.

Sujitha Beevi Karayil (2007) in the article “Does Migration

Matter in Trade – A Study of India’s Exports to the GCC Countries”

has examined India’s exports to the Gulf Cooperation Council (GCC)

countries with special focus on the influence of migration. The

author has analysed the demand pattern of GCC as represented by

its import structure with a view to explain the growing orientation of

34

India’s exports towards the Gulf countries. The Gulf countries’

import structure reveals the influence of the Indian Diaspora and

the possible migration-trade link. The author has verified the

hypothesis of migration-trade nexus using a longitudinal gravity-

type model. The econometric evidence also illustrates the strong

immigrant preference effect for their home-country products. The

author has thus concluded that the preference similarity mechanism

is seen to work in the India-GCC context, despite the violation of its

crucial assumption of income similarity. Overall, the study brings

out the importance of migrant population as a unique source of

advantage for India’s exports to the region.

Atul Aneja (2007) in his article “India’s Trade with UAE on

High Growth Path” has indicated that poised for exponential growth,

India and the United Arab Emirates (UAE) are rediscovering each

other as valued economic partners. Indian companies are arriving in

the UAE in droves as the country has already positioned itself as a

major global destination of trade, investments and services. The

author has tried to link up the fast growing Indian economy with

greater need for energy which UAE is in a position to meet with its

rich oil deposits. The author has referred to the information

provided by the UAE Government. He has mentioned that India is

now ahead of Japan as the leading export market for Abu Dhabi’s

refined products, substantial volumes of Kerosene and LPG.

Covering a period of 5 years, from 2002 to 2006 total trade

35

between Dubai and India soared from $ 2.5 billion to a high of $

10.9 billion. Indian firms have moved a big way to the free zones

set up in the UAE in order to take advantage of the liberalized

business environment that prevails there.

Divya Aggarwal and Arun Chaudhry (2008) in their

report “Trade Flows between India and UAE – Current Status and

Future Prospects” have concluded that as India’s own export

networks are developing, the use of UAE as an intermediary trading

hub is expected to be on the decline. This trend according to the

authors has already started reflecting in a few sectors like textiles,

diamonds and precious metals, which used UAE extensively as a re-

export centre. The trade flows in several non-traditional sectors

have started to grow rapidly, these being pharmaceuticals,

electronics and agro products. There is also a shift in the emphasis

from commodities trade to the services sector. This has also been

reflected in the FTA negotiations where emphasis is being given on

FDI inflows on both the sides by promoting joint ventures and

investments. The study by the authors has revealed that some of

the sectors becoming valuable due to increasing importance of

services in the economies of the two countries are infrastructure,

power, education, biotechnology and information technology. The

authors have referred to the prediction made by the Electronics and

Computer Software Export Promotion Council (ESC), India, that

India’s IT exports to the UAE are expected to jump from $ 542

36

million in 2005-06 to $ 850 million in 2006-07 making a 56.74

percent rise.

Laurence Henry (2008) in “India’s International Trade

Policy” has observed that Indian international trade policy is a good

example of the central contradiction in India’s economic policy, itself

a reflection of the present political situation in New Delhi. The

author comprehends that Indian trade appears less open and less

liberalized than the number of its economic and trade agreements

would suggest at first sight. Even with FTAs, India’s agreements so

far remain merely preferential tariff agreements, since they include

only positive lists of items. In Indian trade agreements, a balance is

often sought between classic diplomatic and intergovernmental

means and a more expert and time-limited dispute settlement

mechanism. The trends towards multiplication of bilateral and

regional agreements in parallel with WTO obligations are not

particular to India but are rather universal, especially as states

await radical change to the global system.

Samir Ranjan Pradhan (2008) in his book “India, GCC and

the Global Energy Regime – Exploring Interdependence and Outlook

for Collaboration” has focused on issues of energy security,

particularly the energy regime in India and its relationship to the

GCC. The analysis looks at the specifics of oil trade between India

and the Gulf Cooperation Council (GCC) highlighting their growing

interdependence and trade relations. The book explores the

37

structural shifts and transformations in the global oil regime which

are in effect redefining patterns of trade, pricing, etc. The author

comprehends that the oil prices are no longer set by the seller alone

but by assorted factors and actions of various market participants,

instead of traditional OPEC versus non-OPEC rivalry, it is now a

trend to focus on patterns of trade. The location of the demand

market has also shifted from the Atlantic to Asia-India and China in

particular. There is now what is referred to as the demand heartland

comprising Asian economies of Japan, China, India, South Korea

and the ASEAN and resource periphery that includes Siberia, Russia,

Central Asia, Iran and the Gulf states.

The book comprises six chapters devoted to (i) the transition

of global oil and gas regime, (ii) the changing patterns of global

energy trade, (iii) the pattern of energy interdependence developing

between India and the GCC, (iv) the issues of energy security, (v)

vulnerabilities and (vi) the competition-interdependence dilemma in

Asia and its implications for India’s Gulf strategy. The book by Dr.

Pradhan is valuable in highlighting the key dynamics of the

contemporary debate surrounding the trade of oil and gas. The

author has efficiently dealt with the entire gamut of issues in the

India – GCC partnership.

Zakir Hussain (2008) in “India’s Economic Relations with

GCC States – A Study of Labour Migration and Energy Dimension

During the Post – 1990 Period” has observed that two components,

38

movement of labour and transfer of energy resources, have been

two significant complementary pillars which sustained and ushered

the Indo-GCC economic relations into new era of post – 1990 which

is marked by globalization, liberalization and privatization. The

author has rightly concluded that these two components which most

of the time seem mutually reinforcing upon each other prepared the

level playing field for exploring, expanding and boosting our existing

relations in new fields such as finance, service sector, technology

transfer, IT, education than confining only to the two elements,

labour and energy resources. The author has suggested that it is

utmost important for India to engage, develop and expand its

relations with the GCC countries in more diversified fields at least

until India is able to discover new sources or destinations of energy,

which are relatively stable and secured. The region is very

significant for India; it sources more than 65 percent of oil it

consumes, receives approximately $ 19-20 billion remittances

remitted by more than 5 million expatriates living and working

there, its non-oil trade has now touched approximately more than $

50 billion. The author has further argued that besides this,

strategically the region is very crucial for India to maintain its

communication links with Europe and further, the sea routes are life

line of Indian maritime trade and energy as more than 65% trade

passes through the same region. Thus looking at these factors the

39

study emphasizes a deeper engagement with the GCC countries in a

more affirmative manner than what has been in the earlier decades.

David K. Parks (2009) in his article “Indian SME’s Striking

Gold in Sharjah” has highlighted the opportunities for investment

and trade for India in Sharjah – the industrial heart land of UAE. He

has referred to the free trade and specialized industrial zones

serviced by an integrated transport system and highly developed

infrastructure in Sharjah. The well developed industrial base and

vibrant market in the Emirates has enabled Sharjah to position itself

as a leading economic power in the world market. Oil, gas, steel,

aluminium, chemicals, agriculture, livestock rearing are key

industries driving Sharjah’s economy. India is one of the foremost

trading partners of the Emirate of Sharjah. Bilateral trade between

the two countries has witnessed quantum increase in the past few

years. Growing trade between India and Sharjah has made it easier

for SMEs on both the sides to seek co-operation in sectors like

infrastructure development, information technology (IT), tourism,

gems and jewellery, oil and gas, chemicals and petrochemicals and

drugs and pharmaceuticals. The author contends that the growing

co-operation between SMEs of both the countries and inking of

deals and trade agreements have further strengthened the multi-

dimensional relationship shared by both India and Sharjah.

Shubhomita Bose (2009) in her article “Indian Food Finds

Favour in the UAE” has mentioned that in recent times, the Indian F

40

and B industry has shown great potential to emerge as the biggest

revenue-generating segment in the country. Ranked as the world’s

second-largest food producer after China, the Indian F and B

industry is currently estimated at around $ 182 billion. India’s food

manufacturers, especially the small sized enterprises are exploring

new destinations to increase exports. The UAE is among the world’s

most economically developed countries. According to trade analysts,

UAE’s economy will continue to grow even at a time when most

developed countries are struggling due to the economic recession.

UAE imports around 60% of its food from Asian and African

countries. Owing to the huge demand for cereals and other food

products in the UAE, the country has approached Asian countries

like India to supply rice, wheat and other food products. Food

exports to the UAE are estimated at around $ 3 billion annually. The

author suggests that to gain from the UAE’s business friendly

environment, Indian food companies should offer high-quality

products to consumers who have a high purchasing power.

Samir Pradhan (2009) in “India’s Economic and Political

Presence in the Gulf : A Gulf Perspective” has observed that Indian

presence in the Gulf region is civilizational which has developed into

a vibrant relationship over the years, primarily based on a

complementary abundance of entrepreneurial skill and wealth. With

the emergence of India as a large economic power in recent years

and simultaneously the Gulf region witnessing spectacular economic

41

growth, economic trends are reinforcing mutual interdependence.

While India’s economic presence in the region has transformed from

barter exchanges between merchants and Indian human capital

foiling the Gulf’s oil-industrial development, India’s political presence

has remained more or less subdued. The author has perceived that

the growing economic presence of India in the Gulf and the Gulf’s

new geo-economic realities provide the platform to synergize

complementarities into multi-pronged stable relations. The

relationship between the two regions has been in focus in the

evolving interdependence centering on energy-economy dynamics

and changed geopolitical environment in the aftermath of the 9/11

attacks.

Harsh Pant (2009) in his article “Looking Beyond Tehran :

India’s Rising Stakes in the Gulf” has underlined the fact that as a

group, the GCC is India’s second largest trading partner. It is the

single origin of imports into India and the second largest destination

for exports from India. Bilateral trade between India and the GCC is

expected to rise above $ 25 billion by 2010. The UAE by itself is

among India’s five largest trading partners and India’s top trading

partner in the entire Middle-East, accounting for 75 percent of

India’s exports to the GCC countries and 6 percent of India’s global

exports. Bilateral trade between India and the UAE is valued at $ 14

billion having tripled over the last five years. The author has opined

that the global financial melt down and the specter of recession in

42

the US and the Europe is further prompting India to turn to Gulf

States sitting on huge resources looking for investment

opportunities. The GCC countries remain a major destination for

Indian investments even as India is making a concerted attempt to

encourage GCC investments in India. India is hoping that major

GCC states such as Saudi Arabia, UAE and Oman would participate

in India’s planned expansion of infrastructure.

Energy is clearly the driving force in Gulf India relations.

Saudi Arabia is the chief supplier of oil to India’s booming economy.

The GCC countries supply 45 percent of India’s petroleum

requirements. Along with the Saudis who are responsible for a

quarter other major suppliers are Kuwait and the UAE. The revival

of trade and investment between the Gulf and India, featuring large

movements of goods and capital, is founded on the search for

energy sufficiency, a new security landscape and very rapid

economic growth.

Yousef Diab (2010) in his study “Studies on Development of

Export Markets – Indian Markets” has made an exhaustive analysis

of the trade and economic co-operation between India and the

United Arab Emirates. The author has divided his analysis into three

parts. The first part of his study comprises of detailed analysis of

India’s economic scenario with special focus on investment climate

and the sectors attracting investment, agreements between India

and the world, dimensions of India’s foreign trade in general, India’s

43

non-oil exports and re-exports to the world and India’s imports from

the world. The author has marshalled useful and relevant data

relating to the different economic indicators of India’s trade and

investment parameters.

The second part of the analysis is focused on economic

relations between India and the UAE, India’s investment in the UAE,

UAE’s investments in India, agreements between UAE, the GCC and

India, prospects of co-operation between India and UAE and the

visits of delegations and personalities. This part of the study is

highly informative and directly related to the topic of the present

research work. The arguments and explanations on the different

aspects of the economic relations between the two countries are

enlightening and analytical.

The third part of the analysis provides details of foreign trade

between India and the UAE, UAE’s non-oil exports to India, UAE’s

imports from India, UAE’s re-exports to India. The author’s

presentation is backed up with necessary statistical support in the

different aspects of trade between India and UAE’s. The discussion

and the information in this part provide a good backdrop to the

thesis of the present research work.

The author has provided a brief summary of the analysis in

the three parts of this study in the conclusion part at the end.

44

Kamco Research (2011) in “United Arab Emirates (UAE) –

Economic Brief and Outlook 2011” has reported that foreign trade

plays an essential part in the UAE’s economy, more importantly oil.

India, China, the USA, Germany and Iran play an essential role

within the UAE’s trade as they represent 40 percent of the UAE’s

trade. As a result it is likely that in the future the UAE will look to

maintain and further strengthen its ties with the major business and

trading partners while also developing ties with new partners as a

means of increasing its trading activity while enabling to it further

diversify its economy away from oil, as stipulated through each

respective emirate’s long term strategic plans. The world’s economic

situation caused growth in trade to slow in 2009 as the total value

of the UAE’s trade reached AED 660.4 billion (USD 179.8 billion)

compared to AED 788.9 billion (USD 214.8 billion) in 2008,

representing a 16 percent drop in foreign trade. Trade with major

foreign partners slumped on the back of lower demand and

economic activity-in line with the economic slowdown.