The EU negotiates various trade deals all over the world, but they depend on approval by the European Parliament. Read our overview of the negotiations in progress.
MEPs debate on 25 October the EU’s upcoming trade talks with Australia and New Zealand, but these free trade agreements are far from the only deals the EU is working on.
The importance of trade agreements
Trade agreements are very important to the EU as they are a key driver of economic growth. In 2015 the EU was the world's biggest exporter and importer of goods and services, covering 32.15% of the global trade, ahead of the US (12.01%) and China (10.68%). 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).
Ceta and TTIP
The free trade agreement with Canada is the latest one to have been agreed. Negotiations for the Comprehensive Economic Trade Agreement or Ceta finished in September 2014 and the agreement was signed on 30 October 2016. The European Parliament approved the agreement on 15 February 2017 and is now provisionally in force.
The Transatlantic Trade and Investment Partnership (TTIP) with the United States has proved very controversial due to concerns over product standards and the resolution of investment disputes. Negotiations are now effectively on hold as the new administration is still defining its trade policy.
The EU and Japan agreed on the main elements of an economic partnership on 6 July 2017, but some issues such as investment protection are still being negotiated. The aim is to have a final text by the end of 2017, which will then have to be approved by Parliament and the national governments.
There are no other free trade negotiations ongoing with China, but there are other talks as well such as negotiations for a comprehensive EU-China investment agreement. This was launched in November 2013 and the latest negotiation round took place in Beijing on 9 October 2017.
Negotiations with other Asian countries are also going on:
- Malaysia (about halfway, but most difficult issues remain to be resolved)
- Indonesia (third round of negotiations took place in September 2017)
- Thailand (four negotiation rounds so far, but no new ones have been scheduled)
- Philippines (no date yet for next round of negotiations)
- Myanmar (four rounds of negotiations, but no date set yet for next round)
- India (no negotiations at the moment, but discussions on resuming talks continue)
In Latin America the latest negotiations for Mercosur took place in Brasilia on 2-6 October 2017. The fifth round of negotiations with Mexico took place in Brussels on 25-29 September 2017.
Southern Mediterranean and Middle East
There are various agreements, including association agreements with eight countries to especially 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
There’s also the Trade in Services Agreement (TiSA), a trade agreement 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.
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.
This article was originally published on 19 October 2016 but was updated on 24 October 2017 to include the latest available information.