UAE to begin talks with EU over landmark trade deal

Agreement would represent major economic boost for both sides

President Sheikh Mohamed has said he has high hopes for trade talks with the EU. Ryan Carter / UAE Presidential Court

The UAE and the EU have agreed to begin talks on a potential trade deal, in what would be a landmark agreement for the two sides.

UAE President Sheikh Mohamed announced the talks on Thursday evening.

"The UAE shares strong and long-standing ties with the European Union and its member states, and today we agreed to launch negotiations towards a Comprehensive Economic Partnership Agreement with the EU," Sheikh Mohamed wrote on X.

"Through this agreement, we aim to deepen bilateral relations and promote economic growth for the benefit of our countries and peoples."

The talks come at a time of uncertainty for global trade, sparked by US President Donald Trump's tariffs on imports from around the world, in a move that was paused on Wednesday night.

Since the Covid-19 pandemic, the UAE has struck a series of deals, called Cepas, to boost trade for the benefit of governments, businesses and consumers. A deal with the EU would be the largest since the UAE signed a Cepa with India in February 2022.

We aim to deepen bilateral relations and promote economic growth for the benefit of our countries and peoples

President Sheikh Mohamed

In a statement, the European Commission said President Ursula von der Leyen spoke to Sheikh Mohamed by phone.

"This marks a positive step forward in EU-UAE relations and, alongside the negotiation of broader strategic partnership agreements, can serve as a catalyst for stronger ties between the EU and the Gulf Co-operation Council," the statement said.

"President von der Leyen emphasised the European Union's strong track record of delivering high-standard trade agreements and building partnerships based on open trade and mutual benefit. In that spirit, the upcoming negotiations will focus on liberalising trade in goods, services and investment, while deepening co-operation in strategic sectors such as renewable energy, green hydrogen and critical raw materials."

EU trade commissioner Maros Sefcovic is to travel to the UAE to take the talks forward, the EU statement said. "Delivering a modern and ambitious agreement will not only reinforce EU-UAE relations, but also contribute to broader regional prosperity," it added.

The EU is the UAE’s second-largest global trade partner, sharing $67.6 billion in non-oil trade in 2024. That was up 3.6 per cent on the previous year and 18.1 per cent higher than in 2022, according to a fact sheet from the UAE's Ministry of Foreign Affairs. The EU now accounts for 8.3 per cent of the UAE’s total non-oil foreign trade.

Background to talks

EU Commission President Ursula von der Leyen. EPA

Before the announcement, technical talks had been going on for almost a year, The National understands. The UAE aims for highly liberalised agreements in trade, services and investments that would focus on the digital and energy sectors. Talks on free trade agreements usually take between three and five years, but the UAE hopes that they could be concluded in under one year.

The UAE started bilateral engagement with Brussels after EU-GCC talks, which started in 1990, were formally suspended in 2008. The GCC has signed very few trade deals. It finalised a pact with South Korea in 2023, 16 years after negotiations started. The UAE-EU negotiations are viewed as a way to expedite GCC-EU talks.

“The decision to launch the FTA talks is another concrete step in closer EU-GCC ties overall in which we have seen institutional ties increase substantially in recent years,” said Christian Koch, director of the Gulf Research Centre Foundation in Brussels.

“The intention now has to be to use this decision to also advance wider GCC-EU FTA talks where little progress has been achieved. Thus, bilateral talks should not be seen as contradictory to the broader multilateral FTA goal but as a stepping stone to that goal,” Mr Koch told The National.

The deals so far

The UAE has Cepa deals with 21 countries. The most recent was with the Republic of the Congo this week.

Six of these deals – with India, Indonesia, Israel, Turkey, Cambodia and Georgia – are currently implemented and operational, according to data provided by the Ministry of Economy. These are already yielding benefits.

Agreements with the remaining 14 countries – Jordan, Australia, South Korea, Malaysia, New Zealand, Chile, Colombia, Costa Rica, Kenya, Serbia, Ukraine, Vietnam, Mauritius and Central African Republic – are awaiting ratification.

Trade deals are expected to add at least 2.6 per cent to the UAE's economy by 2030, creating thousands of jobs and supporting its vision to move away from income from oil and gas. In 2024, the UAE's non-oil foreign trade hit a record Dh3 trillion ($816.7 billion), up 14.6 per cent year on year, as the Emirates continues to diversify its economy and forges closer trade ties with countries around the globe.

Speaking to The National at the World Economic Forum in Davos in January, officials said trade deals could protect the Emirati economy from potential trade wars and ensure uninterrupted access to global markets.

“Whatever happens in the world will affect us if we want to be a global logistics hub … the name of the game is diversification," said Mohammed Alhawi, undersecretary at the UAE’s Ministry of Investment.

Read more: The UAE’s 20 Comprehensive Economic Partnership Agreements explained