The European Union's free trade agreements
Free trade is one of the major drivers of growth for the world economy. Both consumers and enterprises can derive great benefit from it - the history of the European Union shows this.
The Federal Ministry of Food and Agriculture (BMEL) supports the EU's efforts to negotiate comprehensive free trade agreements, in the form of association, partnership and cooperation agreements in cases where no material progress has been made in negotiations at World Trade Organization (WTO) level.
From the European and German perspective, EU free trade agreements merely supplement the WTO negotiations. Concluding the WTO's Doha Development Round negotiations on agriculture and fishery subsidies, which have been ongoing since 2001, and strengthening the multilateral trading system remain priorities for the BMEL. All agreements negotiated outside of the WTO have to be compatible with existing WTO requirements.
Studies show: free trade agreements can create new jobs and secure existing jobs. If tariffs are reduced or other unjustified trade barriers removed, for example through the cooperation of regulating authorities, this opens up new opportunities for the competitive German agri-food sector, especially for high-quality products.
Free market access also means there are advantages for consumers: The range of products available increases whilst consumer prices sink. The BMEL advocates that the high level of European consumer protection should be maintained in the EU's negotiations with potential free trade partners. All products traded in the EU must, for example, comply with the applicable product safety standards. This also applies to imported goods.
What is more, bilateral agreements offer the opportunity to work on specific issues which are more difficult to adopt within a multilateral context. For instance, the EU is trying to incorporate environmental and social rules into its bilateral agreements. With regard to animal welfare, the EU also pursues the objective of codifying cooperation on animal welfare standards in the agreements
The main goal for negotiations is to reach agreements with emerging countries as these countries are not only gaining importance in economic terms, they also often still protect their markets with high tariffs and other non-tariff trade barriers. Traditional trade partners are also interesting negotiating partners.
On 21 September 2017, the EU-Canada free trade agreement provisionally entered into force. The parliaments of all EU Member States have to ratify the agreement before it can fully enter into force since competence for some contents lies with the Member States.
As part of their new and more comprehensive trade policy, the EU also held negotiations with Mexico to overhaul the free trade agreement from the year 2000. In 2018, a political agreement was reached on this matter.
The entry into force of the EU-Japan Economic Partnership Agreement on 1 February 2019 sent a strong message for open markets and rule-based trade in a difficult global environment. Japan is a vital trade partner for the agri-food sector. Japan has a high demand for imported foodstuffs and a large and affluent middle class.
For 20 years, the EU and Mercosur (Mercado Común del Sur (“Common Market of the South”) - Brazil, Argentina, Uruguay and Paraguay) have been negotiating an Association Agreement with a comprehensive part on free trade. In June 2019, at the fringes of the G20 summit in Osaka, a basic policy agreement on the joint free trade agreement was announced.
On 30 June 2019, the EU and Vietnam signed their free trade agreement, the negotiations for which had already been completed by the end of 2015. This growing market offers interesting sales potential for the German agri-food industry to tap.
Trade agreements with EU neighbouring states
The European Neighbourhood Policy is geared towards strengthening the links with the EU's neighbouring states through trade agreements. The EU reached Association Agreements with Ukraine, Georgia and Moldova, which have already entered into force in the EU and are currently undergoing ratification in the Member States. The EU is also looking to cooperate more closely with neighbouring countries in the Mediterranean area through comprehensive development and trade agreements.
Trade policy as part of EU foreign and development policy
The already concluded negotiations with Central America and the Andean countries Columbia, Peru and Ecuador are also expected to generate synergies in foreign policy. The Federal Ministry of Economic Cooperation and Development is spearheading negotiations of Economic Partnership Agreements (EPAs) with the African, Caribbean and Pacific countries and regions (ACP) with a focus on development policy. These also include free trade agreements. Due to their traditionally close ties to the EU states, these countries are granted entirely duty-free and quota-free market access to the EU. This should help to foster their economic development.
Despite the "free trade" concept, the ACP states may protect themselves against EU imports when it comes to sensitive products, especially in the agricultural sector. This means they are able to further develop their own agricultural sector. The agreements are largely near the end of the negotiation stage and some are already in effect. For instance, the regional Economic Partnership Agreement (EPA) with the Caribbean CARIFORUM countries
was signed in October 2008 and has been provisionally applied since December 2008. The EPA Southern Africa (SADC), including Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland, was signed in June 2016 and has been applied provisionally since October 2016. Negotiations have been completed with West Africa (ECOWAS) and East Africa (EAC).
Each agreement still needs to be ratified by the individual countries. Interim EPAs have been concluded with individual states (Papa New Guinea, Fiji, Mauritius, Madagascar, Zimbabwe, Seychelles and Cameroon) in the Pacific, South-East Africa and Central Africa regions. These are also already in force. Negotiations continue at regional level. Notwithstanding the above, the least developed countries are given entirely tariff-free and quota-free market access for their goods in the EU.