#TradeAgreements - What the EU is working on

Trade agreements are a key component of the EU's trade policy. On 12 February, MEPs approved free trade and investment protection agreements with Vietnam. Following Vietnam’s ratification of the trade deal on 8 June, it will take effect by the end of summer 2020.

In February 2019, MEPs voted in favour of EU-Singapore trade and investment protection deals, which will eliminate nearly all tariffs within five years. A few months before that MEPs also approved a major trade agreement and a strategic partnership with Japan.

The importance of trade agreements

Trade agreements are very important to the EU as they are a key driver of economic growth. In 2018 the EU was the world's second biggest exporter of goods (15.5%) after China (15.8%) but ahead of the US (10.6%). It was also the second largest importer (13.7%) after the US 15.8%) but ahead of China (13.0%) in 2018. New trade agreements create new business opportunities for European companies, leading to more jobs being created, while consumers can look forward to more choice and lower prices.

There are concerns that trade agreements can lead to job losses in some sectors due to the increased competition, but these deals always create more jobs than they destroy. Another concern is that they could lead to high quality standards for products such as food being watered down. However, as the EU represents such a large market, it is in a good position to impose its standards on foreign companies.

For MEPs, quality standards are always a red line in trade agreements and any attempt to lower them could be a reason for them to reject them. In addition EU negotiators often include clauses regarding human rights and labour rights in trade agreements to help improve the situation in the country we are trading with

Types of agreements

The EU has different types of agreements in place with countries. They can focus on reducing or eliminating tariff barriers or establishing a customs union by removing customs duties and establishing a joint customs tariff for foreign imports.

It’s not all about tariffs though. It could also be about investment and how to deal with disputes involving investment. For example, when a company feels a decision by a government is affecting its investment in that country. Non-tariff barriers are also vital such as product standards (for example the EU has banned certain hormones in cattle farming over health fears).

Europe

Negotiations with the UK are due to end this year. Read more about the ongoing talks.

North America

The free trade agreement with Canada, known as the Comprehensive Economic Trade Agreement (Ceta) provisionally entered into force on 21 September 2017. It will enter fully into force once all EU countries have ratified the agreement.

Negotiations on the Transatlantic Trade and Investment Partnership (TTIP) with the United States were stopped until further notice at the end of 2016. On 15 April 2019, the Council of the EU approved negotiating mandates for an agreement on eliminating tariffs for industrial goods and mutual recognition of conformity assessment with the US. Further steps remain to be decided.

Asia

The EU-Japan Economic Partnership came into force on 1 February 2019. The agreement with Vietnam will enter into force later this year.

There are no free trade negotiations ongoing with China, but there are other talks such as negotiations for a comprehensive EU-China investment agreement. Launched in November 2013, the latest negotiation round took place in January 2020.

Negotiations with other Asian countries:

• Malaysia (government in Malaysia yet to take position on whether to resume talks)
• Indonesia (the 10th round of talks took place in March 2020)
• Thailand (EU ready to resume talks)
• Philippines (no date yet for next round of negotiations)
• Myanmar (talks halted since 2017)
• India (the two sides remain in regular contact)Oceania

Negotiations for a comprehensive trade agreement with Australia were launched on 18 June 2018. Negotiations for a deal with New Zealand were launched on 21 June 2018. In both cases there have been further rounds of talks since then.

Latin America

An agreement in principle with Mercosur countries was reached in June 2019, however this is subject to approval by the Council and European Parliament.

Negotiations with Mexico on modernizing the EU-Mexico Global Agreement started in June 2016. A political agreement was found on 21 April 2018. However, it still needs to be approved by the Council and the European Parliament before it can enter into force.

The seventh round of negotiations with Chile took place in May 2020 by video conference.

Southern Mediterranean and Middle East

There are various agreements, including association agreements particularly to boost trade in goods. There are also talks on expanding these agreements in areas such as agriculture and industrial standards with individual countries.

Trade in services

The Trade in Services Agreement (TiSA), is currently being negotiated by 23 members of the World Trade Organisation (WTO), including the EU. Together, the participating countries account for 70% of world trade in services. Talks were put on hold in late autumn 2016 and the next steps still need to be determined.

Parliament’s role

Since the Lisbon Treaty entered into force in 2009, trade agreements need the Parliament’s approval before they can enter into force. MEPs also need to be regularly updated on progress during negotiations.

Parliament has already shown it will not hesitate to use its veto if there are serious concerns. For example MEPs rejected the Anti-Counterfeiting Trade Agreement (Acta) in 2012.

Check out the infographic on the EU's position in word trade