EU trade policy in a changing world: The context Isabelle Ramdoo, ECDPM Mexa Worskshop, 27 July 2012 Labourdonnais Waterfront, Port Louis

1. EU Trade Policy in a
changing world
The Context
Isabelle Ramdoo, ECDPM
Mexa Worskshop, 27 July 2012
Labourdonnais Waterfront, Port Louis

2. Overview of Presentation
1. Introduction
1. EU FTAs: Where?
1. EU new trade policy: Why?
1. EU Trade Policy: With whom?
•Autonomous Scheme – Generalised System of Preferences
•Economic Partnership Agreements
•Bilateral FTAs
•FTAs under negotiations
•Trade relations with other countries
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3. Introduction
• After imposing a moratorium on negotiating new PTAs from
1999-2006, the EU in 2007 began negotiating a new
generation of more ambitious or comprehensive FTAs.
• 2006 Global Europe strategy: the EU targeted a number of
larger countries and regions for negotiations, including
South Korea, India, Canada, and the Association of South
East Asian Nations (ASEAN).
• Whether the EU will be successful with a more ambitious
and comprehensive agenda of FTAs remains to be seen.
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4. 1. EU FTAs – Where?
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5. EU Trade Policy in a changing world
EU’s trade agreements can be grouped into four categories :
1.Agreements for geographically close neighbours for which the
EU is prepared to offer accession or some slightly looser
relationship. These include EFTA, Turkey, Central and Western
European countries and West Balkans (Association Agreements for
potential future EU countries
2. Agreements designed primarily to foster stability around the
EU borders – Mediterranean countries, Gulf States, Ukraine
3.Agreements with a historical and development focus – this is
the case of EPAs
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6. 4. FTAs with strategic partners:
countries and regions where EU’s objective is to neutralise potential
discrimination against EU exports and investments resulting from
FTAs between third countries or to secure commercial benefits via
increased market access –e.g Korea, Chile, South Africa, Singapore
etc.
In addition, EU provides autonomous preferences to developing
countries and LDCs under its Generalised System of
Preferences (GSP). The current GSP covers 176 countries.
Reform ongoing – number of countries will be reduced to about 80. All
high income and upper middle income countries (eg. China, Brazil,
Malaysia, Gulf states) will be removed. New GSP will start in 2014.
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7. 2. EU new trade policy: Why?
Expansion of Trade flows
• Global exports of goods and services grew at a real average rate of
6.3% in the period 1980 to 2008, while GDP growth averaged 2.9%
during the same period. Trade in services rose from $0.5 billion in
the 1980s to an average of $2.5 billion in the 2000s.
• Developing countries are now new drivers of global trade: between
2000 and 2009 their exports rose by 80%, compared to 40% for the
world as a whole
Fragmentation of global value chain production in goods and
services
• Production increasingly taking place through global value chains
dominated by multinationals.
• Two thirds of world imports concern intermediate inputs.
• Expansion of world trade mainly in international outsourcing and off-
shoring of services.
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8. • Participation of developing countries in global services
trade rose from 19 to 24% during the same period.
• Trade patterns moved from a country specialisation based
on goods (primary commodities for the South and
manufactures for the North) to intra-firm/network
specialisation in terms of tasks, giving the South considerable
advantage in the production of manufactures
• The rise of the emerging economies: Brazil, Russia, India,
China, and South Africa– now economic and political actors
(members of G20). Together, they account for more than
40% of the world population (market) and approximately
17% of the value of world GDP (purchasing power).
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9. Implications of FTAs
Improved market access for key products for negotiating country BUT
erosion of preferences for others:
In 2010: some 400 PTAs in 2011, covering 50% of world trade (65% for
manufactures). All WTO members (except Mongolia) belong to at least one
PTA. South-South agreements represent 66% of all PTAs in force and North-
South about 25%.
Tariff preferences are a minor motivation for entering into PTAs: increasingly
used to promote services, investment, trade facilitation, competition policy
and government procurement etc.
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10. 3 EU Trade policy : With whom?
1. Autonomous Schemes
• The Generalised system of Preferences
• EU was the first to implement a GSP Scheme in 1971
• The current GSP has 3 schemes:
1. A standard GSP, available to all developing countries, providing
preferences;
2. A GSP Plus Scheme, available to countries meeting some
“vulnerability criteria” and implementing 27 conventions on
sustainable development and good governance, providing more
preferences than under the standard GSP Scheme to eligible
countries;
3. An Everything but Arms Scheme, giving duty free and quota free
market access to all LDCs
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11. EU is currently reviewing the GSP. Will kick in in 2014. The new
GSP will be available to:
- A smaller number of developing countries (80 countries
compared to 176 countries at present)
- Provides a 3.5% point reduction from normal (MFN) rate for all
beneficiary countries (e.x if the tariff is 24%, the GSP is (24 –
3.5 = 20.5%)
- For textiles – a 20% reduction of tariff (if tariff is 20%, GSP
rate is (.8 x 20 = 16%)
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12. But new RoO since 1st January 2011. Key elements
• Differentiated rules for LDCs and non-LDCs;
For LDCs
• For most industrial products, the threshold of valued added
requested in the LDCs is only 30% (as against 50% for non-
LDC).
• For textile and clothing, single transformation has been granted
to LDCs without quotas.
Cumulation
• new opportunities of cumulation.
• Regional cumulation is maintained and enhanced.
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13. Derogation
• the system of derogations from the rules of origin has been made
easier to apply for.
• a procedure is introduced allowing the EU to rapidly grant
derogationvs on its own initiative, in order to be able to respond
more quickly to any special situation which may occur, such as
natural disasters
Simplified rules for exporters as from 2017
• From 2017, exporters will no longer have to go to the authorities for
a certificate of origin 'Form A' for each consignment. Instead, they
would register with authorities (who would remain responsible for
controls) and once registered, issue statements of origin themselves
directly to their customers in the EU.
This set of rules is – or will be – used as a point of reference during
ongoing and future FTA negotiations
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14. 2. Economic Partnership Agreements:
Today, 36 ACP countries have an EPA. They are:
16 Caribbean countries (Haiti did not sign);
2 Pacific countries (Fiji and Papua New Guinea)
2 West African countries (Ivory Coast and Ghana)
1 Central African country (Cameroun)
5 Eastern and Southern African countries (Mauritius, Seychelles,
Madagascar, Zambia, Zimbabwe)
5 SADC countries (Mozambique, Botswana, Lesotho, Swaziland,
Namibia)
5 East African countries (Kenya, Burundi, Rwanda, Uganda,
Tanzania)
All of them have duty free and quota free market access to EU
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15. Trade relations between Mauritius and EU
• Formerly under unilateral preferences (Lome/ Cotonou) until 31
December 2007
• Since 1st January 2008, Mauritius has an EPA with the EU
Mauritius exports of main products to key markets
T Shirts
T Shirts Shirts Pull Denim Cotton Pull
Trousers Man Yarn
Cotton Cotton Cotton Fabric Fabric Wool
made
Total Exports
to world (€ 285,393 142,831 93,948 77,571 25,393 14,442 14,332 6,922 6,023
'000)
EU 82.0% 6.3% 46.9% 85.5% 78.7% 33.9% 41.7% 8.8% 75.5%
US 1.5% 82.1% 10.5% 2.9% 10.5%
Madagascar 60.0% 10.2% 56.7%
South Africa 15.1% 5.0% 37.4% 9.8% 10.2% 19.9% 19.0% 24.2%
Bangladesh 3.2%
Turkey 15.9%
fish prepared and Fish fillets, fresh,
Tuna, skip jack preserved frozen, chilled
Total Exports to world (€ '000) 264,350 9,683 4,732
EU 97.5% 100.0% 40.0%
US 2.5% 3.5%
Japan 50.4%
South Korea 3.1%
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16. Rules of origin for fish and fish products and textiles
Fish and fish products:
• Value tolerance: 15% ex-works price
• Vessels:
• Registration and flag requirements;
• Ownership: either 50% owned by nationals or companies
headquatered in ESA or EC and 50% owned by EC or ESA
• No crew requirements
• Automatic derogation: 10,000 MT (8,000 for canned tuna and
2,000 for loins) for Mauritius, Seychelles and Madagascar
• Specific rules: for fresh products – wholly obtained; for canned
and loins: materials from chapter 3 (fresh produce)
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17. Textile products
• Yarn: manufacture from raw silk, natural fibres, chemical
materials, textile pulp
• Fabric: Single stage transformation
• Garment: Single stage transformation
Value tolerance: 10% of weight of basic material used
Cumulation:
- Bilateral cumulation with EU
- Cumulation in ESA states, OCT and ACP states (excluding South
Africa) having an EPA
- Cumulation with neighbouring countries (Algeria, Egypt, Libya,
Morocco, Tunisia, Maldives), provided the provisions of the EPA
protocol apply and countries have concluded an customs
administration cooperation agreement
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18. 3. Bilateral FTAs – Agreements signed
• To date, EU has signed the following agreements:
• 1. A customs union with Turkey
• A European Free Trade Agreement (EFTA) with neighbouring European
countries, which are not part of the EU (Switzerland, Liechtenstein,
Iceland, Norway).
• Stabilisation and Association Agreements with former Eastern
European countries (Macedonia, Croatia, Albania, Montenegro, Bosnia,
Serbia)
• Association agreements with Mediterranean countries (Algeria, Egypt,
Israel, Jordan, Lebanon, Morocco, Palestine, Syria, Tunisia)
• Free Trade Agreements with Mexico (1999), Chile (2002), Korea
(2012)
• EPAs with ESA, Cariforum, PNG (2008)
• Trade and Development Cooperation Agreement, South Africa (1999)
• Preferential agreements with Peru – Columbia (2012); Central
America with Panama, Guatemala, Costa Rica, El Salvador, Honduras,
Nicaragua (2012) ; These 2 agreements are not yet into force
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19. • These FTAs represent a total of 26.4% of EU imports, of which 14 %
come from EFTA and Turkey.
• EU trades duty free with EFTA and Turkey in industrial products, but
not in agriculture For fish products, duties are as follows:
Fish fillets, fresh, fish prepared and
Tuna, skip jack
frozen, chilled preserved
EEA 5.4% 7.2% 7.2%
Turkey 0.0% 0.0% 0.0%
MFN 18.0% 24.0% 24.0%
EPA Mauritius 0.0% 0.0% 0.0%
• In Latin America, Agreements provide preferential treatment to fish
products, but not duty free treatment.
Fish fillets, fresh, fish prepared and
Tuna, skip jack
frozen, chilled preserved
Mexico 0.0% 6.8% 6.8%
Chile 3.4% 8.0% 8.0%
Colombia* 0.0% 0.0% 0.0%
El Salvador* 0.0% 0.0% 0.0%
• Before their FTAs, Columbia and El Salvador already had duty free
because they had a special scheme with the EU, GSP +
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20. • South Korea benefits from duty free for textiles. Fish products are
covered but do not benefit from duty free
Fish fillets, fresh, fish prepared and
Tuna, skip jack
frozen, chilled preserved
South Korea 13.5% 16.0% 16.0%
• South Africa: textiles are covered by the TDCA but not fish products.
Therefore SA exports under GSP preferences
Fish fillets, fresh, fish prepared and
Tuna, skip jack
frozen, chilled preserved
South Africa 14.5% 20.5% 20.5%
• Euromed countries have duty free access to EU for textiles and for
fish products
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21. FTAs under negotiations
EU is currently negotiating a number of FTAs with key developing countries,
where it has market access interests (20.2% of EU imports):
•India – a high potential economy, with rising middle class (markets) and
rising GDP (purchasing power). Negotiations are quite slow.
•ASEAN (Indonesia, Malaysia, Philippines, Singapore, Philippines, Thailand,
Vietnam, Cambodia, Laos, Myanmar): Third largest trading partner of EU.
Negotiations for FTA have started with Singapore and Malaysia in 2010.
Vietnam started negotiations in 2012
•Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia,
UAE). Negotiations were re-launched in 2002
•MERCOSUR - Argentina, Brazil, Paraguay and Uruguay – first EU’s market
for agriculture (19.8% of total EU imports). Negotiations difficult (8 rounds)
•Canada: Quite advanced, expected to be concluded in 2012.
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22. Trade relations with other countries
• EU’s trade policy aims at key markets. So far, almost 50% of EU’s trade
remain outside FTAs (China, Russia, USA, Japan)
• Possible FTAs – Japan, US, Thailand, Philippines – discussions have
started, but no fixed date yet for start of negotiations (will cover 18%
of EU’s imports)
• No planned FTAs – China, Russia (covers 30% of EU’s imports)
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23. Thank you
www.ecdpm.org
www.slideshare.net/ecdpm
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