The UAE and Japan have finalized a Comprehensive Economic Partnership Agreement (CEPA), marking the first such deal between Japan and an Arab country to deepen trade and investment ties.

The pact highlights cooperation in advanced technology, logistics, cybersecurity, healthcare, education, R&D, innovation, smart mobility, energy security, financial services, and digital transformation.

Under the CEPA, tariffs on major finished vehicles from Japan will be eliminated within seven years, with broader automotive parts and components duties phased out within ten years.

The agreement is designed to expand Japanese exports to the UAE, particularly in automobiles and auto parts which currently account for a large share of bilateral trade.

The CEPA is part of Japan’s broader strategy to strengthen trade ties in the Middle East and support cross-border investment, technology transfer, and sustainable development.

Despite the deal, the UAE will maintain tariffs on certain imports like rice, dairy, and beef to protect domestic farming interests.

The two countries will also cooperate on shipping safety in the Strait of Hormuz and protect Japanese nationals amid regional tensions linked to Iran and energy facilities.

In recent trade momentum, non-oil UAE foreign trade surpassed $1 trillion in 2025, with non-oil exports rising about 45% to Dh813 billion, signaling Cepa-driven growth.

Investors remain watchful as global markets contend with volatile energy and monetary conditions, with equities facing risk-off pressures and oil prices rising on supply concerns.

Japan condemned Iran’s retaliatory attacks on civilians and energy facilities near the Strait of Hormuz, underscoring regional security implications for trade.