Trade agreements and negotiations

Benefits of different forms of trade agreement

Trade agreements open up new opportunities for Europe’s exporters and ensure access to vital competitive imports – around 65 percent of extra-EU imports are inputs for EU business.

Doha Development Agenda (DDA)

• multilateral agreement through the Doha Round will deliver the greatest benefits, to both developed and developing countries, by widespread trade liberalisation
• the DDA could boost the global economy by $170 billion annually, would act as a safeguard against potential protectionism worth $581 billion annually and would benefit developing countries through reduced distortions in the agricultural sector and improved market access

Free Trade Agreements (FTAs/RTAs)

• deliver substantial gains for the UK and EU economies - the EU-Korea FTA is estimated to be worth around £0.5 billion to the UK economy
• achieve near total liberalisation of trade in goods - the EU-Korea FTA will reduce tariffs to zero on 98% of trade between the EU and Korea and eliminate € 1.6 billion duties annually for EU exporters – the most ambitious achieved in an FTA
• lock in and expand market access for services companies - the EU-Korea FTA has an ambitious services chapter, which addresses barriers to the supply of services by UK providers in key sectors such as financial and professional services
• make progress on regulatory issues, which we cannot tackle in the DDA - all EU FTAs contain provisions on Government Procurement, Competition, Investment, Regulatory Standards and Intellectual Property

Investment Promotion and Protection Agreements (IPPAs)

• IPPAs do not open markets to inward investors, but they do provide guarantees as to how foreign investors will be treated by their host governments once they have made an overseas investment so they complement trade by encouraging greater FDI (foreign direct investment)
• should help to increase investor confidence and hence encourage flows of FDI

Unilateral & Bilateral Schemes

These include Economic Partnership Agreements (EPAs); Preferences; Generalised System of Preferences(GSP) and Everything but Arms (EBA). These aren’t expected to directly affect the EU or UK economies significantly, but they will have a beneficial impact on developing countries.

Economic Partnership Agreements

• bilateral agreements we are negotiating with countries in Africa, the Caribbean and the Pacific (ACP)
• provide immediate 100% duty and quota free access to EU markets
• are asymmetric: ACP countries need only liberalise 80% of their trade and may do so over 15-25 years
• contain safeguards that allow countries to protect vital products
• aid development and promote regional integration, as the EU negotiates with regional blocs of countries

GSP

• grants trade preferences and reductions in tariffs to 176 developing countries and territories
• over €47billion worth of goods are imported each year into the EU under GSP (2007 trade figures)

GSP+

• grants additional trade preferences to those given by GSP, particularly in textiles
• beneficiary countries must ratify and effectively implement 27 international conventions on human rights, labour rights, good governance and environmental standards
• as an example of how GSP+ can help to improve human rights, earlier this year, El Salvador changed its constitution to bring it in line with the conventions, following an investigation into its eligibility for GSP+

Everything but Arms

• grants duty free quota free access to all Least Developed Countries (LDCs)
• no requirement to reciprocate
• the best of the unilateral schemes – hence given only to LDCs

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