Trade with privileged partners has been less affected by the Covid-19 crisis than trade with non-privileged ones, according to the European Commission which presented a report, on Wednesday 27 October, on the implementation of 37 of its European trade agreements.
The institution indicates that trade with 67 privileged partners of the Union fell by 9.1% in 2020, while that with non-preferential partners fell by 11.11%. Among the so-called preferential partners, Switzerland remained in first place, followed by Turkey and Japan.
In its annual report, which is the first of its kind, the Commission gives individual examples of European companies that have been able to increase their exports or investments abroad thanks to trade agreements. The report also provides an overview of the tools available to ensure the implementation of the trade agreements and the actions undertaken by the Commission in 2020 and early 2021 in this respect.
Supporting SMEs
One of the biggest reasons for satisfaction for the Commission is that it has facilitated interactions with SMEs. In October 2020, it launched the Access2Markets tool (see EUROPE 12580/30), which allows companies to quickly access the trade preferences offered by the agreements. The platform receives 5,000 visitors per day, according to the report.
In September, the Commission complemented this tool by launching Access2Procurement (see EUROPE 12796/2) to help companies find international procurement opportunities that are open to European companies.
In addition, the report highlights the SME centres in China and Japan, which provide local market information. These structures have organised several hundred training courses for more than 12,000 European SMEs.
“The report shows we have fundamentally changed the way we interact with EU stakeholders”, says a senior EU official.
Lifting trade barriers
The Commission has identified existing barriers to trade around the world and classified them into several categories. The majority of these consist of sanitary and phytosanitary measures (24%), technical barriers to trade (17%) and tariffs and equivalent quantitative restrictions (17%).
By 2020, however, the European Commission said it was able to remove 33 of the 462 barriers in place. They mainly concerned sanitary and phytosanitary measures (17 out of 33). For example, the Japanese market was opened to some European cattle exporters, Belgian apples were allowed into Mexico and Thailand, and a South Korean ban on Hungarian chickens was lifted.
Thanks to these efforts, according to the Commission, European companies were able to increase their exports by €5.4 billion in 2020 compared to what they would have achieved without the removal of barriers over the past five years.
The establishment of the Single Entry Point, the one-stop shop for complaints about trade barriers (see EUROPE 12602/24), is also cited as one of the significant advances for economic actors. This was used more than 80 times and led to 29 complaints.
The Commission also mentions its efforts to initiate dispute settlement at the World Trade Organization (WTO) or within bilateral agreements to deal with trade barriers put in place by third countries. It gives the example of Ukraine, which had introduced an export ban on unprocessed timber. In December 2020, the panel of arbitrators within the EU-Ukraine Association Agreement ruled that the ban was illegal.
Enforcing Trade and Sustainable Development chapters in agreements
Enforcing Trade and Sustainable Development (TSD) chapters in the agreements has been the object of much criticism. While these are binding, they do not provide for sanctions in case of non-compliance by third countries. This is why the Commission has brought forward the review of its 15-point Action Plan on compliance with TSD chapters in trade agreements to spring 2022.
In the meantime, it outlines the work carried out in the domestic advisory groups (DAGs) to monitor compliance with the commitments or the technical assistance offered by the EU to third countries to comply.
It also highlights the first arbitration on TSD chapters in the agreement with South Korea. In January 2021, the panel of arbitrators ruled that South Korea had not fulfilled its obligations on labour rights. Following this decision, Seoul ratified the core conventions of the International Labour Organization (ILO), which it had not yet signed (see EUROPE 12667/15).
Basis for dialogue and cooperation on rules
Finally, the Commission stresses that trade agreements provide a basis for dialogue and cooperation on rule-making. Japan, for example, has brought its wine standards closer to those of the EU. With Canada, the EU has established a forum for cooperation on rules dealing with consumer safety, heavy metals, etc.
The report shows “how the Commission, under the leadership of our CTEO (Chief Trade Enforcement Officer), is driving efforts both within the Commission and other EU institutions to implement and enforce international trade rules”, said Valdis Dombrovskis.
The Commission also wants to strengthen partnerships within the EU. “There is more to do in pulling resources from the European commission, government authorities and stakeholders to get more out of the collective effort in terms of solving problems in third country markets”, says an EU source.
Finally, the report notes that some of the work is still to come. This will come with the proposals on the anti-coercion tool, the one on corporate due diligence - which the Commission is due to present in December - the Carbon Border Adjustment Mechanism, the instrument for foreign subsidies and the one on international public procurement.
See the report: https://bit.ly/3pIcIH6 (Original version in French by Léa Marchal)