The European Union (EU) and the United Arab Emirates (UAE) have officially commenced negotiations for a bilateral free trade agreement. This initiative holds the potential to establish the first comprehensive EU trade deal in the Gulf region.
On 10 April, European Commission President Ursula von der Leyen and His Highness Sheikh Mohamed bin Zayed Al Nahyan, President of the UAE, reached an agreement to initiate these negotiations. Subsequently, on 28 May in Dubai, Maroš Šefčovič, the Commissioner for Trade and Economic Security, and UAE Minister Thani bin Ahmed Al Zeyoudi reaffirmed their commitment to achieving a commercially beneficial agreement. They outlined a roadmap for the discussions, with substantive work anticipated to begin in June.
The current trade relationship between the EU and the UAE is robust, with trade in goods valued at €55 billion, positioning the UAE as the EU’s 19th largest trading partner. Additionally, trade in services is estimated at €39 billion, making the UAE the 11th largest partner in this sector. The UAE serves as the foremost export destination for EU goods and services, as well as the primary foreign direct investment partner within the Gulf region. Notably, EU exports to the UAE have risen by 15% since the previous year and more than 48% since 2019. Moreover, the EU’s investments in the UAE have reached €186 billion.
UAE exports primarily consist of oil, gas, and base metals, while the EU’s major exports include motor vehicles, machinery, chemical products, foodstuffs, and an increasing presence of green technologies. It is worth noting that the UAE currently imposes the highest tariffs on tobacco, wine, spirits, and confectionery products.
The initial meetings of the negotiating teams will concentrate on reducing tariffs on goods and facilitating trade in services, digital trade, and investment flows. Furthermore, discussions are expected to explore avenues for enhancing trade in strategic sectors such as renewable energy, green hydrogen, and critical raw materials. These efforts align with the mutual objective of the EU and UAE to transform their economies toward greener and more digital futures, thereby strengthening overall economic security.
“The launch of EU-UAE trade talks is an important milestone. We will now work together to seal a deal that can benefit our peoples and businesses, bringing us closer together in a spirit of cooperation. Such an agreement would help strengthen ties between the EU and the Gulf region, offering new opportunities for EU businesses while bolstering our partnership in areas that matter to EU citizens like renewable energy and digital technologies,” Ursula von der Leyen, President of the European Commission, said.
There exists substantial potential for trade, investment, and cooperation between the EU and UAE across cutting-edge sectors, including renewable energy, digital technologies, artificial intelligence (AI), fintech, space technologies, advanced machinery, healthcare, logistics, infrastructural development, and sustainable food systems. Establishing a formal agreement with the UAE would further enhance the EU’s extensive network of trade arrangements, which currently includes 44 agreements with 76 countries, solidifying its status as the world’s largest network of trade agreements.
