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
Date: 2018-10-31
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: association agreement (EU), cooperation agreement (EU), free-trade agreement, investment, service, sustainable development, tariff preference, tariff quota, third country, trade agreement (EU)

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 31.10.2018  COM(2018) 728 final  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 {SWD(2018) 454 final}  
 
 
TABLE 1  

OVERVIEW  OF  THE  AGREEMENTS  COVERED  BY 

THIS REPORT (PART 1) ........................................................................................ 2 

TABLE 1  

OVERVIEW  OF  THE  AGREEMENTS  COVERED  BY 

THIS REPORT (PART 2) ........................................................................................ 3 

1. 

INTRODUCTION ....................................................................................................... 4 

2.  OVERVIEW OF MAIN FINDINGS .......................................................................... 8 

3.  NEW GENERATION FTAS: SOUTH KOREA, COLOMBIA-ECUADOR-

PERU, CENTRAL AMERICA, CANADA .............................................................. 14 

3.1   EU-SOUTH KOREA FTA .............................................................................. 14 
3.2   EU  TRADE  AGREEMENTS  WITH  COLOMBIA,  ECUADOR, 

PERU ............................................................................................................... 16 
3.3   EU ASSOCIATION AGREEMENT WITH CENTRAL AMERICA ............ 19 
3.4.  EU-Canada Comprehensive Economic and Trade Agreement- CETA .......... 20 

4.  DEEP AND COMPREHENSIVE FREE TRADE AREAS (DCFTAS) ................... 23 

5.  FIRST GENERATION FTAS ................................................................................... 27 

5.1   Switzerland ...................................................................................................... 27 
5.2   Norway ............................................................................................................ 28 
5.3   Mediterranean countries .................................................................................. 28 
5.4   Mexico ............................................................................................................. 30 
5.5  Chile ................................................................................................................ 31 
5.6   Customs Union with Turkey ........................................................................... 32 
5.7    Stabilisation and Association Agreements with the Western Balkans ............ 33 

6.  ECONOMIC PARTNERSHIP AGREEMENTS (EPAS) WITH  AFRICAN, 

CARIBBEAN AND  PACIFIC (ACP) COUNTRIES .............................................. 34 

6.1.  Southern African Development Community (SADC) EPA ............................ 35 
6.2.  Eastern and Southern African (ESA) Interim EPA ......................................... 35 
6.3.  Forum of the Caribbean Group of ACP States (CARIFORUM) EPA ............ 36 
6.4.  Pacific EPA and EPAs with Ghana, Côte d’Ivoire and Cameroon ................. 36 

7.  TRADE  AND  SUSTAINABLE  DEVELOPMENT  (TSD):  UPDATE  ON 

RECENT ACTIVITIES ............................................................................................ 38 

8. 

IN FOCUS: AGRI- FOOD TRADE UNDER FTAS ................................................ 40 

9.  UPDATE ON PENDING AND FUTURE ACTIVITIES ......................................... 43 

10.  LEGAL ENFORCEMENT ....................................................................................... 45 

ANNEX 1 – PREFERENCE USE ON IMPORTS INTO THE EU ............................ 46 

ANNEX 2 – PREFERENCE USE ON EXPORTS FROM THE EU .......................... 47 

ANNEX 3 – LIST OF ACRONYMS .............................................................................. 48 

1 

 
 
 
 
TABLE 1  

OVERVIEW OF THE AGREEMENTS COVERED BY THIS REPORT (PART 1) 

"New generation" FTAs 

Partner 
EU-South Korea FTA 
EU-Colombia-Peru-Ecuador FTA 

EU-Central 
Agreement  

America 

Association 

Applied since 
1  July 2011 
1 March 2013 for Peru; 1 August 2013 for 
Colombia;  since  1  January  2017  for 
Ecuador. 
1  August  2013:  trade  pillar  applies  with 
Honduras,  Nicaragua  and  Panama,  1 
October 2013: Costa Rica and El Salvador;  
1 December 2013: Guatemala. 
21 September 2017 

EU-Canada  Comprehensive  Economic  and 
Trade Agreement (CETA) 
Deep and Comprehensive Free Trade Areas (DCFTAs) 

EU-Georgia  

EU-Moldova 

EU-Ukraine 

"First generation" FTAs 

Partner 
EU-Turkey Customs Union 

EU-Switzerland 
EU-Norway 
EU-Israel 
EU-Jordan 
EU - Palestine1 
EU - Tunisia 
EU - Morocco 
EU-Lebanon 
EU-Egypt 
EU-Algeria 
EU – Mexico Global Agreement 

1  September  2014,  and  entered  into  force 
on 1 July 2016. 
1  September  2014,  and  entered  into  force 
on 1 July 2016. 
1 January 2016, and entered into force on 1 
September 2017. 

Applied since  
Association  Agreement  signed  in  1963; 
final phase of the customs union completed 
on 1 January 1996. 
1972 
1 July 1973 
1 January 1996 
1 May 2002 
1 July 1997 
1 March 1998 
18 March 2000 
1 March 2003 
21 December 2003 
1 September 2005 
FTA  for  goods  applied  since  1  July  2000. 
Service FTA applied since 1 March 2001. 

1   This designation shall not be construed as recognition of a State of Palestine and is without prejudice 

to the individual positions of Member States on this issue. 

2 

 
 
 
 
 
                                                 
TABLE 1  

OVERVIEW OF THE AGREEMENTS COVERED BY THIS REPORT (PART 2) 

"First generation" FTAs 

Partner 
EU-Chile Association Agreement 
EU  –  the  former  Yugoslav  Republic  of 
Macedonia SAA2 
EU-Albania SAA 

EU-Montenegro SAA 
EU-Serbia SAA 

EU-Bosnia and Herzegovina SAA 
EU-Kosovo3 SAA 
Economic Partnership Agreements (EPAs) 

Applied since  
1 February 2003 
Interim Agreement on trade 1 June 2001 

Interim  Agreement  on  trade  1  December 
2006 
Interim Agreement on trade1 January 2008 
Interim  Agreement  on  trade  for  Serbia:  1 
February  2009;  for  the  EU:  8  December 
2009 
Interim Agreement on trade 1 July 2008  
1 April 2016 

Partner 
EU-Pacific 

EU-Cariforum 

EU-Eastern  and  Southern  African  (ESA) 
sub-region 
EU- Central Africa EPA 
EU-SADC (Southern African Development 
Community) EPA 

EU-Ghana Interim EPA 
EU- Côte d’Ivoire Interim EPA 

Applied since  
28  July  2014:  Fiji;  20  December  2009:  
Papua New Guinea. 
29  December  2008:  Antigua  &  Barbuda; 
Belize;  Bahamas;  Barbados;  Dominica; 
Dominican  Republic;  Grenada;  Guyana; 
Jamaica; St. Kitts & Nevis; Saint Lucia; St. 
Vincent  &  the  Grenadines;  Suriname;  and 
Trinidad & Tobago. 
14  May  2012:  Madagascar,  Mauritius, 
Seychelles and Zimbabwe. 
4 August 2014: Cameroon 
10October  2016:  Botswana,  Lesotho, 
Namibia,  South  Africa  and  Swaziland;  4 
February 2018: Mozambique.  
15 December 2016 
3 September 2016 

2 

Stabilisation and Association Agreement 

3  This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and 

the ICJ Opinion on the Kosovo Declaration of independence. 

3 

 
 
 
 
 
                                                 
1. 

INTRODUCTION 

1.1.    Why this Report?  

Bilateral  and  regional  free  trade  agreements  (FTAs)  are  major  drivers  of  economic 
growth.  Through  harnessing  globalisation,  they  bring  important  benefits  for  the  people 
and companies in the European Union (EU) and in our partner countries. FTAs are major 
contributors  to  the  EU's  external  trade  performance  as  they  open  up  new  markets  for 
exporters  and  offer  a  more  predictable,  rules-based  business  environment  beneficial  to 
consumer choice and competition. While removing tariffs and behind- the- border non-
tariff  barriers  remain  key  features  of  trade  agreements,  other  elements  are  gaining  in 
importance.  In  particular,  rules  supporting  free  and  fair  trade  (e.g  related  to  IPR 
protection  and  competition  rules),  but  also  rules  protecting  labour  rights  and  the 
environment have come to the fore. In addition, some FTAs may offer an opportunity for 
closer cooperation between the parties on a range of issues, from research and innovation 
to standardisation and climate change. 

As  the  number  of  trade  agreements  concluded  by  the  EU  has  been  increasing,  so  has 
public interest in their impacts. To analyse the real and potential benefits of major trade 
agreements4, the Commission itself in its "Trade for All" Communication5 committed to 
take stock annually on how these agreements are being implemented, shedding light on 
progress  but  also  the  challenges that remain  and the steps the Commission is  taking so 
that FTAs can reach their full potential.  

In line with the first report6 published in Novemver 2017 this second Annual Report on 
FTA  Implementation  (hereinafter:  "the  report")  is  meant  to  increase  awareness  and 
transparency  on  how  the  Commission  implements  FTAs.  The  report  should  enable  the 
other  EU  institutions,  EU  Member  States,  civil  society,  business  and  everyone  with  a 
stake in EU trade policy to scrutinise and debate how the EU is applying its FTAs. The 
information gathered through this exercise will also inform future trade negotiations. In 
addition,  the  report  also  provides  useful  insights  about  the  extent  to  which  developing 
countries  are  benefitting  from  FTAs  with  the  EU,  and  on  how  to  better  tailor 
development assistance in line with the newly updated Aid-for-Trade strategy. 

1.2 

Data  used for the report  

General trade statistics7 in the report on the evolution of trade and investment flows use, 
except where indicated otherwise, EUROSTAT data (COMEXT) as was available on 15 

4  An  overview  of  all  trade  agreement  concluded  and  negotiated  by  the  EU  can  be  found  at  : 

http://trade.ec.europa.eu/doclib/docs/2006/december/tradoc_118238.pdf 

5  European  Commission,  Communication  “Trade  for  All:  Towards  a  more  responsible  trade  and 

investment policy”, COM (2015) 497.  

6  Report  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European  Economic  and 
Social  Committee  and  the  Committee  of  the  Regions  of  17  November  2017;    Brussels,  9.11.2017 
COM(2017) 654 final 

7  General statistics on trade flows in goods and services for each FTA partner country can be found in 

the SWD. 

4 

 
 
                                                 
July 2018.8 Except where indicated otherwise, the most recent annual data available for 
trade in goods is for 2017, that for services and investment, 2016. Statistics on preference 
utilisation  rates  (PURs)9  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  or  exports  entering  under  trade 
preferences as a share of the total value of imports or exports eligible for preferences by 
partner  country,  i.e.  total  value  of  imports  or  exports  eligible  for  use  of  preferences 
divided  by  the  imports/exports  that  actually  entered  under  the  preference  scheme. 
Preference eligible imports/exports exist if the applied preferential tariff is lower than the 
applied  Most  Favoured  Nation  (MFN)  tariff.  Subsequently  MFN-duty  free  trade  is  not 
included in the calculations.  

The  PUR  on  imports  into  the  EU  from  FTA  partners  is  based  on  Eurostat  figures. 
Eurostat  merges  tariffs  and  trade  flows  to  build  a  dataset  from  which  the  Commission 
extracts  information  on  both  the  treatment  a  product  is  eligible  for  and  the  extent  to 
which this eligible treatment is used. The dataset obtained is harmonised and consistent10 
and allows for comparison across partner countries and years.  

By  contrast,  to  calculate  the  PURs  on  exports  from  the  EU  to  FTA  partners  the 
Commission uses administrative data collected by the respective importing third country 
concerned.  These  statistics  are  not  harmonised.  Hence,  direct  comparisons  between 
partner countries or with EU imports should merely be seen as indicative. PURs are only 
provided where sufficiently reliable data was available. 

1.3   Coverage and structure of the report 

The  present  reportprovides  an  update  of 
in  FTA 
implementation  and  summarises  the  main  developments  regarding  35  major  EU  trade 
agreements  with  62  partner  countries  that  were  applied  at  least  for  several  months  in 
2017 (see Table I). Detailed information on each individual agreement can be found in a 
Staff Working Document accompanying this report.  

the  Commission's  activities 

  Section 2 sums up some of the main  findings across the main areas covered by 

the agreements, describing progress achieved and outstanding issues.  

  Sections 3-6 cover the highlights within each category of FTA:  

o  "New generation" FTAs (section 3)  
o  Deep and Comprehensive Free Trade Areas (DCFTAs; section 4) 
o  "First generation" FTAs (section 5) and  
o  Economic Partnership Agreements (section 6).  

8  As regards the Association Agreement with Central America, there are significant differences between 
EUROSTAT and Central American statistics; for reasons of consistency, only Eurostat data are used. 

9 

Information on PURs per partner country can be consulted in Annexes 1 and 2. 

10  However, some margin of error is still possible since the data does not capture certain changes in the 
preferential status of imports, such as claims for preferences made by importers after the goods have 
been declared to customs and denial of preferences decided by customs after verification post-release 
of the goods. 

5 

 
 
                                                 
  Section  7  looks  at  the  implementation  of  commitments  related  to  Trade  and 

Sustainable Development (TSD). 

  Section 8 takes stock of agri-food trade under FTAs.  
  Section  9  examines  the  Commission's  ongoing  work  to  raise  awareness  and 

improve uptake of FTAs.  

  Section 10 reflects the state of play in regard to legal enforcement.  

6 

 
7 

 
 
 
2.  OVERVIEW OF MAIN FINDINGS 

2.1   Background  

FTAs  are  major  catalysts  in  opening  markets  and  generating  the  framework  conditions 
conducive to trade and investment. Trade agreements enable EU companies to increase their 
exports and imports, which contributes to increasing the EU's gross domestic product (GDP). 
A clear link has also been established between (EU and foreign) employment and value added 
generated by EU exports to the rest of the world.11 But FTAs also pursue a range of additional 
objectives, both general and specific to the partner country or region. The EU is committed to 
ensuring  that  trade  policy  is  also  about  promoting  values,  such  as  the  protection  of  human 
rights, labour rights, the environment and the fight against climate change. 

In  addition,  the  Deep  and  Comprehensive  Free  Trade  Areas  (DCFTAs)  with  our  Eastern 
Neighborhood  partners  Moldova,  Ukraine  and  Georgia  rely  heavily  on  gradual  legal 
approximation  of  these  countries  to  the  EU  acquis.  The  Economic  Partnership  Agreements 
(EPAs)  with  African,  Caribbean  and  Pacific  (ACP)  countries  are  asymetric  agreements  that 
provide our partner countries with duty-free, quota-free access to the EU market, flanked by 
technical  assistance  and  development  aid  measures.  The  agreements  with  the  Western 
Balkans are built on a strong European perspective of these countries aspiring towards future 
EU membership.  

FTA  implementation  is,  by  its  nature,  trailing  the  negotiation  process  and  will  have  to  be 
adjusted to ensure the achievement of the specific policy objectives of the agreement at stake. 
Meaningful  conclusions  can  only  be  drawn  once  an  agreement  has  been  applied  for  several 
years. In order to examine their impacts the Commission carried out ex post evaluations for 
the  EU's  "first  generation"  FTAs  with  Chile  (2012)  and  Mexico  (2016),  and  is  about  to 
complete  an  in-depth  analysis  of  the  EU's  first  "new  generation"  Agreement  with  South 
Korea.  The  conclusion  in  2016  of  the  Comprehensive  Economic  and  Trade  Agreement 
(CETA) with Canada marked new milestones in terms of scope and content and this will also 
be reflected in its implementation. 

The more ambitious and comprehensive a trade agreement is the more complex and resource-
intensive  its  implementation  will  be.  It  is  thus  nowadays  even  more  crucial  to  monitor  the 
functioning of our main FTAs periodically and systematically. The findings of what does and 
does not work under our different agreements can inform the negotiation of new agreements 
and the modernisation of existing ones. The Commission thus puts the emphasis on a smooth 
transition  from  negotiation  to  implementation  phase  and  an  improved  preparedness  for  the 
day a new agreement will start to be provisonally applied, as can be seen from CETA and the 
Economic Partnership Agreement with Japan. Effective FTA implementation can therefore be 
seen as part of the trade policy cycle.  

11  See  Article  by  José  M.  Rueda-Cantuche  and  Nuno  Sousa  of  February  2016:  "EU  Exports  to  the  World: 
Income"; 
on 

Overview 
Effects 
http://trade.ec.europa.eu/doclib/docs/2016/february/tradoc_154244.pdf 

Employment 

and 

of 

8 

 
 
 
 
                                                 
2.2 

Trade in goods12 

Total EU trade under FTAs in 2017 amounted to 1179 billion EUR, which is around 32% of 
EU total trade with third countries (around 3737 billion EUR in that same year). Our largest 
trade partners for trade under FTAs are Switzerland, accounting for 7% of total EU external 
trade, followed by Turkey with 4.1%, Norway with 3.4% and South Korea with 2.7%. Total 
imports under EU FTAs in 2017 amounted to around 542 billion EUR, wheras total exports 
were in the order of 637 billion EUR. 

In  2017,  overall  trade  in  goods  increased,  in  particular  regarding  EU  exports.  Where  EU 
exports decreased, it seems to be caused mainly by external factors13 affecting the economy of 
the partner country concerned and not the result of any malfunctioning of the FTA as such. A 
sectoral  analysis  of  trade  flows  showed  considerable  increases  in  EU  exports  of  agri-food 
products and motor vehicles to some of our "new generation" FTA partners. At the same time 
a  lot  of  untapped  potential  remains  in  certain  sectors,  such  as  transportation  equipment  or 
machinery  where  the  underlying  value  of  exports  and  potential  duty  savings  are 
comparatively high across all EU Member States and FTA partners. For example, according 
to a recent study conducted by DG TRADE, EU exporters could save an estimated 15 billion 
EUR annually if they fully used the preferences offered by 18 EU FTAs.14 

2.3 

Preference Utilisation Rates (PURs)15 

PUR on imports into the EU from FTA partners 

In 2017 some positive developments could be observed in particular for the Latin American 
countries Chile and Mexico and EFTA partners Norway and Switzerland,  who were able to 
make  better  use  of  FTA  preferences  granted  by  the  EU.  Overall,  the  Mediterranean  FTA 
partners made good use of the FTA preferences, as did some Andean countries like Ecuador. 
Central American countries also show an upward trend, notably El Salvador and Panama.    

PUR on exports from the EU to FTA partners 

Calculating the preference use on exports from the EU to FTA partners remains a challenge in 
many cases, due to the absence of data or lack of reliable data. It should be noted that, as was 
the  case  last  year,  data  on  the  PUR  of  exports  from  the  EU  to  FTA  partners  was  again  not 
readily  available  from  all  FTA  partners  and  in  some  cases  data  received  appeared  to  be 
unreliable  or  inconsistent.16  This  is  due  to  the  fact  that  each  partner  country  uses  its  own 

12  Source: Eurostat 

13  The  specific  political  and  geopolitical  context  can  have  an  impact  on  trade  flows  as  can  other  factor,  not 

necessarily related to the implementation of the FTAs. 

14  See study by Nilsson and Preillon (2018),  

http://trade.ec.europa.eu/doclib/docs/2018/june/tradoc_156931.pdf 

15   The underlying concept is further explained in Section 1.3 above. PURs per partner country are provided in 

Annex 1 and 2.   

16    For example, the reported preferential imports sometimes  concern tariff lines not falling under any 

preference. Sometimes there is a wide difference between reported total imports and exports as given by 

9 

 
 
 
 
 
                                                 
method of collecting and reporting imports. In some cases the insufficiency is due to capacity 
shortcomings and a lack of expertise, while some countries claim not to collect these data at 
all.  

The Commission has raised the issue with partner countries concerned, using the institutional 
structures  under  its  FTAs  to  promote  periodic  exchanges  between  the  parties.  In  the  most 
recent  FTAs  starting  from  CETA  a  binding  provision  on  a  periodic  exchange  of  trade  data 
will be included.  

On the basis of the information at the Commission's disposal there were improvements in the 
PUR on exports from the EU to a number of FTA partners, as was the case for South Korea, 
where  PURs  have  been  increasing  for  four  consecutive  years,  as  well  as  for  Georgia  and 
Chile.  The  PUR  on  exports  from  the  EU  to  our  largest  FTA  trade  partner,  Switzerland, 
remained stable at around 80%. Notwithstanding these positive developments, the utilisation 
of FTAs by EU exporters still leaves room for improvement. The Commission is working to 
enhance the uptake of FTAs by EU companies, using a mix of measures aimed at providing 
more timely information and practical  guidance on complex issues, like rules of origin. The 
Commission is also working to improve its Market Access Database and Trade Helpdesk, in 
close cooperation with EU Member States and the business community, to adjust them to the 
needs of small and medium-sized enterprises (SMEs). 

2.4 

Services and investment 

All  "new  generation"  FTAs  and  DCFTAs  contain  ambitious  provisions  on  services  and 
investment. The most recent ones (e.g. CETA or the Economic Partnership Agreement (EPA) 
with Japan help to establish and solidify a regulatory framework to facilitate the provision of 
services, while protecting consumers. CETA and the EU FTAs with Singapore and Vietnam 
also contain state-of-the art investment protection provisions. EU FTAs go beyond the WTO 
as  they  liberalise  investment  not  only  in  services  but  most  economic  sectors,  including 
manufacturing and agriculture. This makes doing business easier for EU service providers and 
investors, offering a more predictable environment and increased legal security.  

This  being  said,  lack  of  disaggregated  data  makes  it  difficult  to  measure  the  precise  impact 
of FTAs  on  services  trade  and  foreign  direct  investment  (FDI).  The  effects  of  FTAs  in 
services would thus need to be studied in more detail to get a clearer picture. Here are some of 
the most important findings so far:   

  Services  trade  has  increased  under  the  "new  generation"  FTAs  with    South  Korea, 
Colombia, Ecuador, Peru and Central America, since their entry into force. For example, 
in the case of Central America, services trade in 2016 reached almost 40% of the value of 
total trade, with Panama alone accounting for over half of this increase. 

  A similar upward trend can be observed for the "first generation" agreements with  Chile 
and Mexico. The modernised agreements will bring further improvements.  In particular, 

Eurostat. The Commission corrects these discrepancies by elimination of trade in tariff lines for which no 
preference exists according to DG Trade's Market Access Database (e.g. where MFN=0). 

10 

 
 
 
 
 
 
                                                                                                                                                         
 
Mexico  has  committed  to  keep  its  services  markets  widely  open  to  EU  suppliers,  with 
comprehensive and ambitious concessions.  

  "First  generation"    agreements  with  our  Mediterranean  partners  have  only  very  limited 
provisions on investment and services as they focus mostly on goods. Evolution of trade 
in  services  and  investments  has  in  general  been  positive,  notwithstanding  the  recent 
decrease in some countries’ tourism services due to instability or security concerns.  

  The value of services  trade provided by EU  companies in  Switzerland and vice versa is 

growing fast, with a positive balance for the EU. 

  Trade  in  services  and  investment  with  Ukraine  and  Moldova  under  the  DCFTAs 
continued to rise in 2016, recovering after the economic and political crisis, while this is 
not yet the case for Georgia.  

  Among  the  EPAs  in  place  only  the  one  with  the  Caribbean  covers  services,  investment 
liberalisation and other trade-related topics, whereas other EPAs have rendez-vous clauses 
for negotiations on these issues at a later stage. 

2.5 

Progress made and main open issues   

The  Commission  uses  the  FTA's  institutional  framework  to  address  concrete  problems  with 
partner countries, and successfully did so in 201717. Here are some of the main achievements 
and outstanding issues to date:  

Sanitary and Phytosanitary (SPS) measures 

  Chile opened its market for EU beef, removing the last remaining obstacles for meat 

cuts and adjusting the terms of the export health certificate. 

  Peru provided nearly full market access for dairy products from the EU. 
  Colombia, Costa Rica and Panama improved SPS procedures, including prelisting of 

EU establishments. 

  Moldova  adopted  and  started  to  implement  a  SPS  strategy  and  Georgia  adopted  a 

legislative roadmap. 

  European beef exports to South Korea remain banned. This issue was again raised at 

 

the SPS Committee on 6 September 2017.  
In  Colombia,  some  cumbersome  SPS  related  procedures  persist,  in  relation  to  plant 
products;  in Peru, there is limited progress on the approval of harmonised certificates 
for the import of meat products.  

17 See also the 2018 Commission's Trade and Investment Barriers Report: 
http://trade.ec.europa.eu/doclib/docs/2018/june/tradoc_156978.pdf 

11 

 
 
 
 
 
 
 
 
 
 
                                                 
  For some of our DCFTA partners, as for example Georgia, the institutional capacity in 
terms of food safety control still needs to be enhanced; Moldova needs to upgrade its 
laboratory diagnostic capacity for monitoring and surveillance of animal diseases. 

Technical and administrative barriers to trade 

  Mexico  lifted barriers  regarding the registration  and approval  of health products  and 

agri-chemicals. 

  Turkey  abolished  export  restrictions  on  copper  and  aluminium  scrap  and  removed 

paper products from the scope of its import surveillance scheme.  

  Colombia  modified  its  laws  to  create  a  level  playing  field  for  imports  and  sales  of 
domestic and imported spirits and announced the creation of a level playing field for 
imported trucks (although these commitments are still to be implemented). 

  Ukraine  continued  banning  the  export  of  wood  logs  with  little  progress  on  pending 

forest legislation that was supposed to remove this trade restriction. 

  Some Mediterranean countries, including Algeria, Egypt, Morocco and Tunisia, apply 
burdensome  registration  schemes,  certification  processes,  technical  controls  in  ports 
and pre-shipment inspections for industrial products, or local content requirments for 
public tenders.  
In  Turkey,  trade  restrictive  measures  included  discrimination  against  EU  exports  of 
tractors, export restrictions on leather products as well as Turkey’s localisation policy 
in the pharmaceutical sector. 

 

Geographical Indications (GIs) 

  The EU GI ‘Prosecco’and the corresponding international trademark are now legally 

protected in Moldova.  

 

In case of South Korea, there have been difficulties to add further EU GIs to the list 
protected under the FTA.  

Public procurement  

  Ukraine  adopted  a  comprehensive  roadmap  on  public  procurement,  a  further  step 

towards a more transparent and open public procurement system. 

  Due  to  lack  of  transparency  EU  competitors  cannot  yet  benefit  from  the  opening  of 

local procurements markets in some countries of the Eastern Partnership.    

12 

 
 
 
 
 
 
 
 
 
 
 
 
 
Business climate, investment, access to markets by SMEs 

  Mexico  improved  access  to  FDI  by  removing  equity  caps  for  important  sectors, 

including telecom, energy and insurance institutions. 

  Several  countries  in  the  Euro-Mediterranean  region  made  changes  to  their  laws 
regulating  investments  in  an  attempt  to  attract  more  FDIs:  For  example,  Egypt  and 
Tunisia  enacted  a  new  Investment  Law,  Algeria  modified  its  Investment  Code, 
Palestine adopted a number of legislations aiming at improving the investment climate 
and  Jordan  and  Morocco  established  new  institutions  to  develop  investments. 
Effective implementation will be key for the success of such measures. 

  Corruption and poor governance continued affecting EU businesses in some of the 

Western Balkan and Eastern Neighbourhood countries. 

13 

 
 
 
 
 
 
 
3.  NEW  GENERATION  FTAS:  SOUTH  KOREA,  COLOMBIA-ECUADOR-PERU,  CENTRAL 

AMERICA, CANADA 

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  South 
Korea, Colombia, Peru, Ecuador, Central America and Canada, 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. 

3.1  

EU-SOUTH KOREA FTA 

Evolution of trade and preference utilisation 

The FTA has been applied for seven  years.  In 2017 EU trade with  South  Korea  grew more 
robustely  (5.7%  per  annum  on  average  over  the  past  7  years)  than  overall  external  trade 
between  the  EU  and  third  countries  which  grew  at  3.8%,  with  the  FTA  as  a  pillar  of  this 
development. EU imports increased more strongly than EU exports, supported by the revival 
of the EU economy and strong domestic demand on the EU side.  

EU  exports  to  South  Korea  in  motor  vehicles  increased  again  by  7.3%,  after  decreasing  by 
7.5% in 2016. 

EU exports to South Korea and imports from South Korea in the agri-food sector increased by 
10% and 11% respectively, exceeding the growth rate observed for EU agri-food exports and 
imports  across  all  FTA  partners  taken  together  (which  corresponded  to  4%  and  5%, 
respectively). Tariff rate quotas (TRQs)18 for sensitive agricultural products were also  better 
used by EU exporters than in the previous two years.  

In 2017, the EU registered a surplus of 2.6 billion EUR in agri-food trade with South Korea. 
Looking  at  the  time  period  between  2010  and  2017,  EU  agri-food  exports  to  South  Korea 
have  increased  by  113%,  imports  from  South  Korea  by  212%  (albeit  the  latter  from  a  very 
low value, from 65 to 203 million EUR).  

The PUR on exports from the EU to South Korea was 74.3%, the highest rate ever. The PUR 
on imports into the EU from South Korea also slightly increased from 87% in 2016 to 88% in 
2017.  

EU  trade  in  services  with  South  Korea  represents  approximately  1%  of  extra-EU  trade  in 
services.  Between  2010  and  2016  EU  exports  of  services  increased  by  70%.  In  2016,  EU 
exports  slightly  decreased  by  3.6%  and  EU  imports  decreased  by  3.3%,  when  compared  to 
2015. Over the same period, EU inward FDI stocks increased by 46% and EU outward FDI 
stocks (EU investments in South Korea) increased by 34%.  

18  TRQs set a quantitative threshold for a designated time period for imports of a protected domestic product. 

Imports above the threshold are subject to a higher tariff. 

14 

 
 
                                                 
Korea's thirst for Italian wine 

The Col d'Orcia winery estate has been producing wine in Tuscany since 1890, famous 
for  its  Brunello  di  Montalcino  wine  typical  for  the  region.  Col  d'Orcia  has  been 
exporting  its  wine  around  the  world  for  45  years,  using  EU  trade  agreements.  A 
particularly  strong  market  for  Col  d'Orcia  is  South  Korea,  as  the  EU-Korea  FTA  has 
lifted  customs  duties  enabling  the  company  to  offer  its  products  at  much  more 
competitive prices. Col d'Orcia now exports more than 1500 bottles of wine each year. 

Swedish nanotech company Insplorion conquers Korea 

Swedish  company  Insplorion  uses  cutting  edge  nanotechnology  to  produce  ultra-high 
performance  battery  sensors,  air  quality  sensors  and  research  equipment.  Inslporion 
offers  a  technology  used  to  measure  and  address  air  pollution  and  increasing  energy 
output, in particular through an improved charge rate at lower costs. Its solutions can 
be used  for  a multitude  of purposes, from  increasing the range of electric vehicles to 
cheaper energy storage  and safer batteries.  In view of increasing urbanisation and air 
pollution in countries such as South Korea the need for competitive air quality sensors 
has grown exponentially.  The EU-Korea FTA has made it much easier for Insplorion 
to  sell  its  based  research  instruments  to  Korean  battery  makers.  The  agreement  also 
supports the strategic cooperation between Insplorion and its Korean partners, which is 
crucial to foster innovation. 

EU trade deal secures jobs in German engineering sector 

Kolbus,  founded  in  1775,  is  a  German  company  from  North  Rhine-Westphalia 
specialising in book binding and paper processing machines. Thanks to the EU-Korea 
FTA a German manufacturer has found profitable markets in South Korea. Since 2015, 
Kolbus  has  doubled  its  export  output  to  South  Korea.  A  decisive  factor  in  Kolbus' 
success is that customs duties have fallen from 8% to nill under the agreement, leading 
to potential savings of at least 25. 000 EUR/machine. Machinery are the second most 
important  German  export  article  at  a  total  value  of  around  3.14  billion  EUR,  only 
trumped by motor vehicles (export value of 6 billion EUR annually).   

15 

 
 
 
 
 
 
 
 
 
 
 
Labour Rights  

The Commission continued to express its serious concerns and stepped-up its messages vis-à-
vis the new South Korean government regarding labour commitments under the FTA.  

The issues raised included insufficient progress on labour reforms necessary to ensure respect 
for the principle of freedom of association and right of collective bargaining stemming from 
Korea’s membership in the International Labour Organisation (ILO), and on the ratification of 
four outstanding fundamental ILO conventions19. The Commission recalled also the European 
Parliament's report20 and civil society calls for initiating a formal dispute settlement procedure 
under the TSD chapter of the FTA. 

Following EU interventions South Korea has recently communicated to the EU the steps the 
government intends to take domestically towards ratification of four outstanding fundamental 
ILO  conventions  (see:  Summary  of  Discussions  at  the  6th  TSD  Committee).  South  Korea's 
approach is to carry out the necessary legal changes before adhering to the ILO conventions. 
South  Korea  has  taken  some  steps  communicated  to  the  EU.  The  Commission  continues  to 
closely monitor this process and will respond accordingly to developments in South Korea. 

Ex post evaluation of the EU-South Korea FTA 

In accordance with its Communication "Trade for All" the Commission is currently preparing 
the  release  of  its  first  ex  post  in-depth  analysis  of  the  performance  of  the  EU-South  Korea 
FTA. The lessons learnt will help improve the design of other FTAs currently negotiated as 
well as the implementation of FTAs recently concluded.   

3.2  

EU TRADE AGREEMENTS WITH COLOMBIA, ECUADOR, PERU 

The  Trade  Agreement  with  Colombia  and  Peru  in  its  fifth  year  of  implementation  is 
functioning  well.  It  had  a  stabilising  effect  in  the  context  of  declining  commodity  prices 
which affected the economy of Andean Community countries in 2015-2016. The Agreement 
has  created  important  business  opportunities,  which  are  being  increasingly  seized  by 
businesses from  both  sides.  In January 2017, Ecuador joined the Agreement  with  Colombia 
and Peru.  

The  Agreement  showed  a  very  positive  impact  on  SMEs.  For  example,  according  to 
Colombian statistics, even when leaving the mining sector aside, a total of 1,155 Colombian 
companies  were  exporting  to  the  EU  in  2017,  among  them  328  SMEs  and  582 
microenterprises. 

19    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 

20  European  Parliament  resolution  of  18  May  2017  on  the  implementation  of  the  Free  Trade  Agreement 

between the European Union and the Republic of Korea (2015/2059(INI)) 

16 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Evolution of trade and preference utilisation 

In 2017, reversing the trend observed in 2015 and 2016, all three partners reported an increase 
in bilateral trade with the EU – 7% for Colombia, 16% for Peru, and an impressive 20% in the 
first year of implementation with Ecuador. 

The PUR on imports into the EU from Colombia and Peru remained stable at a rate of 97% 
and 96% respectively, and Ecuador used preferences at 97%. The PUR on exports from the 
EU to Colombia for 2017 was 68%, a slight decrease from 71% in 2016; 52% for Peru and 
42% for Ecuador. 

EU exports of agricultural products continued to increase with its three Andean partners and 
are expected to further expand after a full implementation of the SPS chapter. Colombia and 
Peru have improved the use of their TRQs in 2017 and the same is true for EU exporters. For 
Ecuador, which just joined the Agreement, the usage on both sides is still low.  In 2017, the 
stabilisation  mechanism  for  bananas  was  extended  to  include  Ecuador.  In  addition  to  the 
agricultural sector, several industrial sectors, including pharmaceuticals, machinery and motor 
vehicles, have also benefitted from improved market access. 

Services  trade  remained  rather  stable,  with  the  EU  registering  a  substantial  surplus  with  all 
partners. The EU remains the largest foreign investor in Colombia and Peru. EU FDI stocks in 
Ecuador  remain  at  lower  levels,  due  to  complex  regulations  and  legal  procedures  and 
shortcomings in judicial enforcement of contracts.  

Peruvian & Colombian fruit an essential ingredient in Luxembourg firm’s growth 

Harald-Sven  Sontag’s  company  TUKI  headquartered  in  Luxembourg    produces  and 
sells exotic  fruit juices in Luxembourg, Belgium, France and Germany. To offer high 
quality  natural  products  Sontag  uses  guanabana  lulo  and  mora  fruits,  imported  from 
Colombia.  Sales outside of Luxembourg account for 20% of turnover and Harald-Sven 
is now aiming to double sales. 

Helped  by  the  EU’s  trade  deal  and  with  its  rising  popularity  requiring  ever  larger 
quantities  of  fruit,  TUKI  is  now  planning  to  source  fruit  directly  from  Colombian 
producers.  Buying directly will help Harald-Sven to further expand his business. 

A cable car for Bogotá, made in Austria 

Having started out as a small workshop, Doppelmayr, based in Vorarlberg/ Austria, has 
become a world-leading cable car maker. The EU-Colombia FTA helped Doppelmayr 
to expand in South America. Thanks to the EU-Colombia agreement, Doppelmayr  has 
built  a  cable  car  carrying  2600  people  an  hour  which  is  scheduled  to  be  added  to 
Bogota's public transport system in 2018. Doppelmayr's success benefits local Austrian 
suppliers:  contracts  with  companies  based  around  Wolfurt  are  worth  over  50 million 
EUR. Doppelmayr's contribution to Vorarlberg's economy stands at around 158 million 
EUR a year, while annual orders from Austrian businesses are worth 325 EUR million. 

17 

 
 
 
 
 
 
EU-Colombia FTA gives wings to Kaeser Kompressoren 

KAESER Kompressoren, a medium-sized family owned  firm from Bavaria/Germany, 
was  founded  a  100  years  ago,  manufacturing  compressed  air  systems  produced  in  its 
plants  in  Coburg  (Bavaria)  and  Gera  (Thuringia).  Today  it  employs  6000  people 
worldwide  and  exports 90%  of  its  production  to  countries  around  the  world.  The  EU 
Trade  Agreement  with  Colombia  enabled  Kaeser  to  grow  its  Colombian  affiliate, 
Kaeser  Compresores,  in  particular  as  result  of  the  gradual  reduction  of  the  import 
tariffs,  which  will  completely  disappear  in  2019.  Compresores  de  Colombia  employs 
200 people. 

"The  EU  Trade  Agreement  with  Colombia  enabled  the  company  to  significantly 
improve  sales  in  the  growing  Colombian  market,  as  result  of  reduction  of  the  import 
tariffs" says Nelson Lopez, General Manager of KAESER Compresores de Colombia. 

Progress in implementation and outstanding issues   

Several positive steps could be noted in 2017. Colombia, following a challenge brought by the 
EU  at  the  WTO,  ended  the  restrictions  on  imported  spirits  by  amending  its  spirits  law.  In 
parallel  Colombia  also  announced  the  creation  of  a  level  playing  field  for  imported  trucks, 
although these commitments are still to be implemented. Furthermore, Colombia clarified its 
commitments  under  the  government  procurement  annex  of  the  Agreement,  which  should 
improve  access  for  EU  companies  for  tenders  at  the  local  level.  Peru  granted  nearly  full 
market access for dairy products.  

Outstanding issues that the Commission is tackling with its partners in the Trade Committee 
include technical barriers to trade in Colombia and tax discrimination in Peru, which applies a 
preferential  tax  treatment  for  "Pisco",  discriminating  against  imported  spirits.  EU  agri-food 
exports  still  face  restrictions  through  cumbersome  obligatory  import  licenses  and  arbitrary 
limits on TRQs applied by Ecuador. Furthermore, the EU is still seeking to obtain acceptance 
by  its  three  Andean  FTA  partners  of  splitting  of  consignments  for  originating  products 
transiting a third country. 

Labour and environmental rights    

There  has  been  increasing  openness  by  the  EU's  Andean  FTA  partners  to  discuss  the 
implementation  of  labour  and  environmental  provisions  under  the  TSD  chapter.  The  EU 
engaged  in  cooperation  activities  with  all  three  partner  countries,  including  on  labour 
inspection and labour formalisation with Peru, and on the implementation of the Convention 
on International Trade in Endangered Species of Wild Fauna and Flora (CITES), the circular 
economy and corporate social responsibility with Colombia. With Ecuador actions were put in 
place  throughout  the  year  to  raise  awareness  and  build  capacity  to  assist  the  initial  stage  of 
implementation of the TSD chapter. 

Important  challenges  remain  for  all  three  Andean  FTA  partners.  Peru  needs  to  significantly 
improve  its  domestic  consultative  mechanisms  and  to  step  up  efforts  to  implement  its 

18 

 
 
 
 
 
 
 
substantive  obligations.  The  creation  of  a  domestic  advisory  group  (DAG)  in  Colombia  to 
complement  its  existing  consultative  mechanisms  responded  to repeated  demands  by  civil 
society.  With  Ecuador,  there  has  been  constructive  engagement  in  the  first  year  of  the 
implementation of the TSD chapter and work will now focus on concrete points of action. 

3.3  

EU ASSOCIATION AGREEMENT WITH CENTRAL AMERICA 

Evolution of trade and preference utilisation  

Five years after its entry into force, the FTA part of the Association Agreement between the 
EU  and  six  Central  American  countries  (Panama,  Costa  Rica,  Honduras,  Guatemala, 
Nicaragua and El Salvador) has seen a new vitality as EU trade flows with Central America 
grew by 7.2% in 2017.  

Besides trade flows amounting to 11 billion EUR between Central American countries and the 
EU, the Agreement and its institutional setting, together with EU programs in the region, have 
been  furthering  regional  economic  integration  in  Central  America.  EU  imports  from  the 
region experienced a solid upward trend in five of the six countries in the region. EU exports 
to Central America rose overall, albeit more modestly. 

The  use  of  TRQs  improved  in  2017  for  both  regions  while  focussing  on  specific  products. 
Central America fully used its sugar and bulk rum quota, while EU exporters improved their 
use of TRQs, particularly in the case of powdered milk (at 91%).  

The PUR on imports into the EU  from  Central  America was  again  high with  an average of 
95%. Data to calculate the PUR on EU exports to Central America were not available. 

Trade in services between the two regions continued to increase in absolute and relative terms 
and in 2016 represented almost 40% of the value of total trade. Panama is the destination for 
around 60% of EU exports to the region and over 60% of total trade in services. 

EU investment in the region remained relatively strong. For example, in 2016 EU FDI stocks 
in  Central  America  were  double  or  more  those  in  Colombia  or  Peru,  with  similar  or  lower 
trade values and were closer to those with Argentina, which in 2016 had a 50% higher trade 
flow with the EU. 

Labour and environmental rights    

A  milestone  was  reached  in  implementing  the  TSD  chapter,  following  the  establishment  of 
DAGs  in  all  Central  American  countries.  The  EU  again  funded  various  activities  in 
conjunction  with  the  ILO,  the  OECD  and  local  civil  society  amongst  others  covering  the 
region,  with  a  focus  on  important  topics  such  as  corporate  social  responsibility  and 
responsible business conduct, including expert meetings. The EU also provided funding to the 
ILO Regional Office to support the effective implementation of ILO fundamental conventions 
in El Salvador and Guatemala.  

19 

 
 
 
 
 
Progress in implementation and outstanding issues   

Following  a  long  and  arduous  process,  the  Association  Committee  in  2018  agreed  on  a 
mutually satisfactory solution of principle that should pave the way for the full incorporation 
of Croatia into the Agreement, which will follow the necessary legal requirements to become 
effective.  

The  Association  Committee  recently  also  considered  the  issue  related  to  the  lack  of  data 
required from Central American partners to calculate PURs on exports from the EU to Central 
America.  The  Market  Access  Sub-committee  was  tasked  with  identifying  the  reasons  and 
potential solutions to remedy the shortcomings.  

Spanish fish processing company rides on the wave of EU-Central America FTA     

Grupo  Calvo  is  a  Spanish  group  of  companies  dedicated  to  fishing,  processing  and 
distribution  of  canned  goods,  that  has  grown  over  time  from  a  small  canning  factory 
located in the Galician town of Carballo to become an international food group. Today 
it  operates  in  more  than  70  countries  and  employs  over  5,000  people.    One  of  the 
company's central markets is Central America, where it has its highest sales volume in 
Costa Rica, followed by Panama and El Salvador.  

In 2013, following the entry into force of the trade agreement between the EU and six 
Central American countries, Grupo Calvo was able to use the quota assigned to Central 
American partners to  export around 160 metric tons of tuna. Since then, continued and 
steady growth has been witnessed for the Grupo Calvo in Central America over the last 
couple  of  years.  Since  the  signing  of  the  Association  Agreement,  Grupo  Calvo  has 
continuously  stressed  the  legal  certainty  and  investment  opportunities  that  the 
Agreement  would  bring  to  the  region.  This  made  it  easier  for  the  group  to  enter 
strategic alliances with national entities that allow local producers and SMEs to make 
use of best practices. Grupo Calvo has become a leader for innovative business models 
in Costa Rica. 

3.4. 

  EU-Canada Comprehensive Economic and Trade Agreement- CETA 

First experiences 

Provisional application21 only began on 21 September 2017 and conclusions on the impact on 
trade flows are not yet possible, but benefits have started showing. 

  In the first 9 months of the application of the agreement (October 2017 to June 2018) 
EU exports of goods to Canada increased by 7%, with  peaks in  agricultural  exports: 
fruit and nuts (29%) and sparkling wine (11%).  

21     In accordance with Article 218(5), following authorisation by the Council, the EU may provisionally apply 
a trade agreement or any other international agreement, in whole or in part, between the signature and the 
entry into force. Provisional application of treaties reflects a longstanding international treaty practice.    

20 

 
 
 
 
 
                                                 
  Exports in machinery and mechanical appliances (one fifth of EU exports to Canada) 
also  increased  by  8%.  Exports  in  pharmaceuticals  (10%  of  EU  exports  to  Canada) 
increased by 10%. Other important EU exports were also on the rise, as for example 
furniture (10%), perfumes/cosmetics (11%), footwear (8%) and clothing (11%).  

  The Commission is carefully monitoring the uptake of and gathering information on 

allocation and transfers of the cheese tariff rate quotas (TRQs). 

Steps taken to advance implementation  

Work progressed speedily on building the comprehensive institutional framework consisting 
of  13  committees  and  6  specialised  dialogues,  reporting  to  the  CETA  Joint  Committee. 
Several  committees  met  in  the  first  half  of  2018,  including  those  dedicated  to  geographical 
indications  (GIs),  SPS,  customs  and  public  procurement,  e-commerce,  wines  and  spirits,  as 
well  as  the  Dialogues  dedicated  to  "Forest  Products"  and  "Biotech  Market  Access."  More 
information can be found here.   

The first TSD Committee took place on 13 September 2018, the joint report can be accessed 
here.  The  EU  and  Canada  explored,  among  other  issues,  joint  actions  for  implementing  the 
Paris  Agreement  and  ways  for  facilitating  involvement  of  the  respective  civil  society 
representatives.  The  Commission  and  Canada  also  discussed  the  early  review  of  the  TSD 
provisions,  reflecting  the  Commission's  commitment  in  the  CETA  "Joint  Interpretative 
Instrument" (JII). 

Furthermore,  the  Commission,  in  collaboration  with  Member  States  and  Canada,  prepared 
Guidance on rules of origin in CETA for stakeholders, which are being continuously enriched.   

With  CETA  the  Commission  took  another  step  towards  increasing  transparency,  publishing 
timely information on the activities of the institutional bodies on a CETA specific  'Meetings 
and documents' webpage.   

The  new  CETA  step-by-step  guide  for  businesses  and  a  dedicated  CETA  space  within  the 
Market  Access  Database  proved  highly  successful  and  these  instruments  can  provide 
inspiration for future agreements.  

To monitor and further improve implementation of CETA the state of play was discussed by 
the Expert Group on EU Trade Agreements on 11 July 2018. 

21 

 
 
 
 
 
Polish apples: Ready to reap the fruits of CETA  

Warsaw  based  Ewa-Bis  supplies  both  conventionally-grown  and  organic  produce  to 
over 25 countries. Its owner, Marek Marzec, with the help of EU funding received in 
2014,  was  able  to  built  a  business-to-business  IT  system  developing  a  database  of 
suppliers and customers worldwide. Ewa-Bis has established a foothold in Toronto in 
expectation  of  expanding  its  business  to  make  use  of  CETA,  in  particular  zero 
customs duties on its fruit and vegetable exports to Canada. Ewa-Bis will also benefit 
from simplified and more speedy approvals for exporting plants, fruit and vegetables 
from the EU to Canada. 

Top French cheeses set for Canada’s tables 

Maison  Mons  is  a  French  family  firm  founded  in  1964,  specialised  in  refining  and 
selling exceptional cheeses produced in the traditional way. The company sources 190 
cheeses from 130 different farms and exports to over 25 countries, including Canada. 
With CETA now in place, the company is looking forward to increasing its exports, as 
CETA  doubles  the  current  duty-free  quota  for  EU  cheese  exports  to  Canada,  from 
8,000 to 18,500 tons. Maison Mons and its products will also benefit from protection 
of 140 distinctive European regional food and drink products on the Canadian market. 

CEO Herve Mon: "CETA is driving new business. We already have numerous orders 
for our cheeses from Canadian retailers since the agreement entered into force." Says 
Laure  Dubouloz,  Sales  director  North  America:  "Since  CETA,  we  have  started 
receiving enquiries from retailers in Canada about our cheeses. For them, the doubling 
of the duty free quota means they can offer a wider range of high end cheeses. We are 
excited about this new market opportunity".     

Old Irish whiskey goes local in Canada 

The Chapel Gate Irish Whiskey Company is Ireland’s only Whiskey Bonder, based in 
County Clare. Founder Louise McGuane sources whiskey from multiple distilleries all 
over  Ireland  and  matures  it  in  a  rack-house  on  site.  When  it  is  ready  it  is  blended  to 
create  unique  styles.  Being  a  global  SME,  around  70%  of  its  exports  go  to  markets 
outside  the  EU,  and  revenues  are  expected  to  triple  next  year.  Trade  agreements  like 
CETA  make  it  easier  for  smaller  companies  like  Chapel  Gate  to  grow  and  compete 
successfully in these markets. In particular, CETA ensures more effective enforcement 
of the rules protecting is brand from imitation. CETA also reduces red tape, particularly 
at the provincial level, making facilitating exports.   

CEO Louise MaGaune: “The agreement opens the way for small businesses like mine 
who  must  export  to  survive  and  grow.  By  lessening  the  tax  burden  we  can  become 
much  more  competitive  in  the  global  marketplace.  Alcohol  is  generally  a  heavily 
protected sector around the world, so breaking down trade barriers is essential for us to 
access markets we otherwise would not be able to." 

22 

 
 
 
 
 
 
4.  DEEP AND COMPREHENSIVE FREE TRADE AREAS (DCFTAS)22 

State of play 

The  EU's  Association  Agreements  with  Georgia,  the  Republic  of  Moldova  (Moldova)  and 
Ukraine  aim  to  deepen  political  association  and  prepare  for  gradual  economic  integration 
between the EU and its three Eastern partners in the framework of the Eastern Partnership as 
part of the European Neighbourhood Policy.  

The DCFTAs have two main components:  

 

 

reciprocal market opening for goods with some asymmetry benefitting the Eastern 
partners; and  
far-reaching regulatory approximation to the EU law, notably in trade-related areas.  

After  more  than  two  years  of  application  with  Ukraine  and  more  than  four  years  with 
Moldova  and  Georgia  good  results  are  becoming  visible  and  trade  has  been  increasing. 
Legislative approximation is advancing gradually. Its impact in terms  of trade dynamics and 
their sustainability needs to be seen mid- to long-term. 

Evolution of trade and preference utilisation 

The  EU  is  the  largest  trading  partner  of  all  three  countries,  in  2017  accounting  for  56%  of 
total trade in case of  Moldova, 42% for Ukraine and 27% for Georgia. The EU has a positive 
trade balance with all three countries. 

  Trade between EU and Ukraine has been growing strongly. EU exports to and imports 
from  Ukraine  grew  by  22%  and  27%,  respectively,  due  to  a  great  extent  to  the 
stabilization of the economic situation after the economic crisis of 2014-2015.  

  Trade with Moldova also increased, with  EU imports growing by 23%, slightly more 
than  exports,  which  grew  by  19%  in  2017.  The  Moldovan  economy  is  growing  and 
Moldovan  companies  improved  their  performance  as  suppliers  of  machinery, 
foodstuffs, certain agricultural and textiles' products.  

  EU-  Georgia  trade  increased  by  6%,  with  exports  growing  by  1.4%  only,  while  EU 
imports increased by 23%, mainly consisting of mineral products, such ores, slag and 
ash. 

The PURs on imports into the EU from the three DCFTA partners, despite a slight decrease 
when compared to  2016, remained relatively high with  77% for Georgia, 85% for Moldova 
and 87% for Ukraine. The PUR on exports from the EU to Georgia strongly increased from 
71% in 2016 to 77% in 2017. Data from Ukraine and Moldova was not available. 

22   EU-Ukraine DCFTA was provisionally applied since 1 January 2016. DCFTAs with Georgia and Moldova 

were provisionally applied since 1 September 2014. 

23 

 
 
 
 
 
 
                                                 
Ukraine, Moldova and Georgia fell short of fully using the preferential TRQs for agricultural 
products granted by the EU, as they do not yet meet all SPS requirements and are facing some 
problems in positioning their products on the market. 

In 2015-2016, EU exports in  services  to  the three partners increased by  6% and imports by 
3%, respectively. EU exports to Ukraine increased by 9% while imports decreased by 2%. EU 
imports  from  Georgia  remained  stable  while  EU  exports  declined  by  33%.  EU  exports  of 
services to Moldova decreased by 16% while imports increased by 35%.  

In 2016, EU FDI flows to Moldova increased by 183% (albeit from a very low level)  while 
Moldovan investment flows into the EU decreased by 145%. Investment flows from Georgia 
remained stable while flows from the EU to Georgia decreased compared to 2015. EU FDI in 
Ukraine remained at a low level in 2016.  

Progress in DCFTA implementation and outstanding issues  

The higher export duties on metal scrap exports to the EU were not applied by Ukraine, while 
the export ban on raw wood imposed in 2015 remained, despite strong efforts by the EU to 
get  Ukraine  to  resolve  the  issues.  The  constructive  approach  by  the  Commission  and 
Ukraine’s  reluctance  to  progress  means  that  the  Commission  is  now  considering  addressing 
this trade irritant through the dispute settlement mechanism provided for under the DCFTA. 

Moldova  resolved  shortcomings  with  the    protection  of  the  EU  GI  Prosecco,  following  a 
ruling by the Supreme Court. Moldova still needs to address concerns related to the lack of 
transparency in electricity distribution and the ongoing discrimination in respect to a law on 
local sourcing for retailers. These issues are being discussed in the implementation bodies and 
at political level. 

On  SPS  measures,  good  progress  was  made  by  Moldova,  which  adopted  and  started  to  
implement its SPS strategy in December 2017, while Georgia adopted a legislative roadmap. 
Ukraine should follow suit in 2018. The number of companies receiving EU authorisations to 
export agricultural products to Ukraine has been growing. 

Ukraine  and  Moldova  have  shown  interest  in  starting  negotiations  on  Agreements  on 
Conformity Assessment and Recognition of Industrial Products (ACAAs). 

All  three  countries  took  encouraging  steps  in  improving  their  public  procurement  regimes, 
and  were  implementing  comprehensive  reform  strategies.  This  includes  an  e-procurement 
system in Ukraine and Moldova, which should enhance efficiency and reduce corruption. 

EU support to reforms 

The  EU  provides  financial  and  technical  assistance  in  all  three  partner  countries  to  support 
domestic  reforms  deriving  from  the  DCFTA  and  to  foster  the  administrative  capacity  of 
institutions  that  will  design  and  implement  these  reforms.  The  EU  support  covers  a  wide 
range  of  areas  such  as  food  safety,  technical  regulations  and  standards,  public  procurment, 
intellectual property, competition, etc. EU assistance is being delivered using a whole set of 
modalities  (such  as  Twinning,  TAIEX  or  the  EU  Sector  Reform  Performance  Contracts, 
involving budet support against implementation of policy measures).  

24 

 
 
 
EU support for SMEs 

SMEs in countries that have signed an Association Agreement, including a DCFTA with the 
EU,  get  additional  support  from  the  DCFTA  Facility  for  SMEs.  This  facility  will  receive 
approximately 200  million  EUR  of  grants from  the  EU  budget  to unlock  at  least  2  billion 
EUR  of  new  investments by  SMEs.  These  funds  help  businesses  in Georgia,  Moldova and 
Ukraine to adapt to new market requirements, by streamlining processes and investing in new 
equipment to comply with EU rules in areas such as quality and safety, energy efficiency and 
environmental compliance. 

Romanian software solutions for banks in Moldova 

The  Romanian  company  Allevo  headquartered  in  Bucharest  employs  50  staff  and 
provides  software  solutions  that  help  financial  institutions  operate,  process  payments 
and comply with European and local standards and regulations. As foreseen under the 
DCFTA  Moldova  is  adopting  EU  regulations  allowing  Moldovan  banks  to  better 
position  themselves  in  the  wider  financial  services  market.  This  opens  up  business 
opportunities  for  Allevo,  who  is  offering  solutions  tailored  to  fit  the  banks'  needs. 
Furthermore, under the DCFTA, EU companies like Allevo, operating in Moldova are 
now treated like Moldovan companies, making it easier for them to operate. Thanks to 
the  DCFTA,  Moldova  now  bases  most  of  its  financial  regulation  on  the  EU  model, 
simplifying the sale of EU services. 

Polish outdoor equipment company climbs to new heights in Ukraine 

Polish  company  Fjord  Nansen  based  in  the  village  of  Chwaszczyno  near  Gdynia 
specialises  in  outdoor  equipment  such  as  tents,  backpacks,  sleeping  bags,  vacuum 
flasks and outdoor clothing. As confirmed by its owner,  Dariusz Staniszewski, exports 
are  increasingly  important  to  Fjord  Nansen.  A  key  market  is  Ukraine.  In  2011  the 
company  exported  a  record  23%  of  its  production  there.  The  EU-Ukraine  trade  free 
trade  area,  in  application  since  January  2016,  facilitates  growing  the  business  and 
unleashing its full potential.  

Ukraine fashion company uses FTA as stepping stone to supply leading European 
brands 

Supporting  business  development  and  hence  greater  economic  stability  in  partner 
countries  is  a  key  objective  pursued  with  DCFTAs."Uzhgorod  clothing  factory"  has 
been performing to the orders of famous European customers such as Gerry Weber and 
Marc O'Polo and collaborating with Hugo Boss and Dolce & Gabbana. The Director of 
the  factory  underlines  as  very  important  the  moment  when  on  1  January  2016  as  a 
result  of  start  of  application  of  the  DCFTA  the  Ukrainian  custom  authorities  started 
issuing certificates of origin for goods, which ensured the  preferential customs duties 
when  imported  into  the  EU.  Uzhgorod  supplies  400-450  thousand  pieces  of  clothing 
each year to Europe and has 300 employees. 

25 

 
 
 
 
 
Labour and environmental rights    

The  implementation  of  the  TSD  chapters  has  progressed.  In  Moldova  and  Georgia  civil 
society  advisory  mechanisms  have  been  operating  for  a  few  years  now.  The  next  step  for 
Moldova is to set up a TSD implementation work plan. Georgia adopted a TSD workplan  in 
2018 and constructive dialogues involving civil society bodies were led on labour standards, 
in  particular  labour  inspectorates  as  a  key  institution  for  their  effective  implementation,  as 
well as on environmental and climate change related issues. In Ukraine, the dialogue between 
the Parties has started, with a focus on sustainable forest management; labour provisions still 
have to be discussed by the TSD Sub-Committee. The Ukrainian civil society advisory group 
remains to be established. 

26 

 
 
 
 
5.  FIRST GENERATION FTAS 

Introduction 

For the purpose of this report, "first  generation" FTAs are agreements negotiated before the 
2006  "Global  Europe"  Communication"  and  Stabilisation  and  Association  Agreements 
(SAAs)  with  Western  Balkan  countries  concluded  between  2009  and  2016.  Of  the  applied 
agreements, the report covers the following23: 

  FTAs with Switzerland and Norway24, dating from the 1970s  
  FTAs  with  the  EU's  Mediterranean  partners25  as  part  of  Association  Agreements 

concluded in the 1990's 

  FTAs with Mexico and Chile (dating from 2000 and 2003)  
  Customs Union with Turkey (1995),  
  SAAs with five Western Balkan countries (concluded between 2001 and 2016).  

Two  way  trade  increased  in  all  cases  during  the  application  of  the  FTAs.  PURs  on  imports 
into the EU from partner countries varied between 97% (imports from Algeria and Egypt) and 
69%  (imports  from  Norway)  with  an  average  of  87%.  Statistical  information  needed  to 
calculate  the  PURs  on  exports  from  the  EU  to  partner  countries  was  not  available  from  all 
partners.  Where  data  was  available,  PURs  varied  between  86%  (exports  from  the  EU  to 
Israel)  and  44%  (exports  from  the  EU  to  Egypt)26.  Services  are  not  covered  by  the  "first 
generation" FTAs, except in the cases of Mexico and Chile. 

The  EU  and  Mexico  reached  an  ‘agreement  in  principle’  on  the  trade  part  of  a  modernised 
EU-Mexico  Global  Agreement  in  April  2018.  Negotiations  to  upgrade  existing  FTAs  are 
ongoing  with  Chile  and  Tunisia,  and  have  started  with  Morocco.  The  Commission  has 
received the green light to start negotiations with Jordan and Egypt, when these countries are 
ready. The Commission also proposed starting negotiations to modernise the Customs Union 
with Turkey.  

5.1  

Switzerland 

Evolution of trade and preference utilisation 

Switzerland  is  the  EU's  largest  FTA  trade  partner  and  its  third  largest  trade  partner  overall. 
EU  exports  between  2016  and  2017  grew  by  6%,  slightly  more  strongly  than  over  the  past 
decade (5%), while EU imports decreased by 9%. The downward trend of the PUR on imports 
into  the  EU  from  Switzerland  was  reverted  in  2017  when  the  PUR  was  back  to  85%.  The 

23  The  agreements  with  Iceland  and  the  Faroe  Islands  are  not  covered  by  this  report.  The  FTA  with  South 
Africa  has  been  superseded  by  the  EPA  with  Southern  African  Development  Community  (SADC;  see 
section 6.1). 

24  The European Economic Area (EEA) agreement of  1992 with Iceland, Liechtenstein and Norway enhanced 
the free movement of goods, services, investment and people across that area. It is not subject to this Report. 

25  Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Palestine and Tunisia. 
26  The Commission is looking into the possible reasons for the low PUR on EU exports to Egypt. Among the 
possible reasons could be low tariffs for most items or onerous procedures applied by the local authorities to 
establish the origin.  

27 

 
 
 
                                                 
PUR on exports from the EU to Switzerland has remained stable over the past four years and 
amounted to 78% in 2017.  

Switzerland is the EU's second largest partner in services. The value of services provided by 
EU companies in  Switzerland, and vice versa, is  growing fast.  Between 2016 and 2017  EU 
exports  of  services  increased  by  12%  while  EU  imports  decreased  by  26%,  more  than 
doubling  the  EU  trade  surplus,  which  amounted  to  58  billion  EUR  in  2017.27There  is  no 
comprehensive services agreement between the EU and Switzerland, only a partial coverage 
through the Land and Air agreements and the Free Movement of Persons agreement, showing 
the potential for further trade development. 

Improving the institutional setting for EU-Swiss trade  

The  improvement  of  the  institutional  setting  for  EU-Swiss  trade  relations,  which  today  are 
governed by the FTA of 1972 and several sectoral agreements, is also discussed in the broader 
context  of  the  negotiations  on  an  Institutional  Framework  Agreement  between  the  EU  and 
Switzerland.  

5.2  

Norway 

Evolution of trade and preference utilisation 

Norway is the EU's third largest FTA trade partner and its seventh largest partner for trade in 
goods overall. Trade in goods is very dynamic between Norway and the EU. Between 2016 
and  2017,  imports  from  Norway  grew  by  22%.  Exports  to  Norway  grew  also,  albeit  at  a 
slower pace (by 4.9%).  

TRQs granted by Norway for key agricultural products (beef, pork, cheese) have been fully or 
almost completely utilised by EU exporters since 2012. Norway only used four TRQs granted 
by the EU.  

2017 was the first year since 2013 that the PUR on imports into the EU from Norway (70%) 
increased again.  

New Agreement on agriculture 

In  2017,  the  EU  exported  agricultural  products  worth  4.5  billion  EUR  to  Norway  and  the 
trend  is  increasing.  The  agreement  on  agriculture  signed  in  December  2017,  once 
provisionally  applied,  will  offer  new  trade  opportunities  for  EU  and  Norwegian  exporters, 
with 36 fully liberalised tariff lines and TRQs to be opened by both sides.  

5.3  

Mediterranean countries 

Granting  access  to  the  EU  market  is  a  key  instrument  supporting  the  European 
Neighbourhood  Policy  in  its  objective  to  promote  prosperity  in  the  partner  counties.  In  this 
context,  the  FTAs  with  Algeria,  Egypt,  Israel,  Jordan,  Lebanon,  Morocco,  Palestine  and 
Tunisia  provide  for  reciprocal  liberalisation  of  all  trade  in  industrial  goods  and,  to  different 
degrees,  of  trade  in  agricultural,  processed  agricultural  and  fisheries  products.  They  include 

27  For Switzerland, data on services for 2017 was already available.   

28 

 
 
                                                 
elements  of  asymmetry  in  favour  of  most  Mediterranean  countries  to  promote  economic 
development in the region and its closer integration into the EU internal market. 

Evolution of trade and preference utilisation 

For  most  of  these  countries,  the  EU  is  the  leading  trade  partner  and  the  main  source  of 
imports. The EU is also the main destination for products from the five biggest economies in 
the  region  (Algeria,  Egypt,  Israel,  Morocco  and  Tunisia).  While  trade  has  grown  on  both 
sides, EU exports to its partners, except for Tunisia and Israel, have grown faster than imports 
since the agreements came into force, although looking at the period 2016-2017 EU exports 
grew slower that imports in most cases (with the exception of Jordan, Palestine and Tunisia). 
EU  exports  to  Algeria  and  Egypt  decreased  over  the  same  period,  as  they  face  significant 
trade barriers. 

Countries  that  have  progressed  relatively  more  in  diversification,  such  as  Morocco,  Tunisia 
and Israel have relatively smaller and steadier trade deficits with the EU. In 2017 Algeria has 
practically recovered from its trade deficit with the EU and will probably be back to a trade 
surplus with the EU, as was the case in the years preceding 2015. This appears to be driven by 
the increase in oil prices but also trade restrictions applied by Algeria affecting EU exports. 

Our Mediterranean partners made good use of trade preferences in 2017, the average PUR on 
imports into the EU from the eight countries is 87%. Data on the PUR on EU exports were 
only  available  for  Israel  (86%),  Lebanon  (58%)  and  Egypt  (44%)28.  Agricultural  TRQs 
granted by the EU are underutilised by most partners, except for Israel and Morocco, partly 
due to  difficulties in  complying with  EU SPS rules. The utilisation of quotas granted to  the 
EU is also not entirely satisfactory at this stage. 

As  for  trade  in  services  and  FDI  the  EU  is  either  the  largest  or  one  of  the  top  partners  in 
services trade and the main provider of FDI in all countries concerned.  

Spanish company finds beef market in the Middle East 

The  Spanish  family  firm  Cecinas  Nieto  specialises  in  gourmet  meat  products.  The 
award  winning  company,  founded  in  1965,  exports  its  products  to  many  countries 
around the world with a recent focus on the Middle East.  

The EU-Lebanon trade agreement helps European companies such as Cecinas Nieto to 
export their products there without restriction, benefitting also from progressive tariffs 
elimination,  which  will  disappear  completely  in  2018.  This  enables  European  beef 
exporters to keep pace with stiff competition from the likes of India and Brazil.  

Lebanon  is  not  the  only  country  where  Cecinas  Nieto  has  experienced  growth.  Its 
international  business  has  enabled  Cecinas  Nieto  to  maintain  employment  levels  and 
boost economic activity in the region. 

28  See footnote 26 above.  

29 

 
 
 
 
                                                 
A  caffeine  boost  for  global  trade:  Austrian  coffee  energises  markets  in  the 
Mediterranean and beyond 

For  centuries,  Vienna  has  been  famous  for  its  coffee  houses.  Coffeeshop  Company, 
opened  its  first  shop  there  in  1999,  roasting  coffee,  developing  coffee  machines  and 
creating an authentic atmosphere under one roof.  

When expanding into markets outside the EU, understanding local coffee cultures and 
local  traditions  has  been  a  key  to  the  company's  success.  In  addition,  the  company 
benefitted  from  the  EU  trade  deals  with  Morocco  in  2000  and  Egypt  in  2004: 
Establishing  franchises  became  easier  and  less  costly  and  products  cheaper.    Today 
Coffeeshop Company has over 300 franchises employing  4 500 people, including 36 in 
Egypt with 54 more set to open there. The business was founded by the Schärf family 
and  remains  part  of  the  Schärf  Group,  which  was  established  in  the  1950s  and  is  an 
important employer in Neusiedl am See where it is based. 

There are plans to upgrade some of these FTAs to DCFTAs that correspond better to the more 
complex  economic  exchanges  that  take  place  today  between  the  EU  and  its  Mediterranean 
partners.  Negotiations  to  upgrade  the  FTAs  are  ongoing  with  Tunisia  and  have  started  with 
Morocco  and  the  Commission  received  the  green  light  to  start  the  negotiations  with  Jordan 
and Egypt, when these countries are ready.  

Regional instability continues to affect the economy in our Mediterranean partner countries, 
making it more difficult to attract foreign investors. In particular the economies of Jordan and 
Lebanon  have  been  negatively  impacted  by  the  effects  of  the  Syrian  crisis.  The  trade 
facilitation  measures  linked  to  relaxation  of  rules  of  origin  adopted  in  support  of  Jordan  to 
enhance  investments,  export  and  job  opportunities,  both  for  Jordanian  and  Syrian  refugees, 
have produced modest results. The EU is exploring ways to reinforce economic cooperation 
and trade-related assistance aimed at ensuring that Mediterranean countries benefit more from 
trade liberalisation with the EU. 

5.4  

Mexico 

Evolution of trade and preference utilisation 

In  2017,  bilateral  trade  in  goods  increased  by  15%  compared  to  2016,  totalling 61.7 billion 
EUR.  The  EU  trade  surplus  with  Mexico  also  increased,  although  EU  imports  grew  faster 
than EU exports.  

The PUR on imports into the EU from Mexico was around 71%, a solid increase from 58% in 
2016.  The  PUR  on  exports  from  the  EU  to  Mexico29,  by  contrast,  decreased  from  85%  to 
75%.30 

29  Period covered: 1 July 2016 to 30 June 2017 

30  All but four EU Member States display lower PURs for their exports to Mexico in 2017 compared to 2016. 
Germany, accounting for close to a third of all preference eligible EU exports to Mexico, experienced a drop 

30 

 
 
 
 
                                                 
Trade  in  services  grew  more  modestly  by  2.1%,  with  no  change  in  the  EU  surplus  as 
compared to 2015. With 27% (6.5 billion EUR) of the total FDI the EU was the second largest 
investor after the US. 

Spanish chorizo heading to Mexico 

The Spanish family company Tello started over 50 years ago in Toledo, central Spain, 
when  Eusebio  Tello  decided  to  open  a  small  business  to  sell  locally-produced  pork, 
cooked or cured hams, pâtés and other pork products. The Tello Group today exports to 
more than 40 countries.  

The modernised EU- Mexico trade agreement will help companies like Tello to expand 
and  access  the  Mexican  market  of  125  million  consumers,  by  elminating  duties  of 
currently 20% on imports of European pork. Thanks to the agreement, imports of pork 
from  slaughterhouses  in  each  EU  country  will  become  easier.  For  example,  once 
Mexico has approved exports from an EU country such as Spain, it will automatically 
approve all other similar sites in that country. 

Progress, outstanding issues and outlook 

After  discussions  in  the  FTA  framework,  some  difficulties  faced  by  EU  exporters  in  the 
registration  and  approval  of  health  products  and  agri-chemical  products  in  Mexico  were 
solved.  Mexico  also  removed  FDI  restrictions  by  lifting  equity  caps  in  various  sectors.  The 
modernised  agreement  between  the  EU  and  Mexico  will  help  to  significantly  improve  the 
situation  as  to  IPR  protection,  SPS  restrictions  and  government  procurement.  It  will  also 
include a TSD chapter. 

5.5 

Chile 

Evolution of trade and preference utilisation 

Although the FTA helped mitigate this effect, the EU has progressively lost market share in 
Chile  to  other  trading  partners,  such  as  China  and  the  US,  and  is  currently  Chile’s  third 
trading partner. In 2017 EU-Chile bilateral trade in goods grew by almost 7% when compared 
to  2016,  with  EU  imports  growing  comparatively  stronger,  due  in  part  to  the  recovery  of 
copper prices.  

EU  exports  by  far  exceeded  the  TRQs  granted  by  Chile  on  cheese,  although  the  quota 
increases by 75 tonnes each year. Chile only partly uses its quotas.  

The  PUR  on  imports  into  the  EU  from  Chile  has  been  stable  around  95-96%  over  the  past 
three years. The PUR on exports from the EU to Chile increased from 74% in 2016 to 76% in 
2017. EU exports of services to Chile increased by 25% between 2010 and 2016, while EU 

in its PUR from 82% in 2016 to 66% in 2017. This is primarily related to lower German use of preferences 
in HS Chapters 87 (Motor vehicles) and 85 (Electrical machinery).  

31 

 
 
 
 
 
 
 
 
                                                                                                                                                         
imports  increased  by  18%.  The  EU  remains  Chile’s  first  provider  of  FDI.  The  continuing 
decrease in  EU FDI flows is  caused by the decline in  the relative importance of the mining 
industry  in  the  Chilean  economy,  where  it  used  to  represent  over  45%  of  total  FDI  in  the 
country. 

Italian design makes its presence felt in Chile using EU trade agreements 

Moving  is  a  chair  manufacturer  from  Italy's  Veneto  region  established  in  1980.  The 
company employs 45 people and generates an impressive 85-90% of its turnover from 
exports.  The  EU  trade  agreement  with  Chile  which  entered  into  force  in  2003 
eliminated  all  customs  duties  on  furniture,  leading  to  a  rise  in  demand  for  Moving's 
products. Exports of Italian chairs to Chile have more than doubled since the EU-Chile 
trade agreement came into force in 2003, with increases of 103% in terms of value and 
121.4%  in  terms  of  quantity.  This  contributed  substantially  to  the  company's  overall 
growth in turnover. The EU trade agreement with Chile enabled Moving to compensate 
for  a  drop  in  demand  from  other  international  markets  and  maintain  a  stable 
workforce.In  addition,  Moving was able to  invest  €300 000 in  new machinery and to 
channel  funds  into  research  for  development  of  products  specifically  for  the  Chilean 
market. 

Progress, outstanding issues and outlook 

In March 2017 Chile opened its market for EU beef. It is currently assessing updates needed 
to  the  2002  Wine  and  Spirits  agreements.  Chile  will  need  to  take  further  steps  to  fully 
implement its obligations on government procurement. As is the case for Mexico, the EU and 
Chile decided to upgrade and replace the existing trade agreement with a new and ambitious 
framework for bilateral trade and investment. 

5.6  

Customs Union with Turkey 

Evolution of trade and preference utilisation 

Turkey  is  the  EU's  second  largest  FTA  trade  partner,  and  the  EU’s  fifth  largest  overall.  In 
2017, both EU exports to and imports from Turkey increased by 8.4% and 4.5%, respectively, 
when  compared  to  2016.  Over  the  same  time  frame,  the  EU's  trade  deficit  in  agriculture 
significantly  decreased  from  1.4 billion  EUR  in  2016  to  0.8  billion  EUR  in  2017.  Use  of 
preferences  remained  high  on  both  sides:  The  PUR  on  imports  into  the  EU  from  Turkey 
remained  stable  around  92%,  while  the  PUR  on  exports  from  the  EU  to  Turkey  slightly 
decreased from 95% to 94%. 

Modernisation of the Customs Union 

In 2016 the Commission adopted a proposal to modernise the Customs Union to improve its 
functioning and extend the scope to reflect its more recent trade agreements. The proposal is 
pending authorisation in the Council. However, the General Affairs Council on 26 June 2018 
concluded  that  no  further  work  towards  the  modernisation  of  the  EU-Turkey  Customs  Union 
would be foreseen. 

32 

 
 
 
 
 
 
 
 
 
5.7   

Stabilisation and Association Agreements with the Western Balkans 

Overview- state of play 

‘Stabilisation and Association Agreements’ (SAAs) concluded between 2001 and 2016  with 
our  Western  Balkan  partners,  including  Albania,  the  former  Yugoslav  Republic  of 
Macedonia,  Montenegro,  Serbia,  Bosnia  and  Herzegovina  and  Kosovo*,  support  the 
economic  development  and  political  stabilisation  of  the  region.  The  SAAs  are  the  legal 
instrument  for  aligning  the  laws  of  these  countries  to  the  EU  acquis  to  prepare  for  their 
progressive integration into the EU market. Except for Kosovo (where the SAA entered into 
force directly, also covering the trade part) the entry into force of the SAAs was preceded by 
the entry into force of Interim Agreements covering trade matters. These interim Agreements 
have established individual free-trade areas between the EU and each Western Balkan partner, 
eliminating  duties  and  quantitative  restrictions  on  bilateral  trade  for  goods,  with  a  few 
exceptions  concerning  mostly  agricultural  and  fishery  products.  The  SAAs  also  include 
additional  provisions  relevant  to  competition,  protection  of  intellectual  property  rights  and 
customs' cooperation, commitments on services and establishment, and  approximation to the 
EU acquis on government procurement and standardisation.  

All of the Western Balkan partners are either candidates or potential candidates to become EU 
Members. Serbia and Montenegro are currently negotiating their accessions.  

The  EU  supports  the  Western  Balkan  partners’  efforts,  since  2017,  to  develop  a  Regional 
Economic Area, building upon the free trade area established by the  Central  European Free 
Trade Agreement in 2006. The Western Balkans Regional Economic Area aims at developing 
an area where goods, services, investments and skilled workers can move without obstacles.  

Evolution of trade and preference utilisation 

Trade with the Western Balkan region has more than doubled since 2007 and trade expansion 
has  generally  benefitted  the  Western  Balkan  countries:  in  10  years,  the  region  increased  its 
exports  to  the  EU  by  142%  against  a  more  modest  increase  of  EU  exports  to  the  region  of 
84%.  In  2017  PURs  on  imports  into  the  EU  from  all  Western  Balkan  countries,  remained 
high,  averaging  91%.  Where  data  was  available,  PURs  on  EU  exports  were  also  relatively 
high  (78%  for  Albania;  89%  for  the  former  Yugoslav  Republic  of  Macedonia;  86%  for 
Montenegro and 91% for Serbia). 

Main challenges in implementation  

Challenges common to all Western Balkan partners include a lack of transparency, especially 
in the public procurement process, a large informal sector and a lack of systematic, efficient 
and transparent law enforcement, including in inspections and commercial dispute settlement. 
Improving  the  business  climate  will  thus  be  crucial  for  companies  to  make  full  use  of  the 
opportunities under the SAAs.  

        This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the 

ICJ Opinion on the Kosovo Declaration of independence.  

33 

 
 
 
                                                 
 
6.  ECONOMIC  PARTNERSHIP  AGREEMENTS  (EPAS)  WITH    AFRICAN,  CARIBBEAN  AND  

PACIFIC (ACP) COUNTRIES 

In 2017 a total of seven Economic Partnership Agreements were being implemented with 29 
ACP countries. These include 14 Caribbean countries, 13 African countries and two Pacific 
countries.  

Under  EPAs,  the  EU  grants  duty-  free,  quota-free  access  for  all  products  from  day  one 
favouring ACPs, while the latter commit to liberalise around 80% of trade over a period of 15 
to  20  years.  Rules  of  origin  and  special  safeguards  are  designed  to  support  economic 
development,  export diversification  and regional integration in  partner countries.  Exports of 
EPA  partners  are  not  yet  sufficiently  diversified,  with  fluctuations  in  commodity  prices 
heavily impacting the value of year-on-year trade flows. 

EU  support  to  EPA  implementation  aims  at  supporting  private  sector  development  and  job 
creation,  at  increasing  trade  and  attracting  investment,  including  in  specific  sectors,  such  as 
agriculture.  Trade-related  development  assistance  is  provided  in  relation  to  all  EPAs  and 
funds  are  assigned  within  the  framework  of  the  European  Development  Fund  (EDF).  This 
support is complemented by EU Member States, who also provide funding, particularly under 
the Aid for Trade (AfT) strategy31, as well as by intra-ACP programmes. In the future, a smart 
combination  of  Aid  for  Trade,  EPA  implementation  support  and  the  European  External 
Investment Plan32 will allow the partners to further seize the opportunities the EPAs offer. 

31  The  EU  Strategy  on  AfT  is  based  on  Council  Conclusions  of  12  December  2005  (doc.  15791/05),  of  16 

October 2006 (doc. 14018/06) and of 15 May 2007 (doc. 9555/07). 

32  See Communication  from the Commission to the European Parliament, the Council, the European Central 
Bank,    the  European  Economic  and  Social  Committee,  the  Committee  of  the  Regions  and  the  European 
Investment Bank of 14 September 2016;  COM(2016) 581 final.  

34 

 
 
 
 
 
 
 
 
                                                 
Building capacity to trade – examples for EU implementation support under the EPAs 

Support  to  EPA  implementation  aims  to  foster  trade  policy  capacity,  improve  the  business 
climate  and  strengthen  supply  side  capacity  of  the  private  sector  in  partner  countries.  For 
example, in the ESA EPA region, Mauritius is implementing a project to improve the ease-of-
doing-business  and  investment  regulatory  framework,  with  support  from  the  EU.  An  e-
licensing  platform  has  been  developed  as  a  single  point  of  entry  for  business  licenses  and 
permits,  shortening  and  simplifying  the  application  procedure.  In  the  SADC  EPA  region, 
national administrations have received support in the area of customs, SPS management and 
trade facilitation, fostering both regional trade and exports to the EU. 

In July 2017 the EU made an additional contribution of 5 million euro to the Hub and Spokes 
Trade  Programme.  Under  the  programme,  trade  advisers  –  the  ‘spokes’  –  strengthen  and 
enhance  the  capacity  of  government  ministries, while  regional  trade  advisers  –  the  ‘hubs’  – 
provide assistance to major regional organisations. The objective is to enhance the capacity of 
key  stakeholders  in  the  public  and  private  sectors  in  ACP  countries  to  contribute  to  the 
formulation,  negotiation  and  implementation  of  trade  policies  and  agreements,  such  as  the 
EPAs. 

A  significant  part  of  development  cooperation  (under  the  range  of  all  EU  external  aid 
instruments available, including blending) provides support to EPA-related policy fields in the 
respective  partner  countries  and  regions,  including  SME  development,  industrialisation, 
vocational  education,  agricultural  development  and  connectivity  (transport  and  energy 
infrastructure). 

6.1. 

Southern African Development Community (SADC) EPA 

During  the  first  full  year  of  implementation  of  the  Economic  Partnership  Agreement  South 
Africa and the EU made ample use of newly liberalised tariff lines. For Botswana, Lesotho, 
Namibia and Swaziland, exports to the EU of soft drink concentrates, as well as tropical fruits 
and  nuts  increased.  Some  African  EPA  partners  –  particularly  Mozambique,  Swaziland  and 
Zimbabwe (which implements the ESA EPA) – saw their sugar exports to the EU drop, due to 
increased global competition from other producers, as well as the end of the EU sugar quota 
regime.  The  first  Civil  Society  Forum  was  organised  in  South  Africa  in  October  2017.  The 
Forum  discussed  the  role  of  EPAs  in  sustainable  development,  including  its  environmental 
and labour aspects.  

In  2017,  the  EU  continued  to  raise  trade  irritants  in  poultry  and  textile  sectors  with  SADC 
EPA States, especially South Africa.  

6.2.  Eastern and Southern African (ESA) Interim EPA 

The four partner countries of the ESA interim EPA saw their exports to the EU increase again 
by 15.3% in 2017. The EPA partners proposed to deepen the agreement towards a full EPA, 
covering topics beyond trade in goods.  

35 

 
 
 
 
 
 
 
Mauritian edible flower wafers make their way to EU tables 

In 2017, almost half of the Mauritius’ exports found their way to the EU market. One of the 
companies  benefitting  from  the  EPA  is  Creasim  Ltd,  a  Mauritian  company  that  produces 
edible  cake  decorations  of  wafer-made  flowers,  fruits  and  leaves  for  pastry  and  bakery 
products.  More  than  180  tonnes  of  cake  decorations  per  year  are  exported  to  EU  markets, 
representing  60%  of  their  turnover.  Creasim  has  230  workers,  of  which  30%  have  been 
employed since the EPA entered into force. Wafer is becoming more and more popular in the 
EU  because  of  its  low  cost  and  calorie  content.  Registered  patterns  and  models  are  hand-
made productions and are subject to a strict quality control conforming to EU standards. 

6.3. 

Forum of the Caribbean Group of ACP States (CARIFORUM) EPA 

Caribbean  exports  to  the  EU  increased  by  12%  in  2017  despite  decreases  in  banana,  cocoa 
and  rice  exports  due  to  cyclones.  Caribbean  countries  are  yet  to  see  major  benefits  accrue 
from  trade  in  services  liberalisation.  Multiple  factors  play  a  role  here,  including  lack  of 
implementation for some partners, lack of supply capacity, but also EU Member States' visa 
regimes  and  a  lack  of  data  on  Services.  To  tackle  these  issues,  EPA  partners  agreed  to 
establish a dedicated Committee on Trade in Services. Representatives of the civil society (the 
EPA’s Consultative Committee) met for the third time in 2017. In its recommendations, civil 
society  called  for  a  timely  adoption  of  a  monitoring  mechanism  and  stressed  the  need  to 
observe social aspects and core labour standards in the implementation of the EPA. 

6.4. 

Pacific EPA and EPAs with Ghana, Côte d’Ivoire and Cameroon 

In  the  Pacific,  Papua  New  Guinea  continues  to  boost  its  exports  of  prepared  and  preserved 
fish  products  (mostly  canned  tuna).  Exports  increased  by  48.7%  in  2017.  West  and  Central 
Africa, Ghana, Côte d’Ivoire and Cameroon continued to increase exports of processed cocoa 
products under their respective EPAs. 

More Bananas from Côte d’Ivoire 

EU imports of banana from Côte d’Ivoire expanded by 80% over the last decade (2007-2017), 
even  as  overall  banana  imports  in  the  EU  only  increased  by  50%.  Exports  in  quantity 
increased to 316 000 tonnes in 2017 (amounting to  235 million EUR in value in 2017). The 
upward trend was aided by having secured long-term duty free  and quota free access  to  the 
European market through the EPA. The production of bananas for exports accounts for about 
10% of agricultural GDP in Côte d’Ivoire. Banana production is labour intensive, with a ratio 
of  employment  higher  than  other  agricultural  sectors  in  the  country.  The  sector  employs 
around  10 000  workers  directly  and  another  3 300  workers  are  engaged  in  supporting 
activities. Taking into account family members, 60 000 people rely on the banana sector for 
their livelihood. 

36 

 
 
 
 
 
 
 
 
 
Processed cocoa from Ghana adds value locally  

A  key  success  story  for  Ghana  has  been  its  ability  to  increase  exports  of  processed  cocoa 
products to the EU thanks to duty-free quota-free market access under the EPA.  Over the past 
10 years, Ghana has increased its  exports of cocoa butter, cocoa paste and cocoa powder to 
the EU by 237%. By comparison, Nigeria, which remained under the GSP trade regime saw 
its processed cocoa exports to the EU stagnating. 

Moving  beyond  the  export  of  raw  cocoa  beans  towards  locally  processed  cocoa  products 
makes Ghana more resilient to fluctuating world market prices for raw materials. Low prices 
for Cocoa beans in 2017 lead to a  400 million EUR drop in cocoa beans exports from Ghana 
to the EU. By contrast, exports of processed cocoa continued on an upward trend. 

37 

 
 
 
 
 
7.  TRADE AND SUSTAINABLE DEVELOPMENT (TSD): UPDATE ON RECENT ACTIVITIES 

All  "new  generation"  FTAs  and  DCFTAs  the  EU  concluded  since  2010  include  a  TSD 
chapter  with  legally  binding  commitments,  the  enforcement  of  which  is  overseen  by  TSD 
committees that meet once a year.   

2017 saw a profound political  debate involving  EU institutions,  EU Member States  and the 
civil society on how to make the implementation of TSD chapters more effective and improve 
their enforcement, while also reaffirming core international commitments, including the Paris 
Agreement  on  climate  change.  With  this  in  mind  on  26  February  2018  the  Commission 
services  published  a  non-paper  presenting  a  revamped  strategy  built  around  an  Action  Plan 
with 15 concrete points for action. These are grouped  under four broad headings, reflecting 
the  consensus  that  emerged  from  the  debate  regarding  the  areas  where  improvements  are 
needed: 

(1)  working together (with EU Member States, the European Parliament and international 

(2) 

(3) 

organisations);  

enabling  civil  society, 
implementation; 

including 

the  social  partners, 

to  play 

their  role 

in 

delivering (including by setting partner-specific priorities, more assertive enforcement 
and  enhancing  the  thematic  coverage  in  regard  to  labour  and  climate  change 
provisions  as  well  as  increasing  available  resources  under  the  Aid  for  Trade  (AfT) 
strategy and beyond); and  

(4) 

enhanced communication and transparency.  

The focus is now on the full-fledged implementation of the 15-Point Action Plan, bearing in 
mind that a review is foreseen after five years.  

In implementing TSD chapters the Commission ensures close coordination with EU Member 
States through a dedicated TSD Experts Group that meets four times per year. Civil society 
DAGs have been established under the trade agreements and meet regularly, with the support 
of the European Economic and Social Committee.  

The EU continues to push its partners to put in place mechanisms for balanced and transparent 
dialogues  on  TSD-related  issues  and  is  stepping  up  financial  resources  to  promote  the 
participation of stakeholders. The setting up of a DAG in Colombia can be highlighted as an 
important development in this regard.   

Progress  in  implementing  substantive  TSD  commitments  proceeds  at  different  speeds 
reflecting  the  nature  of  the  challenges  faced  by  each  partner.  Nonetheless,  the  stronger  EU 
engagement  is  starting  to  deliver  results.  For  example,  there  have  been  encouraging  signals 
from South Korea as the authorities have communicated to the EU public a timeline for the 
tripartite discussions on reviewing the labour code and other laws to pave the way for South 
Korea's  ratification  of  four  outstanding  fundamental  ILO  Conventions  (see:  Summary  of 
Discussions at the 6th TSD Committee). The Commission services are monitoring this process 
closely and will take further actions as needed. In Central America, the EU has engaged with 
national  governments  and  DAGs  to  push  forward  TSD  commitments  in  challenging 
circumstances,  in  collaboration  with  the  ILO  and  other  international  bodies.  With  Peru,  the 

38 

 
 
 
EU is stepping up efforts to ensure that implementation work is accelerated. The submission 
that a group of civil society organisations filed with the Commission further exposed the need 
for the Peruvian authorities to formally engage its domestic civil society on TSD matters.      

TSD-relevant activities are not exlusive to "new generation" FTAs and DCFTAs but are also 
related to other types of trade agreements, such as the EPAs (see for example the meeting of 
the first Civil Society Forum under the SADC, described in section 6.1).  

A  number  of  EU  funded  programmes  and  projects  also  contribute  to  the  implementation  of 
TSD objectives in the countries covered by EU trade agreements and beyond.33 

In  addition,  the  European  External  Investment  Plan  and    EU  Regulation  2017/1601  of  26 
September 201734 aim to support actions that will contribute to TSD objectives.  

33   See  for  example  the  "Switch  Africa  Green  Programme",  supporting  countries  in  Africa  to  achieve 
inclusive  green  economy; 

towards  an 

transition 

sustainable  development  by  engaging 
https://www.switchafricagreen.org/index.php?lang=en 

in 

34  See  Regulation  (EU)  2017/1601  of  the  European  Parliament  and  of  the  Council  of  26  September  2017 
establishing the European Fund for Sustainable Development (EFSD), the EFSD Guarantee and the EFSD 
Guarantee Fund.  

39 

 
 
 
 
                                                 
8. 

IN FOCUS: AGRI- FOOD TRADE UNDER FTAS 

How EU FTAs contribute to agri-food trade: state of play in 2017 

Agri-food trade under the EU’s FTAs is growing and contributes considerably to the success 
of EU agri-food exports. In 2017, EU agri-food trade with FTA partner countries made up for 
a  third  of  total  EU  agri-food  exports  and  more  than  40%  of  imports.  Trade  under  the  EU's 
"first  generation"  FTAs  (in  particular  with  Switzerland,  Norway  and  Algeria)  made  a 
substantial contribution to the EU’s 20 billion EUR surplus in total agri-food trade in 2017. 
Under the "new generation" FTA with South Korea, the EU’s fifth largest export destination 
in agri-food trade under FTAs, EU exports in the sector have increased by 113% over the past 
8 years. Between 2016 and 2017, EU exports to South Korea increased by 10%, from 2.6 to 
2.9 billion EUR. The agreement with Canada, CETA, is expected to bring major benefits as 
its implementation progresses. CETA aims at the gradual elimination of duties on 91% of all 
agricultural tariff lines. 

EU  exports  under  FTAs  are  fairly  evenly  split  between  primary  agricultural  products  and 
processed food and beverages. In 2017, main export destinations were Switzerland, Norway, 
Turkey, Canada, South Korea and Algeria, accounting for 55% of agri-food exports to FTA 
countries  and  19%  of  total  EU  agri-food  exports.  Ukraine  is  now  the  EU’s  first  source  of 
agricultural  imports  under  FTAs  (mainly  for  cereals,  vegetable  oils  and  oil  seeds).  In  2017, 
imports  from  this  country  increased  by  a  third.  Ukraine,  Switzerland,  Turkey,  Ivory  Coast, 
South Africa, Colombia and Chile accounted for 51% of all FTA agri-food imports and 22% 
of all EU agri-food imports in 2017. Most EU imports are primary agricultural products such 
as tropical fruits, cacao, vegetables and coffee (72%), processed food and beverages make up 
22%.  

FTAs  open  markets  for  agricultural  products,  food  and  beverages,  thus  adding  value  and 
creating  jobs  in  primary  agriculture  as  well  as  food  processing  as  shown  by  a  study  on  the 
impact of EU trade agreements on the agricultural sector by Copenhagen Economics for the 
Commission,  completed  in  2016.  In  2017,  the  Commission  again  reached  out  to  promote 
agricultural trade, including through a high level visit to Canada and promoting EU food and 
beverage products at major international trade fairs (e.g. in Toronto and Abu Dhabi). On top 
of  over  100  individual  promotion  programmes  already  running  in  2017,  the  Commission 
selected 33 additional proposals to promote EU agri-food products in third countries, which 
will  be  implemented  between  2018  and  2020.  Some  of  these  EU  co-financed  campaigns 
include for example the promotion of GI apples in Egypt or boosting exports of EU hams and 
cheeses to Mexico. 

EU exporters can benefit from more than 600 preferential TRQs granted by our FTA partners. 
The utilisation of TRQs varies between countries and products, for various reasons, and the 
Commission is seeking to improve their uptake. In 2017, it succeeded in obtaining improved 
market access conditions for EU beef exports to Turkey.   

FTA provisions on SPS aspects are used to address trade barriers related to SPS measures in 
partner countries. In 2017, for example, the Commission achieved increased market access for 
several EU Member States for pork in Mexico and EU dairy products in Peru. Ukraine lifted 
its temporary ban related to avian influenza on poultry and Japan removed the BSE (bovine 
spongiform  encephalopathy)  beef  import  ban  for  two  additional  Member  States.  FTAs  also 

40 

 
 
 
 
 
 
 
contain provisions  promoting a high level  of protection of plant and  animal health with  EU 
trade  partners,  including  in  the  Eastern  Partnership  countries  and  the  Western  Balkans.  A 
recent success was the adoption by the relevant DCFTA subcommittees of SPS strategies for 
Moldova  and  Georgia.  Ukraine  is  also  finalising  discussions  with  the  Commission  on  that 
matter.   

FTAs provide for the protection of EU flagship products such as AcetoBalsamico di Modena, 
Feta,  Reblochon,  Prosciutto  di  Parma  or  Queso  Manchego,  as  well  as  wines  and  spirits, 
protected  as  geographical  indications  (GIs).35  The  more  recent  EU  FTAs  ensure  high  level 
and considerable scope of GIs protection in countries where, in most cases, no protection was 
offered  before.  For  example,  Ecuador  will  protect  116  EU  GIs.  Since  September  2017,  143 
EU  agri-food  GIs  enjoy  protection  under  CETA,  in  addition  to  the  GIs  for  wine  and  spirits 
protected  in  Canada  since  2003.  The  protection  of  Prosecco  in  Moldova  has  been  secured, 
ending a long standing court case. 

FTAs foresee protection of EU producers of sensitive products, such as beef, poultry or sugar. 
These are either fully excluded from preferential trade or, if they are partially excluded, they 
are covered by  altogether around 360 EU TRQs. For sensitive fruit and  vegetables  an  entry 
price system is applied during the peak harvest season in the EU.  

In addition, FTAs aim to support the local agricultural sector in developing countries like the 
ACP countries or some Central and Latin American partners. EU EPAs focus on development 
goals  and  have  delivered  results  in  supporting  agricultural  sector  capacity  in  many  ACP 
countries:  Between  2007  and  2017  imports  of  agri-food  products  from  EPA  countries  have 
increased by 71% in value, mostly in agricultural commodities, such as tropical fruit, cocoa or 
coffee,  which  are  not  grown  in  the  EU.  Furthermore,  while  EU  exports  to  Central  America 
and  Colombia,  Ecuador  and  Peru  have  been  increasing,  the  latter  run  a  surplus  in  agri-food 
trade based on EU imports of fresh tropical fruits, like bananas.  

The Commission  cooperates  with  its FTA partners on a broad spectrum  of important  issues 
related to agricultural trade, ranging from EU technical assistance in the sector of agriculture 
and rural development to improving food safety control systems.  

Implementing FTAs in the agri-food sector: current and future activities  

The  Commission  is  working  on  several  fronts  to  ensure  FTAs  deliver  benefits  to  the 
agricultural sector, among these the following: 

  Resolution of pending market access issues, such as exports of EU beef to South Korea 
and the recognition of EU regionalisation, especially for EU poultry and pork exports to 
South Korea, Japan and South Africa; 

35    A geographical indication (GI) is a distinctive sign used to identify a product as originating in the territory of 
a  particular  country,  region  or  locality  where  its  quality,  reputation  or  other  characteristic  is  linked  to  its 
geographical origin 

41 

 
 
 
 
 
 
 
 
 
 
                                                 
  Effective implementation of CETA (e.g. monitoring the uptake of and gathering 

information on allocation and transfers of the cheese TRQs) and preparation for the EPA 
with Japan (once fully implemented, it will liberalise 87% of current agri-food exports);   

  Monitoring and improving the utilisation of TRQs;  
  Enforcing the protection of GIs (e.g. CETA, Chile and Colombia, Ecuador and Peru) and 
advancing the process to add further EU GIs to the list protected under the FTA (South 
Korea); 

  Monitoring  the  stabilisation  mechanism  for  bananas  from  Colombia,  Ecuador,  Peru  and 

Central America; 

  Enhancing cooperation with FTA partners (such as Canada or Japan) on important issues 

of common interest, such as animal welfare and antimicrobial resistance;  

  Mobilising the use of EU funds to provide technical assistance, e.g. in the Eastern 
Partnership region (to further regulatory alignment with the EU acquis in Georgia, 
Moldova and Ukraine), in the Western Balkans or the ACP countries.  

42 

 
 
 
 
9.  UPDATE ON PENDING AND FUTURE ACTIVITIES 

including  on 

implementation, 

The Commission has been engaging in an open discussion with the European Parliament on 
FTA 
the 
Commission's  report  on  the  implementation  of  the  Common  Commercial  Policy.  The 
Commission  will  continue  to  report  annually  on  the  implementation  of  EU  FTAs  to  the 
European Parlimament,  the Council, the European Economic and Social  Committee and the 
Committee of the Regions.  

the  European  Parliament's  Resolution  on 

The  Commission  is  engaged  in  numerous  activities  to  help  people  and  business  to  get  the 
most out of FTAs, building on existing tools and practices as well as developing new ones:   

  To facilitate the use of FTAs by SMEs the Commission is developing an online portal for 
EU import and export, integrating the information on its Market Access Database and EU 
Trade  Helpdesk.  Among  others,  the  portal  will  be  offering  product-specific  information 
and  guidance  on  customs  clearance  processes,  backed  up  by  an  alert  system  customised 
for individual users. Up-to-date information on preferential tariffs can also be found in the 
EU TARIC database and detailed information  on preferential  rules of origin  and related 
procedures can be found on the customs-dedicated webpages of the Commission. 

  The Commission  is  seeking to  obtain  reliable data from  partners enabling it to  establish 
the  PURs  on  exports  from  the  EU,  raising  the  issues  with  partners  and  providing  
assistance,  where  appropriate.  From  CETA  onwards,  new  agreements  will  contain  a 
binding provision on periodic data exchange. The Commission is also seeking additional 
information that may result from looking at other proxies, like duty savings rates, which 
measure the extent to which duties are saved out of the total potential duty savings36.  

  The new Expert Group on EU Trade Agreements provides advice to the Commission on 
FTA  implementation.  Civil  society  provides  input  through,  among  other  things,  regular 
Civil Society Dialogue meetings. 

  The  Commission  recently  intensified  collaboration  with  EU  Member  States  on 
crosscutting issues related to FTA implementation through a dedicated FTA Coordinators 
Network.  

  To discuss the implementation of TSD chapters, in particular the practical aspects of the 
15  points  TSD  action  plan,  a  dedicated  TSD  Member  States'  experts  group  now  meets 
four  times  per  year.  In  addition,  the  competent  Commission  services  commissioned 
surveys  in  2018  and  2019  on  the  application  of  core  labour  standards  and  on  working 
conditions in 29 countries covered by commitments in GSP+ and in FTAs. 

36  This indicator could help to identify sectors in which the  underlying value of exports and potentially duty 
savings  are  high  and  where  it  is  important  to  improve  performance  (see  also  2018  study  by  Nilsson  and 
Preillon available at  http://trade.ec.europa.eu/doclib/docs/2018/june/tradoc_156931.pdf 

43 

 
 
 
 
 
 
 
                                                 
  To increase  transparency on implementation, the Commission, starting with CETA, will 
make  information  publicly  available  on  FTA  dialogues  and  committee  meetings  at  its 
“Transparency  in  Action"  webpage.  The  Commission  will  be  striving  to  increase 
transparency for existing FTAs in liaising with its partners.  

  To  ensure  FTAs  become  operational  as  quickly  as  possible,  the  Commission  provides 
comprehensive information on its website in the run up to their application. In addition to 
the  provisional  FTA  text  the  Commission,  from  CETA  onwards,will  publish  factsheets, 
step-by-step  guides  for  businesses,  exporter  stories  and  infographics.  To  be  better 
prepared  for  the  implementation  of  new  FTAs  the  Commission,  where  appropriate,  has 
been investing in studies on the domestic legal framework of several partner countries.   

  The Commission is also promoting FTA implementation through its 'Market Access Day' 
events  with  EU  Member  States,  using  experience  gathered  through  its  Market  Access 
Partnership. The Enterprise Europe Network (EEN) and Trade Promotion Agencies of the 
EU  Member  States,  both  in  Europe  and  abroad,  together  with  business  and  trade 
associations  such  as  the  European  Business  Organisations  worldwide  network  (EBO 
WWN) are informing about and promoting specific opportunities offered by FTAs. 

  Market Access teams at EU delegations in third countries are seeking to use EU funds to 
support  FTA  implementation,  such  as  the  Partnerhip  Instument  or  other  relevant 
instruments.  The  EU  aid  for  trade  strategy  and  the  EU  external  investment  plan  support 
small companies from developing countries to seize the opportunities stemming from the 
FTAs.  The  overarching  European  Economic  Diplomacy  initiative  introduced  in  2017 
ensures  that  different  EU  policies  reinforce  each  other  in  supporting  key  economic 
priorities, one of them being FTA implementation. 

  The Commission will be releasing in 2018 its interim evaluation of the FTA with South 
Korea and will shortly launch an interim evaluation of the Agreement with Colombia and 
Peru. An ex post evaluation of the EU’s FTAs with six Mediterranean partner countries is 
ongoing and expected for end 2019. 

44 

 
 
 
 
 
 
 
 
 
 
 
 
10.  LEGAL ENFORCEMENT 

The EU’s FTAs provide for robust enforcement of the substantive commitments included in 
each  Agreement  with  a  view  to  ensuring  an  efficient  and  timely  resolution  of  disputes  that 
might  arise  in  that  regard.  In  2017  the  FTA  dispute  settlement  was  not  used  but  the 
Commission  continues  to  thoroughly  and  diligently  monitor  the  implementation  of  FTAs. 
This  allows  the  Commission  to  assess  the  appropriateness  of  using  legal  enforcement  on  a 
case by case basis. 

45 

 
 
 
 
ANNEX 1 – PREFERENCE USE ON IMPORTS INTO THE EU 

Exporting country 
"New generation" Free Trade Agreements 
Colombia 
Costa Rica 
Ecuador 
El Salvador 
Guatemala 
Honduras 
Nicaragua 
Panama 
Peru 
South Korea 
DCFTAs 
Georgia 
Moldova 
Ukraine 
"First generation" Free Trade Agreements 
Mediterranean Partners 
Algeria 
Egypt 
Israel 
Jordan 
Lebanon 
Morocco 
Occupied Palestinian Territory 
Tunisia 
Western Balkans 
Albania 
Bosnia-Herzegovina 
the former Yugoslav Republic of Macedonia 
Kosovo 
Montenegro 
Serbia 
Latin American Partners 
Chile 
Mexico 
EFTA States 
Norway 
Switzerland 
Economic Partnership Agreements (EPAs) 
CARIFORUM (average) 
SADC (average)  
ESA (average) 
Cote d’Ivoire 
Ghana 
Central Africa (Cameroon) 
Pacific (average) 

46 

2015 

2016 

2017 

97% 
96% 
89% 
82% 
95% 
91% 
94% 
70% 
98% 
85% 

83% 
91% 
87% 

97% 
95% 
89% 
68% 
76% 
97% 
78% 
95% 

87% 
93% 
97% 
85% 
81% 
93% 

95% 
52% 

71% 
86% 

91% 
87% 
97% 
99% 
98% 
91% 
92% 

97% 
97% 
88% 
74% 
95% 
92% 
94% 
61% 
97% 
87% 

80% 
88% 
89% 

95% 
96% 
90% 
79% 
71% 
97% 
81% 
96% 

86% 
94% 
95% 
89% 
83% 
90% 

95% 
58% 

66% 
83% 

92% 
80% 
97% 
98% 
98% 
97% 
99% 

97% 
96% 
97% 
90% 
93% 
92% 
93% 
82% 
96% 
88% 

77% 
85% 
87% 

97% 
97% 
91% 
75% 
70% 
97% 
77% 
94% 

86% 
94% 
94% 
92% 
90% 
92% 

96% 
70% 

69% 
85% 

91% 
83% 
96% 
98% 
96% 
99% 
81% 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 2 – PREFERENCE USE ON EXPORTS FROM THE EU 

Importing country 
"New generation" Free Trade Agreements 
Colombia 
Peru 
Costa Rica 
Ecuador 
South Korea 
DCFTAs 

Georgia 
"First generation" Free Trade Agreements 
Mediterranean Partners 
Egypt 
Israel 
Lebanon 
Morocco 

Western Balkans 
Albania 
the former Yugoslav Republic of Macedonia 
Kosovo 
Montenegro 
Serbia 
Latin American Partners 
Chile 
Mexico 
EFTA States 
Switzerland 

2015 

2016 

2017 

63% 
28% 

71% 
47% 
38% 

68% 

71% 

68% 
52% 

42% 
74% 

72% 

71% 

77% 

36% 

74% 

76% 

85% 
89% 

76% 
76% 

62% 
89% 

52% 

80% 
90% 
44% 
85% 
90% 

75% 
85% 

44% 
86% 
58% 

78% 
89% 

86% 
91% 

76% 
75% 

79% 

79% 

78% 

47 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 3 – LIST OF ACRONYMS 

ACP  

African, Carribean and Pacific countries 

Cariforum 

Forum of the Caribbean Group of ACP States  

CETA    

Comprehensive Economic and Trade Agremeent EU- Canada 

CITES  

DAG  

Convention on International Trade in Endangered Species of Wild Fauna and Flora 

Domestic Advisory Group 

DCFTA   

Deep and Comprehensive Free Trade Area 

EBO WWN  

European Business Organisations worldwide network 

EEA  

EEN  

EPA  

ESA  

FDI  

FTA 

GIs  

IPRs  

ILO  

MFN 

PUR  

SAA 

European Economic Area 

Enterprise Europe Network   

Economic Partnership Agreement 

Eastern and Southern Africa  

Foreign Direct Investment 

Free Trade Agreement 

Geographical Indications 

Intellectual Property Rights   

International Labour Organisation 

Most Favoured Nation 

Preference Utilisation Rate   

Stabilisation and Association Agreement 

SADC    

Southern African Development Community 

SME 

SPS  

TBT  

TRQ  

TSD  

Small and medium-sized enterprise  

Sanitary and Phytosanitary  

Technical Barriers to Trade 

Tariff Rate Quota 

Trade and Sustainable Development 

48