Tawazun Agreement

In the event of a credit default at the end of the period in which an arms contractor is authorized to obtain credits, an arms contractor may choose to pay 8.5% of the deficit or submerss the deficit by amending an existing endorsement (or signing a new agreement) to carry out another project. In the event of a credit default, DC (i) can pay 8.5% of the deficit; (ii) transferring the defect to another endorsement; or (iii) to carry out a new project (i.e. a new endorsement). Tawazun`s objective is to ensure that defence-related purchases in the United Arab Emirates lead to DCs` industrial participation in the United Arab Emirates in order to generate high economic, social and strategic benefits for the United Arab Emirates. A DC must enter into a PET agreement with Tawazun (“offset agreement”) which includes compensation obligations equal to 60% of the value of the supply contract (“offset bonds”) as a precondition for the conclusion of a supply contract with the UAE government (directly or indirectly) on a certain threshold. DCs must meet these clearing obligations by generating offset credits through projects approved by Tawazun (“projects”). Activated terms that are not defined here must have the meanings defined in the new United Arab Emirates (www.tawazun.ae) compensation guidelines. DCs must participate in a PET agreement (TEPA) with the TCE if the supply agreement with the relevant government authority exceeds the threshold of 36.73 million AED (approximately 9 million euros). For the calculation of the threshold, the value of the supply contracts is added to other existing obligations of the Dc and/or its parent company. According to Business Monitor International (BMI), the United Arab Emirates (United Arab Emirates) is one of the 15 largest defence spending in the world. Defence spending as a percentage of GDP has remained relatively high in recent years in response to the rise of Islamist extremism in the region, lingering tensions with Iran and the united Arab Emirates` participation in the military efforts of the Saudi-led coalition in Yemen. While the UAE government has continued to provide high-priority defense items and services, it has focused recent purchases on urgent operational requirements in support of Yemen operations, and has delayed procurement of other lower-priority defense items. Precise information on UAE defence spending has been very scarce since 2016.

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