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Legal Framework of the UAE-Polish Bilateral Relations

Guiding Principle

The United Arab Emirates and the Republic of Poland support further expansion of bilateral relations. The article focuses mainly on the recent growth in trade and economic cooperation, connected with new legislation and developments in science diplomacy from the end of 2006 through mid-year 2012.

A. Facts

The history of relations between Poland and the UAE dates back to the year 1988 when Poland expressed desire to tighten bilateral relations with the UAE as the key-partner in the Middle East Region. Following the opening of the Polish Trade Office in Dubai in 1988, the Embassy of the Republic of Poland in Abu Dhabi was opened in 1991.

The UAE opened its Embassy in Poland in May 2009, when H.E. Mr. Asim Mirza Al Rahmah presented his letter of credence to the late President of the Republic of Poland H.E. Mr. Lech Kaczyński, which constituted a very important step in strengthening bilateral relations and cooperation between the two countries. Opening of the Embassy by the UAE reflected in the intensification of cooperation between the countries, mainly in the area of trade and economy.

Considering the total trade turnover rate, the UAE ranked among the major trade partners of Poland in the Middle East and it is hoped that Polish-Emirati trade relations will further expand. Just in 2010 the UAE were the third largest trading partner of the Republic of Poland in the Middle East, after Israel and the Kingdom of Saudi Arabia, and among the countries united in the Arab League- the second one, after the KSA.

Polish trade turnover with the UAE in 2006-2010 (in millions of USD)

Source: GUS (CSO- Central Statistics Office Poland)

The main Polish goods exported to the UAE in the year of 2009 were: mechanical and electrical equipment (42%), transportation (17%) and food products (groceries, tobacco, sugar), metallurgy intermediates and measuring equipment.

In 2010, in the Polish exports prevailed:

 

2006

2007

2008

2009

2010

Trade Turnover Dynamics 2009/2010

Export

218.0

302.1

763.5

476.1

244.9

53.5

Import

78.6

119.2

100.3

44.1

69.7

166.0

Turnover

296.6

421.4

863.8

520.2

314.6

62.9

Balance

139.4

182.9

663.2

432.0

175.6

  • Devices – mechanical and electrical (equipment for telephone systems, cable, carbon electrodes, lamps) – 33.7 % of our exports to the UAE;
  • Base metals (razor blades, steel products) – the share of 16.0 %;
  • Groceries (milk, tobacco, sugar) – 8.2 %;
  • Chemical products (mainly cosmetics) – 7.8 %;
  • Miscellaneous items (mainly furniture, bedsteads and mattresses) – 7.2 %;
  • Means of transport (vessels, spare parts, transport vehicles) – 6.6 %.

The most prominent exporters are Komsa Poland Sp. z oo, Spinox Uno Poland Sp. z oo, Gdansk Shipyard “Repair” SA, Procter & Gamble Sp. z oo, Swedwood Poland Sp. z oo, Stalprodukt SA, Wilk Elektronik SA, Solaris Bus & Coach SA, SGL Carbon Poland SA.

Imports from the UAE in 2010 (as in 2009) dominated:

  • Aluminum and articles of base metals – 65.2 % share of total imports;
  • Plastic products (films, tapes, sheets) – share of 21.8 %;
  • Textile materials and products – 6.9 %.

The largest Polish importers are ATS Stahlschmidt & Maiworm Ltd., Ronal Poland Sp. z oo, Sapa Aluminium Ltd., Alupol Packaging Sp. z oo, Bon Prix Sp. z oo, Total Pack Sp. z oo, Pragma Trade Sp. z oo, Praxis SA.

B. International, Bilateral Agreements Related to the Case

I. The European Union Cooperation Agreement between the EU and the GCC Countries to which Poland is a State Party

The European Union – UAE mutual relations, including economic and political sphere are governed by the provisions of the Cooperation Agreement between the EU and the GCC countries (including the UAE) – signed in 1989.

II. Bilateral Cooperation Agreements Regulating Relations between Poland and the UAE

The most important agreements between Poland and the UAE are:

  • The Agreement on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital, 1993;
  • The Agreement on Mutual Promotion and Protection of Investments, 1993;
  • The Agreement on Civil Air Transport, 1994;
  • The Agreement on Cooperation in the Fields of Information, Culture and Science, 1994;
  • Memorandum of Understanding concerning bilateral cooperation between the UAE Federation of Chambers of Commerce and Industry and the Polish Chamber of Commerce, 2009;
  • Memorandum of Understanding between the Anti-Money Laundering Unit of the UAE and General Inspector of Financial Information of the Republic of Poland concerning co-operation in the exchange of financial information related to money-laundering and terrorist financing; 2011;
  • The Agreement for Mutual Exemption of Pre-visa Requirement for Diplomats between the UAE and Poland (in July 2007, the Polish side proposed the mutual abolition of visa requirements for holders of diplomatic passports), 2012;
  • The Agreement for Economic Cooperation between the UAE and Poland, 2012.

UAE Vice President and Prime Minister and Ruler of Dubai His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Deputy Prime Minister and Minister of Interior Lt. General HH Sheikh Saif Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs HH Sheikh Mansour Bin Zayed Al Nahyan, Minister of Higher Education and Scientific Research Sheikh Nahyan Bin Mubarak Al Nahyan and Prime Minister of Poland Donald Tusk signed in April 2012 an agreement for economic cooperation between UAE and Poland. The agreement is to give a boost to economic cooperation in all areas and sectors of the economy. It applies in particular to such sectors as manufacturing, investment, innovation, trade, fuels, small and medium-sized enterprises, or financing of business projects.

The clauses of the agreement establish the basis for cooperation on projects of mutual interest to both countries, cooperation in the field of certification and standardisation, development of consulting, legal, banking and engineering services.

The agreement provides for initiating and promoting various forms of contacts between Poland and the UAE as well as a range of forms of practical cooperation. In addition, the agreement outlines the opportunity to exchange experts and technical personnel, scientific cooperation and exchange of scientific personnel, training, participation in fairs and exhibitions, business missions, collaboration in promotional events and other projects related to economic and tourism cooperation.

The agreement deals with the exchange of information on legislation, encouraging business networking and the establishment of representative offices, branches or agencies promoting the other State’s economic activities. It also addresses the search for industrial investment opportunities and support for cooperation between small and medium-sized enterprises.

Moreover, the agreement has established a Joint Economic Committee whose tasks will include analysing how the agreement has been performed, assessing mutual economic cooperation, submitting proposals and identifying problems.

C. Capital Investment and Cooperation

I. Preliminaries

The total value of the direct Polish investment in the UAE is estimated at USD 150 million. Polish companies operate mainly within the oil and gas industry, construction (Librus), installation (Sergas), surveying services, air conditioning (VTS Clima), furniture (MDD), or metal containers (Cracow company Can-Pack in 2005, built in the UAE Arab label cans Can. Co.).

The most spectacular polish investments in the UAE is a property development project in the city of Dubai, founded by Kulczyk Investment House; the fluoride factory in Abu Dhabi (Gulf Fluor).

The Emirates originated investments in Poland are mainly of the so-called wallet character. In addition, in 2007 Dubai development company – Limitless pursued the initiative of buying the building sites in Poland (main cities like Wroclaw, Poznan, Masuria region). Furthermore in 2008 the company entered into an agreement with the city of Chrzanów to build a greater residential area. Abu Dhabi based, industrial holding company Al Masaood invested in industrial factory bearings and mechanical workshops in Wroclaw. In Gdansk, holding representatives from the Royal Group of Abu Dhabi visited main polish dockyards, revealing interest in the investment proposals coming from the polish side.

In 2009, as in previous years, banks and companies from the UAE invested mainly into Polish government bonds, using, however, their subsidiaries or agents acting within European Union borders.

II. Access to the UAE Market

Polish export of goods and services does not meet the specific administrative barriers to access the emirates market. Uniform import tariff rate of 5 % ad valorem, with approximately 400 items (consisting mainly of basic food and medicine) is free of customs duty. Exempted from customs duties is also import for special economic free zones.

The most important non-tariff barrier and obstacle is the requirement of a certificate of ritual slaughter “halal” for export of meat products. This problem seems to be close to a solution, therefore, the Muslim Religious Union in Poland is to receive the power to issue the certificates of “halal” recognized in the Emirates. The diverse group of consumers in the UAE alone, and above all a very wide range of goods re-exported to other countries in the region create favourable conditions for export expansion. An important incentive seems to be the fact that in general in this country continues to apply a zero rate of corporate tax and personal income.

In addition to the key to the economy of the UAE oil and gas sector, prospective in terms of bilateral trade and economic cooperation are:

  • foreign investments in Poland by companies and specialized financial institutions revolving investment fund of the Gulf countries;
  • supply of equipment and materials for the development of infrastructure;
  • food processing and food supplies;
  • the defense industry;
  • health services and rehabilitation (spa);
  • higher education (offer of study at Polish universities).

A chance for Polish companies (manufacturing and trading) may be operating in a number of UAE free zones (UAE are classified as the third- after Hong Kong and Singapore- the largest re-export center in the world).

D. Promoting the Development of Bilateral Polish- UAE Economic Cooperation

Diversity and prestige exhibitions organized in the UAE will provide additional opportunities for cooperation. There has been a regular participation from the side of the Polish businessmen in various thematic exhibitions in the UAE.

In March 2007 the polish Minister of Economy, G. Wozniak visited the UAE, which included a meeting with the UAE Minister of Economy, Sheikh L. Al-Qasimi. At the end of March/April 2007 a delegation of Polish entrepreneurs with the representatives of the Polish Chamber of Commerce (PCC) signed a cooperation agreement with the Chamber of Commerce and Industry in Dubai.

During the Polish Business Days in November 2007, the Polish National Exhibition and the Polish-Arab Economic Forum under the patronage of the Ministers of Economy of Poland and the UAE was organised in the premises of Dubai World Trade Center.

Since 2006, in Abu Dhabi the Polish Business Group leads the development of Polish-Emirates economic and trade relations. This association-operating under the auspices of the Chamber of Commerce and Industry Abu Dhabi – Polish business associates employed in local companies and representative offices of foreign companies, Polish exporters, Emirati importers of Polish goods, etc.

Among the most important official meetings in the last period, a visit to the UAE of the Ministry of Sport and Tourism of Poland delegation (February / March 2009), Minister of State Treasury of Poland (March 2009 and June 2010) and Under-Secretary of State at the Ministry of Economy M. Korolec (January 2010, April 2011) should be mentioned, and also a visit to Poland of the Minister of Economy of the United Arab Emirates, who was accompanied by a group of representatives of the major emirates companies (January 2010).

The United Arab Emirates Federation of Chambers of Commerce and Industry first mission to Poland took place on 28-31 October 2009. A delegation of the UAE Federation of Chambers of Commerce and Industry headed by H.E. Eng Salah Salem bin Omeir Al Shamsi paid a three day visit to Poland upon the invitation from the Polish Chamber of Commerce. During the visit, the UAE Federation of Chambers of Commerce and Industry and the Polish Chamber of Commerce signed the Memorandum of Understanding concerning bilateral cooperation. The delegation was also received by the Deputy Prime Minister and the Minister of Economy, Mr. Waldemar Pawlak, by the Minister of Sports and Tourism, Mr. Adam Giersz and Minister of Treasury, Mr. Aleksander Grad. At the Polish Chambers of Commerce, the delegation attended the Business Forum Poland – UAE, where both sides discussed over the bilateral economic relations between Poland and the UAE and the ways of its extension. The UAE delegation also met Polish businessmen who attended in a large number of networking session at the Polish Chamber of Commerce.

A Polish economic and investment mission headed by Undersecretary of State in the Ministry of Foreign Affairs, Mrs. Beata Stelmach followed an invitation of the UAE’s Minister of Foreign Affairs, Sheikh Abdullah Bin Zayed Al Nahhan and visited Dubai and Abu Dhabi on 2-3 November 2011. With the delegation, the representative of the Ministry of Treasury, Undersecretary of State Mr. Krzysztof Walenczak joined the visit.

The Ministry of Infrastructure of the Republic of Poland, along with the Polish National Pavilion’s Participants were organizing the Polish National Pavilion at ITU Telecom World 2011. The Ministry of Infrastructure along with the Polish National Pavilion’s Participants (Telekomunikacja Polska S.A., Netia S.A., Comarch S.A., Cyfrowy Polsat S.A., P4 Sp. z o.o., Pomorska Specjalna Strefa Ekonomiczna sp. z o.o., Oxycom S.A.) were dedicated to present the Polish achievements within the establishment and development of information society.

Recently, Donald Tusk, the Prime Minister of the Republic of Poland, paid an official two-day visit to the UAE on the 21st – 23rd of April 2012. The Prime Minister was accompanied by high-ranking official and commercial delegation aiming to tighten relations between the two countries and to expand in particular trade and investment. The Polish side expected to attract Emirati investments to Poland and at the same time to increase Polish exports to the Emirati markets. The visit resulted in signing an agreement on economic cooperation and mutual exemption of visas for diplomats between the UAE and Poland. Following the delegation, the UAE Minister of Foreign Affairs, H.H. Sheikh Abdullah bin Zayed Al Nahyan made a visit to Poland, which took place on the 18th of May 2011.

H.E. Eng. Sultan Bin Saeed Al Mansoori, UAE Minister of Economy met Polish Deputy Prime Minister and Minister of Economy H.E. Mr. Waldemar Pawlak on 21 June 2012. The meeting was also attended by H.E. Mr. Asim Mirza Al Rahmah Ambassador of the UAE to Poland and a number of Polish representatives. The principal aim of the meeting was to discuss the ways of strengthening bilateral relations between the countries especially in the area of economic cooperation and investment opportunities. Both parties agreed upon the implementation of an agreement concerning economic cooperation which had been signed by the Polish Prime Minister, H.E. Mr. Donald Tusk during his visit to the UAE in April 2012.

October, 2012 Catherine Jaskiewicz
Meyer-Reumann & Partners, Oman Office
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