EUROPEAN COMMISSION Brussels, 31.10.2018 SWD(2018) 454 final COMMISSION STAFF WORKING DOCUMENT Individual reports and info sheets on implementation of EU Free Trade Agreements









Accompanying the document Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions

on Implementation of Free Trade Agreements



1 January 2017 - 31 December 2017

{COM(2018) 728 final}



Individual reports and info sheets on implementation of EU Free Trade Agreements Table of Contents DATA USED FOR THE COMPILATION OF INDIVIDUAL REPORTS AND INFORMATION SHEETS PART I: NEW GENERATION FREE TRADE AGREEMENTS ANNUAL REPORT ON THE IMPLEMENTATION OF THE COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT (CETA) BETWEEN THE EU AND ITS MEMBER STATES AND CANADA 1. Introduction 2. Evolution of trade 3. Activities of the implementation bodies 4. Implementation of the provisions on trade and sustainable development 5. Agriculture 6. Conclusions and outlook ANNUAL REPORT ON THE IMPLEMENTATION OF THE EU-SOUTH KOREA FREE Trade Agreement 1. Introduction 2. Evolution of bilateral trade 2.1. Trade in Goods 2.1.1. Overall Evolution

2.1.2. Trade in agricultural goods 2.1.3. Preference Utilisation Rates 2.2. Trade in Services and Foreign Direct Investment (FDI) 3. Activities of the implementation bodies 4. Implementation of the provisions on trade and sustainable development 5. Specific areas subject to reporting or monitoring 6. Progress, main open issues and follow-up actions 7. Conclusions and outlook ANNUAL REPORT ON THE IMPLEMENTATION OF THE EU-COLOMBIA/ECUADOR/PERU TRADE AGREEMENT 1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in agricultural goods 2.3. Trade in Services and development of investment 2.3.1. Trade in Services 2.3.2. FDI 3. Activities of the implementation bodies 4. Implementation of the provisions on trade and sustainable development 4.1. Sub-Committee on Trade and Sustainable Development 4.2. Domestic consultation

4.3. Session of the Sub-Committee on TSDwith civil society 4.4. Further work and other activities 5. Specific areas subject to reporting or monitoring 6. Progress made, main open issues and follow-up actions 7. Conclusions and outlook ANNUAL REPORT ON THE IMPLEMENTATION OF PART IV OF THE ASSOCIATION AGREEMENT BETWEEN THE EU AND ITS MEMBER STATES AND CENTRAL AMERICA 1. Introduction 2. Overall assessment: evolution of bilateral trade 2.1. Trade in Goods overall 2.1.1. Sectoral structure of trade 2.1.2. Country-by-Country analysis 2.2. Trade in agricultural goods 2.3. Preference Utilisation Rates (PURs) 2.4. Trade in Services and FDIs 2.4.1. Trade in Services 2.4.2. Development of FDIs 3. Activities of the implementation bodies 3.1. Association Committee 3.2. Sub-Committee on Market Access for Goods 3.3. Sub-Committee on Customs Procedures, Trade Facilitation and Rules of Origin

3.4. Sub-Committee on Technical Barriers to Trade (TBT) 3.5. Sub-Committee on SPS Matters 3.6. Sub-Committee on Intellectual Property 3.7. Board on Trade and Sustainable Development 3.8. Ad hoc meeting on Government Procurement 4. Implementation of the provisions on trade and sustainable development 5. Specific areas subject to reporting or monitoring 6. Conclusions and outlook part ii: ANNUAL REPORT ON THE IMPLEMENTATION OF THE DEEP AND COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN THE EU AND UKRAINE, MOLDOVA AND GEORGIA ANNUAL REPORT ON THE IMPLEMENTATION OF THE DEEP AND COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN THE EU AND ITS MEMBER STATES AND UKRAINE 1. Evolution of trade 1.1. Trade in goods overall 1.1.1. Scope of trade liberalisation 1.1.2. Overall evolution of EU-Ukraine trade in goods 1.1.3. Sectoral structure of EU-Ukraine trade in goods 1.2. Trade in agricultural goods 1.2.1. Use of TRQs 1.3. Preference utilisation rate (PUR) 1.4. Autonomous trade measures 1.5. Establishment, trade in services and investments

1.5.1. Market access related to establishment and trade in services 1.5.2. Trade in services 1.5.3. FDI 2. Activities of the implementation bodies 2.1. Joint decisions of the Association Bodies 2.2. Meetings of the Association Bodies 3. Implementation of the provisions on trade and sustainable development 4. Progress made, main open issues and follow-up actions 5. Eu Support to DCFTA Implementation 6. Conclusions and outlook ANNUAL REPORT ON THE IMPLEMENTATION OF THE DEEP AND COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN THE EU AND ITS MEMBER STATES AND GEORGIA 1. Evolution of trade 1.1. Trade in Goods overall 1.1.1. The scope of trade liberalization 1.1.2. Overall evolution of EU–Georgia trade in goods 1.1.3. Sectoral structure of EU-Georgia trade in goods 1.2. Trade in agricultural goods 1.3. Use of TRQs (TRQ) 1.4. Preference utilisation rate (PUR) 1.5. Establishment, trade in services and investments

1.5.1. Market access related to establishment and trade in services 1.5.2. Trade in services 1.5.3. FDI 2. Activities of the implementation bodies 2.1. Joint decisions of the Association Bodies 2.2. Meetings of the Association Bodies 3. Implementation of the provisions on trade and sustainable development 4. Specific areas subject to reporting or monitoring 5. Progress made, main open issues and follow-up actions 6. Eu Support to DCFTA Implementation 7. Conclusions and outlook ANNUAL REPORT ON THE IMPLEMENTATION OF THE DEEP AND COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN THE EU AND ITS MEMBER STATES AND MOLDOVA 1. Evolution of trade 1.1. Trade in goods overall 1.1.1. The scope of trade liberalization 1.1.2. Overall evolution of EU-Moldova trade in goods 1.1.3. Sectoral structure of EU-Moldova trade in goods 1.2. Trade in agricultural goods 1.2.1. Review clause for agricultural products 1.2.2. Anti-circumvention mechanism for agricultural products

1.2.3. Use of TRQs 1.3. Preference Utilisation rate (PURs) 1.4. Establishment, trade in services and investments 1.4.1. Market access related to establishment and trade in services 1.4.2. Trade in Services 1.4.3. FDI 2. Activities of the implementation bodies 2.1. Joint decisions of the Association Bodies 2.2. Meetings of the Association Bodies 3. Implementation of the provisions on trade and sustainable development 4. Progress made, main open issues and follow-up actions 5. Eu Support to DCFTA Implementation 6. Conclusions and outlook PART III: FIRST GENERATION FREE TRADE AGREEMENTS FIRST GENERATION FREE TRADE AGREEMENTS WITH MEDITERRANEAN PARTNERS ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE EU-ALGERIA ASSOCIATION AGREEMENT 1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in agricultural goods

2.3. Preference Utilisation rate 2.4. Trade in Services and Investment 3. Issues addressed in the Sub-Committee meetings 4. Specific areas of importance 5. Progress made, main open issues and follow-up actions 6. Conclusions and outlook ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE EU-EGYPT ASSOCIATION AGREEMENT 1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in agricultural goods 2.3. Preference Utilisation rate 2.4. Trade in Services and FDI 3. Issues addressed in the Joint Committee meetings 4. Specific areas of importance 5. Progress made, main open issues and follow-up actions 6. Conclusions and outlook ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE EU-ISRAEL ASSOCIATION AGREEMENT 1. Introduction 2. Evolution of trade

2.1. Trade in Goods 2.2. Trade in agricultural goods 2.3. Preference Utilisation rate 2.4. Trade in Services and Investment 3. Issues addressed in the Annual (Joint Committee/Trade Committee) meeting 4. Specific areas of importance 5. Progress made, main open issues and follow-up actions 6. Conclusions and outlook ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE EU-JORDAN ASSOCIATION AGREEMENT 1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in agricultural goods 2.3. Preference Utilisation rate 2.4. Trade in Services and Investment 3. Issues addressed in the Annual (Joint Committee/Trade Committee) meetingS 4. Specific areas of importance 5. Progress made, main open issues and follow-up actions 6. Conclusions and outlook ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE EU-LEBANON ASSOCIATION AGREEMENT

1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in agricultural goods 2.3. Preference Utilisation rate 2.4. Trade in Services and FDI 3. Issues addressed in the Annual Joint Committee meetings 4. Specific areas of importance 5. Progress made, main open issues and follow-up actions 6. Conclusions and outlook ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE EU-MOROCCO ASSOCIATION AGREEMENT 1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in agricultural goods 2.3. Preference Utilisation rate 2.4. Trade in Services and FDI 3. Issues addressed in the Joint Committee meetings 4. Specific areas of importance 5. Progress made, main open issues and follow-up actions

6. Conclusions and outlook ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE EU-PALESTINE INTERIM ASSOCIATION AGREEMENT 1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in agricultural goods 2.3. Preference Utilisation rate 2.4. Trade in Services and FDI 3. Issues addressed in the Annual (Joint Committee/Trade Committee) meeting 4. Specific areas of importance 5. Progress made, main open issues and follow-up actions 6. Conclusions and outlook ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE EU-TUNISIA ASSOCIATION AGREEMENT 1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in agricultural goods 2.3. Preference Utilisation rate 2.4. Trade in Services and Investment 3. Issues addressed in the Joint Committee meetings

4. Specific areas of importance 5. Progress, main open issues and follow-up actions 6. Conclusions and outlook FIRST GENERATION FREE TRADE AGREEMENTS WITH THE WESTERN BALKAN PARTNERS ANNUAL INFO SHEET ON THE IMPLEMENTATION OF the trade PILLAR OF THE EU-ALBANIA STABILISATION AND association AGREEMENT 1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in agricultural goods 2.3. Preference Utilisation rate (PUR) 2.4. Trade in Services and FDI 3. Issues addressed in the Joint Committee meetings 4. Specific areas of importance 5. Main open issues and follow-up actions 6. Conclusions ANNUAL INFO SHEET ON the IMPLEMENTATION OF THE TRADE PILLAR OF THE EU-BOSNIA AND HERZEGOVINA STABILISATION AND association AGREEMENT 1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in agricultural goods

2.3. Preference Utilisation rate 2.4. Trade in Services and FDI 3. Issues addressed in the annual Committee meetings 4. Specific areas of importance 5. Main open issues and follow-up actions 6. Conclusions ANNUAL INFO SHEET ON the IMPLEMENTATION OF the trade pillar of the STABILISATION AND association AGREEMENT between the EU and the former Yugoslav Republic of Macedonia 1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in agricultural goods 2.3. Preference Utilisation rate 2.4. Trade in Services and FDI 3. Issues addressed in the annual Committee meetings 4. Specific areas of importance 5. Main open issues and follow-up actions 6. Conclusions ANNUAL INFO SHEET ON the IMPLEMENTATION OF the TRADE PILLAR OF THE EU-KOSOVO* Stabilisation and association AGREEMENT 1. Introduction 2. Evolution of trade

2.1. Trade in Goods 2.2. Trade in agricultural goods 2.3. Preference Utilisation rate 2.4. Trade in Services and FDI 3. Issues addressed in the annual Committee meetings 4. Specific areas of importance 5. Main open issues and follow-up actions 6. Conclusions ANNUAL INFO SHEET ON the IMPLEMENTATION OF the trade pillar of the EU-MONTENEGRO STABILISATION AND ASSOCIATION AGREEMENT 1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in Agricultural Goods 2.3. Preference Utilisation rate 2.4. Trade in Services and FDI 3. Issues addressed in the annual Committee meetings 4. Specific areas of importance 5. Main open issues and follow-up actions 6. Conclusions ANNUAL INFO SHEET ON the IMPLEMENTATION OF the TRADE PILLAR OF THE EU-SERBIA STABILISATION AND ASSOCIATION AGREEMENT

1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in agricultural goods 2.3. Preference Utilisation rate 2.4. Trade in Services and FDI 3. Issues addressed in the annual trade committee meeting 4. Specific areas of importance 5. Main open issues and follow-up actions 6. Conclusions FIRST GENERATION FREE TRADE AGREEMENTS WITH LATIN AMERICAN COUNTRIES ANNUAL INFO SHEET ON IMPLEMENTATION OF THE TRADE PILLAR OF THE EU-CHILE ASSOCIATION AGREEMENT 1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in agricultural products 2.3. Trade in Services and FDI 2.4. Preference Utilisation Rate (PUR) 3. Annual Trade Coordinators Meeting and Trade-related Sub-committees 4. progress made, Main open issues and follow-up actions

5. Conclusions and outlook ANNUAL INFO SHEET ON IMPLEMENTATION OF THE TRADE PILLAR OF THE EU-MEXICO ASSOCIATION AGREEMENT 1. Introduction 2. Evolution of trade 2.1. Trade in goods 2.2. Trade in agricultural goods: 2.3. Preference Utilisation rate (PUR) 2.4. Trade in services and FDI 3. Issues addressed in the annual joint committee meeting 4. Progress made, main open issues and follow-up actions 5. Conclusions and outlook FIRST GENERATION FREE TRADE AGREEMENTS WITH THE EFTA COUNTRIES NORWAY AND SWITZERLAND ANNUAL INFO SHEET ON IMPLEMENTATION OF the EU-Norway FREE TRADE AGREEMENT 1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in agricultural goods 2.3. Preference Utilisation rate (PUR) 2.4. Trade in Services and FDI 3. Issues addressed in the EEA and FTA Joint committees

4. Specific areas of importance 5. Progress made, main open issues and follow-up actions ANNUAL INFO SHEET ON IMPLEMENTATION OF the EU-SWITZERLAND FREE TRADE AGREEMENT 1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in agricultural goods 2.3. Trade in Services and Investment 2.4. Preference Utilisation rate 3. Issues addressed in the annual joint committee meeting 4. Specific areas of importance 5. Progress made, main open issues and follow-up actions 6. Conclusions and outlook THE CUSTOMS UNION WITH TURKEY ANNUAL INFO SHEET ON IMPLEMENTATION OF THE EU-TURKEY CUSTOMS UNION AND TRADE AGREEMENTS 7. Evolution of trade 7.1. Trade in Goods 7.2. Trade in agricultural goods 7.3. Preference Utilisation rate (PUR) 7.4. Trade in Services and FDI

8. Issues addressed in the Customs Union Joint Committee Meeting 9. Specific areas of importance 10. Progress made, main open issues and follow-up actions 11. Conclusions and outlook PART IV: ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC PARTNERSHIP AGREEMENTS (EPAs) WITH AFRICAN, CARRIBEAN AND PACIFIC COUNTRIES ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND THE SOUTHERN AFRICAN DEVELOPMENT COMMUNITY (SADC) 1. Introduction 2. Evolution of trade 2.1. Trade in goods 2.2. Trade in services 2.3. FDI 3. Issues addressed in the annual EPA Committee meeting 4. Specific areas of importance 5. Progress made, main open issues and follow-up actions 6. Conclusions and outlook ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND COTE D’IVOIRE 1. Introduction 2. Evolution of trade 2.1. Trade in goods 2.2. Trade in services

2.3. FDI 3. Issues addressed in the annual EPA Committee meeting 4. Specific areas of importance 5. Progress made, main open issues and follow-up actions 6. Conclusions and outlook ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND GHANA 1. Introduction 2. Evolution of trade 2.1. Trade in goods 2.2. Trade in services 2.3. FDI 3. Issues addressed in the first meeting of the joint EPA Committee 4. Specific areas of importance 5. Follow-up actions 6. Conclusions and outlook ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND CAMEROON 1. Introduction 2. Evolution of trade 2.1. Trade in goods 2.2. Trade in services

2.3. FDI 3. Issues addressed in the annual EPA Committee meeting 4. Specific areas of importance 5. Progress made, main open issues and follow-up actions 6. Conclusions and outlook ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND CARIFORUM 1. Introduction 2. Evolution of trade 2.1. Trade in goods 2.2. Trade in services 2.3. FDI 3. Issues addressed in the EPA Committee meetings 4. Specific areas of importance 5. Progress made, main open issues and follow-up actions 6. Conclusions and outlook ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND PACIFIC STATES 1. Introduction 2. Evolution of trade 2.1. Trade in goods 2.2. Trade in services

2.3. FDI 3. Issues addressed in the EPA Committee meetings 4. Specific areas of importance 5. Main open issues and follow-up actions 6. Conclusions and outlook ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE INTERIM ECONOMIC PARTNERSHIP AGREEMENT (iEPA) BETWEEN THE EU AND EASTERN AND SOUTHERN AFRICAN (ESQ) STATES 1. Introduction 2. Evolution of trade 2.1. Trade in Goods 2.2. Trade in Services and Investment 2.3. FDI 3. Issues addressed in the annual EPA Committee meeting 4. Specific areas of importance 5. Progress made, main open issues and follow-up actions 6. Conclusions and outlook ANNEX – LIST OF ABBREVIATIONS





DATA USED FOR THE COMPILATION OF INDIVIDUAL REPORTS AND INFORMATION SHEETS General trade statistics used for the Report reflecting the evolution of trade and investment flows rely, except where indicated otherwise, on EUROSTAT data (COMEXT) as was available on 15 July 2018. For trade in goods the most recent annual data available is for 2017. For services and investment the most recent year available is 2016 (except for Switzerland, where 2017 is available). Statistics on preference utilisation rates (PURs) are based on administrative data collected by the importing country. PURs show to what extent trade flows make use of preferences under a trade agreement. The PUR reflects the share of imports entering under trade preferences as a share of the total value of imports eligible for preferences by partner country. Preference eligible imports exist if the applied preferential tariff is lower than the applied MFN tariff. Subsequently MFN-duty free trade is not taken into account in the calculations. The PUR of EU imports is based on Eurostat figures. Eurostat merges tariffs and trade flows to build a dataset from which we extract information on both the treatment a product is eligible for and the extent to which this eligible treatment is made use of. The obtained dataset is harmonised and consistent and allows for comparison across partner countries and years. By contrast, when it comes to calculating PURs on EU exports to FTA partners the Commission has to rely on administrative data collected by the respective importing third country. Submitted data were used if fulfilling a set of conditions as regards level of detail, accuracy, completeness and consistency to ensure a minimum level of harmonisation. E.g. to systematically exclude from PUR calculations all products not benefiting from preferential treatment (such as products offered duty free on an MFN basis) eligibility has to be determined but this can only be done with data available at tariff line level ; - import values need to be comparable with levels found in other sources (e.g. UN Comtrade). Statistics on PURs for EU exports are not harmonised. Hence, direct comparisons between partner countries or with EU imports should merely be seen as indicative.

PART I: NEW GENERATION FREE TRADE AGREEMENTS For the purpose of this report "new generation" FTAs are comprehensive FTAs negotiated after 2006 with selected third countries. Of the applied agreements, the ones with Canada, South Korea, Colombia, Peru, Ecuador and Central America belong to this category. These agreements typically go beyond tariff cuts and trade in goods and also cover services and public procurement. The agreement with South Korea and Canada also contain provisions on heightened investment liberalisation and CETA in addition covers investment protection (although not yet provisionally applied) and regulatory cooperation. Solid provisions on trade and sustainable development (TSD) are a core part of all "new generation" trade agreements concluded since 2010.



ANNUAL REPORT ON THE IMPLEMENTATION OF THE COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT (CETA) BETWEEN THE EU AND ITS MEMBER STATES AND CANADA 1.Introduction The Comprehensive Economic and Trade Agreement (‘CETA’) was signed on 30 October 2016 and the European Parliament gave its consent to CETA during its Plenary session of 15 February 2017. CETA entered into force provisionally on 21 September 2017. 2.Evolution of trade At the time this report is being drafted the agreement has not been applied for a entire calendar year so it is too early to draw any meaningful conclusions on its impact on trade flows of goods and services or the development of FDI. This information will be included in the next report to be delivered in 2019. 3.Activities of the implementation bodies CETA establishes a number of institutional bodies to facilitate the implementation of the agreement. The CETA Joint Committee is meant to supervise and facilitate the implementation and application of the Agreement. The CETA Joint Committee is co-chaired by the Minister for International Trade of Canada and the Member of the European Commission responsible for Trade. In addition, CETA establishes a number of specialised committees and dialogues to ensure overlook the implementation of the Agreement in specific areas, the work of which is supervised by the CETA Joint Committee. These are the following:

Specialised Committees: üCommittee on Trade in Goods üCommittee on Agriculture üCommittee on Wines and Spirits üJoint Sectoral Group on Pharmaceuticals üCommittee on Geographical Indications üJoint Management Committee for Sanitary and Phytosanitary (SPS) Measures üJoint Customs Cooperation Committee üCommittee on Government Procurement üCommittee on Services and Investment üJoint Committee on Mutual Recognition of Professional Qualifications üFinancial Services Committee üCommittee on Trade and Sustainable Development üRegulatory Cooperation Forum Bilateral Dialogues and cooperation: üBilateral Dialogue on Forest Products üBilateral Dialogue on Raw Materials üBilateral Dialogue on Biotech Market Access Issues üEnhanced Cooperation on science, technology, research and innovation. üDialogue on Electronic Commerce

üBilateral Dialogue on Motor Vehicle Regulations In line with the Commission's commitment to a more transparent and inclusive trade and investment policy and to allow all relevant stakeholders to follow and be informed about the implementation of CETA, the Commission has created a specific "CETA – Meetings and documents " webpage where the schedules, agendas and reports of all above mentoned specialised committees and dialogues can be found. In the course of 2017 the EU and Canada have been working to make operational the administrative and institutional provisions of CETA. This work, which was initiated in 2017, with just over three months of provisional application, continued in 2018 including the setting up of the various CETA committees and dialogues agreeing on co-chairs and contact points for the various committees, timelines for the meetings and rules of procedure. The specialised committees and dialogues did not meet in 2017; the following committees and dialogues met in the first half of 2018 and the reports of these meetings are available on the above mentioned webpage: üCommittee on Government Procurement (15 March 2018) üEnhanced Cooperation on science, technology, research and innovation (23 March 2018) üJoint Management Committee for SPS Measures (26-27 March 2018) üBilateral Dialogue on Biotech Market Access Issues (26 April 2018) üCommittee on Geographical Indications (17 May 2018) üBilateral Dialogue on Forest Products (23 may 2018) üFinancial Services Committee (19 June 2018) üJoint Customs Cooperation Committee (22 June 2018) üCommittee on Wines and Spirits (5 July 2018) Furthermore, the foundations of the Investment Court System (ICS) are already established in CETA but further work is required to operationalise the system. The contours of the further work on the ICS has been agreed between EU and Canada at the time of CETA ratification and is also reflected in Commission and Council Declaration No 36. In the course of 2018, the Commission will consult with Member States to establish the EU position before discussing with Canada about the work that has been committed to during the CETA ratification process. 4.Implementation of the provisions on trade and sustainable development End of 2017, the EU and Canada launched a review on how to improve the effectiveness of the TSD provisions in CETA. A first expert level meeting took place on 1 December 2017, with the objective to inform each other on latest developments and public debate on issues. The EU’s position on this review has since been informed by the Commission Non-Paper published, summarising 15 action points to strengthen the enforcement of TSD chapters. The Non-Paper reflects the results of a seven-month EU wide debate with Member States, European Parliament and with a broad range of civil society organisations and defines the EUs revamped approach to trade and sustainability in its trade agreements. CETA establishes a Civil Society Forum – a consultation mechanisms for the TSD chapters composed of representatives of civil society organisations on both sides. In the EU, in February 2018, the Commission launched a call for expressions of interest to become an EU CETA Domestic Advisory Group (DAG) Member. As a result of this call, the EU DAG under CETA was established and met for the first time on 13 July 2018. The Civil Society Forum will meet back-to-back with the CETA TSD Committee to be held in the third quarter of 2018. 5.Agriculture CETA opened new opportunities to access the Canadian market for EU exporters of agricultural and food products. CETA has eliminated duties on 91% of all agricultural tariff lines at the entry into force of the agreement. The Agreement significantly increases the quotas for the export of duty free cheese to Canada to 32 000 tons. It tackles some of the non-tariff barriers facing the wines and spirits sector and establishes a robust framework to continue work to address them. In addition under CETA, Canada has agreed to protect 143 distinctive food and drink products from specific towns or regions in the EU. The Commission has been closely following the implementation of afore mentioned areas in the field of agriculture.

Increased duty free quota for Cheese is one of the major gains for the EU in CETA. The EU therefore pays particular attention to ensure that the administration of this quota by Canada is in line with the principles agreed in CETA. The EU will continue to closely monitor the utilisation of the quota in subsequent years (5 900 tons in 2018 and up to 17 700 tons as from 2022). The Commission will continue to raise concerns related to the Canadian quota management system. Table 1. Utilisation of the CETA quota for EU cheese Tariff Code Product Quota 2017 (kg) Utilisation 2017 (kg) Utilisation rate 0406 Cheese of which: high quality industrial 824 384 745 299 79 085 765 820 719 521 46 299 92.9% 96.5% 58.5% Source: Global Affairs Canada. In relation to dairy products, Canada eliminated its tariff on milk protein concentrate. The EU is following closely the developments in Canadian market and regulations linked to dairy products and in particular the compositional standard issue, which could affect EU exports of milk protein concentrates. Alcoholic beverages, in particular wines and spirits, top the list of EU agricultural exports, accounting for over 40%. A number of discriminations were maintained against imported wines and spirits, notably at provincial level. In particular, Ontario and Quebec maintained ad-valorem cost of service differential fees after the entry into provisional application of CETA, despite a commitment in the agreement to move to volume-based fees. In addition, the federal government introduced an automatic yearly escalation of the federal excise duty on wine, while maintaining the exemption for wine made from 100% Canadian grape. The Commission is working with the Canadian authorities to seek mutually agreed solutions to the concerns related to the alcoholic beverages sector. Since the entry into force of CETA 143 EU food and drink GIs enjoy full protection in Canada from imitations at a level comparable to that offered by EU law. This means that Canada will have to prevent (a) the use of a geographic name for products that do not originate in the place of origin specified for the protected names; (b) the use of any means in the designation or presentation of a good that indicates or suggests that the good in question originates in a geographical area other than the true place of origin in a manner which misleads the public as to the geographical origin of the good; and, (c) any other use which constitutes an act of unfair competition. Also the use of any of these GI names in Canada is now prohibited even when the true origin of the product is indicated or in translation or with an expression such as ‘kind’, ‘type’, ‘style’, ‘imitation’ or the like. For 8 EU GIs, including some very iconic European GIs such as Asiago, Gorgonzola, Feta, Fontina or Munster, the use of these protected denominations is prohibited except for companies which already used the name on the Canadian market (‘grandfathering’ clause). The Commission will insist with Canada that the protection of these particular GIs is fully enforced and that Canada develops the means to ensure that companies which continue to use these terms do comply with CETA requirements. SPS measures The 1st CETA Joint Management Committee (JMC) meeting for SPS measures took place on March 26-27. The purpose of the meeting was to further expand the existing bilateral dialogue and cooperation on SPS issues affecting agri-food trade in light of CETA. ·With regard to SPS related market access issues, in 2017, progress was seen on several SPS EU export files: Processed animal protein export was authorised from 7 Member States as a result of a positive outcome of an audit carried out by Canada and coordinated by the Commission. Two harmonised EU export certificates (for porcine blood and rendered products of non-animal origin) were negotiated by the Commission on behalf of the Member States and are used for export. The EU and Canada agreed to amend the harmonised export certificate for ornamental bird feed that allows for Member States to export from storage centres located in other provincial control units than were the manufactures are based. Exports were unduly restricted by Lobesia botrana (European grapevine moths) related requirements. Since 1 Jan. 2018, kiwi fruit (and some other fruits) are no longer covered by Lobesia rules. Under the first SPS JMC meeting both sides identified a path forward to further identify ways to continue the important cooperation on animal welfare and antimicrobial resistance. ·Several SPS issues are still outstanding and are being further discussed with Canada with a view to finding a solution. Some examples are: Canada is not recognising the EU Member State Meat Inspection Systems despite a positive follow-up of the Canadian inspection carried out in 2015. As a result of one third of the Member States do not have access to the Canadian market for meat, produced under the EU control systems and complying with the additional Canadian import requirements. Export of EU bovine semen is limited only to Schmallenberg Virus serologically negative animals, while no distinction from serological positive and serological negative animals should be applied. Work on harmonised EU export certificates is slowed down by Canada on equine semen, porcine semen, hatching eggs, day-old-chicken, poultry meat and its products. Export from the EU to Canada is not authorised for potato mini-tubers and fresh tomato with vines, stems, and calyces due to restrictive plant health Canadian import conditions. Also, for some plant commodities no alternatives are recognised by Canada for the use of methyl bromide as a pest mitigating measure for trade. Canada does not accept labelling requirements for the origin of grains used in preparation of dried pasta introduced by Italy.

6.Conclusions and outlook CETA is the most ambitious and progressive trade agreement the EU has concluded to date and the most far reaching, both in terms of market access and trade rules, in particular in setting new standards for investment rules. CETA provides for significant savings on customs duties by eliminating duties on 99% of all tariff lines, of which 98% have been scrapped at entry into force. It opens the Canadian market for EU agricultural products, in particular for processed agricultural products and cheeses where the EU has strong economic interests. It also offers the protection of 143 distinctive EU food and drink products labelled with GIs. CETA provides for a significant further opening of the Canadian procurement market, including at provincial and local level, and gives unparalleled services market access for the EU, including new market access in maritime services, and more globally establishes legal certainty in all key economic sectors. It also includes provisions to facilitate the movement of professionals and the recognition of qualifications. The Commission will continue its work to ensure correct implementation of CETA in all areas and will collaborate with EU Member States and stakeholders in order to make sure that EU companies and citizens take full advantages of the benefits created by CETA.



ANNUAL REPORT ON THE IMPLEMENTATION OF THE

EU-SOUTH KOREA FREE Trade Agreement 1.Introduction 1 July 2018 marked the 7th anniversary of application of the Free Trade Agreement (FTA; referred to as ‘the Agreement’) between the EU and its Member States and the Republic of Korea (in this report referred to as "Korea"). The FTA has been provisionally applied since July 2011. On 13 December 2015 it entered formally into force after ratification by EU Member States. The Additional Protocol to the FTA to take into account the accession of Croatia to the EU has been provisionally applied since 26 May 2014 and entered into force on 1 January 2016. The EU-Korea FTA is the first of a new generation of comprehensive FTAs and the EU’s first trade deal with an Asian country. This is the 6th Annual Report on the implementation of the EU-Korea FTA. It is prepared in accordance with the provisions of Regulation (EU) No 511/2011 of the European Parliament and of the Council of 11 May 2011 implementing the bilateral safeguard clause of the Free Trade Agreement between the European Union and its Member States and the Republic of Korea . According to Article 13(1) of this Regulation, the Commission shall make public an annual report on the application and implementation of the Agreement. This report responds to this requirement (see section 5 below). On 18 May 2017 the European Parliament adopted a resolution to take stock of the first five years of implementation of the FTA between the EU and Korea, acknowledging the very positive economic results of the agreement for the EU, while also expressing concerns on some outstanding points and in particular as regards labour rights in Korea. 2.Evolution of bilateral trade 2.1.Trade in Goods 1.1.1.Overall Evolution Overall, Korea was the EU’s 8th largest partner in terms of total EU external trade in 2017 and the 4th largest FTA trade partner. Imports from Korea represented 2.6% of total imports into the EU in 2010, and 2.7% in 2017, making Korea the EU’s 8th largest import origin in 2017. EU exports to Korea represented 2.1% of total EU exports in 2010, and 2.7% in 2017. On the Korean side, the EU’s share in total Korean imports increased from 9.1% before the start of application of the FTA to 12.2% in 2017, making the EU the 2nd largest Korean import origin (after China). Over the same period of time, the EU’s share in total Korean exports declined from 11.5% to 9.3%% , making the EU the 3rd largest Korean export market. The EU was Korea’s 3rd largest partner in terms of total trade (after China and US). Between 2010 and 2017, EU exports to Korea increased by a significant 77%, from some EUR 28 billion to EUR 49.5 billion. EU imports from Korea increased by some 27% over the same period. As illustrated in Graphic 1 below, the initial EU deficit in goods trade with Korea of EUR 11.5 billion turned into a trade surplus in 2013 but in 2017 Korea again shows a small surplus of EUR 506 million. Graph 1: EU Exports to and Imports from Korea, 2010-2017

Table 1: EU-Korea trade in goods, 2010- 2017

Source: Eurostat June 2018 Between 2016 and 2017, total EU exports to Korea increased by 12.2% while EU imports from Korea increased more strongly, by 20.1% supported by the revival of the EU economy and strong domestic demand on the EU side. Buoyant bilateral trade between the EU and Korea is in line with the overall strong global trade dynamics observed in the recent past. EU trade with Korea accelerated more robustly (16% on average) in 2017 compared to overall external trade of the EU which increased by 8% in 2017 compared to 2016, potentially indicating i.a. the positive impact of the EU-Korea FTA in place. Sector wise, the strongest increase of EU exports to Korea was registered i.a. in mineral products, arms and ammunition and optical and photographic instruments while the strongest increase in EU imports was in chemical products and transport equipment. 1.1.2.Trade in agricultural goods With respect to trade in agriculture goods, last year saw a more dynamic growth in EU-Korea bilateral flows, compared to the EU overall external trade in this sector. Between 2016 and 2017, EU exports to Korea and imports from Korea in the agri-food sector increased by 10% and 11% respectively, that is a more robust growth rate than the one observed for EU agri-food exports and imports across all FTA partners taken together (which corresponded to 4% and 5% respectively). In 2017, the EU registered a surplus of 2.6 billion EUR in agri-food trade with Korea. Looking at the time period between 2010 and 2017, EU agri-food exports to Korea have increased by 113%, imports from Korea by 212% (albeit the latter from a very low value, from 65 to 203 million EUR). Main products exported by the EU are pork (22% of EU agricultural exports to Korea), followed by beer, cheese, chocolate, confectionery and ice cream, spirits and liqueurs and wine. The main impediments to expanding trade remained unchanged in 2017: Approvals of EU beef (due to a Bovine Spongiform Encephalopathy (BSE)-related import ban) are still pending, for some Member States since 2004, and also for poultry there was no progress in eliminating market access barriers. Also for pork exports from the EU, the country-wide ban for pork imposed on Poland due to African Swine Fever (ASF) has not been lifted by Korea. South -Korea recently filed applications for beef exports to the EU, which might indicate a stronger trade orientation in the Korean administration. Table 2. EU-Korea trade in agrifood (2016-2017) Source: ISDB For agricultural products that are sensitive, the EU-Korea FTA created specific tariff rates quotas (TRQs). The fill rate of the import quotas applied by Korea to goods originating in the EU improved for 8 out of 11 product groups. Only in case of oranges the TRQ was not used in the two reference periods. Table 3 EU-Korea FTA TRQ Fill Rates Source: Korean authorities 1.1.3.Preference Utilisation Rates In 2017, the PUR on exports from the EU to Korea reached 74.3%, the highest rate ever. This compares to 71% in 2016, 68% in 2015, and 65% in 2014. The PUR on imports into the EU from Korea reached 88% in 2017, increasing gradually from 87% in 2016, 85% in 2015 and 84 % in 2014. 2.2.Trade in Services and Foreign Direct Investment (FDI)

EU trade in services with Korea represents approximately 1% of extra-EU trade in services. The EU has a trade surplus in this field of some EUR 6 billion in 2016. In 2016 EU exports of services amounted to EUR 12.6 billion. This represents an increase of 70% compared to 2010 (though a decrease of 3.6% compared to 2015). In the same year 2016, EU imports of services from Korea amounted to EUR 6.6 billion. This represents an increase of 38% compared to 2010 (but a 3.3% decrease compared to 2015). Table 4: EU-Korea trade in total services (million EUR) Source: Eurostat (BOP) As regards FDI, in 2016, EU outward FDI stocks to Korea were equal to EUR 50.3 billion and EU inward FDI stocks from Korea totalled EUR 19.3 billion thus the EU stocks in Korea were about 2.5 times bigger than Korean stocks in the EU. EU inward FDI stocks increased by 46% and outward FDI stocks increased by 34% between 2010 and 2016. Table 5: EU-Korea FDI (million EUR) Source: Europsat (BOP) 3.Activities of the implementation bodies The institutional provisions of the EU-Korea FTA (Article 15) established seven Specialised Committees, seven Working Groups and an Intellectual Property (IP) Dialogue. The annual meeting of the Trade Committee at ministerial level plays a supervisory role and ensures that the FTA operates properly. From January 2017 till May 2018, most meetings of committees and working groups, including the Trade Committee, took place in the EU, as summarised below. The Trade Committee met for the 7th time on 19 January 2018 in Brussels, co-chaired by Commissioner for Trade, Ms Malmström, and Korea’s Minister for Trade, Industry and Energy, Mr. Kim. Taking stock of the last six years of the FTA implementation the EU side mentioned the more balanced trade flows between the EU and Korea, also pointing to the EU’s industries perception of a deteriorating business environment in Korea. A trade surplus in goods on the EU side remains a concern on the Korean side. As regards FTA amendment discussions, the EU reiterated its interest in amending provisions of the FTA even in a form of a small amendment package limited to the Rules of Origin Protocol. Korea would like to see a discussion on implementation of rules of origin issues in the Customs Committee and of amendments issues in the informal FTA amendment working group. The EU reiterated serious concerns on insufficient progress on the ratification and implementation of International Labour Organization (ILO) conventions and on protection of labour rights in Korea, pointing to the European Parliament and Civil Society call for a formal dispute settlement procedure under the TSD chapter of the FTA. The EU also strongly emphasised the need to allow EU beef exports to Korea. Other issues addressed included: clarifications on the EU modernisation of Trade Remedy rules; other SPS and customs related issues, including Korean market access of chicken soup with ginseng, Surimi (fish); IPR issues including Public Performance Rights and the addition of 46 EU GIs to the list of protected GIs under the FTA; and services related issues. Both sides agreed to follow-up the discussed implementation and market access issues in the context of the respective Specialised Committees and Working Groups. On 7 April 2017, the Customs Committee met in Seoul. It addressed issues related to the rules of origin, such as the interpretation of primary ingredient of surimi base, origin verification procedures and the approved exporter system, as well as the technical update of product specific rules from HS2007 to HS2017. The parties also discussed cooperation on European Anti-fraud Office (OLAF) investigations on the circumvention of trade defence measures concerning stainless steel tube and solar panel modules originating in Chin. The EU provided a general explanation on the legal and practical requirements that need to be fulfilled for the mutual recognition of Authorised Economic Operators. The 6th meeting of the Working Group on Pharmaceuticals and Medical Devices took place on 12 June 2017. In the area of pharmaceuticals, both sides discussed possibilities to enhance regulatory cooperation via various channels, both bilaterally and multilaterally via the ICH (International Council for Harmonisation of Technical Requirements for Pharmaceuticals) platform. Moreover, upon EU request the Korean side defended their revised pricing policy for pharmaceuticals, notably with regard to their new so-called ‘7.7 pricing policy’ which amends the conditions to satisfy for selecting “Innovative Pharmaceutical Companies” (IPCs) to reward innovation for new pharmaceutical products. Concerning medical devices, the WG offered the opportunity to exchange information and provide clarification i.a. on new UDI (Unique Device Identifier) rules of both Korea and the EU. The Working Group on Motor Vehicles and Parts met in Seoul on 13 June 2017 and addressed environmental issues, technical standards, harmonization, convergence and market access issues. EU and Korea concluded an agreement on the technical update of Annex 2-C. During the Working Group, the parties discussed further sharing of information on Real Driving Emissions and EU clarified aspects of the EU Whole Vehicle type approval (ECWVTA). Market access issues discussed included, inter alia, truck-tractors, self-certification and marking of car parts, restricted market access for certain vehicle types, vehicle width limit, homologation certificates, policies affecting imports of motorbikes and extended producers responsibility for end of life vehicles . The Working Group on Chemicals met for the 5th time on 14 June 2017, following a break since 2015. Both sides engaged in useful exchanges on chemicals-specific issues of interest to both sides, including the functioning of the EU’s REACH regulation and the Korean ‘K-REACH’ legislation. Furthermore, the Korean side replied to a set of specific EU questions concerning the planned adoption of the draft K-BPR (Biocidal Products Regulation) legislation which – in case it is successfully adopted by Korea’s National Assembly – is expected to be implemented as of January 2019. Importantly, the Korean side confirmed that there will be a 10-year transition period following the entry into force of the K-BPR legislation, which will allow industry to adapt to the new K-BPR regime. The Committee on SPS Measures met in Sejong/Korea on 6 September 2017. The Parties discussed pending applications for import of EU beef, the recognition of regionalisation measures for avian influenza and African swine fever, and policies related to the control of hepatitis E. The EU also raised certification issues related to goods sourced or manufactured in one EU Member State and shipped to Korea via another Member State as well as the quantity of sample collection for compliance testing at Korean border controls. Korea requested to discuss the pending application for export of chicken-ginseng soup to the EU as well as new applications related to Korean beef and dairy products. The EU informed about the revised phytosanitary law laid down in Regulation (EU) 2016/2031 and offered a one-day seminar to discuss measures related to the prevention and control of BSE that was held in Seoul on 7 September 2017.

On 14 June 2017, the 6th meeting on the Trade in Goods Committee took place in Seoul. Regarding the overall implementation of the FTA both sides assessed it as an exemplary FTA that realises a high level of comprehensive market opening, playing a significant role as a useful platform for bilateral economic cooperation. Next, the results of the Electronics Dialogue that took place beforehand were discussed, which covered a wide range of issues (risk assessment review of Articles 4 and 5 of Annex 2-B of the FTA, extension of the scope of Annex 2-B to include radio equipment testing, state of play of the implementation of the EU Eco-design Directive for TV and Display, EU Eco-design regulations implementation, notification of list of laboratories/acceptance of test reports and EU Energy labelling regulations implementation). Market access issues of the EU cosmetics industry were raised again, namely the amendment of Korean law related to the reporting of cosmetic ingredients. Furthermore, new alcohol labelling requirements in Korea and labelling restrictions on EU imported foods and livestock products were raised. The EU side also requested more information on the Korean legislation regarding prohibited subsidies, expressing concerns on Korean support plans for the local shipbuilding industry. Information was also requested on safety certification for machinery in Korea. Finally, the Parties discussed preparations of the Trade Committee. On 7 July 2017, back-to-back with the International KTC Seoul Forum on Trade Remedies, the EU and Korea held their annual meeting of the bilateral Trade Remedy Cooperation Working Group, established under the EU-KOR Free-Trade Agreement, in Seoul. The two sides updated each other on latest developments in domestic trade remedy laws, policies and practice. The EU side notably informed Korea of the progress on two EU draft legislative proposals, namely the so-called ‘modernisation of trade defence instruments’ and the ‘new anti-dumping methodology’ which entered into force in the meantime. . The two sides shared statistics on Trade Defence cases and exchanged views on global trends in trade remedy investigations, and related WTO litigation. The meeting of the Working Group on Government Procurement took place in Seoul on 13 September 2017. The Parties provided information on recent legislative developments, discussed market access issues, in particular concerning the railway sector, and exchanged views on cooperation on SME policy now that Korea’s Small and Medium Business Administration has been transformed into a fully-fledged ministry with policy-issuing capabilities. Among other issues, the EU inquired about a possible interest from the Korean side to integrate a machine translation tool for tender notices in its e-procurement portal. The Parties agreed to further enhance their cooperation. On 13 April 2018, the Committee on TSD met in Seoul. The parties exchanged views on their respective environmental and labour policies. Chapter 5 below presents these issues in more detail. The 5th EU-Korea meeting of the Cultural Cooperation Committee was held on 9 April 2018 in Brussels and it was followed by a 2 day study visit to Leuven and Brussels. The topics discussed were cultural exchange, culture and cities, new developments in the cultural and creative sectors and the protection of cultural heritage sites and historic monuments. The Intellectual Property Dialogue took place in Brussels on 29 May 2018. Both sides provided updates on their legislative and policy developments as well as relevant court cases, in particular on copyright, patents and enforcement. The EU side expressed its concerns about the lack of implementation of the FTA provisions on public performance rights, pending the revision by Korea of the Copyright Act, and underlined the economic importance for both the EU and Korea of this issue. The 6th meeting of the Working Group on GIs was held in Brussels, on 30 May 2018. The extension of the initial list of EU GIs remains a significant irritant with respect to the implementation of the FTA provisions on protection of intellectual property. With the approximation of both sides’ positions on the draft rules of procedures of the said Woking Group, the EU is now expecting Korea to now examine the 2014 EU request to add 46 GIs to the list of GIs protected under the FTA. 4.Implementation of the provisions on trade and sustainable development The Commission stepped up its engagement with the new Korean administration on implementing commitments under the TSD Chapter related to labour and environment. The sixth meeting of the TSD Committee was held in Seoul on 13 April 2018, back-to-back with the sixth Civil Society Forum. This allowed the EU and Korea to continue their dialogue and cooperation on implementing the TSD Chapter. With regard to the discussion on labour policies, the EU strongly emphasized the need of ensuring progress in the implementation of the shared labour commitments under TSD Chapter of the Korea-EU FTA, notably commitment to ‘respect and realise in their laws and practices’ the ILO fundamental rights, including the freedom of association and the right to collective bargaining and the commitment to make ‘continued and sustained efforts’ towards ratifying of outstanding ILO conventions (that is, Convention 87 on freedom of association; Convention 98 on the right to organize and collective bargaining; Convention 29 on forced labour; and Convention 105 on abolition of forced labour). In this context and ahead of the sixth TSD Committee meeting the Commission used a multitude of other channels to communicate its concerns regarding the labour rights situation in Korea and to press for further progress. The concerns were raised at the Trade Committee, in correspondence from the Commissioner for Trade to her Korean counterpart and in numerous bilateral contacts, including by the EU Delegation in Korea. In response to a series of detailed EU questions Korea provided information on the domestic context and the efforts the government is making towards ratification of four outstanding fundamental ILO conventions on their reforms on freedom of association. In this context Korea informed that the government established an Expert Committee with the task of analysing of differences between national laws and the outstanding fundamental ILO conventions, and of producing recommendations by July 2018. Based on these recommendations, the tripartite partners are supposed to discuss specific ways to improve laws and systems necessary for the ratification of the ILO fundamental conventions. The Korean government expects that the outcome of these tripartite discussions at the end of 2018 will allow the government to submit a legislative package to the National Assembly at the earliest possible moment. The EU welcomed this move and emphasized that it will monitor the process closely and will react accordingly. The Commission considers that further enhanced bilateral engagement in this regard as necessary. The EU also provided information on the EU Pillar of Social Rights. The TSD Committee meeting also discussed environmental policy issues, where the EU and Korea exchanged information on their respective actions on green growth, circular economy and climate change. Korean provided a general overview of the Framework Act on Resource Circulation, which entered into force as of 1 January 2018. The EU explained its strategy for plastics while emphasizing the need for a new approach to the management of micro plastics. Both sides mutually agreed to provide various types of information in the follow-up to the meeting and deepen cooperation on plastic management. As regards the climate policies, Korean explained how Paris Agreement is being implemented in Korea and both parties further discussed ways to strengthen cooperation on climate change. The EU side mentioned that the cooperation on the Emissions Trading Scheme between the EU and Korea has been successfully operated so far, yet more profound policy discussions on carbon pricing would be desired. The EU also referenced to initial discussions on the new cooperation project on the implementation of the Paris Agreement discussed at the Joint Committee in Brussels in December 2017 and proposed to advance together this project with the target of organizing the relevant events in 2019, possibly at the margins of next UNFCCC National Adaption Plans (NAP) Expo in April 2019. Both sides agreed to share policies and information on carbon pricing and other relevant areas in the follow-up to this meeting. The implementation of the TSD Chapter was also supported by an active participation from civil society through the EU and Korean Domestic Advisory Groups (DAG) which have held a series of regular meetings and exchanges over last year. The EU DAG was particularly active in presenting members’ opinions regarding the labour rights situation in Korea. The sixth meeting of the Civil Society Forum, which brings together the EU and Korean DAGs, took place on 11 April 2018 in Seoul. It had insightful discussions and made recommendations to the parties on circular economy, environmental risk factors, gender pay gap and on labour standards. The Forum issued recommendations in the form of a Joint Statement by the Chairs of the Korea DAG and the EU DAG to the EU and Korea on the implementation of the TSD Chapter.

5.Specific areas subject to reporting or monitoring In accordance with article 3 (3) of Regulation (EU) No 511/2011 of the European Parliament and of the Council of 11 May 2011 implementing the bilateral safeguard clause , the Commission shall present an annual monitoring report to the European Parliament and the Council on updated statistics on imports from Korea of products in sensitive sectors and those sectors to which monitoring has been extended. The evolution of EU imports from Korea in the sectors covered by the monitoring (cars, textiles, electronics) and the results of the specific monitoring on duty drawback and TRQs are presented below. In order to apply a unified methodology across the Annual Report on FTA Implementation, the current report data is presented in calendar years and not in July-June intervals unlike in the previous monitoring reports. Furthermore, for sake of completeness and to get a better assessment of the situation and trends of exports, this report uses statistical regime 4 of Eurostat (representing total trade including trade under inward and outward processing procedures) unlike previous monitoring reports, which were based on statistical regime 1 (normal trade). The comparison under the monitoring exercise is based mainly on quantities imported from Korea to the EU, i.e. units in the case of cars and 1 000 kg in the case of car parts, textiles and electronics. (i) Car sector EU imports of cars from Korea increased by 16% in 2017 in number of cars, compared to the previous year. The current level of car imports is significantly higher (by 55%) compared to 2010, the last year before the implementation of the FTA. Table 6. EU-Korea trade in cars (ii) Textile sector The decreasing trend in textile imports observed since 2013 stabilised in 2017. EU imports of textiles from Korea increased slightly in value terms in the 7th year of FTA implementation compared to 2016 but remained unchanged in terms of volume, hovering at around 2 million kg. on a quantitative basis. Imports in 2017 were lower compared to 2010, the last year before the implementation of the EU-Korea FTA. Table 6 EU-Korea trade in textiles (iii) Electronics Sector EU imports of electronic goods from Korea have been decreasing in quantitative terms for the last three years. Imports at around 4 million kg in 2017 were lower compared to the previous year, and significantly below the level of some 9 million kg reached in the reference base year of 2010. Table 7 EU-Korea trade in electronics Source: Comext (to be confirmed by G2) Duty drawback In line with the Article 14 of the Rules of Origin Protocol, a specific monitoring has been carried out on key car parts and electronics. Source: Comext

In conclusion, there was no significant increase in imports of car components and key electronics from China and Japan to Korea in 2017 compared to 2016. Based on these trade statitics, it is not possible to establish a link between the allowance of duty-draw back and the increase in EU imports of cars from Korea. 6.Progress, main open issues and follow-up actions Enforcement of the TSD chapter of the FTA, i.e. insufficient progress on the ratification and implementation of ILO conventions and on protection of labour rights in Korea remains a serious concern to the EU. The Commission stepped up the engagement with Korea in order to address them, and continue its cooperation with the EU DAG and with the Civil Society Forum comprised of stakeholders from all sides. The EU has a particular interest in exporting again beef to the Korean market which has been closed to all EU imports since January 2001. The acceptance of the principle of regionalisation for animal diseases by Korea is another important topic in the sanitary and phyto-sanitary area. In the area of Intellectual Property, Korea needs to establish a remuneration system for public performance rights. It also needs to agree to protect additional GIs and accept the principles of the regulatory framework for postal services. Other market access and implementation issues relate inter alia to electronics, cars and machinery. Korea also needs to accept the principles of the regulatory framework for postal services. Other market access and implementation issues relate inter alia to electronics, cars and machinery. Improvements in the areas of customs procedures could contribute to increase the PUR, and further facilitate the participation of small and medium sized enterprises (SMEs). Technological changes, for instance in the area of electronics, will require adaptations. 7.Conclusions and outlook Over the seven years of application, the EU-Korea FTA brought tangible results as illustrated by the strong and balanced bilateral trade flows. Though some difficulties persist as outlined in section 7, in the vast majority of areas the implementation works well and strongly supports economic development on both sides. This was also recognised in the resolution of the European Parliament which was adopted on 18 May 2017 . Full and correct implementation of the EU-Korea FTA continues to be of key importance, in order to bring the expected benefits to both sides. The specialised committees and working groups established under the EU-Korea FTA will continue to discuss and seek solutions to the remaining implementation and market access issues, with the aim to produce tangible results. They have also proven to be useful fora to discuss current and up-coming regulatory developments and areas of future cooperation. Furthermore, the Commission will pursue exploratory discussions with Korea on a package of amendments to the FTA or its protocols, with the aim of reaching a balanced and mutually agreeable outcome. ANNUAL REPORT ON THE IMPLEMENTATION

OF THE EU-COLOMBIA/ECUADOR/PERU TRADE AGREEMENT 1.Introduction 2017 marked the fifth year of implementation of the Trade Agreement between the European Union and its Member States, of the one part, and Colombia and Peru, of the other part , as amended by the Protocol of Accession of Ecuador (‘the Agreement’). The Agreement has been provisionally applied with Peru since March 2013, with Colombia since August 2013, and with Ecuador since 1 January 2017. Ratification by Member States of both the Trade Agreement and the Protocol of Accession of Ecuador is ongoing . This is the first report which accounts for the implementation of the Agreement with all three Andean partner countries. The Agreement was also amended through the Protocol of Accession of Croatia to the EU. After completion of the ratification procedure by Peru on 6 April 2017, this Protocol entered into force with Peru on 1 May 2017. The ratification process by Colombia is ongoing. This report shows that the results after almost five years of provisional application in the case of Peru and Colombia, and one year in the case of Ecuador, are positive. Bilateral trade in 2017 increased with all three countries, and the Agreement had a stabilising effect in the context of declining commodity prices which affected the economy of Andean Community countries. The Agreement offers tariff-free access for virtually all industrial and fishery products from the three countries, and substantial tariff preferences for the few agricultural products which were not fully liberalised, with very few exceptions. This improved market access, more predictable trade and investment relationship and the better rules have helped partner countries diversify trade and notably Andean Community country exports. Regarding EU exports, several industrial sectors including pharmaceuticals, machinery and vehicles, have also strongly benefitted from the improved market access. The Parties are dedicating important resources to the implementation process through the work in the bodies under the Agreement, notably the Trade Committee and its eight specialised Sub-committees. The Trade Committee and its Sub-Committees have met on an annual basis since the provisional application of the Agreement with Colombia and Peru in 2013. In 2017, Ecuador attended the meetings for the first time. The Trade Agreement with Colombia, Ecuador and Peru is based on commitments on liberalisation of goods, services and procurement markets taken bilaterally between the EU and each Andean partner.. The institutional structure of the Agreement is common and the Trade Committee and the Sub-committees take place in the presence of all Parties, with an agenda addressing the bilateral issues that may arise between the EU and each Andean FTA partner country, or between the EU and the three Andean partner countries, as relevant. In November 2017, the Trade Committee and Sub-committees met in Lima (Peru). While not all market access issues have been solved, constructive discussions on issues such as spirits, tariff-rate quotas management and vehicles have contributed to facilitating trade in both directions and increasing EU market access in a concrete manner in all the three Andean markets. In addition, the EU and Colombia adopted a Decision in the Trade Committee on public procurement clarifying the coverage in Colombia at sub-central level, which should improve market access for EU companies.

In accordance with Article 13 of Regulation (EU) No 19/2013 of the European Parliament and of the Council of 15 January 2013 implementing the bilateral safeguard clause and the stabilisation mechanism for bananas of the Trade Agreement between the European Union and its Member States, of the one part, and Colombia and Peru, of the other part (‘Regulation’), the Commission committed to submit an annual report to the European Parliament and the Council on the application, implementation and fulfilment of obligations of the Agreement and the Regulation. This report responds to this requirement (see section 5 below). 2.Evolution of trade 2.1.Trade in Goods The present section focuses on bilateral trade in goods as well as on Non-Agricultural Market Access (NAMA) products. As per the definition in the WTO Agreement on Agriculture, these non-agricultural products include industrial goods, manufactured goods, textiles, fuels and mining products, footwear, jewellery, forestry products, fish and fisheries, and chemicals. Colombia Overall evolution The EU remains Colombia’s second trading partner, after the US but ahead of China. The negative trend in bilateral trade in 2015-2016 was reversed in 2017 with a 7% increase. This positive result is due to increased domestic demand in the EU and a slight recovery of commodity prices, and despite the fact that Colombia’s economy slowed markedly in recent years. Compared to 2012, the year before the application of the Agreement, bilateral trade was 18.2% lower, in line with the decrease of Colombia’s total trade with the rest of the world of 20.8% during the same period. In 2017, the EU accounted for 14% of total merchandise trade of Colombia, up from 13.2% in 2016. In 2017, bilateral trade amounted to EUR 11.6 billion, compared to EUR 10.8 billion in 2016. While historically Colombia ran a trade surplus with the EU, this trend reversed somewhat and the EU now posts a slight trade surplus of EUR 367 million. EU exports to Colombia increased by 10.5% in 2017 to EUR 5.9 billion. This increase is driven by a better export performance of industrial goods, notably machinery products, plastics, aluminium and steel, as well as paper products. Imports to Colombia from the rest of the world had an increase of 1.9% during the same period. EU imports from Colombia amounted to EUR 5.6 billion in 2017, increasing from EUR 5.4 billion in 2016, representing a 3.5% growth. It is noteworthy that overall exports from Colombia into the EU increased despite a strong decline in Colombia’s exports of mineral products to the EU. Figure 1: EU-Colombia bilateral trade in goods 2012-2017 (million EUR) Source: Eurostat EU-Colombia trade in non-agricultural products EU exports to Colombia of NAMA products amounted to EUR 5.58 billion in 2017, increasing by 10.8%. The most important categories in 2017 were: ·Machinery and mechanical appliances, representing 19.6% of EU exports, increasing by 34.6% compared to 2016. Notably, turbojets, turbopropellers and other gas turbines increased by 747% to EUR 159 million; ·Pharmaceutical products, accounting for 12.1% of exports, increasing by 4.1%; ·Vehicles and parts, 7.9% of EU exports, increasing by 2%. EU imports from Colombia of NAMA products amounted to EUR 3.2 billion in 2017, decreasing by 2.8% compared to the previous year. The main categories in 2017 were: ·Minerals, representing 46.1% of EU imports from Colombia, versus 52.1% in 2016;

·Machinery and mechanical appliances, representing 1.7% of EU imports, an increase of 187% compared to 2016. ·Semi-precious stones (mainly emeralds and gold); increased by 32.9%, now representing 1.6% of imports. Peru Overall evolution The EU is Peru’s third trading partner, after China and the US. In 2017, bilateral trade increased by 16% compared to 2016, while Peru’s overall trade with the rest of the world increased by 13% during the same period. Bilateral trade amounted to EUR 10.2 billion in 2017, a 16% increase compared to 2016, with the EU’s trade deficit increasing from EUR 1.5 billion to EUR 2 billion. EU imports from Peru increased by 18.7% compared to 2016, thus growing twice as fast as Peru’s total exports (9%). EU exports to Peru have grown by 12.2% over the same period, while Peru’s total imports increased by 19%. Figure 2: EU-Peru bilateral trade in goods 2012-2017 (million EUR) Source: Eurostat EU-Peru trade in non-agricultural products EU exports to Peru of NAMA products amounted to EUR 3.8 billion in 2017, increasing by 12.9% (from EUR 3.37 billion in 2016). The most important categories in 2017 were: ·Machinery and mechanical appliances, notably spare parts, pumps and valves, representing 24% of EU exports; Electrical machinery and equipment, accounting for 12% of total exports to Peru increased by 31% compared to 2016; ·Vehicles and parts, 7% of EU exports, remaining equal compared to 2016; ·Pharmaceutical products, accounting for 5% of exports, increasing by 13% compared to 2016. EU imports from Peru of NAMA products have increased strongly by 32.9% amounting to EUR 3.93 billion in 2017 (from EUR 2.96 billion the previous year). The main categories in 2017 were: ·Minerals have increased by 41.8% compared to 2016 and represent 29.5% of EU imports from Peru, versus 24.5% in 2016; ·Mineral fuels, representing 11% of EU imports, an increase of 81% compared to 2016 (mainly gas);

·Copper articles increased by 20%, now representing 4.5% of imports; ·Fish and crustaceans, representing 4.3% of imports, increased by 5% compared to 2016. Ecuador Overall evolution The EU remains Ecuador´s second trading partner, behind the US and ahead of China, and represents 15% of Ecuador total trade with the world. The results of the first year of implementation of the Agreement have been very good. Bilateral trade increased by 20.4% from EUR 4.36 billon to EUR 5.25 billon over the 2016-2017 period. The immediate elimination of tariffs for most of Ecuador’s exportable supply and the progressive elimination of tariffs on EU products have surely been an important factor in this. The elimination of safeguards and other unilateral restrictions in Ecuador also helped to encourage trade and sent a positive signal to investors. Ecuador maintains a trade surplus with the EU (EUR 803 million). EU exports to Ecuador increased by 36.2% year-on-year (from EUR 1.64 billion in 2016 to EUR 2.23 billion in 2017), recovering from the fall observed between 2014 and 2016, but still under 2012 figures, when EU exports registered a peak. EU imports from Ecuador also increased but by lower percentage, 10.8% year-on-year (from EUR 2.72 billion in 2016 to EUR 3 billion in 2017), reaching a record high. Figure 3: EU-Ecuador bilateral trade in goods 2012-2017 (million EUR) Source: Eurostat EU-Ecuador trade in non-agricultural products EU exports to Ecuador of NAMA products amounted to EUR 2.1 billion in 2017, increasing by 36.6%. The most important categories in 2017 were: ·Machinery and mechanical appliances representing 18.2% of total EU exports, increasing by 10.7% compared to 2016; Electrical machinery represented 6.3% of exports, increasing by 10.3%; ·Mineral fuels exports accounted 17.6% of the market share, increasing significantly by 119.8%; ·Pharmaceutical products represented 6.9% of total exports, however exports decreased by 2%; ·Other products such as ceramics and vehicles also recorded significant increases in 2017 (110% and 138% respectively) as a result of tariff dismantling and the elimination of domestic fees or quotas. At the same time, EU imports of NAMA products from Ecuador amounted to EUR 1.45 billion, or 48.1% of total EU imports from Ecuador, increasing by 17.2% compared to 2016. The key categories in 2017 were: ·Fish and crustaceans (shrimps) registered a small increase of 2.2%, accounting for 22.4% of Ecuador’s total exports to the EU; ·Preparations of meat and fish (tuna) registered a strong increase of 45.2% accounting for 22.1% of total EU imports from Ecuador;

·Mineral products increased by 514.7% in 2017, but account for only 0.6% of Ecuador’s exports to the EU. Preference Utilisation Rates for EU-Colombia, Ecuador, Peru In the context of the Sub-committee on Market Access, the Parties agreed in 2015 to exchange on an annual basis data on PUR. The EU stressed the need to have reliable data to get a better overview of the effect of the Agreement so far and explore means to assist economic operators, in particular SMEs, to make better use of its opportunities. For 2017, EU statistics indicate that approximately 97% of Colombia’s and Ecuador’s exports to the EU are made using the tariff preferences established by the Agreement, while 96% of Peru’s exports make use of these preferences. The PUR on exports from the EU to Colombia for 2017 was 68%, a slight decrease from 71% in 2016. For Peru, PUR of EU exports have been rising over the past three years, albeit from a rather low level (28% in 2015; 47% in 2016 and 52% in 2017). The PUR on exports from the EU to Ecuador in the first year of the application of the agreement was 42%. 2.2.Trade in agricultural goods This section focuses on agricultural products as defined by Article 2 of the WTO Agreement on Agriculture and as listed in Annex 1 of the same agreement. Colombia EU exports to Colombia of agricultural products increased by 6% in 2017, and were dominated by: ·Beverages and spirits (HS22) at EUR 88 million, or 22% of EU exports of agricultural products to Colombia; ·Preparations of a kind used in animal feeding (HS2309) increased by 48 times, now representing 0.9% of EU exports; ·Preparations of cereals, flour, starch (HS19) and vegetables, fruits, nuts & plants (HS20) account for 0.6% of exports each. EU imports of agricultural products from Colombia increased by 13% from 2016 to 2017, reaching a total of EUR 2.4 billion. The most important categories in 2017 were: ·Fruits (HS08), accounted for 19.4% of total imports, up by 12% compared to 2016. Bananas represent 84.3% of all fruits exported, followed by avocados with 5.4%. From 2016 to 2017 there was a strong increase in exports of bananas (10%), plantains (10.1%), dried pineapples (56.5%), avocados (40.2%), guavas, mangoes and mangosteens (26.7%), oranges (80.3%), and lime (54.1%); ·Coffee (HS09), increasing by 4%, represents 10.8% of EU imports; ·Crude palm oil (HS151110), 5.17% of imports, and crude palm kernel, 1% of imports, posted increases by 75.5% and 6.7% respectively. Total EU imports of agricultural products from Colombia increased by 55.3% since 2012, and now account for 42.7% of Colombian exports to the EU, versus 17.8% in 2012. Peru EU exports to Peru of agricultural products increased by 4% in 2017. The most important categories in 2017 were:

·Beverages and spirits (HS22), accounting for 25% of total EU exports of agricultural products to Peru; ·Preparations of vegetables (HS20), increased by 32% compared to 2016; ·Dairy products (HS04), posting a strong 51% increase compared to 2016 thanks to the introduction of a harmonized import certificate. EU imports of agricultural products from Peru decreased by 2.1% from 2016 to 2017. The most important categories in 2017 were: ·Fruits (HS08), accounted for 16.3% of total imports, up 9% compared to 2016; Avocados accounted for 38% of all fruits exported, a 21% increase, followed by mangos with 15% (-0.4%), fresh grapes for 14% (-3%), fresh cranberries for 9% (-7.6%), fresh bananas for 9% (+1.7%); ·Coffee (HS09) now represent 6.6% of total Peruvian exports to the EU; Total EU imports of agricultural products from Peru increased by 39.5% since 2012. Agricultural products now account for 35.2% of Peruvian exports to the EU, versus 24.4% in 2012. Ecuador EU exports of agricultural products to Ecuador grew by 34% year-on-year. This should hopefully further increase once the SPS chapter of the Agreement has been fully implemented, and that certain barriers to imports on the Ecuadorian side are eliminated. Key EU exports of agricultural products were: ·Miscellaneous edible preparations exports (HS21) grew by 19% corresponding to a 0.86% of total exports; ·Beverages and spirits (HS22) exports increased substantially by 262% and occupied 0.8% of EU total exports. EU imports of agricultural products from Ecuador reached a total of EUR 1.57 billion. The EU consolidated its position as the first trading partner for Ecuadorian non-oil exports. The most important categories were: ·Fruits (HS08) grew by 17% year-on year, and represented 31.5% of total EU imports, with banana imports accounting for almost 94% and growing by 17% in 2017. Other fruits grew as well: pineapple by 27% and tamarind by 49%; ·Live trees and other plants (mainly fresh cut flowers) (HS06), remained stable and accounted for 6.2% of Ecuador’s exports to the EU; ·Cocoa and cocoa preparations (HS18) decreased by 13%, and account for 6.1% of total EU imports. Ecuador exports of agricultural to the EU increased by 5% in 2017 compared to 2016; and represent 55% of total Ecuadorian exports to the EU. Use of Tariff-rate quotas

The Agreement provides for TRQs (TRQs) which grant the other Party preferential tariff treatment up to the quota’s quantitative threshold, above which imports are subject to the applicable Most-Favoured Nation tariff. Colombia Colombia’s use of the TRQ for cane or beet sugar and chemically pure sucrose has increased from 88.4% in 2013 to 94.8% in 2017. Other TRQs are hardly or not utilised. Table 1: Rate of utilisation of EU TRQs by Colombia 2013 2014 2015 2016 2017 Cane sugar and chemically pure sucrose 88.4% 85.7% 93.8% 96.2% 94.8% Other sugar confectionery 1.4% 1.3% 1.2% 1.5% 1.5% Source: TAXUD, Surveillance Database The EU is fully using the TRQs established for mushrooms, preparations for infant use and sweetcorn, to a somewhat lesser extent TRQ on yogurt, ice cream (though increasingly through a better implementation of the Agreement), and barely its TRQs on cheese (possibly due to a slowdown in domestic demand in Colombia) and on sugar confectionery (less than 4% in 2017). Table 2: Rate of utilisation of Colombia TRQs by the EU 2013 2014 2015 2016 2017 Mushrooms 1.6% 5% 100% 100% 100% Milk and cream in powder 0% 34.9% 100% 100% 82.6% Whey 57.6% 50% 92.9% No more TRQ No more TRQ Preparations for infant use 40.4% 67.5% 99.1% 100% 100% Yogurt 0% 0.5% 0.8% 100% 99% Sweetcorn 0.42% 54.2% 100% 100% 100% Ice cream 5.26% 13.4% 7.4% 25.9% 45.7% Cheese 9% 8% 8.2% 7.9% 3.1% Sugar confectionary 1.8% 3.4% 3.1% 3.8% 3.9% Source: DIAN (Dirección de Impuestos y Aduanas Nacionales) Peru TRQ for cane sugar has been almost fully utilised by Peru. TRQ for corn has also a high rate of utilisation. Peru is starting to take advantage of the TRQ on garlic. Other TRQs have very low utilisation rate. Table 3: Rate of utilisation of EU TRQs by Peru 2013 2014 2015 2016 2017 Cane sugar 100% 100% 3.5% 99.8% 100% Sweetcorn 21% 76% 83.2% 87.3% 35.4% Garlic 0% 0% 2.4% 53.8% 54.2% Rum 0% 0% 0% 7% 0% Maize (corn) 0.7% 2.9% 1.8% 6.1% 1.7% Sugar confectionery 0.02% 0.01% 0.16% 0.1% 0.2% Source: TAXUD, Surveillance Database The EU is fully using the TRQ established by Peru for milk powder and almost fully for ice cream and butter thanks to the harmonized certificate for dairy products. Other TRQs are barely used. Table 4: Rate of utilisation of Peru TRQs by the EU 2013 2014 2015 2016 2017 Butter 0% 0% 96.0% 100% 82% Cheese 0% 0% 0% 4.3% 5.4% Ice cream 58.6% 89.6% 98.5% 95.6% 94.2% Milk powder 0% 4.1% 99.7% 100% 100% Milk for babies 0% 0% 0% 29.9% 0.0% Chewing gum 0.3% 0% 0.1% 2.20% 3.4% Sugar 0% 0% 0% 0.8% 0.0% Rum 3.5% 0.0% 3.5% 5.8% 4.2% Source: SUNAT (Superintendencia Nacional de Aduanas y de Administración Tributaria) Ecuador Few of the EU’s TRQs for Ecuador’s exports have been used during the first year of implementation of the Agreement. Only TRQs that were used are mentioned.

Table 5: Rate of utilisation of EU TRQs by Ecuador in 2017 Products Size of the quota (tons) Fill rate (%) Sweet corn and other vegetables 300 3.28% Sugar cane 15000 4.3% Confectionary products (high sugar content): Juices, Chocolate, Coffee, Tea, others 10000 1.59% Source: TAXUD, Surveillance Database The limited use of TRQs by the EU is partly due to the still pending implementation of the pre-listing system of Member States’ establishments allowed to export animal products to Ecuador, including some covered by TRQs. Some Ecuador TRQs have been used by the EU, due to the fact that these products have historically been imported and consequently trade flows have not been interrupted. Furthermore, the delay in the opening by Ecuador of its TRQs for the EU, as well as its complex management is also likely to have played a role in the non-use of TRQs by the EU. Table 6: Rate of utilisation of Ecuador TRQs by the EU in 2017 Products Size of the quota (tons) Fill rate 2017 Preparations for animal feeding 800 6.13% Dairy products: Powder milk, butter milk serum, whey 400 12.50% Dairy products: Evaporated milk; condensed milk 600 1.02% Dairy products: Yoghourt, cheeses: grated or powdered, melted, others 500 2.74% Dairy products: Blue-veined cheese, mature cheese 1 000 3.93% Processed sweet corn: Sweet corn: Frozen, canned 400 21.85% Porcine products: Cured ham, Bellies (streaky), Sausages and similar meat products 800 5.65% Confectionary products (high sugar content): Juices, Chocolate, Coffee, Tea, others 750 0.90% Source: Ministry of Agriculture of Ecuador 2.3.Trade in Services and development of investment 1.1.4.Trade in Services Bilateral trade in services between the EU and Colombia increased by 0.7% in 2016 compared to 2015, totalling EUR 4.25 billion. While EU exports increased by 4%, Colombian exports decreased by 5.6% over this period. According to Colombian statistics (DANE), EU share in Colombia’s total trade in services represented 18% in 2017. Table 7: EU-Colombia bilateral trade in services 2011-2016 (million EUR) 2011 2012 2013 2014 2015 2016 EU28 imports 1 347 1 446 1 440 1 529 1 429 1 349 EU28 exports 2 638 2 855 2 564 2 416 2 793 2 906 Balance 1 290 1 409 1 124 888 1 365 1 557 Total trade 3 985 4 300 4 004 3 945 4 222 4 254 Source: Eurostat For Peru, bilateral trade in services decreased by 6% in 2016 compared to 2015. Based on Peru’s statistics, EU share in Peru’s total trade in services represented almost 30% in 2016. Table 8: EU-Peru bilateral trade in services 2011-2016 (million EUR) 2011 2012 2013 2014 2015 2016 EU28 imports 846 855 835 897 894 862 EU28 exports 1 094 1 509 1 707 1 999 1 669 1 541 Balance 248 654 872 1 101 775 679 Total trade 1 940 2 364 2 542 2 896 2 563 2 403 Source: Eurostat EU bilateral trade in services with Ecuador increased significantly by 56.5% in 2016 to a record high of EUR 2.24 billion. As in the case of Colombia and Peru, the EU posts a substantial surplus in the trade in services. The EU share in Ecuador´s total trade in services represented almost 79.7% in 2016. Table 9: EU-Ecuador bilateral trade in services 2011-2016 (million EUR) 2011 2012 2013 2014 2015 2016 EU28 imports 423 405 375 406 374 454 EU28 exports 1 055 1 152 1 148 1 268 1 060 1 790 Balance 632 747 733 862 686 1 337 Total trade 1 478 1 557 1 523 1 674 1 434 2 244 Source: Eurostat

1.1.5.FDI For the third year in a row, the EU remains the first foreign investor in Colombia, totalling EUR 14.7 billion of FDI stocks in 2016. According to Colombian statistics, EU FDI accounted for 36% of the total FDI in flows to Colombia in 2017 with an amount of EUR 5.4 billion. Colombian FDI stocks in the EU decreased by 18.4% since 2015, totalling EUR 2.7 billion in 2016, and according to Colombian statistics, 30.8% of its outward flows went to the EU in 2017. Table 10: EU-Colombia investment flows and stocks 2014-2016 (million EUR) Inward Outward 2014 2015 2016 2014 2015 2016 Stocks 3 828 3 379 2 757 16 566 16 957 14 731 Flows -214.3 1 885.7 -373.3 45.4 587.6 -985.5 Source: Eurostat The EU is the first foreign investor in Peru. EU FDI stocks in Peru increased by 30% between 2015 and 2016, totalling EUR 13.2 billion in 2016. Peru’s FDI stocks in the EU increased to EUR 2 billion in 2016, a 1139% increase compared to 2014. Table 11: EU-Peru investment flows and stocks 2014-2016 (million EUR) Inward Outward 2014 2015 2016 2014 2015 2016 Stocks 159 1 493 1 971 9 384 10 146 13 150 Flows -362 563 449 -1 516 1 366 3 702 Source: Eurostat EU FDI stocks in Ecuador have remained almost constant in 2016 year-on year, at around 6 billion EUR. Ecuador´s FDI stocks in the EU experienced a 45% decline over the 2014-2016 period and reached EUR 300 million in 2016. According to the Central Bank of Ecuador, EU FDI accounted for 21% of total FDI inflows in 2017 (EUR 116 million), a sharp contraction compared to 72% in 2016. Ways to increase EU investment in Ecuador could include less complex regulations for businesses, a better judicial enforcement of contracts and streamlined legal procedures. Table 12: EU-Ecuador investment flows and stocks 2014-2016 (million EUR) Inward Outward 2014 2015 2016 2014 2015 2016 Stocks 538 351 298 5 265 6 001 5 929 Flows -233 -141 -109 2 865 -99 Source: Eurostat 3.Activities of the implementation bodies The fourth meeting of the Trade Committee took place on 24 November 2017 in Lima, Peru. It was preceded by meetings of all eight Sub-committees under the Agreement. The main conclusions of the Trade Committee and Sub-committees can be summarised as follows: a) Trade Committee The EU and Colombia signed a Decision to modify Colombia’s public procurement market access schedules at sub-central level . The modification will result in a clarification of coverage of certain municipal entities. The Trade Committee was able to take stock of progress achieved in the Sub-committees. The EU reiterated some of its main concerns, including most notably: change in the provision defining direct transport to allow for the splitting of consignments for products transiting a third country, continued discrimination of imported spirits in Peru, lack of enforcement for GIs (Oporto and Feta) in Peru, obligation for imported beers to attach strip stamps in some departments in Colombia, exploitation charge levied on spirits introduced in the Colombian departments, the anti-dumping investigation against frozen potatoes from Belgium, Germany and the Netherlands in Colombia, the service tax for customs control in Ecuador. Colombia, Peru and Ecuador raised concerns about the potential impact of some EU SPS measures on their exports of agricultural products.

The EU gave an update on the state of ratification process by the Member States of both the Agreement and the Protocol of Accession of Ecuador. Colombia and Peru informed about the ratification process regarding the Protocol to the Agreement to take account of the accession of the Republic of Croatia to the European Union. The Parties welcomed the provisional application of the Protocol of Accession of Ecuador to the Trade Agreement as from 1 January 2017 and completion of the ratification process by both Colombia and Peru. b) Customs, Trade Facilitation and Rules of Origin The Sub-committee discussed the interpretation of the provision defining direct transport to allow the splitting of consignments for products transiting a third country, but without any conclusive outcome. Colombia, Ecuador and Peru expressed interest in receiving help and assistance from the EU on a wide variety of issues, including Authorised Economic Operators (AEO) and customs laboratories. In this context, the EU underlined the importance of advancing on the issue of direct transport. With Ecuador, the EU mentioned issues of reclassification of goods. c) Government Procurement In 2017, good progress was made with Colombia to address a problem of interpretation in relation to market access in government procurement at sub-central level. The solution consisted in modifying the chapter on government procurement by including a clarification of the coverage of certain municipal entities. With Peru, the EU continued exchanging views on the use of international standards and obligations in respect of technical specifications in government procurement. Given that it is the first time Ecuador undertakes international commitments on government procurement, Ecuador provided information on the activities undertaken to implement the government procurement chapter, including awareness-raising activities to the procuring entities on the obligations arising from the Agreement and required amendments of specific laws and regulations. d) Technical Barriers to Trade (TBT) With regard to Colombia, the EU raised the issue of recognition of EU testing and certification in Colombia, and Colombia confirmed that test results issued in the country of origin are accepted provided that the results originate from an accredited laboratory and the accreditation entity forms part of an international accreditation body. With Ecuador, the EU raised the issue of prohibition of labelling of alcoholic beverages at destination. In the case of Peru, the EU reiterated its interest regarding the recognition of Member States as having ‘strong health monitoring’, as it facilitates the recognition of their certification for pharmaceutical and medical devices products to be exported to Peru. e) SPS Matters The EU discussed with Colombia, Peru and Ecuador their respective advance towards implementing the provisions of the SPS chapter of the Agreement to ensure better market access for EU products. With Peru, the EU welcomed the positive impact of the harmonised certificate for dairy products by which all EU establishments have access to the Peruvian market (pending registration in their system). Progress remains to be done with the approval of a harmonised certificate for the import of meat products. The EU also welcomed the lifting of trade restrictions related to avian influenza. With Colombia, the EU noted considerable advance since the implementation of a single procedure for market access of EU exports of animal-based products, where pre-listing is applied. There is still progress to be made with the adoption of harmonised certificates on dairy products and on cooked meat products. There is progress towards the approval of fruits and vegetables although at a slower pace as phytosanitary import conditions in Colombia imply a lengthy process. With Ecuador, there is a continued dialogue to ensure the full implementation of the provisions of the SPS chapter. In 2017, the EU and Ecuador discussed constructively on a procedure for the approval of exports of products from Member States, including prelisting for animal products (procedure which was agreed in February 2018 but is yet to be implemented by Member States). Colombia, Ecuador and Peru raised concerns related to some EU legislation on certain maximum residue levels for some pesticides, maximum levels of cadmium in cacao-based products, endocrine disruptors, and novel food. f) Agriculture The Parties took stock of trade flows and utilisation of quotas during the four years of implementation of the Agreement and welcomed the increase of exports of agricultural products on both sides. The EU and Ecuador reviewed trends in bilateral trade of agricultural products for the first nine months of 2017. The Parties discussed the bilateral safeguard clause and the stabilisation mechanism for bananas, as well as the implementation of the spirits’ fiscal reform in Colombia (in particular the EU took issue with the exploitation charge that is levied solely on products introduced in the departments). The EU raised its concerns regarding the discrimination against EU spirits in Peru and the issues of TRQ management and rejection of EU imports of agricultural products in the case of Ecuador. g) TSD The Parties held the meetings of the institutions in charge of monitoring the implementation of the TSD provisions of the Agreement (see section 4 below). h) Intellectual Property The Parties addressed specific issues regarding the protection and enforcement of a number of GIs, including matters relating to the addition of new GIs to be protected. With Colombia, the EU informed of work under way to protect nine additional Colombian GIs and welcomed the start of an investigation in Colombia regarding the usurpation of EU cheese GIs. With Peru, the EU referred to the usurpation of GIs names (Oporto and Feta). Peru referred to the protection of Pisco in the EU in relation to registration of trademarks. With Colombia, the EU welcomed the start of an investigation regarding the usurpation of EU GIs on cheese but stressed the importance of an effective and timely solution to ensure the protection of EU GIs. The EU informed of the internal procedures under way to register nine additional Colombian GIs. Peru expressed concerns about what it considers as inadequate protection of Pisco in the EU given the registration of trademarks (TM) containing the name Pisco. Other issues discussed included the overall enforcement of intellectual property rights, patentability of medicines in Colombia, exceptions to copyright and related rights as well as plant variety rights in Ecuador, and possible cooperation projects. i) Market Access The Parties exchanged statistics on trade flows, including use of preferences and tariff rates quotas. With Colombia, the EU raised its concerns regarding truck scrappage, vehicle taxation, the implementation of the spirits law, an ongoing anti-dumping case against EU frozen potatoes, and discrimination against imported beers. In relation to Peru, the EU raised concerns about the application of the duty drawback in Peru, which appears to be a subsidy. With Ecuador, discussions focused on discriminatory treatment against imported spirits and the service tax for customs control, implemented in November 2017. It should, however, be noted that the service tax was discontinued in June 2018. 4.Implementation of the provisions on trade and sustainable development

4.1.Sub-Committee on Trade and Sustainable Development The fourth meeting of the Sub-Committee on TSD was held in Lima on 22 and 23 November 2017. While discussions on labour and environmental issues were constructive, it was clear that a number of critical issues require follow-up and further action and that more dialogue on priority TSD issues is needed. To step up monitoring the Parties agreed to engage more regularly on this on the basis of questions submitted by the EU in early 2018. On labour, important issues of concern with all three countries remain in relation to freedom of association and collective bargaining, the high levels of informality and the inadequate labour inspection capacities. Peru and Colombia informed about their plans to increase the human and material resources to strengthen labour inspection. They also informed they have started the process to ratify the Protocol to the ILO Convention 29 on forced labour. Concerns about the persistence of high levels of child labour were also highlighted by the EU, in particular in Peru. Ecuador participated for the first time, and showed constructive engagement to achieve implementation of this Chapter. It informed about the preparation of the labour law reform and advances in occupational health and safety, among others. On environment, the focus was on: measures taken by Colombia to control exports of brown caiman Caiman crocodilus fuscus skins to implement the CITES convention, the tools and measures in Colombia and Ecuador to monitor deforestation, and the strategies of Colombia and Peru to combat trade of illegal timber. Peru's simplification of administrative procedures for licensing on the environmental sector was also highlighted as an important issue to follow as well as the use of mercury in gold mining in the region. The EU and Peru touched upon the submission in October 2017 by a group of European and Peruvian civil society organisations of a report to the European Commission challenging Peru's compliance with the labour and environment provisions of the TSD chapter. The European Commission has since been assessing the allegations made therein while consulting the relevant authorities in Peru, the civil society organisations responsible for the submission and the ILO. 4.2.Domestic consultation Since its establishment, the EU civil society consultation mechanism (‘domestic advisory group’) has met regulary, with the European Economic and Social Committee providing three members as well as the Secretariat. As part of its work, it submits opinions and makes recommendations on the implementation of the TSD chapter of the Agreement. A main advance in terms of the institutional set up for the participation of civil society in TSD issues came from Colombia who announced the creation of a DAG to complement its existing consultative mechanisms. This initiative responds to repeated demands by civil society in Colombia, which the EU consistently echoed. Ecuador, at this early stage of implementation informed of its decision to use existing domestic mechanisms, while indicating that civil society will have the freedom to determine the agenda. 4.3.Session of the Sub-Committee on TSD with civil society In line with Article 282 of the Agreement, the Sub-Committee on TSD held an open session with civil society organisations and the public on 23 November 2017 in Lima, to carry out a dialogue on matters related to the implementation of the TSD chapter. Around 50 represent