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Israel said it had signed a free trade agreement with the United Arab Emirates, eliminating customs fees on most goods in a step it said would boost transactions by hundreds of millions of dollars. 

The formal signing of the agreement comes less than two years after Israel and the Gulf Arab state forged full diplomatic ties. It was negotiated earlier this year. 

The pact is the fastest free trade agreement to be signed in Israeli history, Prime Minister Naftali Bennett said in a tweet, describing it as the first of its scope to be signed between his country and an Arab nation. 

The UAE is working to close more trade deals as it seeks to deepen its ties with fast-growing economies and draw billions of dollars in foreign investment, a UAE official told Bloomberg earlier this year. It signed a similar agreement with India in February and has started talks with former regional foe Turkey on the topic. 

The deal with Israel, which covers items ranging from fertilizers to pharmaceuticals, will eliminate customs fees on 96% of the items traded between the two countries, Israel’s Economy Ministry said. 

“On the export side, the agreement is expected to give Israeli companies a competitive advantage and facilitate the activity of businesspeople in the Emirati market” the ministry said. “The agreement will help reduce the cost of living by lowering import costs to Israel.”

The accord also aims to promote trade in e-commerce and computing. It includes agreements on the protection of intellectual property, patents and copyrights.

The pact grants mutual access to the government procurement market, and in some tenders, suppliers from both countries will be able to participate on equal terms to those awarded to local suppliers, the Israeli Economy Ministry said.  

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