Formal relations with the EU began in 1996 when the EU-Azerbaijan Partnership and Cooperation Agreement (PCA) was signed. This agreement entered into force in 1999. This agreement marked the beginning of a mainly positive relationship between the Republic of Azerbaijan and the European Union, with both sides benefitting from the relationship.
Azerbaijan also strengthened its relations with Europe by becoming the 43rd state to join the Council of Europe on January 25, 2001. By doing so, Azerbaijan opened itself up even more to Europe and the West. Since joining, Azerbaijan has ratified 50 treaties and has been actively involved in the Council.
As the EU grew in size and scope, it launched the European Neighborhood Policy (ENP). Azerbaijan joined the policy in 2004, and the ENP’s action plan for Azerbaijan was adopted on November 14, 2006, after being passed by the Azerbaijani government and the European Commission. Key items included on the plan are investment in Azerbaijan’s infrastructure, partial integration of the Azerbaijani economy into Europe’s, and partnerships with Azerbaijan on extracting oil from the Azerbaijani controlled part of the Caspian Sea.
Azerbaijan and the European Union have similar beliefs on most policies and are presently working together to forward their combined interests. The European Community has developed a three year aid plan for Azerbaijan, called the National Indicative Program (NIP), for which the EU has allocated a budget of €92 million over three years (2007–2010). The main goals of this program are to develop government agencies, run them more efficiently, and help Azerbaijan to develop its internal infrastructure to promote foreign investment and business growth. Currently the National Indicative Program (NIP) for the period of 2011-2013 is under implementation.
The European Union and Azerbaijan are strong partners on energy policy, and are working together on a number of projects. The main project is the building of a pipeline to connect the Caspian oil supply to Europe, providing a viable route for oil and gas to reach consumers. Europe is also supporting Azerbaijan’s state sponsored program for the increased use of alternative and renewable energy sources. Azerbaijan is a partner country of the EU INOGATE energy programme, which has four key topics: enhancing energy security, convergence of member state energy markets on the basis of EU internal energy market principles, supporting sustainable energy development, and attracting investment for energy projects of common and regional interest. Negotiations are ongoing between the EU and Azerbaijan to replace their existing PCA with an Association Agreement. Roland Kobia, the EU's ambassador to Azerbaijan, said in April 2013 that they could be completed prior to the Eastern Partnership meeting in November 2013.
Currently, Azerbaijan and the European Union are also working together on simplification of visa regime between each other.