An annual report from the European Commission on the implementation of the European Union's free trade agreements (FTAs), published on Wednesday 31 October, reveals improvements in 2017 compared with 2016 as to the use of tariff rebates (see EUROPE 11901).
However, for some sectors, already singled out in 2016, the tariff benefits remain under-utilised by EU economic operators.
The 2017 report, the second of the kind, covers the development of the situation for 35 EU trade agreements – in other words, 32% of the EU's total trade with the world, accounting for €1179 billion.
It was an overall fruitful year for European exporters, according to the report: exports up, with €637 billion for the FTAs – in other words, 12% more with South Korea compared by 2016, 10% more with Colombia, and 7% more with Canada over the nine months of the CETA being in force.
Among the most dynamic sectors are the agri-food industry and that of motor vehicles – both already identified in 2016. By contrast, as in 2016, the potential remains unexploited for the transport equipment and machinery sectors.
As to the imports made as part of the FTAs, they account for €542 billion in 2017.
From a trade point of view, the three economies most integrated with the EU are, unsurprisingly, neighbours of the European bloc: Switzerland with 7% of trade under the FTA framework, Turkey (41%) and Norway (3.4%). Fourth on the list, with 2.7%, South Korea is the first state with which the EU implemented a new generation agreement (seven years ago).
Utilisation rates generally up
In the FTA with South Korea, the increase in preferential utilisation rates by European operators continues, applying to 74.3% of exports and 88% of imports. The result is similar for the FTAs with countries such as Chile, Georgia, Colombia, Ecuador and Peru.
The utilisation of tariff quotas, which are applied especially to sensitive products, is also progressing in European trade with Central America (for European milk powder) and with Chile (EU cheeses). The report nevertheless deplores an under-performance with the Mediterranean countries.
The Commission's report also covers progress made in the elimination of non-trade barriers.
As to the trade and sustainable development chapters in the "new generation" FTAs, the report notes that "the stronger EU engagement is starting to deliver results" although at different speeds according to the partners. In particular it mentions the cases of South Korea and Latin American countries.
Taking more advantage of the agreements
The report is part of an exercise enabling assurance that the many FTAs negotiated by the European Commission do indeed bring the intended benefits to European operators. Another objective is to monitor the FTAs' implementation and to learn lessons for ongoing or future negotiations.
According to a study published by the Commission last July, EU exports could save around €15 billion per year if they fully use the trade preferences offered by the 18 EU FTAs.
The report highlights the measures implemented by the Commission to ensure that these FTAs benefit everyone, particularly small- and medium-sized enterprises (SMEs).
The subject will be on the agenda of the Foreign Affairs-Trade Council on Friday 9 November 2018. European Trade Commissioner Cecilia Malmström will discuss the content of the report with the trade ministers. The report will also be discussed by MEPs from the European Parliament's international trade committee.
The report can be consulted at: https://bit.ly/2OdslQA. (Original version in French by Hermine Donceel)