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IP/07/540

Brussels, 23 April 2007

European Commission welcomes adoption of negotiating mandates for new Free Trade Agreements with India, Korea and ASEAN

The European Commission has today welcomed the formal adoption by European Member States of negotiating mandates for a new generation of Free Trade Agreements with India, South Korea and ASEAN. New independent research released by the European Commission today suggests that the agreements could add more than 40 billion euros to EU exports annually and provide wide new trade opportunities for all sides. The European Commission, which will negotiate on behalf of EU Member states, expects to launch negotiations in the months to come.

EU Trade Commissioner Peter Mandelson said: “Combined with a successful conclusion to the Doha Round, these agreements will open new markets to EU businesses and give a valuable boost to global trade.”

Real benefits for EU exporters, and a boost for global trade

The initial results of analysis undertaken by CEPII and Copenhagen Economics suggest that the agreements will create significant new trade and give a valuable boost to global trade, especially in services. Analysis released by the Commission today concludes:

  • The agreements will boost EU exports to ASEAN by 24.2%, to India by 56.8% and to Korea by 47.8%. The three deals combined could increase total EU exports (1.3 trillion euros in 2005) by 3.23%. They offer an increase of GDP of 0.13% for the EU.
  • ASEAN would see an increase of its exports to the EU of 18.5%, Korea would see exports to the EU rise by 36% and India by 18.7%.
  • The biggest gains for the EU would include: business services to ASEAN; industrial and manufactured goods to India; business services to Korea.
  • The three agreements will result in large net additions to global trade, with trade diversion effects from the three agreements likely to be minimal. By focusing on areas currently outside the WTO such as business services, the three agreements will complement the multilateral system well.

Background

A central part of the European Commission’s Global Europe trade policy framework, the new Free Trade Agreements will complement the EU’s strong commitment to the multilateral trading system by focusing on areas not currently covered by WTO rules such as investment, trade in certain services and the removal of non-tariff barriers.

The key economic criteria for these FTAs is market potential (economic size and growth) and the level of protection against EU export interests (tariffs and non tariff barriers). The EU also takes account of potential partners’ negotiations with EU competitors and the likely impact of this on EU markets and economies. Based on these criteria, ASEAN, Korea and India emerge as priorities. They combine high levels of protection with large market potential.

In terms of content these FTAs are competitiveness-driven: comprehensive and ambitious in coverage, aiming at the highest possible degree of trade liberalisation including far-reaching liberalisation of services and investment. They will also seek stronger protection of intellectual property rights.

To have an overview of preliminary analysis of the potential benefits of the new generation of FTAs or to know more about Global Europe and EU trade policy visit: http://ec.europa.eu/trade/index_en.htm


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