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UAE seeks bilateral EU trade talks due to impasse in GCC negotiations

March 19, 2024 at 2:06 pm

Emirati flag fluttering above Dubai’s marina with the Burj Al Arab landmark hotel in the background [KARIM SAHIB/AFP via Getty Images]

The United Arab Emirates is quietly urging the European Union to start talks on a trade pact separate from an Arab bloc, several sources familiar with the matter have claimed. The Gulf state seeks closer political and economic ties with Europe, Reuters has reported.

According to the sources, Abu Dhabi is frustrated at long-stalled trade negotiations between the EU and the Gulf Cooperation Council (GCC), the members of which are the UAE, Saudi Arabia, Qatar, Kuwait, Oman and Bahrain.

The UAE has long advocated deeper EU involvement in the Gulf region. It is the Arab world’s second largest economy after Saudi Arabia and a major Middle East trade partner for many other nations. Moreover, its sovereign wealth funds rank among the world’s most active.

However, a UAE official denied that bilateral talks with the EU have been proposed, calling the claim “baseless and unfounded”. Such a move might strain relations with the UAE’s GCC partners. Three of the sources pointed out that the UAE had not yet submitted a formal request to the EU and it was unclear whether the GCC was aware that Abu Dhabi had sought to initiate a bilateral process.

Officially, the UAE continues to support the GCC-EU process, they said, although it was pushing privately for its own talks. However, the sources added that UAE officials regularly raise the idea of a bilateral trade process in meetings with counterparts from the EU and its 27 members, and had done so again in recent weeks. Emirati officials had brought up the matter in almost every meeting across many levels, said the sources, who spoke on condition of anonymity.

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The EU prefers a deal with the GCC, but some EU states have voiced support for a UAE deal given the lack of GCC progress, the sources pointed out. Failing any significant momentum by the summer, the EU could consider a bilateral process with the UAE.

The UAE official said that the GCC and EU had recently met to agree on a timeline for technical discussions. “The UAE supports open, rules-based trade, and will always prioritise working through the GCC to support our collective regional and international trade ambitions.”

The GCC headquarters is in Riyadh. The bloc is a longstanding alliance that seeks to encourage political and economic cooperation between the six Gulf states. Its secretariat did not respond to Reuters’ emailed requests for comment. A European Commission spokesperson, though, said that expert-level discussions with the GCC were continuing and that the EU had also held talks with the UAE to enhance trade and investment relations, without saying whether they had discussed a bilateral process.

The EU would require a new mandate from its member states to start bilateral talks with the UAE, a process that the sources said could take several months. Abu Dhabi does not want to engage in simultaneous bilateral and bloc-to-bloc negotiations, however, meaning that the EU negotiates either with the UAE or the GCC.

The EU and energy-rich GCC started trade talks in 1990 that would give companies in the European bloc better access to what is today the EU’s sixth biggest export market. However, the talks were formally suspended in 2008.

Saudi Arabia, the world’s largest oil exporter and the Arab world’s biggest economy, is undergoing an ambitious economic transformation that has created huge business opportunities. A broader deal with the GCC could further open EU member states to investments from Gulf sovereign wealth funds, major cross-sector investors who take a decades-long outlook, but the GCC has signed very few trade deals. It finalised a pact with South Korea last year, 16 years after talks started, and entered into negotiations with the UK in 2022.

The UAE has also urged Britain to engage instead in a bilateral process, two other sources said, declining to be identified. Abu Dhabi has signed several bilateral trade agreements since 2022, including with India and Indonesia, and is in talks with other countries in Africa, Latin America, Asia and elsewhere.

Those deals, known as comprehensive economic partnership agreements, often covered investment, services and other areas, and, in the case of India, were finalised within months. However, EU negotiations with the UAE are likely to take several years and Brussels would want human and labour rights provisions in any final agreement, the five sources noted.

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