UAE, Azerbaijan sign trade deal as officials meet in Abu Dhabi for Armenia peace talks

The United Arab Emirates and Azerbaijan have signed a trade deal, as Azerbaijan’s leader met with his Armenian counterpart in Abu Dhabi on Thursday for peace talks aimed at ending the decades-long conflict between their two countries.

The so-called Comprehensive Economic Partnership Agreement (CEPA) was signed in the Emirati capital by UAE Minister of Foreign Trade Thani bin Ahmed Al Zeyoudi and Azerbaijani Minister of Economy Mikayil Jabbarov.

The trade deal is expected to contribute around $680 million to the UAE’s gross domestic product by 2031, Zeyoudi said in a statement relayed through the Emirates News Agency (WAM) late Wednesday.

He added that Azerbaijan is “a hugely valuable trade and investment partner” for the UAE, citing the country’s strategic location and robust economic growth. He said the Emirates plans to increase investments in the South Caucasus country across sectors, particularly in energy, through state-owned companies Abu Dhabi National Oil Company and renewables-focused Masdar.

The CEPA will enable the two nations to develop a joint logistics infrastructure to allow them to enter broader markets within the region, the WAM statement revealed.

Why it matters: Bilateral trade between the UAE and Azerbaijan grew by 36.2% in 2024 to reach $2.24 billion, which represents 50% of Azerbaijan’s trade with the GCC, Zeyoudi said.

The UAE is the leading Arab investor in Azerbaijan, with investments exceeding $1 billion, according to WAM.

The UAE has been on a CEPA blitz, concluding 27 of the deals with countries including Cambodia, Georgia, India, Indonesia, Israel, Turkey, Serbia, the Republic of Congo and Ukraine, in a bid to diversify its economy away from oil. Namely, it wants to increase non-oil foreign trade to $1.1 trillion by 2031. In 2024, the Gulf state’s non-oil trade reached a record high of around $817 billion.

Know more: Meanwhile, the leaders of Azerbaijan and Armenia held peace talks in the UAE on Thursday after nearly four decades of conflict. The meeting between Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev came after the two countries finalized a draft of a peace deal in March that was mediated by Russia.

The final statements released by each country’s Foreign Ministry did not indicate any progress in the latest peace talks but said the two leaders “agreed to continue bilateral negotiations and confidence-building measures between the two countries."

Since the late 1980s, the two South Caucasus countries have fought several wars over Nagorno-Karabakh — a region in Azerbaijan that, by the early 1990s, had effectively broken away with backing from Yerevan.

Azerbaijan recaptured the breakaway region in September 2023, leading to an exodus of all of Nagorno-Karabakh's 100,000 Armenians, who fled to Armenia. Peace talks began shortly after to address the crisis, which has seen more than 7,000 people killed, according to war monitor estimates.