Last reviewed 2 January 2013
Paul Clarke presents a round-up of the situation, at present, of the EU’s various current, nearly-concluded and proposed trade agreements with other countries and trading blocs, which will have a significant effect on British international traders.
Next year will see the 10th anniversary of the world trade talks held in Cancun, which were expected to see the Doha Round, if not completed, then at least brought to a position where an end was in sight. When those talks collapsed in the face of irreconcilable differences between rich and poor countries, a make-or-break meeting was scheduled for Hong Kong. In December 2005, those talks also failed and, with varying degrees of optimism, all subsequent attempts by the World Trade Organization (WTO) to revive the stalled negotiations have come to nothing. Perhaps not surprisingly, therefore, large trading blocs such as the EU began to turn away from the multilateral idea symbolised by the WTO and back to bilateral deals.
Trade agreements in force
Mandated by the Member States to pursue deals with important markets, the European Commission (EC) has not been idle. As of December 2012, it has brought 28 trade agreements into force, with the most recent being South Korea (July 2012). Other significant agreements include Mexico and South Africa (2000) and Chile (2003). As well as these "classic" free trade deals, free trade agreements (FTAs) are a core component of many EU Association Agreements and Customs Unions with a whole range of countries, from the tiny San Marino to trading giants such as Turkey.
The Southern Mediterranean is a key area of EU interest and FTAs are already in place with Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the Palestinian Authority and Tunisia. The EC has also been working to bring the former colonies and territories known as the African, Caribbean and Pacific (ACP) countries into regional deals, known as Economic Partnership Agreements (EPAs); the Caribbean, Pacific and Eastern and Southern Africa EPAs have been concluded.
Negotiations for an EU–Canada Comprehensive Economic and Trade Agreement (CETA) started in May 2009 and are nearing completion. EU Trade Commissioner Karel De Gucht and Canadian Trade Minister Ed Fast met in Brussels in November 2012, making what was described as substantial progress in the talks. Both sides have instructed their negotiators to narrow the gaps on the outstanding issues, aiming for a deal by the end of this year. Canada is the EU's 11th most important trading partner and the EU is Canada’s second-largest, after the USA. An economic study jointly released by the two sides in October 2008 showed that a comprehensive trade agreement could increase two-way bilateral trade by another €25.7 billion.
A third of EU–ASEAN trade is with Singapore (€65 billion), which is also the EU's main investment partner in the Association of Southeast Asian Nations (ASEAN), accounting for 80% of the investment stock between the regions. An FTA with Singapore is therefore seen as a "trade gateway into Asia", offering enormous opportunities to European business. Negotiations were launched by Commissioner De Gucht and Singapore's Trade Minister in March 2010. The 11th negotiating round was held in November 2012, and further technical meetings are under way, particularly in the area of services, with the aim of bringing the talks to a rapid conclusion.
Also in the ASEAN region, the EU is currently negotiating FTAs with Malaysia (launched in May 2010) and Vietnam (June 2012). "The EU's door remains open to start negotiations with other partners in the region and it hopes one day to complete these agreements with a region-to-region trade agreement," Mr De Gucht said.
On 29 November 2012, the Member States gave the EC the go-ahead to open free trade negotiations with Japan, agreeing that an FTA could increase the EU's GDP by almost 1% and boost EU exports to that country by one third. Recognising the fear of some Member States with regard to non-tariff barriers in Japan, the EC has insisted that Europe can "pull the plug" on negotiations after one year if Japan does not show itself willing to remove some of those barriers.
The EU–US trade relationship is the biggest in the world, with more than €1.8 billion of goods and services traded every day between the two parties. To build on this foundation, the two partners are currently working together in a High-Level Working Group on Jobs and Growth, launched at the 2011 EU–US Summit, to discuss how they can further integrate their trade relationship, with the option of launching an FTA. The results should be known by the end of 2012.
As mentioned above, trade agreements already exist with Egypt, Jordan, Morocco and Tunisia but talks are now under way to "upgrade" the current trade deals with these countries to something the EC is calling Deep and Comprehensive Free Trade Areas (DCFTAs). Morocco looks likely to be the first to benefit from this new type of agreement. DCFTAs will also be part of the "Eastern Neighbourhood" Association Agreements with Georgia, Armenia and Moldova.
Not every set of negotiations can be successful and the EC has so far drawn a blank with the Gulf Cooperation Council (GCC), which suspended negotiations for an FTA in 2008, although "informal contacts" continue to take place.
Talks with India have been ongoing since 2007, with the EC recently calling for both sides "to go the final mile to put the package together". It should be noted that something similar was said in 2010.
With Mercosur (Argentina, Brazil, Paraguay and Uruguay) being referred to in its early years as the Southern Common Market, trade links with the European version seemed a natural extension of both side's ambitions when negotiations for an FTA opened in 1995. That proved not to be the case however; talks stalled and were suspended without agreement in 2004. Trying again in 2010, the EC noted that the total GDP of the Mercosur countries, at €1300 billion, exceeded that of countries such as South Korea, India or Russia. Beginning to lose patience, the EC said in November 2012 that "it is now time to proceed to the exchange of market access offers if we want to give a renewed impetus to this negotiation with the objective of concluding a balanced and ambitious trade agreement".