CEPA serves to build the UAE’s international position and strengthen its status as a regional middle economic power.
Over the years, the Arab Gulf states have demonstrated a commendable commitment to economic diversification as a strategic approach to reducing reliance on hydrocarbon revenues. The prices on the global oil market tend to fluctuate, and this affects both producers and consumers worldwide. National security, particularly in the economic field, is of the utmost importance for the sheikhdoms and their futuristic visions that are to be completed in the long-term perspective.
The UAE is actively expanding its partnerships and enhancing connectivity with countries worldwide. Abu Dhabi marks its presence in various initiatives, such as the India-Middle East Economic Corridor and membership in the informal grouping BRICS. In line with the UAE’s strategy, We the UAE 2031, the Emirates strive to become a “leading economic power.” Achieving this goal also requires cooperation, which is currently being developed on a large scale through the conclusion of Comprehensive Economic Partnership Agreements (CEPA). Currently, there are 28 agreements, of which a few have already entered into force, and more are pending. This makes the UAE present in Africa, South America, Asia, Europe, and Australia. A separate free trade agreement that is being discussed with the European Union aims to reduce “tariffs on goods, facilitate services, digital trade, and investment flows”. Yet the results of negotiations that were launched on May 28, 2025, between the parties remain to be seen; however, they might unlock new opportunities for the UAE in the European market and vice versa. It is important to explore how this developing strategy positions the UAE on a regional and global scale and how these agreements impact its relations with the West.
Deepening Cooperation within the Comprehensive Economic Partnership Agreements Framework
The business environment in the UAE is favorable, as reflected in Abu Dhabi’s strong position in international rankings. According to the Doing Business (2020) report, the UAE has been ranked 16th globally and first in the Middle East. The World Investment Report 2024 ranks the UAE second globally in terms of FDI inflows. Along with a high level of political stability and business-friendly legal regulations, the Emirates market represents a safe haven for potential investors.
The UAE government has introduced the Comprehensive Economic Partnership Agreements as a means to deepen economic relations with specific states, with the aim of diversifying global partnerships, enhancing competitiveness, and exploring various opportunities in strategic sectors. According to the brief explanation of CEPA, it is a “broad, bilateral economic agreement that goes beyond traditional trade deals”. Following the list of opportunities enlisted by the UAE’s Ministry of Economy & Tourism, parties to the agreement can benefit from “enhanced market access, lower or eliminated tariffs, simpler customs procedures, clear and transparent rules and rules-based competition”. Each state can provide a different set of opportunities that makes economic relations, particularly trade and foreign direct investments, vital to contributing to the development of all parties included in the framework.
Eight agreements have already entered into force, namely with India, Israel, Indonesia, Türkiye, Cambodia, Georgia, Costa Rica, Mauritius, Jordan, Serbia, and New Zealand. Negotiations and the ratification process with the remaining twenty countries are pending: Vietnam, Chile, South Korea, Morocco, Kenya, Colombia, Australia, Malaysia, Ukraine, the Central African Republic, the Republic of Congo, Russia, Armenia, Kazakhstan, Kyrgyzstan, Belarus, and Angola. Mahdi Ghuloom points to the new potential partners with whom the UAE is considering initiating negotiations and signing agreements, including, among others, Japan, Pakistan, the Philippines, Argentina, and Brazil.
Undersecretary at the UAE’s Ministry of Investment, Mohammed Alhawi, in his interview for The National, stated that “by continuing to sign bilateral agreements, we offer opportunities to global companies to manufacture in the UAE and export globally, leveraging our strategic location and connectivity”. This reflects Abu Dhabi’s contemporary strategy, which aims not only to enhance the UAE’s strategic position but also its status as a regional middle power.
European Union-UAE Free Trade Agreement
In May, the UAE and the EU officially began negotiations for a free trade agreement. It is essential to note that while the EU refers to it as a “Free Trade Agreement,” the UAE applies the alternative term “Comprehensive Economic Partnership Agreements.” This would be the first agreement of its kind between a Gulf country and the EU.
According to the data, the European Union is the “Gulf Cooperation Council’s second-largest trading partner”, while the “GCC ranks sixth among the EU’s trade partners”. Specifically, the UAE is positioned 19th overall and tops the list of the EU’s partners in terms of FDI inflows in the Gulf.
President of the European Commission Ursula von der Leyen stated that “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.” During a meeting in Brussels in July, Dr. Thani bin Ahmed Al Zeyoudi, Minister of Foreign Trade of the UAE, and Maroš Šefčovič, European Commissioner for Trade, outlined further plans for potential cooperation. Parties involved in the negotiations recognized significant potential for collaboration in fields such as energy transition, advanced technologies, food security, renewable energy, and advanced manufacturing. The first round of negotiations took place in June and July, and the second round is set to begin in September.
UAE’s Building Bridges
Ongoing and planned negotiations with potential trading partners demonstrate the Emirati government’s long-term planning, which is consistent with its economic diversification strategy. A gradual shift away from hydrocarbons is being replaced by investments in other, forward-looking economic sectors and fostering cooperation with a variety of countries, which establishes the UAE’s presence around the world. The conclusion of CEPA and the development of further cooperation with new countries demonstrate the country’s aspirations to strengthen its strategic position globally and exert influence in promising economic sectors such as artificial intelligence (AI) and renewable energy. Above all, the UAE’s policy underscores its role as a regional middle power in the economic field.
This process is still ongoing, and the results of the established cooperation are yet to be seen. Negotiations with individual countries and the European Union are spread out over time, making it necessary to consider not only the potential benefits but also the possible obstacles that could slow progress on the agreements. The future, however, appears promising due to the potential impact the UAE may have on other countries and the launch of trade negotiations with the EU. Members of the GCC have much to offer, as highlighted in their government strategic plans. Eventually, cooperation between them and the European Union could be even more fruitful.
The West holds an important place in the UAE’s national agenda. The United States remains one of the UAE’s most important economic (and security) partners for the UAE, as emphasized during President Donald Trump’s official visit to the Gulf. Until now, the European Union, in comparison with the US, Russia, and China, has had a limited role in the Middle East in terms of economic and security involvement, except for humanitarian aid. This opportunity has instead been undertaken and developed in strategic domains by individual European countries, which appears to stem from an inconsistent EU strategy towards the region. However, now is an opportune moment to start a new chapter in the relationship between the European Union and the Gulf, and the UAE can lead the way for expanding the cooperation.
