Prospects for trade policy in 2018

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2018 will be as busy as 2017 with regards to the trade policy of the EU.

The action will be divided into five main phases:

  • One will focus on the implementation of existing agreements, notably the EU-Canada Comprehensive Economic Trade Agreement (CETA), but also the EU-Ukraine, EU-Georgia and EU-Moldova agreements.
  • The second will aim at signing and ratifying agreements that have been concluded by the negotiating parties, with EU-Singapore likely to come first, followed possibly by an EU-Japan Economic Partnership Agreement, where a political deal was reached in July 2017 and the conclusion of all texts last December. After the legal scrub, the Commission will send the agreement for signature to the Council and then to the Parliament for ratification.  Despite the fact that the EU-Vietnam FTA was concluded before the deal with Japan, it seems that this one will come third on the list of ratification, because of the possible difficulty in getting Parliament’s approval due to the weakness of human rights protection.
  • The third action of the trade policy will focus on pushing for the conclusion of on-going trade negotiations. Two negotiations are now into the last phase, and much bargaining took place in the final weeks of 2017 in an attempt to conclude them by the end of the year: The revision of the EU-Mexico FTA, (originally entered into force in 2000 for trade in goods and 2001 for trade in services) should be concluded first. Mexico is under tremendous pressure from the USA to revise NAFTA and strengthen their efforts to diversify trade, and the EU is the right partner to do that. However, the EU is asking for efforts on Geographical Indications and in Public Procurement, as well as some further openings in services, which makes the last mile difficult.  General and presidential elections in June and July are additional elements which may reduce the window of opportunity. The EU-Mercosur negotiations started in 1999, and have been suspended and relaunched on many occasions. Agriculture is clearly the stumbling block, with difficult bargaining on beef meat, ethanol and sugar. It is the first time in a decade that Argentina and Brazil are on the same political path, and such occasion might not last for long. December 2017 also saw the greenlight for the launch of the revised EU-Chile FTA. Negotiations will come at full speed in 2018, with a first round in January. The talks on the EU-Indonesia FTA will be pursued, but will likely take time. Negotiations of the EU-Malaysia deal may start again after a long pause Similarly, negotiations with Thailand may also resume if the political regime evolves positively as announced.  It is unclear whether the EU-Philippines FTA negotiations could start again, given the human rights breaches under President Duterte’s regime.  Finally, negotiations of the Bilateral Investment Agreement between the EU and China are still on the agenda, but progress is slow and dependent on other trade matters.
  • The last activity in trade policy will be in launching new negotiations: At the State of the Union speech given by European Commission Jean Claude Juncker on 13 September 2017, the idea of launching deep and comprehensive trade agreement with Australia and New Zealand was announced. The “scoping exercises” were concluded between executives of the parties. The Commission sent draft negotiating mandates to EU Member States that same day, and in a radical move towards transparency, published them. The Commission asked for negotiating directives on trade related matters only, taking some conclusions from the CJEU Opinion of May 2017 on the competences of the EU in trade policy. The Council will now debate on EU strategy for future deals and decide whether the EU will negotiate two agreements; one of full competence, covering more than 90% of the substance, and one of mixed competence, including issues where Members states keep some sovereignty but require unanimity and ratification by all competent parliaments of the Member States. This debate might delay the start of the negotiations with Australia and New Zealand.

Last year the Commission also sent a mandate request to the Council regarding the possible modernisation of the Custom Union with Turkey, which will be of great interest to the services industries.  Due to the political situation in the country and a rather tense atmosphere between the two parties, it is difficult how to predict how the discussion will evolve, however the odds are not favorable.

December 2017 also marked the 11th WTO Ministerial Conference that took place in Buenos Aires. The results were extremely disappointing on the multilateral front, with a very minimal agreement taking place at the last minute to save the organisation by allowing the continuation of two moratoria; one on e-commerce and one of TRIPs plus the establishment of a WTO informal work programme for MSMES. Some “joint ministerial statements” were agreed between groups of countries, which will allow continued work in Geneva during 2018. This includes the possible launch of new plurilateral negotiations in three areas; i) Investment Facilitation for Development, ii) Electronic Commerce, and iii) Services domestic regulation.

  • One final trade related activity will be strongly debated in 2018, but it is difficult to classify it under trade policy alone. The European Council gave its consent to start the second phase of Brexit in December 2017. The UK and the EU will now start to discuss the “future relationship” between the two parties. It includes many aspects like defense and security, nuclear cooperation, judiciary and regulatory cooperation, and of course the negotiations of a trade agreement.  The trade aspects draw much attention, but proper negotiations will not effectively start before the exit date in March 2019.  Many trade related issues are likely to arise during the course of the “transition” or “implementation” period,  which will need to be inserted in the transitional agreement.

In summary, the work programme on trade policy in 2018 is considerable and has the potential of creating many business opportunities for the services industries.

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