The EU and UAE CEPA Negotiations: Gateway to Deeper Gulf-Europe Integration

The EU and UAE launched CEPA negotiations in mid-2025, aiming to deepen trade and investment ties across key strategic sectors. This bilateral approach marks a pragmatic shift in EU-Gulf relations, unlocking new market and cooperation opportunities.

Between April and June 2025, the European Union and the United Arab Emirates formally launched negotiations on a Comprehensive Economic Partnership Agreement (CEPA).

The initiative was formally announced on April 10, 2025, following a meeting between European Commission President Ursula von der Leyen and UAE President Sheikh Mohammed bin Zayed Al Nahyan, who affirmed their mutual commitment to advancing economic cooperation.

Predatory work for the talks began on May 28, setting the groundwork for what both sides have described as strategic and forward-looking agreement. President von der Leyen hailed the move as “an important milestone” bringing the two regions closer together in a spirit of cooperation, highlighting both the geopolitical and commercial weight of this initiative.

This article analyzes the trajectory of these negotiations, revisits the current state of EU-UAE economic ties, and evaluates the broader strategic implications, particularly from the perspective of the UAE, which continues to position itself as a global trade and investment hub.

Launch and negotiations framework

Timeline and formalities

The path toward a CEPA between the EU and UAE has progressed rapidly in recent months, marked by key diplomatic engagements that have laid the foundation for formal negotiations. Notable developments include:

• April 10, 2025: Leaders agree to open talks for a free trade agreement.
• May 28, 2025: EU Commissioner Maros Sefcovic and UAE Minister Thani Al Zeyoudi met in Dubai, outlining a roadmap and initiating substantive negotiations in June.

These milestones not only demonstrate a growing convergence of interests but also reflect the strategic importance both parties assign to a deeper and mor structural economic partnership.

Scope of talks

They aim to reduce tariffs on goods and open markets in services, digital trade, and investment. Racially, negotiations target cooperation in strategic sectors: renewable energy, green hydrogen, critical raw materials, AI, advanced manufacturing, logistics, and healthcare.

Current trade and investment landscape

Economic ties between the EU and UAE are already substantial. In 2024, bilateral trade in goods hit US$62 billion, ranking the UAE as the EU’s largest goods partner, while trade in services reached US$44 billion, making in the 11th largest services trading partner. Non-oil trade surged to US$67.6 billion, reflecting an annual growth of 3.6 percent and accounting for 8.3 percent of the UAE’s non-oil trade.

From the EU’s perspective, the UAE is the primary export destination in the Gulf and the region’s largest foreign direct investment (FDI) partner. Export volumes from Europe to the Emirates have climbed by 15 percent since the previous year and by nearly 48 percent since 2019. Meanwhile, the EU remains the UAE’s second-largest  non-GCC trade partner.

Investment flows reinforce economic independence. EU investment stocks in the UAE amounts to roughly US$212 billion, marking the region’s top FDI destination.

In turn, UAE capital has financed high-profile European projects in artificial intelligence, renewables, logistics, and infrastructure. For example, Masdar, the UAE’s leading renewable energy company owned by Mubadala and ADNOC, has strategically invested in Europe’s offshore wind sector. In January 2017, Masdar acquired a 25 percent Stake in Hywind Scotland, the world’s first floating offshore wind farm, developed by Equinor off the coast of Peterhead in northeastern Scotland.

Implications and potential outcomes

For the UAE

A trade deal with the EU is poised to strengthen market access across key sectors, offering a pathway for Emirati investors to fully integrate with European markets. For instance, DP World, the Dubai-based logistics giant, has committed US$2.5 billion in 2025 to expand its logistics infrastructure in Europe, including aUS$1.35 billion investment in the London Gateway Terminal with two new shipping berths and a second rail hub. This offers the UAE a gateway into British and broader EU supply systems.

By removing tariffs and easing regulatory barriers in strategic fields- technology, green energy, and digital services- the deal helps drive the UAE’s diversification goals. Experts forecast that such agreements could boost the UAE economy, generating thousands of jobs while reducing dependency on oil revenues.

For the EU

From the European vantage point, a deal ensures a sustained supply of green energy that is vital for achieving its climate and industrial goals. With the UAE possessing one of the world’s most developed hydrogen value chains, stable imports of green hydrogen and other critical raw materials become more feasible. Fo example, EU initiatives such as the European Hydrogen Bank Aim to bolster import mechanism for renewable hydrogen from trusted partners, including UAE producers.

Beyond energy, European companies spanning from precision manufacturing and AI developers to advanced healthcare and logistics firms could benefit from expanded market access leveraging Tarif-free or streamlined access to a wealthy Gulf consumer base. The agreement also opens Europe’s market for advanced goods and services, spanning AI, healthcare, renewable technology, and high-tech manufacturing, offering EU firms a gateway to Gulf markets through reduced tariffs And more accessible delivery channels.

Wider potential for EU-UAE cooperation

The launch of a bilateral EU-UAE Comprehensive Economic Partnership Agreement (CEPA) marks a subtle yet significant shift in EU-GCC trade dynamics. Single bloc-wide trade negotiations first began in 1990, efforts stalled and were officially suspended in 2008, leaving a two-decade impasse in comprehensive negotiations.

Against this backdrop, relying on a state-level deal with the UAE represents a pragmatic alternative, one capable of speeding up economic integration and producing tangible outcomes faster than a grand treaty with the entire Gulf Cooperation Council. As UAE Minister Thani Al Zeyoudi emphasised on May 28, 2025, “we’re not seeing [the bilateral talks] as a hurdle [to an EU–GCC deal]…usually the blocs are much slower than the bilateral, and that’s why we’re starting here.”

This approach aligns with a broader pattern of Emirati trade policy. In 2024, Abu Dhabi quietly urged Brussels for a separate negotiation track, signalling a shift toward more efficient, flexible deals after years of GCC-level gridlock.

Success with the UAE could prompt similar agreements with other GCC members, like Saudi Arabia and Qatar, bringing progress to other relationships. Given that prior GCC–EU talks touched on multiple complex issues but never culminated in agreement, a sequence of bilateral deals might be the breakthrough mechanism the EU and the Gulf need.

Moreover, such a pivot underscores a strategic reorientation in Europe’s Gulf policy. Instead of enforcing a one-size-fits-all framework, the EU demonstrates a newfound flexibility, selecting partners based on readiness and mutual interest rather than relying on a political bloc to speak with one voice.

Lastly, this model may enhance European leverage. As global trade becomes more fragmented in response to geopolitical and protectionist pressures, the EU can nurture trusted bilateral economic alliances, each with its own incentives, timelines, and sectoral priorities. The UAE-EU talks, unfolding in as little as three to six months, showcase this potential shift from high-level federal accords to nimble, goal-directed compacts.

Benefits for investors and businesses 

The EU-UAE Comprehensive Economic Partnership Agreement brings substantial advantages for businesses and investors across both regions. This includes reduced costs, greater access to markets, and opportunities in emerging industries.

Enhanced market access

The CEPA aims to lower or eliminate tariffs on a wide range of goods and services, reducing operational costs and improving product competitiveness. This is especially beneficial for exporters and importers dealing with high-volume trade. For example, in a similar CEPA signed between the UAE and Australia, mining exporters were estimated to save around US$1 billion due to tariff reductions alone.
In the EU-UAE context, such tariff relief could be especially impactful in high-value sectors like pharmaceuticals, automotive, industrial machinery, and luxury goods.

Increased investment opportunities in emerging sectors 

The agreement prioritizes strategic industries, such as green hydrogen, AI, advanced manufacturing, and healthcare, making cross-border investment more attractive and secure. Masdar’s  25 percent stake in Hywind Scotland, the world’s first floating offshore wind farm, could incentivize more such high-tech, low-carbon investments.

Furthermore, according to Hawksford, CEPA-type agreements facilitate joint ventures and market entry into high-potential sectors by clarifying legal frameworks and improving investor protections. Reduced lawyer fees and barriers to entry allow enables investors to feel greater confidence when deciding where to invest.

Conclusion 

In summary, a strengthened EU-UAE trade pact offers a strategic win for both parties and the wider Gulf region. The UAE gains deeper market integration and diversification; the EU secures critical green resources and market expansion; and both sides establish a template for future Gulf–Europe cooperation, coupling economic pragmatism with long-term planning.

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