Azerbaijan's Trade with Gulf States is Significantly Influenced by the UAE, accounting for half of the overall trade volume.
The United Arab Emirates (UAE) and Azerbaijan have signed a Comprehensive Economic Partnership Agreement (CEPA), marking a significant step towards enhancing economic ties between the two nations. Dr. Thani bin Ahmed Al Zeyoudi, UAE Minister of Foreign Trade, described Azerbaijan as a "hugely valuable trade and investment partner."
The CEPA aims to remove trade barriers and boost bilateral trade and investment flows by reducing tariffs, simplifying customs procedures, and facilitating business exchanges. This strategic agreement reflects the intent of both nations to deepen economic ties, given the UAE’s role as a major commercial hub and Azerbaijan’s position as an energy-rich country with a growing economy.
The agreement is expected to strengthen economic ties, with non-oil trade between the UAE and Azerbaijan surging 36.2% in 2023 to $2.24 billion. Moreover, Azerbaijan's non-oil sector grew by 6.3% in 2024 under the agreement's implementation.
Key sectors of focus for the CEPA include energy, infrastructure and construction, Information and Communication Technology (ICT), agriculture and food processing, logistics and transport, tourism and hospitality, and financial services. The UAE's strategic investments, particularly in energy and renewables, are a key focus of the agreement. ADNOC and Masdar are the entities through which the UAE will invest in Azerbaijan's energy and renewable sectors.
The CEPA is projected to contribute $680 million to the UAE's GDP and $300 million to Azerbaijan's economy by 2031. This trade accounts for half of Azerbaijan's total trade with the Gulf Cooperation Council (GCC). However, the agreement does not specify any direct impact on the GDP of either nation for the year 2024.
Azerbaijan, one of the Caucasus region's fastest-growing economies, is poised to benefit from the CEPA as it opens new opportunities in key sectors such as manufacturing, agriculture, automotive, logistics, and financial services. The agreement does not offer specifics on how it will deepen economic integration beyond strategic Emirati investments.
As the CEPA is a significant step towards enhancing economic cooperation between the UAE and Azerbaijan, it is recommended to consult official government releases from both countries for the precise terms and commitments of the agreement.
The CEPA, aimed at removing trade barriers and enhancing economic collaboration, focuses on key sectors such as energy, infrastructure, ICT, agriculture, logistics, tourism, and financial services. Notably, the UAE's strategic investment, particularly in energy and renewables, is a key part of this agreement, with ADNOC and Masdar being the entities through which investments will be made in Azerbaijan. This partnership is projected to significantly contribute to both economies, accounting for half of Azerbaijan's total trade with the Gulf Cooperation Council by 2031, with an estimated $680 million contribution to the UAE's GDP and $300 million to Azerbaijan's economy. However, the agreement does not specify any direct impact on the GDP of either nation for the year 2024.
