[Article created on Sep 19, 2019]
Overview free trade agreements
While in the past, trade policy reports usually had a dreary existence in the economic sections of the media, they are now also becoming real “headliners” of daily 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 importance of trade agreements is also attracting more and more attention. The opportunities they offer to reshape the global market are too great to shy away from often unfounded reservations about free trade. While the USA is currently tending towards protectionist tendencies, the EU is unwaveringly pursuing its strategy of preferential trade agreements.
EU trade strategy
The EU is currently striving for more than 12 new free trade agreements (Foreign Trade Agreements, or FTAs). Among others with Japan, various ASEAN states, Mexico and also with the Mercosur states. Commission President Juncker has announced that he intends to conclude all current FTA negotiations during his mandate until 2019. In addition to 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 mainly give an overview of the current status of the most important agreements for the German and European market.
Most important free trade agreements for the EU
The aim of the negotiations is to remove barriers to trade in goods and services, to create new opportunities for large and small companies and to establish ambitious rules that are consistent with other EU trade agreements, thus helping to shape world trade.
Australia is one of the fastest growing industrialized countries and has recently signed the Comprehensive and Progressive Transpacific 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 companies from countries with which Australia has already concluded trade agreements.
EU Trade Commissioner Cecilia Malmström as well as Australian Prime Minister Malcolm Turnbull and Trade Minister Steven Ciobo started negotiations for a comprehensive and ambitious trade agreement between the EU and Australia on 18 June 2018. Source: https://ec.europa.eu/germany/news/20180618-handel-eu-und-australien_de
CETA – Canada
The Comprehensive Economic and Trade Agreement CETA is an international trade agreement between the EU and Canada.
By stimulating mutual trade, the CETA will create jobs and growth – and new opportunities for your business. Canada is a large market for Europe’s exports and has large amounts of natural resources that Europe needs. Furthermore, the CETA is progressive. It goes beyond tariff dismantling by taking full account of people and the environment. In this way it will set a global standard for future trade agreements. For further information please see:
- We have summarized detailed information about the provisional applicability in practice in our CETA article: https://www.bex.ag/blog/ceta/
The national – and in some cases also the regional – parliaments in the EU countries still have to approve CETA in order for it to become fully valid. 14 June 2018 Recently the Italian government announced that it does not want to 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 start on 01.02.2019. This will make it much easier for numerous EU manufacturing industries such as the automotive sector, chemicals and pharmaceuticals, mechanical engineering, consumer goods, food and construction to access the Far East market. With 127 million inhabitants and a GDP of about 4.6 trillion EUR, Japan is the third largest economy in the world.
You can find more details in our blog post:
17 July 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. The next step is the 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
The negotiations have been completed. The agreement could now enter into force in 2019. Source: https://www.welt.de/Freihandelsabkommen-Jefta-Der-Wegfall-der-Handelsgrenzen-ist-ein-guter-Zeitpunkt
03 July 2019:
To great jubilation in the Commission, EU Trade Commissioner Cecilia Malmström announced on 29 June 19 the agreement in the negotiations with the Mercosur states. She emphasized that this is the largest trade agreement ever concluded by the Union and that it holds “enormous opportunities” and brings “two continents” together. On July 2nd 2020, however, there was a drop of bitterness when the French government announced that it would not ratify the agreement due to concerns for national agriculture.
More information in this video:
The “Mercosur Agreement” would give European automotive, chemical and mechanical engineering companies in particular advantages in international competition.
The negotiations are expected to be completed by the end of 2018. So far, the South American markets are relatively closed and have high barriers to entry. The planned agreement would further open up a market with a total volume of currently 2.6 billion EUR to local exporters.
In 2000, the EU reached an agreement with Mexico that mainly covers transactions in industrial goods. This is now being expanded 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 – Singapur
The aim of the free trade agreement with the island state is to expand business opportunities for the partners in the financial, services, transport and telecommunications sectors.
Negotiations for the joint EUSFTA (European Union-Singapore-Free-Trade-Agreement) agreement were concluded in December. With the exception of the issue of investment protection. Although negotiations on this issue were already held in October 2014, the European Court of Justice has yet to decide in 2017 that parts of the agreement with Singapore fall within the exclusive competence of the EU, while other parts, such as portfolio investments, are also partly within the competence of the member states. As a result, the agreement had to be split into separate free trade and investment protection agreements.
The negotiations have been completed. At present, 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 come into force before the end of 2019.
As early as 2016, the EU successfully concluded negotiations with Vietnam on the far-reaching reduction of trade barriers. 65% of all customs duties will be lifted from day one. The remaining hands will be liberalized within 10 years. In the summer of 2019, the draft was presented to the EU Council and the EU Parliament. The agreement facilitates market access, especially for the chemical and pharmaceutical industries, manufacturers of consumer goods, food suppliers and mechanical engineering companies. Currently, the Southeast Asian state imports goods worth EUR 9.6 billion from the EU every year.
The negotiations have been completed. At present, only the ratifications are still pending. The trade regulations are expected to come into force in late 2019/early 2020.
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 August 2020 and since then contains rules of origin.
Since 20 August 2020, the rules of origin can be used. The value of goods exported from Germany to Ghana in 2019 was around 240 million euros.