EU Free Trade Agreement – an interim status

Freihandelsabkommen eu fta

Overview Free Trade Agreement

Whereas in the past, trade policy reports mostly eked out a dreary existence in the business sections of the media, they are now also advancing to become real “headliners” of the day’s events. This is not always expressed in a positive way, as there is often talk of “trade wars” and “punitive tariffs”. But the enormous economic significance of trade agreements is also attracting more and more attention. The associated opportunities to reshape the global market are also too great to shy away from often unfounded reservations about free trade. While the USA is currently tending toward protectionist moves, the EU is unwaveringly pursuing its strategy of preferential trade agreements.

Trade strategy of the EU

The EU is currently seeking more than 12 new free trade agreements (FTAs). These include agreements with Japan, various ASEAN states, Mexico and the Mercosur states. Commission President Juncker has announced his intention to conclude all current FTA negotiations during his mandate until 2019. Alongside multilateral trade liberalization under the World Trade Organization (WTO), preferential trade agreements are a central component of the EU’s trade strategy.

Detailed information on free trade agreements can be found at:

In the following, we primarily provide an overview of the current status of the most important agreements for the German and European markets.


Most important free trade agreements for the EU area

Australia

australia ftaThe aim of the negotiations is to remove barriers to trade in goods and services, create new opportunities for businesses large and small, and establish ambitious rules consistent with other EU trade agreements to help shape global trade.

Australia is one of the fastest growing industrialized countries and recently concluded the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) with ten other countries in the Pacific region. The future agreement between the EU and Australia creates the same conditions for European companies as for those from countries with which Australia already has trade agreements.

June 2018:

EU Trade Commissioner Cecilia Malmström and Australia’s Prime Minister Malcolm Turnbull and Trade Minister Steven Ciobo launched negotiations on a comprehensive and ambitious trade agreement between the EU and Australia on June 18, 2018. Source: https://ec.europa.eu/germany/news/20180618-handel-eu-und-australien_de


CETA – Canada

ceta fta

The Comprehensive Economic and Trade Agreement (CETA) is an international trade agreement between the EU and Canada.
By boosting mutual trade, CETA will create jobs and growth – and new opportunities for your business. Canada is a large market for Europe’s exports and has vast amounts of natural resources that Europe needs.

What’s more, CETA is progressive. It goes beyond reducing tariffs by giving full consideration to people and the environment. In this way, it will set a global standard for future trade agreements.

More information at:

Status:

The national – in some cases also the regional – parliaments in the EU countries still have to approve CETA for it to become fully valid.

June 14, 2018: Recently, however, the Italian government announced it would not ratify CETA. Source: http://www.handelsblatt.com/politik/international/ceta-italien-sperrt-sich-gegen-eu-handelsabkommen-mit-kanada/22685374.html?nlayer=Politik-News_11247984&ticket=ST-4568825-crhd5160OpyEepHiwN7I-ap3


JEFTA – Japan

The largest free trade zone in the world will be launched on 01.02.2019. This will make it much easier for numerous EU manufacturing industries such as the automotive sector, the chemical and pharmaceutical industries, mechanical engineering, the consumer goods industry, and the food and construction sectors to access the market in the Far East. With a population of 127 million and a GDP of about EUR 4.6 trillion, Japan is the third largest economy in the world.

You can find out more in our blog post:

EU-Japan Free Trade Agreement
jefta abkommen

July 17, 2018:

Commission President Jean-Claude Juncker, Council President Donald Tusk and Japanese Prime Minister Shinzo Abe have signed the Economic Partnership Agreement (EPA) between the EU and Japan. Next up is ratification of the agreement by the European Parliament and the Japanese Parliament. The agreement could then enter into force in 2019. Source: http://europa.eu/rapid/press-release_IP-18-4526_de.htm

June 2018:

The negotiations have been concluded. Now the agreement could come into force as early as 2019. Source: https://www.welt.de/Freihandelsabkommen-Jefta-Der-Wegfall-der-Handelsgrenzen-ist-ein-guter-Zeitpunkt


Mercosur

July 03, 2019:

To great jubilation in the Commission, EU Trade Commissioner Cecilia Malmström announced the agreement in negotiations with Mercosur countries on June 29, 2019. She stressed that this was the largest trade agreement ever concluded by the Union and that it held “enormous opportunities” as well as bringing “two continents” together.

However, there was a downer on July 02, 2019 when the French government announced it would not ratify the agreement due to concerns for national agriculture.

Sources:

https://www.tagesschau.de/wirtschaft/freihandel-111.html
https://www.tagesschau.de/ausland/frankreich-mercosur-abkommen-101.html

More info in this video:

The “Mercosur States Agreement” would give European automotive, chemical and engineering companies in particular advantages in international competition.

Negotiations are expected to be completed by the end of 2018. To date, the South American markets have been relatively closed and have high barriers to entry. The planned agreement would further open up a market with a total volume of currently EUR 2.6 trillion to local exporters.


Mexico

acapulco-mexico-ftaIn 2000, the EU reached an agreement with Mexico covering mainly transactions in industrial goods. This is now being extended to include agricultural and food products, services and government contracts. Additional labor law and environmental standards are also planned for the new agreements. This would make it more attractive for European automotive companies to invest in Mexican production facilities. There would also be opportunities for European companies in the energy and construction sectors.


EUSFTA – Singapore

The free trade agreement with the island nation is about expanding the partners’ business opportunities in the finance, services, transportation and telecommunications sectors.

Negotiations for the joint EUSFTA (European Union-Singapore Free Trade Agreement) were concluded in December. With the exception of the issue of investment protection. Negotiations on this had already taken place in October 2014, but the ruling of the ECJ, which followed in 2017, was still awaited. The problem was that parts of the agreement with Singapore fall under the exclusive competence of the EU, while other parts, such as portfolio investments, also fall under the competence of the member states. As a result, the agreement had to be split into separate free trade and investment protection agreements.

Status:

The negotiations have been concluded. Currently, only the ratifications are still pending.
In February 2019, the EU Parliament approved the trade and investment protection agreements. The aim is for the free trade agreement to enter into force before the end of 2019.


Vietnam

vietnam ftaBack in 2016, the EU successfully concluded negotiations with Vietnam on the far-reaching removal of trade barriers. 65% of all tariffs will be lifted from day one. The remaining trade will be liberalized within 10 years. The draft was scheduled to be presented to the EU Council and EU Parliament in summer 2019. The agreement will facilitate market access primarily for the chemical and pharmaceutical industries, manufacturers of consumer goods, food suppliers, and engineering companies. Currently, the Southeast Asian state imports goods worth EUR 9.6 billion annually from the EU.

Status:

The negotiations have been concluded. Currently, only the ratifications are still pending.
The trade regulations are expected to enter into force at the end of 2019/beginning of 2020.

Source: https://www.exportmanager-online.de/nachrichten/liefern/eu-handelsabkommen-oeffnen-exportmaerkte-6171/ 


[Update from December 14, 2020]

Ghana

The agreement with Ghana did not contain any rules of origin so far, therefore the regulation for unilateral agreements of ACP states was applied so far. Thus, only advantages applied when importing into the EU from Ghana. The agreement was adapted with publication on 20.08.2020 and since then contains rules of origin.

August 2020:

Since August 20, 2020, the rules of origin can be used. The value of goods exported from Germany to Ghana in 2019 was about 240 million euros. Source: https://www.gtai.de/gtai-de/trade/zoll/zollmeldung/ghana/wirtschaftspartnerschaftsabkommen-zwischen-ghana-und-der-eu-580736

Stefan Kluge

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