The European Union and its trade partners
With trade fundamental for its prosperity, the EU promotes an open economy and supports a multilateral rules-based order. The EU is a founder of and key player in the World Trade Organization (WTO). In addition, to overcome trade barriers, level the playing field for its businesses and promote international commitments on trade and sustainable development the EU has a network of more than 40 free trade agreements (FTAs), with other negotiations ongoing.
Legal basis
Article 207 of the Treaty on the Functioning of the European Union establishes the common commercial policy as an exclusive competence of the EU.
The EU’s central position
The EU, China and the United States (US) are the world’s largest economies. Thanks to its GDP of around EUR 17 trillion and the openness of its market, the EU has played a central role in shaping the global trading system, among other things, by supporting the WTO. Economic openness has brought significant advantages to the EU, given that more than 30 million jobs (or one in seven jobs) in the EU depend on external trade and that global economic growth is expected to be generated mainly outside Europe. New economic players and technological innovation, particularly digitalisation, have changed the structure and patterns of international trade. Today’s global economy is highly integrated and global supply chains have largely replaced the traditional trade in finished goods.
Role of the European Commission and the European Parliament
International trade was one of the first sectors in which the Member States agreed to delegate their decision-making powers to shared institutions. Thus, under the exclusive competence, the EU negotiates both bilateral and multilateral trade agreements on behalf of its Member States. As is demonstrated by its record in the WTO dispute settlement system, the EU has been able to defend its interests in international trade disputes. The EU uses international trade tools to promote its values and policies and strives to extend its regulatory practices to the rest of the world, favouring an open and fair international trading system.
In 2009 with the entry into force of the Treaty of Lisbon, Parliament became co-legislator on trade and investment matters on an equal footing with the Council. In addition, the Treaty conferred on Parliament a more active role during the negotiations and its consent is mandatory for the ratification of international trade agreements. However, some aspects of trade policy remain under the EU’s shared competence. On 16 May 2017, the Court of Justice of the European Union (CJEU) published an opinion that gave clarity about the division between national and EU competences.
Free trade agreements
When the multilateral negotiations within the WTO on the Doha Development Agenda stalled in the first decade of the 21st century, the EU had to find alternative ways to guarantee better access to non-EU countries’ markets. To this end, a new generation of comprehensive FTAs, which go beyond tariff cuts and trade in goods, was introduced. Since then, a number of agreements have been concluded.
The EU’s FTA with South Korea entered into force in December 2015. The Multiparty Trade Agreement between the EU and Peru, Colombia, and later Ecuador (since 2017) has been in force since 2013. The trade pillar of the Association Agreement with the countries of Central America (Honduras, Nicaragua, Panama, Costa Rica, El Salvador and Guatemala), has been provisionally applied since 2013. The EU-Canada Comprehensive Economic and Trade Agreement has been provisionally applied since September 2017. The EU-Singapore FTA entered into force at the end of 2019, and the EU-Viet Nam FTA has been in force since mid-2020. An Economic Partnership Agreement with Japan entered into force on 1 February 2019. In December 2020, the EU concluded a Trade and Cooperation Agreement (TCA) with the United Kingdom (UK), which entered into force on 1 May 2021. The TCA provides for zero tariffs and zero quotas on trade in goods, covering investment and numerous other policy areas. The EU-New Zealand free trade agreement was approved by Parliament on 22 November 2023 and it entered into force on 1 May 2024. On 13 December 2023, the EU and Chile signed the modernised EU-Chile Advanced Framework Agreement, which was approved by Parliament on 29 February 2024. The EU-Chile Interim Trade Agreement has been in force since 1 February 2025.
In the fast-evolving digital era, the EU champions new, modern types of agreements, such as the Digital Trade Agreements (DTAs) to complement the FTAs. On 7 May 2025, the EU-Singapore DTA was signed, while negotiations for the EU-South Korea DTA ended in March 2025.
On 21 May 2025 a package of EU-Switzerland agreements was initialled that will deepen bilateral relations in the fields of transport, free movement of persons, mutual recognition of conformity assessment, agricultural trade, food safety and electricity, among others.
On 21 August 2025, the EU and the US issued a ‘joint statement on a United States-European Union framework on an agreement on reciprocal, fair and balanced trade’. To implement the statement, Parliament is working on two legislative proposals adjusting customs duties. The statement is intended as a first step towards increasing the trade and investment relationship. On 3 September 2025, the Commission proposed the signature and conclusion of the EU-Mercosur Partnership Agreement and the interim Trade Agreement, as well as the modernised Global Agreement with Mexico. Negotiations on a trade agreement with the founding members of Mercosur were initially completed in 2019 and updated at the end of 2024, notably in terms of sustainable development, whereas negotiations with Mexico were concluded in early 2025 On 23 September 2025, the EU and Indonesia concluded negotiations for a Comprehensive Economic Partnership Agreement. There are ongoing FTA negotiations with the Philippines and Australia. Negotiations were restarted with India in 2021, with a Trade and Technology Council launched in 2022. The EU resumed negotiations with Thailand in 2023 and with Malaysia in 2025.
Trade policy
The 2021 EU Trade Policy Review, entitled ‘An Open, Sustainable and Assertive Trade Policy’ aims to set the course for trade policy until 2030. The Trade Policy Review reflects the geopolitical changes by introducing terms such as ‘assertiveness’ and ‘resilience’ into the trade vocabulary, in addition to the well-known concepts of ‘fairness’ and ‘sustainability’. It intends to make trade policy meet current challenges and facilitate the green and digital transitions through ‘Open Strategic Autonomy’. The ‘European Economic Security Strategy’ of 20 June 2023 seeks to maximise the benefits of the EU’s economic openness, while also increasing protection from risks related to the resilience of supply chains or economic coercion, thus underpinning different aspects of the EU’s trade policy. One element of this strategy is strengthening the EU’s foreign direct investment screening, a legislative proposal on which Parliament is currently working. To avert attempts at economic coercion against the Union or its Member States, in 2023 the EU adopted the Anti-Coercion Instrument, providing a toolbox of response measures ranging from trade restrictions and export controls to measures relating to public procurement or intellectual property rights
Main EU trade partners
The EU is the world’s largest trading power, with a global share of 15.8%, in terms of the total volume of trade in goods and services. It is the top trading partner for 80 countries across the globe.
Moreover, the EU is the world’s largest exporter of manufactured goods and ranks second in terms of exported goods overall. In 2024, the US was the top destination for EU goods with a 20.6% share of the total exports, followed by the UK (13.2%), China (8.3%), Switzerland (7.5%) and Türkiye (4.3%). With respect to imports, China was the top country of origin for goods entering the EU in 2024 (21.3%), ahead of the US (13.7%), the UK (6.7%), Switzerland (5.5%) and Türkiye (4.0%).
EU is the world’s largest trader in services, representing 22.8% of the global total. In 2023, the US was the EU’s main trading partner for services, followed by the UK and Switzerland.
Investment
The EU is the world’s largest investor and a major recipient of other countries’ foreign direct investment (FDI) (32.67% of world outward stock and 25.3% of world inward stock in 2023 respectively). The entry into force of the Treaty of Lisbon in 2009 further extended the EU’s exclusive competence in international trade matters to include FDI. To clarify the exact scope of its competences on investment, the Commission asked the CJEU for an opinion on the EU-Singapore FTA. The CJEU’s Opinion 2/15 of 16 May 2017 on the EU-Singapore FTA confirmed that most aspects of FDI fall under the exclusive EU competence, with some exceptions, in particular dispute settlement.
The EU concluded, in principle, the negotiations for a Comprehensive Agreement on Investment with China in December 2020. Parliament gave consent to investment protection agreements with Singapore and Viet Nam in 2019 and 2020 respectively. The final conclusion is pending until all EU Member States have ratified the agreements. On 1 September 2024, the EU-Angola Sustainable Investment Facilitation Agreement entered into force as the first-ever EU agreement on investment facilitation. Aiming to stimulate foreign investments, the agreement’s main focus is on achieving the Sustainable Development Goals. Negotiations for the EU-Indonesia Investment Protection Agreement were concluded on 23 September 2025.
Rasma Kaskina