European Union

Trade Agreements

Karen BoniventoMohammed Hamdan

Laura RodríguezDaniel Salcedo

1. History2. Members3. Level of integration4. Role in World Trade5. Trade goods6. Level of exports and imports: industries and

partners7. Agreements with countries and blocs8. Future

Agenda

• What is the European Union?A unique economic and political partnership

between 27 democratic European countries.• What are its aims?Peace, prosperity and freedom for its 498 million

citizens — in a fairer, safer world.

Introduction

History

45-

59

• A peaceful Europe – the beginnings of cooperation

60’s

• The ‘Swinging Sixties’ – a period of economic growth

70’s

• A growing Community – 1st enlargement: 6 to 9 members

80’s

• The changing face of Europe - the fall of the Berlin Wall

90’s

• A Europe without frontiers: Treaty of Maastricht 93’

00’s

• A decade of further expansion: Euro

Source: European Comission

Member States

Level of Integration

• Single Market: The EU economy consists of a single/common market and is represented as a unified entity in the WTO.

- Free circulation of production factors- Abolishment of Customs duties internally- Uniform system for taxing imports.

Single Market Economic Union

- Euro- European Central Bank- Government and Monetary Policies

World trade: Main Players 2008

EU: 1/5 of world trade

Export Commodities:Machinery, motor vehicles, aircraft, plastics, pharmaceuticals and other chemicals, fuels, iron and steel, nonferrous metals, wood pulp and paper products, textiles, meat, dairy products, fish, alcoholic beverages.

Import Commodities:Machinery, vehicles, aircraft, plastics, crude oil, chemicals, textiles, metals, foodstuffs, clothing.

Trade goods

Source: CIA

Trade Partners: Extra 2009

Trade Partners: Intra

Level of Exports and Imports / Industries and Partners 2009

Agreements between two political entities, thus legally binding these two territories only

• Customs unions, free-trade, association, co-operation and partnerships

• These preferential trade agreements are notified under either Article XXIV of the GATT or Article V of the GATS.

Bilateral Agreements

Countries

Bilateral Agreements

United States"Framework for Advancing

Transatlantic Economic Integration between the USA and the EU"

• Transatlantic Economic Council (TEC) : guides and accelerates the implementation of work designed to closer integrate economies.

Impact on economy of Non-Tariff Measures (NTMs) between the EU and the US:

1. For the EU, no NTMs will increase the GDP (€122 billion per year) and exports (+2.1%).

• Gains: motor vehicles, chemicals, pharmaceuticals, food and electrical machinery.  

2. For the US, no NTMs are estimated at €41 billion per year for GDP and 6.1% for exports.

• Gain: electrical machinery, chemicals, pharmaceuticals, financial services and insurance sectors.

The US gains more in exports and the EU more in income.

China

• The EU's open market has been a large contributor to China's export-led growth.

• EU is committed to open trading relations with China. • Issues to be seen in detail:

• trades fairly, respects intellectual property rights and meet its WTO obligations.

1. EU goods exports to China 2009: €81.6 billion 1. Machinery and transport equipment, miscellaneous

manufactured articles, chemicals2. EU goods imports from China 2009: €214.7 billion

1. The same but NO chemicals

Free Trade Agreement (FTA)(2007): beginning of negotiations between EU and India to increase their trade in both goods and services

• Six negotiating rounds have been held(2009)

• EU goods exports to India 2007: €26.2 billion• EU goods imports from India 2007: €29.4

billion

India

Russia

• Russia: 52.3% of its overall trade with EU

• EU-Russia relations: ongoing WTO negotiations on a new agreement to replace the current Partnership and Co-operation Agreement(PCA)• PCA:

• EU imports from Russia mostly not subject to any restrictions.• EU restrictions, in the steel sector, are addressed under a bilateral

agreement (steel quotas )

• Imports from Russia: energy and mineral fuels products, manufactured goods chemicals and raw materials.

• Exports to Russia: all categories of machinery and transport equipment, manufactured goods, food and live animals.

EconomicBlocs

Bilateral Agreements

Mercosur

• In 2008, the EU is Mercosur's first largest trading partner• 20.7% of total Mercosur trade

• In 2009, Mercosur ranks 8th among EU trading partners• 2.7% of total EU trade.

• EU market for agricultural exports (19.8% of total EU agricultural imports)

• Mercosur market for industrial products:• machinery, transport equipment and chemicals.

Andean Countries

• Second largest trading partner after the US. 

1. EU imports primary products: agricultural products (47.5%); fuels and mining products (41.1%).

2. EU exports manufactured goods: (89.6%) notably machinery and transport equipment (47.4%) and chemical products (18.4%).

• The EU grants the Andean countries preferential access to its market under the EU's General System of Preferences

ASEM (Asia-Europe Meeting)

ASEM(Asia-

Europe Meeting)

• Informal process of dialogue and co-operation established in 1996• non-binding dialogue forum based on equality

and consensus• three pillars: addresses political, economic and

cultural issues

• Objective: make relationships between the two regions stronger

ASEAN Association of South

East Nations

• In 2006, EU-ASEAN trade represented 5% of total world trade. average annual growth rate of 4% 1. exports to ASEAN: chemical products, machinery and

transport equipment 2. imports from ASEAN: machinery and transport equipment,

as well as chemicals, textiles and clothing.

The Trans-Regional EU-ASEAN Trade Initiative (TREATI): promote region-to-region economic relations, particularly by addressing non-tariff barriers through regulatory co-operation and ultimately to lay the foundations for a preferential regional trade agreement in the future.

Africa, Caribbean,

Pacific

Up to 2007, ACP countries enjoyed preferential access to the EC market. ACP countries could apply barriers on imports from the EC, whereas they had almost duty free-quota free access to EC market.

Cotonou Agreement • Reduction and eventual eradication of poverty • Contribute to sustainable development• Integrate the ACP countries into the world

economy

Central Asia

• Geostrategic importance to the EU: A bridge to China as well as to Afghanistan and the Middle East

• Source of significant energy imports for the EU• EU imports: crude oil, gas, metals and cotton

fiber• EU exports: machinery and transport equipment.

• All five Central Asian countries are beneficiaries of the EU's Generalized System of Preferences (GSP).

Central America

• Trade remained largely stable at around 10% (last decade)

• This region has actively sought to widen its export markets in Europe

• Export to the EU: agricultural products (coffee, bananas and other fruits, together= 36% of exports to the EU in 2007)

• Exports from the EU: machinery, chemicals, ships, boats, vehicles and fuels.

- Major challenges to the future of Europe lie ahead

- Institutional process of updating the rules governing the relations between the member countries

- More members joining the Eurozone

Future