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SPEECH/11/625

Karel De Gucht

European Commissioner for Trade

EU trade policy looking East

Civil Society Trade Seminar

Warsaw, 3 October 2011

Ladies and Gentlemen,

Let me start by stressing the importance I attach to an active, two way conversation with civil society, just as with the European Parliament. We need to listen and learn from each other if we are to harness the potential of trade to improve living standards – not only here in Europe but around the globe.

Making trade policy should draw on the wealth of experience, expertise and opinion in Europe. Without a broadly shared policy base I do not believe we can successfully address the many challenges we face.

An open and coherent European trade policy cannot continue if public opinion is not convinced of its merits. And despite the economic setbacks – or rather: because of the economic setbacks – Europe needs international trade more than ever.

Ladies and gentlemen,

World trade volumes have stagnated in the second quarter of 2011. The slowdown is only partly due to disruptions in supply chains after the March disaster in Japan. Across the world, export orders and costs of container shipment have declined – both signs of weakening demand.

To a large degree, this reflects the disappointing prospects for global growth, especially across the developed world. It seems like the economic recovery has stalled in the major industrialised economies. Still facing the effects of a deep and crippling financial crisis, household and business confidence is again dwindling.

As many member states still struggle to keep their budget deficits in check and many households and companies are increasing their savings to get their debts down, our future growth will indeed depend critically on closer links with the fast growing markets of the world.

Which is where the EU's trade and investment policy comes into play.

Today I will focus, in my short speech, on the EU's trade and investment strategy regarding its Eastern neighbours, of particular interest here in Warsaw.

Ladies and Gentlemen,

Since the waves of EU enlargement in 2004 and 2007, our objective has been to make sure we have no new iron curtain with our Eastern neighbours – with Russia, Ukraine, Moldova and the Caucasus.

This was why we launched an EU-Eastern Partnership at the Prague Summit in May 2009. Our agenda is to boost EU relations with Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine.

The Eastern Partnership offers the prospects of political association and economic integration with the EU.

The means to this end are the enhanced bilateral framework agreements - known as Association Agreements – which we are currently negotiating with all countries in the region, save Belarus. When the conditions are right, we will not hesitate to move forward with Belarus as well.

These Association Agreements will provide one of the most ambitious levels ever of political association between the EU and a foreign country. They will affect businesses and citizens in several concrete ways since they cover most aspects of economic life – from consumer protection to company law, from environmental protection to education and training. They include a major trade component – a Deep and Comprehensive Free Trade Agreement or DCFTA in the jargon – which is the key driver for economic integration between the EU and the region.

Last week the second Eastern Partnership Summit was held here in Warsaw. It could take note of several advances on the trade front.

First, the Summit took stock of progress made in the EU-Ukraine trade negotiations. We made very good headway at the negotiating round held two weeks ago as well as during my meeting with Vice Prime-Minister Klyuyev. This should make it possible to conclude the free trade agreement by the time of the EU-Ukraine Summit in early December at the latest.

Classic trade agreements foresee the mutual opening of markets for goods and services – the abolition of import duties for example. But these negotiations go much further.

We have to address the "behind the border" issues in order to free up trade in practice. For example, Ukraine's dairy and meat products that are exported to the EU have to pay tariff duties and to meet certain sanitary standards. It's all very well abolishing those tariff duties but if you don't help Ukrainian exporters meet the EU standards, then there will be no actual trade in those products.

So in this agreement we will tackle such issues: Ukrainian laws and standards will become compatible with those of the European Union in trade-related areas.

This means that Ukrainian manufacturers will meet EU norms and standards simply by respecting Ukraine's own rules and regulations. Coupled with the abolition of import duties already mentioned, this means that the barriers and costs of accessing the EU, the largest market in the world, could be swept aside.

The coverage of this trade agreement with Ukraine will also be exceptionally broad – including issues like public procurement or competition. We want to create a modern, transparent and predictable environment for consumers, investors and businessmen on both sides.

And beyond the truly free trade zone created with Ukraine, this approximation process with the EU will offer Ukraine a pattern for its necessary economic reforms as well as becoming more economically integrated into the European Internal Market. This is why we describe our trade deal with the Ukraine as "deep and comprehensive".

Let me just add that we support Ukraine's economic reforms through our wallets as well as through these negotiations. The EU has provided 470 million Euros to Ukraine for the period 2011-2013. A large part of this is devoted to the reforms that will be needed for the Association Agreement and the Free Trade Agreement.

Second, the Eastern Partnership Summit decided last week to embark on negotiations for a deep and comprehensive trade agreement with Moldova, Georgia and Armenia once the conditions are met. I am hopeful that this step can be taken in the near future given the substantial and rapid progress made towards the conditions already.

The Agreement we are likely to conclude soon with Ukraine may well become a model for the whole of the Eastern Partnership.

Ladies and Gentlemen,

Of course we cannot forget our other Eastern neighbour Russia and its strategic importance.

In terms of trade policy, we are working to make this economic relationship too more predictable and transparent. This is why we have been working assiduously on Russia's accession to the World Trade Organisation.

As the largest economy outside the WTO, Russia's WTO entry would reinforce the multilateral trading system. It would strengthen the international competitiveness of the Russian economy and boost the confidence of traders and investors alike. And for EU exporters, the resulting trade liberalisation would open up access to this huge market on our doorstep.

We have made good progress with Russia on these negotiations and I hope we shall be able to resolve the final outstanding issues soon. What is important for me is the final accession package contains commitments by Russia which have real economic value. I very much hope that work can be completed in time for a decision by the WTO Ministerial Conference in December.

Ladies and gentlemen,

For the EU to reap the gains from trade, we have to work hard for an active trade policy and aim to liberalise further to bring down barriers to trade.

With continued uncertainty in the financial markets and the ongoing public debt debate, it is vital not to lose our focus on reforms such as freeing trade, which will enable us to boost our economic efficiency and tap into growing markets around the world.

For the countries here on the EU's eastern borders, the work we are doing with Ukraine, Moldova, Georgia, Armenia and Russia will soon bear fruit.

I will be happy to elaborate on these and other issues with you.

And I thank you very much for your attention.


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