"The decision will encourage Israel to continue stalling peace efforts, especially as Israel is still imposing its blockade on Gaza," said the general secretariat of the six-nation Gulf Cooperation Council (GCC).
GCC members are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
The GCC and the EU have been at odds recently over a free-trade agreement which has been under discussion for 22 years and the conclusion of which has been repeatedly delayed.
Saudi newspaper al-Eqtisadiah on Tuesday quoted Qatar’s Prime Minister and Foreign Minister Sheikh Hamad bin Jassem bin Jabor as saying that the EU has backtracked two weeks ago from signing the accord and that GCC countries "must make a quick decision to stop the talks altogether."
He said the EU was seeking to include political clauses in the free-trade accord which he did not specify.
EU foreign ministers last week agreed to upgrade the bloc’s relations with Israel, which will bring high-level regular meetings between Israeli and EU leaders and officials on issues that include the peace process, counterterrorism, organized crime, anti-Semitism and human rights.
Israel also hopes the agreement would provide it with European help in integrating it into U.N. institutions.
Arab states have sought to abort the deal while it was being negotiated over the past 18 months.
After the agreement was announced, EU foreign ministers have urged Israel to reach out to the Palestinians and Arab nations.
"The EU’s decision comes at a time when Israel continues to build settlements on Palestinian territories, among other policies that go against international law," the GCC said.
The GCC countries called on the EU to "push Israel to adhere to international accords and commitments it has made at the Annapolis conference".
