UAE to Sign Free Trade Agreement with European Union
Another country in the Mena region is set to sign a free trade agreement with the European Union (EU) soon. This time, it's the United Arab Emirates (UAE). The talks, which began in May 2025, are progressing rapidly and focus on trade in goods and services, investments, and deepening cooperation in strategic sectors, including renewable energy, green hydrogen, and critical raw materials.
EU's Strategic Interests
The EU is seeking to deepen its trade and investment relationships with the Gulf region, and the proposed bilateral agreement could serve as a cornerstone for a future regional partnership. An agreement with the UAE would add to the EU's network of 44 trade agreements with 76 countries, which is the largest global network of trade agreements.
Benefits for the UAE
For the UAE, the EU is its second-largest trading partner, accounting for 8.3% of its non-oil trade, worth $67 billion in 2024. A trade agreement would give the country access to 450 million consumers and numerous investment opportunities. Despite the ongoing impasse in negotiations between the single market and the Gulf Cooperation Council (GCC), there appears to be a willingness to move forward. Economic diversification is vital for the UAE, which has already signed 27 free trade agreements.
Regional Implications
The stakes are not just national, but regional. Other GCC countries may be encouraged to negotiate with the EU if tangible economic benefits are observed following the agreement with the UAE. At the same time, the absence of positive regional spillovers could exacerbate the risk of fragmentation of each country's trade policies.
