Oct 252013

Sharaka Research PapersSharaka Research Paper nr.5

by Rym Ayadi and Salim Gadi

The EU and the GCC formalised their relations in 1988 with the signature of a Cooperation Agreement and the engagement in negotiations for an FTA. Despite an ambitious framework, however, political and economic relations remain limited, as evidenced by the failure to conclude the FTA. Against this backdrop, and with the growing importance of the Gulf region’s trade and investment relations with Europe and the geopolitical outlook for the Arab world, this paper analyses EU-GCC trade and investment patterns over the last two decades. The paper starts by providing a summary of EU-GCC relations. In the second section, it reviews patterns in bilateral trade and foreign direct investment, and goes on to assess both parties’ interests and potential gains from concluding an FTA. Finally, it asks whether a free trade deal between the regions is likely and suggests possible avenues for strengthening economic and political cooperation.