Economic diplomacy circles are witnessing intensified activity to revive the long-stalled free trade agreement between the Gulf Cooperation Council (GCC) and the European Union after more than two decades of suspended collective negotiations, amid strong expectations of finalising the outlines of the deal during a leaders’ summit scheduled in the Saudi capital, Riyadh, in October.
Details of this renewed momentum indicate a fundamental shift in negotiating approaches, as both sides move away from the idea of a single comprehensive treaty toward sector-specific packages focused on key areas such as renewable energy, digital trade and industrial supply chains.
Negotiators are also seeking to overcome long-standing obstacles linked to Brussels’ insistence on including contentious issues within the agreement, a position the Gulf states opposed, arguing it previously hindered talks and caused mutual economic losses.
Both sides now appear more inclined to prioritise shared interests and accelerate economic integration, according to a study published by the German Economic Institute (IW) on 7 May.
The timing of the resumed talks carries heightened strategic significance amid rising protectionism and global geopolitical uncertainty, particularly European concerns over expected protectionist trade policies from US President Donald Trump .
Recent security tensions in the Middle East, including threats to shipping routes in the Red Sea, Bab el-Mandeb Strait and the Strait of Hormuz, have further highlighted the close link between European energy and industrial security and stability in the Gulf region, the same study said.
The rapid success achieved by the GCC in signing a free trade agreement with the United Kingdom on 20 May has served as a direct catalyst for heightened economic mobilisation in EU capitals.
The UK-Gulf deal represents the first agreement of its kind between the Gulf bloc and a Group of Seven economy, providing evidence of the GCC’s ability to conclude major international agreements as a unified bloc, according to an assessment published by EY Tax News on 5 June.
Under the British agreement, annual tariffs of 580 million pounds on UK exports to the Gulf will be eliminated, with 360 million pounds removed immediately, and there is a commitment to clear goods through customs within 48 hours.
This has prompted EU economic officials to call for swift action to preserve the competitiveness of European companies in Gulf markets, according to the same assessment. Gradual approach In this context, the president of the International Association for Economic Policy Research, Ragip Yorumaz, told The New Arab that the decision to revive free trade negotiations between the Gulf states and the EU represents an important and positive signal, but one that must be viewed realistically.
He noted that the original talks began in 1990 and were suspended in 2008 after two decades without tangible results, and that relations since then have continued through dialogue and cooperation rather than a formal agreement.
Yorumaz does not expect a large and comprehensive regional agreement to be reached immediately, instead forecasting a step-by-step approach.
He said the European Commission proposed new negotiating guidelines in 2025 to update the mandate issued in 1989, and that the EU also launched bilateral talks with the United Arab Emirates on 28 May 2025.
This bilateral track is officially described as a potential “building block” for a future regional free trade agreement with the GCC, suggesting initial bilateral deals followed by a possible regional agreement later.
Yorumaz said the current timing of renewed Gulf-European negotiations is highly significant for three main reasons.
First, the global trading system has become more protectionist and uncertain, particularly due to US tariff measures, pushing both Gulf states and the EU to diversify partners and reduce reliance on a single market.
Second, Gulf countries are implementing economic diversification strategies and require European technology, investment and expertise.
Third, the EU needs secure access to energy and critical raw materials, with a current focus on green hydrogen and renewable energy, the same sectors referenced in the UAE talks.
The economic weight of the partnership is evident, with EU-Gulf goods trade reaching 165.7 billion euros in 2025, making the EU the Gulf’s second-largest trading partner after China.
The pace of recent developments, including the GCC-UK free trade agreement in May, reflects accelerating trade momentum aimed at strengthening strategic economic ties, Yorumaz said.
He added that citizens and investors in Gulf states could benefit in multiple ways.
Consumers would likely see lower prices and greater choice, as European goods, machinery, cars, pharmaceuticals and food products currently face tariffs that could be reduced, lowering living costs and import input expenses.
Investors could benefit from stronger legal protections, more predictable rules and access to a market of around 449 million consumers.
Such agreements would also allow Gulf sovereign wealth funds and private companies to invest in Europe with greater confidence and expand joint projects in clean energy, hydrogen and digital services.
Local industries using European components would also become more competitive.
However, Yorumaz cautioned that political and regulatory differences within the EU could slow the process, concluding that “the path is positive but requires long patience to achieve the desired results”. Mutual opportunity Professor of economics at the University of Nice, Alain Safa, told The New Arab that the European Commission is seeking to expand trade openness with several regions worldwide, including Latin America and the Arab Gulf states.
He said this push reflects an effort to offset tariff tensions with the United States and reduce dependence on a single market amid a protectionist and uncertain global trade environment.
While trade liberalisation is generally expected to yield positive outcomes for signatory countries, Safa noted that some sectors could face stronger competition from increased imports. Export-oriented firms , however, would benefit from reduced trade barriers, improving market access and competitiveness.
He said negotiations have recently accelerated after two decades of stagnation, particularly in Latin America, driven by a German political decision to seek new markets for its industrial base amid intense competition.
Safa said the opportunity is also significant for Gulf states seeking to diversify their economies and develop industries and services beyond oil dependence .
These countries are focusing on transforming raw materials into manufactured products, including agricultural fertilisers such as phosphate and potash derivatives, sectors that are not produced at the same efficiency in Europe, creating a complementary opportunity for European industrial and agricultural supply needs.
He added that Gulf states have strong purchasing power, allowing Europe to meet a substantial share of its export demand and expand sales into these wealthy markets.
For investors, the agreement could facilitate inward investment flows within the Gulf and attract European investors , provided local companies increase competitiveness and integrate into global supply chains.
Geopolitical and economic developments over the past decade have increased the need to diversify trade relations between Europe and the Gulf beyond raw materials, Safa said.
He added that Europe’s outreach to other regions and Gulf openness to new partners serve both sides and help establish a strategic balance, explaining the current acceleration in negotiations aimed at achieving shared commercial and industrial gains and supporting economic stability amid ongoing global transformations. Article translated from Arabic by Afrah Almatwari. To read the original, click here .