A key objective of the Trade for All strategy was to continue with the conclusion of a new generation of ‘deep and comprehensive’ FTAs with major trade partners, a policy that was already set in motion by the Commission’s 2006 Global Europe Strategy. The EU has concluded several FTAs with key trade partners since 2013, among them notably Canada (2016) and Japan (2018). The EU- Canada Comprehensive Trade Agreement (CETA) sets standards for the new generation of EU trade agreements with third countries regarding tariff reduction and breaking down non-tariff barriers for optimal market access. The EU-Japan Economic Partnership Agreement (JEPA) established the biggest trade zone ever negotiated in a period of increasing protectionism and contestation of the multilateral trading order. Since 2013 the EU also signed important FTAs with Eastern Partnership countries (Emerson et al., 2018) and Singapore (2018). Moreover, negotiations were finalised with Mexico and Vietnam and trade talks with Australia, New Zealand, Chile and Tunisia are making good progress.
A key objective was to continue with the conclusion of a generation of ‘deep and comprehensive’ FTAs with major trade partners.
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Not all EU FTA negotiations launched in this period were concluded successfully, however. Negotiations with the US on the Transatlantic Trade and Investment Partnership (TTIP) were suspended as soon as the Trump administration was inaugurated in January 2017 (Hamilton & Pelkmans, eds., 2015).17 Also, negotiations with several Asian countries are progressing (very)
slowly, including with Indonesia, the Philippines and Myanmar, for economic and/or political reasons. The EU also put its negotiations with Thailand on hold in 2014 after the military takeover. FTA negotiations with India (launched in 2007) were brought to a de facto standstill in the summer of 2013 due to a mismatch in levels of ambition, but at the 2017 EU-India Summit both parties declared their intention to re-engage actively towards a timely relaunch of negotiations for a comprehensive and mutually beneficial India-EU Broad Based Trade and Investment Agreement (BTIA).
The FTA negotiations with MERCOSUR saw considerable progress on a wide range of issues in 2017, but the parties failed to conclude a political agreement at the end of 2017. And during the subsequent negotiation rounds in 2018, still no agreement was reached on the remaining sensitive issues.
Due to the political situation in Turkey, the Council still needs to agree to launch negotiations on the modernisation of the EU-Turkey Customs Union (Gros et al., 2018) and negotiations on the EU-Morocco DCFTA are being complicated by several rulings of the Court of Justice of the European Union (CJEU) on the application of the existing EU-Morocco agreement to the Western Sahara (Van der Loo 2018).
The main stumbling blocks to the Comprehensive Agreement on Investment with China, one of EU’s top priorities according to its strategy Trade for All, are fair and equitable treatment and national treatment and its related provisions and exceptions (Pelkmans et al., 2018). This aspect has weighed heavily on EU-China trade relations in recent years. Businesses are pleading for a level playing field and reciprocal treatment between the two global trade powers.
Contestation of the EU’s FTAs and the new architecture of EU trade
and investment agreements
Negotiations on the new generation of EU FTAs, in particular those on CETA and TTIP, triggered a heated debate in 2013/2014 about the benefits and consequences of these far-reaching trade agreements. Several (national parliaments of) member states, Members of the European Parliament and civil society groups contested the new generation of EU FTAs, fearing, inter alia, that these agreements would degrade environmental and consumer protection,
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public services and labour standards and lessen the government’s right to regulate. Moreover, several concerns were raised with regard to transparency and the proposed Investor and State Dispute Settlement (ISDS) mechanism in TTIP and CETA. The European Commission tried to accommodate these concerns in the Trade for All Strategy by making trade negotiations more transparent (e.g. by inviting the Council to disclose all FTA negotiating directives and by publishing the textual proposals of FTA chapters during the negotiations), and by reforming the ISDS into a new ‘Investment Court System’ (see below).
After the Walloon region temporarily blocked the EU’s signature of CETA in 2016, a broader discussion was launched on whether, in addition to the EU, all member states need be involved in the conclusion and ratification of trade agreements (as so-called ‘mixed agreements’) or whether these FTAs should only be concluded by the EU (as so-called ‘EU-only agreements’), thus avoiding the risk that one member state can block the conclusion of an EU FTA for the entire EU (Van der Loo, 2016). This discussion took place in parallel with the landmark Opinion 2/15 of the CJEU in which Court broadly interpreted the EU’s post-Lisbon trade competences and concluded that the entire EU- Singapore FTA falls within the exclusive competences of the EU, with the notable exceptions of portfolio investment and ISDS (Van der Loo, 2017). In order to avoid the burdensome and unpredictable ratification procedure by 28 member states (and their national parliaments), and in the light of Opinion 2/15, in September 2017 the Commission proposed to ‘split’ future trade and investment agreements in ‘EU-only’ FTAs covering exclusive EU competence (which only need to be ratified by the EU) on the one hand, and separate mixed investment agreements (which also require ratification by all 28 member states) on the other.
The Council largely agreed with this proposal in May 2018 but stressed that it would decide on a case-by-case basis on the splitting of FTAs (Council, 2018). In the meantime, the Union signed its first ‘split’ FTA and investment protection agreement with Singapore and agreed to a similar approach for the signature of the EU-Vietnam FTA.