Saudi imports from UAE drop 33% in July after new trade rules

DUBAI, Sept 22 (Reuters) - The value of Saudi Arabia's imports from the United Arab Emirates dropped by 33% month on month in July, official data showed on Wednesday, after the kingdom imposed new rules earlier in July on imports from other Gulf countries.

Imports from neighbouring UAE fell to 3.1 billion riyals ($827 million) in July from 4.6 billion riyals in June, according to data from the General Authority for Statistics. On an annual basis UAE imports declined by about 6%.

In July, Saudi Arabia amended its rules on imports from other Gulf Cooperation Council (GCC) countries to exclude goods made in free zones or using Israeli input from preferential tariff concessions, a move seen as a challenge the UAE' status as the region's trade and business hub.

Despite being close allies, Saudi Arabia and neighbouring UAE are competing to attract investors and businesses. Their national interests have increasingly diverged, including in their relations with Israel and Turkey.

Saudi Arabia's new trade rules excluded from the GCC tariff agreement goods made by companies with a workforce made up of less than 25% of local people - a problem for a country like UAE where the population is mostly made of foreigners.

It also said all goods made in free zones in the region will not be considered locally made - a blow to the UAE where free zones are a major driver of the economy.

The monthly drop in UAE import value was by far the sharpest decline this year, the statistics authority data showed.

The UAE slipped to third-main import country in July after China and the United States, while it was second in June.

The value of Saudi overall exports jumped 79.6% compared to July 2020 when international trade was impacted by the COVID-19 pandemic. The increase was mainly because of higher oil exports, which increased 112.1% year on year, the authority said.

($1 = 3.7504 riyals) (Reporting by Davide Barbuscia; Editing by Edmund Blair)