Thursday 15 February 2018
The European Union enjoys an exclusive competence on trade matters and thus it is responsible to negotiate and conclude trade agreements with Third Countries on behalf of the Member States. Being the biggest trade block in the world, ahead of the US and China, the EU is an attractive trade partner and a powerful negotiator. 2018 is set to be an important year for EU trade as some important agreements await to be finalised.
To this day, the EU has around 70 trade agreements already in place with Third Countries, while 21 are awaiting for signature or ratification. Moreover, the EU is currently negotiating, with different levels of smoothness, around 26 trade agreements.
Trade agreements can be of very different kinds and cover different areas. Most of them aim at eliminating tariff and non-tariff barriers while others aim to open the markets to foreign investments and services.
In general, trade agreements are proposed by the European Commission, which needs to receive a mandate from the co-legislators to negotiate on behalf of the 28 Member States. Thanks to the EU important economic weight, and to respond to an increasing pressure coming from different sectors of the civil society, the European Commission is increasingly pushing for the inclusion of high standards into trade deals. These high standards cover a wide range of domains such as labour and social law, environment and sustainable development, animal welfare and food quality. Also for this reason, negotiations with some countries such as India and the US are lagging behind and in some cases have been stuck for several months and even years.
“The EU is the largest market in the world; we have a lot to offer our partners, but also expect things in return in negotiations. But trade agreements do not deal with market access alone; trade must be responsible, and consistent with EU and universal values; this is at the core of our negotiations. We can create incentives for change and improve the living and working conditions of the poorest.”
Cecilia Malmström, EU Commissioner for Trade
Recently, two of the most talked-about trade agreements have meet completely different destinies. The Comprehensive Economic Trade Agreement (CETA) with Canada has been approved by the European Parliament in February 2017 and has provisionally entered into force. On the opposite side, negotiations of the Transatlantic Trade and Investment Partnership (TTIP) with the United States have been abruptly interrupted in 2016, as a consequence of the US Presidential election result.
The CETA, which will fully enter into force after ratification by all Member States’ parliaments, already removed 99% of the customs duties on EU-Canada imports and exports making European products more competitive on the Canadian market. The positive effects of this measure have already been perceived by several European businesses. Other parts of the agreement opened both markets to services and investments, food and drink exports and simplified the procedures for companies and professionals to operate on the two sides of the Atlantic.
As mentioned above, the EU is currently negotiating many trade deals with different partners around the world. In particular, last July, the EU and Japan finalised a deal on the main elements of an Economic Partnership Agreement (EPA) which is also aimed at removing custom duties and to open the Japanese market to EU products. The EPA needs to be approved by the Council and the European Parliament before proceeding to ratification. While the trade talks with Japan have advanced in a relatively smooth way, the negotiations with equally important Eastern countries such as China and India have encountered more difficulties as well as some interruptions, and talks are still ongoing. At the moment, the EU is only negotiating a comprehensive investment agreement with China but there is no discussion on a trade deal because China remains a closed economy and many non-tariff barriers persist.
Trade talks will continue through 2018 with Mexico in order to modernise a Global Agreement which is already in place, and with Mercosur in order to conclude a trade deal. The Mercosur is a trade block formed by Argentina, Brazil, Paraguay and Uruguay. Mercosur is already an important trade partner for the EU and the goal of the trade agreement is to eliminate obstacles to trade for EU companies while at the same time protecting EU standards. Indeed, it must be considered that the exports from Mercosur to the EU are mainly agricultural and animal products and the possibility of increasingly opening up the EU market to this kind of imports has generated some concerns among farmers and consumers.
Following the successful conclusion of the CETA with Canada, 2018 could be a good year to advance many of the EU trade agreements currently on the table. The European Commission is committed to maximum transparency in order to contain negative reactions from the civil society and EU citizens while many sectors look forward to the conclusions of new deals and the creation of new market possibilities as a way to make their business thrive beyond EU boarders.
 Trade agreements: what the EU is working on, European Parliament: http://www.europarl.europa.eu/news/en/headlines/world/20161014STO47381/trade-agreements-what-the-eu-is-working-on
 CETA explained, European Commission: http://ec.europa.eu/trade/policy/in-focus/ceta/ceta-explained/index_en.htm
 EU-Japan Economic Partnership Agreement, European Commission:
 Overview of FTA and other trade negotiations, European Commission:
 EU-Mercosur Association Agreement, European Commission :
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