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The EU Foreign Affairs Council on Trade exercises – on behalf of the member states – trade negotiations with the outside world (so-called EU common commercial policy); this work is within the so-called exclusive EU competences. The EU trade Commissioner provided an overview of some bilateral trade negotiations: the EU already has the largest network of foreign trade agreements (FTAs) in the world, and this network is continuing to expand.
Background
Presently, the EU has been negotiating with Indonesia, the Philippines, Thailand, India, Mercosur, and Mexico. The EU’s “scoping exercise” with Malaysia is ongoing, and the scoping exercise for an FTA with the UAE will start at the end of 2024.
Besides, the EU is looking to open the existing Economic Partnership Agreement with Kenya and extend the process to other East African Community countries in the future.
The EU has been working on other forms of agreement, outside of traditional FTAs, such as Digital Trade Agreements and Sustainable Investment Facilitation Agreements, or SIFAs.
Following the first ever SIFA with Angola in 2023, discussions with other potential SIFAs are now underway with Côte d’Ivoire, Ghana, Cameroon and Nigeria.
Specifically, the digital trade agreements have been recently concluded with Singapore and negotiations with South Korea are on track with an inspiration to conclude in early 2025.
Source and references to Commission press release at: https://ec.europa.eu/commission/presscorner/detail/da/statement_24_6005
Some information on perspectives in: https://economic-research.bnpparibas.com/html/en-US/European-Union-from-trade-deficit-surplus-4/26/2024,49536
Trade relations with the US
The United States continues to be European strategic ally and biggest economic and trading partner: thus, during last four years, the EU “has achieved some notable results”, including parking some of our existing disputes like the US Section 232 tariffs on steel and aluminium and Airbus-Boeing.
The European Commission has been working closely with the Trade and Technology Council (TTC) and increased cooperation on critical raw materials, supply chain resilience, export controls, investment screening, and the role of trade in accelerating the green agenda.
There is an presently an overall agreement among partners “that we must strive to work proactively with the new US Administration on transatlantic trade and investment relations, which support millions of jobs and billions in trade and investment on both sides of the Atlantic”.
Citation from: https://ec.europa.eu/commission/presscorner/detail/da/statement_24_6005
Discussions about the WTO reform
During present Commission’s mandate, the EU has continued to be a champion of preserving and advancing the WTO and rules-based international trade, including during the WTO Ministerial Conferences.
The EU will continue to play a leading role in Geneva and work towards meaningful results at the next Ministerial Conference in 2026.
Both economically and strategically, as trade Commissioner mentioned, the EU “has had the most at stake” in ensuring the continued function of rules-based trade embodied by the WTO.
The Commission has had constructive cooperation over the past years and delivered many important achievements during this mandate regardless of facing unprecedented challenges including the pandemic, Russian-Ukraine military conflict, disrupted supply chains, protectionism and unfair trade, etc. that all were threatening the EU economy.
Perspectives
Nevertheless, the consistent implementation of the EU-wide sincere, open, sustainable and assertive trade strategy has allowed addressing modern challenges, while also supporting EU’s green and digital transition, resilience and competitiveness.
Suffice to say that open and rules-based external trade supported over 30 million European jobs; moreover, due to the work of the new EU Chief Trade Enforcement Officer, the EU has opened up new export opportunities for the member states companies and farmers by breaking down 140 trade barriers in the last 5 years.
Besides, the Commission puts sustainability at the heart of trade policy, integrating it into all external trade deals and promoting it at the WTO.
The Commission has assertively dealt with unfair trade practices, introducing new tools such as the Anti-Coercion Instrument and the Foreign Subsidies Instrument, etc. It all has boosted the EU’s external trade by using trade defence instruments that currently protected around 630,000 jobs in the EU.
The EU has also reviewed its strategy towards China to de-risk trade relationship with a more assertive approach, but without decoupling economies on both sides.
Trade policy has played the leading role in Europe’s support to Ukraine contributing to sanctions against Russia and invigorating Ukraine’s economy through tariff-free access to the EU, but also for medium term actions to bring Ukraine closer to the EU Single market.
Finally, Commissioner noticed, external trade would remain as vital as it used to be, to support the core objectives of the EU-wide competitiveness, security and sustainability.
European trade balance
The EU-27 is one of the world’s biggest trade blocks in the world: it is the second largest exporter and importer of goods in the world, as extra-EU trade accounts for about 17 percent of global exports and about 15 percent of global imports; China is bigger in exports of goods than the EU, while the US is a bigger importer. The EU’s main exports are manufactured goods such as machinery, vehicles and chemicals, as well as foods and beverages.
Meanwhile, the EU is a net importer of energy and raw materials: its main import items also include machinery, vehicles and chemicals. Some EU states, like Germany, Italy, France and the Netherlands account for the largest share of total trade.
China is the most important EU’s trading partner and accounts for about 16 percent of all EU trade in goods, followed by the United States, the United Kingdom, Switzerland and Russia.
Source: https://tradingeconomics.com/european-union/balance-of-trade
During first half of 2024, the EU euro area recorded a surplus of €129.6 bn, compared with €6.2 bn in the same period in 2023; the euro area exports of goods to the rest of the world rose to €1 900.6 bn (an increase of 0.3% compared with 2023), and imports fell to €1 771.0 bn (a decrease of 6.2% compared 2023).
The EU balance showed a €1.7 bn deficit in trade in goods with the rest of the world in mid-2024, compared with a surplus of €0.4 bn in 2023. The extra-EU exports of goods in first half of 2024 was €195.6 bn, down by 1.8% compared with August 2023 (€199.2 bn). Imports from the rest of the world stood at €197.2 bn, down by 0.8% compared with August 2023 (€198.8 bn). Thus, during September 2021 and May 2023 the EU-27 explored deficit in external trade balance in goods.
In 2023, only nine EU states have had a trade surplus: the highest figures were: in the Netherlands (€284.0 billion), in Czechia (€37.1 billion), Belgium (€35.7 billion), Poland (€32.5 billion), Ireland (€27.4 billion) and Hungary (€17.1 billion).
More in: https://ec.europa.eu/eurostat/web/products-euro-indicators/w/6-17102024-bp
Table. Global exports of goods: some examples
Countries Global share, in% Value
China 14,2 3,4 trillion
The US 8,5 2,0 trillion
Germany 7,1 1,6 trillion
(The US is Germany’s largest market)
Holland 3,9 935 billion
Japan 3.0 717 = “=
Italy 2,8 677 =”=
France 2,7 648 =”=
South Korea 2,7 632 =”=
Mexico 2,5 593 =”=
Hong Kong 2,4 574 =”=
The UK 2,2 521 =”=
India 1,8 432 =”=
Russia 1,8 424 =”=
Spain 1,8 423 =”=
Source: Visual Capitalist at https://www.visualcapitalist.com/
Note: Global export of goods was at $23,8 trillion in 2023 (it increased by 5 percent compared to 2022). China’s export to the US has been at about $ 500 bn in 2023.
Besides, trade restrictions world-wide have raised to almost 3 thousand (!), i.e. at five-fold levels compared to 2015.