Trade: EU-Gulf countries agree to work on a free trade deal

Brussels – EU-Arab Gulf countries moving forward on trade: Leaders of the 27 member states and representatives of the region’s Cooperation Council countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) left the first bilateral summit aiming to work toward a regional free trade agreement. It is the most tangible result of a meeting that, nonetheless, was marked by tensions over foreign policy dossiers and disagreements over current hot topics, notably the Russian-Ukrainian war and the Israeli-Palestinian conflict.

As stated in the joint statement at the end of the summit, there is a willingness to “advance discussions” between the parties to reach a new trade model. The numbers, updated to 2022, highlight what is at stake. Bilateral trade flows exceeded $204 billion in value, with the EU alone accounting for 13 percent of the Gulf Arab countries’ total trade. These numbers could grow when considering the potential lowering of the current tariffs.

For the EU, it represents an opportunity but also a risk. The trade balance between the EU and the Gulf countries favors the latter. In 2022, exports to the single European market reached $106.3 billion, compared with imports of ‘made in EU’ products worth about $98 billion.

The leaders gathered around the table viewed convergence for economic and trade integration as the main outcome of a meeting that was seen as historic because it was the first of its kind in Brussels. They also aim to boost investments, building on an already solid foundation. To date, the two sides have direct investments of more than 100 billion euros in energy, transportation, environment, tourism, and the pharmaceutical sector; this will continue. “We will continue to explore tailor-made agreements supporting trade and investments” was the agreement in principle found: a starting point for a new season of bilateral relations.

In the renewed intention for new trade regimes, there is a specific emphasis: “The importance of cooperation within the World Trade Organization” (WTO). The centrality of the WTO, European and Arab leaders in the Persian Gulf stress, remains “essential to contribute to the full functioning of the dispute settlement mechanism to strengthen the multilateral trading system.” A message against China and, in perspective, also against Donald Trump should the Republican candidate, who is critical of the WTO, win in the Nov. 5 elections.