COMMISSION STAFF WORKING DOCUMENT Individual reports and info sheets on implementation of EU Free Trade Agreements Accompanying the document Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Implementation of Free Trade Agreements 1 January 2017 - 31 December 2017
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  SWD(2018) 454 final  COMMISSION STAFF WORKING DOCUMENT Individual reports and info sheets on implementation of EU Free Trade Agreements      Accompanying the document Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions  on Implementation of Free Trade Agreements  1 January 2017 - 31 December 2017  {COM(2018) 728 final}  
 
 
Individual reports and info sheets on implementation of EU Free Trade Agreements 

TABLE OF CONTENTS 

DATA USED FOR THE COMPILATION OF INDIVIDUAL REPORTS AND 
INFORMATION SHEETS ...................................................................................................... 14 

PART I:  

NEW GENERATION FREE TRADE AGREEMENTS ................................... 16 

ANNUAL REPORT ON THE IMPLEMENTATION OF THE COMPREHENSIVE 
ECONOMIC AND TRADE AGREEMENT (CETA) BETWEEN THE EU AND ITS 
MEMBER STATES AND CANADA ..................................................................................... 17 

1. 

Introduction ...................................................................................................................... 17 

2.  Evolution of trade ............................................................................................................. 17 

3.  Activities of the implementation bodies ........................................................................... 17 

4. 

Implementation of the provisions on trade and sustainable development ....................... 19 

5.  Agriculture ....................................................................................................................... 19 

6.  Conclusions and outlook .................................................................................................. 21 

ANNUAL REPORT ON THE IMPLEMENTATION OF THE  EU-SOUTH KOREA FREE 
Trade Agreement ...................................................................................................................... 23 

1. 

Introduction ...................................................................................................................... 23 

2.  Evolution of bilateral trade ............................................................................................... 23 

2.1.

  Trade in Goods .......................................................................................................... 23 

2.1.1.  Overall Evolution ............................................................................................... 23 

2.1.2.  Trade in agricultural goods ................................................................................ 25 

2.1.3.  Preference Utilisation Rates ............................................................................... 26 

2.2.

  Trade in Services and Foreign Direct Investment (FDI) ........................................... 26 

3.  Activities of the implementation bodies ........................................................................... 27 

4. 

Implementation of the provisions on trade and sustainable development ....................... 30 

5.  Specific areas subject to reporting or monitoring ............................................................ 32 

6.  Progress, main open issues and follow-up actions ........................................................... 34 

7.  Conclusions and outlook .................................................................................................. 34 

ANNUAL REPORT ON THE IMPLEMENTATION  OF THE EU-
COLOMBIA/ECUADOR/PERU TRADE AGREEMENT ..................................................... 36 

1. 

Introduction ...................................................................................................................... 36 

2.  Evolution of trade ............................................................................................................. 37 

2.1.

  Trade in Goods .......................................................................................................... 37 

1 

 
  
 
 
2.2.

  Trade in agricultural goods ........................................................................................ 41 

2.3.

  Trade in Services and development of investment .................................................... 45 

2.3.1.  Trade in Services ................................................................................................ 45 

2.3.2.  FDI ..................................................................................................................... 46 

3.  Activities of the implementation bodies ........................................................................... 47 

4. 

Implementation of the provisions on trade and sustainable development ....................... 50 

4.1.

  Sub-Committee on Trade and Sustainable Development .......................................... 50 

4.2.

  Domestic consultation ............................................................................................... 51 

4.3.

  Session of the Sub-Committee on TSDwith civil society ......................................... 51 

4.4.

  Further work and other activities ............................................................................... 51 

5.  Specific areas subject to reporting or monitoring ............................................................ 52 

6.  Progress made, main open issues and follow-up actions ................................................. 54 

7.  Conclusions and outlook .................................................................................................. 55 

ANNUAL REPORT ON THE IMPLEMENTATION OF PART IV OF THE ASSOCIATION 
AGREEMENT BETWEEN THE EU AND ITS MEMBER STATES AND CENTRAL 
AMERICA ............................................................................................................................... 58 

1. 

Introduction ...................................................................................................................... 58 

2.  Overall assessment: evolution of bilateral trade............................................................... 58 

2.1.

  Trade in Goods overall .............................................................................................. 58 

2.1.1.  Sectoral structure of trade................................................................................... 60 

2.1.2.  Country-by-Country analysis ............................................................................. 61 

2.2.

  Trade in agricultural goods ........................................................................................ 63 

2.3.

  Preference Utilisation Rates (PURs) ......................................................................... 64 

2.4.

  Trade in Services and FDIs ....................................................................................... 64 

2.4.1.  Trade in Services ................................................................................................ 64 

2.4.2.  Development of FDIs ......................................................................................... 65 

3.  Activities of the implementation bodies ........................................................................... 65 

3.1.

  Association Committee .............................................................................................. 65 

3.2.

  Sub-Committee on Market Access for Goods ........................................................... 66 

3.3.

  Sub-Committee on Customs Procedures, Trade Facilitation and Rules of Origin .... 66 

3.4.

  Sub-Committee on Technical Barriers to Trade (TBT) ............................................. 67 

3.5.

  Sub-Committee on SPS Matters ................................................................................ 67 

3.6.

  Sub-Committee on Intellectual Property ................................................................... 67 

3.7.

  Board on Trade and Sustainable Development ......................................................... 68 

3.8.

  Ad hoc meeting on Government Procurement .......................................................... 68 

4. 

Implementation of the provisions on trade and sustainable development ....................... 68 

5.  Specific areas subject to reporting or monitoring ............................................................ 69 

6.  Conclusions and outlook .................................................................................................. 70 

2 

 
part ii: ANNUAL REPORT ON THE IMPLEMENTATION OF THE DEEP AND 
COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN  THE EU AND 
UKRAINE, MOLDOVA AND GEORGIA ............................................................................. 72 

ANNUAL REPORT ON THE IMPLEMENTATION OF THE DEEP AND 
COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN  THE EU AND ITS 
MEMBER STATES AND UKRAINE .................................................................................... 74 

1.  Evolution of trade ............................................................................................................. 74 

1.1.

  Trade in goods overall ............................................................................................... 74 

1.1.1.  Scope of trade liberalisation ............................................................................... 74 

1.1.2.  Overall evolution of EU-Ukraine trade in goods ............................................... 75 

1.1.3.  Sectoral structure of EU-Ukraine trade in goods ............................................... 75 

1.2.

  Trade in agricultural goods ........................................................................................ 76 

1.2.1.  Use of TRQs ....................................................................................................... 78 

1.3.

  Preference utilisation rate (PUR) ............................................................................... 78 

1.4.

  Autonomous trade measures ...................................................................................... 78 

1.5.

  Establishment, trade in services and investments ...................................................... 79 

1.5.1.  Market access related to establishment and trade in services ............................ 79 

1.5.2.  Trade in services ................................................................................................. 79 

1.5.3.  FDI ..................................................................................................................... 80 

2.  Activities of the implementation bodies ........................................................................... 80 

2.1.

Joint decisions of the Association Bodies ................................................................. 80 

2.2.

  Meetings of the Association Bodies .......................................................................... 81 

3. 

Implementation of the provisions on trade and sustainable development ....................... 82 

4.  Progress made, main open issues and follow-up actions ................................................. 82 

5.  Eu Support to DCFTA Implementation ........................................................................... 85 

6.  Conclusions and outlook .................................................................................................. 86 

ANNUAL REPORT ON THE IMPLEMENTATION OF THE DEEP AND 
COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN  THE EU AND ITS 
MEMBER STATES AND GEORGIA .................................................................................... 88 

1.  Evolution of trade ............................................................................................................. 88 

1.1.

  Trade in Goods overall .............................................................................................. 88 

1.1.1.  The scope of trade liberalization ........................................................................ 88 

1.1.2.  Overall evolution of EU–Georgia trade in goods ............................................... 89 

1.1.3.  Sectoral structure of EU-Georgia trade in goods ............................................... 89 

1.2.

  Trade in agricultural goods ........................................................................................ 90 

1.3.

  Use of TRQs (TRQ) .................................................................................................. 90 

1.4.

  Preference utilisation rate (PUR) ............................................................................... 90 

1.5.

  Establishment, trade in services and investments ...................................................... 91 

1.5.1.  Market access related to establishment and trade in services ............................ 91 

3 

 
 
1.5.2.  Trade in services ................................................................................................. 91 

1.5.3.  FDI ..................................................................................................................... 92 
2.  Activities of the implementation bodies  .......................................................................... 92 
Joint decisions of the Association Bodies ................................................................. 92 

2.1.

2.2.

  Meetings of the Association Bodies .......................................................................... 93 

3. 

Implementation of the provisions on trade and sustainable development ....................... 95 

4.  Specific areas subject to reporting or monitoring ............................................................ 96 

5.  Progress made, main open issues and follow-up actions ................................................. 96 

6.  EU SUPPORT TO DCFTA IMPLEMENTATION .................................................................. 98 

7.  Conclusions and outlook .................................................................................................. 99 

ANNUAL REPORT ON THE IMPLEMENTATION OF THE DEEP AND 
COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN THE EU AND ITS 
MEMBER STATES AND MOLDOVA ................................................................................ 101 

1.  Evolution of trade ........................................................................................................... 101 

1.1.

  Trade in goods overall ............................................................................................. 101 

1.1.1.  The scope of trade liberalization ...................................................................... 101 

1.1.2.  Overall evolution of EU-Moldova trade in goods ............................................ 102 

1.1.3.  Sectoral structure of EU-Moldova trade in goods ............................................ 103 

1.2.

  Trade in agricultural goods ...................................................................................... 104 

1.2.1.  Review clause for agricultural products ........................................................... 105 

1.2.2.  Anti-circumvention mechanism for agricultural products ............................... 106 

1.2.3.  Use of TRQs ..................................................................................................... 106 

1.3.

  Preference Utilisation rate (PURs) .......................................................................... 107 

1.4.

  Establishment, trade in services and investments .................................................... 107 

1.4.1.  Market access related to establishment and trade in services .......................... 107 

1.4.2.  Trade in Services .............................................................................................. 107 

1.4.3.  FDI ................................................................................................................... 107 
2.  Activities of the implementation bodies  ........................................................................ 108 
Joint decisions of the Association Bodies ............................................................... 108 

2.1.

2.2.

  Meetings of the Association Bodies ........................................................................ 109 

3. 

Implementation of the provisions on trade and sustainable development ..................... 110 

4.  Progress made, main open issues and follow-up actions ............................................... 111 

5.  EU SUPPORT TO DCFTA IMPLEMENTATION ................................................................ 113 

6.  Conclusions and outlook ................................................................................................ 114 

PART III: FIRST GENERATION FREE TRADE AGREEMENTS .................................... 116 

FIRST GENERATION FREE TRADE AGREEMENTS WITH MEDITERRANEAN 
PARTNERS ........................................................................................................................... 118 

4 

 
 
 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  THE EU-ALGERIA 
ASSOCIATION AGREEMENT ............................................................................................ 119 

1. 

Introduction .................................................................................................................... 119 

2.  Evolution of trade ........................................................................................................... 119 

2.1.

  Trade in Goods ........................................................................................................ 119 

2.2.

  Trade in agricultural goods ...................................................................................... 120 

2.3.

  Preference Utilisation rate ....................................................................................... 121 

2.4.

  Trade in Services and Investment ............................................................................ 121 

3. 

Issues addressed in the Sub-Committee meetings .......................................................... 121 

4.  Specific areas of importance .......................................................................................... 122 

5.  Progress made, main open issues and follow-up actions ............................................... 123 

6.  Conclusions and outlook ................................................................................................ 123 

ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  THE EU-EGYPT 
ASSOCIATION AGREEMENT ............................................................................................ 124 

1. 

Introduction .................................................................................................................... 124 

2.  Evolution of trade ........................................................................................................... 124 

2.1.

  Trade in Goods ........................................................................................................ 124 

2.2.

  Trade in agricultural goods ...................................................................................... 125 

2.3.

  Preference Utilisation rate ....................................................................................... 126 

2.4.

  Trade in Services and FDI ....................................................................................... 126 

3. 

Issues addressed in the Joint Committee meetings ........................................................ 127 

4.  Specific areas of importance .......................................................................................... 127 

5.  Progress made, main open issues and follow-up actions ............................................... 128 

6.  Conclusions and outlook ................................................................................................ 129 

ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  THE EU-ISRAEL 
ASSOCIATION AGREEMENT ............................................................................................ 130 

1. 

Introduction .................................................................................................................... 130 

2.  Evolution of trade ........................................................................................................... 130 

2.1.

  Trade in Goods ........................................................................................................ 130 

2.2.

  Trade in agricultural goods ...................................................................................... 131 

2.3.

  Preference Utilisation rate ....................................................................................... 132 

2.4.

  Trade in Services and Investment ............................................................................ 133 

3. 

Issues addressed in the Annual (Joint Committee/Trade Committee) meeting ............. 133 

4.  Specific areas of importance .......................................................................................... 134 

5.  Progress made, main open issues and follow-up actions ............................................... 134 

6.  Conclusions and outlook ................................................................................................ 135 

ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  THE EU-JORDAN 
ASSOCIATION AGREEMENT ............................................................................................ 136 

5 

 
1. 

Introduction .................................................................................................................... 136 

2.  Evolution of trade ........................................................................................................... 136 

2.1.

  Trade in Goods ........................................................................................................ 136 

2.2.

  Trade in agricultural goods ...................................................................................... 137 

2.3.

  Preference Utilisation rate ....................................................................................... 138 

2.4.

  Trade in Services and Investment ............................................................................ 138 

3. 

Issues addressed in the Annual (Joint Committee/Trade Committee) meetingS ........... 138 

4.  Specific areas of importance .......................................................................................... 139 

5.  Progress made, main open issues and follow-up actions ............................................... 140 

6.  Conclusions and outlook ................................................................................................ 140 

ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  THE EU-LEBANON 
ASSOCIATION AGREEMENT ............................................................................................ 142 

1. 

Introduction .................................................................................................................... 142 

2.  Evolution of trade ........................................................................................................... 142 

2.1.

  Trade in Goods ........................................................................................................ 142 

2.2.

  Trade in agricultural goods ...................................................................................... 143 

2.3.

  Preference Utilisation rate ....................................................................................... 144 

2.4.

  Trade in Services and FDI ....................................................................................... 144 

3. 

Issues addressed in the Annual Joint Committee meetings ............................................ 144 

4.  Specific areas of importance .......................................................................................... 145 

5.  Progress made, main open issues and follow-up actions ............................................... 146 

6.  Conclusions and outlook ................................................................................................ 146 

ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  THE EU-MOROCCO 
ASSOCIATION AGREEMENT ............................................................................................ 148 

1. 

Introduction .................................................................................................................... 148 

2.  Evolution of trade ........................................................................................................... 148 

2.1.

  Trade in Goods ........................................................................................................ 148 

2.2.

  Trade in agricultural goods ...................................................................................... 149 

2.3.

  Preference Utilisation rate ....................................................................................... 150 

2.4.

  Trade in Services and FDI ....................................................................................... 150 

3. 

Issues addressed in the Joint Committee meetings ........................................................ 150 

4.  Specific areas of importance .......................................................................................... 150 

5.  Progress made, main open issues and follow-up actions ............................................... 151 

6.  Conclusions and outlook ................................................................................................ 152 

ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  THE EU-PALESTINE 
INTERIM ASSOCIATION AGREEMENT .......................................................................... 154 

1. 

Introduction .................................................................................................................... 154 

2.  Evolution of trade ........................................................................................................... 154 

6 

 
2.1.

  Trade in Goods ........................................................................................................ 154 

2.2.

  Trade in agricultural goods ...................................................................................... 155 

2.3.

  Preference Utilisation rate ....................................................................................... 156 

2.4.

  Trade in Services and FDI ....................................................................................... 156 

3. 

Issues addressed in the Annual (Joint Committee/Trade Committee) meeting ............. 156 

4.  Specific areas of importance .......................................................................................... 157 

5.  Progress made, main open issues and follow-up actions ............................................... 158 

6.  Conclusions and outlook ................................................................................................ 158 

ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  THE EU-TUNISIA 
ASSOCIATION AGREEMENT ............................................................................................ 159 

1. 

Introduction .................................................................................................................... 159 

2.  Evolution of trade ........................................................................................................... 159 

2.1.

  Trade in Goods ........................................................................................................ 159 

2.2.

  Trade in agricultural goods ...................................................................................... 160 

2.3.

  Preference Utilisation rate ....................................................................................... 161 

2.4.

  Trade in Services and Investment ............................................................................ 161 

3. 

Issues addressed in the Joint Committee meetings ........................................................ 161 

4.  Specific areas of importance .......................................................................................... 162 

5.  Progress, main open issues and follow-up actions ......................................................... 163 

6.  Conclusions and outlook ................................................................................................ 164 

FIRST GENERATION FREE TRADE AGREEMENTS WITH THE  WESTERN BALKAN 
PARTNERS ........................................................................................................................... 165 

ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  the trade PILLAR OF THE 
EU-ALBANIA STABILISATION AND association AGREEMENT .................................. 166 

1. 

Introduction .................................................................................................................... 166 

2.  Evolution of trade ........................................................................................................... 166 

2.1.

  Trade in Goods ........................................................................................................ 166 

2.2.

  Trade in agricultural goods ...................................................................................... 167 

2.3.

  Preference Utilisation rate (PUR) ............................................................................ 168 

2.4.

  Trade in Services and FDI ....................................................................................... 169 

3. 

Issues addressed in the Joint Committee meetings ........................................................ 169 

4.  Specific areas of importance .......................................................................................... 170 

5.  Main open issues and follow-up actions ........................................................................ 170 

6.  Conclusions .................................................................................................................... 170 

ANNUAL INFO SHEET ON the IMPLEMENTATION OF  THE TRADE PILLAR OF THE 
EU-BOSNIA AND HERZEGOVINA  STABILISATION AND association AGREEMENT
 ................................................................................................................................................ 171 

1. 

Introduction .................................................................................................................... 171 

7 

 
2.  Evolution of trade ........................................................................................................... 171 

2.1.

  Trade in Goods ........................................................................................................ 171 

2.2.

  Trade in agricultural goods ...................................................................................... 172 

2.3.

  Preference Utilisation rate ....................................................................................... 173 

2.4.

  Trade in Services and FDI ....................................................................................... 173 

3. 

Issues addressed in the annual Committee meetings ..................................................... 174 

4.  Specific areas of importance .......................................................................................... 175 

5.  Main open issues and follow-up actions ........................................................................ 175 

6.  Conclusions .................................................................................................................... 175 

ANNUAL INFO SHEET ON the IMPLEMENTATION OF  the trade pillar of the 
STABILISATION AND association AGREEMENT between the EU and the former 
Yugoslav Republic of Macedonia .......................................................................................... 176 

1. 

Introduction .................................................................................................................... 176 

2.  Evolution of trade ........................................................................................................... 176 

2.1.

  Trade in Goods ........................................................................................................ 176 

2.2.

  Trade in agricultural goods ...................................................................................... 177 

2.3.

  Preference Utilisation rate ....................................................................................... 179 

2.4.

  Trade in Services and FDI ....................................................................................... 179 

3. 

Issues addressed in the annual Committee meetings ..................................................... 180 

4.  Specific areas of importance .......................................................................................... 180 

5.  Main open issues and follow-up actions ........................................................................ 180 

6.  Conclusions .................................................................................................................... 181 

ANNUAL INFO SHEET ON the IMPLEMENTATION OF  the TRADE PILLAR OF THE 
EU-KOSOVO* Stabilisation and association AGREEMENT ............................................... 182 
Introduction .................................................................................................................... 182 
1. 

2.  Evolution of trade ........................................................................................................... 182 

2.1.

  Trade in Goods ........................................................................................................ 182 

2.2.

  Trade in agricultural goods ...................................................................................... 183 

2.3.

  Preference Utilisation rate ....................................................................................... 184 

2.4.

  Trade in Services and FDI ....................................................................................... 184 

3. 

Issues addressed in the annual Committee meetings ..................................................... 184 

4.  Specific areas of importance .......................................................................................... 185 

5.  Main open issues and follow-up actions ........................................................................ 185 

6.  Conclusions .................................................................................................................... 185 

ANNUAL INFO SHEET ON the IMPLEMENTATION OF the trade pillar of the EU-
MONTENEGRO STABILISATION AND ASSOCIATION AGREEMENT ...................... 186 

1. 

Introduction .................................................................................................................... 186 

2.  Evolution of trade ........................................................................................................... 186 

8 

 
2.1.

  Trade in Goods ........................................................................................................ 186 

2.2.

  Trade in Agricultural Goods .................................................................................... 187 

2.3.

  Preference Utilisation rate ....................................................................................... 188 

2.4.

  Trade in Services and FDI ....................................................................................... 188 

3. 

Issues addressed in the annual Committee meetings ..................................................... 189 

4.  Specific areas of importance .......................................................................................... 189 

5.  Main open issues and follow-up actions ........................................................................ 190 

6.  Conclusions .................................................................................................................... 190 

ANNUAL INFO SHEET ON the IMPLEMENTATION OF the  TRADE PILLAR OF THE 
EU-SERBIA STABILISATION AND ASSOCIATION AGREEMENT ............................. 191 

1. 

Introduction .................................................................................................................... 191 

2.  Evolution of trade ........................................................................................................... 191 

2.1.

  Trade in Goods ........................................................................................................ 191 

2.2.

  Trade in agricultural goods ...................................................................................... 192 

2.3.

  Preference Utilisation rate ....................................................................................... 194 

2.4.

  Trade in Services and FDI ....................................................................................... 194 

3. 

Issues addressed in the annual trade committee meeting ............................................... 195 

4.  Specific areas of importance .......................................................................................... 195 

5.  Main open issues and follow-up actions ........................................................................ 196 

6.  Conclusions .................................................................................................................... 196 

FIRST GENERATION FREE TRADE AGREEMENTS WITH LATIN AMERICAN 
COUNTRIES ......................................................................................................................... 197 

ANNUAL INFO SHEET ON IMPLEMENTATION OF THE TRADE PILLAR OF THE EU-
CHILE ASSOCIATION AGREEMENT ............................................................................... 198 

1. 

Introduction .................................................................................................................... 198 

2.  Evolution of trade ........................................................................................................... 199 

2.1.

  Trade in Goods ........................................................................................................ 199 

2.2.

  Trade in agricultural products .................................................................................. 201 

2.3.

  Trade in Services and FDI ....................................................................................... 201 

2.4.

  Preference Utilisation Rate (PUR) .......................................................................... 202 

3.  Annual Trade Coordinators Meeting and Trade-related Sub-committees ..................... 203 

4. 

progress made, Main open issues and follow-up actions ............................................... 204 

5.  Conclusions and outlook ................................................................................................ 205 

ANNUAL INFO SHEET ON IMPLEMENTATION OF THE TRADE PILLAR OF THE EU-
MEXICO ASSOCIATION AGREEMENT  .......................................................................... 206 
Introduction .................................................................................................................... 206 
1. 

2.  Evolution of trade ........................................................................................................... 206 

2.1.

  Trade in goods ......................................................................................................... 206 

9 

 
2.2.

  Trade in agricultural goods: ..................................................................................... 207 

2.3.

  Preference Utilisation rate (PUR) ............................................................................ 208 

2.4.

  Trade in services and FDI ........................................................................................ 209 

3. 

Issues addressed in the annual joint committee meeting ................................................ 210 

4.  Progress made, main open issues and follow-up actions ............................................... 210 

5.  Conclusions and outlook ................................................................................................ 211 

FIRST GENERATION FREE TRADE AGREEMENTS WITH THE EFTA COUNTRIES 
NORWAY AND SWITZERLAND ....................................................................................... 213 

ANNUAL INFO SHEET ON IMPLEMENTATION OF the  EU-Norway FREE TRADE 
AGREEMENT ....................................................................................................................... 214 

1. 

Introduction .................................................................................................................... 214 

2.  Evolution of trade ........................................................................................................... 214 

2.1.

  Trade in Goods ........................................................................................................ 214 

2.2.

  Trade in agricultural goods ...................................................................................... 215 

2.3.

  Preference Utilisation rate (PUR) ............................................................................ 216 

2.4.

  Trade in Services and FDI ....................................................................................... 216 

3. 

Issues addressed in the EEA and FTA Joint committees ............................................... 217 

4.  Specific areas of importance .......................................................................................... 217 

5.  Progress made, main open issues and follow-up actions ............................................... 218 

ANNUAL INFO SHEET ON IMPLEMENTATION OF the  EU-SWITZERLAND FREE 
TRADE AGREEMENT ......................................................................................................... 220 

1. 

Introduction .................................................................................................................... 220 

2.  Evolution of trade ........................................................................................................... 221 

2.1.

  Trade in Goods ........................................................................................................ 221 

2.2.

  Trade in agricultural goods ...................................................................................... 222 

2.3.

  Trade in Services and Investment ............................................................................ 222 

2.4.

  Preference Utilisation rate ....................................................................................... 223 

3. 

Issues addressed in the annual joint committee meeting ................................................ 223 

4.  Specific areas of importance .......................................................................................... 225 

5.  Progress made, main open issues and follow-up actions ............................................... 225 

6.  Conclusions and outlook ................................................................................................ 225 

THE CUSTOMS UNION WITH TURKEY .......................................................................... 227 

ANNUAL INFO SHEET ON IMPLEMENTATION OF THE EU-TURKEY CUSTOMS 
UNION AND TRADE AGREEMENTS  .............................................................................. 228 

7.  Evolution of trade ........................................................................................................... 228 

7.1.

  Trade in Goods ........................................................................................................ 228 

7.2.

  Trade in agricultural goods ...................................................................................... 229 

7.3.

  Preference Utilisation rate (PUR) ............................................................................ 230 

10 

 
7.4.

  Trade in Services and FDI ....................................................................................... 230 

8. 

Issues addressed in the Customs Union Joint Committee Meeting................................ 231 

9.  Specific areas of importance .......................................................................................... 231 

10. 

Progress made, main open issues and follow-up actions ............................................ 231 

11.  Conclusions and outlook ............................................................................................. 232 

PART IV: ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC 
PARTNERSHIP AGREEMENTS (EPAs) WITH AFRICAN, CARRIBEAN AND PACIFIC 
COUNTRIES ......................................................................................................................... 233 

ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC 
PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND THE SOUTHERN 
AFRICAN DEVELOPMENT COMMUNITY (SADC) ....................................................... 234 

1. 

Introduction .................................................................................................................... 234 

2.  Evolution of trade ........................................................................................................... 234 

2.1.

  Trade in goods ......................................................................................................... 234 

2.2.

  Trade in services ...................................................................................................... 238 

2.3.

  FDI ........................................................................................................................... 238 

3. 

Issues addressed in the annual EPA Committee meeting............................................... 239 

4.  Specific areas of importance .......................................................................................... 240 

5.  Progress made, main open issues and follow-up actions ............................................... 241 

6.  Conclusions and outlook ................................................................................................ 241 

ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC 
PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND COTE D’IVOIRE ..... 243 

1. 

Introduction .................................................................................................................... 243 

2.  Evolution of trade ........................................................................................................... 243 

2.1.

  Trade in goods ......................................................................................................... 243 

2.2.

  Trade in services ...................................................................................................... 245 

2.3.

  FDI ........................................................................................................................... 246 

3. 

Issues addressed in the annual EPA Committee meeting............................................... 246 

4.  Specific areas of importance .......................................................................................... 246 

5.  Progress made, main open issues and follow-up actions ............................................... 247 

6.  Conclusions and outlook ................................................................................................ 247 

ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC 
PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND GHANA .................... 249 

1. 

Introduction .................................................................................................................... 249 

2.  Evolution of trade ........................................................................................................... 249 

2.1.

  Trade in goods ......................................................................................................... 249 

2.2.

  Trade in services ...................................................................................................... 251 

2.3.

  FDI ........................................................................................................................... 252 

3. 

Issues addressed in the first meeting of the joint EPA Committee ................................ 252 

11 

 
4.  Specific areas of importance .......................................................................................... 252 

5.  Follow-up actions ........................................................................................................... 253 

6.  Conclusions and outlook ................................................................................................ 253 

ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC 
PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND CAMEROON ........... 254 

1. 

Introduction .................................................................................................................... 254 

2.  Evolution of trade ........................................................................................................... 254 

2.1.

  Trade in goods ......................................................................................................... 254 

2.2.

  Trade in services ...................................................................................................... 256 

2.3.

  FDI ........................................................................................................................... 257 

3. 

Issues addressed in the annual EPA Committee meeting............................................... 257 

4.  Specific areas of importance .......................................................................................... 257 

5.  Progress made, main open issues and follow-up actions ............................................... 258 

6.  Conclusions and outlook ................................................................................................ 258 

ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC 
PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND CARIFORUM .......... 259 

1. 

Introduction .................................................................................................................... 259 

2.  Evolution of trade ........................................................................................................... 259 

2.1.

  Trade in goods ......................................................................................................... 259 

2.2.

  Trade in services ...................................................................................................... 261 

2.3.

  FDI ........................................................................................................................... 262 

3. 

Issues addressed in the EPA Committee meetings ......................................................... 262 

4.  Specific areas of importance .......................................................................................... 263 

5.  Progress made, main open issues and follow-up actions ............................................... 264 

6.  Conclusions and outlook ................................................................................................ 264 

ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC 
PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND PACIFIC STATES ... 265 

1. 

Introduction .................................................................................................................... 265 

2.  Evolution of trade ........................................................................................................... 265 

2.1.

  Trade in goods ......................................................................................................... 265 

2.2.

  Trade in services ...................................................................................................... 267 

2.3.

  FDI ........................................................................................................................... 268 

3. 

Issues addressed in the EPA Committee meetings ......................................................... 268 

4.  Specific areas of importance .......................................................................................... 268 

5.  Main open issues and follow-up actions ........................................................................ 269 

6.  Conclusions and outlook ................................................................................................ 269 

12 

 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE INTERIM ECONOMIC 
PARTNERSHIP AGREEMENT (iEPA) BETWEEN THE EU AND EASTERN AND 
SOUTHERN AFRICAN (ESQ) STATES ............................................................................. 270 

1. 

Introduction .................................................................................................................... 270 

2.  Evolution of trade ........................................................................................................... 270 

2.1.

  Trade in Goods ........................................................................................................ 270 

2.2.

  Trade in Services and Investment ............................................................................ 272 

2.3.

  FDI ........................................................................................................................... 273 

3. 

Issues addressed in the annual EPA Committee meeting............................................... 273 

4.  Specific areas of importance .......................................................................................... 273 

5.  Progress made, main open issues and follow-up actions ............................................... 274 

6.  Conclusions and outlook ................................................................................................ 274 

ANNEX – LIST OF ABBREVIATIONS .............................................................................. 276 

13 

 
 
 
 
 
 
DATA USED FOR THE COMPILATION OF INDIVIDUAL REPORTS AND 
INFORMATION SHEETS 

General trade statistics used for the Report reflecting the evolution of trade and investment 
flows  rely,  except  where  indicated  otherwise,  on  EUROSTAT  data  (COMEXT)  as  was 
available  on  15  July  2018.1  For  trade  in  goods  the  most  recent  annual  data  available  is  for 
2017.  For  services  and  investment  the  most  recent  year  available  is  2016  (except  for 
Switzerland, where 2017 is available).  

Statistics on preference utilisation rates (PURs)2 are based on administrative data collected 
by  the  importing  country.  PURs  show  to  what  extent  trade  flows  make  use  of  preferences 
under  a  trade  agreement.  The  PUR  reflects  the  share  of  imports  entering  under  trade 
preferences as a share of the total value of imports eligible for preferences by partner country. 
Preference  eligible  imports  exist  if  the  applied  preferential  tariff  is  lower  than  the  applied 
MFN tariff. Subsequently MFN-duty free trade is not taken into account in the calculations.  

The PUR of EU imports is based on Eurostat figures. Eurostat merges tariffs and trade flows 
to  build  a  dataset  from  which  we  extract  information  on  both  the  treatment  a  product  is 
eligible  for  and  the  extent  to  which  this  eligible  treatment  is  made  use  of.  The  obtained 
dataset  is  harmonised3  and  consistent  and  allows  for  comparison  across  partner  countries 
and years.  

By  contrast,  when  it  comes  to  calculating  PURs  on  EU  exports  to  FTA  partners  the 
Commission  has  to  rely  on  administrative  data  collected  by  the  respective  importing  third 
country.  Submitted data were used if fulfilling a set of conditions as regards level of detail, 
accuracy, completeness and consistency to ensure a minimum level of harmonisation.  E.g.  to 
systematically  exclude  from  PUR  calculations  all  products  not  benefiting  from  preferential 
treatment  (such  as  products  offered  duty  free  on  an  MFN  basis)  eligibility  has  to  be 
determined but this can only be done with data available at tariff line level ;  - import values 
need to be comparable with levels found in other sources (e.g. UN Comtrade). 

Statistics on PURs for EU exports are not harmonised. Hence, direct comparisons between 
partner countries or with EU imports should merely be seen as indicative.  

1   As  regards  the  Association  Agreement  with  Central  America,  there  are  significant  differences  between 

EUROSTAT and Central American statistics; only Eurostat data are therefore used.  
Information on preference utilisation rates per partner country can be consulted in Annexes 1 and 2. 

2  
3   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 

14 

 
 
                                                 
PART I:  

NEW GENERATION FREE TRADE AGREEMENTS 

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

15 

 
 
     
 
 
 
ANNUAL REPORT ON THE IMPLEMENTATION OF THE COMPREHENSIVE 
ECONOMIC AND TRADE AGREEMENT (CETA) BETWEEN THE EU AND ITS 
MEMBER STATES AND CANADA 

1. 

INTRODUCTION 

The  Comprehensive  Economic  and  Trade  Agreement  (‘CETA’)  was  signed  on  30  October 
2016 and the European Parliament gave its consent to CETA during its Plenary session of 15 
February 2017. CETA entered into force provisionally4 on 21 September 2017.  

2. 

EVOLUTION OF TRADE 

At  the  time  this  report  is  being  drafted  the  agreement  has  not  been  applied  for  a  entire 
calendar  year  so  it  is  too  early  to  draw  any  meaningful  conclusions  on  its  impact  on  trade 
flows of goods and services or the development of FDI. This information will be included in 
the next report to be delivered in 2019.  

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

CETA  establishes  a  number  of  institutional  bodies  to  facilitate  the  implementation  of  the 
agreement.  The  CETA  Joint  Committee  is  meant  to  supervise  and  facilitate  the 
implementation and application of the Agreement. The CETA Joint Committee is co-chaired 
by  the  Minister  for  International  Trade  of  Canada  and  the  Member  of  the  European 
Commission responsible for Trade.  

In addition, CETA establishes a number of specialised committees and dialogues to ensure 
overlook  the  implementation  of  the  Agreement  in  specific  areas,  the  work  of  which  is 
supervised by the CETA Joint Committee. These are the following: 

Specialised Committees: 

  Committee on Trade in Goods 
  Committee on Agriculture 
  Committee on Wines and Spirits 
  Joint Sectoral Group on Pharmaceuticals 
  Committee on Geographical Indications 
  Joint Management Committee for Sanitary and Phytosanitary (SPS) Measures 
  Joint Customs Cooperation Committee 
  Committee on Government Procurement 
  Committee on Services and Investment 
  Joint Committee on Mutual Recognition of Professional Qualifications 
  Financial Services Committee 
  Committee on Trade and Sustainable Development 

4  

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. 

16 

 
                                                 
  Regulatory Cooperation Forum 

Bilateral Dialogues and cooperation: 

  Bilateral Dialogue on Forest Products 
  Bilateral Dialogue on Raw Materials 
  Bilateral Dialogue on Biotech Market Access Issues  
  Enhanced Cooperation on science, technology, research and innovation. 
  Dialogue on Electronic Commerce 
  Bilateral Dialogue on Motor Vehicle Regulations 

In  line  with  the  Commission's  commitment  to  a  more  transparent  and  inclusive  trade  and 
investment policy and to allow all relevant stakeholders to follow and be informed about the 
implementation  of  CETA,  the  Commission  has  created  a  specific  "CETA  –  Meetings  and 
documents5"  webpage  where  the  schedules,  agendas  and  reports  of  all  above  mentoned 
specialised committees and dialogues can be found.  

In  the  course  of  2017  the  EU  and  Canada  have  been  working  to  make  operational  the 
administrative  and  institutional  provisions  of  CETA.  This  work,  which  was  initiated  in 
2017, with just over three months of provisional application, continued in 2018 including the 
setting up of the various CETA committees and dialogues agreeing on co-chairs and contact 
points for the various committees, timelines for the meetings and rules of procedure.  

The specialised committees and dialogues did not meet in 2017; the following committees and 
dialogues met in the first half of 2018 and the reports of these meetings are available on the 
above mentioned webpage:  

  Committee on Government Procurement (15 March 2018) 
  Enhanced  Cooperation  on  science,  technology,  research  and  innovation  (23  March 

2018) 

  Joint Management Committee for SPS Measures (26-27 March 2018) 
  Bilateral Dialogue on Biotech Market Access Issues (26 April 2018) 
  Committee on Geographical Indications (17 May 2018) 
  Bilateral Dialogue on Forest Products (23 may 2018) 
  Financial Services Committee (19 June 2018) 
  Joint Customs Cooperation Committee (22 June 2018) 
  Committee on Wines and Spirits (5 July 2018) 

Furthermore, the foundations of the Investment Court System (ICS) are already established in 
CETA but further work is required to operationalise the  system. The contours of the further 
work on the ICS has been agreed between EU and Canada at the time of CETA ratification 
and is also reflected in Commission and Council Declaration No 36.6 In the course of 2018, 
the  Commission  will  consult  with  Member  States  to  establish  the  EU  position  before 

5  http://trade.ec.europa.eu/doclib/press/index.cfm?id=1811  
6        Link  to  the  Council  Declaration:    http://data.consilium.europa.eu/doc/document/ST-13463-2016-REV-

1/en/pdf  

17 

 
 
                                                 
discussing  with  Canada  about  the  work  that  has  been  committed  to  during  the  CETA 
ratification process.  

4. 

IMPLEMENTATION  OF  THE  PROVISIONS  ON  TRADE  AND 
DEVELOPMENT 

SUSTAINABLE 

End of 2017, the EU and Canada launched a review on how to improve the effectiveness of 
the TSD provisions in CETA. A first  expert level  meeting took  place on 1 December 2017, 
with  the objective to  inform  each other on latest developments  and public debate on issues. 
The  EU’s  position  on  this  review  has  since  been  informed  by  the  Commission  Non-Paper7 
published, summarising 15 action points to strengthen the enforcement of TSD chapters. 
The  Non-Paper  reflects  the  results  of  a  seven-month  EU  wide  debate  with  Member  States, 
European  Parliament  and  with  a  broad  range  of  civil  society  organisations  and  defines  the 
EUs revamped approach to trade and sustainability in its trade agreements.  

CETA establishes a Civil Society Forum  – a consultation mechanisms for the TSD chapters 
composed  of  representatives  of  civil  society  organisations  on  both  sides.  In  the  EU,  in 
February 2018, the Commission launched a call for expressions of interest to become an EU 
CETA Domestic Advisory Group (DAG) Member. As a result of this call, the EU DAG under 
CETA was established and met for the first time on 13 July 2018. The Civil Society Forum 
will  meet  back-to-back  with  the  CETA  TSD  Committee  to  be  held  in  the  third  quarter  of 
2018.  

5. 

AGRICULTURE 

CETA  opened  new  opportunities  to  access  the  Canadian  market  for  EU  exporters  of 
agricultural  and  food  products.  CETA  has  eliminated  duties  on  91%  of  all  agricultural 
tariff lines at the entry into force of the agreement. The Agreement  significantly increases 
the quotas for the export of duty free cheese to Canada to 32 000 tons. It tackles some of 
the non-tariff barriers facing the wines and spirits sector and establishes a robust framework 
to continue work to address them. In addition under CETA, Canada has agreed to protect 143 
distinctive  food  and  drink  products  from  specific  towns  or  regions  in  the  EU.  The 
Commission has been closely following the implementation of afore mentioned areas in  the 
field of agriculture. 

Increased duty free quota for Cheese is one of the major gains for the EU in CETA. The 
EU  therefore  pays  particular  attention  to  ensure  that  the  administration  of  this  quota  by 
Canada  is  in  line  with  the  principles  agreed  in  CETA.  The  EU  will  continue  to  closely 
monitor the utilisation of the quota in subsequent years (5 900 tons in 2018 and up to 17 700 
tons as from 2022). The Commission will continue to raise concerns related to the Canadian 
quota management system. 

7  http://trade.ec.europa.eu/doclib/docs/2018/february/tradoc_156618.pdf  

18 

 
                                                 
Table 1. Utilisation of the CETA quota for EU cheese 

Tariff 
Code 

0406 

Cheese 
  of which: 

high quality 
industrial 
Source: Global Affairs Canada. 

Product 

Quota 2017 (kg)  Utilisation 2017 (kg)  Utilisation rate 

824 384 

745 299 
79 085 

765 820  

719 521 
46 299 

92.9% 

96.5% 
58.5% 

In relation  to  dairy products, Canada  eliminated its tariff on milk  protein  concentrate. The 
EU is following closely the developments in Canadian market and regulations linked to dairy 
products and in particular the compositional standard issue, which could affect EU exports of 
milk protein concentrates. 

Alcoholic  beverages,  in  particular  wines  and  spirits,  top  the  list  of  EU  agricultural  exports, 
accounting  for  over  40%.  A  number  of  discriminations  were  maintained  against  imported 
wines  and  spirits,  notably  at  provincial  level.  In  particular,  Ontario  and  Quebec  maintained 
ad-valorem  cost  of  service  differential  fees  after  the  entry  into  provisional  application  of 
CETA, despite a commitment in the agreement to move to volume-based fees. In addition, the 
federal  government  introduced  an  automatic  yearly  escalation  of  the  federal  excise  duty  on 
wine,  while  maintaining  the  exemption  for  wine  made  from  100%  Canadian  grape.  The 
Commission is working with the Canadian authorities to seek mutually agreed solutions to the 
concerns related to the alcoholic beverages sector. 

Since  the  entry  into  force  of  CETA  143  EU  food  and  drink  GIs  enjoy  full  protection  in 
Canada  from  imitations  at  a  level  comparable  to  that  offered  by  EU  law.  This  means  that 
Canada  will  have  to  prevent  (a)  the  use  of  a  geographic  name  for  products  that  do  not 
originate in the place of origin specified for the protected names; (b) the use of any means in 
the designation or presentation of a good that indicates or suggests that the good in question 
originates  in  a  geographical  area  other  than  the  true  place  of  origin  in  a  manner  which 
misleads  the  public  as  to  the  geographical  origin  of  the  good;  and,  (c)  any  other  use  which 
constitutes an act of unfair competition. Also the use of any of these GI names in Canada is 
now prohibited even when the true origin of the product is indicated or in translation or with 
an expression such as ‘kind’, ‘type’, ‘style’, ‘imitation’ or the like. For 8 EU GIs, including 
some  very  iconic  European  GIs  such  as  Asiago,  Gorgonzola,  Feta,  Fontina  or  Munster,  the 
use of these protected denominations is prohibited except for companies which already used 
the name on the Canadian market (‘grandfathering’ clause). The Commission will insist with 
Canada that the protection of these particular GIs is fully enforced and that Canada develops 
the means to ensure that companies which continue to use these terms do comply with CETA 
requirements. 

SPS measures  

The 1st CETA Joint Management Committee (JMC) meeting for SPS measures took place on 
March 26-27. The purpose of the meeting was to further expand the existing bilateral dialogue 
and cooperation on SPS issues affecting agri-food trade in light of CETA.  

19 

 
 
 
 
 
 
 
 
  With  regard  to  SPS  related  market  access  issues,  in  2017,  progress  was  seen  on 

several SPS EU export files: 

Processed  animal  protein  export  was  authorised  from  7  Member  States  as  a  result  of  a 
positive outcome of an audit carried out by Canada and coordinated by the Commission. Two 
harmonised  EU  export  certificates  (for  porcine  blood  and  rendered  products  of  non-animal 
origin) were negotiated by the Commission on behalf of the Member States and are used for 
export. 

The EU and Canada agreed to amend the harmonised export certificate for ornamental bird 
feed that allows for Member States to export from storage centres located in other provincial 
control units than were the manufactures are based. 

Exports  were  unduly  restricted  by  Lobesia  botrana  (European  grapevine  moths)  related 
requirements. Since 1 Jan. 2018, kiwi fruit (and some other fruits) are no longer covered by 
Lobesia rules. 

Under the first SPS JMC meeting both sides identified a path forward to further identify ways 
to continue the important cooperation on animal welfare and antimicrobial resistance. 

  Several SPS issues are still outstanding and are being further discussed with Canada 

with a view to finding a solution.  Some examples are:  

Canada is not recognising the EU Member State Meat Inspection Systems despite a positive 
follow-up  of  the  Canadian  inspection  carried  out  in  2015.  As  a  result  of  one  third  of  the 
Member States do not have access to the Canadian market for meat, produced under the EU 
control systems and complying with the additional Canadian import requirements. 

Export  of  EU  bovine  semen  is  limited  only  to  Schmallenberg  Virus  serologically  negative 
animals,  while  no  distinction  from  serological  positive  and  serological  negative  animals 
should be applied. Work on harmonised EU export certificates is slowed down by Canada on 
equine  semen,  porcine  semen,  hatching  eggs,  day-old-chicken,  poultry  meat  and  its 
products. Export from the EU to Canada is not authorised for potato mini-tubers and fresh 
tomato  with  vines,  stems,  and  calyces  due  to  restrictive  plant  health  Canadian  import 
conditions. Also, for some plant commodities no alternatives are recognised by Canada for the 
use of methyl bromide as a pest mitigating measure for trade.  

Canada does not accept labelling requirements for the origin of grains used in preparation of 
dried pasta introduced by Italy. 

6. 

CONCLUSIONS AND OUTLOOK 

CETA is the most ambitious and progressive trade agreement the EU has concluded to date 
and  the  most  far  reaching,  both  in  terms  of  market  access  and  trade  rules,  in  particular  in 
setting new standards for investment rules.  

CETA provides for significant savings on customs duties by eliminating duties on 99% of all 
tariff  lines,  of  which  98%  have  been  scrapped  at  entry  into  force.  It  opens  the  Canadian 
market  for  EU  agricultural  products,  in  particular  for  processed  agricultural  products  and 
cheeses  where  the  EU  has  strong  economic  interests.  It  also  offers  the  protection  of  143 
distinctive EU food and drink products labelled with GIs. 

20 

 
CETA  provides  for  a  significant  further  opening  of  the  Canadian  procurement  market, 
including at provincial and local level, and gives unparalleled services market access for the 
EU,  including  new  market  access  in  maritime  services,  and  more  globally  establishes  legal 
certainty in all key economic sectors. It also includes provisions to facilitate the movement of 
professionals and the recognition of qualifications.  

The  Commission  will  continue  its  work  to  ensure  correct  implementation  of  CETA  in  all 
areas and will collaborate with EU Member States and stakeholders in order to make sure that 
EU companies and citizens take full advantages of the benefits created by CETA.  

21 

 
 
 
ANNUAL REPORT ON THE IMPLEMENTATION OF THE  
EU-SOUTH KOREA FREE TRADE AGREEMENT8 

INTRODUCTION 

1. 
1  July  2018  marked  the  7th  anniversary  of  application  of  the  Free  Trade  Agreement  (FTA; 
referred to  as  ‘the Agreement’) between the EU  and its Member States and the Republic of 
Korea (in this  report referred to  as "Korea"). The FTA has been provisionally applied since 
July  2011.  On  13  December  2015  it  entered  formally  into  force  after  ratification  by  EU 
Member  States.  The  Additional  Protocol  to  the  FTA  to  take  into  account  the  accession  of 
Croatia to the EU has been provisionally applied since 26 May 2014 and entered into force on 
1 January 2016. 

The EU-Korea FTA is the first of a new generation of comprehensive FTAs and the EU’s 
first trade deal with an Asian country.  

This is the 6th Annual Report on the implementation of the EU-Korea FTA. It is prepared in 
accordance with the provisions of  Regulation (EU) No 511/2011 of the European Parliament 
and of the Council of 11 May 2011 implementing the bilateral safeguard clause of the Free 
Trade Agreement between the European Union and its Member States and the Republic of 
Korea9. According to Article 13(1) of this Regulation, the Commission shall make public an 
annual report on the application and implementation of the Agreement. This report responds 
to this requirement (see section 5 below).  

On 18 May 2017 the European Parliament adopted a resolution10 to take stock of the first five 
years  of  implementation  of  the  FTA  between  the  EU  and  Korea,  acknowledging  the  very 
positive  economic  results  of  the  agreement  for  the  EU,  while  also  expressing  concerns  on 
some outstanding points and in particular as regards labour rights in Korea. 

2. 

EVOLUTION OF BILATERAL TRADE 

2.1. 

Trade in Goods 

1.1.1.  Overall Evolution  

Overall, Korea was the EU’s 8th largest partner in terms of total EU external trade in 2017 and 
the 4th largest FTA trade partner. Imports from Korea represented 2.6% of total imports into 
the EU in 2010, and 2.7% in 2017, making Korea the EU’s 8th largest import origin in 2017. 
EU exports to Korea represented 2.1% of total EU exports in 2010, and 2.7% in 2017. On the 
Korean side, the EU’s share in total Korean imports increased from 9.1% before the start of 
application of the FTA to 12.2% in 2017, making the EU the 2nd largest Korean import origin 
(after China). Over the same period of time, the EU’s share in total Korean exports declined 

8    OJ L 127  https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=OJ:L:2011:127:TOC 
9  OJ L 145, 31.5.2011, p. 19. 
10  http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P8-TA-2017-

0225&language=EN&ring=A8-2017-0123  

22 

 
                                                 
from  11.5% to  9.3%%11, making the EU the 3rd largest  Korean export market.  The EU was 
Korea’s 3rd largest partner in terms of total trade (after China and US). 

Between  2010  and  2017,  EU  exports  to  Korea  increased  by  a  significant  77%,  from  some 
EUR 28 billion to EUR 49.5 billion. EU imports from Korea increased by some 27% over the 
same  period.  As  illustrated  in  Graphic  1  below,  the  initial  EU  deficit  in  goods  trade  with 
Korea of EUR 11.5 billion turned into a trade surplus in 2013 but in 2017 Korea again shows 
a small surplus of EUR 506 million. 

Graph 1: EU Exports to and Imports from Korea, 2010-2017  

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

Source: Eurostat June 2018 

Between  2016  and  2017,  total  EU  exports  to  Korea  increased  by  12.2%  while  EU  imports 
from Korea increased more strongly, by 20.1% supported by the revival of the EU economy 
and  strong  domestic  demand  on  the  EU  side.  Buoyant  bilateral  trade  between  the  EU  and 
Korea is in line with the overall strong global trade dynamics observed in the recent past. EU 
trade  with  Korea  accelerated  more  robustly  (16%  on  average)  in  2017  compared  to  overall 
external  trade  of  the  EU  which  increased  by  8%  in  2017  compared  to  2016,  potentially 
indicating i.a. the positive impact of the EU-Korea FTA in place.  

Sector  wise,  the  strongest  increase  of  EU  exports  to  Korea  was  registered  i.a.  in  mineral 
products, arms and ammunition and optical and photographic instruments while the strongest 
increase in EU imports was in chemical products and transport equipment. 

11  The EU's share in total Korean imports refers to Korea's imports from the EU as a share of Korea's imports 
from  the  world.  The  EU's  share  in  total  Korean  exports  describes  Korea's  exports  to  the  EU  as  a  share  of 
Korea's exports to the world. 

23 

20102011201220132014201520162017EU imports from South Korea39,53436,31238,01435,83738,78042,37041,65450,026EU exports to South Korea27,96132,51537,81539,91143,20647,78744,12749,519trade balance-11,573-3,797-1994,0744,4265,4172,473-506EU28 merchandise trade with South Korea (in million euro) 
 
 
 
                                                 
1.1.2.  Trade in agricultural goods  

With  respect  to  trade  in  agriculture  goods,  last  year  saw  a  more  dynamic  growth  in  EU-
Korea bilateral flows, compared to the EU overall external trade in this sector. Between 2016 
and 2017, EU exports to Korea and imports from Korea in  the agri-food sector increased by 
10% and 11%  respectively, that is  a more robust growth rate than the one observed for EU 
agri-food exports and imports across all FTA partners taken together (which corresponded to 
4% and 5% respectively). In 2017, the EU registered a surplus of 2.6 billion EUR in agri-food 
trade with Korea. Looking at the time period between 2010 and 2017, EU agri-food exports to 
Korea  have  increased  by  113%,  imports  from  Korea  by  212%  (albeit  the  latter  from  a  very 
low value, from 65 to 203 million EUR). Main products exported by the EU are pork (22% of 
EU agricultural exports to Korea), followed by beer, cheese, chocolate, confectionery and ice 
cream, spirits and liqueurs and wine.  

The  main impediments  to  expanding trade remained unchanged in  2017:  Approvals  of EU 
beef  (due  to  a  Bovine  Spongiform  Encephalopathy  (BSE)-related  import  ban)  are  still 
pending, for some Member States since 2004, and also for poultry there was no progress in 
eliminating market access barriers. Also for pork exports from the EU, the country-wide ban 
for pork imposed on Poland due to African Swine Fever (ASF) has not been lifted by Korea. 
South  -Korea  recently  filed  applications  for  beef  exports  to  the  EU,  which  might  indicate  a 
stronger trade orientation in the Korean administration. 

Table 2. EU-Korea trade in agrifood (2016-2017) 

Source: ISDB 

For  agricultural  products  that  are  sensitive,  the  EU-Korea  FTA  created  specific  tariff  rates 
quotas (TRQs). The fill rate of the import quotas applied by Korea to goods originating in the 
EU improved for 8 out of 11 product groups. Only in case of oranges the TRQ was not used 
in the two reference periods. 

24 

mio €annual %EU28 imports1832032010.9%EU28 exports2 6312 8912609.9%Balance2 4482 688240Total trade2 8153 0942799.9%Source Trade G2 Statistics/ISDBAgrifood trade EU28 with South KoreaSouth Korea20162017Growth 
 
 
 
Table 3 EU-Korea FTA TRQ Fill Rates 

Source: Korean authorities 

1.1.3.  Preference Utilisation Rates 

In 2017, the PUR on exports from the EU to Korea reached 74.3%, the highest rate ever. 
This compares to 71% in 2016, 68% in 2015, and 65% in 2014. 

The PUR on imports into the EU from  Korea  reached 88% in  2017, increasing  gradually 
from 87% in 2016, 85% in 2015 and 84 % in 2014.  

2.2. 

Trade in Services and Foreign Direct Investment (FDI)  

EU trade in services with Korea represents approximately 1% of extra-EU trade in services. 
The EU has a trade surplus in this field of some EUR 6 billion in 2016.  

In 2016 EU exports of services amounted to EUR 12.6 billion. This represents an increase of 
70%  compared  to  2010  (though  a  decrease  of  3.6%  compared  to  2015).  In  the  same  year 
2016,  EU  imports  of  services  from  Korea  amounted  to  EUR 6.6 billion.  This  represents  an 
increase of 38% compared to 2010 (but a 3.3% decrease compared to 2015).  

Table 4: EU-Korea trade in total services (million EUR) 

Source: Eurostat (BOP) 

As  regards  FDI,  in  2016,  EU  outward  FDI  stocks  to  Korea  were  equal  to  EUR 50.3 billion 
and EU inward FDI stocks from Korea totalled EUR 19.3 billion thus the EU stocks in Korea 
were about 2.5 times bigger than Korean stocks in the EU. EU inward FDI stocks increased 
by 46% and outward FDI stocks increased by 34% between 2010 and 2016.  

25 

 
 
 
Table 5: EU-Korea FDI (million EUR) 

Source: Europsat (BOP)  

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The institutional provisions of the EU-Korea FTA (Article 15) established seven Specialised 
Committees,  seven  Working  Groups  and  an  Intellectual  Property  (IP)  Dialogue.  The  annual 
meeting of the Trade Committee at ministerial level plays a supervisory role and ensures that 
the FTA operates properly. From January 2017 till May 2018, most meetings of committees 
and  working  groups,  including  the  Trade  Committee,  took  place  in  the  EU,  as  summarised 
below.  

The  Trade  Committee  met  for  the  7th  time  on  19  January  2018  in  Brussels,  co-chaired  by 
Commissioner  for  Trade,  Ms  Malmström,  and  Korea’s  Minister  for  Trade,  Industry  and 
Energy, Mr. Kim. Taking stock of the last six years of the FTA implementation the EU side 
mentioned  the  more  balanced  trade  flows  between  the  EU  and  Korea,  also  pointing  to  the 
EU’s industries perception of a deteriorating business environment in Korea. A trade surplus 
in goods on the EU side remains a concern on the Korean side. 

As regards FTA amendment discussions, the EU reiterated its interest in amending provisions 
of  the  FTA  even  in  a  form  of  a  small  amendment  package  limited  to  the  Rules  of  Origin 
Protocol. Korea would like to see a discussion on implementation of rules of origin issues in 
the Customs Committee and of amendments issues in the informal FTA amendment working 
group. 

The  EU  reiterated  serious  concerns  on  insufficient  progress  on  the  ratification  and 
implementation of International Labour Organization (ILO) conventions and on protection of 
labour rights in Korea, pointing to the European Parliament and Civil Society call for a formal 
dispute  settlement  procedure  under  the  TSD  chapter  of  the  FTA.  The  EU  also  strongly 
emphasised  the  need  to  allow  EU  beef  exports  to  Korea.  Other  issues  addressed  included: 
clarifications on the EU modernisation of Trade Remedy rules; other SPS and customs related 
issues,  including  Korean  market  access  of  chicken  soup  with  ginseng,  Surimi  (fish);  IPR 
issues  including  Public  Performance  Rights  and  the  addition  of  46  EU  GIs  to  the  list  of 
protected GIs under the FTA; and services related issues. 

Both sides agreed to follow-up the discussed implementation and market access issues in the 
context of the respective Specialised Committees and Working Groups.  

On  7  April  2017,  the  Customs  Committee  met  in  Seoul.  It  addressed  issues  related  to  the 
rules  of  origin,  such  as  the  interpretation  of  primary  ingredient  of  surimi  base,  origin 
verification procedures and the approved exporter system, as well as the technical update of 
product  specific  rules  from  HS2007  to  HS2017.  The  parties  also  discussed  cooperation  on 
European  Anti-fraud  Office  (OLAF)  investigations  on  the  circumvention  of  trade  defence 
measures concerning stainless steel tube and solar panel modules originating in Chin. The EU 

26 

 
 
provided a general explanation on the legal and practical requirements that need to be fulfilled 
for the mutual recognition of Authorised Economic Operators.  

The  6th  meeting  of  the  Working  Group  on  Pharmaceuticals  and  Medical  Devices  took 
place  on  12  June  2017.  In  the  area  of  pharmaceuticals,  both  sides  discussed  possibilities  to 
enhance  regulatory  cooperation  via  various  channels,  both  bilaterally  and  multilaterally  via 
the  ICH  (International  Council  for  Harmonisation  of  Technical  Requirements  for 
Pharmaceuticals)  platform.  Moreover,  upon  EU  request  the  Korean  side  defended  their 
revised  pricing  policy  for  pharmaceuticals,  notably  with  regard  to  their  new  so-called  ‘7.7 
pricing  policy’  which  amends 
to  satisfy  for  selecting  “Innovative 
Pharmaceutical  Companies”  (IPCs)  to  reward  innovation  for  new  pharmaceutical  products. 
Concerning  medical  devices,  the  WG  offered  the  opportunity  to  exchange  information  and 
provide clarification i.a. on new UDI (Unique Device Identifier) rules of both Korea and the 
EU.  

the  conditions 

The  Working  Group  on  Motor  Vehicles  and  Parts  met  in  Seoul  on  13  June  2017  and 
addressed environmental issues, technical standards, harmonization, convergence and market 
access issues. EU and Korea concluded an agreement on the technical update of Annex 2-C. 
During  the  Working  Group,  the  parties  discussed  further  sharing  of  information  on  Real 
Driving  Emissions  and  EU  clarified  aspects  of  the  EU  Whole  Vehicle  type  approval 
(ECWVTA).  Market  access  issues  discussed  included,  inter  alia,  truck-tractors,  self-
certification  and  marking  of  car  parts,  restricted  market  access  for  certain  vehicle  types, 
vehicle  width  limit,  homologation  certificates,  policies  affecting  imports  of  motorbikes  and 
extended producers responsibility for end of life vehicles .  

The Working Group on Chemicals met for the 5th time on 14 June 2017, following a break 
since 2015. Both sides engaged in useful exchanges on chemicals-specific issues of interest to 
both  sides,  including  the  functioning  of  the  EU’s  REACH  regulation  and  the  Korean  ‘K-
REACH’ legislation. Furthermore, the Korean side replied to  a set of specific EU questions 
concerning  the  planned  adoption  of  the  draft  K-BPR  (Biocidal  Products  Regulation) 
legislation  which  –  in  case  it  is  successfully  adopted  by  Korea’s  National  Assembly  –  is 
expected to be implemented as of January 2019. Importantly, the Korean side confirmed that 
there  will  be  a  10-year  transition  period  following  the  entry  into  force  of  the  K-BPR 
legislation, which will allow industry to adapt to the new K-BPR regime.12  

The Committee on SPS Measures  met in  Sejong/Korea on 6 September 2017. The Parties 
discussed  pending  applications  for  import  of  EU  beef,  the  recognition  of  regionalisation 
measures  for  avian influenza and  African swine  fever, and policies related to  the  control of 
hepatitis E. The EU also raised certification issues related to goods sourced or manufactured 
in  one  EU  Member  State  and  shipped  to  Korea  via  another  Member  State  as  well  as  the 
quantity  of  sample  collection  for  compliance  testing  at  Korean  border  controls.  Korea 
requested to discuss the pending application for export of chicken-ginseng soup to the EU as 
well as new applications related to Korean beef and dairy products. The EU informed about 
the revised phytosanitary law laid down in Regulation (EU) 2016/203113 and offered a one-

12  This  is  problematic  due  to  its  large  scope:  the  draft  Korean  BPR  Act  covers  even  sellers  and  distributors 
whereas  under  the  EU's  BPR  only  manufacturers  and  importers  (or  "Only  Representatives"  designated  by 
foreign  companies)  have  to  comply  with  the  approval  and  authorisation  requirements  as  regards  active 
substances and biocidal products. 

13 OJ L 317, 23.11.2016  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32016R2031 

27 

 
                                                 
day seminar to discuss measures related to the prevention and control of BSE that was held in 
Seoul on 7 September 2017. 

On  14  June  2017,  the  6th  meeting  on  the  Trade  in  Goods  Committee  took  place  in  Seoul. 
Regarding the overall implementation of the FTA both sides assessed it as an exemplary FTA 
that  realises  a  high  level  of  comprehensive  market  opening,  playing  a  significant  role  as  a 
useful  platform  for  bilateral  economic  cooperation.  Next,  the  results  of  the  Electronics 
Dialogue  that  took  place  beforehand  were  discussed,  which  covered  a  wide  range  of  issues 
(risk assessment review of Articles 4 and 5 of Annex 2-B of the FTA, extension of the scope 
of Annex 2-B to include radio equipment testing, state of play of the implementation of the 
EU  Eco-design  Directive  for  TV  and  Display,  EU  Eco-design  regulations  implementation, 
notification  of  list  of  laboratories/acceptance  of  test  reports  and  EU  Energy  labelling 
regulations implementation). Market access issues of the EU cosmetics industry were raised 
again, namely the amendment of Korean law related to the reporting of cosmetic ingredients. 
Furthermore,  new  alcohol  labelling  requirements  in  Korea  and  labelling  restrictions  on  EU 
imported  foods  and  livestock  products  were  raised.  The  EU  side  also  requested  more 
information on the Korean legislation regarding prohibited subsidies, expressing concerns on 
Korean support plans for the local shipbuilding industry.  Information was also requested on 
safety certification for machinery in Korea. Finally, the Parties discussed preparations of the 
Trade Committee.  

On 7 July 2017, back-to-back with the International KTC Seoul Forum on Trade Remedies, 
the  EU  and  Korea  held  their  annual  meeting  of  the bilateral  Trade  Remedy  Cooperation 
Working Group, established under the EU-KOR Free-Trade Agreement, in Seoul. The two 
sides updated each other on latest developments in domestic trade remedy laws, policies and 
practice.  The  EU  side  notably  informed  Korea  of  the  progress  on  two  EU  draft  legislative 
proposals,  namely  the  so-called  ‘modernisation  of  trade  defence  instruments’  and  the  ‘new 
anti-dumping methodology’ which entered into force in the meantime.14. The two sides shared 
statistics  on  Trade  Defence  cases  and  exchanged  views  on  global  trends  in  trade  remedy 
investigations, and related WTO litigation. 

The meeting of the Working Group on Government Procurement took place in Seoul on 
13  September  2017.  The  Parties  provided  information  on  recent  legislative  developments, 
discussed  market  access  issues,  in  particular  concerning  the  railway  sector,  and  exchanged 
views  on  cooperation  on  SME  policy  now  that  Korea’s  Small  and  Medium  Business 
Administration  has  been  transformed  into  a  fully-fledged  ministry  with  policy-issuing 
capabilities. Among other issues, the EU inquired about a possible interest from the Korean 
side to integrate a machine translation tool for tender notices in its e-procurement portal. The 
Parties agreed to further enhance their cooperation. 

On  13  April  2018,  the  Committee  on  TSD  met  in  Seoul.  The  parties  exchanged  views  on 
their respective  environmental  and labour policies. Chapter 5 below presents  these issues in 
more detail. 

The  5th  EU-Korea  meeting  of  the  Cultural  Cooperation  Committee  was  held  on  9  April 
2018  in  Brussels  and  it  was  followed  by  a  2  day  study  visit  to  Leuven  and  Brussels.  The 

14 OJ L 338/1 2017 and OJ L148 2018 

28 

 
                                                 
topics discussed were cultural exchange, culture and cities, new developments in the cultural 
and creative sectors and the protection of cultural heritage sites and historic monuments.  

The  Intellectual  Property  Dialogue  took  place  in  Brussels  on  29  May  2018.  Both  sides 
provided updates on their legislative and policy developments as well as relevant court cases, 
in particular on copyright, patents and enforcement. The EU side expressed its concerns about 
the lack of implementation of the FTA provisions on public performance rights, pending the 
revision by Korea of the Copyright Act, and underlined the economic importance for both the 
EU and Korea of this issue. 

The 6th meeting of the Working Group on GIs was held in Brussels, on 30 May 2018. The 
extension  of  the  initial  list  of  EU  GIs  remains  a  significant  irritant  with  respect  to  the 
implementation  of  the  FTA  provisions  on  protection  of  intellectual  property.  With  the 
approximation  of  both  sides’  positions  on  the  draft  rules  of  procedures  of  the  said  Woking 
Group, the EU is now expecting Korea to now examine the 2014 EU request to  add 46 GIs to 
the list of GIs protected under  the FTA.  

4. 

IMPLEMENTATION  OF  THE  PROVISIONS  ON  TRADE  AND 
DEVELOPMENT

15 

SUSTAINABLE 

The  Commission  stepped  up  its  engagement  with  the  new  Korean  administration  on 
implementing commitments under the TSD Chapter related to labour and environment.  

The sixth meeting of the TSD Committee was held in Seoul on 13 April 2018, back-to-back 
with  the  sixth  Civil  Society  Forum.  This  allowed  the  EU  and  Korea  to  continue  their 
dialogue and cooperation on implementing the TSD Chapter. 

With  regard  to  the  discussion  on  labour  policies,  the  EU  strongly  emphasized  the  need  of 
ensuring  progress  in  the  implementation  of  the  shared  labour  commitments  under  TSD 
Chapter of the Korea-EU FTA, notably commitment to ‘respect and realise in their laws and 
practices’ the ILO fundamental rights, including the freedom of association and the right to 
collective bargaining and the commitment to make ‘continued and sustained efforts’ towards 
ratifying of outstanding ILO conventions (that is, Convention 87 on freedom of association; 
Convention  98  on  the  right  to  organize  and  collective  bargaining;  Convention  29  on  forced 
labour; and Convention 105 on abolition of forced labour). 

In  this  context  and  ahead  of  the  sixth  TSD  Committee  meeting  the  Commission  used  a 
multitude of other channels to communicate its concerns regarding the labour rights situation 
in Korea and to press for further progress. The concerns were raised at the Trade Committee, 
in  correspondence  from  the  Commissioner  for  Trade  to  her  Korean  counterpart  and  in 
numerous bilateral contacts, including by the EU Delegation in Korea. 

In response to a series of detailed EU questions Korea provided information on the domestic 
context  and  the  efforts  the  government  is  making  towards  ratification  of  four  outstanding 
fundamental ILO conventions on their reforms on freedom of association.  

In this context Korea informed that the government established an  Expert Committee with 
the  task  of  analysing  of  differences  between  national  laws  and  the  outstanding 

15 For the latest report of the TSD Committee see: http://trade.ec.europa.eu/doclib/html/157105.htm  

29 

 
                                                 
fundamental ILO conventions, and of producing recommendations by July 2018. Based on 
these  recommendations,  the  tripartite  partners16  are  supposed  to  discuss  specific  ways  to 
improve laws and systems necessary for the ratification of the ILO fundamental conventions. 
The Korean government expects that the outcome of these tripartite discussions at the end of 
2018 will allow the government to submit a legislative package to the National Assembly at 
the earliest possible moment. 

The EU welcomed this move and emphasized that it will monitor the process closely and will 
react  accordingly.  The  Commission  considers  that  further  enhanced  bilateral  engagement  in 
this regard as necessary. The EU also provided information on the EU Pillar of Social Rights. 

The TSD Committee meeting also discussed environmental policy issues, where the EU and 
Korea exchanged information on their respective actions on green growth, circular economy 
and climate change.  

Korean provided a  general  overview of the  Framework Act  on Resource  Circulation,  which 
entered  into  force  as  of  1  January  2018.  The  EU  explained  its  strategy  for  plastics  while 
emphasizing  the  need  for  a  new  approach  to  the  management  of  micro  plastics.  Both  sides 
mutually agreed to provide various types of information in the follow-up to the meeting and 
deepen cooperation on plastic management. 

As regards the climate policies, Korean explained how Paris Agreement is being implemented 
in Korea and both parties further discussed ways to strengthen cooperation on climate change. 
The EU side mentioned that the cooperation on the Emissions Trading Scheme between the 
EU and Korea has been successfully operated so far, yet more profound policy discussions on 
carbon  pricing  would  be  desired.  The  EU  also  referenced  to  initial  discussions  on  the  new 
cooperation  project  on  the  implementation  of  the  Paris  Agreement  discussed  at  the  Joint 
Committee in Brussels in December 2017 and proposed to advance together this project with 
the target of organizing the relevant events in 2019, possibly at the margins of next UNFCCC 
National Adaption Plans (NAP) Expo in April 2019. Both sides agreed to share policies and 
information on carbon pricing and other relevant areas in the follow-up to this meeting. 

The implementation of the TSD Chapter was also supported by an active participation from 
civil society through the EU and Korean Domestic Advisory Groups (DAG) which have held 
a  series  of  regular  meetings  and  exchanges  over  last  year.  The  EU  DAG  was  particularly 
active in presenting members’ opinions regarding the labour rights situation in Korea.  

The  sixth  meeting  of  the  Civil  Society  Forum,  which  brings  together  the  EU  and  Korean 
DAGs,  took  place  on  11  April  2018  in  Seoul.  It  had  insightful  discussions  and  made 
recommendations to the parties on circular economy, environmental risk factors, gender pay 
gap  and  on  labour  standards.  The  Forum  issued  recommendations  in  the  form  of  a  Joint 
Statement  by  the  Chairs  of  the  Korea  DAG  and  the  EU  DAG  to  the  EU  and  Korea  on  the 
implementation of the TSD Chapter. 

16 Government, representatives of the business community and representatives of the workers (trade unions). 

30 

 
                                                 
5. 

SPECIFIC AREAS SUBJECT TO REPORTING OR MONITORING 

In accordance with article 3 (3) of Regulation (EU) No 511/2011 of the European Parliament 
and  of  the  Council  of  11  May  2011  implementing  the  bilateral  safeguard  clause17,  the 
Commission  shall  present  an  annual  monitoring  report  to  the  European  Parliament  and  the 
Council on updated statistics on imports from Korea of products in sensitive sectors and those 
sectors to which monitoring has been extended. The evolution of EU imports from Korea in 
the  sectors  covered  by  the  monitoring  (cars,  textiles,  electronics)  and  the  results  of  the 
specific monitoring on duty drawback and TRQs are presented below. 

In order to apply a unified methodology across the Annual Report on FTA Implementation, 
the current report data is presented in calendar years and not in July-June intervals unlike in 
the  previous  monitoring  reports.  Furthermore,  for  sake  of  completeness  and  to  get  a  better 
assessment  of  the  situation  and  trends  of  exports,  this  report  uses  statistical  regime  4  of 
Eurostat  (representing  total  trade  including  trade  under  inward  and  outward  processing 
procedures)  unlike  previous  monitoring  reports,  which  were  based  on  statistical  regime  1 
(normal trade). The comparison under the monitoring exercise is based mainly on quantities 
imported from Korea to the EU, i.e. units in the case of cars and 1 000 kg in the case of car 
parts, textiles and electronics. 

(i) Car sector 

EU imports of cars from Korea increased by 16% in 2017 in number of cars, compared to the 
previous year. The current level of car imports is significantly higher (by 55%) compared to 
2010, the last year before the implementation of the FTA. 

Table 6. EU-Korea trade in cars  

 (ii) Textile sector 

The decreasing trend in textile imports observed since 2013 stabilised in 2017. EU imports of 
textiles from  Korea increased slightly in  value terms in  the 7th  year of FTA implementation 
compared  to  2016  but  remained  unchanged  in  terms  of  volume,  hovering  at  around 
2 million kg. on a quantitative basis. Imports in 2017 were lower compared to 2010, the last 
year before the implementation of the EU-Korea FTA. 

17  OJ L 145, 31.5.2011, p. 19. 

31 

 
 
                                                 
Table 6 EU-Korea trade in textiles 

(iii) Electronics Sector 

EU imports of electronic goods from Korea have been decreasing in quantitative terms for the 
last three years. Imports at around 4 million kg in 2017 were lower compared to the previous 
year, and significantly below the level of some 9 million kg reached in the reference base year 
of 2010. 

Table 7 EU-Korea trade in electronics 

Source: Comext (to be confirmed by G2) 

Duty drawback 

In  line  with  the  Article  14  of  the  Rules  of  Origin  Protocol,  a  specific  monitoring  has  been 
carried out on key car parts and electronics. 

Source: Comext  

32 

 
 
 
 
 
In  conclusion,  there  was  no  significant  increase  in  imports  of  car  components  and  key 
electronics from China and Japan to Korea in 2017 compared to 2016. Based on these trade 
statitics, it is not possible to establish a link between the allowance of duty-draw back and the 
increase in EU imports of cars from Korea. 

6. 

PROGRESS, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

Enforcement of the TSD chapter of the FTA, i.e. insufficient progress on the ratification and 
implementation  of  ILO  conventions  and  on  protection  of  labour  rights  in  Korea  remains  a 
serious concern to the EU. The Commission stepped up the engagement with Korea in order 
to  address  them,  and continue its cooperation with  the EU DAG and  with  the Civil  Society 
Forum comprised of stakeholders from all sides. 

The EU has a particular interest in exporting again beef to the Korean market which has been 
closed  to  all  EU  imports  since  January  2001.  The  acceptance  of  the  principle  of 
regionalisation  for  animal  diseases  by  Korea  is  another  important  topic  in  the  sanitary  and 
phyto-sanitary area. 

In  the  area  of  Intellectual  Property,  Korea  needs  to  establish  a  remuneration  system  for 
public  performance  rights.  It  also  needs  to  agree  to  protect  additional  GIs  and  accept  the 
principles  of  the  regulatory  framework  for  postal  services.  Other  market  access  and 
implementation issues relate inter alia to electronics, cars and machinery.    

Korea also needs to accept the principles of the regulatory framework for postal services. 
Other  market  access  and  implementation  issues  relate  inter  alia  to  electronics,  cars  and 
machinery.  

Improvements in the areas of customs procedures could contribute to increase the PUR, and 
further  facilitate  the  participation  of  small  and  medium  sized  enterprises  (SMEs). 
Technological changes, for instance in the area of electronics, will require adaptations.18 

7. 

CONCLUSIONS AND OUTLOOK 

Over the seven years of application, the EU-Korea FTA brought tangible results as illustrated 
by the strong and balanced bilateral trade flows. Though some difficulties persist as outlined 
in section 7, in the vast majority of areas the implementation works well and strongly supports 
economic  development  on  both  sides.  This  was  also  recognised  in  the  resolution  of  the 
European Parliament which was adopted on 18 May 201719. 

Full and correct implementation of the EU-Korea FTA continues to be of key importance, in 
order to bring the expected benefits to both sides. The specialised committees and working 
groups  established  under  the  EU-Korea  FTA  will  continue  to  discuss  and  seek  solutions  to 
the  remaining  implementation  and  market  access  issues,  with  the  aim  to  produce  tangible 
results. They have also proven to be useful fora to discuss current and up-coming regulatory 
developments and areas of future cooperation.  

18  Such  is  the  case  of  radio  equipment  given  that  the  use  of  radio  components  in  electronic  products  is 

exponentially increasing and many devices now use this technology for connection purposes. 

19  http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P8-TA-2017-

0225&language=EN&ring=A8-2017-0123 

33 

 
                                                 
Furthermore, the Commission will pursue exploratory discussions with Korea on a package of 
amendments to the FTA or its protocols, with the aim of reaching a balanced and mutually 
agreeable outcome.  

34 

 
 
 
ANNUAL REPORT ON THE IMPLEMENTATION  
OF THE EU-COLOMBIA/ECUADOR/PERU TRADE AGREEMENT20 

1. 

INTRODUCTION 

2017  marked  the  fifth  year  of  implementation  of  the  Trade  Agreement  between  the 
European Union and its Member States, of the one part, and Colombia and Peru, of the other 
part21,  as  amended  by  the  Protocol  of  Accession  of  Ecuador  (‘the  Agreement’).  The 
Agreement has been provisionally applied with Peru since March 2013, with Colombia since 
August 2013, and with Ecuador since 1 January 2017. Ratification by Member States of both 
the Trade Agreement and the Protocol of Accession of Ecuador is ongoing22. This is the first 
report which accounts for the implementation of the Agreement with all three Andean partner 
countries.  

The Agreement was also amended through the Protocol of Accession of Croatia to the EU. 
After completion of the ratification procedure by Peru on 6 April 2017, this Protocol entered 
into force with Peru on 1 May 2017. The ratification process by Colombia is ongoing.  

This report shows that the results after almost five years of provisional application in the 
case of Peru and Colombia, and one year in the case of Ecuador, are positive. Bilateral trade 
in 2017 increased with  all three countries, and the Agreement had a stabilising effect in the 
context  of  declining  commodity  prices  which  affected  the  economy  of  Andean  Community 
countries.  The  Agreement  offers  tariff-free  access  for  virtually  all  industrial  and  fishery 
products  from  the  three  countries,  and  substantial  tariff  preferences  for  the  few  agricultural 
products  which  were  not  fully  liberalised,  with  very  few  exceptions.  This  improved  market 
access,  more  predictable  trade  and  investment  relationship  and  the  better  rules  have  helped 
partner countries diversify trade and notably Andean Community country exports. Regarding 
EU  exports,  several  industrial  sectors  including  pharmaceuticals,  machinery  and  vehicles, 
have also strongly benefitted from the improved market access.  

The  Parties  are  dedicating  important  resources  to  the  implementation  process  through  the 
work  in  the  bodies  under  the  Agreement,  notably  the  Trade  Committee  and  its  eight 
specialised Sub-committees.  The Trade Committee  and its Sub-Committees  have met on an 
annual  basis  since  the  provisional  application  of the  Agreement  with  Colombia  and  Peru  in 
2013. In 2017, Ecuador attended the meetings for the first time. The Trade Agreement with 
Colombia, Ecuador and Peru is based on commitments on liberalisation of goods, services and 
procurement  markets  taken  bilaterally  between  the  EU  and  each  Andean  partner..  The 
institutional  structure  of  the  Agreement  is  common  and  the  Trade  Committee  and  the  Sub-
committees take place in the presence of all Parties, with an agenda addressing the bilateral 
issues that may arise between the EU and each Andean FTA partner country, or between the 
EU  and  the  three  Andean  partner  countries,  as  relevant.  In  November  2017,  the  Trade 
Committee and Sub-committees met in Lima (Peru). While not all market access issues have 
been solved, constructive discussions on issues such as spirits, tariff-rate quotas management 

20  See more information at: http://ec.europa.eu/trade/policy/countries-and-regions/regions/andean-community/  
21  OJ L 354, 21.12.2012, p. 3. 
22  Trade  Agreement  with  Colombia 

(http://www.consilium.europa.eu/en/docuents-
publications/agreements-conventions/agreement/?aid=2011057)  and  Protocol  of  Accession  of  Ecuador 
(http://www.consilium.europa.eu/en/documents-publications/treaties-agreements/agreement/?id=2016044). 

Peru 

and 

35 

 
                                                 
and vehicles have contributed to facilitating trade in both directions and increasing EU market 
access  in  a  concrete  manner  in  all  the  three  Andean  markets.  In  addition,  the  EU  and 
Colombia adopted a Decision in  the Trade Committee on public procurement clarifying the 
coverage  in  Colombia  at  sub-central  level,  which  should  improve  market  access  for  EU 
companies. 

In accordance with Article 13 of Regulation (EU) No 19/2013 of the European Parliament 
and of the Council of 15 January 2013 implementing the bilateral safeguard  clause and 
the stabilisation mechanism for bananas of the Trade Agreement between the European Union 
and  its  Member  States,  of  the  one  part,  and  Colombia  and  Peru,  of  the  other  part23 
(‘Regulation’),  the  Commission  committed  to  submit  an  annual  report  to  the  European 
Parliament and the Council on the application, implementation and fulfilment of obligations 
of the Agreement and the Regulation. This report responds to this requirement (see section 5 
below).  

2. 

EVOLUTION OF TRADE  

2.1. 

Trade in Goods  

The present section focuses on bilateral trade in goods as well as on Non-Agricultural Market 
Access (NAMA) products. As per the definition in the WTO Agreement on Agriculture, these 
non-agricultural  products  include  industrial  goods,  manufactured  goods,  textiles,  fuels  and 
mining products, footwear, jewellery, forestry products, fish and fisheries, and chemicals. 

Colombia  

Overall evolution 

The  EU  remains  Colombia’s  second  trading  partner,  after  the  US  but  ahead  of  China.  The 
negative trend in bilateral trade in 2015-2016 was reversed in 2017 with a 7% increase. This 
positive  result  is  due  to  increased  domestic  demand  in  the  EU  and  a  slight  recovery  of 
commodity prices, and despite the fact that Colombia’s economy slowed markedly in recent 
years. Compared to 2012, the year before the application of the Agreement, bilateral trade was 
18.2% lower, in line with the decrease of Colombia’s total trade with the rest of the world of 
20.8% during the same period. In 2017, the EU accounted for 14% of total merchandise trade 
of Colombia, up from 13.2% in 2016. 

In 2017, bilateral trade amounted to EUR 11.6 billion, compared to EUR 10.8 billion in 2016. 
While  historically  Colombia  ran  a  trade  surplus  with  the  EU,  this  trend  reversed  somewhat 
and the EU now posts a slight trade surplus of EUR 367 million. 

EU  exports  to  Colombia  increased  by  10.5%  in  2017  to  EUR 5.9 billion.  This  increase  is 
driven  by  a  better  export  performance  of  industrial  goods,  notably  machinery  products, 
plastics, aluminium and steel, as well as paper products. Imports to Colombia from the rest of 
the world had an increase of 1.9% during the same period.  

EU  imports  from  Colombia  amounted  to  EUR 5.6 billion  in  2017,  increasing  from 
EUR 5.4 billion  in  2016,  representing  a  3.5%  growth.  It  is  noteworthy  that  overall  exports 

23  OJ L 17, 19.1.2013, p. 1. 

36 

 
                                                 
from  Colombia  into  the  EU  increased  despite  a  strong  decline  in  Colombia’s  exports  of 
mineral products to the EU. 

Figure 1: EU-Colombia bilateral trade in goods 2012-2017 (million EUR) 

10.000

8.000

6.000

4.000

2.000

0

-2.000

-4.000
Source Trade G2 

Source: Eurostat 

Imports

Exports

Balance

16/05/2018 

EU-Colombia trade in non-agricultural products 

EU  exports  to  Colombia  of  NAMA  products  amounted  to  EUR 5.58 billion  in  2017, 
increasing by 10.8%. The most important categories in 2017 were: 

  Machinery and mechanical appliances, representing 19.6% of EU exports, increasing 
by 34.6% compared to 2016. Notably, turbojets, turbopropellers and other gas turbines 
increased by 747% to EUR 159 million; 

  Pharmaceutical products, accounting for 12.1% of exports, increasing by 4.1%; 
  Vehicles and parts, 7.9% of EU exports, increasing by 2%. 

EU  imports  from  Colombia  of  NAMA  products  amounted  to  EUR 3.2 billion  in  2017, 
decreasing by 2.8% compared to the previous year. The main categories in 2017 were: 

  Minerals, representing 46.1% of EU imports from Colombia, versus 52.1% in 2016; 
  Machinery and mechanical appliances, representing 1.7% of EU imports, an increase 

of 187% compared to 2016. 

  Semi-precious  stones  (mainly  emeralds  and  gold);  increased  by  32.9%,  now 

representing 1.6% of imports. 

Peru 

Overall evolution  

The  EU  is  Peru’s  third  trading  partner,  after  China  and  the  US.  In  2017,  bilateral  trade 
increased  by  16%  compared  to  2016,  while  Peru’s  overall  trade  with  the  rest  of  the  world 
increased by 13% during the same period.  

Bilateral trade amounted to EUR 10.2 billion in 2017, a 16% increase compared to 2016, with 
the EU’s trade deficit increasing from EUR 1.5 billion to EUR 2 billion. 

EU imports from Peru increased by 18.7% compared to 2016, thus growing twice as fast as 
Peru’s total exports (9%).  

37 

 
 
EU  exports  to  Peru  have  grown  by  12.2%  over  the  same  period,  while  Peru’s  total  imports 
increased by 19%. 

 Figure 2: EU-Peru bilateral trade in goods 2012-2017 (million EUR) 

Source: Eurostat 

EU-Peru trade in non-agricultural products 

EU exports to Peru of NAMA products amounted to EUR 3.8 billion in 2017, increasing by 
12.9% (from EUR 3.37 billion in 2016). The most important categories in 2017 were: 

  Machinery  and  mechanical  appliances,  notably  spare  parts,  pumps  and  valves, 
representing 24% of EU exports; Electrical machinery and equipment, accounting for 
12% of total exports to Peru increased by 31% compared to 2016; 

  Vehicles and parts, 7% of EU exports, remaining equal compared to 2016; 
  Pharmaceutical products, accounting for 5% of exports, increasing by 13% compared 

to 2016. 

EU  imports  from  Peru  of  NAMA  products  have  increased  strongly  by  32.9%  amounting  to 
EUR 3.93 billion in 2017 (from EUR 2.96 billion the previous year). The main categories in 
2017 were: 

  Minerals  have  increased  by  41.8%  compared  to  2016  and  represent  29.5%  of  EU 

imports from Peru, versus 24.5% in 2016;  

  Mineral fuels, representing 11% of EU imports, an increase of 81% compared to 2016 

(mainly gas); 

  Copper articles increased by 20%, now representing 4.5% of imports;  
  Fish  and  crustaceans,  representing  4.3%  of  imports,  increased  by  5%  compared  to 

2016.  

Ecuador  

Overall evolution 

The  EU  remains  Ecuador´s  second  trading  partner,  behind  the  US  and  ahead  of  China,  and 
represents  15%  of  Ecuador  total  trade  with  the  world.  The  results  of  the  first  year  of 
implementation  of  the  Agreement  have  been  very  good.  Bilateral  trade  increased  by  20.4% 
from  EUR 4.36 billon  to  EUR 5.25 billon  over  the  2016-2017  period.  The  immediate 
elimination of tariffs for most of Ecuador’s exportable supply and the progressive elimination 
of  tariffs  on  EU  products  have  surely  been  an  important  factor  in  this.  The  elimination  of 

38 

 
 
 
safeguards and other unilateral restrictions in Ecuador also helped to encourage trade and sent 
a  positive  signal 
the  EU 
(EUR 803 million). 

investors.  Ecuador  maintains  a 

trade  surplus  with 

to 

EU exports  to  Ecuador increased by  36.2%  year-on-year (from EUR 1.64 billion in  2016 to 
EUR 2.23 billion in 2017), recovering from the fall observed between 2014 and 2016, but still 
under 2012 figures, when EU exports registered a peak.  

EU imports from Ecuador also increased but by lower percentage, 10.8% year-on-year (from 
EUR 2.72 billion in 2016 to EUR 3 billion in 2017), reaching a record high.  

Figure 3: EU-Ecuador bilateral trade in goods 2012-2017 (million EUR) 

Source: Eurostat  

EU-Ecuador trade in non-agricultural products 

EU exports to Ecuador of NAMA products amounted to EUR 2.1 billion in 2017, increasing 
by 36.6%. The most important categories in 2017 were: 

  Machinery  and  mechanical  appliances  representing  18.2%  of  total  EU  exports, 
increasing  by  10.7%  compared  to  2016;  Electrical  machinery  represented  6.3%  of 
exports, increasing by 10.3%;  

  Mineral fuels exports accounted 17.6% of the market share, increasing significantly by 

119.8%; 

  Pharmaceutical products represented 6.9% of total exports, however exports decreased 

by 2%;  

  Other  products  such  as  ceramics  and  vehicles  also  recorded  significant  increases  in 
2017  (110%  and  138%  respectively)  as  a  result  of  tariff  dismantling  and  the 
elimination of domestic fees or quotas. 

the  same 

time,  EU 

to 
At 
EUR 1.45 billion, or 48.1% of total EU imports from Ecuador, increasing by 17.2% compared 
to 2016. The key categories in 2017 were: 

imports  of  NAMA  products  from  Ecuador  amounted 

  Fish  and  crustaceans  (shrimps)  registered  a  small  increase  of  2.2%,  accounting  for 

22.4% of Ecuador’s total exports to the EU;  

  Preparations of meat and fish (tuna) registered a strong increase of 45.2% accounting 

for 22.1% of total EU imports from Ecuador; 

  Mineral  products  increased  by  514.7%  in  2017,  but  account  for  only  0.6%  of 

Ecuador’s exports to the EU. 

39 

 
 
 
 
Preference Utilisation Rates for EU-Colombia, Ecuador, Peru 

In  the  context  of  the  Sub-committee  on  Market  Access,  the  Parties  agreed  in  2015  to 
exchange on an annual basis data on PUR. The EU stressed the need to have reliable data to 
get  a  better  overview  of  the  effect  of  the  Agreement  so  far  and  explore  means  to  assist 
economic operators, in particular SMEs, to make better use of its opportunities.  

For 2017, EU statistics indicate that approximately 97% of Colombia’s and Ecuador’s exports 
to the EU are made using the tariff preferences established by the Agreement, while 96% of 
Peru’s exports make use of these preferences. The PUR on exports from the EU to Colombia 
for 2017 was 68%, a slight decrease from 71% in 2016. For Peru, PUR of EU exports have 
been  rising  over  the  past  three  years,  albeit  from  a  rather  low  level  (28%  in  2015;  47%  in 
2016 and 52% in 2017). The PUR on exports from the EU to Ecuador in the  first year of the 
application of the agreement was 42%. 

2.2. 

Trade in agricultural goods  

This section focuses on agricultural products as defined by Article 2 of the WTO Agreement 
on Agriculture and as listed in Annex 1 of the same agreement.  

Colombia  

EU  exports  to  Colombia  of  agricultural  products  increased  by  6%  in  2017,  and  were 
dominated by:  

  Beverages and spirits (HS22) at EUR 88 million, or 22% of EU exports of agricultural 

products to Colombia; 

  Preparations of a kind  used in  animal  feeding (HS2309) increased by  48 times, now 

representing 0.9% of EU exports;  

  Preparations  of  cereals,  flour,  starch  (HS19)  and  vegetables,  fruits,  nuts  &  plants 

(HS20) account for 0.6% of exports each. 

EU  imports  of  agricultural  products  from  Colombia  increased  by  13%  from  2016  to  2017, 
reaching a total of EUR 2.4 billion. The most important categories in 2017 were: 

  Fruits  (HS08),  accounted  for  19.4%  of  total  imports,  up  by  12%  compared  to  2016. 
Bananas  represent  84.3%  of  all  fruits  exported,  followed  by  avocados  with  5.4%. 
From 2016 to 2017 there was a strong increase in exports of bananas (10%), plantains 
(10.1%),  dried  pineapples  (56.5%),  avocados  (40.2%),  guavas,  mangoes  and 
mangosteens (26.7%), oranges (80.3%), and lime (54.1%); 

  Coffee (HS09), increasing by 4%, represents 10.8% of EU imports; 
  Crude palm oil (HS151110), 5.17% of imports, and crude palm kernel, 1% of imports, 

posted increases by 75.5% and 6.7% respectively.  

Total EU imports of agricultural products from Colombia increased by 55.3% since 2012, and 
now account for 42.7% of Colombian exports to the EU, versus 17.8% in 2012.  

40 

 
 
Peru 

EU  exports  to  Peru  of  agricultural  products  increased  by  4%  in  2017.  The  most  important 
categories in 2017 were: 

  Beverages and spirits (HS22), accounting for 25% of total EU exports of agricultural 

products to Peru; 

  Preparations of vegetables (HS20), increased by 32% compared to 2016; 
  Dairy products (HS04), posting a strong 51% increase compared to 2016 thanks to the 

introduction of a harmonized import certificate. 

EU  imports  of  agricultural  products  from  Peru  decreased  by  2.1%  from  2016  to  2017.  The 
most important categories in 2017 were: 

  Fruits (HS08), accounted for 16.3% of total imports, up 9% compared to 2016;  

Avocados  accounted  for  38%  of  all  fruits  exported,  a  21%  increase,  followed  by 
mangos  with  15%  (-0.4%),  fresh  grapes  for  14%  (-3%),  fresh  cranberries  for  9%  (-
7.6%), fresh bananas for 9% (+1.7%); 

  Coffee (HS09) now represent 6.6% of total Peruvian exports to the EU; 

Total  EU  imports  of  agricultural  products  from  Peru  increased  by  39.5%  since  2012. 
Agricultural products now account for 35.2% of Peruvian exports to the EU, versus 24.4% in 
2012.  

Ecuador 

EU  exports  of  agricultural  products  to  Ecuador  grew  by  34%  year-on-year.  This  should 
hopefully  further  increase  once  the  SPS  chapter  of  the  Agreement  has  been  fully 
implemented, and that certain barriers to imports on the Ecuadorian side are eliminated. Key 
EU exports of agricultural products were: 

  Miscellaneous  edible  preparations  exports  (HS21)  grew  by  19%  corresponding  to  a 

0.86% of total exports; 

  Beverages  and  spirits  (HS22)  exports  increased  substantially  by  262%  and  occupied 

0.8% of EU total exports. 

EU  imports  of  agricultural  products  from  Ecuador  reached  a  total  of  EUR 1.57 billion.  The 
EU consolidated its  position as the first  trading  partner  for Ecuadorian non-oil exports.  The 
most important categories were: 

  Fruits (HS08) grew by 17% year-on year, and represented 31.5% of total EU imports, 
with banana imports accounting for almost 94% and growing by 17% in 2017. Other 
fruits grew as well: pineapple by 27% and tamarind by 49%;  

  Live  trees  and  other  plants  (mainly  fresh  cut  flowers)  (HS06),  remained  stable  and 

accounted for 6.2% of Ecuador’s exports to the EU; 

  Cocoa  and  cocoa  preparations  (HS18)  decreased  by  13%,  and  account  for  6.1%  of 

total EU imports. 

41 

 
 
 
Ecuador  exports  of  agricultural  to  the  EU  increased  by  5%  in  2017  compared  to  2016;  and 
represent 55% of total Ecuadorian exports to the EU. 

Use of Tariff-rate quotas  

The  Agreement  provides  for  TRQs  (TRQs)  which  grant  the  other  Party  preferential  tariff 
treatment  up  to  the  quota’s  quantitative  threshold,  above  which  imports  are  subject  to  the 
applicable Most-Favoured Nation tariff. 

Colombia 

Colombia’s use of the TRQ for cane or beet sugar and chemically pure sucrose has increased 
from 88.4% in 2013 to 94.8% in 2017. Other TRQs are hardly or not utilised. 

Table 1: Rate of utilisation of EU TRQs by Colombia 

2013 
Cane sugar and chemically pure sucrose  88.4% 
Other sugar confectionery 
1.4% 
Source: TAXUD, Surveillance Database 

2014 
2016 
2015 
85.7%  93.8%  96.2% 
1.5% 
1.2% 
1.3% 

2017 
94.8% 
1.5% 

The EU is  fully using the TRQs established for mushrooms, preparations for infant  use and 
sweetcorn,  to  a  somewhat  lesser  extent  TRQ  on  yogurt,  ice  cream  (though  increasingly 
through a better implementation of the Agreement), and barely its TRQs on cheese (possibly 
due to a slowdown in domestic demand in Colombia) and on sugar confectionery (less than 
4% in 2017).  

Table 2: Rate 
of utilisation 
of Colombia 
TRQs by the 
EU 

Mushrooms 
Milk and 
cream in 
powder 

2013 

2014 

2015 

2016 

2017 

1.6% 

5% 

100% 

100% 

100% 

0% 

34.9% 

100% 

100% 

82.6% 

Whey 

57.6% 

50% 

92.9% 

No more 
TRQ 

No more 
TRQ 

67.5% 

99.1% 

40.4% 

Preparations 
for infant use 
Yogurt 
Sweetcorn 
Ice cream 
Cheese 
Sugar 
confectionary 
Source: DIAN (Dirección de Impuestos y Aduanas Nacionales) 

0% 
0.42% 
5.26% 
9% 

0.5% 
54.2% 
13.4% 
8% 

0.8% 
100% 
7.4% 
8.2% 

1.8% 

3.1% 

3.4% 

100% 

100% 
100% 
25.9% 
7.9% 

3.8% 

100% 

99% 
100% 
45.7% 
3.1% 

3.9% 

42 

 
 
Peru 

TRQ for cane sugar has been almost fully utilised by Peru. TRQ for corn has also a high rate 
of utilisation. Peru is starting to take advantage of the TRQ on garlic. Other TRQs have very 
low utilisation rate.  

Table 3: Rate of utilisation of EU TRQs by Peru 

2013 
100% 
21% 
0% 
0% 
0.7% 

Cane sugar 
Sweetcorn 
Garlic 
Rum 
Maize (corn) 
Sugar 
confectionery 
Source: TAXUD, Surveillance Database 

0.02% 

100% 
76% 
0% 
0% 
2.9% 

2014 

2015 

3.5% 
83.2% 
2.4% 
0% 
1.8% 

2016 
99.8% 
87.3% 
53.8% 
7% 
6.1% 

2017 
100% 
35.4% 
54.2% 
0% 
1.7% 

0.01% 

0.16% 

0.1% 

0.2% 

The EU is fully using the TRQ established by Peru for milk powder and almost fully for ice 
cream  and  butter  thanks  to  the  harmonized  certificate  for  dairy  products.  Other  TRQs  are 
barely used.  

Table 4: Rate of utilisation of Peru TRQs by the EU  

2017 

2013 

2014 

Butter 
Cheese 
Ice cream 
Milk powder 
Milk for babies 
Chewing gum 
Sugar 
Rum 
Source: SUNAT (Superintendencia Nacional de Aduanas y de Administración Tributaria) 

0% 
0% 
58.6% 
0% 
0% 
0.3% 
0% 
3.5% 

0% 
0% 
89.6% 
4.1% 
0% 
0% 
0% 
0.0% 

82% 
5.4% 
94.2% 
100% 
0.0% 
3.4% 
0.0% 
4.2% 

2015 
96.0% 
0% 
98.5% 
99.7% 
0% 
0.1% 
0% 
3.5% 

2016 
100% 
4.3% 
95.6% 
100% 
29.9% 
2.20% 
0.8% 
5.8% 

Ecuador 

Few  of  the  EU’s  TRQs  for  Ecuador’s  exports  have  been  used  during  the  first  year  of 
implementation of the Agreement. Only TRQs that were used are mentioned. 

Table 5: Rate of utilisation of EU TRQs by Ecuador in 2017 

Products 

Sweet corn and other vegetables 
Sugar cane 
Confectionary  products  (high 
sugar 
Juices, 
content): 
Chocolate, Coffee, Tea, others 
Source: TAXUD, Surveillance Database 

Size of the quota 
(tons) 
300 
15000 

10000 

Fill rate (%) 

3.28% 
4.3% 

1.59% 

43 

 
 
  
The limited use of TRQs by the EU is partly due to  the still pending implementation of the 
pre-listing  system  of  Member  States’  establishments  allowed  to  export  animal  products  to 
Ecuador, including some covered by TRQs. Some Ecuador TRQs have been used by the EU, 
due  to  the  fact  that  these  products  have  historically  been  imported  and  consequently  trade 
flows  have  not  been  interrupted.  Furthermore,  the  delay  in  the  opening  by  Ecuador  of  its 
TRQs for the EU, as well as its complex management is also likely to have played a role in 
the non-use of TRQs by the EU.  

Table 6: Rate of utilisation of Ecuador TRQs by the EU in 2017 

Products 

Preparations for animal feeding 
Dairy products: Powder milk, butter 
milk serum, whey 
Dairy products: Evaporated milk; 
condensed milk 
Dairy products: Yoghourt, cheeses: 
grated or powdered, melted, others 
Dairy products: Blue-veined cheese, 
mature cheese 
Processed sweet corn: Sweet corn: 
Frozen, canned 
Porcine products: Cured ham, Bellies 
(streaky), Sausages and similar meat 
products 
Confectionary products (high sugar 
content): Juices, Chocolate, Coffee, 
Tea, others 
Source: Ministry of Agriculture of Ecuador 

Size of the 
quota (tons) 
800 

400 

600 

500 

1 000 

400 

800 

750 

Fill rate 2017 

6.13% 

12.50% 

1.02% 

2.74% 

3.93% 

21.85% 

5.65% 

0.90% 

2.3. 

Trade in Services and development of investment  

1.1.4.  Trade in Services 

Bilateral  trade  in  services  between  the  EU  and  Colombia  increased  by  0.7%  in  2016 
compared to 2015, totalling EUR 4.25 billion. While EU exports increased by 4%, Colombian 
exports decreased by 5.6% over this period. According to Colombian statistics (DANE), EU 
share in Colombia’s total trade in services represented 18% in 2017. 

Table 7: EU-Colombia bilateral trade in services 2011-2016 (million EUR) 

2011 
1 347 
2 638 
1 290 
3 985 

2012 
1 446 
2 855 
1 409 
4 300 

2013 
1 440 
2 564 
1 124 
4 004 

2014 
1 529 
2 416 
888 
3 945 

2015 
1 429 
2 793 
1 365 
4 222 

2016 
1 349 
2 906 
1 557 
4 254 

EU28 imports 
EU28 exports 

Balance 
Total trade 
Source: Eurostat 

For  Peru,  bilateral  trade  in  services  decreased  by  6%  in  2016  compared  to  2015.  Based  on 
Peru’s statistics, EU share in Peru’s total trade in services represented almost 30% in 2016.  

44 

 
 
Table 8: EU-Peru bilateral trade in services 2011-2016 (million EUR) 

2011 

2012 

2013 

2014 

2015 

2016 

EU28 imports 

846 

855 

835 

EU28 exports 

1 094 

1 509 

1 707 

Balance 

248 

654 

872 

Total trade 
Source: Eurostat 

1 940 

2 364 

2 542 

897 

1 999 

1 101 

2 896 

894 

862 

1 669 

1 541 

775 

679 

2 563 

2 403 

EU  bilateral  trade  in  services  with  Ecuador  increased  significantly  by  56.5%  in  2016  to  a 
record  high  of  EUR 2.24 billion.  As  in  the  case  of  Colombia  and  Peru,  the  EU  posts  a 
substantial surplus in the trade in services. The EU share in Ecuador´s total trade in services 
represented almost 79.7% in 2016.  

Table 9: EU-Ecuador bilateral trade in services 2011-2016 (million EUR) 

2011 

2012 

2013 

2014 

2015 

2016 

423 
1 055 
632 
1 478 

405 
1 152 
747 
1 557 

375 
1 148 
733 
1 523 

406 
1 268 
862 
1 674 

374 
1 060 
686 
1 434 

454 
1 790 
1 337 
2 244 

EU28 imports 

EU28 exports 

Balance 

Total trade 
Source: Eurostat 

1.1.5.  FDI  

For the third year in a row, the EU remains the first foreign investor in Colombia, totalling 
EUR 14.7 billion  of  FDI  stocks  in  2016.  According  to  Colombian  statistics,  EU  FDI 
accounted  for  36%  of  the  total  FDI  in  flows  to  Colombia  in  2017  with  an  amount  of 
EUR 5.4 billion. Colombian FDI stocks in the EU decreased by 18.4% since 2015, totalling 
EUR 2.7 billion in  2016, and  according to  Colombian statistics, 30.8%  of its outward flows 
went to the EU in 2017. 

Table 10: EU-Colombia investment flows and stocks 2014-2016 (million EUR) 

Inward 
2015 
2014 
3 379 
3 828 
-214.3  1 885.7 

Stocks 
Flows 
Source: Eurostat 

2016 
2 757 
-373.3 

2014 
16 566 
45.4 

Outward 
2015 
16 957 
587.6 

2016 
14 731 
-985.5 

The  EU  is  the  first  foreign  investor  in  Peru.  EU  FDI  stocks  in  Peru  increased  by  30% 
between  2015  and  2016,  totalling  EUR 13.2 billion  in  2016.  Peru’s  FDI  stocks  in  the  EU 
increased to EUR 2 billion in 2016, a 1139% increase compared to 2014.  

Table 11: EU-Peru investment flows and stocks 2014-2016 (million EUR) 

Inward 
2015 

2014 

2016 

2014 

Outward 
2015 

2016 

45 

 
  
 
  
  
 
  
  
2014 

Stocks 
Flows 
Source: Eurostat 

159 
-362 

Inward 
2015 
1 493 
563 

2016 
1 971 
449 

2014 
9 384 
-1 516 

Outward 
2015 
10 146 
1 366 

2016 
13 150 
3 702 

EU  FDI  stocks  in  Ecuador  have  remained  almost  constant  in  2016  year-on  year,  at  around 
6 billion  EUR.  Ecuador´s  FDI  stocks  in  the  EU  experienced  a  45%  decline  over  the  2014-
2016 period and reached EUR 300 million in 2016. 

According to the Central Bank of Ecuador, EU FDI accounted for 21% of total FDI inflows 
in 2017 (EUR 116 million), a sharp contraction compared to 72% in 2016. Ways to increase 
EU  investment  in  Ecuador  could  include  less  complex  regulations  for  businesses,  a  better 
judicial enforcement of contracts and streamlined legal procedures. 

Table 12: EU-Ecuador investment flows and stocks 2014-2016 (million EUR) 

2014 

Stocks 
Flows 
Source: Eurostat 

538 
-233 

Inward 
2015 

351 
-141 

2016 

298 
-109 

2014 
5 265 
2 

Outward 
2015 
6 001 
865 

2016 
5 929 
-99 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The fourth meeting of the Trade Committee took place on 24 November 2017 in Lima, Peru. 
It  was  preceded  by  meetings  of  all  eight  Sub-committees  under  the  Agreement.  The  main 
conclusions of the Trade Committee and Sub-committees can be summarised as follows: 

a) Trade Committee  

The  EU  and  Colombia  signed  a  Decision  to  modify  Colombia’s  public  procurement 
market access schedules at sub-central level24. The modification will result in a clarification 
of coverage of certain municipal entities.  

The Trade Committee was able to take stock of progress achieved in the Sub-committees. The 
EU  reiterated  some  of  its  main  concerns,  including  most  notably:  change  in  the  provision 
defining  direct  transport  to  allow  for  the  splitting  of  consignments  for  products  transiting  a 
third  country,  continued  discrimination  of  imported  spirits  in  Peru,  lack  of  enforcement  for 
GIs (Oporto  and  Feta) in Peru, obligation for imported beers to  attach  strip  stamps  in  some 
departments  in  Colombia, exploitation  charge levied on spirits introduced in  the Colombian 
departments, the anti-dumping investigation against frozen potatoes from Belgium, Germany 
and the Netherlands in Colombia, the service tax for customs control in Ecuador. Colombia, 

24  Decision No 1/2017 of the EU-Colombia-Peru Trade Committee of 24 November 2017 amending Appendix 
1 of Annex XII (‘Government Procurement’) to the Trade Agreement between the European Union and its 
Member States, of the one part, and Colombia and Peru, of the other part. OJ L 1, 4.1.2018, p.1 (https://eur-
lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:22018D0001&from=EN). 

46 

 
  
  
  
  
                                                 
Peru and Ecuador  raised concerns about  the potential  impact  of some EU SPS measures on 
their exports of agricultural products.  

The EU gave an update on the state of ratification process by the Member States of both the 
Agreement and the Protocol of Accession of Ecuador. Colombia and Peru informed about the 
ratification process regarding the Protocol to the Agreement to take account of the accession 
of  the  Republic  of  Croatia  to  the  European  Union.  The  Parties  welcomed  the  provisional 
application  of  the  Protocol  of  Accession  of  Ecuador  to  the  Trade  Agreement  as  from  1 
January 2017 and completion of the ratification process by both Colombia and Peru. 

b) Customs, Trade Facilitation and Rules of Origin  

The  Sub-committee  discussed  the  interpretation  of  the  provision  defining  direct  transport  to 
allow  the  splitting  of  consignments  for  products  transiting  a  third  country,  but  without  any 
conclusive  outcome.  Colombia,  Ecuador  and  Peru  expressed  interest  in  receiving  help  and 
assistance from the EU on a wide variety of issues, including Authorised Economic Operators 
(AEO)  and  customs  laboratories.  In  this  context,  the  EU  underlined  the  importance  of 
advancing  on  the  issue  of  direct  transport.  With  Ecuador,  the  EU  mentioned  issues  of 
reclassification of goods. 

c) Government Procurement 

In  2017,  good  progress  was  made  with  Colombia  to  address  a  problem  of  interpretation  in 
relation  to  market  access  in  government  procurement  at  sub-central  level.  The  solution 
consisted in modifying the chapter on government procurement by including a clarification of 
the coverage of certain municipal entities. With Peru, the EU continued exchanging views on 
the  use  of  international  standards  and  obligations  in  respect  of  technical  specifications  in 
government  procurement.  Given  that  it  is  the  first  time  Ecuador  undertakes  international 
commitments  on  government  procurement,  Ecuador  provided  information  on  the  activities 
undertaken  to  implement  the  government  procurement  chapter,  including  awareness-raising 
activities to the procuring entities on the obligations arising from the Agreement and required 
amendments of specific laws and regulations.  

d) Technical Barriers to Trade (TBT) 

With  regard  to  Colombia,  the  EU  raised  the  issue  of  recognition  of  EU  testing  and 
certification in  Colombia, and Colombia confirmed that test  results issued in  the country  of 
origin  are accepted provided that the results originate from an accredited laboratory and the 
accreditation entity forms part of an international accreditation body. With  Ecuador, the EU 
raised the issue of prohibition of labelling of alcoholic beverages at destination. In the case of 
Peru,  the  EU  reiterated  its  interest  regarding  the  recognition  of  Member  States  as  having 
‘strong  health  monitoring’,  as  it  facilitates  the  recognition  of  their  certification  for 
pharmaceutical and medical devices products to be exported to Peru. 

e) SPS Matters  

The  EU  discussed  with  Colombia,  Peru  and  Ecuador  their  respective  advance  towards 
implementing  the  provisions  of  the  SPS  chapter  of  the  Agreement  to  ensure  better  market 
access for EU products. With Peru, the EU welcomed the positive impact of the harmonised 

47 

 
certificate  for  dairy  products  by  which  all  EU  establishments  have  access  to  the  Peruvian 
market (pending registration in their system). Progress remains to be done with the approval 
of a harmonised certificate for the import of meat products. The EU also welcomed the lifting 
of  trade  restrictions  related  to  avian  influenza.  With  Colombia,  the  EU  noted  considerable 
advance since the implementation  of a single procedure  for market  access  of EU exports of 
animal-based products, where pre-listing is applied. There is still progress to be made with the 
adoption of harmonised certificates on dairy products and on cooked meat products. There is 
progress  towards  the  approval  of  fruits  and  vegetables  although  at  a  slower  pace  as 
phytosanitary import conditions in Colombia imply a lengthy process. With Ecuador, there is 
a continued dialogue to ensure the full implementation of the provisions of the SPS chapter. 
In  2017,  the  EU  and  Ecuador  discussed  constructively  on  a  procedure  for  the  approval  of 
exports of products from Member States, including prelisting for animal products (procedure 
which  was  agreed  in  February  2018  but  is  yet  to  be  implemented  by  Member  States). 
Colombia,  Ecuador  and  Peru  raised  concerns  related  to  some  EU  legislation  on  certain 
maximum  residue  levels  for  some  pesticides,  maximum  levels  of  cadmium  in  cacao-based 
products, endocrine disruptors, and novel food. 

f) Agriculture 

The  Parties  took  stock  of  trade  flows  and  utilisation  of  quotas  during  the  four  years  of 
implementation  of  the  Agreement  and  welcomed  the  increase  of  exports  of  agricultural 
products on both sides. The EU and Ecuador reviewed trends in bilateral trade of agricultural 
products for the first nine months of 2017. The Parties discussed the bilateral safeguard clause 
and  the  stabilisation  mechanism  for  bananas,  as  well  as  the  implementation  of  the  spirits’ 
fiscal reform in Colombia (in particular the EU took issue with the exploitation charge that is 
levied  solely  on  products  introduced  in  the  departments).  The  EU  raised  its  concerns 
regarding  the  discrimination  against  EU  spirits  in  Peru  and  the  issues  of  TRQ  management 
and rejection of EU imports of agricultural products in the case of Ecuador.  

g) TSD 

The Parties held the meetings of the institutions in charge of monitoring the implementation 
of the TSD provisions of the Agreement (see section 4 below).  

h) Intellectual Property 

The Parties addressed specific issues regarding the protection and enforcement of a number of 
GIs, including matters relating to the addition of new GIs to be protected. With Colombia, the 
EU informed of work under way to protect nine additional Colombian GIs and welcomed the 
start of an investigation in Colombia regarding the usurpation of EU cheese GIs. With  Peru, 
the  EU  referred  to  the  usurpation  of  GIs  names  (Oporto  and  Feta).  Peru  referred  to  the 
protection of Pisco in the EU in relation to registration of trademarks. With Colombia, the EU 
welcomed  the  start  of  an  investigation  regarding  the  usurpation  of  EU  GIs  on  cheese  but 
stressed the importance of an effective and timely solution to ensure the protection of EU GIs.  

The EU informed of the internal procedures under way to register nine additional Colombian 
GIs. Peru expressed concerns about what it considers as inadequate protection of Pisco in the 
EU given the registration of trademarks (TM) containing the name Pisco.  

48 

 
Other  issues  discussed  included  the  overall  enforcement  of  intellectual  property  rights, 
patentability of medicines in Colombia, exceptions to copyright and related rights as well as 
plant variety rights in Ecuador, and possible cooperation projects. 

i) Market Access 

The Parties exchanged statistics on trade flows, including use of preferences and tariff rates 
quotas.  With  Colombia,  the  EU  raised  its  concerns  regarding  truck  scrappage,  vehicle 
taxation,  the  implementation  of  the  spirits  law,  an  ongoing  anti-dumping  case  against  EU 
frozen potatoes, and discrimination against imported beers. In relation to Peru, the EU raised 
concerns about the application of the duty drawback in Peru, which appears to be a subsidy. 
With  Ecuador,  discussions  focused  on  discriminatory  treatment  against  imported  spirits  and 
the service tax for customs control, implemented in November 2017. It should, however, be 
noted that the service tax was discontinued in June 2018.  

4. 

IMPLEMENTATION  OF  THE  PROVISIONS  ON  TRADE  AND 
DEVELOPMENT 

SUSTAINABLE 

4.1. 

Sub-Committee on Trade and Sustainable Development 

The  fourth  meeting  of  the  Sub-Committee  on  TSD  was  held  in  Lima  on  22  and  23 
November 2017. While discussions on labour and environmental issues were constructive, it 
was clear that a number of critical issues require follow-up and further action and that more 
dialogue on priority TSD issues is needed. To step up monitoring the Parties agreed to engage 
more regularly on this on the basis of questions submitted by the EU in early 2018. 

On labour, important issues of concern with all three countries remain in relation to freedom 
of  association  and  collective  bargaining,  the  high  levels  of  informality  and  the  inadequate 
labour  inspection  capacities.  Peru  and  Colombia  informed  about  their  plans  to  increase  the 
human and material resources to strengthen labour inspection. They also informed they have 
started the process to ratify the Protocol to the ILO Convention 29 on forced labour. Concerns 
about  the  persistence  of  high  levels  of  child  labour  were  also  highlighted  by  the  EU,  in 
particular  in  Peru.  Ecuador  participated  for  the  first  time,  and  showed  constructive 
engagement to achieve implementation of this Chapter. It informed about the preparation of 
the labour law reform and advances in occupational health and safety, among others.  

On environment, the focus was on: measures taken by Colombia to control exports of brown 
caiman  Caiman  crocodilus  fuscus  skins  to  implement  the  CITES  convention,  the  tools  and 
measures in Colombia and Ecuador to monitor deforestation, and the strategies of Colombia 
and Peru to combat trade of illegal timber. Peru's simplification of administrative procedures 
for licensing on the environmental sector was also highlighted as an important issue to follow 
as well as the use of mercury in gold mining in the region.  

The EU and Peru touched upon the submission in October 2017 by a group of European and 
Peruvian  civil  society  organisations  of  a  report  to  the  European  Commission  challenging 
Peru's  compliance  with  the  labour  and  environment  provisions  of  the  TSD  chapter.  The 
European Commission has since been assessing the allegations made therein while consulting 
the relevant authorities in Peru, the civil society organisations responsible for the submission 
and the ILO.  

49 

 
4.2. 

Domestic consultation  

Since  its  establishment,  the  EU  civil  society  consultation  mechanism  (‘domestic  advisory 
group’) has met regulary, with the European Economic and Social Committee providing three 
members  as  well  as  the  Secretariat.  As  part  of  its  work,  it  submits  opinions  and  makes 
recommendations on the implementation of the TSD chapter of the Agreement.  

A main advance in terms of the institutional set up for the participation of civil society in TSD 
issues came from Colombia who announced the creation of a DAG to complement its existing 
consultative  mechanisms.  This  initiative  responds  to  repeated  demands  by  civil  society  in 
Colombia, which the EU consistently echoed.  

Ecuador,  at  this  early  stage  of  implementation  informed  of  its  decision  to  use  existing 
domestic mechanisms, while indicating that civil society will have the freedom to determine 
the agenda.  

4.3. 

Session of the Sub-Committee on TSD with civil society 

In line with Article 282 of the Agreement, the Sub-Committee on TSD held an open session 
with civil society organisations and the public on 23 November 2017 in Lima, to carry out a 
dialogue  on  matters  related  to  the  implementation  of  the  TSD  chapter.  Around  50 
representatives  of  civil  society  were  present  either  in  the  room  (mostly  from  Peru,  Ecuador 
and the EU) or via videoconference from Colombia and Ecuador. The views expressed on the 
results  achieved  in  Peru  and  Colombia  were  generally  critical.  An  important  point  of 
discussion  was  how  to  better  ensure  civil  society  consultation  in  the  area  of  labour  and 
environment  and  on  how  to  improve  channels  of  communication  to  discuss  TSD-related 
issues. The most vocal interventions came from Peru’s civil society who alleged insufficient 
dialogue  with  the  government  and    inadequate  functioning  of  the  domestic  mechanisms  in 
place.  Participants  welcomed  Colombia's  proposal  to  create  a  dedicated  domestic  advisory 
group to discuss TSD issues of relevance to the Agreement. 

4.4. 

Further work and other activities 

In 2017, there was good progress on cooperation activities aimed to assist Colombia and Peru 
in  the implementation  of various facets  of the TSD chapter  and to  promote higher levels  of 
social and environmental standards. .  

In Colombia, the following activities took place: a circular economy business mission aimed 
at  strengthening  ties  between  EU  and  Colombian  institutions  in  the  field  of  environment,  a 
workshop  on  business  development  topics  such  as  Corporate  Social  Responsibility,  organic 
production and fair trade, as well as a TAIEX-funded mission on international trade in brown 
caimans aimed to improve conservation efforts.  It was also agreed with Colombia to pursue 
new actions on labour inspection as well as responsible supply chains in the mining sector.  

In  Peru,  several  financing  instruments  were  mobilised  for  projects  in  the  area  of  labour:  a 
TAIEX-financed  workshop  took  place  on  labour  conflicts  resolution  and  several  technical 
assistance  projects  on  labour  inspection  and  labour  formalisation  financed  via  Eurosocial+ 
and  Socieux+.  There  were  also  activities  to  support  Peru  in  implementing  multilateral 
environmental  agreements  and  policies:  a  TAIEF-funded  workshop  on  conservation  of  the 
vicuña  addressing  regulatory  measures  and  climate  change  challenges  as  well  as  EU  expert 
mission  to  support  capacity  building  and  exchange  of  experiences  with  site  investigations, 
remediation techniques and sustainable management of sites contaminated by hydrocarbons. 

50 

 
With  Ecuador,  actions  were  put  in  place  throughout  the  year  to  raise  awareness  and  build 
capacity to prepare the initial stages of implementation of the TSD chapter in the country. In 
addition, other areas of common interest were identified with Ecuador notably in field of both 
the environmental law and labour law reforms.  

5. 

SPECIFIC AREAS SUBJECT TO REPORTING OR MONITORING 

Implementation of Regulation (EU) No 19/2013  

In 2017, Regulation (EU) No 19/2013 implementing the above mentioned bilateral safeguard 
clause and the stabilisation mechanism for bananas was amended by Regulation 2017/540 to 
reflect the accession of Ecuador to the Agreement25. The amended Regulation provides for the 
possibility  to  initiate  a  safeguard  investigation  or  to  introduce  prior  surveillance  measures 
under  certain  conditions.  In  accordance  with  Articles  3  and  13  of  the  Regulation,  the 
Commission  has  been  monitoring  the  evolution  of  imports  of  fresh  bananas  (HS  code 
08039010) from Colombia, Peru and Ecuador. 

Figure 4: 2016 EU imports of fresh bananas from Colombia and Peru (in tons) 

114 775 

421 869 

1 308 355 

Colombia

Peru

Unused quota

Source: Eurostat 

25      Regulation  (EU)  2017/540  of  the  European  Parliament  and  of  the  Council  of  15  March  2017,  Regulation 
(EU) 2017/540 of the European Parliament and of the Council of 15 March 2017 amending Regulation (EU) 
No 19/2013 implementing the bilateral safeguard clause and the stabilization mechanism for bananas of the 
Trade  Agreement between  the European Union and its Member States, of the one part,  and Colombia and 
Peru,  of  the  other  part,  and  amending  Regulation  (EU)  No  20/2013  implementing  the  bilateral  safeguard 
clause and  the stabilization  mechanism  for bananas of the  Agreement establishing an  Association between 
the European Union and its Member States, on the one hand, and Central America on the other (O.J. L 88, 
31.03.2018, p.1).  

51 

 
 
                                                 
Figure  5:  2017  EU  imports  of  fresh  bananas  from  Colombia,  Ecuador  and  Peru  
(in tons) 

1 391 328 

117 221 

829 769 

1 379 718 

Colombia

Ecuador

Peru

Unused quota

Source: Eurostat 

In  2017,  EU  imports  of  fresh  bananas  from  Peru  reached  117 221  metric  tons,  a  7% 
increase compared to 2016. The trigger volume established in the Agreement (93 750 metric 
tons)  was  reached  in  October  2017.  In  line  with  Article  15(3)  of  the  Regulation,  the 
Commission examined the impact on the EU market taking into account inter alia the effects 
on price level, developments of imports from other sources and the overall stability of the EU 
market.  

As a result, the Commission concluded that the suspension of the preferential duty on fresh 
bananas originating in Peru was not appropriate26: (1) imports from Peru represent only 
2.25%  of  total  EU  imports  of  fresh  bananas,  (2)  imports  from  large  exporting  countries, 
notably Colombia, Ecuador and Costa Rica, amounted to about 60% each of their respective 
thresholds  under  the  stabilization  mechanism,  and  the  ‘unused’  quantities  (approximately 
2.3 million metric tons) are significantly higher than the total imports from Peru, (3) import 
from Peru did not have a downward effect on the import price of bananas of all origins and 
finally, (4) there were no indications of a negative effect  for the stability of the EU market, 
EU producers, or the EU outermost regions.  

Imports  of  fresh  bananas  from  Colombia  amounted  to  1 379 718  metric  tons  in  2017.  In 
2017, Colombia remained below the trigger volume of  1 822 500 metric tons established by 
the Agreement. 

In 2017,  Ecuador  exported  1 391 328 metric  tons  of fresh bananas  to  the EU, with  imports 
remaining 22% below the trigger level established for Ecuador in the Agreement for 2017 at 
1 801 788 metric tons. 

26  Commission  Implementing  Decision  (EU)  2017/2277  of  8  December  2017  determining  that  a  temporary 
suspension  of  the  preferential  customs  duty  pursuant  to  Article  15  of  Regulation  (EU)  No  19/2013  of  the 
European Parliament and of the Council is not appropriate for imports of bananas originating in Peru ( OJ 
L 326, 09.12.2017, p.53). 

52 

 
 
                                                 
 
6. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

In the fifth year of provisional application of the Trade Agreement with Colombia and Peru, 
important progress has been made with regard to a number of implementation issues.  

In 2017, and after the EU brought a challenge against Colombian measures at the WTO, the 
modification of fiscal system for spirits entered into force in Colombia. The new law also 
eliminated  certain  market  access  restrictions  that  distorted  competition  in  the  market  to  the 
detriment  of  EU  spirits.  Colombia  also  modified  its  laws  to  create  a  level  playing  field  for 
imported heavy trucks, although these commitments are still to be implemented. In addition, 
last year 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. 
Work will be needed to reduce technical barriers to trade such as sanitary registrations, and as 
well as to further facilitate trade.  

More specifically on SPS issues, substantial progress has been obtained with Colombia since 
the implementation of a single procedure for market access of EU products in 2015. There 
is  smoother  procedure  for  exports  of  animal-based  products,  where  pre-listing  is  applied. 
Several  Member  States  and  products  now  benefit  from  pre-listing:  a  total  of  1080  EU 
establishments exporting products of animal origin have been approved by Colombia without 
prior individual inspection. For example, in  2017, Colombia opened its market for fresh pig 
meat  from  Spain  with  pre-listing.  Some  of  the  pending  activities  on  the  animal  side  are  the 
conclusion  of  harmonised  certificates  on  dairy  products  and  on  cooked  meat  products.  On 
both  cases,  the  EU  has  already  submitted  counterproposals  to  Colombia.  On  fruits  and 
vegetables, although there is progress (e.g. pears from Portugal), this comes at a slower pace, 
as phytosanitary import conditions are cumbersome.  

Furthermore,  there  are  certain  systemic  issues  where  the  Trade  Agreement  framework  has 
brought  added value to  EU exports both  in  Colombia and Peru. To name some of the main 
examples:  i)  the  issue  of  the  ‘born  and  raised’  clause  has  been  or  is  being  overcome  (with 
Colombia and Peru accepting that animals and their products may move throughout the EU, 
and  are  eligible  to  export,  whereas  previously  they  insisted  that  these  products  should 
originate  from  animals  "born  and  raised  "  in  only  one  EU  Member  State);  ii)  the  issue  of 
regionalisation  has  seen  much  progress  (with  Colombia  and  Peru  now  accepting  in  their 
import conditions that products may originate from a free zone in a Member State, without the 
absolute obligation of the whole Member State being totally free of certain diseases); and iii) 
Audit costs are now borne by the importing Party, hence  removing a constraint for Member 
States and producers. 

With  Peru,  the  main  success  on  SPS  issues  has  been  a  nearly  full  market  access  for  EU 
dairy products. In the past, Peru required in its dairy products certificate certain conditions 
that  were  not  justified  from  an  animal  health  and  food  safety  point  of  view  and  were 
considered as unnecessarily trade restrictive due to the harmonised SPS framework in place in 
the  whole  EU.  In  2017,  after  the  negotiation  of  a  harmonised  certificate  and  associated 
conditions,  all  EU  establishments  have  market  access  to  Peru  (pending  registration  in  their 
system).  Several  products  from  different  Member  States  have  been  approved  by  Peru  (e.g. 
genetic  material,  plant  products).  At  the  same  time,  progress  needs  to  be  made  with  the 
approval  of  a  harmonised  certificate  for  the  import  of  meat  products  which  is  still  pending. 
The Trade Agreement context has also been conducive to faster solving country wide bans as 
that imposed to France over certain outbreaks of avian influenza.  

53 

 
At  the  same  time,  progress  remains  limited  on  trade  irritants  such  as  the  proper 
protection  of  EU  GIs  in  Peru,  the  tax  discrimination  of  imported  spirits  if  compared  to 
Pisco which has been magnified in May 2018 by a sudden and steep increase in the excise tax 
that  does  not  affect  Pisco,  or  the  approval  of  harmonized  certificate  for  the  import  of  meat 
products.  

The first year of implementation of the Agreement with Ecuador has seen an important 
increase of trade in both directions. At the same time, some internal  procedures have not 
yet been brought in line with the provisions of the Agreement. For instance, agri-food exports 
still face restrictions  through  cumbersome obligatory import licenses  and arbitrary limits  on 
TRQs.  All  issues have been raised  and some solved through bilateral  dialogue, including in 
the Trade Committee, while others, notably the  prior licensing system  to  use TRQs, remain 
unresolved. A discriminatory customs service charge was introduced in November 2017, but 
was scrapped in June 2018. It needs to be noted though that the implementation of the Trade 
Agreement with  Ecuador is  still in  its initial  stages, that the  commitment of Ecuador seems 
strong and that the bilateral dialogue remains very constructive. On SPS issues, a continued 
dialogue  has  led  to  the  agreement  of  a  procedure  for  approving  exports  of  products  from 
Member  States,  including  prelisting  for  animal  products.  This  procedure  will  involve  inter 
alia certain questionnaires that should be now filled-in by interested Member States. There is 
still work to be done to ensure full implementation. The regular dialogue in place will offer a 
better framework to tackle any export difficulty. As an example, this dialogue has facilitated 
the  approval  of  exports  of  Italian  ham,  although  this  process  was  outside  of  the  Trade 
Agreement provisions. 

The  EU  will  continue  to  seek  a  solution  with  the  three  Andean  partners  with  regard  to  the 
acceptance of splitting of consignments for originating products transiting a third country. 

The  implementation  of  the  Agreement  also  shows  a  very  positive  impact  on  SMEs  in 
Colombia.  According  to  Colombian  statistics,  a  total  of  1 155  Colombian  companies 
exported  products  not  related  to  mining  to  the  EU.  These  exporting  companies  include  328 
SMEs and 582 are microenterprises. In Colombia, SMEs are defined as companies exporting 
between  USD 500 000  and  USD 5 million,  while  micro-enterprises  export  less  than 
USD 500 000 in total. SMEs and exporting microenterprises accounted for 11.3% of the total 
non-minerals exports to the EU in 2017.  

According to Peru’s Export and Tourism Promotion Board, since the entry into force of the 
Agreement,  2 328  new  companies  have  exported  to  the  EU,  of  which  1 381  were  from  the 
agro-industrial sector and 635 from metalurgical, textile and fishing sectors. More than 90% 
of these new exporting companies are SMEs.  

Ecuadorian  statistics  indicate  that  450  companies  have  either  started  to  export  or  resumed 
their exports to the EU. Half of these companies are micro and small enterprises. According to 
the same source, Ecuador exported 200 new products to the EU which include: treated bovine 
hides, ceramic tiles, mango jam, fine steel fish, lemon juice, strawberry pulp, among others. 

7. 

CONCLUSIONS AND OUTLOOK 

The  Trade  Agreement  with  Colombia,  Peru  and  Ecuador  functions  well  and  has  created 
important  business  opportunities,  which  are  being  increasingly  seized  by  both  businesses 
and  exporters  from  both  sides.  The  negative  trend  in  trade  flows  linked  to  the  decline  of 
commodity prices and slow growth of domestic demand in the EU have been reversed during 

54 

 
the reporting period, with all three partners reporting an increase in bilateral trade with the EU 
–  6.8%  for  Colombia,  15.7%  for  Peru,  and  an  impressive  20%  in  the  first  year  of 
implementation with Ecuador.  

In  the  case  of  Colombia,  the  Agreement  contributed  to  an  important  diversification  of  the 
country’s  exports,  notably  in  favour  of  the  agricultural  sector,  thus  creating  regional 
employment opportunities positive for the implementation of the country's peace agreement. 

In the case of Peru, the Agreement has contributed to a significant increase in the volume and 
variety  of  Peruvian  exports  to  the  EU,  helping  Peru  to  diversify  its  export  base  and  its 
economy  beyond  its  strong  dependence  on  mineral  commodities,  and  has  thereby  offered 
opportunities  to  capture  higher  layers  of  added  value.  Fresh  agricultural  products,  fishery 
products  and  metallurgical  products  are  the  Peruvian  products  which  have  benefited  most 
from increased opportunities. This trend of increased exports of agri-food products has had a 
positive  impact  on  Peruvian  SMEs.  EU  exports  have  also  generally  improved,  notably  for 
products  such  as  machinery,  electrical  appliances,  vehicles,  pharmaceuticals  and  medical 
devices.  

EU imports from Ecuador are at a record high, while EU exports to Ecuador have increased 
by  an  impressive  36%  in  2017.  The  Agreement  has  already  shown  benefits  for  Ecuadorian 
SMEs. Alike its  Andean neighbors, the Agreement  provides Ecuador a potential for  growth 
and diversification.  

Full implementation of the Agreement remains a priority for the EU. It is a positive point 
that  the  institutions  under  the  Agreement  work  well.  The  discussions  with  the  three  partner 
countries in the Trade Committee and specialised Sub-committees have been constructive and 
have helped solve a significant amount of issues. The Decision adopted by Trade Committee 
with regard to public procurement in Colombia should effectively improve EU market access.  

As reported  earlier,  Colombia reformed its market  for domestic  and imported spirits.  While 
this creates a more level playing field, challenges remain and some measures are questionable 
from  a  national  treatment  perspective.  Several  sectors  continue  to  need  to  be  monitored 
closely,  most  importantly  SPS  measures,  market  access  for  EU  spirits,  Intellectual  Property 
Rights and pharmaceuticals, and measures related to imported cars and trucks. In the case of 
Peru,  SPS  market  access  remains  restricted  despite  progress  achieved.  Remaining  trade 
barriers are mainly in the spirits sector or in the form of non-tariff and regulatory barriers. In 
the  case  of  Ecuador,  discussions  regarding  discriminatory  measures  in  the  pharmaceutical 
sectors were fruitful, and resulted in better protection of EU intellectual property. In 2017, the 
EU  and  Ecuador  agreed  on  a  single  procedure  for  agri-food  imports,  which  in  the  future 
should  yield  some  positive  results.  Besides,  early  2018,  both  sides  finally  concluded 
outstanding discussions leading to the approval of imports of Italian ham.  At the same time, 
the low percentage of EU use of agricultural TRQs in Ecuador shows that more work needs to 
be done to improve EU market access. 

The  implementation  of  the  TSDchapter  has  progressed  and  there  has  been  an  increasingly 
open  and  inclusive  dialogue  on  labour  and  environmental  matters.  It  is  for  example 
noteworthy  that  Colombia  and  Peru  are  increasing  their  financial  and  material  resources  to 
enhance  their  labour  inspection  capacities,  but  close  follow  up  will  be  needed  as  important 
challenges remain in that regard. In the case of Peru, the submission to the EU by a group of 
civil  society  organisations  with  allegations  of  non-compliance  by  Peru  of  its  labour  and 
environmental  commitments  under  the  TSD  Chapter  illustrates  the  strong  interest  of  civil 

55 

 
society  in  the  effective  implementation  of  the  Agreement  and  the  importance  of  effective 
mechanisms  for  the  consultation  of  civil  society.  Overall,  there  is  significant  scope  for 
improvement  from  Peru,  with  regard  to  both  the  consultative  mechanism  setup  and  the 
implementation  of substantive obligations, and on which it is  important to  progress rapidly. 
With Ecuador, there has been a constructive engagement in the first year of discussions on the 
implementation of the TSD chapter and work will now focus on concrete points of action and 
progress.  It  is  therefore  clear  that  important  challenges  remain  for  all  three  Andean  partner 
countries  in  this  area  and  that  this  will  need  to  remain  an  important  focus  of  the 
implementation work. 

Regarding the stabilization mechanism for bananas, there is no indication that the stability of 
the  EU  market  or  the  situation  of  the  EU  producers  have  been  affected  by  the  level  of 
Peruvian  exports.  Nevertheless,  the  Commission  will  continue  its  reinforced  monitoring  of 
banana imports and evaluate the market situation.  

In  conclusion,  the  Agreement  creates  important  benefits  for  business,  consumers  and  civil 
society  in  general  on  both  sides.  The  Commission  will  continue  its  efforts  to  promote  the 
Agreement and to work with Colombia, Ecuador and Peru to ensure the full implementation 
of the Agreement in all its aspects. The Commission will continue to keep EU Member States 
and the European Parliament fully informed. 

56 

 
ANNUAL REPORT ON THE IMPLEMENTATION OF PART IV OF THE 
ASSOCIATION AGREEMENT BETWEEN THE EU AND ITS MEMBER STATES 
AND CENTRAL AMERICA27 

1. 

INTRODUCTION 

2018 is the fifth year of implementation of the Trade Pillar (Part IV) of the European Union - 
Central  America  (CA)  Association  Agreement  establishing  an  Association  between  the  EU 
and its Member States, on the one hand, and the six countries of CA on the other (hereinafter, 
“the Agreement”)28. 

Under  Article  13  of  Regulation  (EU)  No  20/2013  of  the  European  Parliament  and  of  the 
Council of 15 January 2013 implementing the bilateral safeguard clause and the stabilisation 
mechanism for bananas of the Agreement establishing an Association between the European 
Union  and  its  Member  States,  on  the  one  hand,  and  Central  America  on  the  other29,  the 
Commission  committed  to  submit  an  annual  report  to  the  European  Parliament  and  the 
Council  on  the  application,  implementation  and  fulfilment  of  obligations  of  the  Agreement 
and the Regulation. This report responds to this requirement.  

2. 

OVERALL ASSESSMENT: EVOLUTION OF BILATERAL TRADE 

2.1. 

Trade in Goods overall 

In  a  change  to  the  methodology  used  in  previous  reports  on  the  implementation  of  the 
Agreement30, the present  report only uses  Eurostat data on trade  flows between the EU  and 
CA.  Eurostat  and  Central  American  trade  statistics  register  significant  differences  in  their 
respective figures. The effect of the Free Trade Zone (FTZ) of Panama, one of the largest in 
the world, may be significant in this regard, as Eurostat counts EU goods transitting through 
the  FTZ  as  exports  to  Panama,  while  CA  statistics  count  them  as  direct  imports  of  their 
country of final destination when in CA. The need to have consolidated and comparable data 
in a timely fashion and with an adequate level of detail requires reverting to the exclusive use 
of Eurostat data for this and subsequent reports.  

2017  data  confirmed  that  CA  continued  to  enjoy  an  overall  surplus  with  the  EU 
(EUR 638 million, 5.5% of total  trade).  It  should, however, be recalled  that the bulk  of this 
surplus is with Costa Rica and Honduras, while Panama and Salvador have deficits. 

Overall, EU imports from the region have seen a very solid upward trend in five of the 
six  countries  in  the  region  –  with  double  figure  growth  in  the  case  of  four  of  them.  The 
outliers  are  Panama  with  a  fall  of  14%  in  its  exports  to  the  EU  and  Honduras  with  exports 

27  More  information  can  be  found  at:  http://ec.europa.eu/trade/policy/countries-and-regions/regions/central-

america/  

28  OJ L 346, 15.12.2012, p. 3. Additional information on EU – Central America trade relations can be found at 

http://ec.europa.eu/trade/policy/countries-and-regions/regions/central-america/. 

29  OJ L 17, 19.1.2013, p. 13. 
30  COM (2017) 160 final. 

57 

 
                                                 
growing by almost 22% year-on-year. The evolution of EU exports to CA has been more 
modest, with  a slight  decrease in  the case of Honduras, but  rising overall  and reversing the 
decrease of 2016. 

EU trade flows worldwide recovered in 2017, growing by 8% after having suffered a fall of 
1.8%  in  2016.  This  overall  rise  in  trade  flows  of  the  EU  with  the  rest  of  the  world  was 
reflected in  its trade with  CA, which grew by 7.2%  year-on-year, but  with  a more vigorous 
growth  of  EU  imports  from  the  CA  region  (up  11.5%)  than  in  exports  from  the  EU  to  the 
region, which nevertheless grew by almost 3% in 2017 after falling by 7.4% in 2016.  

As we reach the fifth anniversary of the provisional entry into force of the trade pillar of the 
Association  Agreement,  EU  imports  of  Central  American  goods  in  2017  remain  almost 
11%  below  their  level  of  five  years  before.  This  is  mainly  due  to  the  steep  reduction  in 
exports of computer parts from  Costa Rica (after the rellocation  to  Asia of the international 
company  producing  the  IT  components).  In  2012  Computer  parts  represented  38.6% 
(EUR 2 627 million) of all Central American exports to the EU, while in 2017 the figure was 
less than 0.1% (EUR 3.6 million). This is an important element to take into account because if 
one were to disregard trade in this category, EU imports would in fact have grown by almost 
45% - when EU import growth from the rest of the world for the same period was just 3.2%. 

EU exports to CA increased by 2.5% between 2012 and 2017, which is significantly below 
the  11.5%  increase  the  EU  reached  with  the  rest  of  the  world  as  a  whole.  This  modest 
increase is mainly due to a severe drop in EU exports of aircraft and ships to the region, 
which  are  high  unit  value  items  that  can  have  a  distorting  effect  on  trade  trends  in  a  small 
market.  The  year  2012  happened  to  be  a  record  one  for  these  exports  –  representing  19% 
(EUR 1 028 million) of all EU exports to CA that year, while the corresponding amounts were 
very modest in 2017 (2.2%, EUR 120 million). Not counting these two chapters, EU exports 
would in fact have risen by 24% between 2012-17, more than double the rate with the rest of 
the world for the same time period.  

Table 1. Trade flows between EU and CA and annual growth in 2017 (million EUR) 

Country 
Costa Rica 
Guatemala 
Honduras 
Nicaragua 
Panama 
El Salvador 
TOTAL 
* Source: EUROSTAT  

EU Exports(*) 
1 097 
992 
437 
244 
2 195 
481 
5 447 

4.3% 
9.5% 
-3.3% 
3.4% 
1% 
2% 
2.9% 

EU Imports(*) 
2 649 
1 033 
1 265 
376 
512 
249 
6 085 

12.3% 
13.9% 
21.8% 
9.3% 
-14% 
16% 
11.5% 

Balance  Total flow 
-1 552 
-41 
-828 
-132 
1 683 
232 
-638 

3 746 
2 025 
1 702 
620 
2 707 
730 
11 530 

32.5% 
17.6% 
14.8% 
5.4% 
23.4% 
6.3% 
100% 

58 

 
 
1.1.6.  Sectoral structure of trade  

CA continues  to  rely on a handful of key  agri-food products  for its exports  to  the EU. Five 
main product categories31 accounted for nearly 64% of total exports from the region to the EU 
in  2017,  with  exports  from  the  whole  agri-food  sector  reaching  74%.  Nevertheless,  exports 
from  two  non-agricultural  sectors  also  saw  significant  growth:  Medical  devices  and 
instruments, up almost 23% year-on-year and 242% over 5 years to 10.6% of all EU imports 
from CA, and knitted clothing up 28% in 2017 (62% over 5 years) at 2.3% of all EU imports 
from CA. The main import product categories from CA (by HS chapter) for 2017 were: Fruits 
30.8%, Coffee and Tea 16%, Optical  and Medical  instruments  and devices 10.6%, Fats  and 
Oils 9.6% and Fish & Crustaceans 5%. 

In particular, significant changes in value of Central American exports to the EU in 2017 were 
identified for the following products: 

  Fruit – a traditional export from the region, 2017 saw record exports with an annual 
20% rise lifting the sector to almost 31% of total exports to the EU. The main products 
are bananas and pineapples, and Costa Rica is the main exporter of fruit with 76% of 
the region’s exports to the EU. 

  Coffee  –  imports  from  CA  suffered  a  significant  decline  in  2016  (-14.5%)  but 
recovered in 2017 rising almost 18% (from EUR 830 to EUR 977 million) to the best 
year  since  2012,  now  representing  16%  of  total  EU’s  imports  from  the  region. 
Honduras  was  the  star  coffee  exporter  to  the  EU  in  2017  with  65%  of  CA’s  coffee 
exports. 

  Medical instruments and devices – EU imports continued their impressive trajectory 
rising by a further 23% in 2017 to stand at EUR 648 million (more than three times the 
figure of 2012) and  representing 10.6% of total  EU imports from  CA. Costa Rica is 
the source of 99.5% of the region’s exports under this heading to the EU. 

As  for  the  EU,  the  range  of  exported  products  is  rather  more  diverse  with  the  five  main 
product  categories  representing  little  more  than  46%  of  all  EU  exports  to  the  region. 
Mechanical machinery represents 18.2% of all EU exports to CA and rised 8.2% in 2017 to 
EUR 990 million and almost 20% over the 2012-17 period. Electrical machinery also rose by 
5.4% in 2017 (and by almost 31% over five years) to EUR 446 million representing 8.2% of 
CA’s imports from the EU. Other significant categories are: Pharmaceuticals, down 4.2% to 
EUR 550 million  (10%  of  EU  exports)  although  up  24%  over  a  five  year  period;  Vehicles, 
down  7.7%  to  EUR 303 million  (5.6%  of  exports)  and  +3.3%  over  five  years;  Perfumes  & 
Cosmetics, down by 5.7% to EUR 239 million (4.4% of exports) and  -7.7% over five years; 
Medical  instruments  and  devices  fell  marginally  (-2.3%)  to  EUR 221m  but  grew  42% 
between 2012 and 2017. 

31  Fresh fruit (mainly bananas and pineapples), coffee, fats and oils (mainly crude palm oil), fish & shrimp, and 

sugar. 

59 

 
                                                 
1.1.7.  Country-by-Country analysis  

On a national breakdown, following Eurostat figures, the main destination for EU exports to 
CA  in  2017  is  Panama  (40%)  followed  by  Costa  Rica  and  Guatemala  (20%  and  18% 
respectively), then El Salvador (9%), Honduras (8%) and Nicaragua (5%). The main source of 
EU  imports  from  CA  continues  to  be  Costa  Rica  by  a  wide  margin  (44%)  followed  by 
Honduras (21%), Guatemala (17%), Panama (8%), Nicaragua (6%) and El Salvador (4%). 

EU  trade  with  Costa  Rica  rose  by  almost  10%  between  2016  and  2017  consolidating  the 
country’s  position  as  the  main  commercial  partner  in  the  region.  EU  exports  to  Costa  Rica 
continued the positive trend of previous years (up 4.3%), while EU imports from the country 
jumped by 12.3% to EUR 2 649 million. 

Costa  Rica  mainly  exports  to  the  EU  fruits  (bananas  and  pineapples)  which  grew  11%  to 
EUR 1 439 million,  and  prepared  vegetables  and  fruits  which  have  grown  157%  to 
EUR 192 million over the last five years. Following the collapse in 2014 of the main export 
item of the country (computer parts), exports of medical devices and instruments have risen at 
a rapid pace (a 247% rise since 2012) reaching EUR 644 million and 24% of EU imports from 
the country. 

EU  exports  to  Costa  Rica  rose  4.2%  to  EUR 1 097 million  but  had  mixed  performances  in 
2017.  Mechanical  machinery  remained 
the  main  category  at  15%  of  exports  – 
EUR 165 million – but fell 13%; Electrical machinery rose 11% to EUR 86 million. Vehicles 
is the second most important export (12.3%) but equally fell 9% to EUR 135 million. Plastics 
and alcoholic beverages are other significant exports. 

Panama  continues  to  be  the  main  gateway  for  EU  goods  into  the  region  with  EU  exports 
totaling EUR 2 195 million, or 40% of all exports to CA. Although overall annual growth has 
been  below  1%,  certain  segments  have  seen  significant  growth  or  simply  represent  a  large 
percent of all EU exports to the region as a whole. 

Pharmaceutical  products  is  the  largest  export  segment  at  EUR 365 million  and  although 
growth has been marginally negative year on year (-1.7%) Panama still absorbs 66% of all EU 
exports  to  the  region  under  this  heading.  Other  important  products  include  beverages  at 
EUR 123 million, having fallen 8% in 2017 but still accounting for 74% of EU exports to CA, 
perfumes & cosmetics down 22% to EUR 168 million – 70% of all EU exports to the region 
and  jewelery  up  10%  to  EUR 72.5 million,  accounting  for  95%  of  EU  exports  to  CA. 
Mechanical  machinery  jumped  21.4%  to  EUR 321 million,  while  ships,  traditionally  a 
significant EU export to the country, fell to an historic low of EUR 96 million in 2017. 

EU imports from Panama fell 14% in 2017 to EUR 512 million and were heavily concentrated 
in  fruits  at  EUR 251 million,  mainly  bananas,  and  fish  &  crustaceans,  which  together  with 
EUR 52 million of new tyres) account for 70% of EU imports from Panama in 2017. 

Guatemala’s  exports  to  the  EU  grew  by  14%  from  EUR 908 million  in  2016  to 
EUR 1 033 million in 2017. Significant growth took place for a number of products. Palm Oil 
has  become  the  top  export  growing  by  20%  in  2017  to  EUR 224 million,  with  a  tenfold 

60 

 
increase  over  the  2012-17  period.  Export  of  bananas  rose  by  9%  to  EUR 64.6 million  –  26 
times higher than in  2012  – and frozen  fish jumped 82% in  2017 to  EUR 28 millon, as did 
iron & steel 122% up on the  year to EUR 60 million. Sugar, a traditional export, fell 4% to 
EUR 44 million  but  still  represents  44%  of  all  sugar  imported  by  the  EU  from  CA.  Finally 
coffee,  another  staple  export,  rose  11%  to  EUR 142 million,  although  still  30%  below  the 
value exported to the EU in 2012. 

Guatemala’s imports from the EU in 2017 grew at the fastest rate of any country in CA, up 
9.5% on the year to EUR 1 033 million. Aluminium shot up 238% to EUR 47.6 million – 15 
times its level in 2012 –, electrical machinery was up 54% to EUR 77 million, and mechanical 
machinery managed a significant rise of 11% to EUR 212 million. 

Trade  flows  between  Honduras  and  the  EU  saw  the  highest  overall  percentage  increase  at 
14% in 2017 but exclusively due to the very significant rise of Honduran exports to the EU 
which 
the  year  (from  EUR 1 039 million  in  2016  to 
EUR 1 265 million), while EU exports were down -3.3%. 

jumped  by  almost  22%  in 

Export concentration is very high, with coffee accounting for over 50% of total exports to the 
EU,  having  risen  19%  in  2017  to  EUR 636 million  and  representing  65%  of  all  coffee 
exported  by  CA  to  the  EU.  Palm  oil  and  kernel  rose  34%  and  19%  respectively,  to 
EUR 299 million  equivalent  to  51%  of  CA  exports  of  these  products  to  the  EU,  fruits  rose 
17%  to  EUR 59 million,  and  knitted  apparel  and  clothing  also  grew  by  21%  to 
EUR 58 million.  In  short,  these  four  categories  represented  over  90%  of  EU  imports  from 
Honduras in 2017. 

EU exports to Honduras were almost three times smaller than its imports and represented 8% 
of  its  total  exports  to  CA  in  2017.  The  main  headings  are  electrical  and  mechanical 
machinery, pharmaceutical products and plastics. 

EU trade flows with  El Salvador rose by 6.4%  over 2017 to  EUR 730 million,  with  a 16% 
rise  in  EU  imports,  which  concentrate  in  a  few  key  sectors:  prepared  fish  and  frozen  fish 
accounted for EUR 100 million  of exports to  the EU and rose by 33% over  2017;  electrical 
capacitors  grew  35%  to  EUR 46 million  and  knitted  apparel  clothing  climbed  78%  to 
EUR 16 million.  Export  values  of  more  traditional  exports  such  as  sugar  (EUR 31 million) 
and  coffee  (EUR 27 million)  remained  essentially  unchanged.  These  five  headings 
represented almost 90% of EU imports from El Salvador in 2017. 

El Salvador is the fourth market for EU exports in CA at EUR 481 million, at just 9% of all 
exports  to  the  region.  In  2017  these  grew  by  2%,  with  double-digit  growth  in  mechanical 
machinery  (EUR 116 million)  and  plastics  (EUR 16 million),  but  a  12%  fall  for  electrical 
machinery. 

Nicaragua’s overall trade with the EU increased in 2017 (almost 7%) although EU imports 
grew  at  almost  three  times  the  rate  (9.3%)  of  EU  exports  to  the  country  (3.4%).  It  is  the 
smallest  EU  trade  partner  within  the  region,  with  bilateral  trade  representing  5.4%  of  total 
trade with the region. 

61 

 
Coffee  regained  its  traditional  positon  as  the  main  export  product  of  Nicaragua  to  the  EU, 
with a growth in 2017 of 30% to EUR 100 million. On the other hand, EU imports of frozen 
seafood – mainly crustaceans – fell 8% to EUR 85 million in 2017, but still 40% above their 
level in 2012. These now traditional products were supplemented by fast growing areas such 
as bananas, groundnuts, or T-shirts. 

EU  exports  to  the  country  reached  a  modest  EUR 244 million.  The  main  segments  remain 
imports)  and  electrical  machinery 
mechanical  machinery  (EUR 55 million,  23%  of 
(EUR 44 million,  18%  of 
imports),  but  other  areas  showed  significant  growth: 
pharmaceuticals, medical instruments and devices, and vehicles.  

2.2. 

Trade in agricultural goods  

The  Agreement  defines  a  number  of  TRQs  with  parties  granting  each  other  a  preferential 
tariff treatment up to the quota’s quantitative threshold. Imports over this threshold are subject 
to the applicable Most-Favoured Nation (MFN) tariff. 

The Association Agreement grants eight TRQs in favour of CA on products that did not enjoy 
preferential access to the EU market prior to the entry into force of the Agreement. In 2017 as 
in previous years, TRQs for products originating in CA were used for only two of the eight 
categories available (cane sugar and rum). 

Table 2: TRQs granted by the EU to CA – Utilisation in 2017 

Origin 

Products 

Unit 

Garlic 
Rice 
Bovine meat 
Mushroom 
Manioc starch 
Sweetcorn 
Sugar 
Rum in container > 2 l 

Tons 

hl pure alcohol 

CA 

CA except 
Panama 
Source: European Commission 

TRQ 
volume 

550 
24 000 
11 400 
275 
5 000 
1 920 
168 000 
8 200 

EU 
Import 
0 
0 
0 
0 
0 
0 
167 686 
8 200 

Utilisation 
rate 

0% 
0% 
0% 
0% 
0% 
0% 
100% 
100% 

CA  granted  the  EU  TRQs  on  four  products.  EU  exporters  continued  to  make  use  of  the 
opportunities offered by these TRQs, with 2017 seeing a marked improvement in the rate of 
utilisation  jumping  to  91%  for  powdered  milk  (from  56%  in  2016)  and  56%  in  the  case  of 
cheese (slightly above the 48% the previous year). Thus, although a margin of growth in these 
products remains, there has been an improvement in their use in 2017.  

Table 3: TRQs granted by CA to the EU – Utilisation in 2017 

Products 

Quota (tons) 

Cured hams 
Powdered milk 
Cheese 
Prepared swine meat 
Source: Data collected at national level in the six CA countries 

1 080 
1 335 
2 495 
1 080 

Annual 
increase 
65 
95 
150 
65 

Volume 
(tons) 
363 
1 218 
1 401 
77 

Utilisation 
rate 

34% 
91% 
56% 
7% 

62 

 
2.3. 

Preference Utilisation Rates (PURs) 

The PUR on imports into the EU  from  Central  America was  again  high with  an average of 
95%. While it is above 90% for 5 of the 6 countries, it remains at 82% for Panama.  

As in previous years, CA has informed the EU that the databases managed by their respective 
customs authorities are not currently adapted for a regular exchange of detailed statistics that 
can  enable  such  an  analysis  of  the  tariff  preference  to  take  place  for  imports  from  the  EU. 
This was again discussed at the Association Committee meeting in June 2018. 

2.4. 

Trade in Services and FDIs 

1.1.8.  Trade in Services  

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 in goods and services. Total 
trade  in  services  in  that  year  amounted  to  EUR 6 857 million,  an  increase  of  almost  9% 
concentrated in the two main markets – Panama and Costa Rica – which grew by 14% and 
19%, respectively. Panama alone accounts for around 60% of EU trade in services with CA.  

Table 4: Trade in services between the EU and CA in 2016 (million EUR) 

Country 

Costa Rica 
El Salvador 

Guatemala 

Honduras 
Nicaragua 

Panama 

Total 
Source: Eurostat 

2015 

EU Exports  EU Imports  Total 
1 112 
325 

586 
268 

526 
105 

337 

177 
171 

1 743 

3 282 

293 

106 
85 

1 949 

3 064 

630 

283 
256 

3 692 

6 298 

2016 
EU Exports  EU Imports 

757 
252 

275 

174 
64 

2 155 

3 677 

566 
93 

249 

94 
88 

2 061 

3 151 

Total 

1 323 
374 

524 

268 
152 

4 216 

6 857 

Total 
19% 
5.5% 

7.5% 

4% 
2% 

62% 

100% 

As  the  trade  in  services  becomes  increasingly  important,  combining  the  EU  –  CA  trade 
figures for goods and services in 2016 reveals certain patterns as regards total trade between 
both regions. Three countries concentrate about 80% of total trade, with Panama accounting 
for  37.7%,  Costa  Rica  27.7%  and  Guatemala  13.9%.  The  case  of  Panama  is  particularly 
relevant from the EU perspective in so far as it is the destination for over 40% of EU exports 
to the region and over 60% of total trade in services (which is relatively balanced in terms of 
imports and exports of the same).  

1.1.9.  Development of FDI  

In  2016,  three  countries  (Panama,  Guatemala  and  Costa  Rica)  concentrated  97%  of  all  EU 
FDI  in  the  region.  FDI  stocks  increased  by  4%  for  the  whole  region  with  higher  rates  of 
increase in the case of Costa Rica (16%) and Guatemala (6.5%).  

Table 5: EU – CA FDI (2016, million EUR) 

Country 

2015 

2016 

Inward 

Outward 

Inward 

Outward 

Total 

Total 

63 

 
 
 
 
Costa Rica 
El Salvador 
Guatemala 
Honduras 
Nicaragua 
Panama 
Total 

1 114 
268 
2 916 
26 
83 
2 071 
6 478 

2 537 
105 
2 098 
498 
305 
23 479 
29 022 

1 347 
252 
2 840 
23 
91  
6 560 
11 113 

2 899 
93 
2 501 
461 
331 
19 541 
25 826 

4 246 
345 
5 341 
484 
422 
26 101 
36 939 

11.5% 
1% 
15% 
1% 
1% 
70.5% 
100% 

Whilst the level of importance of FDI originating from the EU is extremely varied depending 
on the the CA country in question, the overall level of investment in the region is relatively 
high.  In  2016  EU  FDI  stocks  in  CA  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. 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

3.1. 

Association Committee 

On  14  June  2018,  the  Association  Committee  held  its  fourth  meeting  to  review  the  work 
carried out  by the different  subcommittees (see in  more detail  further below 3.2-3.8) and to 
discuss other trade related issues.  

The  Parties  reached  an  agreement  on  the  incorporation  of  Croatia  to  the  Association 
Agreement, including the offer of compensation covering bananas as submitted earlier by the 
EU.  They  shall  start  the  administrative  and  institutional  procedures  to  adopt  the  relevant 
Protocol, the text of which has been agreed with the exception of the precise compensations 
related  to  bananas,  which  will  be  added  to  the  final  decision  before  initiating  legal 
proceedings.  

The EU stressed  the need to have reliable data on the use of tariff preferences to  get  a 
better  overview  of  the  effect  of  the  agreement  so  far  and  explore  means  to  assist  economic 
operators, in particular SMEs, to make better use of its opportunities. It  was agreed that the 
Market Access subcommittee would work on this issue, with a view to identifying the reasons 
for  the  lack  of  data  and  possible  solutions,  including  the  possibility  of  establishing 
cooperation programmes. 

The  EU  equally  noted  the  importance  of  effectively  implementing  the  sustainable 
development chapter in the Agreement. The EU will therefore be requesting regular bilateral 
monitoring  on  specific  issues  with  certain  countries,  as  it  has  already  been  doing  in  some 
cases. 

The  EU  noted  that  there  was  a  delay  in  the  compliance  with  the  commitment  to  adopt  a 
competition law by Guatemala. The latter explained that the preparation of the law had been 
more  difficult  than  originally  expected,  but  that  the  aim  of  adopting  it  was  maintained, 
although it was not in a position provide a date. 

CA pointed out the importance of swift progress with the preparation and adoption of several 
procedural decisions pending in the area of customs and rules of origin. 

CA  also  insisted  on  the  need  to  establish  clear  and  workable  procedures  for  cumulation  of 
origin with other countries of Latin America. 

64 

 
 
Other issues of interest to either of the parties were discussed more in detail at the meetings of 
the subcommittees (see below). 

It  was  agreed  that  the  next  meeting  of  the  institutions  of  the  Association  Agreement  would 
take place in June 2019 in Guatemala. 

3.2. 

Sub-Committee on Market Access for Goods 

On 7 and 8 June 2018, during the fourth meeting of this sub-committee, the Parties reviewed 
pending issues of interest to either party. 

CA main requests were: 

  Systematic control by European customs of export certificates issued by the authorities 
of CA regarding the use of quotas, as provided for in the Agreement, in order to allow 
an adequate follow-up of such use by the Central American countries.  

  Request  by  Costa  Rica  for  the  redistribution  of  products  within  the  quota  applied  to 

the textile sector. 

  The  establishment  of  clear  and  applicable  procedures  for  cumulation  of  origin,  in 

particular with Mexico and Chile regarding tuna.  

The main outstanding market access issue for the EU refers to the taxes on beers and spirits in 
Costa Rica which the EU considers discriminatory and in contradiction to the Joint Statement 
attached  to  the  Agreement.  The  EU  also  reminded  Nicaragua  of  the  longstanding  problem 
with scanner fees at customs. 

The parties also shared information and their analyses on the recent evolution of trade flows 
and on the use of tariff preferences and quotas. 

3.3. 

Sub-Committee on Customs Procedures, Trade Facilitation and Rules of Origin 

The  fourth  meeting  of  the  sub-committee  took  place  on  4  and  5  June  2018,  and  the  main 
following issues were discussed. 

  After detailed discussions, the parties came close to agreeing the text of decisions on 
the Explanatory Notes and Filling Instructions of the EUR.1 certificates, on guidance 
relating to Annex II (rules of origin) of the Agreement, and regarding the transposition 
of rules of origin to the VI Amendment of the Harmonised System. It was agreed that 
once finalised these decisions will be adopted through written procedure. 

  CA  reiterated  the  importance  it  attaches  to  clarifying  the  conditions  for  the  possible 
cumulation  of  origin  with  other  countries  in  Latin  America,  as  provided  for  in  the 
Agreement. The EU noted that cumulation of origin is subject in particular to adequate 
administrative cooperation arrangements between the parties concerned. 

  The EU insisted on its interest in relation to the proposed amendment to the text of the 
Agreement with regard to direct transport. CA is in the process of defining a common 
position on how best to address this issue, which shall be notified to the EU. 

65 

 
The parties  also  exchanged information  on recent developments  of their customs legislation 
and  procedures,  on  customs  related  aspects  of  their  ongoing  trade  negotiations,  and  on  the 
current state of play of regional integration commitments of CA. 

3.4. 

Sub-Committee on Technical Barriers to Trade (TBT) 

On 6 June 2018, the sub-committee on TBT reviewed the following topics: 

  CA  requested  an  update  on  the  ongoing  modifications  of  EU  legislation  on  the 
promotion  of  the  use  of  energy  from  renewable  sources  and  in  particular  as  to  its 
potential effects on the export of palm oil from CA. 

  Nicaragua  enquired  about  the  practical  effects  for  exporting  countries  following  the 

establishment of a traceability system for tobacco products in the EU.  

  The  EU  raised  specific  trade  concerns  on  registration  processes  in  CA,  internal 
processes of technical harmonisation, and on the implementation of CA commitments 
on regional economic integration. 

3.5. 

Sub-Committee on SPS Matters 

The  fourth  meeting  of  the  sub-committee  on  SPS,  held  on  4-5  June  208,  delivered  positive 
outcomes and consolidated progress made to date. The EU highlighted the following issues: 

  The importance for CA to fulfil procedures established in the Association Agreement 
to ensure that market access requests are handled in a timely and transparent manner, 
including the approval of lists of establishments and verifications, among others. 

  The importance of complying with standards, guidelines and recommendations of the 

international standard setting organisations. 

3.6. 

Sub-Committee on Intellectual Property 

On  6  June  2018,  the  fourth  meeting  of  the  sub-committee  on  Intellectual  Property  Rights 
(IPR) took place via video-conference to review in particular the following issues. 

The Parties reviewed the state of play concerning future Geographic Indications (GIs) of CA 
countries  as  included  in  the  Joint  Declaration  of  the  Association  Agreement  as  well  as 
registration  and  protection  of  EU  GIs  (all  registered  in  the  six  countries,  except  parmigiano 
reggiano in Guatemala). 

The  EU  indicated  its  concerns  with  several  pending  cases,  in  particular  on  Parmigiano  in 
Guatemala,  Manchego  in  Costa  Rica  and  the  publication  of  a  list  of  generic  terms  in 
Honduras. Guatemala explained that in the Parmigiano case a court decision is pending. Costa 
Rica  indicated  that  the  existence  of  certain  local  manchegos  preceded  the  Agreement  and 
would  therefore  be  covered  by  Article  246  of  the  AA.  However,  it  took  note  of  the  EU’s 
concerns and indicated that it would follow-up, particularly on possible cases of evocation of 
the region  of  La Mancha. Honduras confirmed its  availability to  discuss in  detail  the list  of 
generics and requested additional documentation from the EU. 

66 

 
The parties agreed to continue the discussions on the EU proposal for simplified procedures 
for registration of new GIs. El Salvador stated its interest in registering within a short period 
of time seven new GIs and requested information on the EU’s registration process. 

3.7. 

Board on Trade and Sustainable Development 

From  11-12  June  2018,  the  EU  and  CA  held  the  meetings  of  the  institutions  in  charge  of 
monitoring the implementation of the TSDprovisions of the Agreement (see part 4 below).  

3.8. 

Ad hoc meeting on Government Procurement 

Following  the  Parties’  agreement  to  create  a  temporary  technical  ad  hoc  working  group  on 
government procurement in 2016, this group met again on 7 June 2018 via videoconference. 

  The EU requested information on the status of the single point of access and stressed 
the importance of the single point of access for EU operators to access information in 
the region. 

  The  EU  addressed  the  importance  of  disseminating  information  regarding  the 
commitments  in  the  Government  Procurement  Title  of  the  AA  to  public  entities,  in 
order  to  make  them  aware  of  the  obligations  stemming  from  the  chapter  if  different 
from national legislation. 

 

Information  on  recent  developments  in  the  field  of  government  procurement  was 
exchanged  between  the  parties,  who  also  confirmed  the  usefulness  for  this  group  to 
continue meeting annually. 

4. 

IMPLEMENTATION  OF  THE  PROVISIONS  ON  TRADE  AND 
DEVELOPMENT 

SUSTAINABLE 

Important  challenges remain in  the implementation  of labour provisions, particularly related 
to  freedom  of  association  and  collective  bargaining  in  some  CA  countries.  Guatemala  has 
made  some  progress  by  creating  the  national  tripartite  body,  Honduras  informed  about  the 
preparation of the labour law reform and El Salvador showed some efforts to re-establish the 
High Labour Council. However, stronger cooperation among the social partners is needed as 
well as more efforts to address the violence against trade unionists. Panama informed about 
the  measures  on  gender  equality  in  employment  and  Costa  Rica  on  the  new  formalisation 
strategy. The EU also highlighted the issue of child labour in CA countries.  

Following a recommendation of the 2016 TSD Board meeting the EU funded two events on 
responsible  business  conduct  /  corporate  social  responsibility  (RBC/CSR)  in  the  region. 
The  first  was  held  in  San  José,  Costa  Rica  in  May  2017,  with  an  emphasis  on  responsible 
global  value  chains.  The  second  was  held  in  Guatemala  City,  Guatemala,  in  May  2018  and 
focussed on decent work. Speakers from the International Labour Organisation (ILO) and the 
OECD as well as the business network CSR Europe spoke at both events, which also involved 
participants  from  CA  countries  and  were  held  in  partnership  with  national  organisations 
promoting responsible business conduct. 

Civil  society  advisory  mechanisms  under  the  TSD  chapter  are  now  established  in  all 
Central  American  countries.  These  mechanisms  have  an  important  role  to  inform  and 
involve civil society groups in the application of the TSD chapter.  

67 

 
Furthermore, funding was provided by the EU to the ILO Regional Office to support the 
effective implementation of ILO fundamental conventions in El Salvador and Guatemala – a 
key obligation under the TSD chapter. Bilateral  exchanges were held with both countries to 
follow up on specific issues identified by the ILO ahead of meetings of the ILO in Geneva.  

Last but not least, in 2018 the EU launched a new project with the Netherlands’ Centre for the 
Promotion of Imports (CBI)32 to promote agricultural and fishery product exports from CA to 
Europe,  with  a  strong  emphasis  on  corporate  social  responsibility  and  decent  work  in  value 
chains.  

5. 

SPECIFIC AREAS SUBJECT TO REPORTING OR MONITORING 

The Agreement provides a preferential customs duty on bananas under heading 0803.00.19 
(fresh bananas), progressively reduced since the date of entry of the Agreement until the year 
2020  (following  the  schedule  indicated  in  a  tariff  reduction  table).  This  special  treatment  is 
linked  to  a  stabilisation  clause  that  sets  out  an  annual  trigger  volume  for  imports  from 
each Central American country during the transition period. If as a result of the reduction of 
customs duties the level of imports of bananas is such as to cause or threaten to cause serious 
injury  to  the  EU  banana  sector,  the  Regulation  establishes  the  appropriate  procedures  to  be 
adopted to avoid serious harm to this sector.  

The  Commission  has  been  monitoring  the  evolution  of  imports  of  bananas  from  Central 
American  countries  (as  per  Articles  3  and  13  of  the  Regulation)  to  assess  whether  the 
conditions  set  out  in  the  Regulation  are  met  so  as  to  initiate  a  safeguard  investigation  or 
introduce  prior  surveillance  measures.  In  2017  Central  American  countries  as  a  whole  did 
again not come close to reaching their trigger level under the stabilisation mechanism. At the 
end of the year the overall total volume that had benefitted from preferential treatment in CA 
was 74.4% of the established annual limit. These imports, very close to the 75% reached the 
previous  year,  did  not  threaten  the  EU  banana  sector  as  a  result  of  the  tariff  reduction. 
Nevertheless,  banana  imports  from  both  Guatemala  and  Nicaragua  exceeded  their 
trigger  level  for  2017,  as  they  did  the  previous  year,  by  61%  and  277%  respectively. 
Notwithstanding  these  individual  countries’  level  of  exports,  the  Commission  did  not 
initiate,  nor  receive  requests  to  initiate,  any  safeguard  investigation  or  introduction  of 
prior surveillance measures.  

2017 import of bananas under the stabilisation mechanism (in kg) 

Country 

GUATEMALA 
HONDURAS 
NICARAGUA 
PANAMA 
COSTA RICA 
EL SALVADOR 
TOTAL 

Used Volume 
108 878 512 
13 934 652 
50 940 735 
250 962 430 
1 093 186 696 
0 
1 517 903 025 

Trigger Level 
67 500 000 
67 500 000 
13 500 000 
506 250 000 
1 383 750 000 
2 600 000 
2 039 100 000 

% 
161 
21 
377 
47 
79 
0 
74.4 

32  https://www.cbi.eu/projects/connecting-central-america/ 

68 

 
 
                                                 
6. 

CONCLUSIONS AND OUTLOOK 

Five  years  after  its  entry  into  force,  the  Association  Agreement  between  the  EU  and  CA 
has seen a new vitality in the evolution of trade flows. In 2017 EU trade flows with Central 
Amercia  grew  by  7.2%,  at  a  similar  pace  as  the  EU’s  trade  with  the  rest  of  the  world  (i.e., 
8%). This growth has been particularly remarkable as far as exports from the region to the EU 
are concerned, which have been growing at an average of 8% annually since 2015.  

CA  exports  use  the  Agreement  to  a  very  high  degree,  with  an  average  PUR  of  95%.  By 
contrast,  there  continues  to  be  no  available  data  on  the  use  of  tariff  preferences  by  EU 
exporters; the EU side has raised this issue in the Association Committee and it was agreed 
that the Market Access subcommittee would work on it, with a view to identifying the reasons 
for the lack of data and possible solutions. 

The use of TRQs improved for both regions, although for CA this use remains centred on 
sugar and bulk rum (both at 100%) while other quotas are not utilised. EU exporters improved 
their use of available TRQs, particularly in the case of powered milk (at 91%), but fluctuated 
in relation to the other products where opportunities for further growth continue to exist.  

With regard to bananas, total imports from CA increased to just under 75% of the established 
trigger levels (almost unchanged from 2016), with Guatemala and Nicaragua exceeding again 
their annual trigger levels by significant margins, 61% in the case of Guatemala and 277% for 
Nicaragua.  However,  these  two  countries’  absolute  levels  of  exports  remain  modest  and 
therefore did not have any significant impact on the overall import figure from the region 
or on the EU banana market. It was therefore not deemed appropriate to apply the safeguard 
and suspend preferential duties. 

EU exports of agri-food products have increased since the provisional application of the 
Agreement,  rising  from  471  M  €  in  2013  to  638  in  2017.  They  have  benefitted  from  the  
facilitation of some SPS measures, particularly in the case of Costa Rica and Panama, with the 
pre-listing system correctly applied for several EU Member States/commodities. Since March 
2017 export to Costa Rica of Pork meat products (cured) and Dairy products is taking place 
with  no  problems  on  certificates.  For  fruits  and  vegetables,  there  are  also  some  success 
stories, like the approval by Costa Rica of  apples from  Poland, or barley seeds from Spain. 
The tools under the Agreement were very useful to get Nicaragua lifting the country wide ban 
imposed  to  Spain  over  certain  avian  influenza  outbreaks.  The  regular  contacts  facilitate 
obtaining  updated  information  and  tackling  irritants,  as  for  example  in  the  June  2018  SPS 
Subcommittee. 

The correct functioning of the institutions created by the Agreement is necessary for its proper 
implementation. The meetings of the Association Committee and its Subcommittees took 
place in June 2018, after having skipped the previous year due to agenda difficulties on both 
sides. 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 steps to become 
effective.  

Building upon the positive cooperation now established with CA is an ongoing priority for the 
EU,  so  as  to  continue  contributing  to  the  common  aim  of  achieving  a  complete  and  correct 
implementation of the Agreement by all relevant actors. This has allowed economic operators, 
consumers  and civil  society  from  both regions to  take  advantage of numerous opportunities 
provided by the Agreement. 

69 

 
As  in  previous  years,  the  Commission  continues  to  engage  in  discussing  with  CA  any 
concerns  raised  by  stakeholders  on  the  implementation  of  the  Agreement.  The  Commission 
reiterates its call on EU Member States and Members of the European Parliament to continue 
to actively contribute in this process and voice their opinion accordingly. 

70 

 
PART II: ANNUAL REPORT ON THE IMPLEMENTATION OF THE DEEP AND 
COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN  
THE EU AND UKRAINE, MOLDOVA AND GEORGIA 

The  DCFTAs  with  Ukraine,  Moldova  and  Georgia  provide  for  deepening  of  political 
association and gradual economic integration between the EU and its three partners, based 
on shared values and principles i.e. democracy and the rule of law, good governance, respect 
for human rights and fundamental freedoms, as well as a free market economy which would 
facilitate the participation in EU policies.  

The DCFTAs cover two main components: 

1. Gradual, reciprocal market opening (elimination/reduction of tariffs and elimination of 
non-tariff  barriers  to  trade)  by  both  Partners  with  a  timeline  asymmetry  benefiting  our 
DCFTA partners; 

2. Far-reaching and dynamic regulatory approximation to  the EU law, notably in  trade-
related  areas,  which  should  stimulate  competition,  create  new  predictable  environment  for 
business  cooperation,  development  of  trade  and  attracting  foreign  investments,  and  hence 
contribute to economic restructuring and modernization of the our partners’ economies. 

Our  partner  countries  have  to  ensure  the  effective  implementation  and  enforcement  of  the 
approximated domestic law and undertake any action necessary to reflect the development in 
the EU acquis in its legislation. Annexes to the Association Agreement which include the lists 
of  EU  laws,  as  well  as  the  deadlines  for  approximation  agreed  by  Ukraine,  Moldova  and 
Georgia  are  regularly  amended  with  the  aim  to  bringing  them  up  to  date  with  the  EU 
legislation.  

The main body under the institutional framework of the EU-DCFTAs is the Association 
Council  (at  ministerial  level),  which  is  supported  by  the  Association  Committee  (at  senior 
civil servant level) in supervising and monitoring the application and implementation of AA. 
For Title V - Trade and Trade-Related Matters - a dedicated Association Committee in Trade 
configuration  (ACTC)  has  been  established.  The  ACTC  is  assisted  by  4  specialised  Sub-
Committees at experts’ level: (1) the SPS Sub-Committee; (2) the Customs Sub-Committee; 
(3) the GIs Sub-Committee; and (4) the TSD Sub-Committee. Civil society is involved in the 
monitoring of the implementation of the TSD Chapter of the DCFTA through the respective 
Domestic Advisory Groups (DAGs) foreseen in the TSD chapter and the Joint Civil Society 
Dialogue Forum (JCSDF), which involves civil society at large. 

The upcoming fourth Macro Financial Assistance (MFA) program of EUR 1 billion is not 
only a token of  continued political  support from  the EU and  recognition  of reforms already 
undertaken but also an encouragement for continued reforms aimed at strengthening a market-
oriented economy in our DCFTA partners, where the rule of law and fight against corruption 
are in  the centre of  authorities' attention for the  sake of creating transparent  and predictable 
policy framework for business operators and investors. 

71 

 
ANNUAL REPORT ON THE IMPLEMENTATION OF THE DEEP AND 
COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN  
THE EU AND ITS MEMBER STATES AND UKRAINE33 

The DCFTA with Ukraine entered fully into force on 1 September 2017 after being applied 
provisionally  since  1  January  2016.  In  general,  implementation  of  the  Agreement  and 
approximation of legislation are advancing at reasonable pace. EU-Ukraine trade has  grown 
substantially  in  2017  with  both  import  and  exports  increasing  in  both  directions.  The 
Autonomous  Trade  Measures  adopted  in  2017  for  a  period  of  3  years  have  also  been  a 
contributing  factor  (see  section  1.1.6).  The  Joint  Government  -  Parliament  Legislative 
Road Map for the Implementation of the Association Agreement34 presented by Ukraine 
in  February 2018  complementing the  Governmental Association Agreement Action  Plan, 
adopted in October 2017, are important and welcome steps to ensure speedy implementation 
of the DCFTA. 

1. 

EVOLUTION OF TRADE 

1.1. 

Trade in goods overall 

1.1.10.  Scope of trade liberalisation 

The  elimination  and  reduction  of  customs  duties  are  taking  place  over  a  transitional  period 
which in the case of Ukraine runs until 2026 and will ultimately result in market opening for 
96.5% of tariff lines for products imported from the EU (97.7% in terms of import value). The 
EU will open its market earlier than Ukraine, implementing its liberalisation commitments by 
2023 for 95.8% of tariff lines (97.9% in value) for products imported from Ukraine.  

The  reduction  and  elimination  of  customs  duties  are  taking  place  in  different  staging 
categories depending on the specific product. Certain products are subject to annual duty-free 
TRQs applied indefinitely by both sides which include annual increases for some product over 
a five year transition period. A supplementing Annex I-A to Chapter 1 of Title IV (Trade and 
Trade-related  Matters)  which  sets  out  in  detail  the  staging  of  liberalisation  will  be  formally 
added to the Association Agreement.35 

A review clause related to trade in goods may be requested by either Party 5 years after the 
entry  into  force  of  the  Agreement  whereby  both  sides  may  consider  accelerating  and 
broadening the scope of the elimination of tariffs on trade between themselves. 

33  See  the  following  website  to  find  more  information  on  Ukraine:  http://ec.europa.eu/trade/policy/countries-

and-regions/countries/ukraine/  

35  Council Decision (EU) 2018/156 of 22 January 2018 determines the EU position in the Association Council. 

The EU-Ukraine Association Council will adopt a formal decision to that effect in 2018. 

72 

 
                                                 
 
1.1.11.  Overall evolution of EU-Ukraine trade in goods 

EU-Ukraine trade in goods increased significantly in 2017 and the positive economic growth 
seems  to  have  settled  after  the  crisis  in  2014  and  2015.  GDP  growth  in  2016  was  2.4%,  a 
positive  trend  which  continued  in  2017  when  GDP  grew  by  2.5%.  The  EU  reinforced  its 
position as Ukraine’s most important trading partner.  

In 2017, the EU remained Ukraine’s first trading partner with 42% of its total trade. Russia 
was  the  second  partner  of  Ukraine  with  12%,  followed  by  China  (8%),  Belarus  (5%)  and 
Turkey (4%). The EU has been Ukraine’s top trading partner since 2013 when the share was 
around 31%. Ukraine is the 25th trade partner of the EU with around 1% of its total trade. 

Ukraine’s  total  trade  in  goods  with  the  EU  increased  by  more  than  24%  in  2017,  reaching 
EUR 37 billion,  up  from  EUR 30 billion  in  2016.  Ukraine’s  total  trade  with  the  world  also 
increased from EUR 68.2 billion in  2016 to  EUR 80 billion in  2017 confirming  a consistent 
evolution in trade globally, following a steep decline in overall trade in 2015 and 2016.  

Table 1: EU trade in goods with Ukraine, 2013-2017 (million EUR) 

EU imports 
EU exports 
EU-UA total trade 
EU-UA trade balance 
Source: Eurostat 

2013 
13 882 
23 899 
37 781 
10 017 

2014 
13 734 
16 988 
30 722 
3 255 

2015 
12 844 
14 033 
26 877 
1 190 

2016 
13 159 
16 565 
29 725 
3 406 

2017 
16 740 
20 217 
36 957 
3 478 

1.1.12.  Sectoral structure of EU-Ukraine trade in goods 

The  EU  continues  to  have  a  trade  surplus  with  Ukraine  as  a  result  of  the  trade  structure 
characterized  by  growing  share  of  goods  with  higher  value  added.  The  main  product 
categories36 exported by the EU to Ukraine in 2017 were machinery and appliances, chemical 
products, transport equipment, mineral products, plastics, rubber and articles thereof, textiles 
and  textile  articles.  Looking  at  the  sectoral  split,  the  main  increase  in  EU  exports  from 
2016 and 2017 was recorded for mineral products increasing by 49% from EUR 1.1 billion 
to  EUR 1.6 billion. Transport equipment  and machinery and appliances rose by respectively 
33% and 21.5%. Live animals and animal products increased by 21% although from a lower 
level  from  EUR 250 million  to  EUR 304 million.  Exports  of  foodstuffs,  beverages  and 
tobacco increased by 19.5% to EUR 940 million while vegetables saw an increase of 13.4% to 
EUR 537 million hence an increasing appetite for EU agricultural produce. 

The  traditional  driving  forces  in  imports  from  Ukraine  to  the  EU  are  the  sectors  of  raw 
materials  and  semi-finished  products  mainly  from  the  agro-food  sector  and  metallurgical 
industry, while exports have increased in most sectors, although in some from relatively low 
levels.  Looking  at  the  sectors  concerned,  the  main  products  Ukraine  exported  to  the  EU  in 

36  By Sections of the Harmonized System Nomenclature (HS). 

73 

 
 
                                                 
2017  were  base  metals,  mineral  products  vegetable  products,  machinery  and  appliances, 
animal or vegetable fats and oils and wood, charcoal and cork and articles thereof.  

From  the  categories  of  products  most  widely  imported  from  Ukraine,  machinery  and 
appliances increased by 25% from 2016 indicating that the significant increase from the 2015 
may be a lasting trend and a positive sign as it represents higher added value goods compared 
to the large portion of the other imported products. 

Table 2: EU trade with Ukraine by HS Sections (million EUR and % growth) 

Source: COMEXT 

1.2. 

Trade in agricultural goods 

Ukraine is a large producer and exporter of agricultural products which is reflected in its trade 
with  the  EU.  In  2017,  EU  imports  and  exports  of  agricultural  products  from  /  to  Ukraine 
increased by 32%  and 17% respectively since 2016.  Ukraine became the EU’s 4th biggest 
supplier of agricultural products in 2017, and the first supplier among our FTA partners. 

74 

HS Section20162017Annual %20162017Annual %Total Goods13.159       16.740       27%16.565       20.217       22%I   Live animals;  animal products153             238             55%250             304             21%II   Vegetable products2.103          2.978          42%505             573             13%III   Animal or vegetable fats and oils1.117          1.418          27%41                42                2%IV   Foodstuffs, beverages, tobacco703             813             16%787             940             19%V   Mineral products1.708          2.532          48%1.088          1.620          49%VI   Products of the chemical or allied industries364             404             11%2.764          3.243          17%VII   Plastics, rubber and articles thereof110             151             37%1.179          1.333          13%VIII   Raw hides and skins, and saddlery98                121             23%169             211             25%IX   Wood, charcoal and cork and articles thereof860             881             2%119             138             16%X   Pulp of wood, paper and paperboard88                102             16%530             537             1%XI   Textiles and textile articles383             427             11%951             1.093          15%XII   Footwear, hats and other headgear90                97                8%138             156             14%XIII   Articles of stone, glass and ceramics111             141             26%230             238             4%XIV   Pearls, precious metals and articles thereof14                20                43%26                23                -9%XV   Base metals and articles thereof2.891          3.496          21%789             950             20%XVI   Machinery and appliances1.509          1.886          25%4.335          5.265          21%XVII   Transport equipment82                108             32%1.762          2.344          33%XVIII   Optical and photographic instruments etc.22                37                67%354             476             34%XIX   Arms and ammunition24                3                  -86%20                13                -34%XX   Miscellaneous manufactured articles284             386             36%345             404             17%XXI   Works of art and antiques0                  1                  110%2                  2                  -17%Other444             502             13%181             310             71%EU importsEU exports 
 
Table 3: EU trade in goods with Ukraine, split by AG and NAMA 2015-2017 (million EUR) 

Source: Eurostat COMEXT. 

The  traditional  products  such  as  cereals,  oil  seeds,  animal  or  vegetable  fats  and  oils  still 
dominate  overall  Ukraine  exports  to  the  EU.  A  closer  look  at  trade  data  reveal  overall 
increases  for  most  products  indicating  that  the  trade  preferences  provided  for  under  the 
DCFTA are starting to be noticed and being better exploited. For example, Ukraine’s exports 
of  dairy  products  increased  by  30%  from  2016  to  2017  while  edible  fruits  and  edible 
vegetables increased by respectably 44.6% and 51.8% over the same period. Cereals, oilseeds, 
fish,  meat  and  edible  meat  offal  exports  also  increased  significantly.  Similarly,  important 
growth  in  EU’s  export  to  Ukraine  was  registered  for  meat  and  edible  offal,  dairy  products, 
cereals, cocoa products, beverages and tobacco products. 

Table 4: EU trade with Ukraine in agricultural goods (million EUR) 

Source: COMEXT 

75 

EU28 importsEU28 exports20152016201717/1620152016201717/1620162017Total Goods12.84413.15916.75727,3%14.03316.56520.22322,1%3.4063.466Agricultural products4.0634.1165.51734,0%1.3551.5461.81417,4%-2.570-3.703Non-agricultural products8.7809.04311.24024,3%12.67815.02018.40922,6%5.9767.169Fishery products10122180,5%53829718,5%7076Industrial products8.7709.03211.21924,2%12.62514.93818.31222,6%5.9067.094product categoryEU28 trade balanceHS Chapterimport growth export growth2.016          2.017          total M€annual %2.016          2.017          total M€annual %Total Goods13.159       16.740       3.580       27%16.565       20.217       3.652       22%01 Live Animals1                  1                  0-                -2%54                50                4-                -7%02 Meat and edible meat offal63                112             49             79%72                98                26             36%03 Fish and crustaceans11                21                10             87%65                78                13             19%04 Dairy produce75                98                23             30%50                71                21             43%05 Products of animal origin3                  6                  3                77%9                  6                  3-                -35%06 Live trees and other plants1                  1                  0                5%38                40                2                5%07 Edible vegetables, roots & tubers21                32                11             52%22                23                1                5%08 Edible fruits & nuts103             149             46             45%76                90                14             18%09 Coffee, tea, mate & spices3                  3                  1                24%69                83                14             20%10 Cereals1.360          1.759          399           29%96                118             22             23%11 Products of the milling industry14                15                1                6%10                11                1                12%12 Oil seeds & oleaginous fruits568             992             424           75%180             194             14             8%13 Lacs, gums, resins & other veg. saps0                  0                  0-                -3%15                13                1-                -8%14 Vegetable products n.e.s.33                26                7-                -20%0                  0                  0                41%15 Animal or vegetable fats & oils1.117          1.418          301           27%41                42                1                2%16 Preparations of meat5                  2                  3-                -59%22                27                5                21%17 Sugars & sugar confectionery37                45                9                23%21                29                8                41%18 Cocoa & cocoa preparations24                35                11             44%124             150             26             21%19 Preps. of cereals, flour, starch, etc.45                65                20             45%57                74                18             31%20 Preps. of vegetables, fruits, nuts & plants76                86                10             13%58                72                14             24%21 Miscellaneous edible preparations26                33                7                26%165             177             12             7%22 Beverages, spirits & vinegar20                24                4                19%137             176             39             28%23 Residues and waste from food industry470             523             53             11%107             118             12             11%24 Tobacco & tobacco products0                  0                  0                1%96                116             20             21%EU importsEU exports 
 
 
1.1.13.  Use of TRQs  

For  products  which  have  not  been  completely  liberalised  under  the  DCFTA,  TRQs  are  in 
place.  Ukraine  is  starting  to  make  better  use  of  the  quotas  granted  by  the  EU,  as  the 
country diversifies its exports. While 12 out of the 36 TRQs in place are fully used, fill rates 
also increased for garlic, glucose and fructose, starches, dextrins and glues, milk powder, eggs 
and albumins. Still other quotas remain unused such as for example sheep, pork and beef meat 
(due  to  non-compliance  with  EU  SPS  regimes),  and  buttermilk,  dairy  spreads,  sweetcorn, 
food preparations and flavoured syrup.  

Ukraine grants five quotas to the EU for imports of agricultural goods (two quotas for pork, 
two  quotas  for  poultry  meat  and  one  quota  for  sugars).  One  poultry  quota  is  fully  utilised 
while the other quotas had a relatively low to very low utilisation rate in 2017. 

Table 5: Tariff rates quotas for EU exports to Ukraine in 2017 

Product 
Pork 
Pork 
additional for: 
0203 11 (10) 
0203 12 (19) 
0203 19 (11-15-59) 
0203 21 (10) 
0203 22 (19) 
0203 29 (11-15-59) 
Poultry meat 
Poultry meat 
additional for: 
0207 12 
Sugars 
Source: Ukrainian authorities 

Quantity (tons) 
10 000 
10 000 

Utilisation rate 
38.7% 
9.7%  

8 400 
10 000 

32 000 

99.5% 
0.2% 

1.9% 

1.3. 

Preference utilisation rate (PUR)  

The PUR on EU imports from Ukraine reached 87% in 2017 slightly down from 89% in 
2016. Data to calculate the PURs on EU exports were not available from Ukraine.   

1.4. 

Autonomous trade measures 

In view of the difficult economic and political situation in Ukraine the EU granted temporary 
autonomous  trade  measures  (ATMs)  for  certain  agricultural  and  industrial  products  for  a 
period of three years, starting on 1 October 2017. This is in addition to the trade concessions 
available  under  the  DCFTA  and  means  that  tariff  elimination  for  22  industrial  products 
(ammonium  sulphate  and  nitrate,  fertilisers,  footwear,  aluminium  and  certain  electrical 
machinery)  will  be  accelerated  and  additional  TRQs  will  be  granted  for  8  agricultural 
products  (common  wheat,  maize,  barley,  barley  groats  and  pellets,  oats,  natural  honey, 
processed tomatoes and grape juice). The quotas for natural honey, common wheat, maize and 

76 

 
 
processed  tomatoes  have  already  been  fully  used,  while  utilisation  for  the  other  quotas  can 
only be determined by the end of 2018.  

1.5. 

Establishment, trade in services and investments 

1.1.14.  Market access related to establishment and trade in services 

The DCFTA contains the necessary arrangements for the progressive reciprocal liberalization 
of  establishment  and  cross-border  trade  in  services  and  for  cooperation  in  electronic 
commerce.  This  includes  the  freedom  of  establishment  by  granting  each  other  national 
treatment and most favoured-nation treatment (subject to several reservations specified by EU 
Member States and Ukraine) as well as liberalization of cross-border supply of services (by 
granting  each  other  national  treatment)  with  several  limitations  and  reservations  on  both 
sides).  In  four  services  sectors  (postal  and  courier  services,  telecommunication,  financial 
services and international maritime transport services) both Parties recognized the importance 
of  gradual  approximation  to  the  EU  legislation.  The  internal  market  treatment  may  be 
envisaged for those four sectors once Ukraine effectively implements the EU acquis (foreseen 
within  2  to  7  years  after  the  entry  into  force  of  the  Agreement)  and  ensures  adequate 
administrative capacity to implement and enforce it. Ukraine was notified of amendments to 
EU legislation in those sectors in early 2018.  

The  EU  and  Ukraine  agreed  on  a  review  clause  with  a  view  of  liberalizing  establishment 
(regular review), cross-border supply of services (regular review) and capital movement (by 
end  2021,  the  fifth  year  following  the  date  of  entry  into  force  of  the  DCFTA).  This  review 
shall  take  into  account,  inter  alia,  the  process  of  gradual  approximation  foreseen  in  the 
Agreements and its impact on the elimination of remaining obstacles to cross border supply of 
services between the parties. 

1.1.15.  Trade in services  

After  the  decline  in  2014  for  similar  reasons  as  trade  in  goods,  the  total  bilateral  trade  in 
services between the EU and Ukraine continued its increasing trend started in 2015 and 
rose to  around EUR 10 billion in 2016. This is an increase of 4% from 2015 and above 7% 
from 2014. 

Table 6: EU services trade with Ukraine (million EUR) 

EU 28 imports 
EU28 exports 
Total 
Source: European Commission, DG Trade. 

2014 
2 691 
4 716 
9 421 

2015 
2 737 
5 006 
9 759 

2016 
2 678 
5 467 
10 161 

EU  exports  of  services  grew  in  that  period  by  6.3%  (to  EUR 5.0 billion)  compared  to  2014 
(EUR 4.7 billion).  EU  imports  increased  in  the  same  time  by  3%  (from  EUR 2.6 billion  to 
2.7 billion).  

77 

 
 
1.1.16.  FDI  

After  a deep economic crisis  in  2014 and 2015  with  GDP decline of respectively 6.6%  and 
9.9%, Ukraine’s economy progressively recovered in 2016 (GDP growth of +2.3%) and 2017 
(+2.5%).  However,  the  2017  recovery  was  hampered,  inter  alia,  by  the  cargo  blockade 
introduced  vis-à-vis  the  non-government-controlled  areas  (following  the  confiscation  of 
Ukrainian companies  by Russia-backed separatists), while the forecasts for 2018 suggest  an 
acceleration of GDP growth to 3.2-3.5%.  EU Foreign Direct Investment (FDI) in the country 
remains at a very low level as seen in table 7. 

A  number  of  key  reforms  were  introduced  in  Ukraine  in  the  recent  years  to  improve  the 
business  climate  and  attract  investors.  Ukraine  ranks  76  in  the  2018  World  Bank  Doing 
Business Index. It considerably improved its position over the last years since it ranked 112 in 
2014, but is still doing worse than its peers in the region. Ukrainian authorities have to make 
further  efforts  to  address  the  long-standing  barriers  that  affect  negatively  the  process  of 
attracting foreign investors who are preoccupied with corruption, lack of trust in judiciary and 
unpredictable regulatory changes. This would also stimulate investment by small and medium 
sized enterprises in Ukraine itself. 

Table 7: EU FDI with Ukraine, 2015-2016 (million EUR) 

FDI stocks  

Ukraine in EU28 (inward) 

EU28 in Ukraine (outward) 

Net investment stocks 

FDI flows  

Ukraine EU28 (inward) 

EU28 into Ukraine (outward) 

Net investment flows 
Source: Eurostat. 

2015 

456 

12700 

12244 

2015 

200 

500 

300 

2016 

175 

9900 

9725 

2016 

60 

-600 

-540 

2. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

2.1. 

Joint decisions of the Association Bodies 

Resulting from preparatory work in 2017 the following two decisions were adopted in 2018 
(date) by the Association Committee in Trade configuration: 

  Public Procurement: Decision 1/2018 of the EU-Ukraine Association Committee in 
Trade  configuration  updating  Annex  XXI  to  Chapter  8  on  Public  Procurement  of 
Title IV to the Association Agreement and giving a favourable opinion regarding the 
comprehensive roadmap on public procurement37 of 14 May 2018. This is a first step 

37  Council Decision (EU) 2017/43 of 12 December 2016. 

78 

 
                                                 
in  obtaining  market  access  to  the  public  procurement  market  as  provided  for  in  the 
DCFTA. 

  Export  duties,  safeguards:  Decision  2/2018  of  the  EU-Ukraine  Association 
Committee  in  Trade  configuration  recalculating  the  schedule  of  export  duty 
elimination  and  safeguard  measures  for  export  duties  set  out  in  Annex  I-C  and 
Annex I-D to Chapter 1 of Title IV of the Association Agreement38 of 14 May 2018. 
The  following  decision  includes  a  new  appendix  that  clarifies  the  staging  categories 
for the reduction of customs duties.  

A  third  decision  containing  a  new  appendix  clarifying  the  reduction  to  the  base  rate  of 
customs  duties  to  be  applied  for  staging  category  will  also  be  adopted  by  the  Association 
Council in 2018 via written procedure:  

  Customs  duties:  Decision  of  the  EU-Ukraine  Association  Council  as  regards 
supplementing Annex I-A to Chapter 1 of Title IV of the Association Agreement39 

2.2.  Meetings of the Association Bodies 
The 2nd Association Committee in Trade configuration (ACTC) met in Brussels on 28-29 
September  2017.  Both  sides  exchanged  information  on  trade  data,  trade  policies  and  took 
stock  of  the  situation  in  all  DCFTA  chapters:  competition,  public  procurement,  intellectual 
property rights (including GIs), SPS issues, trade in services, trade related energy, trade and 
sustainable  development.  Discussions  included  also  the  wood  export  ban  maintained  by 
Ukraine, implementation of autonomous trade measures, business and investment climate and 
support  to  SMEs.  Both  sides  also  exchanged  list  of  individuals  to  serve  as  arbitrators  in 
dispute  settlement  proceedings  (while  the  Ukrainian  list  remains  incomplete,  May  2018). 
Ukraine  gave  an  overview  of  progress  in  the  approximation  of  legislation  and  on  the 
institutional  capacity  building  in  several  areas,  often  supported  by  EU  technical  assistance. 
The  operational  conclusions  from  the  ACTC  guide  work  in  monitoring  commitments  and 
implementation on both sides. 

The 2nd EU-Ukraine High Level Industrial and Regulatory Dialogue was held on the 27 
March 2018 with the participation of Commissioner Bieńkowska. The main objectives were 
to 1) To strengthen EU-Ukraine industrial cooperation, 2) To encourage the reforms launched 
by the government to modernize the Ukrainian economy 3) To provide EU support to Ukraine 
in implementing its reform agenda. On this occasion five working groups held meetings - the 
Dialogue  on  Technical  Barriers  to  Trade  (as  provided  by  the  Article  of  55  of  the 
Association  Agreement)  as  well  as  Public  Procurement  Dialogue,  working  groups  on 
SMEs, Space, and Industrial cooperation in Automotive.  

38  Council Decision (EU) 2018/156 of 22 January 2018. 
39  Council Decision (EU) 2018/156 of 22 January 2018. 

79 

 
 
                                                 
The four sub-committees  on GIs, customs, SPS and TSD held  their first meetings in  2017 
and reports  from  these  meetings were included  in  the FTA  Implementation  Report of 2017. 
Three of the sub-committees have met since. The SPS sub-committee held its second meeting 
on the 19 October 2017 in Kiev. The main topics concerned the new import requirements of 
Ukraine, bilateral veterinary certificates for EU exports to Ukraine. Ukraine also provided an 
update  on  the  animal  health  situation.  Bilateral  trade  issues  focussed  in  particular  on  the 
recognition of the regionalization principles on highly pathogenic avian influenza (HPAI) and 
the  possibility  of  beef  export  to  EU.  The  SPS  strategy  was  also  discussed.  The  GI  Sub-
committee held its second meeting on the 12 June 2018 in Brussels with discussions focussing 
on legislative developments  in relation  to  GIs, the update of the list  of GIs protected in  the 
Association  Agreement  (AA),  various  enforcement  issues  and  possible  misuse  of  Asti  and 
Prosecco respectively a protected and not protected GI under the Agreement. Both sides took 
stock of the work of the GIs technical assistance project financed by the EU. The 2nd Customs 
Sub-Committee held its meeting on 2 July 2018 in Brussels. The main topics discussed were 
(i) fostering Ukraine's efforts in the implementation of the Customs Chapter of the AA, and in 
particular  advancing  the  preparation  to  accede  to  the  Convention  on  a  common  transit;  (ii) 
achieving initial accord on the draft texts of the new Annex XV and the new Protocol I; (iii) 
taking  tangible  measures  by  the  Ukrainian  Customs  to  more  effectively  combat  tobacco 
smuggling and corruption 

3. 

IMPLEMENTATION  OF  THE  PROVISIONS  ON  TRADE  AND 
DEVELOPMENT 

SUSTAINABLE 

The first and only meeting of the TSD Sub-committee took place in May 2017 and the second 
meeting is foreseen in October 2018. Ukraine has still not appointed its members to the joint 
Group  of  Experts,  a  group  the  parties  agreed  to  consult  on  TSD  matters  if  there  is  a  need.  
Neither  has  the  Ukraine  appointed  its  members  of  the  Advisory  Group  consisting  of 
representatives of different groups of Ukrainian civil society. It is expected that these groups 
will be established in 2018 following the establishment in June 2018 of the Council on TSDin 
Ukraine 

4. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

SPS aspects 

The Comprehensive Strategy on alignment with EU legislation on SPS and animal welfare is 
expected to be formally adopted in 2018 following amendments and technical adjustments to 
the  initial  Union  position  on  the  SPS  Strategy  from  2017.  Ukraine’s  effort  to  align  its 
legislation  is  ongoing.  Ukraine  still  needs  to  step  up  efforts  in  lifting  the  remaining  trade 
irritants (notably the recognition of regionalisation for African Swine Fever (ASF) as well as 
the one related to the draft Order 71 on adoption of requirements for importing (sending) into 
the customs territory of Ukraine of live animals, their reproductive material, food products of 
animal origin and products not intended for human consumption). Several video conferences 
and bilateral meetings including SPS Sub-Committee have taken place to make progress and 
we expect this to be finalised 2018 or early 2019. 

80 

 
In  2017,  following  EU  SPS  market  access  issues  were  solved:  for  poultry  and  poultry 
products,  in  January  2017,  an  agreement  was  reached  on  reciprocal  recognition  of 
regionalisation  when  outbreaks  of  avian  influenza  occur;  for  milk  and  dairy  products,  a 
harmonised  veterinary  certificate  is  in  force  as  of  mid  –September  2017  (Born  and  raised 
clause  has  been  eliminated);  the  temporary  ban  on  EU  eggs,  poultry  meat  and  offal  due  to 
fipronil  contamination  in  the  Netherlands,  Belgium,  Germany  and  France  has  been  lifted  in 
September 2017.  

There is an on-going negotiation of other export certificates to Ukraine. Ukraine is interested 
in red meat export. So far, the relevant EU import requirements are not met. 

Public procurement 

After much preparatory work in 2017, a  comprehensive roadmap on public procurement 
was  formally  adopted  by  Ukraine  on  the  14  May  2018  (see  Decision  No  1/2018  of  the 
ACTC  on  updating  Annex  XXI  to  Chapter  8  on  Public  Procurement  to  the  Association 
Agreement).  Ukraine  has  progressed  towards  building  a  transparent,  non-discriminatory, 
competitive  and  open  public  procurement  system  and  has  introduced  compulsory  e-
procurement  in  the  public  sector,  which  proves  to  be  effective  in  enhancing  efficiency  and 
reducing corruption. Despite these solid reforms there have been attempts by certain members 
of  the  Parliament  of  Ukraine  to  amend  the  law  by  including  discriminatory  local  content 
requirements  which,  if  adopted,  would  violate  both  the  provisions  of  the  DCFTA  and  the 
revised  WTO  Government  Procurement  Agreement  that  Ukraine  joined  in  2016.  The 
Commission  has  on  several  occasions  expressed  its  concern  and  continues  to  work  closely 
with the Government of Ukraine to avoid these amendments from being adopted.  

Intellectual property rights  

Ukraine made ambitious commitments in the DCFTA on alignment of its system of protection 
and enforcement of intellectual property rights (IPRs). Progress is monitored at technical level 
within  the  IPR  Dialogue  established  under  the  DCFTA.  Throughout  2017  the  EU  provided 
input  and  comments  to  several  draft  laws,  including  the  draft  patent  law,  the  draft  law  on 
trademark and design and the draft law on copyright and related rights, among other things. 
There are still problems in relation to collective right management organisations and an 
analysis  by  the  Commission  of  the  law  on  collective  right  management  adopted  in  2018  is 
ongoing. Ukraine needs  to step up efforts against counterfeiting and piracy, especially at its 
border. It should be noted that Ukraine improved its legal system of fighting against internet 
piracy.  The  adopted  Law  on  Cinematography  introduces  better  controls  to  prevent  illegal 
content being shown on  websites based in  Ukraine, and the activities of  the cyber-police to 
enforce the law in  good cooperation with international bodies is very encouraging. Since its 
adoption,  the  law  has  not  been  properly  enforced  due  to  the  lack  of  the  IP  inspectors.  The 
importance of these aspects has been made clear to Ukraine and was raised again during the 
Intellectual  Property  Rights  dialogue  that  took  place  in  Ukraine  the  20  June  2018.  The 

81 

 
Commission  is  following  this  closely  and  are  in  a  constructive  dialogue  with  the  Ukrainian 
authorities. 

Ukraine’s accession to  the Regional  Convention on pan-Euro-Mediterranean preferential 
rules of origin  

On 13th December 2017 the instrument of Ukraine’s accession to the Regional Convention on 
pan-Euro-Mediterranean preferential rules of origin (PEM Convention) was deposited at the 
General  Secretariat  of  the  Council  of  the  EU.  Ukraine  acceded  to  the  Convention  on  1st 
February 2018. The Customs Sub-Committee will take a decision to replace Protocol I of the 
DCFTA by a new protocol which refers to the PEM Convention. This would make effective 
the  cumulation  of  rules  of  origin  between  the  EU  and  Ukraine  under  the  PEM  Convention. 
One sentence to explain what this means, pls. 

Export ban on raw wood  

The  export  ban  on  raw  wood  continues  to  be  of  concern  to  the  EU  since  2015.  The 
Commission repeatedly raised this issue in meetings, including in the Association Committee 
in Trade configuration, and in writing, reminding Ukraine of its obligation under the DCFTA. 
In  September  2017  the  EU  handed  over  a  non-paper  suggesting  a  number  of  initiatives 
surrounding  the  lifting  of  Ukraine’s  export  ban  on  wood.  The  non-paper  covers  a  possible 
communication campaign to increase knowledge among relevant stakeholders and help ensure 
a  fact-based  discussion.  Furthermore,  the  EU  offered  technical  assistance  to  implement  the 
forestry roadmap 2020 and support a number of other activities, including the improvement 
and  implementation  of  systems  for  wood  certification/traceability  and  the  improvement  of 
forest  monitoring  and 
facilities  and  equipment 
inspection/control.  An  important  areas  addressed  in  the  non-paper  also  concerning  the 
strengthening  of  cooperation  with  international  organisations  including  INTERPOL  and 
customs  and  law-enforcement  agencies  of  timber  importing  countries,  in  particular  EU 
Member  States  and  TAIEX  study  visits  by  the  Ukrainian  authorities  to  EU  Member  States 
that  have  successfully  addressed  illegal  logging.  These  have  not  materialised.  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. 

(GIS/IT  databases) 

for  effective 

Poultry imports 

In  2017  the  EU  observed  a  large  increase  of  imports  of  specific  poultry  cuts  from  Ukraine. 
The  product  in  question  is  a  traditional  breast  cap  with  the  humerus  bones  of  the  wings 
attached,  which  is  systematically  deboned  after  import,  turning  it  into  traditional  poultry 
breast.  The  bone-in  cuts  are  classified  under  the  tariff  line  ‘other  cuts’,  which  is  duty  free 
under the DCFTA. The EU had limited its concessions under the DCFTA for poultry breast to 
the  opening  of  a  zero-duty  tariff-rate  quota  explicitly  because  of  the  sensitivity  of  poultry 
breasts for the EU market. This situation may lead to potentially unlimited imports of poultry 

82 

 
breast  from  Ukraine,  which  is  of  concern  to  the  EU.  The  Commission  has  acted  swiftly  to 
address the issue and is in contact with Ukraine to find a solution agreeable to both sides. 

5. 

EU SUPPORT TO DCFTA IMPLEMENTATION 

EU Support to DCFTA-related reforms 

EU assistance to the implementation of the DCFTA is embedded in a comprehensive support 
programme to systemic reforms, drawn up in response to the 2014 events as well as in view of 
the AA/DCFTA implementation. This so far notably includes a a substantive package on good 
governance  with Public Administration Reform, decentralisation reform and the rule of law 
including  the  fight  against  corruption  in  the  focus;  private  sector  development;  fostering  of 
energy  efficiency;  support  to  the  conflict-affected  areas  in  Eastern  Ukraine;  skills 
development and people-to-people contacts. With an annual budget of up to 200 million euro, 
965 million euro has been allocated bilaterally under the European Neighbourhood Instrument 
so far. 

including 

technical  barriers 

In  the  area  of  economic  reform,  including  implementation  of  the  DCFTA  and  the  related 
approximation  of  Ukrainian  legislation  to  EU  acquis,  EU  support  covers  a  wide  range  of 
sectors, 
intellectual  property  rights, 
competition, financial services, food safety, sanitary and phyto-sanitary measures, and others. 
Most significat EU support operations to DCFTA-related reforms currently take place in the 
areas of customs, food safety and fiancial services. Ukraine benefits from EU support projects 
provided  through  a  whole  set  of  assistance  modalities,  including  technical  assistance, 
twinning and TAIEX projects. 

trade,  customs, 

to 

Legal approximation of Ukraine's customs legislation with EU acquis is about to be supported 
under  the  EU  public  finance  management  support  programme.  The  technical  assistance 
project  aims  to  support  customs  reforms  in  order  to  facilitate  mutual  trade.  In  addition,  an 
ongoing EU twinning project focuses on reinforcing integrated border management elements 
in the area of customs. 

The  EU  provides  assistance  to  Ukraine  in  the  sector  of  food  safety,  sanitary  and  phyto-
sanitary measures in order to align Ukrainian standards to those of the EU. The EU supports 
Ukraine through a technical assistance project on improvement of food safety control system 
and a twinning project on approximation of Ukrainian legislation with the EU in the field of 
plant protection and plant health.   

The EU supports reforms in financial services in Ukraine with a technical project in financial 
sector priority areas, which focuses on financial transparency, stability and better supervision. 
A  further  technical  assistance  project  works  towards  strengthening  the  regulation  and 
supervision of the non-bank financial market.  

The EU supports alignment of the Ukrainian quality infrastructure system with that of the EU 
in  order  to  remove  technical  barriers  to  trade.  An  EU  technical  assistance  project  works 
towards further regulatory harmonisation between the EU and Ukraine in the area of technical 
barriers to trade. 

83 

 
Alignment of Ukraine's national competition legislation with EU standards is being supported 
with  a  twinning  project.  In  the  perspective  of  the  effective  entry  into  force  of  the  state  aid 
control in Ukraine, a further technical assistance project started aiming to build institutional 
capacities with the state aid control bodies. 

EU Support for SMEs 

SMEs  in  Ukraine are benefitting from  the EU support under the DCFTA Facility for SMEs 
which aims at increasing SMEs competitiveness, easing their access to finance, helping them 
to  seize  new  trade  opportunities  and  comply  with  new  food  safety,  technical  and  quality 
standards,  as  well  as  with  environmental  protection  measures  implied  by  the  DCFTA 
implementation.   

The DCFTA Facility consists of a set of programmes implemented principally by EBRD and 
EIB. SMEs are benefiting from the EU support through four types of instruments:  

1) risk sharing mechanisms (mostly first loss portfolio guarantees for local banks);  

2) currency hedging (interest rate subsidies for loans in local currency);  

3)  investment  incentives  (grants  provided  to  SMEs  combined  with  investment  loans  to 
upgrade machinery or production processes in line with the EU standards) and  

4)  technical  assistance  (business  advice  to  SMEs  and  local  banks,  assessment  of  the 
compliance with the EU standards, capacity building for local banks).  

EU also supports private sector in Ukraine, in particular SMEs through capacity building and 
by  facilitating  access  to  markets.  A  flagship  project  is  "EU4Business:  Network  of  Business 
Support  Centres  in  Ukraine"  implemented  by  EBRD.  It  offers  advisory  support  to  SMEs 
(creation  of  15  regional  Business  Support  Centres,  business  advice 
to  SMEs  by 
local/international  consultants)  and  investment  preparation.  Another  relevant  initiative  is 
“Eastern  Partnership:  Ready  to  Trade  (International  Trade  Centre)”.  The  EU  provides  also 
technical assistance to authorities on SME policy and better regulation: FORBIZ including the 
Better  Regulation  Delivery  Office  (BRDO),  and  EU4Business:  From  Policies  to  Action 
(OECD). 

6. 

CONCLUSIONS AND OUTLOOK 

The economic situation in Ukraine has  been stabilised after the economic crisis  of 2014-
2015 when the illegal annexation of Crimea and Sevastopol and the conflict in the east of the 
country  provoked  by  Russia's  destabilising  actions,  coupled  with  an  unfavourable  global 
economic environment and measures introduced by Russia40 resulted in an overall decline by 

40  As  from  1  January  2016  Russia  suspended  (indefinitely)  the  application  of  the  Russia-Ukraine 
Commonwealth  of  Independent  States  FTA  i.e.  reintroduced  MFN  tariffs  on  imports  from  Ukraine  (as  a 
direct response to the start of provisional application of the EU-Ukraine DCFTA 

84 

 
                                                 
 
over 17% of GDP, having a negative impact on foreign trade, including with the EU. All these 
aspects strongly contributed to the drop in overall exports from Ukraine to the world, and in 
particular  to  the  Russian  Federation.  The  reversal  of  the  negative  trend  in  exports  from 
Ukraine  to  the  EU  indicates  the  gradual  reorientation  of  its  exports  towards  the  EU  and  an 
improvement of Ukraine’s export performance overall.  

The dynamic regulatory approximation and alignment are advancing and are being monitored 
closely.  The  Joint  Government  -  Parliament  Legislative  Road  Map  for  the 
Implementation of the Association Agreement adopted in February 2018 should speed up 
the process in 2018 while reforms in trade-related areas, financially and technically supported 
by the EU start to bring tangible effects. Ukraine should take full advantage of the financial 
incentives provided by the EU to strengthen the small and medium sized enterprises which are 
also important for job creation and economic growth.  

Ukraine still needs to make further efforts in IPR reforms and in institutional aspects for 
the  implementation  of  TSD  Chapter.  It  also  needs  to  better  prepare  for  discussing  the 
implementation  of  the  labour  provisions  under  the  TSD  chapter.  Furthermore,  policies  and 
reforms related to strengthening the rule of law and the business and investment climate 
need to advance for the benefit of foreign and domestic investors alike. Capacities to enforce 
labour standards and rights need to be further enhanced. EU support to this effect has started. 
Getting rid of trade irritants such as the export ban on raw wood, which might be linked to the 
vested  interests,  and  avoiding  the  adoption  of  discriminatory  legislation  as  regards  public 
procurement are very important. 

Ukraine has made substantive progress in trade-related reforms under difficult circumstances 
over a short period of time and this important momentum has to be sustained.  

).  Furthermore,  Russia  introduced  an  embargo  (extended  until  the  end  of  2018)  on  imports  from  Ukraine  of 
agricultural  products  in  the  follow-up  to  Ukraine's  adherence  to  EU  sanctions  against  Russia  as  well  as 
started to apply the road and railway transit restrictions on exports from Ukraine to Central Asia. 

85 

 
 
 
                                                                                                                                                         
ANNUAL REPORT ON THE IMPLEMENTATION OF THE DEEP AND 
COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN  
THE EU AND ITS MEMBER STATES AND GEORGIA41 

The DCFTA (DCFTA) of the EU-Georgia Association Agreemen (AA)42 entered into force on 
1  July  2016  after  being  applied  on  provisional  basis  since  1  September  2014.43  This  is  the 
second  report  on  the  implementation  of  the  EU-Georgia  DCFTA.  It  responds  also  to  the 
requirements of the Regulation implementing the anti-circumvention mechanism provided for 
in the EU-Georgia Association Agreement.44  

To highlight that the Government of Georgia adopted in November 2017 an Action Plan for 
the implementation of the DCFTA 2018-202045. It is a continuation of the Action Plan for 
2014-2017,  outlining  the  priorities  of  the  Association  Agenda,  planned  activities  related  to 
each  priority  with  indicators,  responsible  implementing  institutions  and  timeframe  for 
implementation.  

1. 

EVOLUTION OF TRADE 

1.1. 

Trade in Goods overall 

1.1.17.  The scope of trade liberalization 

At  the  start  of  provisional  application  of  the  DCFTA  on  1  September  2014  both  partners 
eliminated import duties for all goods with a few exceptions on the European Union side, 
related  to  sensitive  agriculture  products.  Nevertheless  market  access  for  these  products  has 
been improved. To this end the EU has granted a duty-free TRQs for garlic originating from 
Georgia and, for 28 agricultural products (including fruits and vegetables) that are subject to 
entry prices, the EU has eliminated the ad valorem component of the import duty.  

An  anti-circumvention  mechanism  applies  to  several  agricultural  goods  i.e.  beef,  pork, 
sheep  and  poultry  meat,  dairy  products,  eggs  and  albumins,  mushrooms,  cereals,  malt, 

41  See  the  following  website  to  find  more  information  on  Georgia:  http://ec.europa.eu/trade/policy/countries-

and-regions/countries/georgia/ 

42  The  EU-Georgia  Association  Agreement  was  published 

in  OJ  L 261,  30.08.2014.  http://eur-

lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2014:261:FULL&from=EN  

43  When it comes to DCFTA application to breakaway regions Abkhazia and South-Ossetia, the EU gives its 
full support to Georgia's territorial integrity, however, in accordance with Article 429 (Territorial application) 
of the Association Agreement, conditions enabling effective implementation of the DCFTA, and notably de 
facto  government  control  over  those  territories,  would  need  to  be  created  in  either  Abkhazia  or  South 
Ossetia, which is not the case at present. 

44  Regulation (EU) 2016/401 of the European Parliament and of the Council of 9 March 2016 implementing the 
anti-circumvention mechanism provided for in the Association Agreement between the European Union and 
the European Atomic Energy Community and their Member States, of the one part, and Georgia, of the other 
part  (OJ  L 77/2016).  According  to  its  Article  4,  the  Commission  shall  submit  annual  report  on 
implementation  of  this  Regulation  and  Title  IV  (DCFTA)  of  the  Association  Agreement.  The  report  shall, 
inter  alia,  include  information  about  the  application  of  the  anti-circumvention  mechanism  and  set  out  a 
summary of the statistics and the evolution of trade with Georgia. 

45  See http://www.dcfta.gov.ge/en/implementation  

86 

 
 
                                                 
starches  and  sugars  as  well  as  to  processed  agricultural  products  such  as:  sweetcorn, 
processed sugars and cereals and cigarettes. 

Both Parties agreed on a review clause, i.e. that after five years from the entry into force of 
the  DCFTA,  they  would  consult  (if  there  is  a  request  from  either  party)  to  consider 
broadening the scope of the liberalization of customs duties in bilateral trade. 

1.1.18.  Overall evolution of EU–Georgia trade in goods  

In  accordance  with  2017  Eurostat  data,  the  EU  is  the  most  important  trade  partner  of 
Georgia  with  27% share in  its overall trade (24% in  total  export and 28% imports) and is 
followed  by  Turkey  (15%),  Russia  11%),  China  (9%)  and  Azerbaijan  (8%).  Georgia  is  the 
EU’s 73rd trade partner and accounts for only 0.1% of its total trade. 

In 2017 the overall trade between the EU and Georgia increased on year-on-year-basis by 6% 
and amounted to  EUR 2.66 billion. EU exports to Georgia  increased in  that time by 1.4% 
while  EU  imports  from  Georgia  noted  an  increaseof  23%  compared  to  2016.  Mineral 
fuels, nuts, fertilizers , and mining products account for over 63% of total Georgian export to 
the EU. 

In  the  analysed  period  the  surplus  in  EU  trade  with  Georgia  has  decreased  from 
EUR 1.41 billion to 1.32 billion. 

2016 

2015 

Table 1: EU trade in goods with Georgia, 2015-2017 (million EUR) 
EU trade with 
Georgia 
EU Exports 
EU Imports 
Total trade 
Trade balance 
Source: Eurostat COMEXT. 

% change 
2016/2015 
6.5 
-26.2 
-3 
- 

1 840 
736 
2 576 
+1 104 

1 960 
543 
2 500 
+1 417 

1 989 
667 
2 656 
+1 322 

2017 

% change 
2017/2016 
1.4 
22.8 
6.2 
- 

% change 
2017/2015 
8 
-9.3 
3.1 
19.7 

1.1.19.  Sectoral structure of EU-Georgia trade in goods  

As  concerns  the  structure  of  EU  exports  to  Georgia  in  2017,  the  most  important  product 
categories  (by  Sections  of  the  Harmonized  System  Nomenclature  –  HS)  were:  machinery 
and  appliances,  mineral  and  chemical  products.  The  observed  shares  and  dynamics  in 
2017 in comparison to 2016 were as follows: machinery and appliances amounted to 18.8% of 
overall EU exports to Georgia and decreased by 12.6%; mineral products  – 18.8%, increase 
by  3%;  products  of  chemical  or  allied  industries  -  18%,  increase  by  6%  (pharmaceutical 
products  represented  the  largest  proportion  of  EU  exports  to  Georgia  in  this  category, 
accounting for 12.5%). Other products categories that showed an increase in EU exports are 
transport equipment and prepared foodstuffs. 

In  terms  of  structure  of  EU  imports  from  Georgia  in  2017,  the  most  important  product 
categories were: mineral products, fruits and vegetables (notably nuts), base metals and 
chemical  goods.  The  following  shares  and  dynamics  in  2017  comparing  to  2016  were 
observed: mineral products accounted for almost 46% of the total EU imports  from Georgia 
and  increased  by  110%  (due  to  a  sharp  increase  in  EU  imports  of  ores,  slag  and  ash); 
vegetable products – 11.4%; a decrease by 61% (by far the largest sub-categories of imported 

87 

 
 
products  were  edible  fruits  and  nuts  accounting  for  11.3%  of  the  total  EU  imports  from 
Georgia); base metals and articles thereof – 10%; prepared foodstuffs, beverages, spirits and 
vinegar – 7.9%; products of chemical or allied industries – 6.8%; other categories of products 
that  have  shown  an  increase  in  EU  imports  from  Georgia  are  textiles  and  textile  articles, 
optical equipment.. 

Table 2: EU trade with Georgia by HS section (million EUR)  

1.2. 

Trade in agricultural goods 

In  2017,  EU  imports  of  agricultural  products  from  Georgia  have  decreased  by  36%  since 
2016. Fruit  & nuts  accounted for 42% of the EU's  agri-food imports from  Georgia in  2017, 
followed  by  wine  and  spirits  (almost  30%).  EU  exports  of  agricultural  products  to  Georgia 
have  increased  by  12%  over  the  same  period.  The  EU's  key  agri-food  exports  to  Georgia 
consisted  of  spirits  and  liqueurs  (15%),  beet  and  cane  sugar  (10%)  and  food  preparations, 
chocolate, confectionery & ice cream (10%). 

Throughout  the  first  three  years  of  DCFTA  implementation  Georgia  started  to  export  some 
new products to the EU e.g. kiwi and blue berries. This shows a potential of the DCFTA to 
attract new product categories to be commercialized on the markets of both Parties. 

Table 3: EU trade in goods with Georgia, split by AG and NAMA (million EUR) 

1.3. 

Use of TRQs (TRQ) 

In 2017 the EU annual duty-free TRQ of 220 tons for Georgian garlic was not used at all, mainly due 
to the lack of marketing for these products on the EU market. 

1.4. 

Preference utilisation rate (PUR) 

The preference utilization rate (PUR) on imports into the EU from Georgia amounted to 77% 
in 2017, down from 80% in 2016. At HS Section level, the highest overall PURs are found in 
animal  and  vegetable  fats  and  oils  at  100%,  vegetable  products  at  98%,  wood  and  wood 
products,  prepared  foodstuffs,  beverages,  spirits  and  vinegar  at  95%  and  articles  of  stone, 
plaster, cement, asbestos at 95%. PURs for EU exports to Georgia increased from 71.3% in 
2016 to 76.9% in 2017.  

88 

Agrifood trade EU28 with GeorgiaGrowth mio €annual %EU28 imports183118-65-35.7%EU28 exports2212482712.0%Balance3813092Total trade405366-39-9.6%Source Trade G2 Statistics/ISDBNAMA trade EU28 with GeorgiaGrowth mio €annual %EU28 imports36054919052.8%EU28 exports1,7391,74120.1%Balance1,3791,192-188Total trade2,0982,2911929.2%Source Trade G2 Statistics/ISDBGeorgia20162017Georgia20162017 
 
 
 
1.5. 

Establishment, trade in services and investments 

1.1.20.  Market access related to establishment and trade in services 

In the DCFTA the EU and Georgia laid down the necessary arrangements for the progressive 
reciprocal  liberalization  of  establishment  and  trade  in  services  and  for  cooperation  on 
electronic commerce. Both Partners committed to freedom of establishment as from the start 
of the DCFTA’s provisional application, by granting each other national treatment and most 
favoured-nation treatment (subject to several reservations specified by EU Member States and 
a  few  reservations  by  Georgia).  Cross-border  supply  of  services  was  also  liberalised  (EU 
and Georgia granted each other national treatment with several limitations and reservations on 
both sides). 

In four services sectors (postal and courier services, telecommunication, financial services 
and  international  maritime  transport  services)  Georgia  recognized  the  importance  of 
gradual approximation (over a period of 4 and 8 years – pls specify which time period applied 
to which sector) of its existing and future legislation to the list of the EU  acquis (in case of 
financial  services  Georgia  also  committed  to  the  international  best  practice  and  standards). 
Further  market  opening  in  those  sectors  is  conditioned  upon  Georgia  fulfilling  its 
commitments of gradual approximation up to 2022. 

The EU and Georgia also agreed on a review clause with a view to liberalizing establishment, 
cross-border supply of services (regular review) and capital movement (by the end of the fifth 
year  following  the  date  of  the  entry  into  force  of  the  DCFTA).  This  review  shall  take  into 
account,  inter  alia,  the  process  of  gradual  approximation  foreseen  in  the  DCFTA  and  its 
impact on the elimination of remaining obstacles to cross border supply of services between 
the parties. 

1.1.21.  Trade in services  

In  general,  trade  in  services  between  the  EU  and  Georgia  has  more  than  doubled  between 
2006 and 2016, both in terms of imports and exports. In 2014-2016 the total trade in services 
between both Partners decreased from EUR 862 to 684 million. 

Table 2: EU trade in services with Georgia, 2014-2016 (million EUR) 

EU trade with Georgia 

2014 

2015 

EU exports 
EU imports 
Total trade 
Trade balance 
Source: European Commission, DG Trade. 

591 
271 
862 
320 

547 
290 
837 
257 

% change 
2015/2014 
-7 
7 
-3 
-20 

2016 

393 
291 
684 
102 

% change 
2016/2015 
-32 
0.0 
-18 
-60 

The  structure  of  exports  of  services  by  Georgia  to  the  world  is  dominated  by  travel  and 
transport  services,  in  imports  the  most  important  sectors  are  transport,  travel,  insurance  and 
pension services as well other business services. 

89 

 
1.1.22.  FDI 

In  2016  FDIs  (FDIs)  stocks  in  Georgia  originating  from  the  EU  accounted  for 
EUR 1.6 billion  (a  sharp  decrease  compared  to  2015).  Top  EU  Member  States  investing  in 
Georgia  are:  the  Netherlands,  United  Kingdom,  France,  Germany  and  the  Czech  Republic. 
Inward FDIs flows in that year amounted to EUR 25 million and were also considerably lower 
level than in 2015 when they reached EUR 123 million. 

Table 3: EU FDI with Georgia, 2015-2016 (million EUR)  

FDI stocks 

Georgia in EU28 (inward) 

EU28 in Georgia (outward) 

Stocks: balance 

FDI flows) 

Georgia into EU28 (inward) 

EU28 into Georgia (outward) 

Flows: balance 
Source: European Commission, DG Trade. 

2014 
90 

3 922 

3 832 

2014 
4 

203 

199 

2015 

123 

3 884 

3 761 

2015 

-30 

142 

172 

2016 

25 

1 589 

1 564 

2016 

-82 

-1 351 

-1 269 

According to the data provided both by the EU and Georgia, the main sectors chosen by EU 
investors are: telecommunications, transport, infrastructure and manufacturing. 

The above statistics show that positive impact of the DCFTA on attracting more investments 
from the EU is still ahead for Georgia. Georgia performs very well in international rankings in 
terms  of  business  climate.  According  to  the  2018  World  Bank  Doing  Business  Index  2018 
Georgia is  on 9th  position amongst  190 countries.  In the 2017 Transparency  International  – 
Corruption Perception Index Georgia appeared on 44th position among 176 countries. 

2. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 46 

2.1. 

Joint decisions of the Association Bodies 

In  2017,  the  following  amendments/updates  have  been  introduced  in  the  Association 
Agreement:  

  Agriculture:  List of EU agricultural  products  and foodstuffs other than wine 
and  spirits  to  be  protected  in  Georgia  (Annex  XVII-C)  and  the  List  of  spirit 
drinks of the EU to be protected in Georgia (part B of Annex XVII-D);47 

  SPS:  List  of  the  EU  SPS  and  animal  welfare  acquis  (Annex  XI-B)  to  which 
Georgia  intends  to  approximate  its  domestic  legislation.48  This  jointly  agreed 

46  Official Journals of the EU where the decisions on the Rules of Procedure for the EU-Georgia Association 
bodies  were  published:  of  the  Association  Council  and  those  of  the  Association  Committee  and  of  Sub-
Committees  (OJ  L 321,  5.12.2015);  of  the  Customs  Sub-Committee  (OJ  L 114,  5.5.2015);  of  the  Sanitary 
and Phytosanitary Sub-Committee (OJ L 123, 23.05.2017); of the Trade and Sustainable Development Sub-
Committee (publication pending); of the GIs Sub-Committee (OJ L 134, 23.05.2017).  

47  OJ L 100, 19.4.2018. 

90 

 
                                                 
SPS  roadmap  is  to  serve  as  a  reference  document  for  the  implementation  of 
SPS Chapter of the DCFTA.  

  Dispute  Settlement:  Establishing  the  list  of  arbitrators  for  bilateral  trade 

dispute settlement mechanism49; 

  Rules  of  Origin:  Replacement  of  Protocol  I  concerning  the  definition  of  the 
concept  of  ‘originating  products’  and  methods  of  administrative  cooperation, 
by  a  new  protocol  which  refers  to  the  Regional  Convention  on  pan-Euro-
Mediterranean preferential rules of origin (PEM Convention)50; 

  Standardisation: Annex III (rules applicable to standardisation, accreditation, 
conformity  assessment,  technical  regulation  and  metrology);  procedure  is 
ongoing, and should be finalized before the report is published. 

  Public Procurement: Annex XVI (public procurement); procedure is ongoing, 

and should be finalized before the report is published. 

2.2.  Meetings of the Association Bodies 
The  4th  meeting  of  the  EU-Georgia  Association  Committee  in  Trade  configuration  was 
held on 6 December 2017 in Tbilisi. The meeting provided an opportunity to review all issues 
related  to  the  comprehensive,  timely  and  inclusive  implementation  of  the  EU-Georgia 
DCFTA.  Both  Parties  reviewed  progress  made  in  all  DCFTA  Chapters,  including  trade  in 
goods,  SPS  measures,  intellectual  property  rights,  customs  and  trade  facilitation,  technical 
barriers  to  trade,  public  procurement,  establishment,  trade  in  services  and  electronic 
commerce,  trade-related  energy,  competition,  trade  and  sustainable  development.  The 
Committee assessed the development of bilateral trade after three years of implementation of 
the DCFTA. The Georgian side expressed concerns about their trade deficit with the EU.  

Both  Partners  raised  their  respective  concerns  related  to  the  implementation  of  the 
commitments  on  approximation  with  the  EU  law  in  particular  in  the  area  of  SPS  measures, 
technical  barriers  to  trade,  public  procurement,  intellectual  property  rights,  TSD  and 
instructed  the  specialized  Sub-Committees  to  continue  to  seek  solutions.  Both  sides 
underlined the importance of EU financial and technical assistance in the implementation of 
the  DCFTA,  notably  projects  aimed  at  supporting  both  the  Georgian  administration  and  the 

48  Decision  No  1/2017  of  the  EU-Georgia  Sanitary  and  Phytosanitary  Sub-Committee  of  7  March  2017 
modifying  Annex  XI-B  to  the  Association  Agreement  OJ  L 98,  11.04.2017  http://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:22017D0683&from=EN   

49  Decision No 1/2017 of the EU-Georgia Association Committee in Trade configuration of 6 December 2017 
establishing  the  list  of  arbitrators  referred  to  in  Article  268(1)  of  the  Association  Agreement  between  the 
European Union and the European Atomic Energy Community and their Member States, of the one part, and 
Georgia, 
http://eur-lex.europa.eu/legal-
the 
content/EN/TXT/?uri=CELEX:22018D0002  

4.01.2018, 

other 

part, 

L 1, 

OJ 

50  Council  Decision  (EU)  2017/2433  of  18  December  2017  on  the  position  to  be  adopted  on  behalf  of  the 
European Union within the Customs Sub-Committee established by the Association Agreement between the 
European Union and the European Atomic Energy Community and their Member States, of the one part, and 
Georgia,  of  the  other  part,  as  regards  the  replacement  of  Protocol  I  to  that  Agreement,  concerning  the 
definition  of  the  concept  of  ‘originating  products’  and  methods  of  administrative  cooperation,  by  a  new 
protocol which refers to the Regional Convention on pan-Euro-Mediterranean preferential rules of origin, OJ 
L 344, 23.12.2017;  http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32017D2433  

of 

91 

 
                                                                                                                                                         
small  and  medium-sized  enterprises  (SMEs)  to  align  with  the  acquis  and  reap  the  benefits 
from the Agreement. 

The  2nd  meeting  of  the  EU-Georgia  Sub-Committee  on  Economic  and  Other  Sector 
Cooperation  –  Cluster  V  "Agriculture  and  Rural  Development,  Fisheries  and  Maritime 
Governance,  Regional  Development,  Cross-Border  and  Regional  Level  Cooperation"  took 
place  16  March  2017.  The  discussions  highlighted  the  implementation  of  the  "Strategy  for 
Agricultural  Development  in  Georgia,  2015-2020"  and  the  adoption  of  the  first  Rural 
Development  Strategy  of  Georgia  (2017-2020).  The  EU  committed  to  continue  providing 
assistance  to  Georgia,  in  particular  through  the  European  neighbourhood  programme  for 
agriculture and rural development. 

The 3rd Customs Sub-Committee met in Brussels on 17 May 2017. The discussion focused 
on:  the  legislative  and  policy  developments,  including  Georgia’s  progress  report  on  the 
implementation of DCFTA customs provisions, information about initiatives in strengthening 
customs enforcement of intellectual property rights (IPR) to be shared by the Parties; strategic 
framework  for  EU-Georgia  Customs  Cooperation;  Georgia’s  prospects  for  accession  to  the 
Convention on a Common Transit Procedure; prefe’s replies to a questionnaire related to the 
Authorized  Economic  Operator  program;  risk  management  and  fight  against  fraud;  rules  of 
origin.  Georgia  requested  the  relevant  joint  decision  adopted  with  a  view  to  reflecting  the 
linkage of the EU-Georgia rules of origin to the PEM Convention.51  

The 3rd SPS Sub-Committee met in Brussels on 9 October 2017. Both Parties discussed the 
approximation  list  in  Annex  XI-B  which  serves  as  a  reference  document  for  the 
implementation  of  Chapter  4  SPS  Measures  of  Title  IV  of  the  Association  Agreement.  The 
discussion also focused on: progress in reforms in the SPS area and a timeframe for legislative 
approximation  submitted  by  Georgian  authorities  (including  analysis  of  the  tables  of 
correspondence  for  already  approximated  legislation  prepared  by  Georgia);  improvement  in 
the food safety control system and animal health situation, in particular the strengthening the 
role  of  the  National  Food  Agency  (NFA)  in  ensuring  overall  food  safety;  as  well  as  on  a 
potential of Georgia in exports of goods to foreign markets. 

The  3rd  GIs  Sub-Committee  took  place  in  Tbilisi  on  14  March  2018.  The  Sub-Committee 
discussed  updates  of  the  lists  of  EU  for  agricultural  products  and  foodstuffs,  wines,  spirit 
drinks  and  aromatized  wines.  During  the  meeting  the  Parties  adopted  a  Decision  amending 
Annex XVII-C (list of EU agricultural products and foodstuffs other than wine and spirits to 
be  protected  in  Georgia)  and  part  B  of  Annex  XVII-D  (list  of  spirit  drinks  of  the  EU  to  be 
protected in  Georgia) of the DCFTA. The provisions on exchange of information  on all the 

51  The joint Decision on the linkage of the rules of origin in bilateral trade to the Protocol of PEM Convention 
was adopted during the 4th Customs Sub-Committee  which took place in Brussels on 20 March 2018.  The 
abovementioned amendments envisage diagonal cumulation to come into force between the EU, Georgia and 
the  Republic  of  Turkey  after  the  Turkish  side  has  ratified  respective  amendments  to  the  Free  Trade 
Agreement (FTA) between Georgia and the Republic of Turkey (Georgia  has already  finalized ratification 
process). 

92 

 
                                                 
updates  on  EU  as  well  as  Georgian  GIs  (new  ones,  removals  from  the  list,  modifications) 
were also discussed in view of the need for each Party to have the possibility to run objection 
procedures for the new names and for any other procedures necessary for the next update of 
GI Annexes to the DCFTA. 

For the 2nd TSD Sub-Committee see section 5 below.  

3. 

IMPLEMENTATION  OF  THE  PROVISIONS  ON  TRADE  AND 
DEVELOPMENT 

SUSTAINABLE 

The 2nd TSD Sub-Committee took place on 20 March 2018. The discussions highlighted the 
importance of the TSD chapter implementation, notably due to a growing political and public 
awareness of the importance of the environmental and labour provisions in trade policy. The 
meeting was also an occasion to discuss Georgia’s progress in implementing the fundamental 
International Labour Organisation (ILO) conventions, to welcome cooperation by both Parties 
on sustainable development, and in particular on environmental aspectsand to discuss the TSD 
joint work plan. The main priority areas identified in the work plan are illegal wildlife trade, 
implementation  of  UNFCCC,  effective 
sustainable 
implementation  of  core  labour  standards  including  strengthening  the  Labour  Inspection 
system  and  the  operational  framework  regarding  child  labour  and  enhancing  non-
discrimination in the workplace as well as promoting equal pay for equal work.  

forest  management,  effective 

At  the  same  time  discussions  were  held  with  the  Civil  Society  Forum  and  between  the 
Domestic Advisory Groups. 

Both  Parties  noted  some  progress  in  implementing  the  fundamental  International  Labour 
Organization (ILO) conventions but it was underlined that in a number of specific areas more 
efforts  need  to  be  undertaken  to  effectively  implement  them,  notably  with  regard  to  the 
establishment  of  a  fully  flegded  labour  inspection  system,  preventing  child  labour  and 
ensuring  freedom  of  association  and  collective  bargaining.  Tripartite  discussions  on  labour 
policy  enforcement,  labour  inspections  and  occupation  and  health  and  safety  need  to  be 
strengthened. 

The EU welcomed the cooperation on environmental aspects of the TSD Chapter, applauded 
Georgia  for  adopting  the  Environmental  Assessment  Code52.  This  Code  regulates  matters 
related  to  strategic  documents  and  public  or  private  activities  which  may  have  significant 
effects  on  the  environment,  human  life  and/or  health.  The  procedures  for  environmental 
impact assessment, strategic environmental assessment, transboundary environmental impact 
assessment,  and  public  participation  in  decision-making,  as  well  as  the  conduct  of  expert 
examinations,  fall  within  the  scope  of  this  Code),  and  for  the  ratification  of  the  Paris 
Agreement  on  Climate  Change  in  force  as  of  7  June  2017.  The  EU  encouraged  Georgia  to 
implement the Paris Agreement, while acknowledging the challenges in its application. 

52  https://matsne.gov.ge/en/document/view/3691981  

93 

 
                                                 
The  representatives  of  Georgia  underlined  the  developments  in  the  forestry  sector.  A  Final 
draft of the Forestry Code elaborated by the Government, was submitted to the Parliament in 
2017. Sustainable forestry management and risk assessment are being developed along with 
wildlife  trade  and  other  biodiversity  aspects.  The  draft  law  on  biodiversity  was  prepared  in 
2016 and will undergo public hearings before adoption in 2018. 

4. 

SPECIFIC AREAS SUBJECT TO REPORTING OR MONITORING 

Entry price system and anti-circumvention mechanism  

In 2017 there was no overshooting for products subject to the entry price (Annex II-B of the 
Association Agreement). When it comes to agricultural products subject to anti-circumvention 
mechanism, none of the trigger levels were exceeded in 2017, due to the low trade levels for 
those  products.  It  is  worth  noting,  that  in  the  analysed  period  there  were  no  imports  of 
products  to  be  potentially  affected  by  anti-circumvention  mechanism  with  exception  of 
cereals. 

5. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

The  approximation  commitments  for  2015-2017  have  not  been  completed  to  date.  These 
concerned the submission (6 months after the entry into force of the Agreement) of a list of 
the  EU  SPS,  animal  welfare  and  other  legislative  measures  that  Georgia  should  be 
approximating  its  laws  to;  the  completion  of  the  first  phase  of  the  Public  Procurement 
Roadmap (pending); as well as the approximation of Georgian law to EU legal acts on anti-
money laundering and the Regulation on customs enforcement of IPR (pending). It should be 
noted that the timeline for approximation of Georgian legislation was back-loaded by Georgia 
in  the  negotiation  process  to  the  extent  that  approximation  intensifies  in  2018  and  will 
continue  e.g.  until  2022  in  TBT  area  or  even  until  2027  as  concerns  certain  veterinary 
measures, plant protection and food safety.  

The  Government  of  Georgia  adopted  in  November  2017  an  Action  Plan  for  the 
implementation of the DCFTA 2018-2020. It is a continuation of the Action Plan for 2014-
2017, outlining the priorities for implementation of the DCFTA in different sectors (including 
for  example  Technical  Barriers  to  Trade,  SPS  measures,  customs  or  IPR)  as  well  as  the 
planned activities related to each priority, indicating the responsible implementing institutions 
and timeframe for implementation. 

SPS aspects 

The  list  of  the  EU  SPS  acquis  that  Georgia  will  approximate  was  submitted  to  the  EU  in 
December  2015  and  formally  adopted  by  the  EU-Georgia  SPS  Sub-Committee  on  7  March 
2017. Deadlines  committed by Georgia to  achieve compliance  with  the  EU SPS system  are 
rather  long,  to  the  extent  that  about  45%  of  the  legal  acts  will  be  subject  to  approximation 
only  after 2020 (in concrete terms,  35 legal  acts  in  case of veterinary measures, 41 on food 
safety and 46 in  case of plant protection).  The institutional capacity in terms  of food safety 

94 

 
control still needs to be enhanced. A number of Georgian establishments are authorised to 
export fruits, vegetables, honey and fishery products (from the Black Sea) to the EU.  

Technical Barriers to Trade  

In terms of technical barriers to trade (TBT), Georgia has committed to approximate by the 
end of 2018 its legislation on horizontal quality infrastructure to that of the EU as well as to 
several  EU  New  and  Global  Approach  Directives.  In  this  field  reform  efforts  should  be 
intensified. The situation has improved as concerns the adoption of technical standards (over 
95%  of  the  existing  Georgian  Standards  are  International  or  European  Standards).  The 
Georgian market surveillance system needs strengthening. As concerns institutional capacity 
building  Georgia  needs 
the  enhancement  of  certification/accreditation 
infrastructure. 

to  speed  up 

Public Procurement  

The  institutional  part  in  public  procurement  approximation  has  been  accomplished.53 
Discussions  are  ongoing  for  both  Parties  to  formally  adopt  a  roadmap  developed  by  the 
Government  and  State  Procurement  Agency  (GSPA).  The  roadmap  will  be  a  point  of 
reference and facilitate the implementation of the Public Procurement Chapter of the DCFTA, 
including  on  alignment  of  the  Georgian  legislation  to  the  EU  acquis  in  this  area.  The 
institutional capacity needs to be built within the GSPA and the contracting authorities. 

Intellectual Property  

The implementation of the IPR Chapter of the DCFTA has started and Georgia has brought 
the majority of its laws in compliance with the DFTA. Still the exhaustion regime of Georgia 
is  not  line  with  the  DCFTA  and  some  copyright  related  provisions  need  to  be  improved, 
including the collective right management system.  

Rules of Origin 

On 1 July 2017 Georgia joined the  Convention  on pan-Euro-Mediterranean preferential 
rules of origin54. The joint Decision on the linkage of the rules of origin in bilateral trade to 
the Protocol of PEM Convention55 was adopted during the 4th Customs Sub-Committee which 
took place in Brussels on 20 March 2018 and the linkage entered into force on 1 June 2018. 

53  In  accordance  with  the  Association  Agreement  the  first  approximation  stage  relates  to  the  setting  up  the 
institutional framework: executive body at central government level to be responsible for coherent policy in 
all  areas  related  to  public  procurement  and  an  impartial,  the  independent  body  tasked  with  the  review  of 
decisions  taken  by  the  contracting  authorities  and  entities  as  well  as  introduction  of  basic  standards 
regulating the award of contracts. 

54  The  Decision  of  the  Joint  Committee  of  the  PEM  Convention  on  Georgia  accession  was  published  in  OJ 

L 329, 3.12.2016 http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:22016D2126 

55  Council  Decision  (EU)  2017/2433  of  18  December  2017  on  the  position  to  be  adopted  on  behalf  of  the 

European Union within the Customs Sub-Committee; OJ L 344, 23.12.2017, p. 21. 

95 

 
                                                 
(report published on 6 June 2018). This allows Georgia to benefit from diagonal cumulation 
of origin with the EU and Turkey as of 1 June 2018, and be better integrated in regional trade 
flows.  

Energy 

Georgia officially became a Contracting Party to the  Energy Community Treaty on 1 July 
2017.  The  Protocol  of  Accession  to  the  Energy  Community  Treaty  commits  Georgia  to 
approximate  its  legislation  to  key  energy  and  energy-related  EU  acquis  between  2017  and 
2020. 

Trade Facilitation 

On 4 January 2016, Georgia ratified the WTO Trade Facilitation Agreement which is in 
force since February 2017 and contains commitments on simplifying border procedures and 
modernization  of  customs  techniques  and  instruments  and  customs  control.  An  unresolved 
issue  for  the  time  being  is  the  application  of  the  DCFTA  to  the  breakaway  territories  of 
Abkhazia  and  Southern  Ossetia.  According  to  Article  429  (Territorial  application)  of  the 
Association Agreement, conditions enabling effective implementation of the DCFTA need to 
be created in either Abkhazia or South Ossetia for the AA/DCFTA to be able to be applied in 
those areas.  

2.  EU SUPPORT TO DCFTA IMPLEMENTATION 

EU Support to DCFTA-related reforms 

The EU is supporting the implementation of the DCFTA through technical and financial 
assistance. A Sector Reform Contract focusing on the transposition of relevant EU acquis 
(particularly in the area of SPS, TBT, public procurement), capacity building of relevant 
institutions to implement the DCFFTA (such as the Competition Authority or the Market 
Surveillance Authority) and support to SME development to increase exports has been put in 
place. This is complemented by technical assistance focusing on cluster and value chain 
development and support to the SME regulatory/institutional framework as well as Twinnings 
by Member States to share their experience in the transposition of EU law.  

EU Support for SMEs 

SMEs in Georgia are benefitting from the EU support under the DCFTA Facility for SMEs, 
which aims at increasing SMEs competitiveness, easing their access to finance, helping them 
to  seize  new  trade  opportunities  and  comply  with  new  food  safety,  technical  and  quality 
standards,  as  well  as  with  environmental  protection  measures  implied  by  the  DCFTA 
implementation.   

The DCFTA Facility consists of a set of programmes implemented principally by EBRD and 
EIB. SMEs are benefiting from the EU support through four types of instruments:  

96 

 
 
1) risk sharing mechanisms (mostly first loss portfolio guarantees for local banks);  

2) currency hedging (interest rate subsidies for loans in local currency);  

3)  investment  incentives  (grants  provided  to  SMEs  combined  with  investment  loans  to 
upgrade machinery or production processes in line with the EU standards) and  

4)  technical  assistance  (business  advice  to  SMEs  and  local  banks,  assessment  of  the 
compliance with the EU standards, capacity building for local banks).  

7. 

 CONCLUSIONS AND OUTLOOK 

After three years of the DCFTA implementation by both Partners, it should be underlined that 
external  trade  and  FDIs  remain  key  for  the  overall  economic  growth  of  a  small  open 
economy  like  Georgia.  Economic  uncertainty  in  some  key  trading  partners  in  the  region 
(Russia,  Turkey,  and  Azerbaijan)  and  the  recovery  from  the  recession  the  EU  faced  in  the 
previous  years  created  a  relatively  fragile  but  positive  external  environment  for  Georgia’s 
trade in 2017.  

The  EU  is  constantly  encouraging  and  assisting  Georgia  to  accelerate  the  necessary 
reforms, notably in the SPS area, as they would not only enhance food safety in the country 
but  also  facilitate  and  allow  further  access  for  Georgian  agricultural  products  to  the  EU 
market.  In  the  medium  term,  the  benefits  from  approximation  to  the  EU  acquis  should 
translate into an increase of bilateral trade, and especially growth in Georgia’s exports to the 
EU. Georgia has  an untapped trade potential not  only in  relation  to  trade  in  goods, but  also 
services and public procurement. The DCFTA will help Georgia to diversify its economy and 
enhance regional trade with its neighbours and the broader paneuromed region. 

The continuation of the DCFTA implementation, notably through legal approximation (that 
has  a  dynamic  character  due  to  developments  of  EU  acquis)  and  institutional  capacity 
building will require continuous efforts by Georgian authorities as well as on the EU side in 
terms  of  assisting  Georgia  in  this  process.  To  this  end  the  Association  Committee  in  Trade 
configuration  as  well  as  the  specialised  Sub-Committees  established  under  DCFTA  remain 
the main fora for discussions and comprehensive evaluation of that progress. Simultaneously, 
in order to effectively enhance exports from Georgia, the EU delivers financial and technical 
support  to  the  reforms  and  administrative  capacity  building  in  trade-related  areas  like  TBT 
(e.g.  standardization  and  metrology  infrastructure;  accreditation  and  surveillance  system), 
SPS (notably in institutional capacity building in food safety control) as well as in promotion 
of producers organizations, value chain optimization and the SMEs development. Improving 
the enforcement and governnace of labour standards and working conditions  is an important 
factor for georgia to fully reap the benefits of the DCFTA and of the AA.  

97 

 
ANNUAL REPORT ON THE IMPLEMENTATION OF THE DEEP AND 
COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN THE EU AND ITS 
MEMBER STATES AND MOLDOVA56 

The  DCFTA  (DCFTA)  between  the  EU  and  Moldova  as  the  main  economic  pillar  of  the 
Association  Agreement  (AA)57  has  been  provisionally  applied  since  1  September  2014  and 
fully entered into force on 1 July 2016. The trade facilitation measures which allow to keep 
the EU market open to goods from the breakaway region Transnistria have been reviewed and 
extended twice since January 2016; on this basis the EU-Moldova DCFTA’s provisions have 
been applied on the entire territory of Moldova.  

This second report on the implementation of the EU-Moldova DCFTA has been prepared in 
accordance with the provisions of the Regulation implementing the safeguard clause and the 
anti-circumvention  mechanism.58  In  addition  to  providing  an  overview  of  the  evolution  of 
EU-Moldova trade, information about the application of trade defence measures and the anti-
circumvention mechanism has been included.  

1. 

EVOLUTION OF TRADE 

1.1. 

Trade in goods overall 

2.1.1.  The scope of trade liberalization 

At the start of the DCFTA provisional application on 1 September 2014, the European Union 
eliminated  all  customs  duties  on  goods  imported  from  Moldova  except  six  agricultural 
products i.e. apples, table grapes, plums, grape juice, garlic and tomatoes, that are subject to 
annual  duty-free  TRQs  (TRQs).  Further  to  that,  the  EU  has  eliminated  the  ad  valorem 
component of the import duty for twenty agricultural products (fruits and vegetables). Import 
of  14  groups  of  agricultural  and  processed  agricultural  products  (pig  meat,  poultry,  dairy 
products  and processed  dairy  products,  cereals,  cigarettes, sugar processed  goods  and sweet 
corn) is duty-free but monitored under anti-circumvention mechanism (if the imports to the 

56  See  the  following  website to find  more information on Moldova:  http://ec.europa.eu/trade/policy/countries-

and-regions/countries/moldova/  

57  The  EU-Republic  Moldova  Association  Agreement  was  published  in  OJ  L 260,  30.08.2014.  http://eur-

lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2014:260:FULL&from=EN  

58  Regulation (EU) No 2016/400 of the European Parliament and of the Council of 9 March 2016 implementing 
the  safeguard  clause  and  the  anti-circumvention  mechanism  provided  for  in  the  Association  Agreement 
between the European Union and the European Atomic Energy Community and their Member States, of the 
one part, and the Republic of Moldova, of the other part (OJ L 77, 23.03.2016). According to Article 14 of 
the Regulation, the Commission shall submit an annual report to the European Parliament and to the Council 
on  the  application  and  implementation  of  this  Regulation  and  Title  V  of  the  Agreement.  Furthermore,  the 
report  shall,  inter  alia,  include  information  about  the  application  provisional  and  definitive  safeguard 
measures, prior surveillance measures, the termination of investigations and proceedings without measures, 
and  the  application  of  the  anti-circumvention  mechanism.  The  report  shall  also  set  out  a  summary  of  the 
statistics and the evolution of trade with Moldova. 

98 

 
                                                 
EU reaches certain  agreed levels  and Moldova fails proving the origin  of these imports, the 
EU may temporarily suspend the preferential treatment of the products concerned). 

Moldova liberalised import duties on 93.6% of tariff lines for goods imported from the EU at 
the start of provisional application of the DCFTA. One per cent of tariff lines (for agricultural 
products) are covered by preferential TRQs. Customs duties on 4.8% of products in terms of 
tariff lines are to be liberalised in stages (3, 5, 7 or 10 years; the longest liberalisation period 
applies  to  agrifood  products).  This  schedule  of  tariff  elimination  reflects  an  asymmetric 
market opening for the benefit of Moldova.  

2.1.2.  Overall evolution of EU-Moldova trade in goods 

According to Eurostat data for 2017, the EU is a key trade partner of Moldova, accounting 
for  56%  of  its  total  trade  (64%  of  total  exports  and  51%  of  Moldova’s  total  imports).  In 
terms  of  the  share  in  overall  Moldovan  exports,  the  EU  is  followed  by  Russia  (14%)  and 
Ukraine (5%). Moldova is EU’s 63rd trade partner and accounts for 0.1% of the EU’s total 
trade.  

In  2017,  the  total  trade  between  the  EU  and  Moldova  grew  by  20%  compared  to  2016  to 
slighlty  over  EUR 4 billion.  EU  exports  have  increased  by  19%  from  EUR 2.05 billion  to 
EUR 2.44 billion while EU imports from Moldova have increased by 23% from EUR 1.31 to 
EUR 1.61 billion in that period. This has been driven by economic growth as well as a better 
export  performance  of  Moldovan  companies  as  concerns  machinery,  foodstuffs,  certain 
agricultural and textiles products.  

Table 1: EU trade in goods with Moldova, 2016-2017 (million EUR) 

2016 

2 057 
EU Exports 
1 318 
EU Imports 
3 375 
Total trade 
Trade balance 
+739 
Source: Eurostat COMEXT. 

2017 

2 445 
1 616 
4 061 
+829 

% change 
2017/2016 
18.9 
22.7 
20.4 
- 

value change 
2017/2016 
388 
298 
686 
- 

In  2017,  the  EU  maintained  a  trade  surplus  with  Moldova  which  increased  to 
EUR 0.82 billion. The EU’s share in total Moldovan exports has been steadily increasing 
since  the  start  of  the  provisional  application  of  the  DCFTA,  and  has  reached  64%  in  2017. 
The EU’s share in total Moldovan imports has increased from 49% in 2016 to 51% in 2017. 
The EU’s share in the total trade of Moldova has similarly increased from 55% to 56% in that 
period. 

In addition, the number of companies involved in trade with the EU has continued to increase, 
with  approximately  1748  Moldovan  companies  exporting  to  the  EU  in  2017  up  from  1360 
firms engaged in exporting to the EU in 2016.  

99 

 
 
2.1.3.  Sectoral structure of EU-Moldova trade in goods  

The  main  product  categories  (according  to  the  Sections  of  the  Harmonized  System 
Nomenclature  –  HS)  exported  by  the  EU  to  Moldova  in  2017  were  machinery  and 
appliances,  mineral  products,  chemical  products  and  transport  equipment.  Amongst 
these, the main increase in exports from 2016 and 2017 was for base metals which increased 
by  37%  from  EUR 120 million  to  EUR 165 million.  Machinery  and  appliances  and  mineral 
products rose by respectively 15% and 20%. Exports of chemical products increased by 22% 
to  EUR 276 million  while  transport  equipment  exports  saw  an  increase  of  30%  to 
EUR 235 million.  The  signs  of  recovery  in  EU  exports  witnessed  in  2016  (after  a  general 
decline  of  EU  exports  in  certain  key  sectors  in  2014-2015  due  in  large  part  to  the  weak 
performance  of  the  Moldovan  economy)  were  therefore  confirmed  and  sustained  in  2017. 
This  is  evidenced  both  by  the  general  19%  increase  in  EU  exports  to  Moldova  in  2017 
(following a 2% decrease in 2016) as well as by the increase of EU exports across all the main 
HS product categories.  

The main product categories in EU imports from Moldova in 2017 were vegetable products, 
machinery  and  appliances,  textiles  and  textile  articles  and  foodstuffs,  beverages, 
tobacco. Machinery accounted for a large part of Moldova’s export growth to the EU due to 
the trade and investment opportunities in specific sectors such as the manufacuring of wiring 
harnesses. From the categories of products most widely imported from Moldova, the highest 
increase  in  imports  was  for  animal  products  (+65%)  although  remaining  at  a  low  level  of 
EUR 12 million. 

Bilateral  trade  in  non-agricultural  products  has  experienced  an  increase  of  19%  (to 
EUR 3.15 billion)  in  2017,  with  EU  imports  of  non-agricultural  goods  growing  by  20%  (to 
EUR 981 million)  and  EU  exports  of  such  goods  increasing  by  19%  (to  EUR 2.2 billion). 
Trade  has  grown  considerably  in  plastics,  textiles,  metals,  machinery  but  also  ceramics  and 
toys.  Similarly,  the  EU  has  become  a  major  market  for  Moldova’s  Information  and 
Communication Technology services. 

100 

 
Table 2: EU trade with Moldova by HS section (million EUR) 

1.2. 

Trade in agricultural goods 

In 2017, agricultural goods accounted for 22% (EUR 908 million) of total bilateral trade with 
Moldova while non agricultural products represented 78% (EUR 3.1 billion). In terms of EU 
imports  from  Moldova  in  2017,  the  share  of  agricultural  goods  stood  at  39%  while  non 
agricultural  goods  represented  61%  of  imports.  Agricultural  goods  constituted  11%  of  EU 
exports  to  Moldova,  with  89%  of  EU  exports  being  non-agricultural.  The  trade  balance  in 
agricultural  products  (in  particular  nuts,  cereals,  sunflower  seeds,  wine)  has  also  improved 
considerably in favour of Moldova. Moldovan exports of vegetable products to the EU almost 
doubled in 2016-2017 (from EUR 240 million to EUR 409 million).  

Table 3: EU trade in goods with Moldova, split by AG and NAMA (million EUR) 

101 

EU28 merchandise trade by HS section with Moldova (million Euro)EU importsimport growthEU exportsexport growthEU balance20162017total M€annual %20162017total M€annual %Total Goods2,6353,23359822.7%4,1134,89177818.9%I   Live animals;  animal products712564.9%62761523.6%II   Vegetable products30340910634.9%75881418.4%III   Animal or vegetable fats and oils37481231.3%4509.3%IV   Foodstuffs, beverages, tobacco146160149.9%1061181211.4%V   Mineral products88111.3%3283926419.4%VI   Products of the chemical or allied industries56116.7%2262765021.9%VII   Plastics, rubber and articles thereof1013326.4%1251441915.2%VIII   Raw hides and skins, and saddlery2018-3-12.8%4753612.8%IX   Wood, charcoal and cork and articles thereof770-0.2%2835726.9%X   Pulp of wood, paper and paperboard44127.8%333639.0%XI   Textiles and textile articles2302572711.6%184201179.4%XII   Footwear, hats and other headgear525300.9%1112112.5%XIII   Articles of stone, glass and ceramics3531-4-10.8%3439514.6%XIV   Pearls, precious metals and articles thereof00023.7%2202.6%XV   Base metals and articles thereof831425970.4%1211654436.9%XVI   Machinery and appliances2312966528.0%3874455714.8%XVII   Transport equipment76-1-19.7%1822355329.2%XVIII   Optical and photographic instruments etc.18180-2.7%34471339.7%XIX   Arms and ammunition00011062.5%XX   Miscellaneous manufactured articles1121271513.4%5662610.6%XXI   Works of art and antiques000-35.1%000269.4%Other1,3191,61829922.6%2,0682,45839018.9%Source Trade G2 Statistics/ISDB from Eurostat COMEXTHS SectionAgrifood trade EU28 with MoldovaGrowth mio €annual %EU28 imports49963513727.5%EU28 exports2302724218.0%Balance-268-363-95Total trade72990817824.5%NAMA trade EU28 with MoldovaGrowth mio €annual %EU28 imports81998116219.8%EU28 exports1,8262,17334819.0%Balance1,0071,192185Total trade2,6443,15451019.3%Source Trade G2 Statistics/ISDBMoldova20162017Moldova20162017 
 
 
Trade in agri-food products with Moldova has been gradually increasing for the past years to 
the benefit of both sides. In 2017, agrifood trade between the EU and Moldova increased by 
25% since 2016 and amounted to EUR 908 million. EU imports of agricultural products from 
Moldova have increased by 27% (EUR 635 million) while EU exports have increased by 18% 
(EUR 272 million). 

The main EU agricultural exports to Moldova included oils seeds, pork, spirits and liqueurs, 
dairy and tropical fruits and nuts. Key EU imports from Moldova included oil seeds, wheat, 
tropical  fruits  and  nuts,  other  cereals  and  other  vegetable  oils.  Imports  of  all  these  products 
increased in 2017 compared to 2016, ranging from an increase of 23% for oil seeds to 8% for 
vegetable oils. 

Table 3: EU trade with Moldova in agricultural goods (million EUR) 

2.1.4.  Review clause for agricultural products 

The EU and Moldova have agreed on a review clause which stipulates that after the entry into 
force of the DCFTA, the Parties may consider accelerating and broadening the scope of the 
elimination of customs duties on their bilateral trade. During the third year after the entry into 
force of the Agreement, the Parties shall assess the situation, taking account of the pattern of 
trade in agricultural products, the particular sensitivities of such products and the development 
of  agricultural  policy  on  both  sides.  They  shall  examine,  in  the  Association  Committee  in 
Trade configuration (ACTC), on an appropriate reciprocal basis, the opportunities for granting 
each other further concessions with a view to improving liberalisation of trade in agricultural 
products, in particular those subject to duty-free TRQs.  

102 

EU28 Agrifood trade by HS chapter with Moldova (million euro)EU importsimport growthEU exportsexport growthEU balance20162017total M€annual %20162017total M€annual %Total Agrifood49963513727.4%2312724218.0%01 Live Animals0007704.6%02 Meat and edible meat offal000-97.0%18281052.6%04 Dairy produce712565.2%2024421.4%05 Products of animal origin000389.1%44114.4%06 Live trees and other plants00018.9%79236.5%07 Edible vegetables, roots & tubers253135.3%58362.5%08 Edible fruits & nuts79992025.2%171917.9%09 Coffee, tea, mate & spices000-19.2%67116.3%10 Cereals1201523327.2%1012215.6%11 Products of the milling industry11-1-50.5%330-5.5%12 Oil seeds & oleaginous fruits1011525150.7%2429417.5%13 Lacs, gums, resins & other veg. saps000-98.0%110-16.1%14 Vegetable products n.e.s.00071.2%000-50.5%15 Animal or vegetable fats & oils37481231.3%4509.4%16 Preparations of meat00023140.1%17 Sugars & sugar confectionery4023-17-41.5%87-1-7.1%18 Cocoa & cocoa preparations34123.2%101001.0%19 Preps. of cereals, flour, starch, etc.11110-1.2%810221.9%20 Preps. of vegetables, fruits, nuts & plants27532697.9%811227.5%21 Miscellaneous edible preparations1106.4%1819210.7%22 Beverages, spirits & vinegar5157713.7%252714.3%23 Residues and waste from food industry101001.9%1720320.1%24 Tobacco & tobacco products41-3-84.3%67231.4%Other6606.7%2208.1%Source Trade G2 Statistics/ISDBHS Section 
 
2.1.5.  Anti-circumvention mechanism for agricultural products 

Fourteen  product  categories  of  agricultural  and  processed  agricultural  products  included  in 
Annex  XV-C  can  be  imported  duty-free  from  Moldova  into  the  EU;  their  imports  are 
monitored  under  anti-circumvention  mechanism  (the  EU  may  temporarily  suspend  the 
preferential  treatment  of  the  products  concerned  if  the  imports  into  the  EU  reach  certain 
trigger volumes.  If those imports reach 100% without  justification, the EU may temporarily 
suspend  the  preferential  treatment.  In  2017  those  levels  were  exceeded  for  wheat,  barley, 
maize  and  processed  cereals  (ethanol).  The  information  provided  about  the  increased 
production  in  Moldova  in  that  period  was  accepted  by  the  European  Commission  therefore 
exports exceeding those trigger volumes could continue to benefit from preferential treatment 
by the EU. 

2.1.6.  Use of TRQs  

In accordance with Annex XV-B of the Association Agreement the EU applies annual duty-
free  TRQs  for  6  agricultural  product  categories  imported  from  Moldova:  tomatoes,  garlic, 
table  grapes,  apples,  plums  and  grape  juice.  In  2017,  only  the  TRQs  for  table  grapes  and 
plums were used (with a 100% utilisation for both products).  

Moldova  has  made  a  request  to  increase  the  volumes  for  TRQs  and  the  anti-circumvention 
thresholds  under  the  DCFTA  for  certain  agricultural  products  at  the  meeting  of  the 
Association  Committee  in  Trade  configuration  in  October  2017.  This  request,  after  having 
been  examined  by  the  relevant  Commission  services,  will  be  subject  to  talks  with  the 
Moldovan side and may result in the modification of Annex XV of the Agreement through a 
joint  Decision  of  the  Association  Committee  in  Trade  configuration.  The  representatives  of 
Moldova  officially  requested  to  review  the  EU  duty-free  TRQs  for  certain  products  in  line 
with  the  review  clause  foreseen  in  the  DCFTA,  and  to  raise  the  thresholds  under  the  anti-
circumvention  mechanism  for  cereals  and  sugar.  Moldova  grants  six  duty-free  TRQs  for 
agricultural  products  from  the EU (pork and poultry meat,  dairy, processed meat,  sugar and 
sweeteners).  Apart  from  processed  meat  and  sweeteners,  EU  exports  were  in  excess  of  the 
quota amount in 2017.  

Table 4: Utilisation of TRQs for EU exports to Moldova in 2017 

Quantity (tons) 
4 000 
Pork 
4 000 
Poultry meat 
Dairy 
1 000 
Processed meat  1 700 
5 400 
Sugar 
640 
Sweeteners 
Source: European Commission 

EU exports (tons) 
7 607 
8 621 
19 799 
694 
13 863 
476 

103 

 
 
1.3. 

Preference Utilisation rate (PURs) 

The  PUR  on  imports  into  the  EU  from  Moldova  amounted  to  85%  in  2017,  a  slight 
decrease from 2016 when it stood at 88%. Data to calculate the PURs on EU exports were not 
available from Moldova.   

1.4. 

Establishment, trade in services and investments 

2.1.7.  Market access related to establishment and trade in services 

Approximation  to  the  EU  acquis  is  foreseen  in  four  services  sectors  (postal  and  courier 
services,  telecommunication  services,  financial services and international  maritime transport 
services).  Moldova  recognized  the  importance  of  gradual  (lasting  between  3  and  8  years) 
approximation  of  its  existing  and  future  legislation  to  the  list  of  the  EU  acquis  (in  case  of 
financial services also to the international best practice and standards). 

2.1.8.  Trade in Services 

The  total  trade  in  services  between  the  EU  and  Moldova  has  increased  by  9%  in  2016 
compared to 2015. In that time period, EU exports of services to Moldova have decreased by 
16%  (from  EUR 587 million  to  491 million)  while  EU  imports  have  increased  by  34.5% 
(from EUR 567 million to EUR 763 million).  

Table 5: EU trade in services with Moldova, 2015-2016 (million EUR) 

EU trade with 
Moldova 
EU Exports 
EU Imports 
Total trade 
Trade Balance 
Source: Eurostat COMEXT. 

2015 

587 
567 
1 154 
20 

2016 

491 
763 
1 254 
-273 

% change 2016/2015 

-16.0 
34.5 
8.6 
- 

While import and export values have been evolving mostly in tandem with a slight surplus for 
the EU, this has been reversed in 2016, where the value of imports from Moldova into the EU 
was higher than the value of exports from the  EU to Moldova. To be noted that 2015 is the 
first  full  year  for  which  there  is  data  on  services  since  the  provisional  application  of  the 
DCFTA, and as such it is  still early to  draw any  conclusion on the effect  of the DCFTA in 
services  trade.  The  main  sub-sectors  of  services  exported  by  Moldova  to  the  world  remain 
transport,  travel,  ICT  and  other  business  services  as  well  as  manufacturing  services  on 
physical inputs owned by others. In terms of imports, the most important sub-sectors belong 
to transport and travel-related services. 

2.1.9.  FDI  

In  terms  of  FDIs  (FDIs)  in  2016,  the  EU  FDI  stocks  have  remained  at  similar  levels  to 
previous years and amounted to around EUR 1 billion with the EU ranking as a major foreign 
investor in the country (over 60% of overall FDI stocks). EU companies are present in many 

104 

 
sectors (including for example energy, financial sector, industry, retail trade, agriculture and 
services).  According  to  data  provided  by  Moldova,  5  658  active  companies  with  foreign 
investments coming from the EU are registered in Moldova. These are mainly from Romania 
(1731), Italy (1385), Germany (429), Cyprus (305) and France (237). 

Table 6: EU FDIs with Moldova, 2016-2015 (million EUR) 

FDI stocks  

Moldova in EU28 (inward) 

EU28 in Moldova (outward) 

Net investment stocks 

FDI flows  

Moldova into EU28 (inward) 

EU28 into Moldova (outward) 

Net investment flows 
Source: Eurostat. 

2015 

94 

912 

818 

2015 

11 

29 

18 

2016 

86 

991 

905 

2016 

-5 

82 

77 

Direct investment flows from the EU have increased to EUR 82 million in 2016 following a 
decrease in 2015 and 2014 as a result of the banking fraud scandal.  

2. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 59

2.1. 

Joint decisions of the Association Bodies 

In 2017, the following amendments/updates have been adopted or are to be adopted by the 
Association bodies in 2018: 

  Customs: Annex XXVI on approximation of customs legislation60 

  Services: Annex XXVIII-A (Rules applicable to financial services), Annex XXVIII-B 
(Rules  applicable  to  telecommunication  services),  and  Annex  XXVIII-D  (Rules 
applicable to international maritime transport)61 

59  Official Journal of the EU where the decisions on the Rules of Procedure for the EU-Moldova Association 
bodies  were  published:  of  the  Association  Council  and  those  of  the  Association  Committee  and  of  Sub-
Committees (OJ L 110, 29.4.2015); of the Customs Sub-Committee (OJ L 185, 14.7.2015); of the Sanitary 
and Phytosanitary Sub-Committee (OJ L 178, 2.07.2016); of the Trade  and Sustainable  Development  Sub-
Committee (OJ L 264, 9.10.2015); of the GIs Sub-Committee (OJ L 335, 9.12.2016). 

60  Council Decision (EU) 2017/1364 of 17 July 2017 on the position to be adopted on behalf of the European 
Union within the EU-Republic of Moldova Association Council as regards the amendment of Annex XXVI 
to  the  Association  Agreement  between  the  European  Union  and  the  European  Atomic  Energy  Community 
and  their  Member  States,  of  the  one  part,  and  the  Republic  of  Moldova,  of  the  other  part,  OJ  L 191, 
22.07.2017. 
https://publications.europa.eu/en/publication-detail/-/publication/cbf814bf-6e88-11e7-b2f2-
01aa75ed71a1/language-en/format-PDFA1A 

61  Council Decision (EU) 2017/0338 of 9 February 2018 on the position to be taken on behalf of the European 
Union,  in  the  Association  Committee  meeting  in  Trade  configuration  established  by  the  Association 
Agreement  between  the  European  Union  and  the  European  Atomic  Energy  Community  and  their  Member 
States, of the one part, and the Republic of Moldova, of the other concerning the update of Annex XXVIII-A 

105 

 
  
                                                 
 
  Public  Procurement:  Decision  giving  a  favorable  opinion  regarding  Moldova’s 

comprehensive roadmap on public procurement62 

2.2.  Meetings of the Association Bodies  

The  following  section  contains  an  overview  of  the  most  important  meetings  of  the 
implementation bodies in 2017.  

The  4th  Association  Committee  in  Trade  Configuration  met  on  18  October  2017.  Both 
Parties  reviewed  progress  made  in  all  DCFTA  chapters,  including  trade  in  goods,  SPS 
measures,  intellectual  property  rights,  customs  and  trade  facilitation,  technical  barriers  to 
trade,  public  procurement,  establishment,  trade  in  services  and  electronic  commerce,  trade-
related energy, competition, trade and sustainable development. The Committee also assessed 
trade performance, trade policy aspects and business climate issues in bilateral trade relations.  

The  Moldovan  authorities  presented  the  progress  achieved  in  the  approximation  of  the 
domestic legislation to that of the EU in all relevant chapters. The Moldovan side referred to 
its  accession  to  the  WTO  Trade  Facilitation  Agreement  and  the  WTO  Government 
Procurement Agreement (GPA) in 2016, the approval of the National Strategy for Investment 
and  Export  Promotion,  the  initiation  of  the  modernization  of  laboratories  for  food  safety 
controls, and advancement in the process of accession to international institutions as regards 
quality infrastructure as the main achievements to date. 

The  EU  side  welcomed  the  achievements  but  raised  strong  concerns  with  regards  to  the 
usurpation  of  the  EU  PDO  (Protected  Designation  of  Origin)  ‘Prosecco’  by  Moldovan 
companies, as well as the impact of the measures taken by the energy regulator ANRE on the 
company  Gas Natural  Fenosa (see both  further explained in  section 4 below).. The EU also 
expressed  its  concerns  with  the  draft  legislation  on internal  trade  which  could  affect  free 
competition as well as the free access of EU products to the Moldovan market. In general, the 
EU  underlined  the  need  for  Moldovan  authorities  to  focus  on  implementation  and 
enforcement  of  legislation  and  programming  documents  and  their  translation  into  concrete 
results for the benefit of businesses and citizens. 

Both sides underlined the importance of EU financial assistance for the implementation of the 
DCFTA  which  aims  at  supporting  both  the  Moldovan  administration  and  the  companies 
(notably  SMEs)  in  aligning  with  the  acquis  and  reaping  the  benefits  of  the  Association 
Agreement.  

The  3rd  Sub-Committee  on  SPS  measures  (SPS  Sub-Committee),  met  on  22  June  2017. 
During the meeting, the Moldovan authorities presented progress in the implementation of the 

(Rules applicable to financial services), Annex XXVIII-B (Rules applicable to telecommunication services) 
and Annex XXVIII-D (Rules applicable to international maritime transport) to the Agreement. 

62  Decision  No  1/2018  of  the  EU-Moldova  Association  Committee  in  Trade  configuration  of  16  April  2018 
giving  a  favourable  opinion  regarding  the  comprehensive  roadmap  on  public  procurement  [2018/955],, OJ 
L 168/10, 5.7.2018. 

106 

 
                                                                                                                                                         
operational conclusions from the previous Sub-Committee meeting of June 2016 and updates 
as  regards  the  implementation  of  the  DCFTA  SPS  Chapter  and  institutional  capacity  of  the 
Food Safety Agency (ANSA). The EU underlined the importance for Moldovan authorities to 
meet the deadlines foreseen in Annex XXIV-B of the DCFTA ranging from 2014-2019, and 
to allocate human resources in order to meet this priority. Discussions also touched upon the 
need for the laboratory network to be strengthened and extended and to have more monitoring 
and exchange of data between the two sides on African Swine Fever (ASF). 

The  4th  Sub-Committee  on  Customs  and  Trade  Facilitation  took  place  on  16  November 
2017. The Parties discussed the ongoing approximation of domestic legislation to the Union 
Customs Code and the EU recommended the creation of a working group  on the drafting of 
secondary  legislation  related  to  the  implementation  of  the  new  Customs  Code  of  Moldova. 
The  Roadmap  on  Authorized  Economic  Operator  (AEO)  mutual  recognition  as  well  as  the 
extension of the AEO pilot project at the Leuseni-Albita border crossing point were approved. 
The  update  of  Annex  XXVI  by  the  Association  Council  to  update  the  reference  to  the 
Customs  Code  was  also  discussed,  as  was  the  EU  twinning  project  launched  in  November 
2017 to assist Moldova with its preparatory actions in order to adhere to the Convention on a 
common transit procedure and set up a single window environment for customs formalities 

The 4th GIs Sub-Committee, which met on 17 October 2017, discussed the enforcement of 
the  protection  of  GIs  by  customs,  the  latest  developments  as  regards  the  ‘Prosecco’  Court 
case  on  the  usurpation  of  the  EU  Protected  Designation  of  Origin  ‘Prosecco’  by  Moldovan 
companies producing sparkling wine as well as the update of the GIs lists. The EU reiterated 
the importance for Moldova to protect the EU GIs under the Association Agreement. Areas of 
cooperation  and  technical  assistance  as  well  as  progress  made  by  Moldova  as  regards  the 
alignment to the EU acquis were also discussed.  

As regards the 3rd TSD Sub-Committee meeting -see section 3 below.  

3. 

IMPLEMENTATION  OF  THE  PROVISIONS  ON  TRADE  AND 
DEVELOPMENT  

SUSTAINABLE 

The TSD Sub-Committee which has been established under the TSD Chapter of the AA met 
for the third time on 16 October 2017 in Chisinau. During that meeting both Parties agreed to 
focus  dialogue  and  cooperation  on  five  priorities:  labour  inspection  (including  operational 
safety and health), child labour, EU Eco-label scheme, the Convention on International Trade 
of  Endangered  Species  (CITES)  and  climate  change.  Those  priorities  were  shared  and 
discussed with civil society at the Joint Civil Society Dialogue Forum held in Chisinau on 17 
October 2017. A work programme operationalizing the priorities still need to be agreed. 

During these meetings, the EU voiced its expectation for civil society in Moldova to play an 
active role in overseeing the implementation of the DCFTA (e.g. the good application of food 
safety  standards,  as  this  affects  the  daily  life  of  citizens)  and  signalling  areas  where 
improvements  are  required.  The  EU  also  expressed  concern  regarding  the  situation  of  the 
State  Labour  Inspectorate  which  continues  to  appear  highly  problematic  in  view  of  the 

107 

 
implementation  of  the  International  Labour  Organization  (ILO)  standards.  Finally,  the  EU 
presented  its  support  to  facilitate  the  functioning  of  the  DAGs  in  all  trade  agreements, 
including  the  ones  under  the  Moldova  DCFTA,  through  a  EUR 3 million  project  funded  by 
the Partnership Instrument.  

4. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

SPS aspects 

In  terms  of  SPS  measures,  the  administrative  capacity  of  the  Food  Safety  Agency  in 
verifying animal health and animal welfare rules has been strengthened however it still needs 
to be enhanced. The SPS strategy was adopted by the Government in December 2017 and is 
currently  under  implementation.  Signficiant  improvement  is  needed  as  regards  laboratory 
diagnostic  capacity  for  monitoring  and  surveillance  of  animal  diseases  as  part  of  official 
controls in order for Moldova to receive more authorisations for export of for e.g. fish, eggs 
and egg products to the EU. As from October 2017, Moldova has received authorizations to 
export  by  processing  plants  (32  companies)  and  by  other  facilities  for  the  collection  or 
handling  animal  by-products  (i.e.  unprocessed/untreated  materials)  as  from  March  2018  (16 
companies).  Furthermore,  Moldova  has  requested  to  authorise  poultry  meat  and  table  egg 
export. So far, the EU import requirements are not met by Moldova. 

Technical Barriers to Trade 

On  technical  barriers  to  trade,  as  a  follow-up  to  earlier  progress,  Moldova  adopted 
secondary horizontal legislation in September 2017. Outstanding discrepancies with regard to 
specific  product  legislation  should  be  removed.  In  late  2016  the  Moldovan  government 
adopted  a  Roadmap  for  initiating  the  negotiations  of  the  Agreement  on  Conformity 
Assessment and Acceptance of Industrial Products (ACAA) which serves as a valuable tool in 
the process leading to the start of ACAA negotiations.  

Customs and Trade Facilitation 

On customs and trade  facilitation, Moldova approved amendments  to  customs regulations 
to  align  with  the  EU  Authorised  Economic  Operator  (AEO)  requirements  and  Approved 
Exporter  conditions,  which  entered  into  force  in  July  2017.  The  Trade  Facilitation  Action 
Plan for the period 2018-2020 was approved in December 2017. The new Customs Code has 
been  developed  for  approximation  with  the  provisions  of  the  Union  Customs  Code  and 
presented for public consultation. It is expected to be adopted in 2018. Preparatory work on 
accession  to  the  Convention  on  a  common  transit  procedure  with  EU  assistance  should 
continue.  Finally,  the  Convention  on  Pan  Euro  Mediterranean  preferential  rules  of  origin 
entered into application for Moldova in December 2016.   

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Energy  

With  regards  to  trade-related  energy,  Moldova  has  pursued  alignment  with  the  EU  acquis 
however concerns remain as regards the independence of the energy regulator ANRE and the 
transparency of the electricity procurement process. In this regard, the recommendations made 
by the Group of Observers for the 2018 Electricity Procurement in Moldova should be taken 
into account to improve the next procurement exercise. Full independence and impartiality of 
the  energy  regulator  is  crucial  to  the  ensure  proper  functioning  of  the  energy  market, 
including proper implementation of the Third EU Energy Package and secondary legislation. 
It is equally important for Moldova to pursue work on the new distribution tariff methodology 
for  electricity  in  consultation  with  all  concerned  stakeholders  and  the  Energy  Community 
Secretariat and comply with the settlement agreement reached with the company Gas Natural 
Fenosa in 2016. 

Competition policy 

With  regards  to  competition  policy  Moldova  should  pursue  the  implementation  of  the 
National  Program on Competition and State Aid for  2017-2020. There are serious concerns 
with certain provisions contained in Moldova’s law on Domestic Trade which may limit free 
competition  on  the  market.  These  relate  in  particular  to  limitations  of  discounts  between 
traders and producers and an obligation for retailers to have at least 50% of local products on 
their  shelves,  contrary  to  DCFTA  and  WTO  provisions  on  national  treatment  of  goods.  If 
implemented, these provisions will severely affect the ability of European economic operators 
to conduct their business in Moldova. 

Intellectual Property Rights 

In the field of intellectual property rights (IPRs) progress has been registered in particular 
with regards to the usurpation of the EU GI  ‘Prosseco’. In December 2017 and April 2018, 
the Moldovan Supreme Court of Justice has issued a final and irrevocable decision as a result 
of which Moldovan companies now have a ban on the production and placing on the market 
of sparkling wine under the name ‘Prosecco’ and the corresponding international trademark is 
protected  in  Moldova.  Besides,  some  copyright  related  provisions  need  to  be  improved  in 
Moldova (i.e. terms of protection for music recordings and the collective right management). 

Services  

On  services,  in  international  maritime  transport  services  the  main  concerns  relate  to 
Moldova’s continued presence on the ‘black list’ of the Paris Memorandum of Understanding 
on Port State Control for which Moldova has developed an Action Plan to exit the ‘black list’. 
Moldova  is  planning  to  set  up  a  naval  agency  expected  to  be  fully  operational  in  2018. 
Moldova has made progress in reforming its postal services in line with the EU acquis (next 
steps foreseen in 2019), as well as in telecommunications services with the adoption of a law 
on electronic communications. Moldova has also aligned with the 4th Anti-Money Laundering 

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Directive. An update of Annex XXVIII-A (Rules applicable to financial services with regards 
to  anti-money  laundering),  Annex  XXVIII-B  (Rules  applicable  to  telecommunication 
services)  and  Annex  XXVIII-D  (Rules  applicable  to  international  maritime  transport)  has 
been prepared in 2017 and will be adopted in 2018.  

Public Procurement  

Reforms  in  public  procurement  were  pursued  according  to  the  National  Reform  Plan  for 
Public Procurement for 2016-2020 including approximation of the legal framework to the EU 
acquis,  the  reform  of  the  Public  Procurement  Agency  and  progressive  introduction  of  e-
procurement  for  which  an  EU-funded  pilot  project  is  ongoing.  The  newly  established 
Complaint Settlement Agency playing the role of the public procurement review body started 
to  operate  in  2017  with  some  delays.  The  appointment  of  the  management  of  the  Agency 
lacked transparency. 

3.  EU SUPPORT TO DCFTA IMPLEMENTATION 

EU Support to DCFTA-related reforms 

EU financial assistance is being provided to Moldova for the implementation of the DCFTA: 
it aims at supporting both the Moldovan administration and the companies (notably SMEs) in 
aligning with the acquis (i.e. norms for food products and non-food products) and reaping the 
benefits of the Agreement. Furthermore, the EU is supporting the implementation of structural 
reforms  in  Moldova, including in  the  financial and the public administration sectors, with  a 
view to improving the business environment and facilitating trade. The EU is also providing 
assistance  for  the  development  of  value  chains  (e.g.  textile)  and  of  economic  clusters  in 
Moldova. 

EU Support for SMEs 

SMEs in Moldova are benefitting from the EU support under the DCFTA Facility for SMEs, 
which aims at increasing SMEs competitiveness, easing their access to finance, helping them 
to  seize  new  trade  opportunities  and  comply  with  new  food  safety,  technical  and  quality 
standards,  as  well  as  with  environmental  protection  measures  implied  by  the  DCFTA 
implementation.   

The DCFTA Facility consists of a set of programmes implemented principally by EBRD and 
EIB. SMEs are benefiting from the EU support through four types of instruments:  

1) risk sharing mechanisms (mostly first loss portfolio guarantees for local banks);  

2) currency hedging (interest rate subsidies for loans in local currency);  

3)  investment  incentives  (grants  provided  to  SMEs  combined  with  investment  loans  to 
upgrade machinery or production processes in line with the EU standards) and  

4)  technical  assistance  (business  advice  to  SMEs  and  local  banks,  assessment  of  the 
compliance with the EU standards, capacity building for local banks).  

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6. 

CONCLUSIONS AND OUTLOOK 

Moldova has adopted ambitious legal approximation commitments under the DCFTA with 
extensive  work  required  in  the  first  three  years  of  implementation.  After  three  years  of 
implementation  of  the  trade  and  trade-related  part  of  the  Association  Agreement,  good 
progress  has  been  observed  in  terms  of  regulatory  approximation,  despite  political  and 
economic turbulence. With extensive support from the EU, Moldova has adopted a number of 
trade-related  programs,  including  for  example  a  plan  for  SPS  reform,  roadmaps  for  the 
approximation  of  legislation  in  TBT  and  public  procurement  and  Moldova  has  also  taken 
steps  in  preparing  to  adopt  a  new  Customs  Code  to  align  with  the  one  of  the  EU. 
Furthermore,  the  comprehensive  reform  of  the  public  administration  completed  in  2017 
should  enhance  the  capacity  and  functioning  of  key  regulatory  bodies  such  as  the  National 
Food  Safety  Agency  (ANSA),  National  Energy  Regulator  (ANRE),  National  Regulator  in 
Telecommunications (ANRCETI). 

The  DCFTA  has  helped  Moldova  to  gradually  enter  into  integrated  and  predictable 
international  value  chains,  and  engage  into  a  structural  transformation  of  its  trade  patterns 
towards a more sustainable model. Examples of successful companies testify to the benefits of 
free  trade  with  the  EU  both  in  the  agricultural  sector,  producing  wine,  nuts,  juices,  fruit 
conserves  and  alcohol,  and  in  the  industrial  sector,  making  electrical  cables,  apparel,  shoes 
and smart electricity meters. 

The  EU  has  been  supporting  Moldova  to  align with  and  implement  European  norms  for 
food  products  and  non-food  products  with  a  view  to  ensuring  higher  standards  for  the 
Moldovan consumers and workers and facilitating international trade. Furthermore, the EU is 
delivering  financial  and  technical  assistance  in  the  implementation  of  structural  reforms  in 
Moldova,  including  in  the  financial  and  the  public  administration  sectors,  with  a  view  to 
improving the business environment. The EU has also strengthened the export capacity of a 
number  of  Moldovan  companies  and  facilitated  their  access  to  finance:  over  2009-2017  in 
Moldova,  it  has  provided  financial  support  for  5  000  enterprises,  supported  56  000  jobs  in 
SMEs,  and  created  at  least  1  735  new  jobs.  The  EU  is  also  providing  assistance  for  the 
development of value chains (e.g. textile) and of economic clusters in Moldova. 

However, further reform efforts are needed to ensure the respect of  the rule of law, to step 
up the fight against corruption, including high-level corruption, and to improve the business 
environment.  Implementation  and  enforcement  of  new 
laws  and  strengthening  of 
administrative capacity and relevant institutions should be the focus of attention. In particular, 
concrete  progress  is  needed  in  the  SPS  (SPS)  area  in  meeting  EU  import  requirements. 
Besides  food  safety  reform,  focus  in  2018  should  remain  on  technical  regulations  and 
standards (TBT), reform of the customs code and implementation of the public procurement 
strategy.  

Moldova should refrain from adopting any trade measures incompatible with the provisions of 
the  Association  Agreement/DCFTA.  In  this  regard,  the  specialised  Sub-Committees 

111 

 
established  to  implement  the  DCFTA  will  continue  to  discuss  and  seek  solutions  to  the 
implementation and market access issues, with the aim to produce tangible results.  

In addition, for the DCFTA to deliver its full benefits, it is crucial for Moldova to  improve 
working  conditions,  the  business  and  investment  climate,  strengthen  the  rule  of  law  and 
ensure a level-playing field for all businesses and citizens alike. There is untapped potential in 
the  level  of  FDI  in  Moldova,  which  is  needed  to  modernize  and  diversify  the  economy. 
Pursuing  the  fight  against  corruption63,  ensuring  policy  stability  and  predictability,  and 
improving access to finance as well as governance of labour rights and standards is crucial to 
attract more investors and reap the full benefits of the DCFTA. 

63  According to the 2018 World Bank Doing Business Index, Moldova ranks as 44th out of 190 countries (no 
change  to  the  previous  index).  Corruption  is  widely  spread  which  has  been  reflected  by  Transparency 
International in its 2017 Corruption Perceptions Index where Moldova has been ranked as 122nd - out of 180 
countries  (+1  position  in  comparison  to  the  previous  index)  -  with  the  score  31  (score  0  means  highly 
corrupted and 100 very clean). 

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PART III: FIRST GENERATION FREE TRADE AGREEMENTS 

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 following64: 

  FTAs with Switzerland and Norway65, dating from the 1970s  
  FTAs  with  the  EU's  Mediterranean  partners66  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).  

The "first generation" FTAs do not have a structure of implementation bodies as elaborate as 
the most recent FTAs, but an annual meeting to take stock of developments is planned and 
usually takes place.Issues that were raised in these meetings are very diverse, reflecting the 
specific situation of each partner country. Common topics addressed include lengthy customs 
procedures, restrictions to trade in agricultural products, pharmaceutical products, government 
procurement, and restrictions on FDI. 

64   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 SADC. 

65   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. 

66    Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Palestine, and Tunisia. 

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FIRST GENERATION FREE TRADE AGREEMENTS WITH MEDITERRANEAN 
PARTNERS 

The EU has concluded ‘first generation’ free trade agreements (FTAs) as part of Association 
Agreements  (AA)  in  the  1990s  with  eight  of  its  Mediterranean  partners:  Algeria,  Egypt, 
Israel,  Jordan,  Lebanon,  Morocco,  Palestine67  and  Tunisia.  These  FTAs  typically  covered 
only trade in goods, and even agricultural products were often only added to their scope at a 
later stage.  

The existing FTAs with Mediterranean countries provide for reciprocal liberalisation of all 
trade  in  industrial  goods  and,  to  different  degrees,  of  trade  in  agricultural,  processed 
agricultural and fisheries products. These FTAs typically include elements of asymmetry in 
favour  of  our  Mediteranean  partners,  for  example,  long  transitional  periods  and/or  less  far-
reaching  liberalisation  of  agricultural  trade.  This  benefits  Mediterranean  partners  and  is 
primarily aimed to promote economic development of the region and closer integration with 
the EU internal market. 

67   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. 

114 

 
 
 
                                                 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  
THE EU-ALGERIA ASSOCIATION AGREEMENT68 

1. 

INTRODUCTION 

The  EU  and  Algeria  established  a  free  trade  area  under  the  EU-Algeria  Association 
Agreement, signed in 2002, which entered into force on 1 September 2005 (hereinafter called 
‘the  Agreement’).  The  Agreement  provides  for  a  reciprocal  liberalisation  of  trade  in  goods, 
with elements of asymmetry in favour of Algeria, such as a 12 years’ transitional period for 
dismantling  tariffs  of  industrial  goods  and  a  selective  liberalisation  on  agriculture.  In  2012, 
the  EU  and  Algeria  agreed  to  review  the  timetable  of  tariff  dismantling  set  forth  in  the 
Association  Agreement  for  certain  products  (steel,  textile,  electronics,  and  automobiles), 
extending the transitional period from 12 to 15 years. Complete dismantling of tariffs and thus 
completion of the EU-Algeria free trade area is now scheduled for September 2020. Market 
opening for agricultural products so far only concerns a limited number of tariff lines subject 
to  full  liberalisation, TRQs  or a reduction of MFN rates on  both  sides.  The Agreement  also 
features  provisions  on  investment  and  services,  although  less  far-reaching  than  those  on 
goods. So far, no additional negotiations have been opened on a Dispute Settlement Protocol.  

Algeria  is  a  member  of  the  Regional  Convention  on  pan-Euro-Mediterranean  preferential 
rules of origin,  which it signed in  2012 and notified the EU of ratification in January  2017. 
The  main  objective  of  the  Convention  is  to  provide  a  more  unified  framework  for  origin 
protocols. 

Algeria had started negotiating its accession to the WTO with the Accession Working Party 
established in 1987. The negotiation process has, however, stalled since 2014.  

2. 

EVOLUTION OF TRADE  

2.1. 

Trade in Goods 

The  EU  was  Algeria’s  first  partner  for  merchandise  trade  in  2017,  accounting  for  50%  of 
Algeria’s total trade, before China (11%), the United States (6%), and Brazil (4%). The EU is 
Algeria’s first export market: 59% of Algerian exports were directed towards the EU in 2017, 
followed by the United States (9%), and Brazil (6%). The EU is also Algeria’s first source of 
imports, with 44% of Algerian imports originating from the EU.  

Algeria is the EU’s second trading partner amongst all Euromed countries, after Morocco: in 
2017,  in  the  Euromed  area  28%  of  EU  imports  originated  from  Algeria  and  17%  of  EU 
exports  to  the  Euromed  went  to  Algeria.  This  privileged  position  is  mainly  due  to  the 
prevalence of hydrocarbons in EU-Algeria trade flows. 

Trade in goods between the EU and Algeria has intensified within the progressive free-trade 
area established by the Association Agreement: in 2017, the total two-way trade amounted to 
EUR 37.4 billion,  an  increase  of  50.8%  from  its  2004  value  of  EUR 24.8 billion,  the  year 
preceding the entry into force of the Association Agreement. Two-way trade peaked in 2012 
at EUR 53.9 billion. 

68  For more information see http://ec.europa.eu/trade/policy/countries-and-regions/countries/algeria/  

115 

 
                                                 
EU  exports  to  Algeria  grew  by  97.9%  between  2004  and  2017,  from  EUR 9.5 billion  to 
EUR 18.8 billion.  EU  exports,  however,  decreased  (-7%)  between  2016  and  2017,  with 
exports standing at EUR 18.7 billion in 2017 compared to EUR 20.3 billion in 2016. In 2017, 
EU exports to Algeria were mainly made in the sectors of machinery and transport equipment 
(35.6%), chemicals (12.8%) and agricultural and food products (12.9%). The four biggest EU 
exporters to Algeria were: France, Italy, Germany and Spain.  

EU imports from Algeria are dominated by trade in the sectors of oil and gas (mineral fuels 
amount to 95.7% of the total exports69 to the EU) which has a significant impact on overall 
volumes.  EU 
imports  from  Algeria  rose  21.7%  between  2004  and  2017,  from 
EUR 15.2 billion  to  EUR 18.5 billion  (with  a  peak  of  EUR 32.7 billion  in  2012,  which 
represented a 115.1% increase compared to 2004). EU imports increased (12%) between 2016 
and 2017, with  imports reaching EUR 18.5 billion in  2017 compared to  EUR 16.5 billion in 
2016.  The  three  biggest  EU  importers  for  Algeria  in  2017  were:  Italy,  Spain,  and  France. 
Since  2012,  the  sharp  decline  of  oil  prices  has  led  to  a  sharp  fall  in  the  value  of  Algeria’s 
exports to the EU. After many years of surplus, Algeria registered limited trade deficits with 
the  EU  in  2015  and  2016,  of  EUR 1.3 billion  and  EUR 3.9 billion  respectively.  In  2017, 
Algeria’s trade deficit returned to merely EUR 0.2 billion with the icrease in oil prices.  

2.2. 

Trade in agricultural goods  

Total trade in agricultural products between the EU and Algeria increased by 135% between 
2003 and 2017, from EUR 1.0 billion in 2003 to EUR 2.4 billion in 2017. Between 2016 and 
2017, EU agricultural exports decreased (-6%) going from EUR 2.5 billion in 2016 to EUR 
2.4 billion in 2017. EU imports, on the other hand, increased (14%) from EUR 0.09 billion in 
2016 to EUR 0.1 billion in 2017. In 2017, among our Euromed partners, Algeria was the EU's 
most important destination for exports of agri-food products. The EU exported mainly wheat 
(27%),  milk  powders  &  whey  (18%),  infant  food  and  other  cereals,  flour,  starch  or  milk 
preparations (6%) to Algeria. EU agricultural imports from Algeria were dominated by beet 
and cane sugar (46%) followed by fruits and nuts (34%). 

69  Despite what the above graph suggests, mineral fuels continuously accounted for more than 90% of Algerian 
exports since the entry into force of the Agreement. The discrepancy between the lines ‘EU imports’ and ‘EU 
imports of mineral fuels’ prior to 2009 is presumably due to a change in the reporting methods. 

116 

 
 
                                                 
Regarding agricultural TRQ, Algeria’s 2017 fill rate was low for a limited number of products 
such as couscous (26%), olive oil or seed potatoes (less than 5%) and remained nil or close to 
zero  for  the  majority  of  products,  such  as  tomato  juice,  fruit  juices,  yogurt,  apricots, 
strawberries or wine.  

2.3. 

Preference Utilisation rate  

Algeria  had  an  average  utilisation  rate  of  preferences  of  97%  in  2017,  across  all  goods, 
including  agricultural  and  non-agricultural  products.  Data  was  not  available  to  calculate  the 
PURs on EU exports to Algeria.  

2.4. 

Trade in Services and Investment70 

The total trade in services between the EU and Algeria remained stable from 2010 to 2016, 
going from EUR 4.6 billion to EUR 5.1 billion. In 2016, Algeria exported EUR 1.7 billion in 
services to the EU and imported EUR 3.5 billion from the EU. 

FDI EU28 with Algeria (million EUR) 

Inward 
2015 
2 069 
Stocks 
299 
Flows 
Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 

2014 
1 878 
222 

2014 
2016 
2 287  14 106 
768 

162 

Outward 
2016 
2015 
14 820  14 623 
333 
2 741 

FDI flows between the EU and Algeria remained volatile between 2013 and 2016, with most 
investments  coming from  the EU to  Algeria (EUR 0.3 billion in  2016, for the total  stock of 
EU  FDI  of  EUR 14.6 billion).  The  weakness  of  EU-Algeria  FDI  flows  is  mainly  due  to 
investors’ concerns regarding the business climate in the country. In 2017, Algeria modified 
its  Investment  Code  in  an  attempt  to  attract  more  investments;  nevertheless  the  country 
currently  ranks  166th  out  of  190  in  the  Wold  Bank  ranking  Doing  Business  2018,  with  a 
distance  to  frontier  (DTF)71  score  of  46.7  out  of  100  –  a  decrease  of  0.01  in  DTF  score 
compared to 2017. 

3. 

ISSUES ADDRESSED IN THE SUB-COMMITTEE MEETINGS 

The  last  Sub-Committee  on  Trade,  Industry,  and  Services  was  held  in  October  2017. 
Major  trade  irritants  addressed  included  chiefly  the  quantitative  restrictions  under  a  non-
automatic licensing regime in force since January 2016 (see in more detail section 5). Legal 
restrictions  to  foreign  investments  were  also  addressed,  such  as  the  so-called  ‘49/51  Law’, 
which sets a 49% cap for foreign ownership of any company established in Algeria, regardless 
of the sector of activity. Other long-standing issues were also mentioned, such as restrictions 
to  imports  of  medicines  or  vehicles  and  the  issue  of  ship-owners’  disbursement  accounts. 
Notwithstanding these issues, the EU recalled its commitment to support Algeria’s accession 
to the WTO.  

The last Sub-Committee on Agricultural and Fisheries Products was held back-to-back in 
October 2017. Several  technical  assistance programmes were discussed, as well as potential 

70  Statistics can be found here http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_111616.pdf 
71  The  DTF  score  is  a  measurement  used  by  the  World  Bank  to  assess  the  absolute  level  of  regulatory 

performance in economies over time.  

117 

 
  
  
  
  
  
  
                                                 
ways  to  reinforce  EU  technical  assistance  to  Algeria  in  the  field  of  conformity  assessment. 
Algeria  mentioned  the  will  to  request  for  more  concessions  within  the  Association 
Agreement, despite its inability to fulfill the current quotas at any meaningful level. 

On  the  same  day,  during  the  EU-Algeria  Sub-Committee  on  Customs  Cooperation  the 
parties discussed the development of their respective customs legislation and procedures, the 
revision of the PEM convention on Preferential  Rules of Origin  and the Algerian request to 
share information on the value of goods at customs level for taxation purposes. 

More significant meetings were held during the first half of 2018, with consultations at senior 
official level occurring in January, February and May, in an effort to tackle the several market 
access barriers that Algeria has been imposing on trade with the EU, especially from 2016. If 
Algeria  agrees,  these  efforts  will  continue  in  the  second  half  of  2018  and  according  to  the 
Association  Council  conclusion  of  May  201872,  should  lead  to  a  negotiated  solution  to  the 
existing trade irritants by the end of 2018. 

4. 

SPECIFIC AREAS OF IMPORTANCE 

The recent fall in oil prices has significantly impacted Algeria's finances. Algerian authorities 
have  resorted  to  administrative  measures  to  restrict  imports,  with  a  view  to  reducing  trade 
deficits and countering shrinking foreign currency reserves. The EU has reacted forcefully to 
these  trade-restrictive  measures  and  has  repeatedly  requested  full  compliance  with  the 
provisions  of  the  Association  Agreement.  Algeria  has  argued  that  the  present  economic 
conjuncture  justifies  exceptional  measures;  she  has  also  recognised  the  need  for  economic 
reforms in order to encourage greater economic diversification and to foster investment.  

The Partnership Priorities adopted by the EU and Algeria at the Association Council of 13 
March 201773 mention cooperation for the socio-economic development of Algeria, including 
trade and access to the European single market. The EU and Algeria also conducted a joint 
evaluation of the Association Agreement in 2016-17. The findings of the evaluation are that 
Algerian  efforts  and  EU  assistance  should  focus  on  the  following  areas:  diversification  and 
competitiveness  of  the  Algerian  economy,  improvement  of  the  business  climate,  and 
facilitation of investments. A number of trade related reforms were discussed and Algeria was 
encouraged to commit to the improvement of business climate, new financing mechanisms for 
SMEs, a fine-tuning of subsidies, and the reduction of red tape.  

The  EU  is  providing  support  to  Algeria  through  various  trade-related  assistance 
programmes such as DIVECO I, II (Programme d’appui à la diversification de l’économie), 
P3A  I  and  II  (Programme  d’appui  à  la  mise  en  oeuvre  de  l’Accord  d’Association),  or 
PADICA (Programme d’appui à la diversification industrielle et à l’amélioration du climat 
des  affaires),  implemented  in  partnership  with  the  Algerian  authority  for  trade  promotion 
(ALGEX)74.  Such  programmes  aim  to  strengthen  export  competitiveness,  to  modernise  the 
legal  framework,  to  diversify  the  economy,  and  to  improve  the  business climate  in  Algeria. 
This support will continue under the 2018-20 programming period. The EU is also supporting 
Algeria  in  preparation  of  negotiations  on  an  Agreement  on  Conformity  Assessment  and 
Acceptance of industrial products (ACAA), in sectors identified as key priorities by Algerian 

72 

For  more 

information 

see 

http://www.consilium.europa.eu/en/meetings/international-ministerial-

meetings/2018/05/14/algeria/  

73  They  can  be  downloaded  here:  https://eeas.europa.eu/delegations/algeria/31985/les-nouvelles-priorites-du-

partenariat-ue-algerie_en  

74  See DG DEVCO for more information https://ec.europa.eu/europeaid/home_en 

118 

 
                                                 
authorities such as construction materials, domestic appliances and low voltage electric goods. 
This work has been conducted since 2013 through TAIEX missions, resulting for instance in 
twinning  programmes  involving  the  Algerian  authority  for  certification  and  accreditation 
(ALGERAC). Additional programmes, such as PASSEM (Programme d’appui spécifique à la 
surveillance  et  à  l’encadrement  du  marché),  focus  on  specific  areas,  such  as  market 
surveillance and consumer protection.  

5. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

Several market access issues remain in Algeria. The most relevant in 2016 and 2017 was the 
non-automatic licensing regime for imports, imposed on an increasing number of products, 
among  which:  automobile  vehicles,  steel  rebar  and  iron  rod  (since  2016).  In  April  2017, 
the import licence scheme was extended to a new set of products, bringing the total to 22 sets 
of  products  including  wood,  ceramic  and  several  foodstuffs.  In  December  2017,  Algerian 
authorities declared that as from January 2018, the licence scheme would apply only to cars. 
At the same time, new measures designed to curb imports have been put in place, notably 
an  import  ban  on  a  list  of  currently  877  products  (across  all  sectors  of  the  economy),  the 
increase  of  custom  duties  for  another  129  products  (including  agricultural)  as  well  as 
additional administrative hurdles for exporters.  

Other trade-related issues include: a ban on imports of medicines for which exists a locally-
produced equivalent; technical standards; particularly stringent mandatory security devices for 
vehicles, coupled with obligatory inspections. The EU has engaged in an active political and 
technical dialogue with Algerian authorities on these measures, to ensure they are brought in 
to line with the Association Agreement. 

Another  long-standing  issue  is  the  business  climate  in  Algeria,  and  the  reluctance  to  relax 
restrictions on foreign investment.  Numerous obstacles to foreign investment remain  and 
most notably the horizontal ‘49%/51%’ cap that applies across the board to  all sectors. The 
Algerian  government  has  recently  shown  some  willingness  to  consider  changes,  notably 
through the adoption of a new Investment Code, which was vocally advertised. At the same 
time, the problematic rules still remain enshrined in the Budget Law 2009 and 2012, and this 
may render it easier for the Algerian government to reintroduce restrictions through amending 
the  Code  in  the  future.  Such  a  blanket  foreign  equity  cap  enshrined  in  domestic  legislation 
sends  negative  signals  to  potential  investors  and  further  delays  Algeria’s  prospects  of 
accession  to  the  WTO.  The  EU  has  routinely  raised  the  issue  with  Algerian  authorities, 
suggesting a more limited scope of application of the rule still enshrined in the Budget Law.  

6. 

CONCLUSIONS AND OUTLOOK 

There  has  been  a  positive  overall  trend  in  EU-Algeria  trade  since  entry  into  force  of  the 
Association Agreement, although Algeria’s heavy dependency on hydro-carbons has held 
back  any  significant  diversification  of  its  exports,  The  country  registered  its  first  negative 
trade balance with the EU in 2015, at a time when oil prices were considerably low. In 2017 
however trade has become balanced again as oil prices improved, while EU exports faced an 
increasing  number  of  trade  restrictions.  EU  therefore  continues  to  offer  its  support  to  the 
Algerian  government  to  diversify  its  economy.  At  the  same  time,  the  Commission  has 
engaged Algerian authorities with the aim to end the trade restrictive measures and ensure that 
any temporary measures be brought in line with the Association Agreement.  

119 

 
 
 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  
THE EU-EGYPT ASSOCIATION AGREEMENT75 

1. 

INTRODUCTION 

The  EU  and  Egypt  established  a  free  trade  area  as  part  of  the  EU-Egypt  Association 
Agreement, signed in 2001 (hereinafter referred to as ‘the Agreement’). The Agreement was 
provisionally  applied  from  21  December  2003  and  officially  entered  into  force  on  1  June 
2004. It provides for reciprocal liberalisation of trade in goods, with elements of asymmetry 
in  favour  of  Egypt:  all  industrial  products  covered  by  the  Agreement  could  be  exported  by 
Egypt  to  the  EU  tariff-free  from  the  day  of  entry  into  force  of  the  Agreement,  while  Egypt 
benefited  from  a  transitional  period  of  3  to  15  years  to  dismantle  tariffs,  depending  on  the 
product. The Commission received a Council mandate authorising it to negotiate a Deep and 
Comprehensive  FreeTrade  Area  (DCFTA)  with  Egypt  in  November  2011,  but  Egypt  has 
shown limited interest so far.  

Today,  tariffs  applied  to  most  industrial  products  have  been  dismantled  by  Egypt,  with  the 
exception  of  certain  automotive  imports,  for  which  the  transitional  period  will  run  until 
January  2019.  This  agreement,  which  already  included  preferential  arrangements  on 
agricultural,  processed  agricultural  and  fisheries  products,  was  complemented  by  an 
agreement  on  additional  liberalisation  in  agricultural,  processed  agricultural  and  fisheries 
products  signed  in  October  2008  that  entered  into  force  on  1  June  2010.  For  agricultural 
goods, 80% of trade is now covered by duty-free treatment. In November 2010, the EU and 
Egypt signed a protocol establishing a Dispute Settlement Mechanism (DSM), for which the 
ratification  process  is  still  pending.  Negotiations  were  launched  on  liberalisation  of  trade  in 
services, but have been halted.  

Egypt  also signed the Regional Convention on pan-Euro-Mediterranean preferential rules of 
origin  on  9  October  2013  and  notified  it  on  1  June  2014.  The  main  objective  of  the 
Convention is to provide a more unified framework for origin protocols. 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in Goods  

In  2017,  the  EU  remains  Egypt’s  main  trading  partner,  accounting  for  29.7%  of  the  total 
Egyptian  trade,  before  UAE  (6.8%),  China  (5.8%)  and  the  United  States  (5.3).  The  EU  is 
Egypt’s first export market: 34.1% of Egyptian exports were directed towards the EU in 2017, 
followed by UAE (10.9%), United States (7.4%) and Turkey (4.4%). The EU is also Egypts 
first source of imports, with 27.9% of Egyptian imports originating from the EU.  

Trade in  goods  between  the EU and Egypt  has increased significantly over the period since 
the FTA entered into force: total trade between the EU and Egypt increased by 176% in 15 
years, from EUR 10.1 billion in 2002 (the year preceding the provisional entry into force of 
the Association Agreement) to EUR 27.9 billion in 2017 (record year so far for total bilateral 
trade value).  

75  For more information see http://ec.europa.eu/trade/policy/countries-and-regions/countries/egypt/  

120 

 
                                                 
EU  exports  increased  193%  between  2002  and  2017,  from  EUR 6.7 billion  in  2002  to 
EUR 19.8 billion in 2017. Between 2016 and 2017, EU exports decreased (-3%), with exports 
standing at EUR 19.8 billion in 2017 compared to EUR 20.6 billion in 2016. In 2017, the EU 
mainly  exported  goods  in  the  sectors  machinery  and  transport  equipment  (35%),  chemicals 
(13.2%),  fuels  and  mining  products  (9.8%),  and  agricultural  products  (6.9%)  to  Egypt.  The 
three biggest EU exporters to Egypt were Germany, France, and Italy.  

EU  imports  increased  by  142%  between  2002  and  2017,  from  EUR 3.3 billion  in  2002  to 
EUR 8.1 billion in 2017. Between 2016 and 2017, EU imports increased (20%), going from 
EUR 6.7 billion in 2016 to EUR 8.1 billion in 2017. In 2017, EU imports were principally in 
the sectors of fuel and mining products (34.8%), chemicals (11.7%), and textiles and clothing 
(10.4%).  The  three  biggest  importers  of  Egyptian  products  in  the  EU  were:  Italy,  Germany 
and Spain. EU imports of agricultural and food products and in non-fuel industrial products 
remained  stable  since  2011,  increasing  during  2017  –  most  notably  agricultural  and  food 
imports increased by 10.5%. 

A  reduction  in  Egyptian  exports  from  2011  onwards,  coupled  with  significant  increase  of 
imports from the EU, has resulted in a widening trade imbalance between the EU and Egypt. 
The  decrease  in  Egyptian  exports  is  largely  imputable  to  the  fall  of  oil  prices  and  growing 
internal demand for energy in Egypt (fuels accounted for one third of Egyptian exports to the 
EU  in  2017,  while  they  used  to  constitute  almost  half).  2017  suggests  an  upwards  trend  in 
Egyptian  exports  to  the  EU,  having  increased  20.5%  from  2016,  while  imports  slightly 
dipped. This is mainly the result of devaluation of the local currency carried out in November 
2016, coupled with government policy aimed at import reduction. 

2.2. 

Trade in agricultural goods  

Total  trade  in  agricultural  products  between  the  EU  and  Egypt  increased  by  170%  between 
2003  and  2017,  from  EUR 0.8 billion  in  2003  to  EUR 2.3 billion  in  2017.  EU  agricultural 
exports  decreased  (-25%),  going  from  EUR 1.8 billion  in  2016  to  EUR 1.3 billion  in  2017. 
EU imports increased (10%), from EUR 0.9 billion in 2016 to EUR 1.0 billion in 2017.  

In  2017,  Egypt  was  the  EU’s  second  biggest  supplier  of  agri-food  products  among  our 
Euromed-partners. The EU imported mainly fruit, including citrus fruit, (35%) and vegetables 
(33%)  from  Egypt.  EU  agricultural  exports  to  Egypt  were  dominated  by  wheat  (21%), 
vegetables (11%) and milk powders & whey (7%). 

121 

 
 
Regarding agricultural TRQs, Egypt’s 2017 fill rate was high for a limited number of products 
such as garlic (88%), sweet oranges (88%) or strawberries (88%), but remained nil or close to 
zero for the majority of products, such as cucumbers, brown rice, cereal preparations, etc. It is 
worth  mentioning  that,  apart  from  18  products  under  TRQ,  other  agricultural  exports  from 
Egypt to the EU enter duty-free on the European market. So far, Egypt has made little use of 
its TRQs and has requested assistance on SPS issues to fully benefit from existing provisions 
of the FTA. 

2.3. 

Preference Utilisation rate 

Egypt had an average PUR of 96.7% in 2017. For EU exporters to Egypt, the PUR was 44% 
in 2017.  

2.4. 

Trade in Services and FDI76 

After a period of instability from 2011 to 2014, the  total trade in services between the EU 
and  Egypt  had  fully  recovered  its  pre-2011  level  in  2015,  amounting  to  EUR 10.0 billion 
(EUR 10.2 billion in 2010). In 2016, however, Egypt witnessed a significant reduction in the 
export of services, due to the reduced inflow of tourists, aggravated by the crash of a Russian 
airliner in November 2015 over the Sinai, and slightly lower revenues of the Suez Canal due 
to reduced global trade. In 2016, total trade in services amounted to EUR 8.6 billion, a 14% 
decrease from 2015 levels. 

FDI EU28 with Egypt (million EUR) 

Stocks 
Flows 
Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 

184 
265 

Inward 
2015 

2016 

2014 
476  49 474 
1 526 
64 

Outward 
2015 
2016 
42 049  42 758 
1 346 
-2 584 

2014 
835 
74 

As regards FDI, the EU remains the biggest investor in Egypt but EU foreign investment in 
Egypt remains highly volatile, with divestments exceeding investments by EUR 1.6 billion in 
2015. In 2016, EU foreign investment in Egypt improved, amounting to EUR 1.3 billion, for a 
remaining total stock of EUR 42.7 billion.  

Overall, Egypt underperforms as regards its business climate, only ranking 128nd out of 190 in 
the  World  Bank  ranking  Doing  Business  2018  with  a  distance  to  frontier  (DTF)77  score  of 
56.2  out  of  100  -  an  increase  of  0.1  in  DTF  score  compared  to  2017.  FDI  remains  to  be 
concentrated  in  the  oil&gas  sector,  with  renewable  energy  on  the  rise  (wind  and  solar).  To 
improve this situation, on 1 June 2017, a new Investment Law entered into effect in Egypt. In 
November  2017,  the  Egyptian  Government  also  launched  an  online  "Investment  Map",  a 
dedicated website that displays the details of investment opportunities across the country. 

76  Full statistics available here http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_122000.pdf  
77  The  DTF  score  is  a  measurement  used  by  the  World  Bank  to  assess  the  absolute  level  of  regulatory 

performance in economies over time.  

122 

 
  
  
  
  
  
  
 
                                                 
3. 

ISSUES ADDRESSED IN THE JOINT COMMITTEE MEETINGS 

The latest Sub-Committee on Industry, Trade, Services, and Investment met in November 
2017  in  Brussels.  Bilateral  issues  discussed  included  Egypt’s  delay  in  the  dismantling  of 
tariffs for passenger vehicles under the schedule in the Association Agreement, and the draft 
tax incentive  scheme  targeting  the  automotive  industry.  Egypt  was  also  invited  to  ratify  the 
Protocol  on  the  Dispute  Settlement  Mechanism.  Discussions  also  covered  various  trade 
irritants  –  see  in  more  detail  section  5.  Other  issues  covered  included  the  progress  on  a 
potential Agreement on Conformity Assessment and Acceptance (ACAA), the need for time 
to  adapt  Egyptian  SPS  legislation  to  EU  requirements,  and  the  continued  possibility  of  a 
DCFTA in the long-term. 

During the last Sub-Committee on Agricultural and Fisheries products (November 2017), 
several issues were discussed, among them the agri-food trade developments with the recent 
increase  of  Egyptian  agri-food  exports  to  the  EU  market,  the  recent  developments  in  the 
agricultural  policies  of  both  EU  and  Egypt,  possible  future  cooperation  on  organic  farming 
and GIs, and a review of the impact of the EU technical assistance provided to Egypt in the 
sector of agriculture and rural development.  

The last Sub-Committee on Customs Cooperation was held in Brussels in November 2017. 
The EU side and Egypt agreed to reinforce their cooperation through organisation of a TAIEX 
workshop on rules of origin, and a workshop dedicated to tackle fraud (value, customs, forged 
documents).  

4. 

SPECIFIC AREAS OF IMPORTANCE 

Since  2015,  the  Egyptian  economic  slowdown  and  currency  crisis  have  had  serious 
consequences  on  trade.  Faced  with  growing  trade  deficits  and  a  shortage  of  foreign 
exchange, the Egyptian government implemented a series of administrative measures aimed at 
restricting imports in 2015 and 2016. In November 2016 the Egyptian authorities liberalized 
the  exchange  rate  and  adopted  an  economic  reform  programme  supported  by  a  three-year 
USD 12 billion  IMF  loan  programme  -  the  Extended  Fund  Facility  (EFF).  Although 
challenging  in  the  short  term,  bold  economic  measures  were  taken  to  address  fiscal  and 
external unbalance: flotation of the currency, energy subsidy reform, VAT introduction, wage 
restraint.  

Overall, the economy is showing signs of stabilization, with a GDP growth (4.1% in 2017) 
accelerating,  inflation  and  unemployment  on  a  declining  path,  fiscal  consolidation  on  track, 
and international currency reserves at the highest level since 2011. Fiscal efforts still need to 
be  further  pursued  but  have  contributed  to  the  reduction  of  the  primary  and  the  current 
account  deficits,  recently  benefitting  from  increased  tourism  and  gas  sector  revenues  and  a 
reduction of energy imports.  Going forward, the government’s reform  agenda is  focused on 
public  finance  management,  financial  sector,  energy  sector,  business  climate,  competition, 
social protection and encouraging female participation in the labour force. While the principal 
objective of the reforms is macroeconomic stability, a longer term objective is to foster more 
participation  of  the  private  sector  in  the  economy  by  creating  a  more  business  friendly 
environment. However, while the Egyptian government seems to be committed to reforming 
legislation directly related to investments, it  does not focus to a sufficient extent on trade 
facilitation measures; on the contrary, it has been observed to direct its efforts at reducing its 
trade deficit in goods by adopting measures aimed at making imports more difficult. Although 
the  reforms  have  brought  foreign  reserves  back  to  comfortable  levels,  the  policy  of  import 

123 

 
substitution is still prevalent. In addition, the business environment is hindered by excessive 
bureaucracy,  and  lack  of  transparency  and  predictability  of  regulations  affecting  economic 
operators. 

In the light of the revised European Neighbourhood Policy, Partnership Priorities78 were 
jointly agreed between the EU and Egypt and adopted at the Ministerial Association Council 
on 25 July 2017. These  priorities will further  guide future relations, for three  years with  an 
annual review, and will also set the priorities for European Union support under the European 
Neighbourhood  Instrument  (ENI).  Trade-related  assistance  in  Egypt  has  been  conducted 
mainly  under  the  EUR 20 million  Trade  and  Domestic  Market  Enhancement  Programme 
(TDMEP)79, structured around two components i) foreign trade and trade agreements and ii) 
industrial  policy  and  quality  infrastructure.  The  programme  has  delivered  significant 
results, such as the creation of a policy unit within the trade ministry and the adoption of a 
trade  and  industrial  development  strategies.  The  TDMEP  has  also  assisted  Egypt  on  the 
establishment  of  a  proper  regulatory  environment,  including  National  Quality  Policy, 
market  surveillance strategy, horizontal and sector legislation, and supporting the alignment 
of quality infrastructure bodies.  

These  improvements  will  be  essential  in  order  for  the  country  to  pursue  an  ACAA  of 
industrial products with the EU.  

5. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

EU-Egypt  trade  is  currently  being  affected  by  two  significant  technical  barriers  to  trade 
(TBTs): a registration scheme and pre-shipment inspections imposed on entities importing 
certain goods to Egypt. These measures apply to 25 categories of manufactured goods since 
the beginning of 2016. The measures have been discussed in the WTO Technical Barriers to 
Trade (TBT) Committee and in the WTO Council for Trade in Goods (CTG) several times, 
and Commissioner Malmström has written to the Egyptian Minister of Trade raising concerns. 
The  Commission  also  raised  this  issue  twice  at  meetings  in  2017,  insisting  on  more 
transparency,  rapidity,  and  streamlining  of  the  administrative  process,  in  order  to  facilitate 
registration from a practical point of view. 

At the end of 2017 Egypt stated that it would not apply the staged reduction in tariffs on 
certain  motor  vehicles  under  the  terms  of  its  obligations  under  the  FTA.  The  EU  has 
formally  notified  Egypt  that  this  unilateral  decision  goes  against  the  provisions  of  the 
Association Agreement, which require prior consultation of the Association Committee. The 
EU has asked Egypt  to  cancel  its decision and indicated it will be put  on the agenda of the 
next  Association  Committee  where  Egypt  is  expected  to  substantiate  the  difficulties  in  the 
automotive sector that would justify in Egypt’s view such exceptional measures.  

Other  trade  irritants  that  remain  include  the  following:  arbitrary  customs  valuations  by  the 
Egyptian authorities, problems with acceptance of origin declarations by importers, restrictive 
labelling requirements, mainly affecting the textile and ceramic tiles sectors, a prohibition on 
the  import  of  certain  motorcycles,  a  ‘reference  list’  of  countries  authorised  to  export  milk 
formula that includes some -but not all- EU MS, and SPS issues, mainly affecting wheat and 

78  See http://www.consilium.europa.eu/media/23942/eu-egypt.pdf  
79  This programme will end in 2020. 

124 

 
                                                 
beef/live  cattle  importers.  The  EU  is  also  closely  following  the  drafting  of  a  future  tax 
incentives scheme targeting the automobile sector. The draft text of the legislation has yet to 
be disclosed by the Egyptian government, but several aspects of the future scheme may be at 
odds with Egypt’s commitments under the WTO and the Association Agreement, notably in 
terms of discrimination against imports and trade-related investment measures.  

Egypt  yet  has  to  ratify  the  protocol  establishing  a  Dispute  Settlement  Mechanism  signed  in 
November 2010.  

6. 

CONCLUSIONS AND OUTLOOK 

Two-way  trade  has  grown  significantly  since  the  entry  into  force  of  the  FTA,  although  a 
mixture  of  political  and  economic  factors  have  impeded  Egyptian  exporters  from  fully 
benefitting  from  the  opportunities  it  created.  The  EU  is  therefore  engaged  in  several  trade-
related assistance projects with Egypt in order to create the conditions in which the FTA can 
deliver.  

Discussion  on  implementation  focusses  on  the  abovementioned  trade  irritants.  The  EU  and 
Egypt are engaged in an active dialogue to address these, both at the political and technical 
level.  

Facilitating  trade  has  been  made  one  of  the  priorities  under  the  Partnership  Priorities 
adopted  by  the  EU  and  Egypt  in  201780,  which  should  cover  issues  such  as  reduction  of 
trade  barriers  as  well  as  technical  assistance  on  SPS  issues  and  ACAA-related  fields. 
Negotiating a DCFTA remains a medium-long term objective to be followed when Egypt will 
be ready for it. 

80  See: http://www.consilium.europa.eu/media/23942/eu-egypt.pdf  

125 

 
                                                 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  
THE EU-ISRAEL ASSOCIATION AGREEMENT81 

1. 

INTRODUCTION 

The  EU  and  Israel  have  an  Association  Agreement  (AA),  creating  a  Free  Trade  Area, 
hereinafter called ‘the Agreement’, provisionally applied since 1996, which fully entered into 
force  on  1  June  2000.  The  Association  Agreement  liberalised  two-way  trade  in  industrial 
goods. The liberalisation process was asymmetrical with the EU eliminating tariffs from the 
first  day  of  the  agreement,  while  Israel  enjoyed  a  12  year  transition  period  which  ended  in 
2013. The Association Agreement included selected arrangements on agri-food trade. The EU 
and Israel however subsequently upgraded the Free Trade Area with further liberalisation of 
agricultural, processed agricultural and fish products, in force since 2010. Israel is a member 
of  the  Regional  Convention  on  Pan-Euro-Mediterranean  preferential  rules  of  origin  (PEM 
Convention) which it signed in 2013 and notified the EU of its ratification and entry into force 
in  2014.  The  main  objective  of  the  Convention  is  to  provide  a  more  unified  framework  for 
origin protocols. 

The  EU  and  Israel  also  have  an  Agreement  on  Conformity  Assessment  and  Agreement 
(ACAA) on pharmaceuticals82, in force since January 2013, which facilitates trade on both 
sides,  as  it  recognises  each  partners  certification  of  conformity  of  pharmaceutical  products, 
without the need for re-testing at import. 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in Goods 

In 2017, the EU was Israel’s first trading partner, representing 36% of Israeli trade. Israel is 
the EU’s 26th largest trading partner and the 3rd largest one in the Euro-Mediterranean region 
after Algeria and Morocco. The EU was the largest exporter into Israel holding a 41% market 
share, ahead of the US (12%) and China (9%). The EU was Israel’s largest export market in 
2017 receiving 30% of Israeli exports, with the USA slightly behind with 29%. 

It should be noted that the value of EU exports to Israel has increased more than in the other 
direction.  The  EU’s  annual  trade  surplus  with  Israel  has  therefore  increased  over  the  same 
period. The annual trade balance in the EU’s favour was EUR 4.8 billion in 2002 compared to 
EUR 6.7 billion in 2017. 

81  For more information see http://ec.europa.eu/trade/policy/countries-and-regions/countries/israel/  
82  See https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX%3A32013D0001   

126 

 
                                                 
Since the Association Agreement came into force, the value of imports and exports between 
the  EU  and  Israel  has  increased  in  both  directions.  In  2002,  the  first  year  in  which  data  is 
available,  the  value  of  trade  in  goods  was  EUR 23.1 billion  and  by  2017  it  was 
EUR 36.1 billion representing an increase of 56.7%.  

The  value  of  EU  exports  to  Israel  has  risen  by  54%  from  EUR 13.9 billion  in  2002  to 
EUR 21.3 billion  in  2017.  EU  exports  between  2016  and  2017  increased  (1%),  going  from 
EUR 21.1 billion in 2016 to EUR 21.3 billlion in 2017. With the exception of 2009 (financial 
crash), EU exports to Israel have demonstrated fairly consistent growth, reaching an all-time 
high  of  EUR 21.3 billion  in  2017.  In  2017,  the  most  important  groups  for  export  by  value 
were  machinery  and  transport  equipment  (43%),  and  chemicals  (13.8%),  and  other  semi 
manufactured  products  (10%).  The  four  largest  exporters  to  Israel  from  the  EU  were 
Germany, the Netherlands, Italy and Belgium. 

The  value  of  EU  imports  from  Israel  has  risen  from  EUR 9.1 billion  in  2002  to 
EUR 14.8 billion  in  2017,  representing  a  62%  rise.  EU  imports  between  2016  and  2017 
increased (11%), going from EUR 13.2 billion in 2016 to EUR 14.8 billion in 2017. Imports 
from Israel have been steady with an overall upward trend, the only year in which imports fell 
heavily  was  2009  (financial  crash).  In  2017  the  most  important  groups  for  import  by  value 
were  chemicals  (38.4%),  machinery  and  transport  equipment  (18.5%),  and  other  and  other 
manufactured  goods  (10.5%).  In  2017,  the  four  largest  importers  from  Israel  within  the  EU 
were the Netherlands, Belgium, Germany and the United Kingdom. 

2.2. 

Trade in agricultural goods 

Total  trade  in  agricultural  products  between  the  EU  and  Israel  increased  by  92%  between 
2003  and  2017,  from  EUR 1.4 billion  in  2003  to  EUR 2.7 billion  in  2017.  EU  agricultural 
exports increased (5%), going from EUR 1.7 billion in 2016 to EUR 1.8 billion in 2017. EU 
imports  did  not  fluctuate  much  between  between  2016  and  2017  and  stood  at 
EUR 0.98 billion in  2017, a slight  decrease (-1%) from EUR 0.99 in  2016.  In 2017,  among 
our Euromed partners,  Israel  was the EU's second most important  destination for exports of 
agri-food  products;  in  the  same  year  it  was  the  EU's  third  biggest  supplier  of  agri-food 
products. 55% of the EU's agricultural imports from Israel were fruit and vegetables; the EU 
mainly  exported  beverages,  spirits  &  vinegar  (13.5%),  followed  by  preparations  of  cereals, 
flour, starch (11.2%) and live animals (8.7%) to Israel.  

127 

 
 
 
Israel has made good use of a part of its access under TRQs. In 2017 Israel used 100% of its 
TRQ on new potatoes, sweet peppers, fresh clementines/mandarins/wilkings, glues based on 
starches and wine of fresh grapes for all other TRQs, the rate of use was below 40% and in 
many of them 0%.  

Israel  grants 113 TRQs for agricultural products from the EU; the majority of them is duty-
free.  For  13  quotas,  Israel  provided  information  of  the  utilisation  at  the  12th  EU-Israel 
Subcommittee  Meeting  on  Agriculture  and  Fisheries  on  23  May  2018.  Most  of  these  13 
quotas were fully or almost fully utilised, except the quota for dried prunes. 

Utilisation of TRQs for EU exports to Israel in 2017 

Quota  2017  (tons, 
indicated 
unless 
otherwise) 

2017 
Utilisation 
unless 
(tons, 
indicated otherwise) 

Utilisation rate 

Product 

Garlic 

Apples 

Pears 

Quinces 

Onion 

Honey (< 1.5 kg) 

Honey (> 1.5 kg) 

Dried grapes 

Eggs 

Potatoes 

Dried prunes 

Pet food 

230 

3 280 

2 140 

380 

2 300 

180 

300 

120 

230 

3 235 

2 135 

317 

2 300 

180 

299 

110 

8 million pieces 

7 008 000 pieces 

6 380 

730 

1 610 

1 150 

6 380 

71 

1 535 

1 141 

100% 

99% 

100% 

83% 

100% 

100% 

100% 

92% 

87.6% 

100% 

10% 

95% 

99% 

Dogs and cats' food 

Source: Israeli authorities 

2.3. 

Preference Utilisation rate  

In  2017  Israel’s  use  of  the  preferential  utilisation  rates  was  91%.  The  EU’s  preferential 
utilisation rate was 89% in 2016 and 86% in 2017.  

128 

 
  
2.4. 

Trade in Services and Investment83 

In 2016 trade in services between the EU and Israel was worth EUR 11.3 billion. In the last 6 
years, there has  been an overall increase in  the  value of services imported from  Israel  from 
EUR 3.2 billion  in  2010  to  EUR 4.8 billion  in  2016.  In  the  same  period  there  has  been  an 
increase in EU export of service to Israel from EUR 3.8 billion in 2010 to EUR 6.6 billion in 
2016. 

FDI EU28 with Israel (million EUR) 

Stocks 
Flows 
Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 

2014 
40 883 
7 096 

Inward 
2015 
2014 
2016 
40 345  62 101  14 389 
1 862 
2 191  11 651 

Outward 
2015 
2016 
17 318  24 673 
1 225 

769 

On  FDI flows  there is  no consistent  image either on volume or on partner country. Figures 
show fluctuations every year and no trend can be identified. Despite the lack of consistency, it 
can be seen that FDI flows between the US and Israel clearly exceed those between the EU 
and Israel. However, EU FDI in both stocks and flows both in and out of Israel have grown 
continuously  since  2001.  The  EU  accounts  for  a  substantial  40%  of  all  outgoing  Israeli 
investments, followed by the US with 20%. For incoming investments into Israel, the share of 
the EU is 20% which is similar to that of the US.84  

According to The World Bank Doing Business Index 2018 which ranks 190 countries, Israel, 
an OECD member, was ranked 54th in the world with a distance to frontrier (DTF)85 score of 
71.4 out of 100 – an increase of 0.05 in DTF score compared to 2017. 

3. 

ISSUES  ADDRESSED  IN  THE  ANNUAL  (JOINT  COMMITTEE/TRADE  COMMITTEE) 
MEETING 

Two recent  meetings  of  the  EU-Israeli Sub-committees on Industry, Trade and Services 
were  held  in  December  2016  and  24  May  2018.  A  range  of  bilateral  issues  were  discussed 
including the state of EU-Israeli trade under the Association Agreement and the experience of 
the  ACAA  on  Pharmaceuticals  already  concluded.  Regarding  trade  barriers,  the  recent 
removal  of  a  distinction  between  ‘new’  and  ‘old’  Member  States  (pre  and  post-2004)  for 
import of pharmaceuticals  into  Israel  was welcomed. The EU stressed the need to  resolve a 
similar distinction still existent for medical devices. A number of IPR issues were also raised, 
including related to the protection of biological medicines. Both parties provided an update on 
their ongoing bilateral and multilateral trade negotiations. 

The EU-Israeli Sub-Committee on Agriculture and Fisheries also met in December 2016. 
A range of issues were discussed, including the current trade in agricultural products between 
the two partners and related issues, such as SPS regulations in both directions. On agricultural 
issues, Israel provided an update on changes to its agricultural policy and the EU stressed the 
importance of GIs. Parties also discussed the ongoing process of reviewing the EU regulation 

83  See statistics http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_111672.pdf  
84  Both Eurostat and IMF data was used for investment figures. 
85  The  DTF  score  is  a  measurement  used  by  the  World  Bank  to  assess  the  absolute  score  of  regulatory 

performance in economies over time.  

129 

 
  
  
  
  
  
  
                                                 
on organic farming. Israel sought reassurance that there would be no gaps between the EU’s 
new regulation  on organic farming  and the current  bilateral  relationship  – the EU  reassured 
Israel  that  the  five  year  transition  period  from  2020  would  allow  for  any  necessary 
adjustments  in  bilateral  exchanges.  Israel  also  expressed  its  request  to  extend  the  current 
arrangement  to  aquaculture  products  to  which  the  EU  clarified  that  any  modification  of 
current arrangements would have to be done through a bilateral agreement. On fisheries, there 
was discussion on sustainable Mediterranean fisheries and the EU provided an update on its 
Maritime  Spatial  Planning.  Israel  signalled  its  intention  to  request  EU  technical  support  in 
several areas, such as the sustainable use of pesticides and flood risk prevention, while Israel 
also  offered  technical  support  to  the  EU  on  tackling  lumpy  skin  disease.  The  next  Sub-
committee on Agriculture and Fisheries will meet on 23 May 2018. 

The  latest  EU-Israel  Customs  Cooperation  and  Taxation  Subcommittee  took  place  in 
November 2017. Parties informed each other of the development of their customs legislations, 
on  the  enforcement  by  customs  of  IPR,  on  the  implementation  of  the  Protocol  on  mutual 
assistance  between  administrative  authorities  in  customs  matters  and  on  the  Pan  euro-
Mediterranean (PEM) Convention on Rules of Origin. 

4. 

SPECIFIC AREAS OF IMPORTANCE 

The  Israeli  economy  stayed  on  its  path  of  steady  growth,  low  fiscal  deficit,  low 
unemployment  and  solid  external  position.  The  Shekel  has  been  on  an  appreciation  trend 
against all major currencies since 2015, with an impact of the price competitiveness of Israel's 
exports. The discovery of natural gas fields in Israel's exclusive economic zone and the future  
export plans might bring related risks but also opportunitites to the economy. 

The  EU  and  Israel  continue  to  work  together  on  the  implementation  of  the  ACAA  on 
pharmaceuticals. This is important because it allows seamless trade without the need for re-
testing products that have been alredy certified by the exporting side. Following this success, 
Israel is considering additional areas on which to focus. To this end, the Israeli authorities 
have made an increasing number of requests for technical assistance from the EU in the form 
of  TAIEX  workshops  and  Twining  programmes  –  the  only  type  of  capacity  building 
assistance  the  EU  provides  to  Israel  being  a  developed  country.  In  a  wide  range  of  areas 
(including  environment,  energy,  statistics  and  agriculture)  EU  regulatory  practice  (norms, 
standards  and  procedures)  is  shared  with  the  Israeli  authorities  to  help  specific  policy 
formulation and implementation. For trade, it is particularly important to continue to provide 
support for ongoing market reforms, in particular those that relate to the opening of the Israeli 
domestic  market  –  such  as  in  the  areas  of  agricultural  policy,  accreditation,  import 
authorization procedures, conformity assessments and standard setting etc. – as this could also 
improve market access conditions for EU operators. 

5. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

No  significant  roll  back  of  commitments  in  the  Association  Agreement  has  been  recorded; 
however there are a number of persistent trade irritants. These include the discriminatory 
treatment  of  Member  States,  who  joined  since  2004  and  of  Luxembourg,  with  particular 
reference to restrictions on import authorization of medical devices. Other technical barriers 
to trade include the lack of data protection (IPR) on biological medicines, the rigid regime of 
kosher certification of slaughtered meat as well as restrictions to the import of live animals. A 
number of technical meetings are taking place to look into these issues.  

130 

 
In the context of the wish expressed by the Israeli government to fight the high cost of living 
and enhance competitiveness on the market, the EU is supporting Israel’s ongoing market 
reforms  by  sharing  its  best  practices  on  issues  such  as  standards,  import  procedures, 
conformity  assessments,  agricultural  support  policy,  etc.  In  particular,  in  2017  the  EU  has 
been closely following the development of Israel’s regulatory policies of nutritional labelling 
and on cosmetics,  advocating for rules that  are  aligned with  international  and, possibly, EU 
standards.  An  important  result  was  achieved  when,  following  EU  requests  in  that  sense, 
Israeli authorities decided on a transitional period of two years for the full implementation of 
the new rules on nutrional labelling.  

6. 

CONCLUSIONS AND OUTLOOK 

Overall  the  value  of  trade  between  the  EU  and  Israel  has  increased  during  the  period  of 
implementation  of  the  Association  Agreement  and  this  is  true  in  both  directions.  Goods 
continue  to  account  for  the  majority  of  trade,  although  services  and  foreign  investment  are 
also noteworthy. Trade fell in both directions in 2009 due to the financial crisis; it should be 
noted, however, that it has since recovered and exceeded pre-crash levels in both directions, 
and has remained strong despite wider regional instability.  

irritants  (e.g.  for 
There  have  been  some  recent  successes 
pharmaceuticals), which is a path that the EU aims to continue on to further strengthen trade 
relations; the deepening of such relations is also facilitated by a continuous dialogue in many 
areas,  such  as  in  the  regulatory  field,  where  Israel  considers  the  EU  as  an  international 
reference.  The  EU  and  Israel  continue  to  cooperate  in  bilateral  and  multilateral  trade 
talks. 

in  resolving  trade 

Discussions  between  the  EU  and  Israel  on  a  Dispute  Settlement  Agreement  under  the 
Association Agreement are still to be finalised. Israel has expressed some limited interest in 
using the Agreement’s review clause on services.  

The  EU  will  continue  to  support  Israel’s  ongoing  market  reforms  and  will  continue  in 
2018 working with Israel on nutritional labelling, cosmetics and in other areas, advocating for 
rules that are aligned with international and, possibly, EU standards.  

131 

 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  
THE EU-JORDAN ASSOCIATION AGREEMENT86 

1. 

INTRODUCTION 

The  Association  Agreement  (AA)  creating  a  Free  Trade  Area  between  the  EU  and  Jordan 
(hereinafter  referred  to  as  ‘the  Agreement’)  was  signed  on  24  November  1997  and  entered 
into force on 1 May 2002. It liberalised two-way trade in goods, with asymmetrical transition 
periods in favour of Jordan, which allowed Jordan to phase in tariff reductions over a 12 year 
period. Tariff dismantling has been completed. The EU and Jordan upgraded the Agreement 
in 2006 concluding an additional agreement on trade in agricultural and processed agricultural 
products.  Today  all  Jordanian  agricultural  products  can  enter  the  EU  duty  free  with  the 
exception  of  virgin  olive  oil  and  cut  flowers,  which  are  under  TRQs,  while  agricultural 
liberalisation on the Jordanian side is substantial, but not complete. A protocol establishing a 
bilateral Dispute Settlement Mechanism was added to the Agreement in 2011.  

Jordan is a member of the Regional Convention on pan-Euro-Mediterranean preferential rules 
of origin (PEM Convention) which it signed in 2011 and notified the EU of its ratification in 
2013.  The  Convention’s  main  objective  is  to  provide  a  more  unified  framework  for  origin 
protocols. 

In  2011  the  EU  Council  adopted  negotiating  directives  to  further  enhance  the  trade 
relationship through a DCFTA (DCFTA) with Jordan, but negotiations have not yet started. 

2. 

EVOLUTION OF TRADE  

2.1. 

Trade in Goods 

In 2017 the EU was Jordan’s largest trade partner, representing 17% of its total trade. The EU 
was the largest importer into Jordan with a 22% market share. It was however only Jordan’s 
7th  largest  export  market  behind  the  US,  India  and  regional  players  including  Saudi  Arabia, 
Iraq  and  the  UAE.  The  value  of  trade  between  the  EU  and  Jordan  has  increased  in  both 

86  For more information see http://ec.europa.eu/trade/policy/countries-and-regions/countries/jordan/  

132 

 
 
                                                 
directions  since  the  Association  Agreement  came  into  force.  Since  2002,  the  first  year  for 
which data is  available  and also  the  year the Agreement  came into force, there has been an 
overall growth in trade in goods in both directions.  In 2002 the value of trade in goods was 
EUR 2.4 billion and in 2017 it was EUR 4.5 billion - a growth of 87.5%.  

The value of EU exports in  goods to  Jordan has  increased more than in  the other direction. 
Jordan’s  trade  deficit  with  the  EU  has  grown  over  the  period  2002-2017.  This  is  broadly 
consistent with Jordan’s overall trade pattern. As the largest supplier to Jordan, the EU is also 
the  trading  partner  with  which  it  has  its  largest  trade  deficit  –  EUR 3.7 billion  (35%)  of  its 
EUR 10.3 billion total deficit.  

The  value  of  EU  exports  to  Jordan  has  risen  by  100%  from  EUR 2 billion  in  2002  to 
EUR 4.1 billion  in  2017.  Exports  to  Jordan  have  risen  year-on-year  with  the  exception  of 
2009 (financial crisis) and 2014; which may be a reflection of regional political and economic 
instability.  In  2017  the  value  of  exports  reached  an  all-time-high  of  EUR 4.1 billion,  an 
increase  (1.5%)  from  2016  which  stood  at  EUR 4.0 billion.  The  most  important  exports 
sectors were machinery and transport equipment (33.2%), agricultural and products (18.5%) 
and  chemicals  (13.3%).  In  2017  the  four  largest  exporters  to  Jordan  from  the  EU28  were 
Germany, Italy, the Netherlands and Spain.  

The  value  of  EU  imports  from  Jordan  has  risen  from  EUR 314 million  in  2002  to 
EUR 358 million in 2017 – an increase of EUR 44 million or 14%. Within the lifespan of the 
agreement however the value of imports has fluctuated. In 2015 imports reached an all-time 
high  of  EUR 386 million,  but  have  since  declined.  Between  2016  and  2017,  EU  imports 
increased (5%) from EUR 339 million in 2016 to EUR 358 million in 2017. In 2017 the most 
important import sectors, were chemicals (37.5%), clothing (13.4%), machinery and transport 
equipment (13.1%), and agricultural products (12.6%). In 2017 the four largest importers of 
products from Jordan among the EU were Belgium, the United Kingdom, the Netherlands and 
Italy.  

2.2. 

Trade in agricultural goods 

Total trade in agricultural products between the EU and Jordan increased by 310% between 
2003 and 2017, from EUR 0.1 billion in 2003 to EUR 0.8 billion in 2017. Between 2016 and 
2017,  EU  agricultural  exports  decreased  (-6%)  going  from  EUR 0.8 billion  in  2016  to 
EUR 0.7 billion in 2017. EU imports increased (12%) between 2016 and 2017, with imports 
going  from  EUR 41 million  in  2016  to  EUR 45 million  in  2017.  In  2017,  the  EU  mainly 
exported  wheat  (15%),  live  animals  (9%)  and  infant  food  and  other  cereals,  flour,  starch  or 
milk  preparations  (7%)  to  Jordan.  The  EU's  key  agricultural  imports  from  Jordan  were 
vegetables (27%), cigars and cigarettes (20%) and preparations of vegetables, fruits and nuts 
(11%). 

Regarding agricultural TRQs, Jordan’s 2017 fill rate of the two TRQs on virgin olive oil and 
fresh cut flowers and buds was practically 0%. 

2.3. 

Preference Utilisation rate  

In  2017  Jordan’s  use  of  the  preferential  utilisation  rates  was  75%.  Data  on  the  EU’s  use  of 
preferential utilisation rates in not available for Jordan. 

133 

 
2.4. 

Trade in Services and Investment87 

In 2016 trade in services between the EU and Jordan was worth EUR 1.3 billion. There has 
been an overall decline in the value of services imported from Jordan from EUR 0.6 billion in 
2010  to  EUR 0.5 billion  in  2016;  no  doubt  explained  by  the  protracted  instability  in  the 
region. In the same period there has been an increase in EU export of services to Jordan from 
EUR 0.6 billion  in  2010  to  EUR 0.9 billion  in  2015.  Jordan’s  exports  of  services  are 
dominated by services in the travel sector, while Jordan’s imports of services are dominated 
by the transport sector. 

FDI EU28 with Jordan (million EUR) 

Stocks 
Flows 

2014 

495 
20 

Inward 
2015 

457 
-23 

2016 

0 
-408 

2014 
2 977 
335 

Outward 
2015 

2 882 
221 

2016 
3 039 
133 

Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 

In  2016,  the  total  of  FDI  (FDI)  stocks  were  EUR 3.03 billion  (EUR 3.0 billion  EU  FDI  in 
Jordan and EUR 0.03 million Jordanian FDI in the EU). According to the World Bank 2018 
"Ease of Doing Business" index which ranks 190 countries, Jordan ranked 103rd in the world 
for overall ease of doing business, with a distance to frontier (DTF)88 score of 60.6 out of 100 
– an increase of 2.38 in DTF score compared to 2017. 

3. 

ISSUES  ADDRESSED  IN  THE  ANNUAL  (JOINT  COMMITTEE/TRADE  COMMITTEE) 
MEETINGS 

The  most  recent  EU-Jordan  Sub-Committee  on  Industry,  Trade  and  Services  met  in 
December  2017  in  Amman.  Much  of  the  Sub-Committee  discussion  focused  on  the 
implementation  of  the  Agreement  on  the  relaxation  of  Rules  of  Origin  applicable  under  the 
EU-Jordan  Association  Agreement.  The  EU  and  Jordan  had  an  exchange  of  views  on  the 
overall investment climate in Jordan. On-going trade related assistance and capacity building 
was also discussed.  

The  Agriculture  and  Fisheries  Sub-Committee  last  met  in  December  2017  in  Amman 
(back-to-back with the Sub-Committee on Industry, Trade and Services) and discussed: latest 
developments of agricultural policies, as well as a state-of-play with regard to GIs (GIs) and 
organic  farming  in  Jordan.  The  EU  and  Jordan  also  discussed  technical  assistance  and 
capacity building for Jordan in agriculture field.  

The  latest  EU-Jordan  Customs  co-operation  sub-committee  met  in  December  2017  in 
Amman. Issues discussed included the modernisation process of customs administration and 
simplification  of  customs  legislation  and  procedures,  including  computerisation.  The  EU 
presented  the  state-of-play  and  latest  developments  with  regard  to  the  modernisation  of  the 
PEM  Convention.  Other  points  of  discussion  referred  to  strengthening  the  EU-Jordan 
administrative  cooperation  on  customs  matters,  including  to  combatting  irregularities  and 
customs fraud.  

87  For more information see http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_111671.pdf  
88  The  DTF  score  is  a  measurement  used  by  the  World  Bank  to  assess  the  absolute  level  of  regulatory 

performance in economies over time.  

134 

 
  
  
  
  
  
  
                                                 
4. 

SPECIFIC AREAS OF IMPORTANCE 

The protracted Syrian crisis has had serious consequences  for the Jordanian economy and 
its  trade.  The  closure  of  traditional  trade  routes  has  resulted  in  significant  losses  and 
downscaling  of  production  for  the  export  market.  The  presence  of  over  650,000  Syrian 
refugees  in  Jordan89  has  compounded  existing  economic  grievances.  In  the  absence  of 
sufficient  reform  to  the  regulatory  environment,  attracting  foreign  investments  to  offset  the 
negative trend has proven difficult. Jordan agreed in 2016 to three-year program with the IMF 
of  long-delayed  structural  reforms.  Additionally,  Jordan  continues  to  benefit  from  Macro-
Financial  Assistance  (MFA)  from  the  EU  and  it's  currently  implementing  a  second  MFA 
operation aimed at strengthening the country's foreign exchange reserve position and meeting 
its  balance  of  payments  and  budgetary  financing  needs.  In  order  to  address  the  problems 
caused  by  the  Syrian  crisis,  the  EU  is  also  providing  Jordan  with  a  package  of  support  of 
which  the  trade  angle  is  a  simplification  of  the  rules  of  origin  applicable  to  Jordanian 
exports to the EU and trade support programs. This initiative was agreed in July 2016 and 
will  apply  until  the  end  of  2026.  Under  the  initiative,  Jordanian  exporters  to  the  EU  can 
now benefit from the same rules of origin for manufactured products as those applied by 
the EU for Least Developed Countries, provided that certain conditions are met. These rules 
are  simpler  than  those  that  would  otherwise  apply  under  the  Association  Agreement.  This 
simplification  applies  to  52  product  groups.  To  qualify  to  use  the  simpler  rules,  production 
must  take  place  in  one  of  18  designated  industrial  zones  and  Syrian  refugees  must  also 
account for no less than 15% of a manufacturer’s workforce in the first 2 years of the scheme 
and 25% from the third year, once the scheme enters into force. 

Regarding the Rules of Origin initiative there is interest on both sides to further incentivise 
economic operators to use the scheme. Until today eleven companies registered in the scheme 
and four of them exported their products into the EU for a total value of EUR 2.3 million. In 
its first report on the Implementation of the Rules of Origin scheme Jordan made a number of 
requests for further modification of criteria required by the scheme. After an analysis of the 
requests,  the  Commission  considered  it  justified  and  intends  to  address  certain  requests  in 
2018,  in  order  to  further  improve  the  effects  of  the  initiative  on  Jordanian  economy  and 
contribute  to  increasing  a  number  of  Syrian  refugees  legally  employed  in  Jordan  in  decent 
jobs.  

A renewed effort towards enhancing regulatory coherence forms part of the Partnership 
Priorities adopted in December 201690, which also cover actions to enhance Jordan’s social 
and  economic  resilience.  The  EU  seeks  to  work  with  Jordan  to  promote  a  stronger,  more 
competitive economy whereby an enhanced trade and investment climate will encourage and 
enable Jordanian enterprises to take better advantage of preferential access to the EU market 
and  act  as  a  powerful  incentive  for  job  creation.  Cooperation  also  covers  the  area  of  skills 
development and related educational reform, to promote the productive contribution of young 
people in the economy.  

Jordan is also working on approximating its standards to EU standards. The Jordan Food 
and Drug Administration was active in early 2017 on undertaking steps for alignment to EU 
technical  regulations  and  SPS  standards.  Two  expert  missions  were  conducted  to  determine 

89 According to UNHCR data, see http://data2.unhcr.org/en/situations/syria/location/36  
90  See http://www.consilium.europa.eu/en/press/press-releases/2016/12/20/eu-jordan-partnership-priorities-and-

compact/  

135 

 
                                                 
the needs and potential technical assistance. Trade-related assistance projects to improve the 
trade  and  investment  climate  also  include  a  EUR 55 million  Private  Sector  Development 
programme comprising a budget support component, technical assistance to the Government 
and  company-level  assistance  for  the  private  sector.  There  is  a  further  project  to  support 
entrepreneurship  in  the  north  of  Jordan,  the  region  most  strongly  affected  by  the  influx  of 
refugees.  It  aims  to  stimulate  innovation  and  increase  the  competitiveness  of  Jordanian 
exports and to supporting of the Rules of Origin initiative. 

5. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

There  are  no  significant  open  issues  or  follow-up  actions  relating  directly  to  the  current 
agreement.  There  is,  however,  a  continuing  difference  of  views  concerning  Jordan’s 
commitments  on  the  import  conditions  for  alcoholic  drinks,  arising  from  the  interaction 
between  the  initial  Association  Agreement  and  the  subsequent  updated  Agreement  that 
brought  additional  liberalisation  of  trade  in  agricultural,  processed  agricultural  and  fisheries 
products.  

Furthermore, there are a number of structural issues on the side of Jordan, which prevent the 
country from taking full advantage of the FTA, such as a lack of clear trade and development 
policies  and  administrative  weaknesses.  We  also  note  a  lack  of  interest  from  the  private 
sector,  which  still  prefers  to  satisfy  neighbouring  markets  to  the  EU  as  the  latter  remains  a 
highly  competitive  and  demanding  market  with  high  regulsatory  requirements.  In  addition, 
production  costs  in  Jordan  are  high  due  to  water  shortages,  high  electricity  prices  and 
transportation costs, which reduce the competitiveness of goods made in Jordan. 

6. 

CONCLUSIONS AND OUTLOOK 

Overall the value of trade between the EU and Jordan has increased since the Association 
Agreement came into force. This is true in both directions. Goods continue to account for the 
majority  of  trade,  although  services  and  foreign  investment  are  also  present.  EU  exports  to 
Jordan have grown faster than Jordanian exports to the EU, so the Jordanian trade deficit with 
the EU has increased in the same period, no doubt exacerbated by regional developments.  

The  Syria  crisis  has  closed  many  traditional  trade  routes  for  Jordan.  The  Decision  on 
relaxation of Rules of Origin, adopted in July 2016, was designed to boost Jordanian exports 
into the EU and to support formal integration of Syrian refugees into the Jordanian economy. 
Further  actions are planned to  raise awareness  of this initiative and to  promote the business 
opportunities it provides. Based on additional requests made by Jordan in December 2017, the 
EU  has  agreed  to  a  further  relaxation  of  certain  criteria  applicable  throughout  the  Rules  of 
Origin scheme.  

DCFTA  negotiations  have  not  yet  started,  however,  the  importance  of  the  DCFTA  to 
improve  the  resilience  of  the  Jordanian  economy  was  formally  recognised  in  the 
Partnership  Priorities91.  In  the  last  Sub-Committee  on  Industry,  Trade  and  Services,  Jordan 
indicated  that  they  preferred  to  deal  with  further  liberalisation  of  agriculture,  processed 
agriculture, fisheries and processed fisheries products under the DCFTA.  

91  See http://data.consilium.europa.eu/doc/document/ST-12384-2016-ADD-1/en/pdf 

136 

 
 
 
                                                 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  
THE EU-LEBANON ASSOCIATION AGREEMENT92 

1. 

INTRODUCTION 

The EU and Lebanon have an Association Agreement, creating a Free Trade Area, which was 
provisionally  applied  on  1  March  2003  and  fully  entered  into  force  on  1  April  2006 
(hereinafter  referred  to  as  ‘the  Agreement’).  The  Agreement  liberalised  two-way  trade  in 
industrial goods with an asymmetrical transition period of 12 years in favour of Lebanon. The 
phased liberalisation of industrial products by Lebanon started in 2008 and was completed in 
2015. From the first day of provisional application, it also granted tariff-free access to the EU 
for most Lebanese agricultural and processed agricultural products (89% enter tariff and quota 
free)  with  only  27  agricultural  products  facing  a  specific  tariff  treatment,  mostly  TRQs 
(TRQs). On the other hand, agricultural liberalisation by Lebanon has been more limited. In 
2010 the EU and Lebanon signed an additional protocol on a Dispute Settlement Mechanism, 
which  has  not  yet  entered  into  force,  pending  the  notification  of  the  ratification  by  the 
Lebanese Parliament. 

Lebanon has signed the Regional Convention on Pan-Euro-Mediterranean preferential rules of 
origin  (PEM  Convention)  in  2014;  it  notified  its  ratification  in  October  2017  and  formally 
joined on 1 December 201793. The Convention’s main objective is to provide a more unified 
framework for origin protocols. 

2. 

EVOLUTION OF TRADE  

2.1. 

Trade in Goods 

Since 2012 the EU has ranked as Lebanon’s first trading partner. In 2017 the EU represented 
36% of Lebanese trade. The value of EU exports to Lebanon has increased more than in the 
other direction. This has roughly doubled Lebanon’s annual trade deficit with the EU over the 
same  period.  The  annual  trade  balance  in  the  EU’s  favour  was  EUR 3.0 billion  in  2002 
compared to EUR 6.8 billion in 2017. At the same time, the EU has become a less important 
export destination in relative terms with its share of Lebanese exports falling in the last couple 
of  years. The increasing importance of regional  export markets  such as  Saudi  Arabia or the 
UAE highlights the need for removing regional barriers and encouraging regional trade.  

92  For more information see http://ec.europa.eu/trade/policy/countries-and-regions/countries/lebanon/  
93  For  more  information  see  https://ec.europa.eu/taxation_customs/business/calculation-customs-duties/rules-

origin/general-aspects-preferential-origin/arrangements-list/paneuromediterranean-cumulation-pem-
convention_en  

137 

 
                                                 
Since the Association Agreement was provisionally applied, the value of imports and exports 
between the EU and  Lebanon has increased in  both  directions.  In 2002, the  year before the 
Association  Agreement  was  provisionally  applied,  the  value  of  trade  in  goods  was 
EUR 3.4 billion and by 2017 it was EUR 7.7 billion (an increase of 126%).  

The value of EU exports to Lebanon has risen by by 128% from EUR 3.2 billion in 2002 to 
EUR 7.3 billion in 2017, an all-time high. Since then they have held steady with slight year-
on-year  fluctuations.  Between  2016  and  2017,  EU  exports  increased  (9%)  rising  from 
EUR 6.6 billion in 2016 to EUR 7.2 billion in 2017. The most important groups for export by 
value  were  fuel  and  mining  products  (32%),  machinery  and  transport  equipment  (15.9%), 
agricultural and food products (14.5%), and chemicals (12.3%). The four largest exporters to 
Lebanon from the EU28 were Italy, Greece, Germany and France.  

The value of EU imports from  Lebanon has risen from less than EUR 0.2 billion in 2002 to 
EUR more  than  0.4 billion  in  2017.  The  value  of  imports  rose  year-on-year  up  to  2009 
(financial crisis), then recovered to exceed pre-crash levels before falling again from 2012 to 
2014, in part explained by the simultaneous decrease in the price of gold. Between 2016 and 
2017, EU imports increased (10%) going from EUR 413 million in 2016 to EUR 454 million 
in  2017.  The  most  important  groups  for  import  by  value  were  base  metals  (31.8%), 
agricultural  and  food  products  (21.8%),  and  semi-manufactured  products  (16.5%).  In  2016, 
the three largest importers from Lebanon within the EU were the Netherlands, Germany and 
France. 

2.2. 

Trade in agricultural goods  

Total trade in agricultural products between the EU and Lebanon increased by 129% between 
2003 and 2017, from EUR 0.5 billion in 2003 to EUR 1.1 billion in 2017. Between 2016 and 
2017, EU agricultural exports increased slightly (2%) going from EUR 1.02 billion in 2016 to 
EUR 1.04 billion in 2017. EU imports increased (4%) between 2016 and 2017, with imports 
going  from  EUR 99 million  in  2016  to  EUR 103 million  in  2017.  In  2017,  the  EU  mainly 
exported live animals (16%), cheese (8%), spirits and liqueurs (7%) and milk powder & whey 
(7%)  to  Lebanon.  The  EU's  key  agricultural  imports  from  Lebanon  were  preparations  of 
vegetables,  fruits  and nuts  (23%), offal, animals  fats  & other meats  (14%) and  raw tobacco 
(11%). 

138 

 
 
  
Regarding  agricultural  TRQs,  the  fill  rate  by  Lebanon  was  low  in  2017.  It  used  4%  of  the 
olive oil quota and 8% of its table grape quota, but less than one per cent of other quotas. 

2.3. 

Preference Utilisation rate  

In 2017 Lebanon’s PUR was 70%. In 2015 the EU’s preferential utilisation rate was 74%, the 
same figure as in 2014.  

2.4. 

Trade in Services and FDI94 

In 2016 trade in services between the EU and Lebanon was worth EUR 2.2 billion. In the last 
5  years, there has  been  an overall increase in  trade in  services in  both  directions but  with  a 
fluctuating  trend.  The  import  of  services  from  Lebanon  has  risen  from  EUR 0.9 billion  in 
2010 to EUR 1.1 billion in 2014 and then shrunken to EUR 0.9 billion in 2016, while the EU 
export of services has risen from EUR 1.2 billion in 2010 to EUR 1.9 billion in 2014 and then 
back to EUR 1.4 billion in 2016. The annual trade balance on services in the EU’s favour has 
increased from EUR 0.3 billion in 2010 to EUR 0.5 billion in 2016.  

According  to  the  Ministry  of  Economy  and  Trade,  in  2016  the  services  sector  represented 
around  69%  of  Lebanese  GDP  and  employed  more  than  76%  of  the  total  labour  force. The 
most prominent service sectors included trade (retailing and wholesale), construction, tourism, 
telecommunications and financial services. 

FDI EU28 with Lebanon (million EUR) 

Inward 
2015 
Stocks 
5 156 
1 285 
Flows 
Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 

2014 
3 776 
262 

2016 
5 515 
332 

2014 
1 399 
129 

Outward 
2015 

1 712 
86 

2016 
1 928 
128 

In  2016,  EU  FDI  stocks  in  Lebanon  amounted  to  EUR 1.9 billion  with  outward  FDI  stocks 
from  Lebanon  to  EU  accounting  for  EUR 5.5 billion  in  2016.  In  2016,  EU  FDI  flows 
accounted for EUR 128 million.  

According  to  The  World  Bank  Doing  Business  Index  2018  which  ranks  190  countries, 
Lebanon ranked 133rd in the world on the ease of doing business, with a distance to frontier 
(DTF)95 score of 54.67 out of 100 – a decrease of 0.1 in DTF score compared to 2017.  

3. 

ISSUES ADDRESSED IN THE ANNUAL JOINT COMMITTEE MEETINGS 

The EU-Lebanon Sub-Committee on Industry, Trade and Services met the last time on 7 
March  2018.  The  key  issues  discussed  were  the  need  to  further  increase  Lebanese  trade 
integration  with  the  EU  and  international  community  including  through  the  possible 
implementation  of  a  the  revised  PEM  rules,  Lebanese  accession  to  the  Agadir  Agreement96 
and the WTO membership bid – which the EU supports. Parties also discussed the EU support 

94  For more information see http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_111614.pdf  
95  The  DTF  score  is  a  measurement  used  by  the  World  Bank  to  assess  the  absolute  level  of  regulatory 

performance in economies over time.  

96  The Agadir Agreement  for establishing a Mediterranean Free Trade Area was signed on 25 February 2004 

and entered into force in 2007. Agadir member countries include Morocco, Tunisia, Egypt and Jordan. 

139 

 
  
  
  
  
  
  
                                                 
to  the  strengthening  of  Lebanese  capacity  in  key  sectors  that  were  identified  in  the  Joint 
Working Group on Trade and Investment97 of July 2017: pharmaceuticals products, agri-food 
and statistics. The EU also noted the obligation not to impose trade related measures without 
consultation  and required information  on a series of measures that could have an impact  on 
EU exports, notably additional duties on imports of wine and spirits and the exemption of oil 
from customs duties that has been suspended. Agricultural topics were also discussed: there 
were  exchange  views  on  latest  developments  in  Lebanese  and  EU  agricultural  and  rural 
development policies, the state of play regarding the review of the Lebanese draft law on GIs, 
organic farming and the technical assistance for increasing competitiveness of the agricultural 
and agro-food sectors.  

The Joint Working Group on Trade and Investment,  which reports to the Subcommittee 
on Trade, meets at a technical level at least three times a year98.  

The Sub-Committee took place in the framework of an ‘Economic Cluster’ which included, 
back-to-back:  the  Macro-Economic  dialogue  and  the  Subcommittee  on  other  economic-
related  areas.  The  latter  discussed  on  areas  of  mutual  economic  interest  such  as  the  EU 
External Investment Plan (EIP), Lebanon’s economic fragility brought about by slow growth, 
rising  public  debt  and  vulnerability  to  the  reforms  planned  within  the  framework  of  the 
presentation  of  Lebanon’s  Capital  Investment  Programme  (and  its  monitoring  mechanism), 
EU-Lebanon  cooperation  to  fulfil  climate  change  commitments  and  its  impact  on  economic 
growth  and  job  creation,  waste  management,  energy  and  other  issues.  The  CEDRE99 
conference  was  held  on  6  April  2018  in  Paris  where  international  donors  met  to  support 
Lebanese developments and reforms and the conference on Supporting the future of Syria and 
the region took place in Brussels on 24 and 25 April 2018. 

4. 

SPECIFIC AREAS OF IMPORTANCE 

The  protracted  Syrian  crisis  has  had  serious  consequences  for  Lebanon.  The  conflict  has 
exacerbated the security, political and economic issues facing the country. It has resulted in a 
decline  in  tourism,  (private)  investments  and  economic  activities.  This  has  culminated  in 
economic growth falling sharply from the 7%-9% growth rates experienced between 2008 and 
2010  to  1.5%  and  less  in  the  last  years;  the  lowest  growth  performance  since  the  2006 
conflict.  The  unstable  political  environment  (with  the  Presidential  election  of  2016)  and 
budgetary constraints (exacerbated by the high debt levels, currently at 144% of GDP) have 
made it difficult for the country to address issues such as poverty, unemployment and ‘brain 
drain’.  Furthermore,  Lebanon  is  characterised  by  regional  socio-economic  disparities  with 
almost 30% of the population living under the poverty line and 8% under the extreme poverty 
line.  The  numbers  of  Syrian  refugees  has  significantly  increased  in  2013-2014.  Refugees 
currently constitute about one third of the population and, while spread throughout the whole 
country,  the  highest  concentrations  are  in  Northern  Lebanon  and  in  the  Beqaa.  Lebanon  is 
seeking further support from the EU in order to boost the Lebanese economy and cope with 
the spill-over effects of the Syrian Crisis.  

97  For  more 

information  see  https://eeas.europa.eu/headquarters/headquarters-Homepage/26716/european-

union-and-lebanon-set-joint-working-group-trade-and-investment_en  

98  In 2017 it met in March, July and October. 
99  Conférence économique pour le développement, par les réformes et avec les entreprises 

140 

 
                                                 
Following the commitments undertaken by the EU and Lebanon in the Partnership Priorities 
and Compact to address the factors hindering trade towards the EU, a Joint Working Group 
(JWG) on Trade and Investment was set up with the aim to address the factors hindering trade 
with the EU and to help Lebanon to upgrade its local production standards (see in more 
detail section 3 above). In particular, the three meetings of the working group that have been 
held  so  far  (the  last  one  in  October  2017)  focused  on  sanitary  and  phyto-sanitary  standards 
(SPS)  and  pharmaceutical  issues,  in  view  of  upgrading  quality  standards  and  good 
manufacturing practices (GMPs) of the sector. Lebanon will also receive assistance under the 
TAIEX  program100.  In  addition,  there  are  a  number  of  trade  related  assistance  projects  to 
improve  the  trade  and  investment  climate.  For  example,  the  EU  is  currently  financing  a 
EUR 15 million  programme  on  improving  value  chains  in  agriculture  and  wood  processing, 
with  the  aim  to  improve  quality  of  Lebanese  products  and  boost  the  competitiveness  of  the 
targeted sectors.  

5. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

The  EU  and  Lebanon  are  committed  to  increase  the  dialogue  on  trade,  with  a  view  to 
identifying  pragmatic  solutions  to  help  Lebanon  to  take  advantage  of  trade  opportunities 
provided  by  the  Association  Agreement.  The  Joint  Working  Group  on  Trade  and 
Investment,  which  reports  to  the  Subcommittee  on  Trade  has  an  important  role  in  shaping 
future  assistance  and  advocates  for  strategic  trade  reforms  (horizontal  reforms  and  sector 
reforms, business climate, quality standards etc.). Specific issues addressed cover, but are not 
limited  to:  facilitating  exports  of  agri-food  and  industrial  goods  to  the  EU,  improving 
competitiveness  and  productivity  of  the  agri-food  sector  as  well  as  services,  statistics,  SPS, 
SMEs, business and investment climate. At the JWG of July 2017 the EU and Lebanon agreed 
to  set  up  an  Action  Plan  with  defined  milestones  for  establishing  a  Lebanese  food  safety 
system that complies with basic principles and international standards.  

Lebanon is still in the process of applying to the WTO. The EU will continue to support and 
encourage Lebanon towards WTO membership and membership of the Agadir Agreement.  

6. 

CONCLUSIONS AND OUTLOOK 

Overall  the  value  of  trade  between  the  EU  and  Lebanon  has  increased  since  the 
Association  Agreement  came  into  force.  This  is  true  in  both  directions.  Goods  continue  to 
account  for  the  majority  of  trade,  although  services  and  foreign  investment  are  also 
noteworthy. Despite the overall increase in the value of trade, the increase in pace of exports 
has been noteworthy and hence the overall trade balance has favoured the EU.  

Services  are  the  main  driver  of  Lebanon’s  economy.  Enhancing  the  competitiveness  of  the 
Lebanese  service  sector  could  lead  to  economic  growth  in  selected  sectors  of  strategic 
importance for the country. There is therefore untapped potential on services whose growth 
could have positive spill-over effects into other areas of the economy. At the same time, there 
are a number of ongoing issues which restrict trade and investment in  Lebanon and prevent 
her  taking  full  advantage  of  the  FTA.  In  this  regard,  there  will  be  further  work  on  helping 
Lebanon  reach  the  EU  standards,  for  example  on  SPS  and  Pharmaceutical  products.  The 
private sector, in particular SMEs, forms the cornerstone of the Lebanese economy and is the 

100  More information can be found here: https://ec.europa.eu/neighbourhood-enlargement/tenders/taiex_en  

141 

 
                                                 
main source of job creation in Lebanon. Despite its dynamism and high resilience, businesses 
suffer  from  an  inadequate  business  environment,  weak  infrastructure  (an  example  being  the 
unreliable provision of energy, whose system is in need of a reform) and a lack of structural 
reforms. In those areas as well, the EU is ready to support Lebanon. 

Lebanon  also  remains  constrained  by  the  spill-over  of  the  Syrian  conflict:  apart  from  the 
high number of Syrian migrants in the country, the crisis has closed traditional trade routes for 
both  Lebanese  imports  and  exports.  The  EU  and  Lebanon  continue  to  consider  further 
collaboration to ease the strain of the refugee crisis. 

142 

 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  
THE EU-MOROCCO ASSOCIATION AGREEMENT101 

1. 

INTRODUCTION 

The EU and Morocco established a Free Trade Area as part of the EU-Morocco Association 
Agreement,  signed  in  1996,  which  entered  into  force  on  1  March  2000.  The  Agreement 
provides  for  a  reciprocal  liberalisation  of  trade  in  goods,  with  elements  of  asymmetry  in 
favour of Morocco: since the day of entry into force of the Agreement, all industrial products 
covered  by  the  Agreement  could  be  exported  by  Morocco  to  the  EU  tariff-free,  while 
Morocco benefited from a transitional period of 12 years. The transitional period for Morocco 
to reduce its tariffs on industrial products to zero ended in March 2012. The EU and Morocco 
also  signed  an  agreement  on  additional  liberalisation  of  trade  in  agricultural  and  fisheries 
products,  which  came  into  force  in  2012.  Trade  for  industrial  products  is  now  entirely 
liberalised, while market opening for agricultural products is also substantial with only a few 
products subject to TRQs on each side. Negotiations for a DCFTA started in 2013.  

A  protocol  establishing  a  Dispute  Settlement  Mechanism  was  agreed  upon  by  the  EU  and 
Morocco, and came into force in 2012. Morocco also signed the Regional Convention on pan-
Euro-Mediterranean preferential rules of origin on 18 April 2012. The ratification process is 
still pending. The main objective of the Convention is to provide a more unified framework 
for origin protocols. 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in Goods 

In 2017, the EU was Morocco’s first partner for trade in goods, accounting for almost 60% of 
Morocco’s total trade. Other trading partners fell far behind the EU, such as China (6%), the 
United States  (6%), and Turkey (4%). Morocco is the EU’s 22nd largest  trading partner  and 
the first trading partner in the Euro-Mediterranean region. 

Trade  in  goods  between  the  EU  and  Morocco  has  increased  significantly  over  the  period 
since the Free Trade Area entered into force: trade flows have consistently grown since the 
entry  into  force  of  the  agreement  and  more  than  doubled  over  the  past  16  years,  from 
EUR 14.3 billion in 2002 to EUR 37.5 billion in 2017 (162%). Between 2016 and 2017, total 
trade increased by 8%, from EUR 34.7 billion in 2016 to EUR 37.5 billion in 2017. 

101  For more information see http://ec.europa.eu/trade/policy/countries-and-regions/countries/morocco/  

143 

 
                                                 
EU exports rose by 186% between 2002 and 2017, from EUR 7.8 billion to EUR 22.4 billion. 
Between  2016  and  2017,  EU  exports  increased  (7%)  from  EUR 20.9 billion  in  2016  to 
EUR 22.4 billion in 2017. In 2017, EU exports to Morocco were mainly made of machinery 
and transport equipment (37.7%), fuels and mineral products (13.7%) and textiles (8.1%). The 
three biggest EU exporters to Morocco were: Germany, France and Spain.  

EU imports increased by 133% between 2002 and 2017. Between 2016 and 2017, EU imports 
increased (9%) from EUR 13.7 billion in 2016 to EUR 15.0 billion in 2017. This tendency is 
particularly  reflected  for  industrial  products  and  manufactured  goods  (+121%),  with 
important progress also being made in terms of EU imports of Moroccan agricultural products 
(+150% between 2002 and 2017). In 2017, EU imports were made of machinery and transport 
equipment (40.4%), agricultural products (23.0%), and textiles (19.3%). The three biggest EU 
importers were: Spain, France and Italy. 

The agreement has proven mutually beneficial. While the first years of implementation of the 
EU-Morocco Free Trade Area led to an increasing trade surplus for the EU, this trend has now 
stabilised. 

2.2. 

Trade in agricultural goods 

Morocco is the largest exporter of vegetables to the EU.  Total trade in agricultural products 
between  the  EU  and  Morocco  increased  by  187%  between  2003  and  2017,  from 
EUR 1.3 billion in 2003 to EUR 3.7 billion in 2017. In 2017, Morocco was the EU’s biggest 
supplier of agricultural products among our Euromed partners. 

EU  agricultural  exports  decreased  by  10%  between  2016  and  2017,  going  from 
EUR 1.7 billion  in  2016  to  EUR 1.5 billion  in  2017.  Over  the  same  period,  EU  imports 
increased  by  15%  between  2016  and  2017,  going  from  EUR 1.9 billion  in  2016  to 
EUR 2.2 billion in 2017. 

Regarding  the  6  agricultural  TRQs  granted  by  the  EU  under  the  Association  Agreement, 
Morocco’s 2017 fill rate was high for a limited number of products such as tomatoes (100%) 
and courgettes (72%), intermediate for other products such as clementines (52%), cucumbers 
(40%)  or  strawberries  (25%).  The  utilisation  of  quota  for  garlic  remained  very  low  (1%), 
whilst the quota on chemically pure fructose remained unused by Morocco. 

144 

 
 
2.3. 

Preference Utilisation rate  

Morocco  had  an  average  utilisation  rate  of  preferences  of  97%  in  2017  for  all  goods, 
agricultural  and  non-agricultural  products.  No  data  was  available  to  calculate  the  PURs  for 
EU exports to Morocco.  

2.4. 

Trade in Services and FDI102 

Total trade in services between the EU and Morocco increased between 2010 and 2016, from 
EUR 7.5 billion  in  2010  to  EUR 8.8 billion  in  2016.  The  EU  is  Morocco’s  first  partner  for 
trade in services and investment. Moroccan exports of services to the EU have progressed by 
15% between 2010 and 2016 and EU exports of services to Morocco have increased by 19% 
over the same period. In 2016, the EU exported EUR 3.6 billion in services to Morocco and 
Morocco exported EUR 5.9 billion in services to the EU.  

FDI EU28 with Morocco (million EUR) 

2014 

Inward 
2015 

Stocks 
Flows 
Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 

966 
46 

955 
203 

2016 

574 
-303 

2014 
14 153 
-3 457 

Outward 
2015 
15 014 
791 

2016 
15 721 
639 

EU-Morocco  FDI  flows  remained  relatively  steady  between  2013  and  2016,  despite  some 
volatility,  resulting  in  the total  EU FDI stock of  EUR 15.7 billion in  Morocco  at  the  end of 
2016. More than 50% of FDI in Morocco comes from the EU, thanks to strong cooperation 
efforts between EU Member States and the Moroccan Government, quality of local facilities 
and infrastructure, and above all attractive conditions made available for investors, especially 
in  the  automotive,  aeronautics  and  the  electronics  sectors.  With  the  aim  of  improving  its 
attractiveness  for  investors,  in  2017  Morocco  merged  three  bodies  which  were  dealing  with 
investments (Agence Marocaine de Dévelopement des Investissements – AMDI, the Centre Marocain 
de  Promotion  des  Exportations  –  CPME  and  the  Office  des  Foires  et  Expositions  de  Casablanca  – 
OFEC)  into  a  single  institution:  the  Agence  Marocaine  de    Développement  des  Investissements    – 
AMDI). Morocco currently ranks 69th out of 190 in the World Bank ranking ‘Doing Business 
2018’  with  a  distance  to  frontier  (DTF)103  score  of  67.9  out  of  100  –  a  decrease  of  0.03  in 
DTF  score  compared  to  2017.  These  positive  developments  efficiently  mitigated  more 
contrasted results in traditional sectors (textiles, clothing, and tourism). 

3. 

ISSUES ADDRESSED IN THE JOINT COMMITTEE MEETINGS 

The  last  Sub-Committee  on  Industry,  Trade,  and  Services  was  held  in  December  2013  and 
both  the  last  Sub-Committee  on  Agricultural  and  Fisheries  Products  and  the  last  Sub-
Committee on Customs Cooperation took place in 2015. Committees did not meet since then.  

102  For more information see http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_111609.pdf  
103  The  DTF  score  is  a  measurement  used  by  the  World  Bank  to  assess  the  absolute  score  of  regulatory 

performance in economies over time.  

145 

 
  
  
  
  
  
  
                                                 
4. 

SPECIFIC AREAS OF IMPORTANCE 

After  a  relative  slowdown  in  2016,  Morocco’s  economic  indicators  are  rather  positive  for 
2017,  driven  by  growing  exports  and  a  strong  agricultural  season104  and  moderate 
improvements  in  non-agricultural  activities,  including  private  consumption  as  main  growth 
driver  on  the  demand  side.  The  economic  expansion  in  2017  was  also  supported  by  the 
continuation of sound macroeconomic policies, while external vulnerabilities abated driven by 
strong  export  growth.  According  to  IMF  data,  the  Moroccan  economy  grew  by  4.2%  in 
2017105, notably thanks to the recovery of Morocco’s main trade partners, including the EU. 
Morocco  also  benefited  from  the  good  economic  performance  of  new  industrial  sectors 
(automobile,  aeronautics,  and  electronics).  Such  sectors  have  enjoyed  a  fast-paced 
development  in  recent  years,  driven  by  the  investment-friendly  industrial  policy  adopted  by 
the Moroccan government, which resulted in the country considerably improving its business 
climate.  

The  EU  is  providing  support  to  Morocco  through  several  programmes.  The  programme 
‘Réussir le statut avancé’ (RSA I and II)106 supports Morocco’s efforts in terms of legislative 
convergence  with  the  EU  acquis,  in  particular  in  areas  which  will  be  targeted  by  the  future 
DCFTA and ACAA (e.g. electrical appliances, toys, machinery, construction products, etc.). 
In November 2016, the EU and Morocco launched a cooperation programme on sustainable 
growth,  in  cooperation  with  several  other  actors  (e.g.  European  Investment  Bank,  European 
Bank  for  Reconstruction  and  Development  EBRD).  The  programme  will  provide  important 
financial support, distributed according to three objectives: (1) enhancing the competitiveness 
of  Moroccan  companies  in  accordance  with  the  industrial  strategy  set  forth  by  Moroccan 
authorities  for  2014-2020,  (2)  strengthening  Moroccan  export  capacities  to  ensure  a  better 
access to the European market, and (3) fostering the transition towards a low-carbon economy 
by supporting the implementation of the Moroccan strategy for sustainable development. The 
ultimate goal is to prepare Morocco’s economy for the future DCFTA. 

5. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

In recent  years, Moroccan authorities have adopted some  more restrictive trade measures. 
The  new  Foreign  Trade  Law  dedicates  12  articles  out  of  34  to  the  protection  of  national 
production.  Public  procurement  procedures  have  been  modified  so  as  to  increase  the 
percentage  of  local  component  required  to  apply  for  tender  (notably  as  regards  renewable 
energies).  Since  July  2016,  EU  companies  and  Moroccan  importers  reported  an  increasing 
number of administrative procedures limiting effective market access in Morocco, notably in 
the  sector  of  car  parts.  The  EU  is  currently  addressing  this  issue  through  informal  bilateral 
dialogue with Moroccan authorities, waiting for regular bilateral trade-related work to resume. 

On 10 December 2015, the General Court issued a ruling that annulled the Council Decision 
2012/497/EU of 8 March 2012 on the conclusion of an Agreement in the form of an Exchange 
of Letters between the European Union and the Kingdom of Morocco concerning reciprocal 
liberalisation  measures  on  agricultural  products,  processed  agricultural  products,  fish  and 

104  For  more  information  see  http://www.worldbank.org/en/country/morocco/publication/economic-outlook-

april-2017  

105 For more information see http://www.imf.org/en/Countries/MAR  
106  See http://europa.eu/rapid/press-release_MEMO-13-1029_en.htm  

146 

 
                                                 
fishery  products.  The  subsequent  appeal  ruling  by  the  European  Court  of  Justice  (ECJ)107 
established  that  the  EU-Morocco  Association  Agreement  and  its  protocols  on  additional 
liberalisation  of  trade  in  agricultural  and  fisheries  products  are  not  applicable  to  Western 
Sahara.  HR/VP  Mogherini  and  Moroccan  Foreign  Minister  Nasser  Bourita  in  their  joint 
statement took note and expressed their willingness to negotiate the necessary instruments in 
relation to the fisheries partnership. 

These ruling have affected the work of the Trade Sub-Committee and other bodies established 
under the Agreement, which have not met in the past two years; and it has also slowed down 
the ratification of the Agreement for the Protection of GIs, which is still pending. Following 
the ruling Morocco has also put on hold the negotiations for a DCFTA, launched on 1 March 
2013,  following  Morocco’s  request  for  a  pause  aimed  at  enabling  Moroccan  authorities  to 
carry out impact assessment studies as well as further internal consultations with stake holders 
before a future round. The results of these studies have not yet been made public by Morocco. 

More  recently,  in  February  2018,  in  another  case108  the  Court  ruled  that  the  EU-Morocco 
Fisheries Agreement and its Protocol on fishing opportunities and financial contributions109 do 
not apply to the waters off the coast of the territory of Western Sahara.  

To remedy the situation, following the mandate of the Council of the EU and in accordance 
with the rulings of the European Court of Justice, the EU pro-actively engaged in negotiations 
with  Morocco  in  order  to  amend  the  relevant  protocols  of  the  EU-Morocco  Association 
Agreement  to  create  the  legal  basis  for  granting  the  tariff  preferences  laid  down  in  the 
Association Agreement to products originating in Western Sahara.  

6. 

CONCLUSIONS AND OUTLOOK 

The overall impact of the Free Trade Area on EU-Morocco trade has been positive, bringing 
both economies closer and rapidly intensifying exchanges in goods. As a result, the EU is the 
leading trade partner of Morocco today, accounting for over 50% of total Moroccan trade. 

It will be important to resume negotiations for a DCFTA as soon as possible. The DCFTA 
holds promise as it would both expand the existing free trade area into new areas as well as 
deepening it in a number of areas that are already included but in a relatively superficial way. 
Negotiations  are  meant  to  cover  areas  such  as  access  to  public  procurement,  disciplines  on 
non-tariff measures, harmonization of standards and regulations towards the EU acquis, SPS 
measures, intellectual property rights, consumer protection, competition, investment, trade in 
services and sustainable development. 

The  protocols  between  the  EU  and  Morocco,  allowing  both  parties  to  pursue  bilateral 
relations  in  the  fisheries  sector,  started  in  1986  with  the  signature  of  a  first  agreement  and 
continued, after interruption, during the conclusion of a second agreement in 2015. The last 

107  Judgment of 21 December 2016 in Case C-104/16 P Council v Polisario 
108  Judgment  of  27  February  2018  in  Case  C-266/16  The  Queen,  on  the  application  of  Western  Sahara 
Campaign  UK  vs.  Commissioners  for  Her  Majesty's  Revenue  and  Customs  and  Secretary  of  State  for 
Environment, Food and Rural Affairs. 

109  Protocol between the European Union and the Kingdom of Morocco setting out the fishing opportunities and 
financial contribution provided for in the Fisheries Partnership Agreement between the European Union and 
the Kingdom of Morocco. 

147 

 
                                                 
Protocol concerns the access of up to 126 EU vessels to Morocco’s fishing zone operating in 
six different fishing categories and targeting pelagic and demersal species. It expired in July 
2018.  The  revised  negotiating  directives  for  both  the  Fisheries  agreement  and  its  protocol 
were  approved  on  16th  April  2018.  Negotiations  of  a  revised  Fisheries  agreement  and  the 
renewal  of  its  Protocol  started  right  afterwards  and  were  concluded  in  late  July  2018. 
Approval by the Council of the EU and the European Parliament is pending.  

148 

 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  
THE EU-PALESTINE INTERIM ASSOCIATION AGREEMENT110 

1. 

INTRODUCTION 

The  Interim  Association  Agreement  creating  a  Free  Trade  Area  between  the  EU  and 
Palestine111 (hereinafter called ‘the Interim Agreement’) was signed in 1997 and entered into 
force on 1 July 1997. The Interim Agreement liberalised two-way trade in industrial goods by 
providing duty-free and quota-free access for industrial goods traded in both directions, with . 
some limited liberalisation of agricultural products by both parties. This was an asymmetrical 
liberalisation to the extent that the EU dismantled its tariffs on the first day of the agreement 
while Palestine had a phased reduction of tariffs. The Agreement was first  updated in  2005 
before a more significant update was signed in 2011 to further liberalise trade in agricultural, 
processed agricultural products (PAPs), fish and fishery products. The EU removed all tariffs 
and quotas on agricultural  products  and PAPs  imported into the Community  for a period of 
ten years, which is renewable. Palestine continues to maintain a number of tariffs and quotas 
on selected agricultural and PAPs products.  

Products from  Israeli settlements in Palestinian  territory do not benefit from the preferential 
tariff agreement under the EU-Palestine or EU-Israel Association Agreement. 

Palestine  is  a  member  of  the  Regional  Convention  on  pan-Euro-Mediterranean  preferential 
rules  of  origin  (PEM  Convention)112,  which  it  signed  in  2013  and  notified  the  EU  of  its 
ratification  in  2014.  The  main  objective  of  the  Convention  is  to  provide  a  more  unified 
framework for origin protocols. 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in Goods 

In 2017 the EU was Palestine’s second largest trade partner behind Israel, representing 11% 
of its total trade. The EU was the second largest exporter into Palestine behind Israel with a 
12% market share.  It  was  Palestine’s fourth largest  export market  behind  Israel,  Jordan  and 
UAE, representing 2% of Palestine’s exports. 

The  value  of  trade  between  the  EU  and  Palestine  has  increased  since  the  Association 
Agreement  came into force. Since 2002, the first  year for  which data is  available, there has 
been  an  overall  growth  in  trade  in  goods  in  both  directions.  In  2002  the  value  of  trade  in 
goods was EUR 41 million and in 2017 it was EUR 278 million.  

It  should  be  noted  that  the  value  of  EU  exports  to  Palestine  has  increased  more  than  in  the 
other direction. This has deepened Palestine’s trade deficit with the EU over the same period. 
Palestinian exports remained largely at that same level despite full preferential market access 

110  For more information see http://ec.europa.eu/trade/policy/countries-and-regions/countries/palestine/  
111  This designation shall not be construed as recognition of a State of Palestine and is without prejudice to the 

individual positions of EU Member States on this issue 

112  More  information  can  be  found  at:  https://ec.europa.eu/taxation_customs/business/calculation-customs-
duties/rules-origin/general-aspects-preferential-origin/arrangements-list/paneuromediterranean-cumulation-
pem-convention_en  

149 

 
                                                 
to  the  EU  market.  This  is  largely  due  to  obstacles  facing  Palestinian  trade,  as  well  as 
competitivity issues and the Palestinian difficulty in meeting EU standards, including SPS and 
technical standards.  

The  value  of  EU  exports  to  Palestine  has  risen  from  EUR 33 million  in  2002  to 
EUR 262 million in 2017 (an increase of almost 700%). Between 2002 and 2009 EU exports 
to Palestine showed year on year variations but have grown steadily year on year since 2010. 
EU exports increased (3%) between 2016 and 2017, rising from EUR 254 million in 2016 to 
EUR 262 million  in  2017.  The  main  export  markets  are  machinery  and  transport  equipment 
(52.6%),  agricultural  products  (22.9%)  and  chemicals  (10.5%).  In  2017  the  three  largest 
exporters to Palestine from the EU were Germany, Italy and Spain.  

The  value  of  EU  imports  from  Palestine  has  risen  from  less  than  EUR 8 million  in  2002  to 
almost EUR 16 million in 2017, which represents an increase of 105%.. Within the lifespan of 
the agreement however the value of imports has fluctuated. In 2009 it reached an all-time low 
of EUR 6 million before demonstrating remarkable recovery in 2010 to reach an all-time high 
of EUR 35 million. It has since fallen and fluctuated year on  year. Between 2016 and 2017, 
EU  imports  decreased  (-12%)  from  EUR 18 million  in  2016  to  EUR 16 million  in  2017.  In 
2017  the  most  important  import  sectors  were  agricultural  products  (82.3%)  and  chemicals 
(12.3%). In 2016 the three largest importers of products from Palestine among the EU were 
the United Kingdom, France and the Netherlands. 

2.2. 

Trade in agricultural goods 

Total trade in agricultural products between the EU and Palestine increased by 812% between 
2003 and 2017, from EUR 8 million in 2003 to EUR 73 million in 2017. EU exports remained 
the  same  between  2016  and  2017,  accounting  for  EUR 60 million.  EU  imports  decreased  (-
8%)  between  2016  and  2017,  falling  from  EUR 14 million  in  2016  to  EUR 13 million  in 
2017. 

In  2017,  agricultural  products  represented  the  majority  of  EU  imports  from  Palestine, 
accounting  for  EUR 13 million  (82.3%)  of  the  EU's  total  imports  from  Palestine.  Palestine 
exports  a  limited  number  of  agricultural  products  including:  tropical  fruit,  nuts  and  spices, 
bulbs, roots, live plants, vegetables and olive oil. Overall the level of Palestinian agricultural 
exports  has  grown  since  the  Agricultural  Agreement  of  2012,  rising  from  EUR 9 million  in 
2011  to  its  current  value.  The  biggest  increase  has  been  in  olive  oil  which  has  risen  from 
EUR 1 million  to EUR 4 million  in the same period, with  a peak of EUR 5 million  in 2015. 

150 

 
 
Export levels of vegetables, bulbs, roots and live plants have remained relatively static over 
the same period and even fell slightly in the last year. The EU exported mainly preparations of 
cereals,  flour  &  starch,  followed  by  cocoa  &  cocoa  preparations  and  dairy  produce  to 
Palestine. 

2.3. 

Preference Utilisation rate  

In 2017 Palestine’s PUR was 77%. The EU’s preferential utilisation rate for the same year is 
not available.  

2.4. 

Trade in Services and FDI113 

In 2016 trade in services between the EU and Palestine was worth EUR 170 million which 
represents  a  62%  increase  on  EUR 92 million  in  2010.  There  have  been  year-on-year 
fluctuations in the value of services imported from Palestine which declined slightly overall 
between  2011  and  2015.  In  2016,  EU  imports  from  Palestine  reached  a  high  of 
EUR 95 million.With  the  exception  of  2012,  there  has  been  a  year-on-year  increase  in 
services exported to Palestine which in 2016 stood at EUR 75 million. 

FDI EU28 with Occupied Palestinian Territory (million EUR) 

Stocks 
13 
3 
Flows 
Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 

Inward 
2015 

2016 
15 
1 

2014 
16 
0 

Outward 
2015 

17 
0 

2016 
23 
1 

2014 
5 
0 

In  2016,  EU  FDI  stocks  in  Palestine  amounted  to  EUR 23 million,  an  increase  from 
EUR 15 million in 2013. In 2016, EU FDI flows accounted for EUR 1 million.  

According  to  the  World  Bank  2018  "Ease  of  Doing  Business"  index  which  ranks  190 
countries, Palestine ranked 114th in the World for overall ease of doing business, up from the 
144th position in 2017. The distance to frontier (DTF)114 score is 58.7 out of 100 – an increase 
of 3.8 in DTF score compared to 2017. This improvement is also due to the 2017 regarding 
the  Secured  Transaction  Law,  the  Registry  of  Interest  in  Movable  Assets  and  the  E-
Transaction Law which were enacted in 2017. 

3. 

ISSUES  ADDRESSED  IN  THE  ANNUAL  (JOINT  COMMITTEE/TRADE  COMMITTEE) 
MEETING 

The two most recent meetings of the EU-Palestinian Sub-committee on Trade and Internal 
Market, Industry, Agriculture and Fisheries, and Customs took place in May 2017 and in 
September 2018. On trade, it was recognised that the Association Agreement had not reached 
its full potential due to external issues. On wider trade matters, the EU reiterated its support 
for  Palestine  to  have  observer  status  at  the  WTO  –  and  inquired  about  concrete  steps  for 
Palestine’s  accession  to  the  Agadir  Agreement115  and  to  materialise  this  in  practice.  A 

113  For more information see http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113074.pdf  
114  The  DTF  score  is  a  measurement  used  by  the  World  Bank  to  assess  the  absolute  score  of  regulatory 

performance in economies over time.  

115  The Agadir Agreement for establishing a Mediterranean Free Trade Area was signed on 25 February  2004 
and entered into force in 2007. Agadir member countries include Morocco, Tunisia, Egypt and Jordan.  

151 

 
  
  
  
  
  
  
                                                 
possible  negotiation  in  view  of  an  Agreement  on  Conformity  Assessment  and  Acceptance 
(ACAA)  was  also  discussed  where  Palestine  is  focused  on  construction  material  and 
pharmaceuticals.  Agriculture  and  SPS  issues  were  also  raised,  with  the  EU  encouraging 
Palestine  to  diversify  exports.  Customs  issues  were  discussed  with  Palestine  providing 
updates on customs procedures and ongoing reforms.  

4. 

SPECIFIC AREAS OF IMPORTANCE 

The expansion of Palestinian trade is largely influenced by its relationship with Israel. Several 
reports  have  identified  a  number  of  key  trade  barriers  including  Israeli  control  over 
Palestinian  trade  routes,  internal  restrictions  on  the  movement  of  people  and  goods  by 
physical  barriers  (such  as  checkpoints)  and  the  cost  of  bureaucratic  process  –  including 
transaction costs imposed at Israeli checkpoints. Such restrictions contribute to the increased 
dependency  of  the  Palestinian  economy  on  Israel  which  in  2015  accounted  for  55%  of 
Palestinian  imports  and  absorbed  86%  of  Palestinian  exports.  The  reactivation  of  the  Joint 
Economy Committee in charge of follow-up of the Paris Protocol that has not met since 2009 
would be an important step in achieving progress.  

In order to assess the usefulness and feasibility of Agreements on Conformity Assessment and 
Acceptance of Industrial Products (ACAAs)116 with Palestine, further analysis is needed in the 
sectors  of  interest  (pharmaceuticals  and  construction):  a  gap  analysis  in  those  two  sectors 
would help to establish whether an ACAA is desirable and if further support to improve the 
quality of infrastructure will be needed. 

Trade-related  support  to  Palestine  includes  the  EU-funded  project  on  ‘EU  Support  to  the 
Ministry of National Economy for trade policy formulation and WTO accession 2015-2017’. 
The  project  supported  Palestinian  WTO  accession  Agenda  with  the  provision  of  technical 
assistance  to  align  policies,  legislation  and  trade  agreements  with  WTO  requirements. 
Furthermore,  the  EU  financed  the  National  Export  Strategy,  formulated  by  the  Palestinian 
Authority  and  Paltrade,  which  identified  12  potential  export  growth  sectors.  An  action  plan 
was rolled out mapping the specific activities needed for its implementation. The EU also co-
funds, together with certain EU Member States, projects supporting the implementation of the 
National Export Strategy and local entrepeneurship. The EU supported the implementation of 
the  Asycuda  customs  management  information  system,  in  cooperation  with  UNCTAD,  and 
reinforced Palestinian readiness for border management with a project running from 2007 and 
2011 and a Twinning between an EU Member States’ Customs and the Palestinian Customs 
on valuation and revenue collection is under preparation and should start in 2018. 

5. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

There  are  preliminary  discussions  between  the  EU  and  Palestine  to  upgrade  the  interim 
Association Agreement to a full Association Agreement.  

116  An ACAA is an ambitious instrument, which facilitates access to the market for industrial products covered 
allowing  them  to  enter  the  EU  without  further  testing  or  certification  and  move  freely  in  the  27  Member 
States  and  vice  versa.  As  part  of  the  preparations  for  negotiating  such  an  agreement,  the  partner  countries 
need  to  overhaul  their  quality  systems  for  industrial  products.  This  includes  a  gradual  approximation  of 
technical  regulations,  standards  and  procedures  for  conformity  assessment  in  the  priority  sectors  and  the 
upgrading of infrastructure for standardisation, accreditation, conformity assessment, metrology and market 
surveillance. 

152 

 
                                                 
The ongoing situation with Israel remains a key factor in EU-Palestinian trade. The Union for 
Mediterranean Trade Ministerial in 2010 adopted a package of measures to facilitate trade 
of  Palestinian  products  with  other  Euro-Mediterranean  partners  on  a  bilateral  and  regional 
basis  and  was  followed  by  an  informal  Trade  Trilateral  Working  Group  (European 
Commission,  Israel  and  Palestine).  It  is  planned  to  continue  this  work  to  facilitate  trade  of 
Palestinian products.  

In March 2018 at the Union for the Mediterranean (UfM) Trade Ministerial Conference, the 
EU  presented  a  Technical  Program  Report  on  the  implementation  of  the  2010  Package  of 
Measures.  Ministers  called  for  rapid  and  substantial  progress  in  the  implementation  of  the 
2010  Package  of  measures  to  facilitate  trade  of  Palestinian  products  with  other  Euro-
Mediterranean  partners.  Ministers  thanked  the  European  Union  for  preparing  a  Technical 
Progress  Report117  and  noted  that  the  EU  shall  prepare  updates  of  this  report  working  for 
concrete actions taken to facilitate Palestinian trade, including a report to be presented at the 
2019 Ministerial Conference. 

6. 

CONCLUSIONS AND OUTLOOK 

Overall the value of trade between the EU and Palestine has increased during the Association 
Agreement.  Trade  flows  are  however  uneven.  The  trade  balance  continues  to  increase  in 
favour  of  the  EU  as  the  value  of  Palestinian  exports  to  the  EU  remains  negligible.  The 
continuation of the trade restrictions applied by Israel  remains a key issue in EU-Palestinian 
trade relations and continues to  be addressed in the trade discussions with both  parties.  The 
EU continues to promote the usefulness of trilateral discussions on trade to facilitate progress 
and will continue to engage with both sides to remove the obstacles to Palestinian trade. 

117  For more information see http://trade.ec.europa.eu/doclib/docs/2018/june/tradoc_156946.pdf 

153 

 
                                                 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  
THE EU-TUNISIA ASSOCIATION AGREEMENT118 

1. 

INTRODUCTION 

The  EU  and  Tunisia  established  a  Free  Trade  Area  as  part  of  the  EU-Tunisia  Association 
Agreement, signed on 17 July 1995 and entered into force on 1 March 1998. The Free Trade 
Area provided for a reciprocal liberalisation of trade in goods, with elements of asymmetry in 
favour of Tunisia: since the day of entry into force of the Agreement, all industrial products 
covered by the Agreement could be exported by Tunisia to the EU tariff-free, while Tunisia 
benefited from a transitional period of 12 years. Tunisia started implementing the agreement 
in 1996, i.e. 2 years before its official entry into force, and all tariffs and non-tariff measures 
mentioned  in  the  Association  Agreement  were  entirely  dismantled  by  2008:  so  the  EU-
Tunisia  free  trade  area  was  even  fully  implemented  two  years  ahead  of  schedule.  Trade  of 
industrial  products  is  entirely  liberalised,  while  market  opening  of  agricultural  products  has 
been more limited. As regards fisheries products, the EU has opened its market (with only one 
product  subject  to  TRQs)  while  the  Tunisian  market  remains  closed.  The  EU  and  Tunisia 
signed  a  protocol  establishing  a  Dispute  Settlement  Mechanism,  which  came  into  force  in 
2011. 

The Regional Convention on Pan-Euro-Mediterranean preferential rules of origin was signed 
by  Tunisia  on  16  January  2013  and  notified  on  1  January  2015.  The  Convention  seeks  to 
provide a more unified framework for origin protocols. 

Negotiations for a DCFTA have started in 2015. 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in Goods 

The EU is Tunisia’s main trading partner and Tunisia is the 34th trade partner for the EU – 4th 
in  the  Euromed  region.  In  2016,  the  EU  accounted  for  73.7%  of  Tunisian  total  exports  of 

118  For more information see http://ec.europa.eu/trade/policy/countries-and-regions/countries/tunisia/  

154 

 
 
                                                 
goods, and 53.1% of its total imports119. In 2017 the EU accounted for 64% of Tunisia’s total 
trade.  The  EU  was  the  1st  importer  into  Tunisia  with  a  54.3%  market  share  and  was  also 
Tunisia’s largest export market with a 78.5% market share.  

Trade in goods between the EU and Tunisia has increased significantly over the period since 
the Agreement entered into force: between 2002 and 2017, the total trade in goods increased 
by 47%, from EUR 13.9 billion in 2002 to EUR 20.5 billion in 2017. 

(5%),  with  exports 

EU  exports  rose  by  45%  between  2002  and  2017.  Between  2016  and  2017,  EU  exports 
increased 
to 
EUR 10.5 billion in 2016. In 2017, EU exported machinery and transport equipment (35.1%), 
textiles and clothing (12.3%), and fuels and mining products (11.6%). The three biggest EU 
exporters were: France, Italy, and Germany. 

reaching  EUR 11.1 billion 

in  2017  compared 

EU  imports  rose  by  52%  between  2002  and  2017.  EU  imports  increased  (1%)  slightly 
between  2016  and  2017,  with  imports  reaching  EUR 9.4 billion  in  2017  compared  to 
EUR 9.3 billion  in  2016.  A  closer  look  at  EU-Tunisia  trade  trends  shows  that  Tunisia’s 
exports of non-fuel industrial products (machinery, transport equipment, textiles and clothing) 
increased steadily over the period, while the export of agricultural products has remained at a 
comparatively low level  even if it more than tripled since 2002 . In 2017, EU imports were 
made  of  machinery  and  transport  equipment  (41.3%),  textiles  and  clothing  (23.7%),  and 
agricultural  products  (6.1%).  The  three  biggest  EU  importers  were:  France,  Italy,  and 
Germany. 

Overall, the agreement has proven mutually beneficial. Tunisia’s trade deficit (of EUR) with 
the  EU  is  relatively  small  when  compared  to  the  one  Tunisia  has  with  China,  Russia  or 
Turkey  –  two  countries  which  make  up  for  a  far  smaller  share  of  Tunisia’s  total  trade. 
Following a dip in 2008 due to the financial crisis, trade flows between the EU and Tunisia 
appear  to  have  reached  a  plateau  since  2011.  Negatively  impacted  by  growing  economic 
difficulties faced by Tunisia, the total trade even decreased by 1.3% between 2014 and 2015 
and  by  2.3%  between  2015  and  2016,  mainly  driven  by  decreasing  EU  exports  due  to  the 
economic  crisis  while  Tunisian  export  to  the  EU  remained  stable.  Ongoing  negotiations  for 
the DCFTA therefore aim at making room for further progress in trade between the EU and 
Tunisia, including further liberalising agricultural and fishery trade, two areas only covered in 
a limited way by the current Agreement. 

2.2. 

Trade in agricultural goods 

Total  trade  in  agricultural  products  between  the  EU  and  Tunsia  increased  by  97%  between 
2003  and  2017,  from  EUR 0.5 billion  in  2003  to  EUR 1.0 billion  in  2017.  EU  agricultural 
exports  decreased  (-12%),  going  from  EUR 0.6 billion  in  2016  to  EUR 0.5 billion  in  2017. 
EU imports also decreased (-6%) from EUR 489 million in 2016 to EUR 458 million in 2017. 

Regarding agricultural TRQs, imports of olive oil from Tunisia almost filled the quota set out 
in  the  bilateral  agreement,  reaching  as  much  as  98.75%  of  the  56 700 tons  availalable 
(however,  the  additional  quota  of  35 000 tons  unilaterally  granted  by  the  EU  for  2016  and 
2017  upon  Tunisia’s  request  was  not  utilised  in  2017,  due  to  a  low  production  during  the 
2016/2017 campaign). The utilisation rate was intermediate for other products such as sweet 
oranges  (41%,)  but  remained  low  for  prepared  tomatoes  (6%),  wine  (6%),  or  cut  flowers 
(0.2%). 

119  Institut National de Statistiques Tunisien, 2017. 

155 

 
                                                 
2.3. 

Preference Utilisation rate  

Tunisia  had  an  average  utilisation  rate  of  preferences  for  all  goods,  agricultural  and  non-
agricultural  products,  of  94%  in  2017.  Data  to  calculate  the  PUR  on  EU  exports  was  not 
available.   

2.4. 

Trade in Services and Investment120 

The total trade in services between the EU and Tunisia decreased between 2010 and 2016, 
from  EUR 5.9 billion  in  2010  to  EUR 4.7 billion  in  2016,  mainly  owing  to  the  weak 
performance  of  the  tourism  sector,  mostly  due  to  security  issues.  Both  Tunisia  and  the  EU 
suffered  from  this  decrease,  with  Tunisian  exports  of  services  to  the  EU  falling  by  23% 
between 2010 and 2016 and EU exports of services to Tunisia falling by 17% over the same 
period.  In  2016,  the  EU  exported  EUR 1.4 billion  in  services  to  Tunisia  compared  to 
EUR 1.3 billion in 2015 and Tunisia exported EUR 3.3 billion in services to the EU compared 
to EUR 3.2 billion in 2015.  

FDI EU28 with Tunisia (million EUR) 

252 
Stocks 
-32 
Flows 
Source: Trade G2 Statistics/ISDB from Eurostat BOP statistics 

Inward 
2015 

2016 
253 
-30 

2014 
4 305 
764 

Outward 
2015 

4 299 
693 

2016 
4 380 
747 

2014 
248 
-25 

FDI  flows  remained  relatively  steady  between  2013  and  2016,  despite  a  slowdown  of  EU 
foreign  investment  in  Tunisia,  resulting  in  the  total  EU  FDI  stock  of  EUR 4.9 billion  in 
Tunisia at the end of 2016. The EU remains the first foreign investor in Tunisia, accounting 
for  over  85%  of  FDIs  entering  the  country.  In  2015,  3 100  EU  companies  were  present  in 
Tunisia, employing around 327 000 persons.121 

The  business  environment  was  affected  by  the  instability  prevailing  after  the  2011  Arab 
Spring Revolution, even though Tunisia enacted a new Investment Law in 2017, which also 
led to the establishment of a Tunisian Investment Authority in 2018. Tunisia remained ranked 
at  88th  out  of  190  in  the  Doing  Business  2018  ranking,  with  a  distance  to  frontier  (DTF)122 
score of 63.6 out of 100 – a decrease of 0.2 in DTF score compared to 2017. 

3. 

ISSUES ADDRESSED IN THE JOINT COMMITTEE MEETINGS 

The  Sub-Committee  on  Agricultural  and  Fisheries  Products  met  in  December  2017. 
Tunisia  and  the  EU  exchanged  trade  statistics  on  bilateral  trade  in  agricultural  and  fishery 
products and updated each other on their agricultural and fishery policies. Tunisia expressed 
the wish  for cooperation between the EU and Tunisia on quality policies, notably  regarding 
organic agriculture and GIs. Both Parties discussed Tunisian requests for a reintegration to the 
Generalized System of Preferences, an additional olive oil quota and a possibility to renew a 
quota for eels. The EU raised several self-contained SPS issues, notably regarding the exports 
of  apples,  live  plants,  and  poultry  products  from  the  EU  to  Tunisia.  Tunisia  touched  on  the 

120  For more information see http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_111593.pdf  
121  Tunisian Foreign Investment Promotion Agency, 2017 
122  The  DTF  score  is  a  measurement  used  by  the  World  Bank  to  assess  the  absolute  level  of  regulatory 

performance in economies over time.  

156 

 
  
  
  
  
  
  
                                                 
issue  of  its  fishery  products  returned  by  the  EU  and  inquired  about  a  possibility  to  export 
dairy  products  to  the  EU.  The  EU  raised  concerns  about  the  increase  of  customs  duties  on 
some agricultural products and import restrictions on red meat and live animals.  

The Sub-Committee on Customs Cooperation and Taxation met in February 2017. Several 
issues  were  discussed,  among  which 
the  Tunisian  customs 
administration,  the  evolution  of  the  legislation  of  both  parties  since  the  previous  meeting, 
border  management  (especially  the  challenge  met  by  Tunisian  customs  at  the  border  with 
Libya),  preferential  origin  including  a  state  of  play  of  the  revision  of  the  pan-euro-
Mediterranean preferential rules of origin and the reform of the taxation rules. In general, both 
Parties  agreed  on  the  need  to  support  Tunisian  customs  in  preparing  projects  relating  to 
customs legislation and operational questions as well as modernisation.  

the  modernisation  of 

The Sub-Committee on Industry, Trade, and Services did not meet in 2017.  

4. 

SPECIFIC AREAS OF IMPORTANCE 

The economic situation of Tunisia is fragile. Multiple shocks, including the fall in EU demand 
for  Tunisian  products  because  of  the  economic  crisis  and  the  2011  Revolution  and  the 
political transition that ensued, have resulted in a sharp drop in growth, a deterioration of the 
balance of payments, increasing unemployment and poverty, and a growing informal sector. 
To ensure this fragility does not compromise the democratic transition unfolding in Tunisia, 
the EU provides sizable support to Tunisian authorities, and has stepped up its political and 
financial support considerably since 2011. Also following the terrorist attacks in 2015, the EU 
under  an  emergency  autonomous  trade  measure  granted  additional  olive  oil  quota  of 
35 000 tons/year for 2016 and 2017, adding to the existing quota of 56 700 tons.  

Tunisia benefits from a ‘special relationship’ with the EU, which since 2012 takes the shape 
of a ‘Privileged Partnership’ detailed in an ambitious ENP (European Neighborhood Policy) 
Action Plan. Additionally, and in complement to external support from the IMF, Tunisia has 
benefitted from a first Macro-Financial Assistance (MFA) operation between 2014 and 2017, 
and  is  currently  implementing  a  second  MFA  operation  aimed  at  alleviating  balance  of 
payment  issues  as  well  as  promoting  growth-stimulating  social  and  economic  reforms.  In 
2016, the EU reaffirmed its support to Tunisia through a joint communication, ‘Strengthening 
EU  support  for  Tunisia’,123  detailing  the  areas  in  which  EU  support  is  to  be  provided, 
including  a  number  of  trade-related  measures  as  well  as  the  launch  of  a  ‘Partnership  for 
growth’  initiative.  These  include  a  possible  early  entry  into  force  of  the  EU’s  trade 
concessions  on  agricultural  market  access  of  a  future  DCFTA  on  a  temporary  basis,  the 
possible  advanced  implementation  of  the  new  the  Pan-Euro-Mediterranean  (PEM)  rules  of 
origin  as  well  as  temporary  flexibility  for  certain  products,  the  setting  up  of  a  structured 
regulatory dialogue to facilitate and speed up the negotiation of an Agreement on Conformity 
Assessment and Acceptance (ACAA) of industrial products that still needs key legislation to 
be adopted (i.e. laws on security of industrial and food products). Discussions are ongoing on 
several of these issues. 

Following a preparatory process ahead of the launch of DCFTA negotiations, which included 
an  analysis  of  the  Tunisian  regulatory  framework  in  the  economic  field,  the  Commission 

123  http://europa.eu/rapid/press-release_IP-16-3192_en.htm  

157 

 
                                                 
concluded that Tunisia has achieved considerable progress in terms of regulatory alignment in 
the areas which will be covered by the future DCFTA. Nevertheless, some challenges remain 
in terms of implementation of some key and of institutional capacity.  

The EU has provided substantial trade-related assistance to Tunisia, particularly following 
the signature of the EU-Tunisia Association  Agreement, through a number of private sector 
development projects with the objective to allow Tunisia to take advantage of the agreement 
and  adapt  to  the  new  conditions  of  competition. In  preparation  of  DCFTA  negotiations,  the 
EU  began  supporting  sectors  that  are  not  yet  liberalised,  such  as  services  (“Programme 
d’Appui  à  la  Compétitivité  des  Services  (PACS)”124  was  launched  in  2016  with  a  budget  of 
EUR 20 million).  The  EU  also  supported  Tunisia  in  upgrading  its  horizontal  quality 
infrastructure and prepare for an ACAA in sectors identified as key by Tunisian authorities, 
primarily electrical and mechanical industries and construction products. A new project called 
“Programme  d’appui  à  la  compétitivité  et  aux  exportations  (PACE)”125  to  support  the 
competitiveness of Tunisian exports of industrial and agricultural sectors will be signed in the 
second half of 2018.  

5. 

PROGRESS, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

There  is  no  major  contentious  trade  issue  between  the  EU  and  Tunisia,  although  some 
protectionist tendencies have appeared in recent years. Several open issues include:  

  technical  and  administrative  difficulties  met  by  EU  exporters  of  pharmaceutical 

products and ceramic tiles and glass,  

  brurdensome customs procedures and technical controls in ports on an extended list of 

products 

  difficulties faced by EU operators to invest in Tunisia.  
  longstanding  SPS  issues  related  to  exports  of  apples  as  well  as  (more  recent)  issues 

with live plants, animals and poultry products exported from the EU.  

Nevertheless, on some other issues Tunisia has been cooperative while looking for solutions 
for EU companies such as with regard to the requiement for exporters to Tunisia to provide an 
additionnal  document,  i.e.  export  declaration.  The  operators  will  be  allowed  to  submit 
documents in the original language, without having to translate them into French or Arabic, 
and  equivalent  documents  will  also  be  accepted.  The  EU  is  pursuing  a  resolution  of  these 
issues  through  regular  dialogue,  in  the  framework  of  the  Sub-Committee  Meetings,  and  in 
view of the negotiations of the DCFTA.  

As  of  spring  2017,  the  Tunisian  authorities  were  under  heightened  public  pressure  to  adopt 
import  restrictive  measures  as  the  ones  described  above  in  order  to  stop  or  slow  down  the 
deterioration  of  the  trade  and  current  account  deficit  that  is  associated  with  increasing 
imports, albeit mainly stemming from non EU partners, and to address stagnating exports, and 
weak flows of remittances and tourism. The EU is following the issues closely. Tunisia also 
raised  MFN  tariffs  on  all  agricultural  products  from  0%  to  15%,  for  all  products  currently 

124  http://eeas.europa.eu/archives/delegations/tunisia/documents/projets/cp_pacs_26jan2016_fr.pdf  
125  https://ec.europa.eu/neighbourhood-enlargement/sites/near/files/tableau_feuille_de_route_tn-

ue_mars_2018.pdf  

158 

 
                                                 
duty  free  and  it  raised  tariffs  from  15%  or  in  some  cases  27%  to  36%  for  all  processed 
agricultural products and a number of agricultural products.  

6. 

CONCLUSIONS AND OUTLOOK 

The  overall  impact  of  the  Free  Trade  Area  on  EU-Tunisia  trade  has  been  positive.  Both 
Tunisia and the EU benefitted from the dismantling of bilateral tariffs and non-tariff barriers. 
It seems, however, that the EU-Tunisia Association Agreement, the first signed by the EU in 
the  region,  has  reached  its  limits,  and  needs  to  be  upgraded  in  order  to  continue  to  deliver 
positive  results.  This  means  both  extending  the  scope  and  deepening  the  provisions  of  the 
Free Trade Area in the future DCFTA for which negotiations started in October 2015.  

The DCFTA aims to expand liberalisation in agriculture and fisheries and will also cover 
services  and  investment.  With  a  view  to  supporting  ongoing  economic  reforms  in  Tunisia 
and in order to better integrate the country into EU and world markets, it will include a wide 
range of trade related regulatory areas of mutual interest, such as trade facilitation, technical 
barriers  to  trade,  SPS  measures,  investment  protection,  public  procurement,  competition 
policy as well as trade and sustainable development. Negotiations are guided by the principles 
of progressivity and asymmetry in favour of Tunisia. One full round of negotiations was held 
in April 2016, followed by a technical meeting in February 2017. A joint DCFTA Action Plan 
for 2018 has been agreed between the Parties, which foresees to hold two full rounds before 
the end of the year, one was held end of May in Tunisia, the other is planned for autumn in 
Brussels. Important intersessional work is to take place inbetween the rounds. 

159 

 
FIRST GENERATION FREE TRADE AGREEMENTS WITH THE  
WESTERN BALKAN PARTNERS 

‘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.  

The Instrument for  Pre-accession Assistance (IPA) is the means by which the EU supports 
reforms  in  the enlargement  countries. They help the beneficiaries to  carry  out  the necessary 
political and economic reforms, which should provide their citizens with better opportunities. 
The  current  IPA  framework  for  pre-accession  assistance  covers  the  period  from  2014–2020 
and has a dedicated budget of EUR 11.7 billion. 

Each  year  the  Commission  adopts  its  ‘Enlargement  package’  –  a  set  of  documents 
explaining  its  policy  on  EU  enlargement,  including  individual  reports126  in  which  the 
Commission services present their detailed assessment of the state of play in each candidate 
country and potential candidate. 

        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.  

126  https://ec.europa.eu/neighbourhood-enlargement/countries/package_en  

160 

 
 
 
 
 
                                                 
 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  
THE TRADE PILLAR OF THE EU-ALBANIA STABILISATION AND 
ASSOCIATION AGREEMENT 

1. 

INTRODUCTION 

On  12  June  2006,  the  EU  and  Albania  signed  a  Stabilisation  and  Association  Agreement 
(SAA).  The  SAA  is  the  prime  instrument  of  the  EU’s  overall  policy  towards  the  Western 
Balkan  countries’  Stabilisation  and  Association  process127.  Under  this  process,  all  Western 
Balkans countries, including Albania, have a common future as EU Member States.  

The  full  SAA  entered  into  force  on  1  April  2009,  however,  the  trade-related  part  of  the 
SAA  already  entered  into  force  through  an  Interim  Agreement  on  1  December  2006, 
hereinafter ‘the Agreement’. This Agreement established a free-trade area over a transitional 
period of ten years. As regards the EU, in 2006, 98.7% of its tariff lines were already duty-
free, representing 100% of the value of imports from Albania. By 2010, Albania liberalized 
92.7% of tariff lines for imports from the EU. 

The  Agreement  covers  products  in  all  Chapters  of  the  Harmonised  System.  Regarding 
agricultural  products  the  agreement  is  largely  asymmetrical.  EU  agricultural  imports  from 
Albania are almost completely liberalized (with very few exceptions). On the other hand, EU 
agricultural exports to Albania are subject to tariffs and TRQs.   

The  Agreement  also  includes  provisions  concerning  competition  matters,  investment  and 
related  payments,  a  high  level  of  protection  of  intellectual  property  rights  and  strengthened 
co-operation in customs matters. Since the entry into force of the full SAA on 1 April 2009, a 
number  of  additional  disciplines  are  being  implemented  concerning,  notably,  government 
procurement,  legislative  approximation  in  many  areas  including  standardisation,  as  well  as 
provisions regarding services and establishment. 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in Goods 

Albania and the EU are very close and growing trade partners having doubled their total trade 
since the entry into force of the trade agreement. The EU is Albania’s main trading partner, 
accounting  for  77.2  %  of  total  exports  and  61.5  %  of  total  imports  of  goods.  Compared  to 
2016,  total  trade  between  the  EU  and  Albania  increased  by  12.3%  reaching  nearly 
EUR 4.5 billion in 2017.  

Table 1 

127  See http://ec.europa.eu/trade/policy/countries-and-regions/regions/western-balkans/ for more information 

161 

 
 
 
 
                                                 
Source: Eurostat 

Figure 1 

As  can  be  seen  from  table  1  and  figure  1,  since  the  start  of  implementation  of  the  trade 
agreement,  total  trade  between  the  EU  and  Albania  has  more  than  doubled  (+118%),  from 
EUR 2 billion in 2006 to nearly EUR 4.5 billion in 2017. The main traded products concern 
the following sectors: machinery and appliances; footwear, hats and other headgear; textiles 
and  textile  articles  and  mineral  products.  Albania  has  a  relatively  narrow  production  base, 
resulting in a large structural deficit on the trade balance for goods (around EUR 1.4 billion), 
although it has slightly been contained by the more rapid expansion of Albania’s exports to 
the EU (+200%) as compared to the growth of EU’s exports to Albania (+90%).  

2.2. 

Trade in agricultural goods 

As shown in table 2, the EU’s trade surplus with Albania concerns both agricultural and non-
agricultural  products.  Trade  in  agricultural  products  represents  around  10%  of  the  total 
bilateral trade.  In 2017, 5.2% of all EU’s imports from Albania were agricultural products 
versus 13% of all EU’s exports to Albania. This ratio has remained relatively stable over the 
last ten years of implementation of the agreement.  In 2017, both EU imports and exports of 
agricultural  products  from  /  to  Albania  have  increased  by  about  10%  since  2016.  The  EU 
imported mainly edible vegetables from Albania and exported primarily beverages and food 
preparations to Albania. 

162 

200620072008200920102011201220132014201520162017Imports4986316816518959461.1181.2351.2461.1651.2921.503Exports1.5641.8552.2032.1212.1872.3302.4442.3262.4682.5202.7062.986Balance1.0661.2241.5221.4701.2921.3841.3261.0921.2221.3551.4141.483Total trade2.0622.4862.8842.7723.0833.2763.5623.5613.7143.6843.9984.490EU 28 trade in goods with Albania (million euro) 
 
 
Table 2 

A limited share of the EU-Albania agricultural  trade is  subject  to  duty-free  TRQs. Three of 
five Albania’s TRQs for agricultural  products  from  the EU were fully utilised in  2017;  two 
quotas were not used or almost not used by EU exporters. 

The EU grants very few agricultural duty-free quotas to Albania, namely for wine and sugar, 
which had a very low uptake by Albanian exporters in 2017.  

Table 3 .Utilisation of TRQs for EU exports to Albania in 2017 

Product 

Size of the quota 

Milk and cream 
Wheat 
Maize 
Sauces and preparations 
Wine 
Source: Albanian authorities 

790 t 
42 000 t 
10 000 t 
60 t 
10 000 hl 

2.3. 

Preference Utilisation rate (PUR) 

Fill rate (%) 
100 
3 
0 
100 
100 

The  PUR  is  relatively  high  for  both  imports  and  exports  which  highlight  a  generally  good 
knowledge  of  trade  operators  regarding  the  preferential  access  to  both  markets,  with  some 
margin for improvement, particularly from the side of EU trade operators. 

Table 4 

Source: Eurostat - Includes all preferences (FTA, GSP, bilateral) 

Table 6 

Source: DG TRADE based on Albanian statistics  

163 

EU28 merchandise trade by AMA/NAMA sector with Albania (million euro)2008200920102011201220132014201520162017Total6816518959461.1181.2351.2461.1651.2921.503Agricultural29262936414649627379Non-Agricultural6526258669101.0771.1891.1981.1031.2191.424Total2.2032.1212.1872.3302.4442.3262.4682.5202.7062.986Agricultural305298318323322334328335352388Non-Agricultural1.8971.8231.8702.0082.1221.9932.1402.1852.3532.599Total1.5221.4701.2921.3841.3261.0921.2221.3551.4141.483Agricultural276272288286281288280273280309Non-Agricultural1.2461.1981.0041.0981.0458039421.0821.1341.174EU28 exportsEU28 trade balanceEU28 importsUse of preferences on imports into EU from AlbaniaUse of preferences on imports into Albania from EU20132014201520162017use as % eligible88%88%87%86%86%PUR (%)20132014201520162017 EU-            72.9          76.4          79.8          78.2          Use of preferences on imports into Albania from EU 
 
 
 
 
 
2.4. 

Trade in Services and FDI 

In 2016, total trade in services represented nearly 28% of the total bilateral trade of goods and 
services with a share of 38% for EU imports and a more modest 21% share for EU exports. 
For the first time since 2013, Albania recorded a trade surplus mainly explained by revenues 
from foreign tourism and the export of manufacturing services for foreign-owned products. 

Table 7 

Source: European Commission 

The EU’s contribution to total FDI in Albania was 242.3 million in 2016. Albania’s success 
in attracting foreign investment in recent years has been heavily concentrated in non-tradable 
and natural resource-based industries. 

Table 8 

Source: European Commission 

3. 

ISSUES ADDRESSED IN THE JOINT COMMITTEE MEETINGS  

Commercial issues are discussed on an annual basis in the context of the Sub-committee on 
Trade, Industry, Customs and Taxation. The last two meetings took place on 24 January 2017 
and  more  recently  on  18  January  2018,  during  which  the  doubling  of  the  trade  volume 
between  the  EU  and  Albania  was  highlighted,  with  the  EU  remaining  Albania’s  first  trade 
partner representing over 66% of its global trade. Albania’s overall smooth implementation of 
the  trade  agreement  was  welcome  as  well  as  its  good  co-operation  in  the  context  of  WTO-

164 

201120122013201420152016EU28 imports731610686729719802EU28 exports601725643738724730Balance-130115-4395-72Total trade1,3321,3351,3281,4671,4431,532EU28 services trade with Albania (million euro)Foreign direct investment EU28 with Albania (million euro)Foreign direct investment EU28 with Extra-EU28 (million euro)InwardOutward201420152016201420152016Stocks50-182655.7235.9635.642Flows21-23222715617573 
 
 
 
related activities. Other trade issues addressed included the importance for Albania to deliver 
on  the  implementation  of  its  national  plan  on  trade  facilitation,  with  a  particular  focus  on 
border measures and the improvement of risk-based inspections by customs authorities.  

The  11th  EU-Albania  Sub-Committee  on  Agriculture  and  Fisheries  on  14  November  2017 
confirmed progress in the following fields:  

  publication of agricultural census results,  
  adoption of framework law on GIs,  
  adoption of organics legislation, and  
  approximation of marketing standards for olive oil. 

4. 

SPECIFIC AREAS OF IMPORTANCE 

The key factors with negative impact on trade are unfair competition and lack of transparency, 
especially in the public procurement process, as well as non-compliance with the rule of law, 
including the judicial system. 

5. 

MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

Enhancing transparency and accountability -in particular ensuring the effective, efficient and 
transparent functioning of the public procurement system- and the fight against corruption are 
essential  issues  that  affect  EU  businesses  doing  business  in  Albania.  The  appointment  of  a 
new Minister of State for the Protection of Entrepreneurship in September 2017 is expected to 
contribute  to  the  development  of  effective  state  control  mechanisms  to  eliminate  the 
conditions  of  unfair  competition  underlying  the  large  informal  economy.  Finally,  it  is 
expected that the acceleration of the European integration progress will give further impetus 
to  major  reforms  and  consequently  have  a  positive  impact  on  the  investment  and  business 
climate in Albania in the following years. 

6. 

CONCLUSIONS 

Albania and the EU are very close and growing trade partners having doubled their total trade 
since the entry into force of the trade agreement. The EU is Albania’s main trading partner, 
accounting for 77.2 % of total exports and 61.5 % of total imports of goods. While the trade 
agreement is generally implemented smoothly by Albania, the business climate is negatively 
affected by the large size of its informal economy and shortcomings in the rule of law which 
are a strong deterrent to  investments.  Overall, it is expected that the renewed momentum of 
the  European  integration  process  will  give  further  impetus  to  major  reforms  and 
consequently have a positive impact on the investment and business climate in Albania in the 
coming period. Similarly, the development of a Regional Economic Area based on EU rules 
and standards, to which all Western Balkan economies have committed, has the potential to 
generate untapped growth. 

165 

 
 
 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  
THE TRADE PILLAR OF THE EU-BOSNIA AND HERZEGOVINA  
STABILISATION AND ASSOCIATION AGREEMENT 

1. 

INTRODUCTION 

On 16 June 2008, the EU and Bosnia and Herzegovina signed a Stabilisation and Association 
Agreement (SAA). The SAA is the prime instrument of the EU’s overall policy towards the 
Western  Balkan  countries’  Stabilisation  and  Association  process128.  Under  this  process,  all 
Western Balkans countries, including Bosnia and Herzegovina, have a common future as EU 
Member States.  

The  SAA  entered  into  force  on  1  June  2015,  however,  the  trade-related  part  of  the  SAA 
already  entered  into  force  through  an  Interim  Agreement  on  1  July  2008.  This  Agreement 
established  a  free-trade  area  over  a  transitional  period  of  five  years.  The  Agreement  covers 
products  in  all  Chapters  of  the  Harmonised  System.  Regarding  agricultural  products  the 
agreement is largely asymmetrical. EU agricultural imports from Bosnia and Herzegovina are 
almost completely liberalized (with very few exceptions). On the other hand, EU agricultural 
exports to Bosnia and Herzegovina are subject to tariffs and TRQs. 

 The  Agreement  also  includes  provisions  concerning  competition  matters,  investment  and 
related  payments,  a  high  level  of  protection  of  intellectual  property  rights  and  strengthened 
co-operation in customs matters. Since the entry into force of the full SAA on 1 June 2015, a 
number  of  additional  disciplines  are  being  implemented  concerning,  notably,  government 
procurement,  legislative  approximation  in  many  areas  including  standardisation,  as  well  as 
provisions regarding services and establishment. 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in Goods 

Bosnia and Herzegovina and the EU are very close trading partners with bilateral exchanges 
that  expanded  by  32%  since  the  entry  into  force  of  the  trade  agreement.  The  EU  is  the 
country’s  main  trading  partner,  accounting  for  72.3  %  of  total  exports  and  60.8  %  of  total 
imports of goods. Compared to 2016, total trade between the EU and Bosnia and Herzegovina 
increased by 12.8% reaching EUR 10.2 billion in 2017. 

Table 1 

Source: Eurostat 

128  See http://ec.europa.eu/trade/policy/countries-and-regions/regions/western-balkans/ for more information. 

166 

2008200920102011201220132014201520162017Imports2.4931.9342.4882.9512.9903.2443.3303.4933.7824.267Exports5.2093.9384.2024.7464.8304.7775.0245.0755.2545.924Balance2.7162.0051.7141.7951.8401.5321.6951.5821.4721.658Total trade7.7025.8726.6907.6977.8218.0218.3548.5689.03610.191EU28 trade in goods with Bosnia-Herzegovina (million euro) 
 
 
                                                 
In the ten years since the application of the agreement, total trade between the EU and Bosnia 
and Herzegovina has increased by over 32% from EUR 7.7 billion to EUR 10.2 billion. The 
five  top  traded  products  are  machinery  and  appliances;  base  metals;  mineral  products; 
chemicals and miscellaneous manufactured articles. The EU has consistently recorded a large 
trade  surplus  with  the  country;  it  has  however  stabilised  over  the  last  five  years  around 
EUR 1.5 billion  down  from  EUR 2.7 billion  at  the  start  of  implementation  of  the  trade 
agreement in 2008. 

2.2. 

Trade in agricultural goods 

As  shown  in  table  2,  the  EU’s  trade  surplus  with  Bosnia  and  Herzegovina  concerns  both 
agricultural and non-agricultural products. In 2017, trade in agricultural products represented 
just over 10% of the total bilateral trade; this is a 2% reduction since the start of application 
of the trade agreement. In 2017, 4.8% of all EU’s imports from Bosnia and Herzegovina were 
agricultural  products  versus  14% of all EU’s  exports to  Bosnia and  Herzegovina. This  ratio 
has remained relatively stable since 2008. In 2017, EU imports of agricultural products from 
Bosnia  and  Herzegovina  increased  by  almost  17%  since  2016.  EU  exports  of  agricultural 
products to Bosnia and Herzegovina decreased by 6% over the same period. The EU exported 
primarily meat followed by beverages, spirits & vinegar to Bosnia and Herzegovina. 

Table 2 

167 

2008200920102011201220132014201520162017Total2.4931.9342.4882.9512.9903.2443.3303.4933.7824.267Agricultural149144181198210201160165173203Non-Agricultural2.3451.7902.3072.7532.7813.0443.1703.3283.6094.064Total5.2093.9384.2024.7464.8304.7775.0245.0755.2545.924Agricultural763683708789831803791808779828Non-Agricultural4.4463.2553.4943.9574.0003.9734.2334.2664.4765.096Total2.7162.0051.7141.7951.8401.5321.6951.5821.4721.658Agricultural615540527591621602631643605626Non-Agricultural2.1021.4651.1871.2041.2199301.0639388671.032EU28 importsEU28 exportsEU28 trade balanceEU28 merchandise trade by AMA/NAMA sector with Bosnia-Herzegovina (million euro) 
 
 
 
 
 
A  limited  share  of  EU-Bosnia  and  Herzegovina  agricultural  trade  is  subject  to  duty-free 
TRQs.  

Bosnia and Herzegovina’s authorities have not provided detailed figures on the utilisation of 
the  TRQs.  EU  export  data  suggest  that  most  of  Bosnia  and  Herzegovina's  TRQs  for 
agricultural  products  from  the  EU  were  fully  utilised  in  2017  and  for  almost  a  quarter,  EU 
exports exceeded the quota volume (grapes, potatoes, biscuits and butter). A few quotas were 
less  utilised  such  as  poultry  products  (average  utilisation  of  15%);  spirits  (6%)  and  tobacco 
(30%).  

The  EU  grants  very  few  agricultural  TRQs  to  Bosnia  and  Herzegovina:  beef  (not  used  by 
exporters from the country, mainly due to SPS reasons), sugar (almost fully used in 2017) and 
wine (significant, but not full use throughout the years, including 2017). . 

2.3. 

Preference Utilisation rate 

The PUR is on imports from Bosnia and Herzegovina is extremely high, which highlights an 
excellent knowledge of trade operators regarding the preferential access to both markets. 

Table 4 

Source: Eurostat - Includes all preferences (FTA, GSP, bilateral) 

Reliable  data  to  calculate  the  PURs  for  EU  exports  was  not  made  available  by  Bosnia  and 
Herzegovina.  

2.4. 

Trade in Services and FDI 

In 2016, trade in services represented roughly 24% of the total bilateral trade of goods and 
services with a share of 23% of EU imports and a more modest 17% of EU exports. For the 
first  time  again  since  2011,  Bosnia  and  Herzegovina  recorded  a  trade  surplus,  with  tourism 
representing a major growth sector. 

Table 6 

Source: European Commission 

168 

Use of preferences on imports into EU from Bosnia-HerzegovinaUse of preferences on imports into Bosnia-Herzegovina from EU20132014201520162017use as % eligible93%94%93%94%94%201120122013201420152016EU28 imports7469328379048951.115EU28 exports6699761.0339769401.097Balance-78431967345-18Total trade1.4151.9081.8711.8801.8352.211EU28 services trade with Bosnia-Herzegovina (million euro) 
 
 
Source: European Commission 

Regarding FDI, nearly 63 % of the country’s stock in FDI is originating from EU countries. 
Annual FDI inflows largely show a similar pattern. 

Table 7 

Source: European Commission 

3. 

ISSUES ADDRESSED IN THE ANNUAL COMMITTEE MEETINGS 

Commercial issues are discussed on an annual basis in the context of the Sub-committee on 
Trade,  Industry,  Customs  and  Taxation.  The  last  meeting  took  place  on  24  October  2017, 
during which the continuing growth of the bilateral trade in 2016 and 2017 was welcome. The 
main trade issues addressed during the meeting concerned: 

  Excise duties on beer: the country was requested to expedite alignment of the current 
excise structure for small breweries with the threshold set by the acquis (200 000 hl).  
  Excise  duties  on  spirits:  the  EU  reminded  Bosnia  and  Herzegovina  that  applicable 
provisions on excise duties on spirits do not comply with Article 35 of the SAA on 
the prohibition of fiscal  discrimination and the EU  acquis that foresees a single rate 
for all spirits.  

  WTO accession: the EU encouraged Bosnia and Herzegovina to intensify efforts to 

conclude its pending bilateral negotiations. 

Agricultural  and  fishery 
25 October 2017. 

issues  were  discussed 

in 

the  Sub-committee  meeting  on 

4. 

SPECIFIC AREAS OF IMPORTANCE 

The  business  environment  is  a  key  area  of  importance,  in  particular  the  large  size  of  the 
informal  economy  which  distorts  competition  and  has  a  negative  impact  on  the  business 
environment. Public procurement is another area of concern.  

169 

Foreign direct investment EU28 with Bosnia-Herzegovina (million euro)Foreign direct investment EU28 with Extra-EU28 (million euro)InwardOutward201420152016201420152016Stocks1021071562.4533.3483.532Flows835-164-415201142 
 
 
5. 

MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

Enhancing transparency and accountability -in particular ensuring the effective, efficient and 
transparent functioning of the public procurement system- and the fight against corruption are 
essential issues that affect EU businesses doing business in Bosnia and Herzegovina that are 
part of the regular follow-up done under the SAA multidisciplinary subcommittee structures. 

6. 

CONCLUSIONS 

While  the  trade  agreement  is  generally  implemented  smoothly  by  Bosnia  and  Herzegovina, 
the  business  climate  is  negatively  affected  by  the  large  size  of  its  informal  economy. 
However,  it  is  expected  that  the  renewed  momentum  of  the  European  integration  process 
will  give  further  impetus  to  major  reforms  and  consequently  have  a  positive  impact  on  the 
investment  and  business  climate  in  the  coming  period.  Similarly,  the  development  of  a 
Regional  Economic  Area  based  on  EU  rules  and  standards,  to  which  all  Western  Balkan 
economies have committed, has the potential to generate untapped growth.  

170 

 
 
 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  
THE TRADE PILLAR OF THE STABILISATION AND ASSOCIATION 
AGREEMENT BETWEEN THE EU AND THE FORMER YUGOSLAV REPUBLIC OF 
MACEDONIA  

1. 

INTRODUCTION 

On  9  April  2001,  the  EU  and  the  former  Yugoslav  Republic  of  Macedonia  signed  a 
Stabilisation  and  Association  Agreement  (SAA).  The  SAA  is  the  prime  instrument  of  the 
EU’s  overall  policy  towards  the  Western  Balkan  countries’  Stabilisation  and  Association 
process129.  Under  this  process,  all  Western  Balkans  countries  have  a  common  future  as  EU 
Member States.  

The SAA  entered into force on 1  April 2004, however, the  trade-related part of the SAA 
already entered into force through an Interim Agreement on 1 June 2001. Trade liberalisation 
between  the  EU  and  the  former  Yugoslav  Republic  of  Macedonia  was  completed  over  a 
period  of  ten  years.  The  Agreement  covers  products  in  all  Chapters  of  the  Harmonised 
System.  

Regarding  agricultural  products  the  agreement  is  largely  asymmetrical.  EU  agricultural 
imports from the former Yugoslav Republic of Macedonia are almost completely liberalized 
(with  very  few  exceptions).  On  the  other  hand,  EU  agricultural  exports  to  the  former 
Yugoslav Republic of Macedonia are subject to tariffs and TRQs. 

 The  Agreement  also  includes  provisions  concerning  competition  matters,  investment  and 
related  payments,  a  high  level  of  protection  of  intellectual  property  rights  and  strengthened 
co-operation  in  customs  matters.  Since  the  full  entry  into  force  of  SAA,  a  number  of 
additional  disciplines are being implemented concerning, notably,  government procurement, 
legislative  approximation  in  many  areas  including  standardisation,  as  well  as  provisions 
regarding services and establishment. 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in Goods 

Compared  to  2016,  total  trade  between  the  EU  and  the  former  Yugoslav  Republic  of 
Macedonia increased by 12.7%, reaching over EUR 9.2 billion in 2017.  

Table 1  

Source: Eurostat 

129  See http://ec.europa.eu/trade/policy/countries-and-regions/regions/western-balkans/ for more information. 

171 

20072008200920102011201220132014201520162017Imports2.0191.9491.3211.8522.2812.1102.3883.0193.3653.7234.238Exports2.1712.6432.1702.5323.0383.3723.3963.8184.1144.4504.973Balance1516948496807581.2621.008799749727734Total trade4.1904.5923.4914.3845.3195.4815.7846.8377.4798.1739.211EU 28 trade in goods with the former Yugoslav Republic of Macedonia (million euro) 
 
 
                                                 
Between  2007  and  2017,  total  trade  between  the  EU  and  the  former  Yugoslav  Republic  of 
Macedonia has more than doubled (+120%), from EUR 4.2 billion to over EUR 9.2 billion in 
2017. The five top traded products are machinery and appliances; chemical products; textiles; 
pearls and precious  metals; and mineral  products. The EU has consistently  recorded a large 
trade surplus with the country, which stabilised around EUR 750 million over the last four 
years. Furthermore, the EU is the country’s first trade partner with a share of over 70% of its 
global trade. 

2.2. 

Trade in agricultural goods  

Trade  in  agricultural  products  represents  around  7%  of  the  total  bilateral  trade.  In  2017, 
6.5% of all EU’s imports from the former Yugoslav Republic of Macedonia were agricultural 
products  versus  7.4%  of  all  EU’s  exports  to  the  country.  Trade  in  agricultural  products  has 
gradually  decreased  since  the  application  of  the  trade  agreement  when  it  represented  nearly 
12% of the total bilateral trade. In 2017, both EU imports and exports of agricultural products 
from  /  to  the  former  Yugoslav  Republic  of  Macedonia  increased  by  3.5%  and  1.8% 
respectively  since  2016.  Tobacco,  vegetables  and  preparations  of  cereals,  flour,  starch  were 
the EU's key import products. The EU exported primarily meat followed by food preparations 
to the former Yugoslav Republic of Macedonia. 

Table 2 

Source: European Commission 

For  a  number  of  agricultural  products,  EU  exports  to  the  former  Yugoslav  Republic  of 
Macedonia are subject to Tariff rate quotas (TRQs), either duty-free or at a reduced customs 
duty  rate. Most quotas were either fully utilised or utilised to  a large extent. The EU grants 

172 

2008200920102011201220132014201520162017Total1.9491.3211.8522.2812.1102.3883.0193.3653.7234.238Agricultural176170183186204233259259266276Non-Agricultural1.7731.1511.6692.0951.9052.1562.7593.1063.4573.963Total2.6432.1702.5323.0383.3723.3963.8184.1144.4504.973Agricultural261237261324347339326348363369Non-Agricultural2.3821.9332.2702.7153.0253.0573.4923.7664.0874.603Total6948496807581.2621.008799749727734Agricultural85677813814310767899794Non-Agricultural6097826026191.119901732660630641EU28 importsEU28 exportsEU28 trade balanceEU28 merchandise trade by AMA/NAMA sector with the former Yugoslav Republic of Macedonia (million euro) 
 
 
one  agricultural  TRQ  to  the  former  Yugoslav  Republic  of  Macedonia  (beef)  which  was  not 
used by the former Yugoslav Republic of Macedonia. 

Table 3. Tariff rate quotas for EU exports to the former Yugoslav Republic of Macedonia in 2017 

Fill rate (%) 

Product 

Pork (2 quotas) 
Milk and cream (4 quotas) 
Cheese (4 quotas) 
Potatoes (2 quotas) 
Onions 
Sunflower seed 
Margarine 
Sausages 
Prepared meat 
Sugar 
Chocolate 
Pasta 
Bread, pastry, cakes 
Vegetables, fruits and nuts 
Yeasts (2 quotas) 
Soups and broths (2 quotas) 
Mushrooms 
Other vegetables (2 quotas) 
Fruit juices 
Waters (3 quotas) 
Wine 
Tobacco products (2 quotas) 
Source: Authorities of the former Yugoslav Republic of Macedonia 

Size of the quota (tons, 
unless 
indicated 
otherwise) 
2 200 
4 870 
1 600 
550 
300 
100 
450 
3 400 
2 050 
385 
1 150 
215 
1 435 
40 
885 
550 
50 
210 
300 
2 870 
15 000 hl 
370 

100 
90 
100 
99 
49 
100 
100 
99 
100 
100 
100 
100 
100 
0 
76 
100 
100 
100 
96 
100 
89 
79 

2.3. 

Preference Utilisation rate 

The  PUR  was  high  for  both  imports  and  exports,  which  highlights  a  good  knowledge  of 
trade operators regarding the preferential access to both markets. 

Table 4 

Source:  Eurostat - Includes all preferences (FTA, GSP, bilateral) 

Table 5 

Source:  DG TRADE based on statistics of the For.JRep.Macedonia 

173 

Use of preferences on imports into EU from For.JRep.MacedoniaUse of preferences on imports into For.JRep.Macedonia from EU20132014201520162017use as % eligible96%97%97%95%94%Use of preferences on imports into For.JRep.Macedonia from EU2013201420152016use as % eligible90%90% 
 
 
 
 
 
 
 
2.4. 

Trade in Services and FDI 

In 2016, trade in services represented roughly 21% of the total bilateral trade of goods and 
services with a share of 20% of EU imports and nearly 32% of EU exports. Overall the trade 
balance in services has been largely positive for the EU over the last 6 years, and even more 
pronounced in 2016 when it grew by 64%. 

Table 6 

Source: European Commission 

Source: European Commission 

Regarding  FDIs,  the  share  of  the  stock  of  EU  investments  in  total  foreign  investment 
increased in 2016 to 79 %, while it had remained stagnant in the preceding five years. 

Table 7 

Source: European Commission 

3. 

ISSUES ADDRESSED IN THE ANNUAL COMMITTEE MEETINGS 

Commercial issues are discussed on an annual basis in the context of the Sub-committee on 
Trade, Industry, Customs and Taxation. Two meetings took place in 2017, on 4 April and on 
23 November, during which the continuing growth of the bilateral trade was highlighted, and 
in particular the fact that bilateral trade has increased almost 2.5 times (144% growth) since 
2006. The country’s overall smooth implementation of the trade agreement was welcome as 
well  as  its  good  co-operation  in  the  context  of  WTO-related  activities.  Agricultural  and 
fishery issues were discussed in the Sub-committee meeting on 15 May 2018. 

174 

201120122013201420152016EU28 imports418496507569602741EU28 exports6486477388541.0091.407Balance230151231285407666Total trade1.0661.1431.2451.4221.6112.148EU28 services trade with For.JRep.Macedonia (million euro)Foreign direct investment EU28 with For.JRep.Macedonia (million euro)Foreign direct investment EU28 with Extra-EU28 (million euro)InwardOutward201420152016201420152016Stocks-56-35-152.0502.5562.614Flows91412114112237 
 
 
 
4. 

SPECIFIC AREAS OF IMPORTANCE 

The business environment is a key area of importance. Challenges for doing business in the 
former  Yugoslav  Republic  of  Macedonia  include  frequent  legal  changes  to  the  regulatory 
framework,  a  lack  of  transparency  of  public  procurement  procedures,  a  lack  of  systematic, 
efficient  and  transparent  law  enforcement  including  in  inspections  and  commercial  dispute 
settlement,  and  many  para-fiscal  charges  at  different  administrative  levels.  The  size  of  the 
informal economy is also an area of concern as it creates unfair competition from unregistered 
companies. 

5. 

MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

The  main  open  issues  are  linked  to  non-tariff  barriers,  including  technical  standards  and 
administrative obstacles. Barriers also include relatively high logistical and customs costs. In 
its  2018-2020  Economic  Reform  Programme,  the  government  included  a  measure  on  trade 
facilitation aimed at simplifying inspections and clearance procedures which has the potential 
to improve competitiveness. This new measure focuses on speeding up all trade that requires 
veterinary  and  phytosanitary  certificates  issued  through  the  EU  Trade  Control  and  Expert 
System  (TRACES).  The  resulting  improved  data  exchange  between  customs  authorities 
would lead to faster and cheaper trade flows.  

6. 

CONCLUSIONS 

The  former  Yugoslav  Republic  of  Macedonia  and  the  EU  are  very  close  and  growing  trade 
partners  having  more  than  doubled  their  total  trade  between  2007  and  2017.  The  EU  is  the 
country’s  main trading partner, accounting for 81.3 % of its total  exports  and 62.4  % of its 
total imports of goods. While the trade agreement is generally implemented smoothly by the 
former  Yugoslav  Republic  of  Macedonia,  the  business  climate  is  negatively  affected  by  the 
large  size  of  its  informal  economy  and  shortcomings  in  the  rule  of  law  which  are  a  strong 
deterrent  to  investments.  On  the  other  hand,  the  renewed  momentum  of  the  European 
integration  process  is  expected  to  give  further  impetus  to  major  reforms  and  consequently 
have  a  positive  impact  on  the  investment  and  business  climate  in  the  former  Yugoslav 
Republic  of  Macedonia  in  the  coming  period.  Similarly,  the  development  of  a  Regional 
Economic  Area  based  on  EU  rules  and  standards,  to  which  all  Western  Balkan  economies 
have committed, has the potential to generate untapped growth. 

175 

 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF  
THE TRADE PILLAR OF THE EU-KOSOVO* STABILISATION AND 
ASSOCIATION AGREEMENT 

1. 

INTRODUCTION 

On 27 October 2015, the EU and Kosovo signed a Stabilisation and Association Agreement 
(SAA).  The  SAA  is  the  prime  instrument  of  the  EU’s  overall  policy  towards  the  Western 
Balkan  countries’  Stabilisation  and  Association  process130.  Under  this  process,  all  Western 
Balkans partners, including Kosovo, have a European perspective.  

The SAA -including the trade-related part- entered into force on 1 April 2016 and foresees: 

  Upgrading the existing trade relations by gradual establishment of free trade area over 

a period lasting a maximum of 10 years. 

  Almost  unrestricted  market  access  to  the  EU  for  Kosovo  products:  the  EU  has 
abolished  all  customs  duties  with  Kosovo  upon  entry  into  force  of  the  SAA  with 
exception of a few product lines in the agricultural sector, which are subject to specific 
duties or tariff-quotas. 

  Kosovo  has  abolished  the  customs  duties  on  a  number  of  tariff  lines  (industrial, 
agricultural  and  fishery  products)  while  for  the  rest  it  will  reduce  the  duties 
progressively over 10 years. 

The SAA also includes Kosovo’s commitment to ensure the gradual approximation of its laws 
with EU acquis in a number of important areas, such as public procurement, standardisation, 
consumer  protection,  working  conditions  and  equal  opportunities.  It  also  provides  for  a 
gradual liberalisation in the areas of rights of establishment, supply of services and movement 
of  capital;  and  it  includes  provisions  on  competition  matters,  state  aid,  and  intellectual 
property rights. 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in Goods 

The EU remains Kosovo’s main trade partner, accounting for 25% of total exports and 43% of 
total imports of goods. The EU has a very large trade surplus with Kosovo: despite a 23% 
growth  in  exports  to  the  EU,  Kosovo’s  trade  deficit  with  the  EU  further  widened  in  2017. 
Compared to the first year of implementation of the trade agreement, total trade between the 
EU and Kosovo increased by 7.5% reaching nearly EUR 1 billion in 2017.  

130  See http://ec.europa.eu/trade/policy/countries-and-regions/regions/western-balkans/ for more information 
* 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 

176 

 
                                                 
Table 1  

Source: Eurostat 

Regarding  the  sectoral  split,  the  main  traded  products  from  the  EU  side  are  machinery  and 
appliances,  foodstuffs,  beverages,  tobacco,  transport  equipment,  chemicals  and  plastics  & 
rubber  products.  Kosovo’s  exports  consist  mostly  of  metals,  minerals  and  low-value  added 
products.  Kosovo’s  imports  are  likely  to  increase  further  because  of  large  infrastructure 
investment. 

2.2. 

Trade in agricultural goods 

The  EU’s  trade  surplus  with  Kosovo  concerns  both  agricultural  and  non-agricultural 
products. Trade in agricultural products represents nearly 26% of the total bilateral trade. In 
2017,  28%  of  all  EU’s  imports  from  Kosovo  were  agricultural  products  versus  26%  of  all 
EU’s exports to Kosovo. In 2017, both EU imports and exports of agricultural products from / 
to Kosovo increased by 46% and 7.4% respectively since 2016.  

The EU grants one TRQ to Kosovo (beef) which was not used by Kosovo's exporters in 2017. 

177 

20102011201220132014201520162017Imports149140124125961047289Exports681736714724728764854907Balance532596590599632660781818Total trade830876838849823868926996Merchandise trade EU28 with Kosovo (million euro) 
 
 
Table 2 

Source: European Commission 

2.3. 

Preference Utilisation rate 

The  PUR  for  EU’s  exports  to  Kosovo  was  very  low  at  44%,  which  highlights  a  poor 
knowledge of trade operators regarding the preferential access to Kosovo’s market, which can 
partly be explained by the still recent entry into force of the trade agreement (April 2016). By 
contrast, the PUR on imports into the EU from Kosovo was high at 92%.   

Table 3 

Source: 
 of Kosovo 

Table 4 

Source: 

DG 

Trade 

own 

calculations 

based 

on 

statistics 

Source: Source: Eurostat - Includes all preferences (FTA, GSP, bilateral) 

2.4. 

Trade in Services and FDI 

The  service  sector  contributes  57.3%  of  gross  value  added  in  Kosovo,  and  it  is  the  fastest 
growing export sector. 

The EU is the main investor in Kosovo with 46.4 % of the overall inflow of FDI in 2017. 

3. 

ISSUES ADDRESSED IN THE ANNUAL COMMITTEE MEETINGS 

Commercial issues are discussed on an annual basis in the context of the Sub-committee on 
Trade, Industry, Customs and Taxation. The last two meetings took place on 6 April 2017 and 
on 14 June 2018. The main points discussed in 2017 included information from the EU side 
on the initiation of implementing procedures in order to ensure that the EU trade preferences 
foreseen in the SAA could be effective at the customs level. Export trends with the EU and at 

178 

20102011201220132014201520162017Total149140124125961047289Agricultural1314131619171725Non-Agricultural13712611110977875564Total681736714724728764854907Agricultural133167174183200206217233Non-Agricultural548568540541528558637674Total532596590599632660781818Agricultural121154161166181188199207Non-Agricultural411442429432451472582611EU28 merchandise trade by AMA/NAMA sector with Kosovo (million euro)EU28 importsEU28 exportsEU28 trade balanceUse of preferences on imports into Kosovo from EU2013201420152016use as % eligible44%Use of preferences on imports into EU from KosovoUse of preferences on imports into Kosovo from EU20132014201520162017use as % eligible87%84%85%89%92% 
 
 
 
regional level were discussed as well as the foreseen measure by Kosovo to increase the cost 
efficiency of international transactions through simplification and standardisation of customs 
formalities and procedures. The 2018 trade meeting included a follow-up of trading trends as 
well as discussions on specific issues such as the need for Kosovo to adopt legislation which 
takes into account  losses during transportation of goods (evaporation of petroleum  and look 
into the possibility for recognition of losses for other perishable goods while transported from 
the loading site to the final unloading point).  

The  first  EU-Kosovo  Stabilisation  and  Association  Sub-committee  on  Agriculture  and 
Fisheries  took  place  on  21  March  2017.  It  was  agreed  to  continue  aligning  the  legal 
framework  with  the  EU  acquis  in  all  sectors,  according  to  the  best  EU  practices  and  to 
continue  to  strengthen  all  the  bodies  involved  in  the  management  of  the  agriculture,  food 
safety and fisheries parts of the EU acquis. 

4. 

SPECIFIC AREAS OF IMPORTANCE 

The business environment is struggling with an inefficient judiciary, a lack of transparency of 
public  procurement  procedures,  slow  and  inconsistent  contract  enforcement,  a  widespread 
informal  economy,  weak  property  rights,  and  an  inefficient  and  unaccountable  public 
administration.  

5. 

MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

Main  open  issues  relate  to  Kosovo’s  trade  openness  including  the  high  administrative  costs 
linked to procedural, quality, logistical and border barriers which reduce the level of exports 
and increase the price of imports. All these issues affecting EU businesses doing business in 
Kosovo  are  closely  monitored  and  followed  up  through  the  SAA  multidisciplinary 
subcommittee structures. 

6. 

CONCLUSIONS 

Even though Kosovo is yet to reap the full benefits of its trade liberalisation with the EU, the 
EU  remains  its  main  trading  partner,  accounting  for  25%  of  total  exports  and  43%  of  total 
imports of goods. Kosovo’s business environment is hampered by the large informal economy 
which results in unfair competition from unregistered companies. However, it is expected that 
the  renewed  momentum  of  the  European  integration  process  will  give  further  impetus  to 
major  reforms  and  consequently  have  a  positive  impact  on  the  investment  and  business 
climate  in  the  coming  period.  Similarly,  the  development  of  a  Regional  Economic  Area 
based  on  EU  rules  and  standards,  to  which  all  Western  Balkan  economies  have  committed, 
has the potential to generate untapped growth. 

179 

 
 
 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE TRADE PILLAR 
OF THE EU-MONTENEGRO STABILISATION AND ASSOCIATION AGREEMENT 

1. 

INTRODUCTION 

On  15  October  2007,  the  EU  and  Montenegro  signed  a  Stabilisation  and  Association 
Agreement (SAA). The SAA is the prime instrument of the EU’s overall policy towards the 
Western  Balkan  countries’  Stabilisation  and  Association  process131.  Under  this  process,  all 
Western  Balkans  countries,  including  Montenegro,  have  a  common  future  as  EU  Member 
States.  

The  SAA  entered  into  force  on  1  May  2010,  however,  the  trade-related  part  of  the  SAA 
already entered into force through an Interim Agreement on 1 January 2008. This Agreement 
established  a  free-trade  area  over  a  transitional  period  of  five  years.  From  the  date  of  the 
Interim  Agreement,  the  EU  granted  permanent  liberalisation  of  97.3%  of  tariff  lines, 
representing  almost  duty  free  treatment  to  all  imports  from  Montenegro.  By  2013, 
Montenegro  liberalised  95%  of  its  tariff  lines,  representing  99%  of  EU  imports  during  the 
three preceding years of the entry into force of the agreement. The Agreement covers products 
in  all Chapters of the Harmonised System. Only a few  agricultural  and  fishery products  are 
not fully liberalised and subject to preferential quantitative concessions (TRQs).  

The  Agreement  also  includes  provisions  concerning  competition  matters,  investment  and 
related  payments,  a  high  level  of  protection  of  intellectual  property  rights  and  strengthened 
co-operation in customs matters. Since the entry into force of the full SAA on 1 May 2010, a 
number  of  additional  disciplines  are  being  implemented  concerning,  notably,  government 
procurement,  legislative  approximation  in  many  areas  including  standardisation,  as  well  as 
provisions regarding services and establishment. 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in Goods 

The EU is Montenegro’s main trading partner, accounting for 81.3 % of total exports and 62.4 
% of total imports of goods. Compared to 2016, total trade between the EU and Montenegro 
increased by 7.6% reaching EUR 1.2 billion in 2007.  

Table 1 

Source: Eurostat  

131  See http://ec.europa.eu/trade/policy/countries-and-regions/regions/western-balkans/ for more information. 

180 

2008200920102011201220132014201520162017Imports276172185225298188251144153166Exports1.1356937157868939129738779941.068Balance859521530562595724722733841901Total trade1.4128659011.0111.1911.1001.2241.0201.1471.234EU28 trade in goods with Montenegro (million euro) 
 
                                                 
In  the  ten  years  since  the  application  of  the  trade  agreement,  total  trade  in  merchandise 
between the EU and Montenegro went down by 12.6% going from EUR 1.4 billion in 2008 
to EUR 1.2 billion in 2017. This reduction can be explained by the fact that the structure of 
Montenegrin  exports  in  the  last  10  years  has  substantially  changed  in  favour  of  exports  of 
services, which increased to over 70% of total exports in 2016. The main sectors traded are 
machinery  and  appliances;  transport  equipment  and  mineral  products.  The  EU  has 
consistently recorded a large trade surplus with the country (averaging EUR 1.1 billion).  

2.2. 

Trade in Agricultural Goods 

The  EU’s  trade  surplus  with  Montenegro  concerns  both  agricultural  and  non-agricultural 
products. Trade in agricultural products represents around 15% of the total bilateral trade. 
In 2017, 3.6% of all EU’s imports from Montenegro were agricultural products versus 17% of 
all  EU’s  exports  to  Montenegro.  In  2017,  EU  imports  of  agricultural  products  from 
Montenegro  decreased  by  25%  since  2016  whereas  EU  exports  of  agricultural  products  to 
Montenegro increased by 3.7%. The EU imported mainly edible vegetables from Montenegro 
and exported meat to Montenegro. 

Table 2 

Source: European Commission 

Part of the agricultural trade between the EU and Montenegro is subject to Tariff rate quotas 
(TRQs), either duty-free or at a reduced customs duty rate. The agricultural TRQs granted by 
Montenegro were almost fully utilized by EU exporters.  

181 

2008200920102011201220132014201520162017Total276172185225298188251144153166Agricultural6767778876Non-Agricultural270165180218292182243136145161Total1.1356937157868939129738779941.068Agricultural124115121134184159195164177183Non-Agricultural1.011578594652709753779713817885Total859521530562595724722733841901Agricultural118108116127178152187156169178Non-Agricultural741413414434417571535577672724EU28 importsEU28 exportsEU28 trade balanceEU28 merchandise trade by AMA/NAMA sector with Montenegro (million euro) 
 
 
 
The EU grants two agricultural TRQs to Montenegro (beef and wine). In 2017, the beef quota 
was not used by Montenegro's exporters and the wine quota was used at 14%. 

Table 3.Utilisation of tariff rate quotas for EU exports to Montenegro in 2017 

Product 

Size of the quota 

Fill rate (%) 

Poultry meat 

Cheese 

Meat preparations 

Waters (3 quotas) 

Wine 

500 t 

65 t 

130 t 

14 800 hl 

3 500 hl 

100 

100 

100 

74 

100 

Source: Montenegro's authorities 

2.3. 

Preference Utilisation rate 

The  PUR  is  relatively  high  for  both  imports  and  exports,  which  highlight  a  generally  good 
knowledge  of  trade  operators  regarding  the  preferential  access  to  both  markets,  with  some 
margin for improvement from the side of EU trade operators. 

Table 4 

Source: Source: Eurostat - Includes all preferences (FTA, GSP, bilateral) 

Table 5 

Source: DG TRADE based on statistics from Montenegro 

2.4. 

Trade in Services and FDI 

In 2016, total trade in services represented nearly 57% of the total bilateral trade of goods and 
services with a share of 69.5% for EU imports and a much more modest 23% share for EU 
exports. This large imbalance allows Montenegro to run a surplus in its services trade with the 
EU, which is largely explained by important investment on high-end tourism facilities. 

182 

Use of preferences on imports into EU from MontenegroUse of preferences on imports into Montenegro from EU20132014201520162017use as % eligible83%85%81%83%90%20132014201520162017use as % eligible86%86%85%85%86%Use of preferences on imports into Montenegro from EU 
 
 
Table 6 

Source: European Commission 

The EU’s contribution to total FDI in Montenegro was 38.7% in 2017. 

Table 7 

Source: European Commission 

3. 

ISSUES ADDRESSED IN THE ANNUAL COMMITTEE MEETINGS 

Commercial issues are discussed on an annual basis in the context of the Sub-committee on 
Trade,  Industry,  Customs  and  Taxation.  The  last  meeting  of  the  Sub-committee  on  Trade, 
Industry,  Customs  and  Taxation  took  place  on  3  October  2017,  during  which  the  slight 
recovery  of  trade  in  2016  was  highlighted.  In  this  respect  Montenegro  was  encouraged  to 
diversify  its  exports  of  goods  and  to  increase  added  value  in  export-oriented  production. 
Montenegro  also  recognised  the  need  to  further  improve  the  business  environment  as  an 
essential prerequisite to attract investments in the country.  

4. 

SPECIFIC AREAS OF IMPORTANCE 

The business environment is a key area of importance, in particular unfair competition from 
the  informal  economy,  has  a  negative  impact  on  the  business  environment.  Public 
procurement  is  another  area  of  concern.  Under  the  SAA  (Article  76)  the  respective  public 
procurement  markets  are  in  principle  opened  on  the  basis  of  non-discrimination  and 
reciprocity  (no  less  favourable  treatment).  Despite  a  broad  level  of  alignment  with  the  EU 
acquis  in  the  area  of  classical  and  utilities  procurement,  Montenegro  needs  to  bring  up 

183 

201120122013201420152016EU28 imports165233219231236349EU28 exports292382216271226304Balance127149-340-10-46Total trade458615435502462653EU28 services trade with Montenegro (million euro)Foreign direct investment EU28 with Montenegro (million euro)Foreign direct investment EU28 with Extra-EU28 (million euro)InwardOutward201420152016201420152016Stocks-27551.6631.3961.307Flows-2982-721285140 
 
 
 
implementation and enforcement capacities at all levels. Agricultural and fishery issues were 
discussed in the Sub-committee meeting on 6 November 2017. 

5. 

MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

Enhancing transparency and accountability -in particular ensuring the effective, efficient and 
transparent functioning of the public procurement system- and the fight against corruption are 
essential  issues  that  affect  EU  businesses  doing  business  in  Montenegro  that  are  part  of  the 
regular follow-up done under the SAA multidisciplinary subcommittee structures. 

6. 

CONCLUSIONS 

Montenegro  and  the  EU  are  very  close  trading  partners,  even  though  Montenegro  is  yet  to 
reap  the  full  benefits  of  trade  liberalisation  with  the  EU.  As  a  small  country  with  an  open 
economy  it  needs  to  diversify  and  steer  its  goods-export  base  away  from  low-value  added 
sectors, which are exposed to volatile commodity prices, and from competition in low-value 
added sectors. While the trade agreement is generally implemented smoothly by Montenegro, 
the  business  climate  is  negatively  affected  by  the  large  size  of  its  informal  economy  and 
shortcomings  in  the  rule  of  law  which  are  a  strong  deterrent  to  investments.  However,  it  is 
expected that the renewed momentum of the European integration process will give further 
impetus  to  major  reforms  and  consequently  have  a  positive  impact  on  the  investment  and 
business climate in the coming period. Similarly, the development of a  Regional Economic 
Area  based  on  EU  rules  and  standards,  to  which  all  Western  Balkan  economies  have 
committed, has the potential to generate untapped growth. 

184 

 
 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE  
TRADE PILLAR OF THE EU-SERBIA STABILISATION AND ASSOCIATION 
AGREEMENT 

1. 

INTRODUCTION 

On  29  April  2008,  the  EU  and  Serbia  signed  a  Stabilisation  and  Association  Agreement 
(SAA).  The  SAA  is  the  prime  instrument  of  the  EU’s  overall  policy  towards  the  Western 
Balkan  countries’  Stabilisation  and  Association  process.    Under  this  process,  all  Western 
Balkans countries, including Serbia, are granted a clear perspective to become an EU Member 
State.  

The SAA entered into force on 1 September 2013, however, the trade-related part of the SAA 
already applied, through an Interim Agreement, as of 1 February 2009 for Serbia, and as of 8 
December  2009  for  the  EU  side.    This  Agreement  established  a  free-trade  area  over  a 
transitional period of six years.  As regards the EU, in 2010, 97.5% of tariff lines were already 
duty-free, representing 96% of the value of imports from Serbia. On Serbia’s side, by 2016, 
95.6% of tariff lines for imports from the EU were liberalised.   

The  Agreement  covers  products  in  all  Chapters  of  the  Harmonised  System.    Only  a  few 
exceptions,  concerning  a  limited  number  of  agricultural  and  fishery  products  were  not  fully 
liberalised and are still subject to preferential quantitative concessions (TRQs).  

The  Agreement  also  includes  provisions  concerning  competition  matters,  investment  and 
related  payments,  a  high  level  of  protection  of  intellectual  property  rights  and  strengthened 
co-operation in customs matters.  Since the entry into force of the full SAA in 2013, a number 
of  other  legislation  approximations  with  impact  on  trade  were  put  in  place  in  the  fields  of 
public procurement, standardization and the right of establishment. 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in Goods 

Compared to 2016, total trade between the EU and Serbia increased by 14.7% reaching nearly 
EUR 23.5 billion  in  2017. Unlike last  year’s trend, where imports from  Serbia increased by 
almost 11% against a more modest 4.6% growth of EU exports to Serbia, 2017 saw an equal 
growth rate on both imports and exports. 

Table 1 

Source: Eurostat 

185 

2008200920102011201220132014201520162017Imports4.3353.4364.3495.1475.0536.5887.1107.8798.7399.997Exports9.7007.0717.8819.1169.6609.92710.35711.15511.66413.408Balance5.3653.6353.5323.9694.6063.3393.2473.2772.9253.411Total trade14.03510.50612.23014.26414.71316.51517.46619.03420.40323.405EU 28 trade in goods with Serbia (million euro) 
 
Since the signature of the trade agreement in 2008, total trade between the EU and Serbia has 
increased by almost 67% from EUR 14 billion to nearly EUR 23.5 billion. Over this period, 
the EU has further consolidated its position as Serbia’s main trade partner: 64.5% of Serbia’s 
total trade is now with the EU compared to only 56.5% in 2008. The five top traded products 
in  2017  remained  machinery  and  appliances;  base  metals;  transport  equipment,  mineral 
products; and chemicals.  

Overall,  the  EU  enjoys  a  trade  surplus  with  Serbia,  which  has  however  declined  by  more 
than 36% since the start of the reciprocal trade preferences in 2008 and following the set of 
reforms undertaken by the country to make its economy more competitive. 

Serbia  has  also  consistently  recorded  a  trade  surplus  in  agricultural  products,  in  average 
around EUR 200 million. In 2017 this surplus fell to EUR 54 million as Serbia was affected 
by a major drought which led to a sharp decline in its agricultural output. 

2.2. 

Trade in agricultural goods 

Trade in agricultural products represents  around  10% of the total bilateral trade. In 2017, 
nearly  12%  of  all  EU’s  imports  from  Serbia  were  agricultural  products  versus  8.5%  of  all 
EU’s  exports  to  Serbia.  This  ratio  has  remained  relatively  stable  over  the  last  ten  years  of 
implementation  of  the  agreement.  In  2017,  EU  imports  and  exports  of  agricultural  products 
from / to Serbia have increased by 3.4% and 23.4% respectively since 2016. The EU imported 
mainly  fruits  &  nuts  and  cereals  from  Serbia.  Serbia's  key  export  products  to  the  EU  were 
food preparations and oil seeds & oleaginous fruits. 

Table 2 

Source: European Commission 

186 

2008200920102011201220132014201520162017EU28 importsTotal4.3353.4364.3495.1475.0536.5887.1107.8798.7399.997Agricultural5797217351.0059679649891.0831.1511.190Non-Agricultural3.7562.7153.6144.1424.0865.6246.1206.7967.5878.806EU28 exportsTotal9.7007.0717.8819.1169.6609.92710.35711.15511.66413.408Agricultural5504765055636947688389119241.136Non-Agricultural9.1506.5947.3768.5538.9659.1609.51810.24410.74012.272EU28 trade balanceTotal5.3653.6353.5323.9694.6063.3393.2473.2772.9253.411Agricultural-30-245-230-442-273-197-151-172-228-54Non-Agricultural5.3943.8803.7624.4114.8793.5363.3983.4483.1533.465EU28 merchandise trade by AMA/NAMA sector with Serbia (million EUR) 
 
 
Part of the agricultural trade between the EU and Serbia is subject to TRQs, either duty-free 
or  at  a  reduced  customs  duty  rate.  The  majority  of  agricultural  and  fish  quotas  were  fully 
utilised  by  EU  exporters.  Quotas  for  fruit  juices  and  wine  were  well  utilised  (60  and  80% 
respectively); quotas for wheat (31%) and sunflower seeds (10%) were little utilised and the 
maize quota remained completely unused in 2017. 

The EU grants tariff quota to Serbia for beef, sugar and wine. The sugar quota is traditionally 
fully utilised with some take-up of the wine and beef quotas. 

Table 3 Utilisation of TRQs for EU exports to Serbia in 2017 

Product 

Size of the quota 

Live pigs 
Pork 
Milk and cream (2 quotas) 
Cheese 
Potatoes 
Vegetables 
Wheat and meslin 
Maize 
Sunflower seed 
Meat preparations 
Sugar 
Fruit juices 
Wine 
Spirits 
Tobacco 
Cigarettes (2 quotas) 
Source: Serbian authorities 

200 t 
200 t 
260 t 
50 t 
165 t 
20 t 
300 t 
270 t 
60 t 
150 t 
70 t 
20 t 
25 000 hl 
1 180 
75 
1 625 

Fill rate (%) 
100 
100 
100 
100 
100 
98 
31 
0 
11 
100 
100 
60 
81 
100 
100 
n.a. 

187 

 
2.3. 

Preference Utilisation rate 

The  PUR  is  high  for  imports  from  Serbia,  which  indicates  a  good  knowledge  of  trade 
operators regarding the preferential access to both markets. 

Table 4 

Source: Source: Eurostat - Includes all preferences (FTA, GSP, bilateral) 

Reliable data to calculate the PURs for EU exports was not made available by Serbia.  

2.4. 

Trade in Services and FDI 

In 2016, total trade in services represented nearly 20% of the total bilateral trade of goods and 
services with a share of 17% for EU imports and a 16% share for EU exports. Overall the EU 
records  a  surplus  in  its  trade  in  services  with  Serbia  which  has  averaged  around 
EUR 488 million over the last 6 years. 

Table 6 

Source: European Commission 

Regarding FDI, the EU is by far Serbia’s main investment partner, accounting for more than 
three  quarters  of  net  FDI  inflows.  The  EU  continued  to  be  the  main  source  of  foreign 
investment  with  a  share  in  net  FDI  of  63%  in  2016  and  more  than  three-quarters  of  the 
cumulative FDI stock. 

188 

20132014201520162017use as % eligible92%94%93%90%91%Use of preferences on imports into EU from SerbiaEU28 services trade with Serbia (million EUR)201120122013201420152016EU28 imports1.6431.5741.6031.8231.9531.771EU28 exports1.8482.1082.2952.5162.2882.244Balance205534691693335473Total trade3.4923.6823.8984.3394.2424.015 
 
 
 
Table 7 

Source: European Commission 

3. 

ISSUES ADDRESSED IN THE ANNUAL TRADE COMMITTEE MEETING 

Commercial issues are discussed on an annual basis in the context of the Sub-committee on 
Trade,  Industry,  Customs  and  Taxation.  The  last  meeting  took  place  on  7  February  2017, 
during which the positive trade trends were again highlighted, with the EU remaining Serbia’s 
first  trade  partner  with  a  share  of  nearly  64%  of  its  global  trade.  Serbia’s  decision  to 
discontinue  the  nearly  two-year  long  safeguard  measures  against  EU  originating  imports  of 
dairy and pork products as of 1 January 2017 was welcome and the importance to respect the 
smooth implementation of the SAA was emphasised. Other trade issues addressed include the 
importance for Serbia to finalise its WTO accession; the need to effectively and consistently 
implement a risk-based methodology as the basis to exercise controls of exports and imports 
at borders and avoid excessive administrative and time-consuming barriers to trade that result 
from unnecessary inspections, and the excise discrimination of grain-based spirits, which tend 
to  be  imported  from  the  EU,  as  opposed  to  the  favourable  treatment  of  fruit-based  spirits, 
which tend to be produced domestically.  

The  most  pressing  open  issue  in  2017  concerned  the  132restrictive  measures  imposed  by 
Serbia for the export of non-hazardous waste, in particular metal waste. These restrictions 
led to a complete halt in the issuing of new export licences for metal waste up until the end of 
March  2018  when  a  few,  very  limited,  export  licences  were  granted  by  Serbia.  Since 
December 2017, the EU has repeatedly urged Serbia to lift those measures which it considers 
in  breach of the SAA. After a series of bilateral  consultations, the situation was resolved in 
May 2018. 

Agricultural  and  fishery  issues  were  discussed  in  the  Sub-committee  meeting  on  9  March 
2017. 

The next annual trade committee meeting is foreseen on 17 October 2018.  

4. 

SPECIFIC AREAS OF IMPORTANCE 

The  EU  has  repeatedly  encouraged  Serbia  to  finalise  its  accession  to  the  WTO  as  it  will 
anchor  economic  reform  and  trade  liberalization  carried  out  in  the  context  of  the  EU 
Stabilisation and Association Process. WTO accession is a requirement for the closing of the 
External Relations Chapter (Chapter 30) in the process of Serbia’s accession to the EU. The 
chapter on External Relations was opened at the Intergovernmental Conference in Brussels on 
11 December 2017.  

132  Since the second half of 2017 

189 

Foreign direct investment EU28 with Serbia (million EUR)InwardOutward201420152016201420152016Stocks2015616512.57011.94112.657Flows2716926185262403 
 
                                                 
Serbia applied for WTO membership in 2005. Serbia’s WTO membership remains dependent 
on the adoption of a WTO and EU acquis-compliant law on genetically modified organisms 
and on the completion of market access negotiations with a number of WTO members.  

5. 

MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

Although  Serbia  has  continued  to  build  a  record  of  accomplishment  in  implementing  the 
interim  agreement  and  then  the  SAA  provisions  since  their  entry  into  force,  some  non-
compliance issues remain. These concern mainly State aid regulation (article 73 of the SAA), 
restrictions  to  free  movement  of  capital  -  in  particular  restrictions  to  the  acquisition  by 
foreigners,  including  EU  citizens,  of  agricultural  land  -  (article  63),  respect  for  the 
transparency and non-discrimination principals in public procurement procedures (article 73) 
and fiscal discrimination on alcohol (article 37). All these pending issues were raised in the 
relevant EU-Serbia Sub-committee meetings held or planned in 2018. 

6. 

CONCLUSIONS 

Serbia and the EU have a very close and growing trade partnership which increased their total 
trade  by  almost  67%  since  the  entry  into  force  of  the  trade  agreement  (SAA).  The  EU  is 
Serbia’s  main  trading  partner,  accounting  for  67.6  %  of  total  exports  and  62.3  %  of  total 
imports of goods. 

The EU continued to be the main source of foreign investment too, with a share in net FDI of  
63% in 2016 and more than three-quarters of the cumulative FDI stock.  

Despite  very  good  trade  and  investment  dynamics,  companies  still  face  a  number  of 
challenges,  including  an  unpredictable  business  environment  and  issues  of  non-compliance 
with  the  SAA,  regarding  in  particular  a  lack  of  transparency  of  public  procurement 
procedures,  restrictions  on  capital  movements,  state  aid  control,  fiscal  discrimination  on 
imported spirits.  

Overall, it is expected that the renewed momentum of the European integration process and 
progress  in  accession  negotiations  will  give  further  impetus  to  major  reforms  and 
consequently have a positive impact on the investment and business climate in Serbia in the 
coming  period.  Similarly,  the  development  of  a  Regional  Economic  Area  in  the  Western 
Balkans  based  on  the  CEFTA  agreement  and  on  the  EU  rules  and  standards,  to  which  all 
regional economies have committed, has the potential to generate untapped growth.  

190 

 
 
 
FIRST GENERATION FREE TRADE AGREEMENTS WITH LATIN AMERICAN 
COUNTRIES  

191 

 
ANNUAL INFO SHEET ON IMPLEMENTATION OF THE TRADE PILLAR OF 
THE EU-CHILE ASSOCIATION AGREEMENT133 

1. 

INTRODUCTION 

The  trade  pillar  of  the  EU-Chile  Association  Agreement  (‘the  Agreement’)  entered  into 
force on 1 February 2003 and was fully implemented after finalisation of all ratifications on 
1 March 2005. During the following 15 years there has been continuous work and cooperation 
by both sides to implement the agreement. The Agreement with Chile is one of the EU’s first 
generation FTAs and was considered highly ambitious at the time of its conclusion. It was the 
first trade agreement subjected to an ex-post evaluation study to analyse the impact it had had. 
This study was concluded in 2012. Another study conducted in 2017 clearly showed the need 
for modernising the agreement, to avoid the EU losing further ground to other partners trading 
with Chile, such as the US and China.  

the  Agreement.  The  2015  Trade 

Against this background, at the EU-CELAC (Community of Latin American and Caribbean 
States) summit in Santiago in January 2013, the EU and Chile agreed to explore options for a 
comprehensive  modernisation  of 
for  All 
Communication134 highlighted the objective of pursuing a modernisation of the Agreement. A 
scoping  exercise  was  successfully  concluded  with  Chile  in  January  2017.  Negotiations  for 
modernising the Agreement were launched on 16 November 2017 in Brussels, following the 
adoption of the negotiating directives by the Council on 13 November in 2013135. The EU and 
Chile  are  now  engaged  in  a  negotiation  process  for  an  ambitious,  comprehensive  and 
progressive modernised agreement. The most important areas include (1) further liberalisation 
in agriculture and food products, (2) rules of origin, customs and trade facilitation provisions, 
(3)  non-tariff  barriers  for  industrial  and  agri-food  products,  (4)  market  access  for  services 
sectors  of  key  EU  and  Chile  interest,  (5)  more  comprehensive  investment  liberalisation 
disciplines,  (6)  public  procurement  rules  and  improved  coverage  in  terms  of  entities,  (7) 
intellectual property rights, including the protection of GIs on foodstuffs, (8) TSD and (9) for 
the  first  time  trade  and  gender  equality,  which  is  a  pilot  case  for  the  EU  with  the  aim  of 
identifying and addressing those barriers faced by women to benefit from trade opportunities, 
building on the sustainable development goals and reaffirming commitments of international 
conventions. 

133  More information can be found at: http://ec.europa.eu/trade/policy/countries-and-regions/countries/chile/  
134  http://ec.europa.eu/trade/policy/countries-and-regions/countries/chile /  
135  http://www.consilium.europa.eu/media/32405/st13553-ad01dc01en17.pdf  

192 

 
                                                 
2. 

EVOLUTION OF TRADE  

2.1. 

Trade in Goods 

Overall evolution since the FTA provisional entry into force 

Bilateral trade in goods between 2003 and 2017 more than doubled in value, increasing 114% 
in total. Overall, the rise is substantially sharper for EU exports, which increased 197% over 
the period, compared to a 65% grow in EU imports from Chile. Chile’s share in total EU trade 
has remained stable since 2003, at around 0.5% of total EU trade, with a 0.7% peak in 2006. 

Merchandise trade EU28 with Chile (million EUR) 

Chile 

Base 
2003 
5 004 
2 963 
-2 041 
7 967 

Latest 
2017 
8 259 
8 785 
526 
17 044 

EU28 imports 
EU28 exports 
Balance 
Total trade 
Source: Trade G2 Statistics/ISDB 

Growth 

total 
65% 
196% 

average 
6% 
9% 

114% 

7% 

The  evolution  of  bilateral  trade  in  goods  can  be  divided  into  three  distinct  periods,  with 
marked differences:  

1.  2003-2007 was characterised by a substantial increase in EU imports, a more moderate 

growth in EU exports and an increasing trade deficit. 

2.  2008-2011 saw an initial fall in EU imports, followed by comparable growth rates in 
EU imports and EU exports and a smaller trade deficit. In 2011 bilateral trade reached 
a historic high of EUR 18.9 billion. 

3.  Since 2012 EU imports have fallen slightly while EU exports have remained relatively 
stable and bilateral trade has been close to balance, with a slight trade surplus for the 
EU (except in 2014), which is due to price effects rather than quantities.  

193 

 
 
 
 
 
Trade flows in 2017 

In  2017  EU-Chile  bilateral  trade  grew  by  6.7%  in  value  compared  to  2016,  reaching 
17 billion.  The  EU  experienced  a  trade  surplus  worth  EUR 544 million,  the  fourth  trade 
surplus  in  the  EU’s  favour  since  2007.  While  EU  exports  increased  2.3%  year-on-year,  EU 
imports  grew  by  11.7%.  The  increase  in  the  value  of  Chile’s  exports  to  the  EU  is  mainly, 
although  not  exclusively,  attributable  to  the  recovery  of  copper  prices.  Compared  to  2016, 
copper imports from Chile grew by 18% in value. 

Performance of the EU compared to other trade partners of Chile 

Despite  the  prima  facie  strong  bilateral  growth  rate  since  2003,  over  time  the  EU  has 
progressively lost market share in Chile to other trading partners. Between 2003 and 2009 the 
EU was Chile’s 1st trading partner. The EU was overtaken by China in 2009 and by the US in 
2011136,  and  is  therefore  currently  Chile’s  third  trading  partner.  Whilst  China’s  share  in 
Chile’s total trade continues to increase (partly due to China’s increasing imports of Chilean 
copper), the gap with the US has narrowed recently. 

The external ex-post assessment of the impact of the FTA commissioned by DG TRADE in 
2012 concluded that the FTA had helped to prevent the EU market share in Chile from further 
substantial falls, thereby mitigating the crowding-out effect of the FTAs concluded by Chile 
with third parties since 2003. The 2017 ex-ante external study commissioned by DG TRADE 
to  support  the  impact  assessment  on  the  modernisation  of  the  Agreement  confirmed  that  in 
relative terms there is clear erosion in bilateral EU trade flows to Chile since 2003 in favour 
of third partners. 

136  The  Chile-USA  FTA  entered  into  force  on  1  January  2004  and  Chile-China  FTA  entered  into  force  on  1 

October 2006. 

194 

 
 
                                                 
2.2. 

Trade in agricultural products  

Almost a third of EU imports from Chile are agricultural products. The main agricultural 
products shipped by Chile to the EU are fruits (notably grapes, of which Chile is the world's 
top exporter, apples and pears), vegetables, wines, nuts and fruit juices.  In 2017, imports of 
agricultural goods from Chile were worth EUR 2 371 million. While EU agricultural exports 
to  Chile  were  much  smaller  at  EUR 716 million  in  (constituting  8%  of  the  total  value  EU 
exports to Chile), exports of agricultural products to Chile grew by almost 30% between 
2016 and 2017. 

EU  products  subject  to  TRQs  are  cheese,  tuna,  salmon  and  hake.  The  fish  quotas  are  less 
used, except for tuna where industry calls for an extension of the quota. Cheese, however, is 
one of the top EU agricultural exports to Chile, with exports worth EUR 67 million in 2017. 
Although the quota increases by 75 tons each year, cheese exports to Chile by far exceeded 
the quota in recent years. The quota for 2018 was filled on 14 February. Quantities exported 
in excess of the quota are subject to Chile’s flat 6% import duty. 

Utilisation of TRQs for EU exports to Chile in 2017 

Product 

Cheese 
Hake 
Salmon 
Canned tuna 
Source: Chilean authorities 

Size of the quota 
(tons) 

Fill rate (%) 

2 550 
5 000 
40 
150 

100 
n.a. 
n.a. 
97 

For Chile, products subject to tariff quotas are certain types of fish (hake, Pacific salmon and 
tuna),  meat  (beef,  pork,  poultry  meat,  sheep  meat),  garlic,  processed  cereals,  mushrooms, 
cheese,  preserved  cherries  and  sweets,  chocolate  and  biscuits.  The  poultry  meat  quota  was 
fully filled in 2016 but the utilisation rate fell to 77% in 2017. Only a quarter of the pork and 
sheep meat quotas were utilised in 2017. The use rate was smaller for beef (14% in the 2016-
2017 quota year) and garlic (2%), and even zero for all the other quotas. 

2.3. 

Trade in Services and FDI 

Bilateral  trade  in  services  in  2016  stood  at  EUR 5.5 billion  (EUR 3.7 billion  in  exports  and 
EUR 1.8 billion  in  imports),  compared  to  EUR 5.6 billion  in  2015.  Between  2010  and  2016 
EU exports of services increased 25%, while EU imports increased 18%.  

Trade in Services EU-28 with Chile (million EUR) 

EU28 (imports) 
EU28 (exports) 
Balance 
Total trade 

2010 
1 518 
2 956 
1 438 
4 474 

2011 
1 335 
3 192 
1 857 
4 527 

2012 
1 517 
3 064 
1 547 
4 580 

2013 
1 573 
3 081 
1 507 
4 654 

2014 
1 681 
3 417 
1 736 
5 098 

2015 
1 907 
3 677 
1 770 
5 584 

2016 
1 787 
3 684 
1 897 
5 470 

Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 

195 

 
 
The EU remains Chile’s first FDI provider, with outward FDI stocks worth EUR 47.2 billion 
in  2016  but  EU  FDI  flows  in  2016  (EUR 3.2 billion)  were  less  than  half  the  outward  flows 
registered  in  2014.  The  decrease  in  outflows  is  largely  due  to  the  evolution  in  the  mining 
industry, which has historically represented over 45% of total FDI in Chile. With 2016 data, 
in  2017 Chile remained the 3rd  recipient  of FDI  in  Latin America overall, after Mexico and 
Brazil, according to UNTACD. However with 2017 data, in 2018 report it is not among the 
top 5 host regional economies.  

FDI  inflows  from  Chile  to  the  EU  recorded  EUR 331 million  in  2016,  slightly  above  the 
average. Since 1998, Chile has been the World Economic Forum’s most competitive nation in 
the  region  (in  2017  it  ranked  33  of  138  globally).  Chile  used  to  be  regional  leader  on  the 
World Bank Doing Business Report (DB) but it is now second after Mexico. In 2018 Chile 
ranks 55 of 190 on DB and 71.22 on the distance to frontier (DTF) measure (Mexico ranks 49 
and 72.27 respectively)137  

2.4. 

Preference Utilisation Rate (PUR) 

In 2017 the  use of preferences on EU imports from Chile was  95%, a high rate that has 
remained stable over recent years. 

Use of preferences on imports into the EU from Chile 

use as % of eligible 

2014 
94% 

2015 
95% 

2016 
95% 

2017 
95% 

Source Trade G2 Statistics/ISDB. Includes all preferences (FTA, GSP, bilateral) 

The use of preferences for EU exports to Chile was 75.7% in 2017 as compared to 74% in 
2016, showing a slight improvement in the take-up of the opportunities by EU firms. 
Utilisation by EU companies can be expected to increase over time once the modernised 
Agreement and its improved will be applied, offering, inter alia, a better market access for EU 
exporters and a better framework for doing business in Chile. 

137  Chile currently ranks 55th out of 190 countries on the list, down from 34th in 2014. Its ranking declined to 

41st in 2015, 48th in 2016, and 57th in 2017, according to the World Bank’s reports. 

196 

FDI EU28 with Chile (million euro)FDI EU28 with Extra-EU28 (million euro)2013201420152016Inward stocks9981,7078231,387Outward stocks29,13442,72342,57647,233Inward flows846205-687331Outward flows5,7468,1801,7162,899Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 
 
 
  
 
                                                 
Use of preferences on EU exports to Chile (adjusted utilisation rate) 

use as % of eligible 
Source Trade G2 based on Chilean national statistics 

2013 
78.3  

2014 
77.9  

2015 
75.7  

2016 
73.9  

2017 
75.7  

3. 

ANNUAL  TRADE  COORDINATORS  MEETING  AND  TRADE-RELATED  SUB-
COMMITTEES 

Both  sides  have  invested  the  necessary  resources  in  the  institutional  work  under  the 
Agreement  and  the  meetings  under  the  Agreement  have  been  very  regular.  The  Trade 
Coordinators Meeting and Subcommittees on trade related matters are organised every year. 
The Trade Coordinators Meeting of the EU-Chile Association Agreement met in Brussels on 
15  November  2017.  It  was  preceded  by  meetings  of  all  the  trade-related  subcommittees 
created  by  the  Agreement  except  for  the  Special  Committee  on  Customs  Cooperation  and 
Rules of Origin, which will be held at a later date.  

The Committee on Standards, Technical Regulations and Conformity Assessment took place 
on 30 October 2017, the Joint Committees on Trade in Wine and Spirits/Aromatised drinks on 
13  November  2017  and  the  Joint  Management  Committee  on  SPS  Measures  on  14-15 
November 2017. 

Trade-related sub-committees 

  The  Special  Committee  on  Standards,  Technical  Regulations  and  Conformity 
Assessment Procedures: the EU questioned Chile on a draft Technical Regulation on 
the sector of cables that  deviates  from international  standards. Chile stated that after 
receiving and analysing numerous comments, the relevant authorities have decided to 
undertake  an  impact  study  of  the  proposed  measures  before  they  are  adopted.  Also, 
another  issue  discussed  concerned  the  withdrawal  of  the  certification  of  a  specific 
category of electric cables produced by the EU that had been deemed to be deficient 
according to Chilean test results. The affected companies were re-admitted to certify 
the cables in May 2018. 

  The Joint Committee on Trade in Wine and Spirits/Aromatised drinks: the Parties 
agreed to finalise the textual modifications of the wine and spirits agreement and Chile 
committed to conclude its examination of the pending EU GIs registration. Regarding 
the Agreement on Trade in Organic Products,138 which entered into force on 1 January 
2018,  Chile  requested  a  transition  period  of  six  months  during  which  both  the  new 
agreement  and  the  previous  recognition  by  the  EU  of  equivalent  Control  Bodies  in 
Chile would be valid. 

138  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L:2017:331:TOC 

197 

 
  
                                                 
  The  Joint  Management  Committee  on  SPS  Matters:  The  Joint  Management 
Committee on SPS Matters: the EU highlighted that good progress was made on EU 
applications to access the Chilean market in the case of products of animal origin, but 
pointed out the lack of effective market access for fruits and vegetables, except kiwis, 
exported to Chile by the EU. The parties agreed that the work of the Animal Welfare 
Group,  established  by  the  Joint  Management  Committee,  was  satisfactory  and  also 
exchanged views on the need of updating some of the Appendixes of Annex IV139. 

Trade Coordinators Meeting 

The Trade Coordinators Meeting, to which the sub-committees on trade related issues report, 
reviewed recent bilateral trade and investment flows, and exchanged information on relevant 
multilateral  developments  and  on  trade  negotiations  with  third  partners.  The  Trade 
Coordinators Meeting reviewed the reports on the outcome of the trade-related sub-committee 
meetings.  EU  highlighted  a  number  of  issues  related  to  government  procurement,  urging 
Chile  to  make  progress  to  ensure  compliance  with  the  obligations  arising  from  the  existing 
Agreement. The EU also raised the issue of the access of its vessels fishing for swordfish to 
Chilean  ports.  Chile  took  note  and  agreed  to  inform  the  Chilean  competent  authorities.  The 
issue was further discussed at the EU-Chile Ocean Governance Dialogue in Lima in January 
2018  where  Chile  confirmed  that  there  are  no  longer  reasons  to  prevent  the  EU  swordfish 
vessels from accessing Chilean ports, as long as certain requirements, applying to all national 
and foreign vessels, are met.  

4. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

The main open issue on FTA implementation is related to some of the existing obligations on 
government  procurement,  which  Chile  is  yet  to  implement.  Although  Chile  has  made  some 
progress  (e.g.  creating  a  common  procurement  portal  and  registry),  a  number  of  pending 
issues remain, and the EU continues to urge Chile to make progress, to ensure full compliance 
with  its  obligations,  and  to  possibly  adopt  interim  measures  in  case  legislative  changes  are 
needed. 

Moreover, the 2002 wine and spirits agreements were amended last time in 2009. Therefore, 
they need to be up-dated, in particular adding the new wine and spirits names that have been 
granted protection in the EU and Chile since then. This process has proven to be challenging, 
due to  the lengthy Chilean internal  assessment procedures necessary  for  amending the wine 
and spirits agreements.  

In  March  2017  Chile  opened  its  market  for  EU  beef.  The  last  remaining  obstacle  was  the 
identification of meat cuts which was also reflected in amending the terms of the export health 
certificate. With regard to  SPS measures, Chile opened its market  for bovine embryos from 

139  Annex  IV,  to  the  Association  Agreement,  is  the  ‘Agreement  on  Sanitary  and  Phytosanitary  measures 
applicable  to  trade  in  animals  and  animal  products,  plants,  plant  products  and  other  goods  and  animal 
welfare’, the SPS Agreement currently in force between EU and Chile. 

198 

 
                                                 
Belgium,  porcine  semen  from  the  Netherlands  and  casings  from  Denmark.  These  two 
openings in 2017 added to an already long list of agri-food commodities that the EU exports 
to  Chile.  The  Market  Access  procedure  derived  from  the  EU/Chile  SPS  Agreement  has 
proved to be advantageous for the Member States. Chile recognises applies the same import 
requirements to the entire EU. In addition, the market access procedure has been simplified. 
Namely once the market is open for a commodity from one or more Member States and when 
another  Member  State  wants  to  export  for  the  first  time,  Chile  evaluates  the  information 
provided by the Commission. Further information is only needed when Chile has some doubts 
on  specific  aspects.  Chile  rarely  requires  to  carry  out  on-the-spot  verifications  of  the 
information  provided.  In  such  cases,  Chile  visits  some  EU  Member  States  and  extends  the 
conclusions to the entire European Union. For certain commodities such as gelatine, collagen, 
egg  products,  prepared  meals,  meat  extract  all  MS  are  authorised.  Chile  approves  the  EU 
exporting establishments with a pre-listing procedure in a short delay (within days). 

5. 

CONCLUSIONS AND OUTLOOK 

As  in  previous  years,  the  process  of  implementation  through  the  work  of  the  various  trade-
related sub-committees and the Trade Coordinators Meeting has worked very well, dialogue is 
fluid and potential problems have been generally addressed early on. The key issues are the 
above-mentioned  list  of  pending  obligations  for  Chile  on  public  procurement  and  the  up-
dating of the wine and spirits agreement.  

In  absolute  terms  the  evolution  of  bilateral  trade  and  investment  is  at  first  sight  overall 
positive, both Chile and the EU have concluded numerous trade agreements since 2003, and 
both  sides  face  challenges  to  retain  their  respective  market  share  and  preferential  status  in 
competition to other preferential trading partners.  

It is against this backdrop that the EU and Chile decided to modernise to upgrade and replace 
the existing EU-Chile trade agreement with a completely new and very ambitious framework 
for  bilateral  trade  and  investment.  This  process  is  under  way  and  two  substantial  rounds  of 
negotiations have already taken place in January 2018 in Santiago de Chile and in May 2018 
in Brussels140.  

140  http://trade.ec.europa.eu/doclib/press/index.cfm?id=1395  

199 

 
 
 
                                                 
ANNUAL INFO SHEET ON IMPLEMENTATION OF THE TRADE PILLAR OF 
THE EU-MEXICO ASSOCIATION AGREEMENT 141 

1. 

INTRODUCTION 

In  1997  Mexico  was  the  first  country  in  Latin  America  to  sign  an  Economic  Partnership, 
Political Coordination and Cooperation Agreement with the EU, which came into force in 
2000  (‘Global  Agreement’).  Its  trade  provisions  were  later  developed  into  a  comprehensive 
Free  Trade  Agreement  (hereinafter  called  ‘the  FTA’),  which  entered  into  force  in  October 
2000 for goods and 2001 for services, respectively. It has now been applied for 18 years. 

At  the  time  the  FTA  was  concluded,  it  was  the  most  extensive  trade  agreement  that  had 
ever been signed by the EU. The Agreement was considered ambitious and worked well for 
both sides, but over time it became clear that its provisions needed to be modernised to be fit 
for  the  21st  century.  Bilateral  goods  trade  between  the  EU2  and  Mexico  has  expanded 
significantly after the entry into force of the FTA, with exports and imports having more than 
doubled.  Bilateral  imports  and  exports  developed  in  a  similar  pattern,  although  the  exports 
from the EU to Mexico have grown slightly faster than exports from Mexico to the EU. 

Although  the  FTA  between  the  EU  and  Mexico  includes  some  elements  of  non-tariff 
measures  besides  tariff  reductions,  it  does  not  yet  go  as  far  as  the  deep  and  comprehensive 
FTAs that the EU recently concluded with other partner countries. Nowadays, there is a clear 
trend for FTAs to focus more on the Non-Tariff Measures (NTMs) aspects of trade, as tariffs 
have become relatively less important barriers to trade than are NTMs. In this context, the EU 
and Mexico agreed to explore the possibility of deepening the level of its commitments during 
the  CELAC  summit  in  Santiago  de  Chile  in  2013.  Following  these  exploratory  talks,  trade 
negotiations to modernise the existing EU-Mexico Global Agreement which includes an FTA 
were launched on 25 May 2016 and carried out over 9 rounds. 

An ‘Agreement in principle’ was reached at ministerial level on the trade part of a modernised 
EU-Mexico  Global  Agreement  on  21  April  2018.  Discussions  are  now  focussing  on 
completing  the  technical  details  of  the  new  FTA,  which,  once  in  force,  will  replace  the 
existing  FTA.  In  view  of  the  above,  trade  relationships  between  the  EU  and  Mexico  were 
marked in 2017 by the negotiation process to modernise the EU-Mexico Global Agreement. 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in goods 

In 2017, bilateral trade in goods between the EU and Mexico increased by 14.7% compared to 
2016,  and  totalled  EUR 61.7 billion.  Mexican  exports  to  the  EU  (EUR 23.2 billion)  grew 
faster  than  the  EUR 37.9 billion  worth  of  exports  that  the  EU  sent  to  Mexico  (19.6%  and 
12.0%, respectively), even though the EU continues to register a trade surplus with Mexico, 
which grew from EUR 13.9 to EUR 14.1 billion in 2017. In 2017, the EU remains Mexico’s 

141  See 

detailed 
regions/countries/mexico/ 

information 

available 

on: 

http://ec.europa.eu/trade/policy/countries-and-

200 

 
                                                 
second  largest  export  market,  with  a  share  of  6%  of  total  exports  and  totalling 
EUR 23.8 billion. 

Graph 1: Merchandise trade between the EU and Mexico 

Source: Eurostat. 

As can be seen from the above graphic the structure of Mexico’s trade with the EU maintains 
a  coherent  pattern  with  the  main  sectors  and  their  respective  share  of  the  bilateral  trade 
remaining quite stable over the years.  

into 

into 

the  EU  from  Mexico 

the  EU  from  Mexico:  Imports 

totalled 
Imports 
EUR 23.2 billion. The largest export categories of products imported from Mexico to the EU 
were machinery and appliances (EUR 6 billion – 25% of EU imports from Mexico), followed 
by transport equipment  (cars mainly  EUR 5.6 billion  –  23.6%), oil-related products  (17.8%) 
and optical/photographic instruments (12%). The import growth is widespread throughout the 
sectors  as  all  sectors  showed  positive  growth  rates  above  2015  levels  (except  for  the  oil 
sector).  This  marks  a  positive  trend  compared  to  the  year  2016,  which  was  marked  by  a 
significant decrease of overall trade flows due to a marked reduction of oil-related products 
imports from Mexico. 

EU  Exports  to  Mexico:  European  exports  to  Mexico  totalled  EUR 37.9 billion;  the  main 
categories  remain  the  same  in  comparison  to  previous  years,  namely:  industrial  machinery 
(EUR 13.6 billion  -  36%  of  EU  exports  to  Mexico),  followed  by  the  automotive  sector 
industries 
(EUR 6.3 billion  –  16.5%), 
(EUR 5.4 billion), base metals (EUR 2.8 billion) and plastics (EUR 1.8 billion). The increase 
was widespread throughout the different sectors. 

the  chemical  or  allied 

then  products  of 

2.2. 

Trade in agricultural goods:  

Trade in agricultural and fisheries products totalled EUR 2.7 billion, which represented 4.4% 
EU-Mexico  trade  flows  consisting  of  EUR 1.3 billion  EU  imports  from  Mexico  and 
EUR 1.4 billion EU exports to Mexico.  

201 

 
 
Table 1: Agrifood trade flow between the EU and Mexico 

Source: Eurostat 

2.3. 

Preference Utilisation rate (PUR) 

This  rate  shows  to  what  extent  Mexican  importers  and  EU  exporters  are  using  the  FTA 
preferences, i.e. take advantage of the FTA’s duty reductions. In 2017, the PUR for Mexican 
imports  into  the  EU  was  70.5%.  This  compares  to  57.8%  in  2016,  52.1%  in  2015,  and 
60.7% in 2014 and 66.8% in 2013.  

According  to  statistical  data  received  from  the  Mexican  authorities  on  the  utilisation  of 
preferences  by  EU  exporters,  covering  the  period  from  1  July  2016  to  30  June  2017,  EU 
preferential  utilisation  rates  increased  significantly  reaching  85%,  while  EU  exports  to 
Mexico have decreased in value during the same period. During the consecutive period (i.e. 1 
July 2016 to 30 June 2017), EU exports increased substantially in value (by more than 16%) 
but  this  was  accompanied  by  a  reduction  of  the  preferential  utilisation  rate  to  a  level 
comparable to the year 2015 and 2016, (from 85% to 75%).142  

As  a  general  pattern,  it  can  be  noted  that  the  existing  agreement  does  not  provide  tariff 
reduction  to  approximately  two  thirds  of  the  EU  exports  to  Mexico  due  to  the  fact  that, 
depending on the product, the corresponding MFN applied rate is zero or because there is no 
preference under the agreement. 

See  below  statistics  provided  by  the  Mexican  authorities  on  the  PURs  for  EU  exports  to 
Mexico. Note that Mexican data are not consolidated over a calendar year but over a temporal 
window of 12 months starting on 1st July each year. 

Table 2. Preferential Utilisation Rate for EU exports to Mexico (1000 EUR) 

Period 

1/7/2014 to 30/6/2015 
1/7/2015 to 30/6/2016 

Total EU 
exports to 
Mexico 
31 603 733.6 
37 226 535.6 

Preference 
eligible exports 

Preferential 
exports 

10 694 933.1 
12 775 592.0 

8 263 931.2 
9 745 100.7 

Preference 
Utilisation Rate 
(%) 

77.3 
76.3 

142 The fluctuation in the PUR for 2016 and 2017 could also have other reasons, including lack of detailed tariff 
line data from Mexico for some product categories concerning exports worth 2.4 billion EURO (out of a total 
of  43.2  billion  EUR).   The  remaining  "unknown"  preference  utilisation  in  lines  with  real  preferences 
concerns less than 1 million euro. 

202 

 
 
                                                 
 
Period 

1/7/2016 to 30/6/2017 
1/7/2017 to 30/6/2018 

Total EU 
exports to 
Mexico 
36 419 907.6 
43 277 509.6 

Preference 
eligible exports 

Preferential 
exports 

12 307 045.4 
13 527 132.4 

10 467 239.1 
10 178 425.3  

Preference 
Utilisation Rate 
(%) 

85.1 
75.2 

Source: Secretariat of Economy of Mexico 

2.4. 

Trade in services and FDI 

Growth  in  trade  in  services  was  more  limited  than  in  goods,  increasing  marginally  from 
EUR 14.6 billion  in  2015  to  EUR 14.8 billion  in  2016  (+2.1%).  The  trade  surplus  remained 
stable as the EU registered a EUR 4.8 billion surplus with Mexico, identical to the one from 
the previous year.  

Table 3 

As for FDIs, according to Eurostat BoP statistics, Mexican investment in the EU went up to 
EUR 42 million  in  2016,  whereas  EU  investment  reached  EUR 137 million  down  from 
EUR 152 million in 2016. 

According to  the Mexican Central  Bank, the EU contributed with  27% (EUR 6.5 billion) of 
the  total  FDI  in  2017.  Over  60%  of  the  EU’s  contribution  came  from  two  member  states 
(Spain  and  Germany).  Total  stocks  of  EU  FDI  in  Mexico  since  2000  is  estimated  to 
EUR 130 billion  and  represents  31%  of  Mexico’s  total  accumulated  FDI  since  2000,  which 
positions the EU as the second largest investor behind the US. According to the World Bank 
classification,  Mexico  rank  49  in  the  2018  ‘Doing  business’  ranking  and  its  ‘Distance 
Frontier’ index increased from 72.09 to 72.27 owing, essentially, to the electricity reform.  

Table 4  

203 

Services trade EU28 with Mexico (million euro)Services trade EU28 with Extra-EU28 (million euro)Growthmio €annual %EU28 imports4,8505,0151643.4%EU28 exports9,6969,8431471.5%Balance4,8454,828-17Total trade14,54614,8583112.1%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsMexico20152016FDI EU28 with Mexico (million euro)FDI EU28 with Extra-EU28 (million euro)2013201420152016Inward stocks25,11931,39233,35142,257Outward stocks110,180135,203152,741137,266Inward flows1,8327,5602,3535,812Outward flows22,88524,52816,990-11,960Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 
 
 
3. 

ISSUES ADDRESSED IN THE ANNUAL JOINT COMMITTEE MEETING 

In 2017, the EU and Mexico focussed their efforts in advancing in the negotiations for modernizing 
the  existing  agreement.  As  a  consequence,  no  joint  meeting  was  held  in  2017  but  in  these  regular 
meetings the EU and Mexico were also able to address some existing trade irritants.  

4. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

The following paragraph presents below the evolution of the barriers which have been registered under 
the EU market access database143. 

Two barriers have been solved in the course of 2017:  

  Registration and approval of health products and agro-chemicals: EU companies 
complained about the length to receive the marketing authorization from the Mexican 
Authority. During the last years, Mexico improved significantly the efficiency of the 
process  and  reduced  the  delay  to  get  products  registered.  In  2017,  the  EU  did  not 
register new complaints on this matter and considers that this barrier has been de facto 
lifted. 

  Restrictions on FDIs: The barrier has been solved as a result of a reform carried out 
by  Mexico.  There  is  no  more  equity  cap  for  FDI  in  Telecom  and  satellite 
communications,  Energy  (marketing  of  gasoline  and  distribution  of  liquefied 
petroleum  gas;  drilling  of  petroleum  and  gas  wells;  construction  of  pipelines  for 
petroleum  and  petroleum  products)  and  insurance  institutions,  bonding  institutions, 
credit information companies, securities rating institutions and insurance agents. 

On SPS matters, the SPS Committee under the current Agreement did not meet in year 2017 
due  to  the  commencement  of  the  negotiation  for  the  modernisation  of  the  Agreement.    In 
parallel of these negotiations, regular exchanges/meetings between the EU and Mexico took 
place to find solutions on pending market access issues.   

Mexico keeps several SPS measures in place which are considered a barrier to trade affecting 
EU exports of fresh  fruit and vegetables due to cumbersome administrative procedures with 
disproportionate  and  overly  costly  mitigation  measures  including  for  some  products,  costly 
pre-shipment  inspections  in  the  country  of  origin  to  be  paid  by  the  industry  (preclearance). 
Also  for  imports  of  meat  and  meat  products,  Mexico  applies  a  burdensome  application 
procedure  and  when  market  access  is  granted  for  a  limited  number  of  approved 
establishments, further on-the-spot inspections by Mexico have to be carried out for each new 
establishment with the costs of this procedure to be covered by the EU establishments visited. 
In  2017,  more  frequent  exchanges  between  the  EU  and  Mexico  took  place  on  SPS  related 
market access issues due to the ongoing negotiation on the modernisation of the existing EU-
Mexico  FTA.  The  EU  has  carried  out  regular  meetings  with  the  competent  Mexican 
authorities,  the  SENASICA,  in  order  to  speed  up  the  approval  of  pending  applications  by 

143  See: http://madb.europa.eu/madb/barriers_crossTables.htm?isSps=false 

204 

 
                                                 
Member States. This  method  has proved successful with  many  applications (some of which 
were  longstanding)  approved  and  related  to  some  key  EU  exports  such  as  pork  meat 
(Belgium,  France, Germany  and  Italy have been authorised) or poultry (Mexico applied the 
recognition  of  regionalisation  for  exporting  EU  Member  States  affected  by  avian  influenza 
outbreaks  in  2017).  Also  in  2017,  further  market  access  was  granted  to  some  EU  Member 
States  for  products  such  as  pears,  dairy,  and  fishery  products.  Current  tariff  measures  limit 
still the full benefit of the SPS barriers which have been addressed and further work continues 
with  the  Mexican  authorities  for  progressing  on  these  issues.  In  April  2017,  Mexico  agreed 
upon  a  certificate  for  poultry  manure  and  opened  the  market  for  Tilapia  fry  from  The 
Netherlands. Early 2017 Mexico agreed upon a certificate on bees for reproduction for Italy. 
In  September  2017,  a  certificate  was  accepted  by  Mexico  which  opened  the  market  for 
hydrolysed  proteins  from  porcine  and  avian  origin  for  animal  feed  originating  from  The 
Netherlands. On pig products, France received a communication from Mexico, October 2017, 
that France can export cured ham with prelisting. 

The  EU  monitored  the  other  identified  barriers,  and  continued  pressing  the  Mexican 
authorities for progressing on these issues. Most of these barriers (i.e. Enforcement problems 
of IPR, SPS restrictions and pre-listing, Government Procurement) will be tackled when the 
modernised agreement will enter into force. 

5. 

CONCLUSIONS AND OUTLOOK 

In 2017 EU trade relations with Mexico confirmed their positive trends. Overall trade flows increased 
well  above  the  average  to  14.7%  and  amounted  to  EUR 67.7 billion.  In  2017,  the  opening  of 
negotiations  to  renegotiate  NAFTA  caused  uncertainty  as  to  the  future  of  regional  trade  and  could 
have impacted investment decisions. Mexican growth GDP grew by 2.3%, which compares favourably 
to the rest of Latin American region (+/ 0.9%) but is below its long-term average of 2.6%.  

In  2017,  the  EU-Mexico  trade  relations  were  focussed  on  progressing  on  the  negotiations  for 
modernising the Global Agreement. An ‘Agreement in principle’ was reached on 21 April 2018.  

The  outcome  of  negotiations  is  highly  satisfactory  given  that  the  level  of  ambition  of  the 
modernised agreement is very high and in line with the most recent FTAs signed by the EU, 
such as the one with Canada or with Japan. As a result the modernised agreement will bring 
improvements across the board of EU-Mexico trade and investment relations, for example: 

  Goods: The EU has obtained significant market access on key EU exports (e.g. pork, 

poultry, PAPs and dairy). 

  Services: Mexico committed to open up its services market with comprehensive and 
ambitious  concessions,  including  on  Maritime  Transport,  Financial  Services  and 
Telecommunication. 

  Investment protection: Mexico has agreed to the ICS and to the substantive rules for 
protection and to replace the existing 16 BITs with EUMS by the agreement with the 
EU. 

205 

 
  Energy:  Mexico  has  accepted  commitments  in  several  chapters  (Energy  and  Raw 
Material,  Services,  Investment,  State  owned  enterprise)  which  will  give  the  EU 
important market access.  

  SPS:  The  agreed  texts  established  a  high  level  of  cooperation  between  the  Mexican 
and  EU  administrations,  in  particular  regarding  pre-listing,  pre-clearance  and 
regionalisation. 

  GIs:  Mexico  has  agreed  to  protect  the  shortlist  of  340  EU  GIs  with  a  high  level  of 

protection.  

  TSD, civil  society  mechanism & anti-corruption:  For the  first  time ever in  an EU 
trade agreement there will be an annex on anti-corruption to fight against bribery and 
money  laundering,  with  an  enforcement  mechanism.  The  modernised  FTA  will 
contain  a  fully-fledged  TSD  Chapter  in  which  Mexico  committed  to  effectively 
implement labour and environmental standards and agreements. For the first time ever, 
the  civil  society  consultation  mechanism  which  previously  was  limited  to  the  TSD 
chapter will be extended to the whole agreement. This will allow the civil society  on 
both  sides  (but  in  particular  in  Mexico)  to  make  its  voice  heard  also  on  the  human 
rights provisions of the political pillar. 

Some  technical  issues  still  remain  to  be  finalised.  Meanwhile  the  EU  and  Mexico  have 
decided to start the process for legal revision to allow the Commission to present its proposal 
to  the  EU  Council  and  European  Parliament  for  the  signature  and  conclusion  of  the 
modernised agreement before the end of this Commission in the second half of 2019.  

Now  that  the  negotiations  are  closed,  the  Commission  will  seek  to  reinitiate  the  regular 
dialogue  with  Mexico  regarding  the  implementation  of  the  existing  EU-Mexico  Global 
Agreement.  The  Commission  has  proposed  to  Mexico  organising  the  meetings  of  the  Joint 
Committee in early 2019. 

Some  technical  issues  still  remain  to  be  finalised.  Meanwhile  the  EU  and  Mexico  have 
decided to start the process for legal revision to allow the Commission to present its proposal 
to  the  EU  Council  and  European  Parliament  for  the  signature  and  conclusion  of  the 
modernised agreement before the end of this Commission in the second half of 2019.  

Now  that  the  negotiations  are  closed,  the  Commission  will  seek  to  reinitiate  the  regular 
dialogue  with  Mexico  regarding  the  implementation  of  the  existing  EU-Mexico  Global 
Agreement.  The  Commission  has  proposed  to  Mexico  organising  the  meetings  of  the  Joint 
Committee in early 2019. 

206 

 
FIRST GENERATION FREE TRADE AGREEMENTS WITH THE EFTA 
COUNTRIES NORWAY AND SWITZERLAND 

207 

 
ANNUAL INFO SHEET ON IMPLEMENTATION OF THE  
EU-NORWAY FREE TRADE AGREEMENT 

1. 

INTRODUCTION 

On 1 July 1973, a Free Trade Agreement between Norway and the EU entered into force. 
It foresaw the progressive abolition of customs duties and the creation of a Joint Committee. 
It concerns goods only and is one of the oldest trade agreements signed by the EU. 

Although  the  bilateral  Free  Trade  Agreement  is  still  in  force,  it  has  been  in  practice 
superseded  in  many  respects  by  the  Agreement  on  the  European  Economic  Area  (EEA), 
which entered into force on 1 January 1994, and brings together the EU Member States and 
the three EEA EFTA States — Iceland, Liechtenstein and Norway — in the Internal Market. 
The  EEA  agreement  ensures  the  free  movement  of  goods,  services,  capital  and  persons 
between Norway and the EU and is the backbone of EU-Norway cooperation. Members of the 
EEA  fully  apply  the  whole  acquis  communautaire  related  to  the  "four  freedoms"  through 
dynamic incorporation of the relevant legislative acts into the Protocols  and Annexes of the 
EEA Agreement via Joint Committee Decisions. 

The  EEA  Agreement  does  not  cover  the  common  agricultural  and  fisheries  policies,  the 
customs union, the common trade policy, the common foreign and security policy, the field of 
justice and home affairs, the economic and monetary union (EMU). 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in Goods 

The EU remains the first import and export partner for Norway, capturing 70 % of the latter's 
trade.  Norway  is  the  EU's  third  largest  FTA  trade  partner  overall  and  its  seventh  largest 
partner for trade in goods. Norway's trade with the EU shows a surplus. However, the balance 
is in favour of the EU in the services' area, with a balance of almost EUR 13 billion in 2016, 
comparable  to  figures  the  EU  has  with  China  or  Japan.  For  agricultural  products,  the  trade 
balance is also positive for the EU (almost EUR 4 billion).  

Exchange 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, but not at such pace (by 
4.9%).  

Table 1 

208 

EU 28 trade in goods with Norway (million Euro)20072008200920102011201220132014201520162017Imports79.29595.94568.91879.02695.32599.84389.55985.10774.15663.31577.414Exports43.47043.71937.49241.93346.81949.93050.07950.16848.78048.32450.707Balance-35.824-52.226-31.426-37.093-48.506-49.913-39.479-34.939-25.376-14.991-26.707Total Trade 122.765139.664106.411120.959142.143149.773139.638135.276122.936111.639128.122 
 
Figure 1 

2.2. 

Trade in agricultural goods  

Agriculture  is  not  covered  by  the  EEA  agreement  (with  the  exception  of  processed 
agricultural  products).  However  the  EEA  agreement  encourages  further  liberalisation  of 
agricultural trade through its Article 19. Negotiations based on this Article started in 2015 and 
were concluded successfully at negotiators' level in April 2017. This agreement144, signed on 
4 December 2017, will enter into force on 1 October 2018. The concessions consist of 36 
fully liberalised tariff lines and TRQs to be opened by both sides. This will offer new trade 
opportunities  for  EU  and  Norwegian  exporters  of  agricultural  products.  The  impact  will  be 
duly monitored by the Commission.  

The  EU  exported  agricultural  products  worth  EUR  4.5  billion  to  Norway  and  the  trend  is 
increasing.  Agricultural  exports  to  Norway  doubled  in  the  last  decade  and  increased  by  4% 
from 2016 to 2017. In 2017, the EU's key agri-food exports to Norway consisted of fruit & 
vegetables  (13%), pasta, pastry, biscuits  and bread (8%), wine, vermouth, cider and vinegar 
(7%), cigars and cigarettes (7%). The EU imported agri-food products worth EUR 575 million 
from  Norway.  The  EU's  main  agricultural  products  imported  from  Norway  were  oilcakes 
(13%), raw hides, skins and furskins (13%) and vegetable oils (11%). 

TRQs granted by Norway for key agricultural products (beef, pork, cheese) have been fully or 
almost  completely  utilised  by  the  EU  since  2012.  The  uptake  of  the  TRQs  for  other 
agricultural products (fruit, sausages, live plants) has been high, ranging from more than 70% 
to almost 100%. The utilisation rate for poultry and turkey meat as well as for eggs has – with 
intermittent  fluctuations  –  decreased  from  100%  in  2012  to  more  than  60%  in  2017;  these 
fluctuations are due to a variety of factors such as the EU internal market's own demand. 

In  general,  Norway  makes  little  use  of  the  agri-food  TRQs  granted  by  the  EU.  Only  four 
TRQs are fully utilised (waters, feedingstuff for fish, potato slices, cheese) and two TRQs are 
utilised by about 50% (ethyl alcohol, chocolates). 

144  Agreement in the form of an Exchange of Letters between the European Union and the Kingdom of Norway concerning additional trade 

preferences in agricultural products, OJ L 129/3, 25.05.2018 

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2018.129.01.0003.01.ENG&toc=OJ:L:2018:129:TOC 

209 

-60.000-40.000-20.000020.00040.00060.00080.000100.000120.000200320042005200620072008200920102011201220132014201520162017Merchandise trade EU28 with Norway (million euro)ImportsExportsBalance07-06-2018Source Trade G2 Statistics/ISDB from Eurostat  
 
                                                 
 
Table 2 

2.3. 

Preference Utilisation rate (PUR) 

The  PUR  overall  on  imports  into  the  EU  from  Norway  is  for  the  second  consecutive  year 
below  70%.  However,  the  declining  trend  since  2013  has  been  reverted  in  2017.  Figures  to 
calculate the PUR on EU exports to Norway were not available.  

Table 3 

2.4. 

Trade in Services and FDI 

Regarding trade in services, the trade balance is positive for the EU.  In 2016, after several 
years  of  regular  increase,  the  value  of  services  provided  by  the  EU  to  Norway  however 
slightly  decreased  while  the  value  of  imported  services  stabilised  in  2015  and  2016  after 
several years of increase.  

Table 4 

FDI is an important aspect of the EU-Norway relations. In 2016, Norwegian investment in the 
EU  was  worth  approximately  74  billion  EUR  while  European  investments  in  Norway 
represented 94 billion EUR.  

210 

EU28 merchandise trade by AMA/NAMA sector with Norway (million euro)20072008200920102011201220132014201520162017EU28 importsTotal79.29595.94568.91879.02695.32599.84389.55985.10774.15663.31577.414Agricultural385414382427469499523531535544575Non-Agricultural78.91095.53068.53778.59994.85699.34489.03684.57673.62162.77176.840EU28 exportsTotal43.47043.71937.49241.93346.81949.93050.07950.16848.78048.32450.707Agricultural2.4412.6742.5522.9093.3983.8323.9834.0254.0914.3084.486Non-Agricultural41.03041.04534.94039.02443.42146.09846.09646.14444.68944.01546.222EU28 trade balanceTotal-35.824-52.226-31.426-37.093-48.506-49.913-39.479-34.939-25.376-14.991-26.707Agricultural2.0562.2602.1702.4832.9293.3323.4603.4943.5553.7643.911Non-Agricultural-37.880-54.485-33.596-39.575-51.435-53.245-42.939-38.433-28.932-18.755-30.618Source Trade G2 Statistics/ISDBDefinition AMA UR AoAUse of preferences on imports into the EU from Norway20132014201520162017use as % eligible74%72%71%66%69%Source: Eurostat - Includes all preferences (FTA, GSP, bilateral)Source Trade G2 Statistics/ISDBEU28 trade in services with Norway (million euro)201120122013201420152016EU28 imports11.99312.76414.34616.41815.67915.169EU28 exports22.63924.96427.12228.17929.59527.947Balance10.64612.20012.77611.76113.91612.779Total trade34.63237.72841.46744.59745.27443.116Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 
 
 
 
Table 5 

3. 

ISSUES ADDRESSED IN THE EEA AND FTA JOINT COMMITTEES 

The EEA Joint Committee, where the European Action Service represents the EU side, meets 
six  to  eight  times  per  year145.  Four  subcommittees  assist  the  Joint  Committee  (on  the  free 
movement  of  goods, the free movement  of capital  and services including  company law, the 
free  movement  of  persons  and  horizontal  and  flanking  policies).  They  mainly  deal  with  the 
incorporation  of  the  EU  acquis  into  the  legal  system  of  Norway.  The  EEA  Council  meets 
twice a year to discuss at political level a series of issues related to the EEA agreement. Trade 
in  agricultural  products  belongs  to  the  topics  raised  in  the  2017  and  2018  EEA  Council 
conclusions146. 

In practice, since the signing of the EEA agreement, the bilateral FTA have been less active 
and no  FTA Joint Committee meetings have been called in the last  years. Joint committee 
decisions, often of technical nature and limited in number, are taken by written procedure. 

Trade issues are also discussed on a case-by-case basis, notably at the occasion of high-level 
meetings. In 2017, bilateral trade irritants such as reclassification and tariff switch issues were 
notably raised from the EU side, in addition to pointing at areas with room for further trade 
liberalisation, such as processed agricultural products or GIs.  

4. 

SPECIFIC AREAS OF IMPORTANCE 

The integration in the Internal Market via the EEA agreement is a main achievement of EU-
Norway relation and the main driver of our trade relations. Norwegian companies participate 
in the Single Market almost under the same conditions as Member States, and vice-versa. The 
same  rules  apply  (for  example,  technical  requirements  of  certain  products  or  competition 
rules) to ensure a level-playing field. EU Single Market rules are dynamically integrated into 
Norwegian  law  through  the  EEA  agreement.  This  creates  a  stable  and  predictable 
environment. Norway has a say in the EEA decision-shaping process, albeit without a vote on 
the  final  decision.  A  relatively  high  number  of  legal  acts  (554  acts  as  of  May  2018)  are 
however  still  pending  incorporation  into  the  EEA  Agreement,  creating  the  so-called 
"backlog" in this dynamic approximation. A joint effort is required, especially in the area of 
financial services, where the backlog is concentrated.  

Agricultural and fisheries products, which are excluded from the scope of the EEA agreement, 
are not in free circulation between Norway and the EU and quotas exist in a number of areas.  

As  Norway  and  the  EU  did  not  form  a  Customs  Union,  customs  procedures  apply  –  unlike 
among Member States. 

145  https://eeas.europa.eu/diplomatic-network/european-economic-area-eea/348/european-economic-area-eea_en 
146 http://www.efta.int/EEA/EEA-Council-1315 

211 

Foreign Direct Investment EU28 with Norway (million euro)InwardOutward201420152016201420152016Stocks73.82477.74874.71981.30282.99394.064Flows4.9772.5922.8545.4886.2095.927Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 
 
                                                 
5. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

Processed agricultural products 

Trade in processed agricultural products is regulated by Protocol 3 to the EEA agreement (and 
by Protocol 2 to the FTA, which still offers a more preferential treatment than the EEA for a 
few products). Protocol 3 of the EEA foresees the possibility to levy customs duties based on 
the cost of the basic agricultural products in the EU and in Norway. In practice, EU exports of 
processed agricultural products are hindered by high customs tariffs. Despite the fact that the 
Protocol  foresees  annual  consultations  and  possible  new  concessions  to  make  sure  that  the 
terms  are  adapted  to  market  developments,  there  have  been  only  two  adaptations  since  the 
entry into force of the EEA Agreement in 1994. 

The  EU  is  ready  to  engage  in  discussions  on  further  liberalisation  of  trade  in  processed 
agricultural  products,  as  indicated  at  several  occasions.  This  was  notably  discussed  at  three 
meetings  with  Norwegian  authorities  in  2012-2014.  At  the  last  meeting  in  December  2014, 
Norway  said  that  such  negotiations  might  only  be  envisaged  if  and  when  Article  19 
negotiations  on  trade  in  agricultural  products  would  be  successfully  concluded  –  which 
eventually  happened  in  2017  as  indicated  above.  Hence,  the  EU  expects  the  discussions  to 
resume. 

GIs 

The last EU-Norway bilateral agreement negotiated under Article 19 of the EEA Agreement 
contains also a commitment of the parties to encourage trade in agricultural products with GIs 
(GIs). The GIs negotiations were launched on 20 November 2013 but were suspended at the 
request of the Norwegian side following the 5th negotiating round on 5 April 2016. The EU is 
ready to resume these negotiations. 

Trade irritants  

A recurring trade irritant since 2012 was linked to the reclassification and tariff switch by the 
Norwegian  Customs  Authorities  of  several  agricultural  products  under  different  HS  tariffs 
codes. These issues were successfully addressed in the framework of the recent EU-Norway 
Article 19 negotiations, mentioned above. Additional export possibilities should be in October 
2018 . This outcome will be duly monitored by the Commission. 

During  2017,  the  Commission  also  sought  clarification  from  Norwegian  authorities  on  a 
change  of  classification  for  kalanchoe  varieties,  one  of  the  most  popular  potted  plants  in 
Norway. Adopted in November 2016, it resulted, according to stakeholders, in duty increase 
from  0%  to  72%  for  the  hybrid  type  of  kalanchoes.  This  issue  is  being  followed  up  with 
Norwegian authorities. 

Over the  years, stakeholders have indicated that in several instances the auction fees for the 
TRQs  granted  by  Norway  to  the  EU  under  bilateral  agricultural  trade  agreements  and 
managed  via  auctioning,  raise  as  high  as  the  MFN  duty.  These  fees  may  be  passed  on 
indirectly  to  EU  exporters  eroding  thereby  the  preferences  given  to  the  EU  under  bilateral 
agreements.  

In  general,  European  companies  or  business  associations  report  burdensome  administrative/ 
tax  procedures  when  exporting  to  Norway.  The  issues  will  be  further  examined  and  if 
appropriate raised with the Norwegian partners. 

212 

 
6. 

CONCLUSIONS AND OUTLOOK 

Institutionally,  through  the  EEA  agreement,  Norway  is  as  closely  linked  to  the  Internal 
Market  as  a  third  country  can  be.  There  is  however  room  for  further  strengthening  of  trade 
relations in the area of basic and processed agricultural products. Politically, Norway and the 
EU  are  close  allies.  Norway  actively  aligns  itself  with  EU  foreign  policy  instruments, 
including  the  EU's  sanction  policy  towards  Russia,  and  is  also  subject  to  the  Russian 
agricultural ban. In multilateral trade fora, notably the WTO, the EU and Norway very often 
defend the same position. 

213 

 
 
 
ANNUAL INFO SHEET ON IMPLEMENTATION OF THE  

EU-SWITZERLAND FREE TRADE AGREEMENT

147 

1. 

INTRODUCTION 

The  EU-Swiss  trade  relations  are  among  the  deepest  worldwide  outside  the  context  of  a 
customs union/internal market. Switzerland is the EU's largest FTA trade partner and its third 
largest  trade  partner  overall  (number  2  for  services).  For  Switzerland,  the  EU  is  by  far  the 
most important trading partner. The EU’s trade in goods surplus with Switzerland amounted 
to  more  than  EUR 40 billion  in  2017  (EUR 20 billion  in  2016)  while  the  services  surplus 
reached EUR 20 billion in 2016 (EUR 44 billion in 2015).  

The cornerstone of EU-Swiss trade relation is the EU-Switzerland Free Trade Agreement of 
1972148. It concerns goods only and is one of the oldest trade agreements signed by the EU. It 
does not contain provisions on services, investment, IPR, government procurement or social 
and  environmental  values.  No  dispute  settlement  mechanism  is  foreseen  beyond  the  regular 
annual dialogue at Joint Committee meetings.  

As  a  consequence  of  the  rejection  of  EEA  membership  in  1992  by  the  Swiss  people, 
Switzerland  and  the  EU  agreed  on  a  package  of  seven  sectoral  agreements  signed  in  1999 
(known in Switzerland as ‘Bilaterals I’). Some of them are relevant from a trade perspective:  

 

 

 

 

 

The  Free  Movement  of  Persons  Agreement149  allows  for  the  provision  of 
services, limited in time.  
The  Mutual  Recognition  Agreement  in  relation  to  conformity  assessment150 
ensures  that, in  twenty  regulated sectors, the  conformity assessment  provided 
by  one  party  is  recognised  by  the  other,  which  of  course  facilitates  trade 
between the parties.  
The  Public  Procurement  Agreement151,  that  builds  on  the  WTO  Government 
Procurement Agreement; 
The Agreement on trade in agricultural products152, which includes SPS rules, 
as well as tariffs and quotas for agricultural products, except for cheese that is 
liberalised.  
A  protocol  on  processed  agricultural  products  (protocol  2)  was  also  added  to 
the  Free  Trade  Agreement,  in  2004.  It  includes  a  mechanism  whereby  in 
practice  Switzerland  receives  compensation  for  the  very  significant  price 
differential of basic agricultural products - which serve as inputs to processed 
agricultural products - between the EU and Switzerland. 

147  http://ec.europa.eu/trade/policy/countries-and-regions/countries/switzerland/  
148  https://eur-lex.europa.eu/legal-content/en/ALL/?uri=OJ:L:1972:300:TOC  
149  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A22002A0430%2801%29  
150  http://trade.ec.europa.eu/doclib/docs/2013/december/tradoc_152006.pdf  
151  https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:22002A0430(06)  
152  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2002.114.01.0132.01.ENG 

214 

 
 
                                                 
Overall, the EU-Swiss relationship is characterised by a complex web of approximately 120 
bilateral  sectoral  agreements.  Since  2015,  both  parties  are  negotiating  an  Institutional 
Framework Agreement to streamline the operation of some of these agreements. The aim is 
to  provide  an  overarching  framework  with  clear  mechanisms  for  dynamic  acquis  take-over, 
uniform interpretation of rules and an efficient dispute settlement mechanism. 

Between  2014  and  end-2016,  the  EU-Swiss  relation  has  been  overshadowed  by  the  popular 
vote ‘against mass immigration’, which is now being implemented in a way that is compatible 
with the Free Movement of Persons Agreement. New impetus was brought to the relation in 
2017:  the  Swiss  President  and  the  President  of  the  European  Commission  met  at  two 
occasions  and  agreed  that  progress  should  be  made  on  all  open  files  in  parallel  -  and  in 
particular on the institutional front. 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in Goods 

The EU is Switzerland’s main trading partner by far, representing 52% of its exports of goods, 
followed  by  the  United  States  (with  approximately  10%)  and  China  (with  around  6%). 
Switzerland is the EU’s third trading partner, representing 7% of its trade, after the USA and 
China. 60% of Swiss imports come from the EU while 45% of their exports go to the EU. The 
total  value  of  goods  exchanged  in  the  last  decade  grew  by  65%.  European  exports  to 
Switzerland grew by 6% between 2016 and 2017.  

Table 1 

Figure 1 

2.2. 

Trade in agricultural goods  

With  EUR 4.7 billion  imported  yearly  from  Switzerland,  and  EUR 8.2 billion  exported,  the 
Swiss  and  European  markets  for  agricultural  products  are  closely  linked  and  on  a  lasting 

215 

020.00040.00060.00080.000100.000120.000140.000160.000180.000200320042005200620072008200920102011201220132014201520162017Merchandise trade EU28 with Switzerland (million euro)ImportsExportsBalance17-05-2018Source Trade G2 Statistics/ISDB from Eurostat  
 
 
increasing  path.  Our  imports  of  agricultural  products  tripled  since  2003  and  our  exports 
doubled in the same period.  

The  EU  imports  mainly  coffee  and  tea  (HS  09),  followed  by  beverages  (HS  22),  edible 
preparations  (HS  21),  cocoa  (HS  18)  and  dairy  products  (HS  04).  The  EU  exports  mainly 
beverages (HS 22), fruits & nuts (HS 08) and cereals, flour and starch (HS 19). Between 2016 
and  2017,  our  agri-food  exports  to  Switzerland  grew  by  4.3%  whereas  our  imports  from 
Switzerland declined slightly by 0.3%. 

The  EU  utilised  25  of  32  agricultural  TRQs  by  more  than  85%  (including  EU  key  export 
products  such  as  cured  ham  &  pork  products).  Five  TRQs  were  utilised  between  43-54% 
(such  as  poultry  meat,  honey)  and  only  two  were  below  33%  (gherkins,  frozen  fruit  –  the 
latter includes frozen strawberries and frozen raspberries for which the MFN is at zero %). In 
2017, Switzerland hardly utilised the agri-food quotas granted by the EU. The majority of the 
quotas were not used at all, or used by a very low percentage, notable exceptions being Dried 
Bovine Meat and Cream & Yoghurt, that were used entirely.  

Table 2 

2.3. 

Trade in Services and Investment 

Switzerland  is  a  very  important  partner  of  the  EU  for  trade  in  services,  in  particular  for 
commercial  services.  The  value  of  services  provided  by  EU  companies  in  Switzerland,  and 
vice versa, is on a fast growing path. The balance is positive for the EU. However, between 
2015 and 2016, EU imports of services from Switzerland grew faster than EU exports, thus 
reducing the size of the surplus, which nevertheless represents EUR 20 billion. 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. 

Table 3 

216 

20072008200920102011201220132014201520162017Total77.04782.65080.90985.49393.498105.90094.53296.560102.362121.723110.336Agricultural2.5762.9113.0493.4003.8394.1894.3494.4334.6114.6744.659Non-Agricultural74.47179.73977.86082.09289.659101.71190.18392.12797.751117.049105.677Total93.234100.62388.797110.470142.095133.619169.142140.286150.513142.219150.813Agricultural4.9135.5725.5076.0116.4506.7157.0807.2117.6527.8758.213Non-Agricultural88.32195.05183.290104.459135.646126.904162.062133.075142.861134.344142.599Total16.18717.9737.88824.97748.59827.71974.61043.72648.15220.49640.476Agricultural2.3372.6612.4582.6112.6112.5262.7312.7783.0413.2013.554Non-Agricultural13.85015.3125.43022.36645.98725.19471.87940.94745.11017.29536.922Source Trade G2 Statistics/ISDBDefinition AMA UR AoAEU merchandise trade by AMA/NAMA sector with Switzerland (million EUR)EU 28 importsEU 28 exportsEU 28 trade balanceEU28 services trade with Switzerland (million euro)201120122013201420152016EU28 imports47.41450.84954.56363.30472.63694.090EU28 exports82.20196.573100.203107.703114.477115.028Balance34.78845.72445.63944.39941.84220.938Total trade129.615147.421154.766171.008187.113209.118Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 
 
 
 
FDI  is  a  prominent  feature  of  the  EU-Swiss  relationship.  The  Swiss  stocks  of  the  FDI 
represents 12% of all FDI in the EU. 

Table 4 

2.4. 

Preference Utilisation rate  

The PUR on EU exports to Switzerland has remained relatively stable over the past four years 
and amounted to 78% in 2017 (table 5). The downward trend of the PUR on imports into the 
EU from Switzerland was reverted in 2017 when the PUR amounted to 85%, back to the level 
of 2015 (table 6).  

Table 5 

Table 6 

ISSUES ADDRESSED IN THE ANNUAL JOINT COMMITTEE MEETING 

3. 
At  the  63rd  meeting  of  the  Joint  Committee  under  the  EU-Swiss  FTA,  which  took  place  in 
Brussels on 26 November 2017, the main points on the agenda have been the following: 

Processed  agricultural  products:  Both  parties  exchanged  latest  reference  prices  for  basic 
agricultural  products.  On  that  basis,  the  Swiss  customs  duties  for  processed  agricultural 
products  originating  in  the  EU  were  lowered  as  of  1  May  2018.  The  processed  agricultural 
products originating in Switzerland enjoy a duty-free market access to the EU. 

Company tax reform: The EU inquired about the next steps envisaged by Switzerland to put 
an  end,  in  line  with  a  political  agreement  of  October  2015,  to  the  cantonal  fiscal  status  of 
companies - considered discriminatory.  

Reform of Swiss VAT law: The EU sought clarification on planned changes to VAT law in 
order to better assess its possible impact, notably on European SMEs and on e-commerce.  

217 

Foreign Direct Investment EU 28 with Switzerland (in million euro)InwardOutward201420152016201420152016Stocks510.669656.900766.992721.599852.438976.744Flows38.317121.64180.468-31.03732.83262.396Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsPUR (%)20132014201520162017 EU80.3          80.3          79.0          78.8          78.3          Use of preferences on imports into Switzerland from EUUse of preferences on imports into EU from SwitzerlandPUR (%)20132014201520162017EU92.0          90.8          85.7          83.4          85.0           
 
 
 
Access  to  market/  trade  barriers:  In  line  with  Council  conclusions  adopted  in  February 
2017153,  the  EU  highlighted  difficulties  faced  by  European  companies  in  relation  to  market 
access, notably in the services sector. Switzerland has indeed put in place so-called “flanking 
measures”  to  accompany  the  implementation  of  the  EU-Switzerland  Free  Movement  of 
Persons  Agreement154.  Their  objective  is  to  monitor  the  respect  of  minimum  working 
conditions in Switzerland notably of (comparatively very high) Swiss salaries and to provide 
for  sanctions  -  where  deemed  necessary.  The  EU  considers  the  flanking  measures  as 
burdensome  and  disproportionate,  giving  rise  to  barriers  for  EU  companies  accessing  the 
Swiss services markets.  

Radiometric  controls:  Parties  discussed  the  difficulties  encountered  by  the  Swiss  due  to 
some  administrative  requirement  set  by  a  Member  State,  requiring  radiometric  controls  on 
certain types of metal imports from Switzerland. 

Steel  surveillance:  Switzerland  emphasised  the  strong  integration  of  European  and  Swiss 
companies  in  the  steel  sector  and  noted  that  the  general  prior  surveillance  measures 
introduced  by  the  EU  in  2016  to  monitor  steel  imports  are  perceived  as  an  administrative 
burden  by  Swiss  companies  involved  in  “just  in  time”  delivery  chains.  They  called  for  a 
smooth and harmonised implementation of these surveillance measures by different Member 
States. 

Customs issues: Parties addressed two unrelated customs issues with negative impact on the 
partner  country:  the  change  of  classification  of  dog  and  cat  food  by  the  EU  and  changes  to 
seasoned meat by the Swiss customs authorities.  

PURs: Despite relatively high utilisation rates of the FTA, the Joint Committee noted a slight 
downward trend, especially on imports into EU from Switzerland, and agreed to examine in 
more detail if – and how - further use could be made of the FTA.  

In addition to the yearly meeting of the FTA joint committee, about a dozen joint committees 
under  other  bilateral  agreements  take  place  on  a  regular  basis  but  there  is  no  overarching 
committee which oversees bilateral economic relations in their entirety.  

The  Annual  Joint  Committee  meeting  on  agriculture,  for  example,  took  place  on 
16 November 2017 and several working group met on technical issues such as GIs, organics 
and  wine  &  spirits  drinks.  The  EU  and  Switzerland  are  also  cooperating  to  protect  the 
homonymy of the denomination ‘Gruyère’ in agreements with third countries. 

4. 

SPECIFIC AREAS OF IMPORTANCE 

Unlike the three EEA EFTA countries (Norway, Iceland and Liechtenstein), Switzerland does 
not  have  full  access  to  the  four  freedoms  of  the  Internal  market  and  does  not  dynamically 
integrate  the  EU  acquis.  On  the  basis  of  the  sectoral  bilateral  agreements,  Switzerland  has 
however  access,  to  a  certain  extent,  to  two  pillars  of  the  internal  market:  free  movement  of 
goods (with the exception of most agricultural products and approximately half of processed 
agricultural products, where access is limited), and free movement of persons (which includes 
also  cross-border provision of services limited in  time). The sectoral  agreements are largely 

153  http://www.consilium.europa.eu/en/press/press-releases/2017/02/28/conclusions-eu-swiss-confederation/ 
154  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A22002A0430%2801%29 

218 

 
                                                 
static: the arrangements between Switzerland and the EU are usually based on recognition of 
the  identical  or  equivalent  nature  of  the  EU  and  Swiss  legislation  in  the  sectors.  However, 
Switzerland is taking over – on a contractual or even on an autonomous basis  - parts of the 
EU  acquis,  for  example  in  the  area  of  recognition  of  professional  qualifications.  Hence  the 
need for an Institutional Framework Agreement mentioned above. 

5. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

Basic agricultural products: Liberalisation of agricultural products is very limited (the most 
notable exception being cheese which is fully liberalised on both sides). Although there was a 
commitment  in  2002  to  progressively  further  liberalise  trade  in  agriculture,  the  negotiations 
stalled in 2010.  

Processed agricultural products: A protocol annexed to the FTA in 2004 foresees a rather 
burdensome  and  asymmetric  mechanism  whereby 
in  practice  Switzerland  receives 
compensation  for  the  very  significant  price  differential  between  the  EU  and  Switzerland  of 
basic agricultural products, which serve as inputs to processed agricultural products. The EU 
considers that a review of protocol 2 is needed and expects discussions to start in due course. 

SPS issues:  Negotiations  to  extend the scope of  the SPS rules currently  applicable between 
Switzerland and the EU are on-going. A new agreement addressing notably labelling or food 
security issues could facilitate trade between the parties. Transiting Swiss territory by road of 
EU  live  animals  is  not  allowed  (Namely  Swiss  animal  welfare  standards  are  more  stringent 
than the EU standards). 

Services:  There  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.  

Trade barriers: The main trade barriers for EU businesses in Switzerland are linked to the 
services  sectors,  in  particular  to  the  implementation  of  the  EU-Swiss  Free  Movement  of 
Persons Agreement and the “flanking measures”, as described above.  

Dispute  settlement:  the  bilateral  trade  relationship  lacks  any  reliable  dispute  settlement 
mechanism. 

6. 

CONCLUSIONS AND OUTLOOK 

EU  and  Switzerland  remain  very  important  trade  partners  and  bilateral  trade  continues 
growing.  However,  there  is  room  for  improvement.  The  institutional  setting  for  EU-Swiss 
bilateral  trade  relations  is  very  complex  with  the  coexistence  of  an  old  FTA  and  numerous 
sectoral agreements addressing a variety of trade issues. The improvement of the institutional 
setting for EU-Swiss trade relations is discussed in the broader context of the negotiations on 
an Institutional Framework Agreement between the EU and Switzerland.  

219 

 
 
 
THE CUSTOMS UNION WITH TURKEY  

The contractual relations between the EU and Turkey date back to 1963 when the European 
Economic  Community  (i.e.  the  EU’s  predecessor)  and  Turkey  signed  an  Association 
Agreement (the ‘Ankara Agreement’), in which both parties agreed to progressively establish 
a  Customs  Union  over  a  period  of  several  years.  An  Additional  Protocol  was  signed  in 
November  1970  setting  out  a  timetable  for  the  abolition  of  tariffs  and  quotas  on  industrial 
goods circulating between the parties. The final phase of the Customs Union was completed 
on  1  January  1996  by  the  EU-Turkey  Association  Council  Decision  No  1/95,  which  is 
currently in force.155 

The Customs Union ensures the free movement of all industrial goods and certain processed 
agricultural  products  between  the  EU  and  Turkey.  It  also  established  a  requirement  for 
Turkey’s  alignment  to  the  EU’s  customs  tariffs  and  rules,  commercial  policy,  competition 
policy, intellectual property rights, as well as to the EU’s technical legislation related to the 
scope of the Customs Union. The Customs Union with Turkey therefore goes well beyond the 
traditional free trade agreements which the EU has concluded with other third countries.  

In  addition  to  the  Customs  Union,  the  EU  and  Turkey  concluded  two  further  bilateral 
preferential  trade  agreements.  The  Agreement  between  the  European  Coal  and  Steel 
Community (ECSC) and Turkey on trade in products covered by the Treaty establishing the 
ECSC established a Free trade agreement for coal, iron and steel products156, along with 
relevant competition rules. Association Council Decision No 1/98157 (amended by Decision 
No 2/2006158) provides for preferential concessions on trade in certain agricultural and fishery 
products. 

On 21 December 2016, the European Commission adopted its Recommendation for a Council 
Decision  authorising  the  opening  of  negotiations  with  Turkey  on  an  Agreement  on  the 
extension  of  the  scope  of  the  bilateral  preferential  trade  relationship  and  on  the 
modernisation of the Customs Union. The negotiations can start once the Council adopts the 
related negotiating directives. The proposal is pending authorisation by the Council.  

155  http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:21996D0213(01):EN:HTML  
156  http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:21996A0907(01):en:HTML  
157  http://eur-lex.europa.eu/legal-content/en/ALL/?uri=OJ:L:1998:086:TOC  
158  http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:22006D0999&from=EN  

220 

 
 
                                                 
ANNUAL INFO SHEET ON IMPLEMENTATION OF THE EU-TURKEY CUSTOMS 

UNION AND TRADE AGREEMENTS 

159 

7. 

EVOLUTION OF TRADE 

The Customs Union has led to substantial increase in trade between the EU and Turkey. Since 
its entry into force in 1996, the value of bilateral trade increased more than fourfold160. The 
rise  in  FDI  to  Turkey  from  the  EU  has  been  similarly  significant,  as  has  been  the  deeper 
integration in production networks between Turkish and European firms. Turkey is now the 
EU’s 5th largest trading partner overall (it is the EU’s 5th biggest export market and 6th largest 
source of imports), whilst the EU is by far Turkey’s most important trading partner.  

7.1. 

Trade in Goods 

Trade  in  goods  between  the  EU  and  Turkey  has  seen  a  sharp  increase  over  the  last  two 
decades.  In  2017,  the  total  two-way  trade  amounted  to  EUR 154 billion  up  from  100 
EUR  billion in 2007. When comparing the more recent years 2016 and 2017, the data shows 
that  EU’s  exports  to  Turkey  grew  by  8.4%  from  2016  to  2017,  and  the  EU’s  imports  from 
Turkey also increased by 4.5%.  

Table 1. EU merchandise trade with Turkey (million EUR) 

Figure 1 shows the overall evolution of trade in goods since 2007. 

Figure1. EU Merchandise trade with Turkey (million EUR) 

Regarding  the  sectoral  split,  the  EU’s  biggest  export  category  in  2017  was  machinery  and 
appliances  (26.3%  of  overall  EU  exports),  followed  by  transport  equipment  (16.8%),  base 
metals  and  article  thereof  (11.8%)  and  chemical  products  (11.6%).  Turkey’s  biggest  export 
sector was transport equipment (26.2%), followed by textiles and textile articles (20.8%) and 
machinery and appliances (17.2%) 

159  More  information  on  EU-Turkey  trade  relations  can  be  found  at  the  following  website  of  the  European 

Commission: http://ec.europa.eu/trade/policy/countries-and-regions/countries/turkey/ 

160  World Bank: Evaluation of the EU - Turkey Customs Union, March 2014  

221 

Merchandise trade EU28 with Turkey (million euro)Merchandise trade EU28 with Extra-EU28 (million euro)Growth mio €annual %EU28 imports66,76769,7662,9994.5%EU28 exports77,93784,5076,5698.4%Balance11,17114,7413,571Total trade144,704154,2729,5686.6%Source Trade G2 Statistics/ISDB20162017TurkeyMerchandise trade EU28 with Turkey (million euro)Imports47,37846,28836,44643,06248,82048,82250,65754,40961,69666,76769,766Exports52,83054,47644,48661,92973,33675,49177,62474,74378,96677,93784,507Balance5,4518,1888,04018,86724,51626,66926,96620,33317,27011,17114,741 
 
 
                                                 
Trade in agricultural goods  

7.2. 
In 2017, Turkey was our 9th largest destination and 8th largest supplier of agricultural goods. 
The  EU  had  a  trade  deficit  in  agriculture  with  Turkey  of  EUR 816 million.  However,  that 
trade deficit decreased by 602 million down from EUR 1.4 billion in 2016. 

Table 2. EU-Turkey agricultural trade (million EUR)  

EU imports 
EU exports 
Source: Eurostat 

2013 
3 751 
2 639 

2014 
4 105 
2 600 

2015 
4 966 
3 244 

2016 
4 262 
3 093 

2017 
4 492 
3 676 

EU  agri-food  exports  to  Turkey  are  well  diversified.  Only  one  specific  category  exceeded 
10% of all agri-food exports in 2017, namely live animals (13.4%). The other biggest export 
categories were wheat (7.4%), food preparations (7.3%), cotton, flax and hemp (4.7%), cigars 
and cigarettes (4.6%), spirits and liqueurs (3.3%) and chocolate, confectionery and ice cream 
(3.2%). The categories that showed the biggest increases from 2016 were beef, cereals,  rice 
and  wheat.  Beef,  fresh,  chilled  and  frozen,  represents  only  1.9%  of  agri-food  exports  but  it 
increased 154% in 2017, amounting to EUR 71 million, up from EUR 28 million in 2016. 

EU exports of live cattle increased from EUR 46 million in 2013 to EUR 494 million in 2017, 
making  Turkey  the  EU’s  largest  market  destination  in  2017.  EU  exports  were  boosted  in 
particular by the temporary suspension of import duties by Turkey on an MFN basis. 

For  frozen  beef,  the  19 100 tons  quota  is  used  irregularly  from  one  year  to  another,  e.g.  in 
2016, 271 tons  while in 2017, 10 800 tons.  The quota is  managed by a  government  agency, 
the  Meat  and  Milk  Institute  (ESK),  which  has  in  most  years  not  issued  import  licenses 
resulting in the non-utilisation of the quota. 

In order to facilitate trade and ensure a better use of the quota, a Decision of the EU-Turkey 
Association  Council  amending  Protocol  2  of  Decision  No  1/98  and  the  quota  definition  to 
include also fresh and chilled beef has been adopted on 28 March 2018 and has entered into 
force on the same date. 

As regards agri-food imports from Turkey, fresh, dried or preparations of vegetables, nuts or 
tropical fruit represent around 70%. In 2017, these categories amounted to EUR 2 956 million 
(7% decrease, from EUR 3 184 million in 2016). 

7.3. 

Preference Utilisation rate (PUR) 

One of the specific features of the Customs Union is the free movement of goods between the 
partner countries, without the need to prove compliance with the rules of origin, thereby 
significantly reducing the overall cost of trade. It also makes it easier for traders to benefit 
from the preferential arrangements. In 2017, 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%.   

222 

 
 
Table 3. Use of preferences on imports into EU from Turkey 

Source: Trade G2 Statistic, includes all preferences. 

Table 4.  Use of preferences on imports from the EU to Turkey  

7.4. 

Trade in Services and FDI 

The EU-Turkey Customs Union only covers trade in  industrial  goods and certain  processed 
agricultural products. Services and investment are not covered under the current agreement.  

As regards trade in services, the latest data available cover the year 2016 and they show that 
a trade surplus for Turkey, reflecting the high barriers to enter the Turkish market as well as 
the net surplus of EU visitors to Turkey.  

Table 4.  

As for FDI, the EU is by far the biggest source of FDI (FDI) in Turkey, with a total FDI stock 
exceeding EUR 72 billion in 2016 (the latest available data). In 2016, European investment in 
Turkey was much more limited (EUR 337 million) than in 2015 (more than EUR 10 billion).  

Table 5.  

8. 
ISSUES ADDRESSED IN THE CUSTOMS UNION JOINT COMMITTEE MEETING 
The 34th and the 35th Customs Union Joint Committee (CUJC) meetings took place on 11 
and 12 May 2017 in Brussels , and on 16 and 17 May 2018 in Ankara, respectively. At both 
meetings, the parties discussed issues linked to the proper functioning of the Customs Union, 
including the following: 

  The  state  of  play  of  the  Commission’s  proposal  in  the  Council,  as  regards  future 

negotiations on the modernisation of the EU-Turkey Customs Union.  

223 

Use of preferences on imports into EU from TurkeyPUR (%)20132014201520162017EU91.7          92.5          92.8          92.5          92.0          PUR (%)20132014201520162017 EU-            -            -            95.3          94.3          Use of preferences on imports into Turkey from EUEU28 services trade with Turkey (million euro)EU28 services trade with Extra-EU28 (million euro)201120122013201420152016EU28 imports15,04214,57715,12415,90416,61713,913EU28 exports9,1639,49210,31710,67012,27511,768Balance-5,879-5,085-4,807-5,234-4,342-2,145Total trade24,20524,06925,44126,57428,89225,681Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsForeign direct investment EU28 with Turkey (million euro)Foreign direct investment EU28 with Extra-EU28 (million euro)InwardOutward201420152016201420152016Stocks9,2389,6889,42966,49276,76972,318Flows1,7209572814,64811,876337Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 
 
 
 
 
 

Increasing  number  of  trade  barriers  and  breaches  of  the  Customs  Union by  Turkey, 
including measures  such as  additional  duties  imposed on imports  of products  from 
third  countries  which,  however,  are  already  put  into  free  circulation  in  the  EU, 
surveillance  measures  of  certain  products,  export  restrictions  of  copper  and 
aluminium,  unnecessary  testing  requirements  and  customs  procedures,  Turkey’s 
localisation policy in the pharmaceutical sector, IPR enforcement, etc.  

  The  shortcomings  of  the  IPR  enforcement  regime  in  Turkey  and  the  new  
international  exhaustion  regime  while  participating  in  the  Customs  Union  with  the 
EU. 

  Turkey’s alignment to EU technical legislation in areas which are essential for the 

functioning of the Customs Union. 

  Update  on  recent  EU  trade  policy  developments,  in  particular  as  regards 
negotiations  of  free  trade  agreements  with  third  countries,  linked  to  Turkey’s 
obligation to align with the EU’s commercial policy.  

Under the umbrella of the Association  Committee, the 13th  meeting of the EU-Turkey Sub-
Committee on Agriculture and Fisheries was held on 22–23 March 2017 in Ankara. Turkey’s 
agricultural  policy was  still not  aligned with  the Common agricultural  policy. However, the 
success of the Rural Development component of the Instrument for Pre-accession Assistance 
for 2007-2013 (IPARD I) was highlighted and progress for the period 2014-2020 (IPARD II) 
was on track. On 22 September 2017, consultations were held on hazelnuts in Ordu, Turkey. 

9. 

SPECIFIC AREAS OF IMPORTANCE 

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.161  

10. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

In 2017, Turkey introduced various trade barriers, which also affect European companies. A 
number  of  these  measures  are  in  breach  of  the  Customs  Union  rules.  As  regards  the 
implementation  of  the  existing  bilateral  preferential  trade  framework,  Turkey  has  created 
further  trade  barriers  that  breach  the  Customs  Union  agreement  (ranging  from  localisation 
policy  in  the  pharmaceutical  sector  and  discrimination  against  EU  exports  of  tractors  to 
further deviation in the alignment of import tariffs to the EU and export restrictions on leather 
products).  The  European  Commission  has  been  raising  and  addressing  these  barriers  in 
various fora, including the Customs Union Joint Committee and other bilateral meetings.  

At the same time, during 2017 Turkey also solved a number of trade barriers.  For example, 
Turkey  abolished  export  restrictions  on  copper  and  aluminium  scrap  and  removed  paper 
products from the scope of its import surveillance scheme.  

161 

See 

also 

conclusions 

of 

the  General  Affairs 

Council 

of 

26 

June 

2018; 

http://www.consilium.europa.eu/en/meetings/gac/2018/06/26/   

224 

 
                                                 
11. 

CONCLUSIONS AND OUTLOOK 

Turkey’s obligation to align to the EU’s common customs tariff, as well as to EU technical 
legislation which are important for the free movement of goods, go much beyond classic trade 
agreements  and  thus  make  the  bilateral  trade  relationship  unique.  The  Customs  Union  has 
therefore led not only to significant increase in bilateral trade over the last 20 years, but also 
to important investment and production links between the two parties. However, the economic 
and trading environment has changed substantially since the  creation of the Customs Union 
and  it  has  become  less  well  equipped  to  deal  with  the  modern  day  challenges  of  trade 
integration.  

The  European  Commission  has  therefore  adopted  on  21  December  2016  a  proposal  to 
modernise the Customs Union to improve its functioning and to further extend the scope of 
the  bilateral  preferential  trade  arrangements  in  line  with  its  approach  to  modern  free  trade 
agreements and the ‘Trade for All’ Communication, thus also covering areas such as services, 
public procurement, specific rules for SMEs and sustainable development, as well as further 
liberalisation  of  agricultural  products.  A  modernised  Customs  Union  would  also  need  to 
contain an effective dispute settlement mechanism to address the increasing number of trade 
and  market  access  problems  faced  by  European  companies.  It  remains  to  be  seen  when  the 
political circumstances will allow for the Council to resume its suspended work on the above 
Commission proposal.  

225 

 
 
 
PART IV: ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE 
ECONOMIC PARTNERSHIP AGREEMENTS (EPAS) WITH AFRICAN, 
CARRIBEAN AND PACIFIC COUNTRIES 

The Economic Partnership  Agreements (EPAs)  with  African, Caribbean, and Pacific groups 
of states aim at leveraging trade and investment to accelerate sustainable development in 
the partner countries.162 A total of 7 EPAs were being implemented with 29 ACP countries 
in  2017.163  These  include  14  Caribbean  countries,  13  African  countries  and  2  Pacific 
countries. In addition, two regional agreements (with West Africa and with the East African 
Customs Union) have been negotiated and are awaiting signature and implementation.  

EPAs implemented in 2017 

EPA partners 

CARIFORUM 

Antigua and Barbuda, Bahamas, Barbados, Belize, 
Dominica, Dominican Republic, Grenada, Guyana, 
Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the 
Grenadines, Suriname, and Trinidad and Tobago 

Pacific 

Fiji, Papua New Guinea 

Eastern and Southern Africa (ESA) 

Madagascar, Mauritius, Seychelles, Zimbabwe 

Southern African Development 
Community (SADC) 

Botswana, Lesotho, Mozambique, Namibia, Swaziland, 
South Africa 

Central Africa 

Ghana 

Côte d’Ivoire 

Cameroon 

Ghana 

Côte d’Ivoire 

EPAs are asymmetric trade agreements. The ACP side liberalises around 80% of trade over 
a period of 15  years (20 years for some products), while the EU grants duty free quota free 
access for all products from day one. Numerous instruments, from generous rules of origin to 
special  safeguards,  ensure 
the  EPAs  support  economic  development,  export 
diversification  and  regional  integration  in  partner  countries.  While  EPAs  have  some 
common characteristics, they differ from each other in order to respect the interests and needs 
of different regions.  

that 

162  More  on  EPAs  online:  http://ec.europa.eu/trade/policy/countries-and-regions/development/economic-
partnerships/; EPA State of Play: http://trade.ec.europa.eu/doclib/docs/2009/september/tradoc_144912.pdf  
163  For the  EPAs negotiated by  2007, the terms ‘comprehensive/full’ and  ‘interim’  have  been used. The  term, 
‘full’  EPAs  indicated  regional  EPAs  with  comprehensive  thematic  and  country  coverage.  ‘Interim’  EPAs 
with more limited thematic (trade in goods, development cooperation) and country (sub-regional) coverage, 
were meant as stepping stones for full EPAs. However, all EPAs are self-standing international agreements 
subject to signature, provisional application, ratification and ultimately entry into force. The dichotomy has 
lost much of its meaning as ‘interim’ EPAs are not limited in time and can be extended to cover wider areas. 

226 

 
 
                                                 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC 
PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND THE SOUTHERN 
AFRICAN DEVELOPMENT COMMUNITY (SADC) 

1. 

INTRODUCTION 

The  EU-SADC  EPA  is  an  agreement  between  the  EU  and  six  countries  from  the  Southern 
African Development Community (SADC): Botswana, Lesotho, Mozambique, Namibia South 
Africa  and  Swaziland.164  It  was  signed  on  10  June  2016  and  entered  into  provisional 
application on 10 October 2016 for  all Parties to  the Agreement  except  for Mozambique.  It 
entered into provisional application for Mozambique on 4 February 2018. Hence 2018 will be 
the first year in which all SADC EPA states fully implement the agreement.165 

The EU-SADC EPA (‘the Agreement’) is the first and only regional EPA in Africa to be fully 
operational  (all  partners  are  implementing  the  tariff  cuts  foreseen  by  the  EPA).  The 
Agreement  replaces  all  the  trade  provisions  of  the  former  bilateral  Trade  and  Development 
Cooperation Agreement (TDCA) between the EU and South Africa166.  

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in goods 

The EU-SADC EPA provides for asymmetric liberalisation of trade in goods. All SADC EPA 
States  except  for  South  Africa  receive  duty  free  and  quota  free  treatment  of  all  their  goods 
(except  arms  and  munition)  in  the  EU.  South  Africa  receives  such  treatment  for  96%  of  its 
exports to the EU and an additional 2.7% of exports from South Africa benefits from reduced 
tariffs or from TRQs.  

In return, Botswana, Lesotho, Namibia, Swaziland and South Africa (who form the Southern 
African  Customs  Union,  SACU)  grant  duty  free  and  quota  free  treatment  to  84.9%  of 
products exported by the EU to the region. An additional 12.9% of EU exports benefits from 
partial liberalisation (reduced tariffs or TRQs). Mozambique (a Least Developed Country and 
not a member of SACU) liberalises a smaller percentage of exports from the EU. 

Exports of SADC EPA States to the EU have been growing steadily in the last years. Exports 
to  the  EU  have  increased  for  Lesotho  (+30%),  Mozambique  (+25%),  Namibia  (+19%)  and 
South  Africa  (+0.7%)  in  2017  (the  first  full  year  in  which  the  EPA  has  been  provisionally 
applied). A decrease in exports from Botswana (-37%) was caused by a drop in the value of 
diamond  exports  (EUR -683 million  or  -33%  compared  to  2016).  The  decrease  in  exports 

164  Of  the  remaining  9  SADC  countries,  4  are  Parties  of  the  interim  EPA  with  Eastern  and  Southern  Africa 
(ESA),  namely  Mauritius,  Madagascar,  Seychelles  and  Zimbabwe.  The  reminder  has  the  possibility  of 
accession to either the ESA or SADC EPA.  

165  More on trade with SADC EPA states: http://ec.europa.eu/trade/policy/countries-and-regions/regions/sadc/  
166  The  TDCA  has  been  concluded  in  1999  and  governed  the  trade  relations  and  development  cooperation 

between the EU and South Africa. It has been fully replaced by the EPA.  

227 

 
                                                 
from Swaziland (-28%) can be attributed to a contraction of its sugar exports due to the end of 
the EU’s sugar quota system, as well as severe droughts in 2016-2017.  

EU exports to SADC EPA States have increased by 5.6% in 2017, after a drop in 2016. The 
strongest 
for  motor  vehicles 
(EUR +594 million),  while  the  largest  percentage  increase  was  in  animal  products  (+134%) 
and cereals (+88%). 

(outside  mineral  products)  was 

in  value 

increase 

Table1: EU28 Merchandise trade with SADC6 (million EUR) 

2014 

2015 

2016 

2017 

Botswana 

EU28 imports from Botswana 
EU28 exports to Botswana 
EU28 trade balance 

Lesotho 

EU28 imports from Lesotho 
EU28 exports to Lesotho 
EU28 trade balance 

Mozambique 

EU28 imports from Mozambique 
EU28 exports to Mozambique 
EU28 trade balance 

Namibia 

EU28 imports from Namibia 
EU28 exports to Namibia 
EU28 trade balance 

Swaziland 

EU28 imports from Swaziland 
EU28 exports to Swaziland 
EU28 trade balance 

South Africa 

EU28 imports from South Africa  
EU28 exports to South Africa 
EU28 trade balance 

TOTAL 

EU28 total imports from SADC-6 
EU28 total exports to SADC-6 
EU28 trade balance 
Source: Trade G2 Statistics, from Eurostat 

1 822 
273 
-1 549 

247 
11 
-237 

1 366 
894 
-472 

963 
585 
-378 

151 
29 
-122 

18 514 
23 318 
4 804 

23 063 
25 110 
2 046 

1 503 
275 
-1 228 

254 
12 
-242 

1 435 
983 
-453 

1 039 
404 
-635 

139 
35 
-104 

19 399 
25 432 
6 033 

23 769 
27 141 
3 372 

2 199 
331 
-1 868 

208 
12 
-195 

1 326 
682 
-645 

1 092 
372 
-719 

122 
51 
-71 

22 933 
22 979 
46 

27 879 
24 426 
-3 453 

1 384 
267 
-1 117 

271 
12 
-259 

1 664 
531 
-1 133 

1 305 
476 
-828 

87 
49 
-39 

23 112 
24 465 
1 353 

27 823 
25 800 
-2 022 

It  should  be  borne  in  mind  that  all  SADC  EPA  States,  except  for  South  Africa,  already 
benefited  from  duty  free  and  quota  free  access  to  the  EU  market  before  the  entry  into 
provisional application of the EU-SADC EPA. Similarly, South Africa already benefited from 
preferential  treatment  under  the  Trade,  Development  and  Cooperation  Agreement  (TDCA), 
even though in less favourable term compared to the EPA.  

However, the EPA created new legal certainty about trade relations between the EU and the 
SADC EPA States. In addition, the EPA included new elements to facilitate trade between the 
EU  and  the  SADC  EPA  States,  such  as:  (a)  the  possibility  for  SADC  EPA  States  to  use 
flexible  rules  of  origin;  (b)  additional  market  access  for  agricultural  products  from  South 
Africa;  (c)  some  additional  market  access  for  the  EU  in  SADC  EPA  states;  and  (d)  a 
framework for the protection of GIs in the EU and South Africa. This value-added of the EU-

228 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SADC EPA is already reflected in the trade statistics for specific products, in particular those 
that benefited from additional liberalisation.  

For example, the EU-SADC EPA contains additional market access concessions for South 
African exports of sugar, frozen orange juice, wine, ethanol, flowers and fish. As a result, the 
following could be observed following the entry into application of the EU-SADC EPA: 

  The  value  of  South  African  exports  of  sugar  to  the  EU  increased  from 
EUR 2.3 million in 2015 to EUR 52.6 million in 2017, indeed the TRQ of 150 000 t 
was nearly fully used in 2017; 

  Similar situation was for the TRQs for wine and orange juice, on the other hand the 

TRQ for ethanol was used only partly; 

  The  value  of  South  African  exports  of  fish  fillet  and  fish  meat  increased  from 
to 
EUR 34.93 million 
EUR 42.5 million  in  the  first  semester  of  2017  (under  the  EPA).  Overall  exports  of 
fish,  crustacean  and  molluscs  from  South  Africa  to  the  EU  increased  from 
EUR 192.7 million in 2016 to EUR 235 million in 2017 (+22%).  

first  semester  of  2016 

the  TDCA) 

(under 

the 

in 

EU Imports from South Africa: TRQ fill rate for 2017  

Product 

Annual quota in 2017  Quota fill in 2017 (%) 

Skimmed milk powder 
Butter 
Strawberries 
Cane sugar 
Glucose and glucose syrup 
Citrus jams 
Canned pears, apricots, peaches and mixtures 
Canned tropical fruit 
Frozen orange juice 
Apple juice 
yeast 
Wine in containers 
Wine 
Ethanol 
Source: European Commission 

500 t 
500 t 
385 t  
150 000 t 
500 t 
100 t 
57 156 t 
3 020 t 
1 057 t 
3 595 t 
350 t 
77 741 300 l 
33 317 700 l 
80 000 t 

0% 
0% 
0% 
95% 
0% 
0% 
55% 
0% 
100% 
25% 
24% 
75% 
100% 
14% 

Exports  from  Botswana,  Lesotho,  Namibia  and  Swaziland  (BLNS)167  to  the  EU  have  also 
increased for a number of tariff lines despite droughts in Botswana, Namibia and Swaziland: 

  For  example,  the  value  of  exports  of  soft  drink  concentrates  increased  from 

EUR 2.98 million in 2015 to EUR 8.94 million in 2017 (+ 200.2%);  

  The  value  of  exports  of  dates,  figs,  pineapples  and  avocados  increased  from 

EUR 0.37 million in 2015 to EUR 1.49 million in 2017 (+ 299.7%);  

167  Mozambique  has  not  been  included  in  the  analysis  since  they  only  started  applying  the  EPA  in  February 

2018 

229 

 
                                                 
  The  value  of  exports  of  dried  nuts  and  fruit  increased  from  EUR 1.18 million  in 

2015 to EUR 1.32 million in 2017 (+ 12.4%).  

Figure 1: EU28 Merchandise trade with SADC6 (million EUR) 

30000

25000

20000

15000

10000

5000

0

-5000

-10000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

EU28 Imports from SADC6
EU28 Trade Balance

EU28 Exports to SADC6

Source: Trade G2 Statistics/ISDB from Eurostat 

Similarly,  EU  exports  to  SACU  have  increased  for  many  products  for  which  the  EPA 
provides additional market access, in the form of additional or modified TRQs: 

  The  value  of  EU  exports  of  wheat  increased  from  EUR 223.8 million  in  2015  to 

EUR 266.2 million in 2017 (+19%): 

  The  value  of  EU  exports  of  pig  fat  increased  from  EUR 418 119  in  2015  to 

EUR 1 994 168 in 2017 (+ 376%);  

  The  value  of  EU  exports  of  frozen  pork  ham  and  shoulder  have  increased  from 

EUR 549 089 in 2015 to EUR 890 078 in 2017 (+ 62%);  

  The  value  of  EU  exports  of  butter  increased  from  EUR 5.56 million  in  2015  to 

 

EUR 14.1 million in 2017 (+ 153%).  
In  the  case  of  the  most  prominent  EU  export  products  that  are  subject  to  TRQs  by 
SACU, in particular wheat, pork, cheese, the TRQs were overall well used.  

Table 1: SACU Imports from the EU: Usage of TRQs from 1 January to 1 September 2017 

Product 

Pork 
Pig fat 
Butter 
Cheese 
Wheat 
Barley 
Cereal Based Food Preparations 
Ice cream 

Annual quota in 2017 
(tons) 

Quota fill till 1 September 
2017 

1 500 
200 
500 
7 550 
300 000 
10 000 
2 300 
150 

1 240 
123 
21 
5 767 
289 064 
0 
0 
0 

230 

 
 
Product 

Annual quota in 2017 
(tons) 

Quota fill till 1 September 
2017 

Mortadella Bologna 
Source: DG TRADE calculations based on data provided by the Office of the Executive Secretary of SACU 

100 

0 

Table 2: EU28 merchandise trade with SADC6 by AMA/NAMA (million EUR) 

2014 

2015 

2016 

2017 

Growth 2016-2017 

Trade in Agri-food products (AMA) 
2 689 
EU28 imports from SADC 
1 697 
EU28 exports to SADC 
-993 
EU28 Trade Balance 
Total trade 
4 386 
Trade in non-agricultural goods (NAMA) 
20 374 
EU28 imports from SADC 
23 413 
EU28 exports to SADC 
3 039 
EU28 Trade Balance 
Total trade 
43 787 
Source: Trade G2 Statistics/ISDB from Eurostat 

2 977 
1 812 
-1 165 
4 789 

20 792 
25 329 
4 536 
46 121 

2 968 
1 837 
-1 130 
4 805 

24 911 
22 589 
-2 322 
47 500 

3 076 
1 943 
-1 134 
5 019 

24 747 
23 858 
-889 
48 605 

108 
105 
-3 
213 

-164 
1 269 
1 433 
1 105 

% 

3.6% 
5.7% 

4.4% 

-0.7% 
5.6% 

2.3% 

Generally, there has been a clear increase in agri-food trade between the EU and the SADC 
EPA  States  in  the  years  2014-2017.  Total  trade  in  agri-food  products  went  up  from 
EUR 4 386 million in 2013 to EUR 5 019 million in 2017 (an increase of 14.4%). Throughout 
this period the trade balance has been in favour of the SADC EPA States.  

Similarly,  for  non-agricultural  goods,  there  has  been  a  clear  positive  trend  in  trade  from 
EUR 43 787 million in 2013 to EUR 48 605 million in 2017, representing an increase of 11%. 

2.2. 

Trade in services 

The EU-SADC EPA does not liberalise trade in services, but it should be noted that the EU 
and  Botswana,  Lesotho,  Mozambique  and  Swaziland  have  started  negotiations  on  trade  in 
services.  Services  trade  with  the  SADC  EPA  States  has  slightly  increased  over  the  last  six 
years. The balance of trade is positive in favour of the EU. 

Table 3. EU28 services trade with SADC EPA States (million EUR) 

2011 

2012 

2013 

2014 

EU28 imports 
EU28 exports 
Balance 
Total trade 
Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 

4 938 
8 555 
3 617 
13 494 

5 137 
8 334 
3 197 
13 471 

4 912 
8 597 
3 685 
13 509 

5 175 
8 439 
3 264 
13 614 

2015 

5 672 
9 815 
4 143 
15 487 

2016 

5 720 
8 870 
3 151 
14 590 

2.3. 

FDI 

The EPA does  not  cover investment; however, it is  expected to  contribute to  an increase in 
FDI in the region. Both the inward and the outward investment stock have seen variations in 
recent  years.  The  outward  investment  stock  continues  to  be  much  more  significant  than  the 
inward investment stock. Of the EUR 74.6 million in EU FDI stocks in SADC EPA states in 
2016,  EUR 71.6 million  were  in  South  Africa.  Similarly,  the  vast  majority  of  inward 

231 

 
 
 
 
 
 
investment is from South Africa. It should be noted that the international investment climate 
rankings  of  SADC  EPA  states,  as  well  as  macroeconomic  outlooks  (of  South  Africa  in 
particular), have deteriorated over the past few years, and the debt situation in several of the 
countries has been worsening.  

Table 4: FDI EU28 with SADC EPA States (million EUR) 

Inward 
2015 

Stocks 
Flows 
Source Trade G2 Statistics/ISDB from Eurostat BOP statistics 

9 766 
-669 

2014 
12 602 
698 

2016 
13 076 
5 763 

2014 
63 040 
4 606 

Outward 
2015 
94 397 
21 645 

2016 
74 563 
-11 753 

3. 

ISSUES ADDRESSED IN THE ANNUAL EPA COMMITTEE MEETING 

Since the EPA entered into force in October 2016, the Trade and Development Committee has 
met  three  times  (in  February  2017,  October  2017  and  February  2018).  During  the  meeting, 
Parties discussed the setting up of the institutional framework of the Agreement (in particular 
the setting up of the dispute settlement  system)  and differences of interpretation  on specific 
provisions  of  the  Agreement  (in  particular  on  bilateral  safeguard  measures  and  on  tariff 
dismantling). Other issues  included quota management systems,  cumulation of origin168 and 
the agricultural safeguard.  

Since  the  entry  into  application  there  have  also  been  meetings  of  the  Customs  and  Trade 
Facilitation  Committee  (CTFC),  of  the  Committee  on  GIs,  Wines  and  Spirits  (a  bilateral 
Committee with  South Africa only) and of the  Agricultural  Partnership. The meeting of the 
CTFC allowed partners to advance preparatory work for the start of diagonal cumulation of 
origin, but this work is not finalised yet.  

In  October  2017,  non-state  actors  from  both  the  EU  and  SADC  held  a  first  Civil  Society 
Dialogue  Meeting  in  Johannesburg,  South  Africa.  Stakeholders  elaborated  a  range  of 
recommendations, including the establishment of a permanent civil society platform under the 
EPA and intensified outreach, using technology-based information and communication tools.  

SPECIFIC AREAS OF IMPORTANCE 

4. 
Under the 10th European Development Fund (EDF)169, the Regional Indicative Programme for 
SADC included regional economic integration as a key focal sector. In total EUR 20 million 
the  Regional  Economic  Integration  Programme  (REIS)  and 
were  allocated 

to 

168  SADC EPA States have the possibility to cumulate origin among themselves, as well as with a range of other 
ACP  and  non-ACP  countries.  Cumulation  means  that  originating  products  from  country  X  can  be  further 
processed or added to products originating in e.g. Botswana, just as if they had originated in Botswana. The 
final  product  would  have  the  origin  of  Botswana.  The  SADC  EPA  allows  SADC  EPA  States  to  cumulate 
with originating products from any country, as long as the product in question faces zero tariffs upon entry in 
the EU (e.g. products that fall under MFN zero, or face zero tariffs under the EBA regime or under an FTA).  
https://ec.europa.eu/europeaid/funding/funding-instruments-

the  European  Development 

169  More 

Fund: 

on 

programming/funding-instruments/european-development-fund_en  

232 

 
  
  
                                                 
EUR 32 million to the Trade Related Facility (TRF). The first one aimed at building trade 
capacities  at  regional  level,  while,  under  the  second  one,  support  was  provided  to  the 
implementation of the regional free trade areas and to EPA implementation in each individual 
SADC  country.  In  practice,  however,  the  former  also  included  support  to  national 
administrations  to  better  integrate  them  into  the  wider  regional  context.  For  instance,  under 
the REIS, each SADC EPA country requested funds to implement specific projects aimed at 
trade  administrations, 
strengthening 
competition  and  customs  enforcement,  SPS  authorities  and  bodies  in  charge  of  standards, 
trade facilitation and private sector development. In addition, the EPA implementation unit in 
the SADC Secretariat has also been funded under this programme. 

the  capacities  of 

their  respective 

international 

National EPA Implementation Plans (NEIPs) have been drawn up jointly between the EU 
and the partner country for all SADC EPA States except Namibia. The purpose is to identify 
necessary  steps  and  measures  the  country  would  need  to  take  in  order  to  maximize  the 
contribution  of  the  EPA  to  long-term  sustainable  economic  development.  The  NEIPs  are  a 
useful tool to align EPA implementation priorities with development assistance funds. Under 
the 11th EDF, a total of EUR 30 million are about to be earmarked to the 5 SADC EPA States 
other  than  South  Africa  specifically  for  EPA  implementation.  Under  a  separate  instrument, 
EUR 10 million have been earmarked for the same purpose only to South Africa.  

A significant part of development cooperation (under the range of EU external aid instruments 
available),  at  regional  and  national  level,  provides  support  to  EPA-related  policy  fields 
including SME development, vocational education and policy dialogue, as well as support to 
agriculture  and  venture  capital  development,  but  also  to  connectivity  (transport  and  energy) 
through blending.  

Finally,  the  SADC  region  will  also  benefit  under  the  11th  EDF  of  EUR 15 million  for  trade 
facilitation, EUR 18 million for industrialisation and productive sectors, and EUR 14 million 
for the investment and business environment. 

The  support  provided  by  EU  Member  States  individually  should  also  been  taken  into 
consideration.  For  example,  Germany,  through  a  EUR 3.5 million  project  managed  by 
Deutsche  Gesellschaft  für  Internationale  Zusammenarbeit  (GIZ),  is  promoting  sustainability 
aspects  in  the  implementation  of  the  SADC  and  CARIFORUM  EPAs.  GIZ  is  also 
implementing  a  EUR 20.7 million  project  on  regional  economic  integration  in  SADC.  The 
UK has allocated GBP 35 million under the UK prosperity fund to support economic growth 
in South Africa. 

5. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

2017  marks  the  first  year  when  the  Agreement  was  provisionally  applied  between  all 
parties.170 There are a number of outstanding issues with regard to the implementation of the 
EU-SADC EPA. To begin with, the institutional framework of the Agreement is not fully in 

170  With the exception of Mozambique which started to apply the agreement in 2018.  

233 

 
                                                 
place  yet. The dispute settlement system has not yet been agreed upon (roster of arbitrators, 
rules  of  procedure  and  code  of  conduct  for  arbitrators  are  pending).  The  Joint  Council,  the 
Trade and Development Committee and other Committees do not have rules of procedure yet, 
meaning that these institutions cannot take binding decisions at this stage.  

Furthermore, the possibility to ‘cumulate origin’ between SADC EPA States, one of the key 
benefits  of  the  Agreement,  is  not  active  yet.  Cumulation  of  origin  will  allow  SADC  EPA 
states to fulfil origin requirements jointly and hence boost regional value chains. SADC EPA 
States  have  to  notify  (orally  or  in  writing)  the  administrative  cooperation  agreements  (a 
prerequisite for cumulating origin) that they have already put in place.  

Differences  of  views  about  the  interpretation  of  certain  provisions  of  the  Agreement  would 
need to be resolved, particularly on the tariffs that apply to specific textile products exported 
from the EU to SACU.  

SACU has carried out a safeguard investigation on EU poultry according to a legal basis and 
methodology the EU disagrees with.  

With regard to SPS measures, since the Trade and Development Cooperation Agreement was 
signed in 1999, EU agri-food trade with South Africa has more than doubled, with EU exports 
increasing four-fold by 2017.  

SPS  issues  are  discussed  in  the  Trade  and  Development  Committee,  which  last  met  in 
November 2017. Foremost among the issues related to the EU exports was the suspension of 
nearly  all  exports  of  EU  poultry  (had  reached  over  200  billion  euro  in  2015  and  2016)  by 
South Africa following the avian influenza (HPAI) outbreaks of the winter of 2017.  

The Commission has been actively pressuring the South African authorities to recognise the 
HPAI-free  status  of  Member  States,  and  to  recognise  regionalisation  in  future  outbreaks 
instead  of  imposing  country-wide  bans.  However,  South  Africa  has  made  the  re-opening  of 
market conditional on audit visits to EU Member States, to be conducted in 2018. 

Finally,  work  is  ongoing  to  agree  a  mechanism  to  monitor  the  operation  and  impact  of  the 
Agreement  and  on  a  way  to  regularly  involve  non-state  actors  from  all  Parties  in  the 
monitoring process. 

6. 

CONCLUSIONS AND OUTLOOK 

For 2017 we can observe a clear increase in trade flows for specific products from both the 
EU  and  South  Africa  that  have  benefited  from  additional  liberalisation  in  comparison  to 
TDCA regime. Exports of certain products from Botswana, Lesotho, Namibia and Swaziland 
also  increased.  Moreover,  progress  was  made  in  preparing  the  future  implementation  of  the 
Agreement through several EU-SADC Trade and Development and Sub-Committee meetings. 
However, it is clear that, to maximise the Agreement’s positive impacts, in addition to tariff 
liberalisation, other outstanding implementation issues will need to be addressed. This will be 
easier  once  the  institutional  framework  of  the  Agreement  will  be  complete  and  fully 
operational.  

234 

 
235 

 
 
 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC 
PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND COTE D’IVOIRE  

1. 

INTRODUCTION 

Pending an EPA with the West African region, Côte d’Ivoire concluded a stepping stone or 
interim Economic Partnership Agreement with the EU in November 2008.171 The stepping 
stone EPA with Côte d’Ivoire was signed on 26 November 2008, approved by the European 
Parliament  on  25  March  2009  and  ratified  by  the  Ivorian  Parliament  on  12  August  2016.  It 
entered into provisional application on 3 September 2016. Côte d’Ivoire officially announced 
that  it  would  start  liberalising  its  market  for  EU  products  by  the  1st  of  January  2019.  The 
stepping  stone  or  interim  EPA  (iEPA)  will  be  substituted  by  the  regional  EU-West  Africa 
EPA once the latter enters into force.172, 173 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in goods 

Trade  with  Côte  d’Ivoire  has  been  relatively  stable  over  the  last  decade.  Exports  of  Côte 
d’Ivoire to the EU have seen a steady increase. Côte d’Ivoire has a trade surplus, except for 
non-agricultural products, where the EU has a surplus. 

Table 1: EU-28 Merchandise Trade with Côte d’Ivoire (million EUR) 

EU-28 imports from Côte d’Ivoire 
EU-28 exports to Côte d’Ivoire 
EU-28 trade balance 
Source: Trade G2 Statistics/ISDB Eurostat 

2014 
3 258 
2 306 
-952 

2015 
4 255 
2 672 
-1 583 

2016 
4 548 
2 434 
-2 114 

2017 
4 678 
2 849 
-1 829 

The EU is by far the most important trade partner of Côte d’Ivoire: In 2017, 40.5% of Côte 
d’Ivoire’s exports went to the EU and 32.5% of Côte d’Ivoire’s imports came from the EU.  

Since  2008,  all  exports  from  Côte  d’Ivoire  enter  the  EU  duty-free  and  quota-free.  Main 
products imported by the EU from Côte d’Ivoire 2017 were cocoa beans (45% of total imports 
in value), processed cocoa products (23%), oil (9%), natural rubber (8 %) and bananas (5%).  

171  The official name of the agreement (‘stepping-stone agreement’) reflects the fact that the initial and ultimate 
objective for economic partnership in West Africa is a comprehensive, regional agreement. It is also called 
‘interim EPA’.  

172  The  Economic Partnership Agreement  was signed in December 2014 by the European Union and 13 West 
African Countries. In 2017, three West  African countries  had still  not signed the agreement (The Gambia, 
Mauritania  and  Nigeria).  The  agreement  will  enter  into  provisional  application  if  the  16  West  African 
Countries sign the agreement and 2/3 of these countries ratify it.  

173  More  on  Trade  with  West  Africa  and  Côte  d’Ivoire:  http://ec.europa.eu/trade/policy/countries-and-

regions/regions/west-africa/  

236 

 
 
                                                 
The  main  EU  exports  to  Côte  d’Ivoire  in  2017  were  machinery  and  transport  equipment 
(35%),  a  variety  of  foodstuff  and  agricultural  products  (20%)  and  chemicals  and 
pharmaceuticals (17%). 

The interim EPA foresees that Côte d’Ivoire will liberalize 80% of imports from the EU in the 
coming  years.  Côte  d’Ivoire  has  formally  announced  to  the  EU  and  the  WTO  that  it  would 
start liberalising its market for EU products by the 1st of January 2019.  

Table 2: EU-28 merchandise trade with Côte d’Ivoire (million EUR) 

Total 

Total 

Total 

Agricultural 
Non-Agricultural 

Agricultural 
Non-Agricultural 

Agricultural 
Non-Agricultural 

2014 

2015 

EU-28 imports from Côte d’Ivoire 

3 258 
2 443 
815 

4 255 
3 282 
973 

EU-28 exports to Côte d’ivoire 

2 306 
510 
1 796 

EU-28 trade balance 

-952 
-1 933 
981 

2 672 
551 
2 121 

-1 583 
-2 731 
1 148 

Source: Trade G2 Statistics/ISDB Eurostat 

2016 

4 548 
3 653 
895 

2 434 
541 
1 893 

-2 114 
-3 113 
998 

2017 

4 678 
3 580 
1 098 

2 849 
575 
2 274 

-1 829 
-3 005 
1 176 

Between  2014  and  2017  Côte  d’Ivoire  made  large  use  of  EU  preferences  (MFN  zero,  GSP 
and EPA preferences) for its exports to the EU market. More than 98% of its products entered 
the EU market duty free in the past four years. For most years, the share of products entering 
under MFN zero is around 60-65% of total exports, owning to the large share of raw materials 
in Côte d’Ivoire’s exports to the EU.  

Figure 1. EU-28 Merchandise trade with Côte d’Ivoire (million EUR) 

6000

5000

4000

3000

2000

1000

0

-1000

-2000

-3000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

EU-28 imports from Côte d’Ivoire  

EU-28 exports to Côte d’Ivoire  

EU-28 trade balance

Source: Trade G2 Statistics/ISDB Eurostat 

237 

 
 
 
 
 
 
 
 
 
 
 
 
Success stories: 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 around 50%. Exports in quantity 
increased  to  316 000 tons  in  2017  (amounting  to  EUR 235 million  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  interim  EPA.  The production  of  bananas  for  exports  accounts 
for  about  10%  of  agricultural  GDP  in  Côte  d’Ivoire  and  production  covers  about 
8 000 hectares. 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 in Côte d’Ivoire for their livelihood. 

Figure 2: EU-28 Imports of Bananas (incl. plantains, fresh or dried) 
from Côte d'Ivoire  

350000

300000

250000

200000

150000

100000

50000

0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Import value (in 1000 EUR)

Import quantity (in 1000kg)

2.2. 

Trade in services 

The EPA does not cover trade in services. Trade in services between the EU and Côte d’Ivoire 
has shown some variation over the last years.  

Table 3. EU28 services trade with Côte d’Ivoire (million EUR) 

EU28 imports 
EU28 exports 
Balance 
Total trade 
Source: Eurostat Balance of Payment statistics 

2013 
409 
926 
517 
1 335 

2014 
478 
796 
318 
1 274 

2015 
664 
793 
129 
1 457 

2016 
590 
797 
207 
1 387 

2.3. 

FDI 

The EPA does not cover investment. The EU investment stock in Côte d’Ivoire has seen some 
variation over last  years, mostly unrelated to the EPA which does not  yet cover investment. 

238 

 
 
 
  
However,  sectors  such  as  bananas  and  cocoa  processing,  where  the  EPA  secures  long-term 
duty-free and quota-free access to the EU market for final products, have seen an increase in 
European investment (see also above).  

Table 4: FDI EU28 with Côte d’Ivoire (million EUR) 

2014 

Inward 
2015 

2016 

Stocks 
Flows 
Source: Eurostat Balance of Payment statistics 

-183 
-216 

3 
35 

-58 
62 

2014 
3 694 
-65 

Outward 
2015 

3 732 
700 

2016 
3 477 
-176 

3. 

ISSUES ADDRESSED IN THE ANNUAL EPA COMMITTEE MEETING 

The first EPA Committee meeting between Côte d’Ivoire and the EU took place on in April 
2017,  and  the  second  meeting  in  March  2018,  both  in  Abidjan.  The  parties  finalised  the 
transposition  of  Côte  d’Ivoire’s  market  access  offer  from  the  Harmonised  System  (HS) 
version  2002  to  HS2017  and  acknowledged  Côte  d’Ivoire’s  proposal  for  a  updated  tariff 
dismantling schedule (as the initial market access offer is from 2008, it includes liberalisation 
dates already in the past). This paves the way for Côte d’Ivoire to start opening its markets for 
EU imports from 2019 onwards. In addition, the second meeting approved the internal rules 
of the EPA committee and made substantial progress in the negotiation of reciprocal rules of 
origin. Parties furthermore discussed the future monitoring and evaluation arrangement for the 
agreement.  

4. 

SPECIFIC AREAS OF IMPORTANCE 

Development  cooperation,  particularly  trade-related  assistance,  is  an  important  pillar  of  the 
EPA, as it contributes to operationalizing the development dimension of the partnership.  

The  Côte  d’Ivoire  EPA  Implementation  Strategy  was  adopted  in  October  2017.  Its 
implementation is already supported by the EU through a series of programmes and projects 
that  target  value  chain  development,  export  competitiveness  and  industrialization.  The 
national  component  (EUR 9.9 million)  for  Côte  d’Ivoire  of  the  regional  “Competitiveness 
support programme in West Africa” will aim at: (1) Upgrading and supporting consortiums 
of companies in target sectors and value chains; (2) Strengthening the capacities of the Private 
Sector  Intermediary  Organizations 
lever  for  modernization, 
competitiveness  and  growth  for  SMEs;  (3)  Improving  the  overall  business  regulatory 
environment.  The  programme  will  further  consolidate  results  achieved  under  the  previous 
Trade and Regional Integration support programme (PACIR, EUR 16 million, 2010-2015). 

that  will  serve  as  a 

A dedicated programme in support of EPA implementation is currently under preparation. It 
will promote customs cooperation on tariff and non-tariff issues and provide support on SPS 
measures  to  reduce  barriers  to  trade.  The  programme  will  also  assist  relevant  government 
actors  with  other  reforms  related  to  the  implementation  of  the  EPA,  including  transition  in 
taxation (diversification of fiscal revenues away from customs income) and the establishment 
of trade defence instruments.  

239 

 
  
 
 
 
 
  
Two  measures  that  came  to  an  end  recently  were  support  to  the  banana  sector 
(EUR 44.75 million) and the sugar sector. In the case of bananas, the programme contributed 
to  increasing  productivity  of  the  sector  and  contributed  to  making  Côte  d’Ivoire  the  largest 
banana exporter in Africa. In the sugar sector, production of cane sugar and revenue earned 
increased  for  the  targeted  villages.  Measures  also  focussed  on  social  and  environmental 
aspects  of  sugar  production  and  supported  the  construction  and  rehabilitation  of  social 
infrastructure for sugar producing communities, as well as the introduction of environmental 
management practices. 

5. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

The  next  steps  towards  full  implementation  of  the  stepping  stone  EPA  with  Côte  d’Ivoire 
include:  

a)  Implementation of the different  steps leading to the first  tariff cut  on the  1st January 

2019;  

b)  Effective  communication  on  the  state  of  play,  challenges  and  opportunities  of  the 
interim EPA to main stakeholders, including regional organisations, the private sector 
and civil society; 

c)  Preparing  a  study  to  examine  the  implications  of  the  implementation  of  the  interim 

EPA in Côte d’Ivoire for the regional economic integration;  

d)  Finalisation of the negotiation of the protocol on rules of origin;  

e)  Completing of work on a dispute settlement procedure.  

CONCLUSIONS AND OUTLOOK 

6. 
Based on the extensive preparatory work in 2017, the 2nd EPA EU- Côte d’Ivoire Committee 
opened the way for the liberalisation of the Côte d’Ivoire Market by the 1st of January 2019. 
This  is  an  important  step  in  EU  trade’s  relationship  with  Côte  d’Ivoire.  Each  step  of  the 
liberalisation process will be closely followed up by the EU in close coordination with Côte 
d’Ivoire  and  the  regional  organisations  West  African  Economic  and  Monetary  Union 
(UEMOA)  and  Economic  Community  of  West  African  States  (ECOWAS).  The  EU  will 
support Côte d’Ivoire in the implementation of the EPA through trade related development assistance. 

In  terms  of  impact,  it  is  too  early  to  draw  conclusions.  Overall,  trade  flows  have  steadily 
increased  and  the  EU  remains  the  primary  trading  partner  of  Côte  d’Ivoire.  The  EPA  has 
provided predictability to new investors and led to increased production and market share in 
the EU for Côte d’Ivoire’s cocoa and bananas production, among others. Moving forward, the 
impact  of  the  EPA  on  trade  flows,  the  business  climate  in  general,  fiscal  revenue  and 
sustainable  development  will  be  closely  monitored  to  ensure  that  EPA  objectives  are 
achieved.  

240 

 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC 
PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND GHANA  

1. 

INTRODUCTION 

Pending an EPA with the West African region, Ghana concluded a stepping stone (or interim) 
Economic Partnership Agreement with the EU in December 2007.174 The stepping stone EPA 
with  Ghana  was  signed  on  28  July  2016,  ratified  on  3  August  2016  by  the  Ghanaian 
Parliament  and  approved  by  the  European  Parliament  on  1  December  2016.  It  entered  into 
provisional  application  on  15  December  2016.  Discussions  are  ongoing  to  update  Ghana’s 
market  access  commitments  and  timeline  for  implementation.  Once  completed,  Ghana  will 
start reciprocating its preferential access to the EU. This agreement will be substituted by the 
regional EU-West Africa EPA once the latter enters into force.175 176 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in goods 

Merchandise trade with Ghana has been relatively stable over the last decade. The decrease in 
value of imports from  Ghana in  recent  years can be attributed to  a decline in  oil prices:  the 
value of oil imports from Ghana dropped by EUR 800 million between 2014 and 2017. Non-
oil imports from Ghana remained stable over the same period and stood at EUR 1 655 million 
in  2017.  The  EU  has  an  overall  trade  surplus,  but  Ghana  has  a  surplus  on  agricultural 
products. 

Table 1. Total Merchandise Trade EU-28 with Ghana (million EUR) 

EU-28 imports from Ghana 
EU-28 exports to Ghana 
EU-28 trade balance 
Source: Trade G2 Statistics/ISDB Eurostat 

2014 
2 885 
3 112 
227 

2015 
2 645 
3 041 
396 

2016 
2 308 
2 845 
537 

2017 
2 119 
3 042 
923 

The  EU  is  by  far  the  most  important  trade  partner  of  Ghana  for  imports  (30%  of  Ghana’s 
imports  come  from  the  EU)  in  2017.  The  EU  is  also  the  4th  largest  destination  for  Ghana’s 
exports (13% of total exports), after Switzerland (17%), India (15 %) and China (13 %).  

All  exports  from  Ghana  enter  the  EU  duty-free  and  quota-free.  In  2017,  the  main  products 
exported by Ghana to the EU in value were cocoa beans (30% of total exports in value), cocoa 

174  The official name of the agreement (‘stepping-stone agreement’) reflects the fact that the initial and ultimate 
objective for economic partnership in West Africa is a comprehensive, regional agreement. It is also called 
‘interim EPA’ 

175  The  Economic Partnership Agreement  was signed in December 2014 by the European Union and 13 West 
African Countries. In 2017, three West  African countries  still  had  not signed the agreement (The  Gambia, 
Mauritania  and  Nigeria).  The  agreement  will  enter  into  provisional  application  if  the  16  West  African 
Countries sign the agreement and 2/3 of these countries ratify it.  

176  More on trade with Ghana: http://ec.europa.eu/trade/policy/countries-and-regions/regions/west-africa/  

241 

 
 
                                                 
butter, paste and powder (23%), fuels (22%), and edible fruits and nuts (6%), half of which 
bananas.  The  main  EU  exports  to  Ghana  in  2017  were  machinery  and  transport  equipment 
(30%)177, fuels (16%), prepared foodstuff and animal products (16%) and chemicals (11%). 

Figure 1. EU-28 Merchandise trade with Ghana (million EUR) 

4.000

3.500

3.000

2.500

2.000

1.500

1.000

500

0

-500

-1.000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

EU28 Imports from Ghana

EU28 Exports to Ghana

EU28 trade balance

Source: Trade G2 Statistics/ISDB Eurostat  

Table 2. EU-28 merchandise trade by AMA/NAMA sector with Ghana (million EUR) 

2014 

2015 

EU-28 imports from Ghana 

Total 

Total 

Total 

Agricultural 
Non-Agricultural 

Agricultural 
Non-Agricultural 

2 885 
1 335 
1 550 
EU-28 exports to Ghana 
3 112 
321 
2 791 

EU-28 trade balance 

Agricultural 
Non-Agricultural 

Source: Trade G2 Statistics/ISDB 

227 
-1 014 
1 241 

2 645 
1 508 
1 136 

3 041 
348 
2 693 

396 
-1 160 
1 557 

2016 

2 308 
1 650 
658 

2 845 
348 
2 497 

537 
-1 301 
1 839 

2017 

2 119 
1 313 
806 

3 042 
444 
2 598 

923 
-870 
1 793 

The EPA foresees that Ghana will liberalize 80% of imports from the EU in the coming years. 
Effective liberalization is still pending (more on this below). 

In the past years, Ghana made a large use of EU preferences (Most Favoured Nation (MFN) 
tariffs  that  are  at  zero  percent,  General  System  of  Preference  and  EPA  preferences)  for  its 
exports to the EU market. Between 96% and 98% of its products entered into the EU market 
duty and quota free in the years 2013 to 2017. For most years, the share of products entering 

177  Especially of HS chapters 83, 84, 85 and 87 

242 

 
 
 
 
 
 
 
 
 
 
 
                                                 
under MFN zero is far above 60% of total exports, owning to the large share of raw materials 
in Ghana’s exports to the EU.  

Increased exports of processed cocoa products provide for more local value-added 

A  key  success  story  for  Ghana  has  been  its  ability  to  increase  exports  of  processed  cocoa 
products. Since 2008, Ghana benefited from duty-free quota-free market access for processed 
cocoa products and steadily increased their exports of transformed cocoa products to the EU 
market.  In  the  past  10  years,  Ghana  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 EUR 400 million drop in cocoa beans exports from Ghana 
to the EU. By contrast, the value of processed cocoa exports continued on an upward trend. 

Figure 2. EU28 Imports of raw and processed Cocoa from Ghana, 
in million EUR 

1.200

1.000

800

600

400

200

0

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Cocoa beans (1801) and Cocoa shells, husk, skins etc. (1802)

Cocoa paste (1803), Cocoa butter (1803), Cocoa powder (1805), Chocolate (1806)

Source: ISDB/Eurostat 

2.2. 

Trade in services 

The  interim  EPA  does  not  cover  trade  in  services.  Trade  in  services  between  the  EU  and 
Ghana has shown some variation over the last years.  

Table 3. EU-28 services trade with Ghana (million EUR) 

2013 

568 
EU-28 imports 
973 
EU-28 exports 
405 
Balance 
1 542 
Total trade 
Source: Eurostat Balance of Payment statistics 

2014 
1 174 
1 553 
379 
2 726 

2015 
1 353 
1 968 
615 
3 321 

2016 
1 340 
1 800 
460 
3 140 

243 

 
 
  
2.3. 

FDI 

The interim EPA does not cover investment. There was some variation in the EU investment 
stock in Ghana over the last years, unrelated to the EPA which does not cover investments. 

Table 4. EU-28 FDI with Ghana (million EUR) 

2014 

Inward 
2015 
-1 070 
-396 

2016 
-1 431 
-307 

2014 
2 665 
68 

Outward 
2015 

4 888 
237 

2016 
3 412 
219 

Stocks 
Flows 
Source: Eurostat Balance of Payment statistics 

-567 
-41 

3. 

ISSUES ADDRESSED IN THE FIRST MEETING OF THE JOINT EPA COMMITTEE 

After Ghana’s ratification in 2016, the preparatory work for implementation commenced. As 
a  result,  the  first  meeting  of  the  EPA  Committee  was  held  in  Accra,  Ghana,  on  24  January 
2018.  The  EPA  Committee  adopted  its  rules  of  procedures  governing  the  Joint  EPA 
committee. The Parties exchanged information on the state of play in the implementation of 
the EPA with Côte d’Ivoire and the process of adoption of the regional EPA with West Africa.  

The  Parties  have  discussed  Ghana’s  updated  liberalization  schedule.  The  interim  EPA  was 
negotiated back in 2007 and was only signed and ratified in 2016, therefore a certain number 
of dates in the market access offer were still in the past and had to be updated. At the same 
time,  the  Parties  made  substantial  progress  in  the  transposition  of  Ghana’s  market  access 
commitments  from  HS2002  (in  which  it  was  originally  drafted)  to  HS2017.  The  Parties 
furthermore  discussed  rules  of  origin,  the  institutional  set  up  for  the  implementation  of  the 
EPA,  the  monitoring  of  operation  and  impact  of  the  EPA,  as  well  as  the  Aid  for  Trade 
accompanying measures.  

4. 

SPECIFIC AREAS OF IMPORTANCE 

Development cooperation, particularly trade-related assistance, is an important pillar of EPA, 
as it contributes to operationalizing the development dimension of the partnership.  

Ghana  adopted  an  EPA  Accompanying  Measures  Strategy  in  2015  to  facilitate  EPA 
implementation. The EU will support the implementation of the strategy with EUR 12 million 
for 2018-2023 through the following actions: i) support to the Ministry of Trade to implement 
the  EPA  and  to  engage  on  EPA-related  issues;  ii)  support  to  the  Ghana  Export  Promotion 
Authority and the Ghana Investment Promotion Centre in promoting local SMEs to upgrade 
along  value  chains  and  improve  the  quality  of  their  products;  and  iii)  overall  support  to 
improving the business policy and regulatory environment. 

Previously, 
the  EUR 12 million  Trade  Related  Assistance  and  Quality  Enabling 
programme  (TRAQUE),  helped  to  modernise  the  Ghanaian  quality  infrastructure  and 
strengthen export competitiveness. Implemented from 2011 to 2017, the project facilitated the 
upgrading  of  equipment  and  provided  training  for  staff  in  28  Ghanaian  laboratories. 

244 

 
  
 
 
 
 
  
Furthermore, with  TRAQUE, Ghana was able to  improve the inspection and control system 
for phytosanitary requirements at exit points – which resulted in the EU lifting an import ban 
on five vegetable commodities from Ghana (chilli pepper, bottle gourds, luffa gourds, bitter 
gourds and eggplants).  

With  regard  to  productive  capacities,  value  chains  and  competitiveness,  the  EU  supports 
Ghana’s  agricultural  sector,  through  the  Market  Oriented  Agricultural  programme 
(MOAP)  (EUR 35 million,  2017-2024)  and  the  programme  to  promote  productive 
investments 
(2018-2025, 
for 
EUR 102 million).  

in  Northern  Ghana 

sustainable 

agriculture 

Furthermore,  the  EU  is  also  supporting  Ghana’s  infrastructure  sector,  e.g.  the  upgrade  of 
Eastern  and  Western  transport  corridors  and  a  power  transmission  line  with  neighbouring 
Cote d’Ivoire. 

5. 

FOLLOW-UP ACTIONS 

In regard to the next steps for the iEPA, EU and Ghana agreed to:  

a)  Review and endorse the final transposition of the tariff nomenclature in HS 2017;  
b)  Review and endorse the updated liberalization schedule; 
c)  Set up an appropriate mechanism to monitor the operation and impact of the EPA;  
d)  Start negotiating the procedures relating to a reciprocal Protocol on Rules of Origin. 

6. 

CONCLUSIONS AND OUTLOOK 

The  implementation  of  the  iEPA  with  Ghana  is  in  its  early  stages.  As  Ghana  moves  to 
implement its market access commitments, close attention will be paid to the effects the iEPA 
might have for Ghana’s economy in terms of trade and investment flows, government revenue 
and sustainable development. In the coming years, the implementation of iEPA should also be 
impacted by the ongoing business climate and fiscal reforms in Ghana and by the EU support 
to various aspects of iEPA implementation 2018.  

245 

 
 
 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC 
PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND CAMEROON  

1. 

INTRODUCTION 

Pending  an  EPA  with  the  Central  African  region,  Cameroon  concluded  an  Economic 
Partnership Agreement (EPA) with the EU on 17 December 2007178. This agreement was 
signed  by  Cameroon  and  the  EU  on  15  January  2009.  It  was  approved  by  the  European 
Parliament (EP) on 13 June 2013 and ratified by the Parliament of Cameroon on 22 July 2014. 
On  4  August  2014,  the  agreement  entered  into  provisional  application.  In  August  2016  and 
August  2017,  Cameroon  started  reciprocating  its  preferential  access  to  the  EU,  and  the 
agreement has now reached cruising speed.179 This EPA is a regional agreement and is open 
to the accession of other Central African countries180.  

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in goods 

Trade  with  Cameroon  has  been  relatively  stable  over  the  last  decade.  Cameroon’s  present 
trade surplus is slowly decreasing.  

Table 1. Total Merchandise Trade EU-28 with Cameroon, 2014-2018 (million EUR) 

EU-28 imports from Cameroon 
EU-28 exports to Cameroon 
EU-28 trade balance 
Source: Trade G2 Statistics, Eurostat 

2014 
2 150 
1 627 
-523 

2015 
1 800 
1 578 
-222 

2016 
1 776 
1 560 
-217 

2017 
1 914 
1 470 
-444 

The EU is by far the most important trade partner of Cameroon: 32% of Cameroon’s imports 
come from the EU and 54% of Cameroon’s exports go to the EU. 

All  exports  from  Cameroon  enter  the  EU  duty  free  and  quota  free.  Main  products  exported 
from Cameroon to the EU are oil (32% of total exports in value), cocoa beans (22%), wood 
(15%),  bananas  (13%),  and  aluminium  (5%)  (Eurostat,  2017).  Exports  of  processed  cocoa 
products have increased by 82% since 2010, to EUR 84 million in 2017. 

178  The official name of the agreement (‘stepping-stone agreement’) reflects the fact that the initial and ultimate 

objective for economic partnership in Central Africa is a comprehensive, regional agreement.  

179  More  on  Trade  with  Cameroon 

/  Central  Africa:  http://ec.europa.eu/trade/policy/countries-and-

regions/regions/central-africa/  

180  By  2016,  negotiations  for  a  comprehensive  regional  EPA  with  Cameroon,  Central  Africa  Republic,  Chad, 
Congo,  Democratic  Republic  of  Congo  (DRC),  Equatorial  Guinea,  Gabon  and  Sao  Tome  y  Principe  had 
come to a halt. For the time being, the Commission is focussing its efforts on the ‘stepping stone’ agreement 
with Cameroon. 

246 

 
 
                                                 
Taking into account the share of raw materials in these exports, 75% of Cameroon’s exports 
to  the  EU  are  free  of  duty  on  an  MFN  basis.  The  remainder,  mainly  bananas  but  also 
aluminium, processed cocoa and wood are imported under EPA preferences. 

The  EPA  foresees  that  Cameroon  will  successively  liberalize  80%  of  imports  from  the  EU 
over the next years. Effective liberalization started on 4 August 2016 for 1st category products 
(1727 tariff lines) and on 4 August 2017 for 2nd category products (985 tariff lines). The two 
first  categories  consist  mainly  of  basic  necessities,  industrial  and  agricultural  inputs, 
machines,  chemicals,  vehicles  and  spare  parts,  computers,  papers,  consumer  products  for 
households. 

Table 2. EU-28 merchandise trade with Cameroon (million EUR) 

Total 

Total 

Total 

Agricultural 
Non-Agricultural 

Agricultural 
Non-Agricultural 

Agricultural 
Non-Agricultural 

Source: Trade G2 Statistics/ISDB 

2014 

2015 

EU-28 imports from Cameroon 

2 150 
657 
1 493 
EU-28 exports to Cameroon 
1 627 
298 
1 329 

1 800 
726 
1 074 

1 578 
301 
1 277 

EU-28 trade balance 

-523 
-358 
-164 

-222 
-425 
203 

2016 

1 776 
747 
1 030 

1 560 
276 
1 284 

-217 
-471 
254 

2017 

1 914 
665 
1 249 

1 470 
267 
1 203 

-444 
-398 
-46 

The total value of goods imported into Cameroon under EPA preferences from August 2016 
to  February  2018  is  estimated  at  EUR 150 million.  Main  products  imported  under  EPA 
preferences  according  to  Cameroon  customs  were  clinker  (31%  of  total  value  of  imports 
under  EPA  preferences),  machinery  and  Equipment  (21%),  articles  for  breweries  (13%), 
chemical industries (10%), fertilizers (10%), electrical machinery and equipment (7%). 

247 

 
 
 
 
 
 
 
 
 
 
 
Figure 1. EU-28 Merchandise trade with Cameroon (million EUR) 

3.000

2.500

2.000

1.500

1.000

500

0

-500

-1.000

-1.500

-2.000

-2.500

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

EU28 imports from Cameroon

EU28 exports to Cameroon

EU28 trade balance

Source: Trade G2 Statistics, Eurostat 

Over  the  year  2017,  the  total  value  of  forgone  customs  revenue  as  a  result  of  the  EPA  was 
EUR 2.72 million or 0.4% of total 2017 customs revenue.181 (Source: Cameroon Customs)  

Parties  are  currently  still  negotiating  a  common  reciprocal  regime  governing  the  rules  of 
origin, to be annexed to the agreement. In the meantime, Cameroon benefits from the general 
EPA  rules  of  origin  included  in  EU  Market  Access  Regulation  2016/1076.  Before  starting 
liberalization, Cameroon published a decree on rules of origin applicable to products imported 
from the EU (Decree 2016/367, 3 August 2016).  

2.2. 

Trade in services 

Trade in services between the EU and Cameroon shows little variation over the last years. The 
EPA does not yet cover trade in services.  

Table 3. EU28 services trade with Cameroon (million EUR) 

EU28 imports 
EU28 exports 
Balance 
Total trade 
Source: Eurostat Balance of Payment statistics 

2013 
458 
673 
215 
1 132 

2014 
404 
933 
530 
1 337 

2015 
422 
601 
179 
1 023 

2016 
353 
640 
287 
993 

181  The  2018  Budget  law  estimate  total  yearly  customs  revenue  at  670  million  euros,  including  exports  and 
imports  taxes,  stamp  duties,  etc.  The  IMF  estimates  customs  revenues  at  1.14  billion  euros  in  2017,  also 
including VAT on imports. 

248 

 
 
  
                                                 
2.3. 

FDI 

The  investment  stock  has  been  stable  over  the  last  four  years.  The  EU  investment  stock 
remains largely tied up in extractive industries, although recent EU investments in Cameroon 
are  diversified  across  various  sectors  such  as  infrastructure  (transport,  energy),  agriculture 
(bananas,  sugar),  communication  and  distribution.  Main  investor  is  France  with  about  300 
companies  established  that  are  estimated  to  contribute  about  30%  of  the  Government’s  tax 
revenue. The largest single EU investment announced in the last 12 months was Actis LLP, 
which plans a USD 200 million investment into a shopping mall and Business Park in Douala. 

Table 4. FDI EU28 with Cameroon (million EUR) 

2014 
43 
1 

Inward 
2015 
-14 
-46 

2016 
4 
33 

Stocks 
Flows 
Source: Eurostat Balance of Payment statistics 

2014 
1 281 
44 

Outward 
2015 
1 123 
44 

2016 
1 352 
95 

ISSUES ADDRESSED IN THE ANNUAL EPA COMMITTEE MEETING 

3. 
The  3rd  EPA  Committee  between  Cameroon  and  the  EU  took  place  in  December  2017  in 
Brussels.  One  of  the  main  points  of  discussion was  the  assessment  of  the  tariff  dismantling 
process  in  Cameroon  and  its  impact  in  terms  of  products  concerned  and  customs  revenue 
losses. A dedicated study on the fiscal impact of the EPA will be prepared over the coming 
months.  Parties also  further refined the tariff dismantling schedule.  In particular, the Parties 
concluded  transposition  of  Cameroon’s  market  access  commitments  under  Annex  III  of  the 
EPA from Harmonised System (HS) 2002 to HS 2017.182 In addition, parties took stock of the 
current negotiations of the protocol on rules of origin to be annexed to the agreement.  

Furthermore, the parties discussed EPA accompanying measures and action programmes to be 
elaborated  over  the  next  few  months.  Other  issues  addresses  during  the  meeting  include 
Croatia’s  accession  the  EPA,  trade  barriers,  and  the  presentation  of  the  EPA  to  the  WTO 
Committee on Regional Trade Agreements (CRTA). 

4. 

SPECIFIC AREAS OF IMPORTANCE 

The  EU  has  been  a  long  standing  partner  for  Cameroon’s  economic  development. 
Development assistance from the EU in recent  years focussed for example on  strengthening 
agricultural productivity and competitiveness. In anticipation of the EPA, the EUR 10 million 
PACOM programme (Programme d’appui à l’amélioration de la compétitivité de l’économie 
camerounaise)183  facilitated  the  expansion  of  quality  infrastructure,  public  private  dialogue 
and enhanced productivity of Cameroon’s enterprises. PACOM supported Cameroonian firms 

182  As Cameroon's tariff dismantling schedule runs over multiple years, it is important to regularly transpose it 
into  the  most  recent  HS  nomenclature,  to  ensure  that  customs  and  traders  always  have  correct,  up  to  date 
information.  

183  Implemented from 2013-2018, under the 10th European Development Fund (EDF) 

249 

 
  
 
 
 
 
  
                                                 
in  upgrading  their  productive  equipment  and  production  processes,  and  in  acquiring 
international  quality  certifications  (ISO,  OHSAS).  For  more  than  10  years,  the  EU  together 
with  other  international  partners  has  been  supporting  the  ‘Cameroon  Business  Forum’  as  a 
platform  for  dialogue  between  the  government  and  the  business  community.  Also  technical 
assistance and support for customs modernisation were provided. PACOM will be replaced in 
2018 by DACC (Dispositif d’appui à la compétitivité du Cameroun), another EUR 10 million 
programme  under  the  11th  European  Development  Fund  (EDF)  to  provide  direct  support  to 
companies, start-ups and intermediary organizations and to improve the provision of business 
services.  

In  addition,  another  programme  of  accompanying  measures  directly  linked  to  the 
implementation of the EPA under the regional 11th EDF envelope is under preparation. 

Part  of  the  support  provided  will  include  a  monitoring  mechanism.  Such  monitoring  should 
include  among  others  the  tax  implications  of  the  liberalization  process,  and  the  sustainable-
development dimensions of the agreement. 

Throughout 2017, various outreach and awareness raising events with civil society and private 
sector  representatives  were  organized  by  the  Cameroonian  Administration  and  the  EU 
Delegation to Cameroon.  

5. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

Negotiations are ongoing on a common protocol of rules of origin, which was not included in 
the EPA at the time negotiations were concluded in 2007. The main open issue is adjusting 
the  liberalization  timetable  (2008-2023)  to  the  delay  in  implementation  resulting  from 
Cameroon’s  EPA  ratification  in  2014.  Contacts  are  ongoing  between  the  regional 
organisations and the EU on accession to this EPA by other Central African States. 

6. 

CONCLUSIONS AND OUTLOOK 

In 2017, Cameroon took again important steps in implementing its commitments, culminating 
in significant tariff cuts. While it is too early to discern any impact on trade and investment 
flows in 2017, there was a clear increase in the number of import declarations in Cameroon, 
without major additional revenue losses. Implementation will also be impacted by the ongoing 
domestic reforms and accompanying measures to be implemented from 2018.  

In March 2017, the ministers in charge of EPA from the Central African region declared the 
availability  of  their  countries  to  study  their  possible  accession  to  the  stepping  stone 
agreement.  However, uncertainty remains as to  the effective resumption of negotiations and 
the possibility of concluding an agreement.  

250 

 
 
 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC 
PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND CARIFORUM  

1. 

INTRODUCTION 

The  EU-CARIFORUM  (CF)  EPA  (hereinafter  ‘The  Agreement’)  is  a  regional  agreement 
between the EU and its Member States and 15 Caribbean countries.184 The negotiations 
were concluded in December 2007. The agreement was signed in October 2008 and it entered 
into provisional application on 29 December 2008. In 2017, this agreement was provisionally 
applied  by  the  EU  and  by  14  Caribbean  States  (Haiti  still  needs  to  ratify  the  agreement  in 
parliament before applying it, due to domestic legal requirements). By the end of 2017, 22 EU 
Member States and 9 Caribbean States had ratified the EPA.  

The EU-CF EPA is ‘comprehensive’ both in the geographic and thematic sense, covering the 
whole region and including not only provisions on trade in goods, but also trade in services 
and  provisions  on  trade-related  issues  (including  competition,  innovation  and  intellectual 
property, transparency in public procurement and trade and sustainable development).185  

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in goods  

The  trade  in  goods  chapter  provides  for  reciprocal  but  asymmetric  market  opening  by  the 
Parties. All Caribbean products (except arms and ammunition) enter the EU market duty free 
and quota free. This  largely represents  a continuation of the trade preferences  granted up to 
2008  under  the  Cotonou  Agreement.  CARIFORUM  states  will  open  about  92%  of  its  trade 
over  a  25-year  period  (83%  over  15  years),  and  will  exclude  about  8%  of  imports  from 
liberalisation altogether. The first tariff cuts were scheduled for 1  January 2011, 2013, 2015 
and 2017. As of November 2017, the bigger Caribbean countries were implementing the tariff 
liberalization  schedule  as  planned,  while  some  progress  was  still  required  in  some  of  the 
smaller countries that form part of the Organisation of Eastern Caribbean States (OECS).  

Table 1: Total Merchandise Trade EU28 with CARIFORUM-14 (million EUR) 

EU28 imports from CF states 
EU28 exports to CF states 
EU28 trade balance 
Source: Trade G2 Statistics, Eurostat 

2014 
4 057 
4 159 
102 

2015 
4 043 
5 270 
1 228 

2016 
3 176 
4 950 
1 775 

2017 
3 561 
5 130 
1 569 

184  The  EU-CARIFORUM  EPA  has  been  negotiated  with  15  countries  in  the  Caribbean  Region,  the  Member 
States  of  the  Caribbean  Forum  (CARIFORUM):  Antigua  and  Barbuda,  Bahamas,  Barbados,  Belize, 
Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent 
and the Grenadines, Suriname, and Trinidad and Tobago. All except Haiti apply the EPA provisionally.  
185  More on trade with the Caribbean: http://ec.europa.eu/trade/policy/countries-and-regions/regions/caribbean/  

251 

 
 
                                                 
The EU is the 2nd most important trading partner for the Caribbean, behind the USA. In total, 
14% of Caribbean imports come from the EU and 14% of Caribbean exports go to the EU.  

The overall trade volume between the EU and the Caribbean shows fluctuations over the last 
decade.  Total  Caribbean  exports 
in  2017  (almost 
the  EU 
EUR 400 million), recovering  from  a significant  drop in  2016. EU exports to  the Caribbean 
also increased. 

increased  by  12% 

to 

Table 2: EU28 merchandise trade sector with CARIFORUM-14 (million EUR) 

Agricultural trade EU28 with CARIFORUM-14 

EU28 imports 
EU28 exports 
Balance 
Total trade 

2013 

931 
567 
-364 
1 498 

2014 

918 
626 
-292 
1 544 

2015 

1 021 
741 
-279 
1 762 

2016 

1 026 
751 
-275 
1 777 

2017 

909 
786 
-123 
1 694 

Growth 
2016-2017 
-117 
35 
153 
-82 

Non-agricultural trade EU28 with CARIFORUM-14 

2013 

2014 

EU28 imports 
EU28 exports 
Balance 
Total trade 
Source: Trade G2 Statistics, Eurostat  

3 450 
3 488 
38 
6 938 

3 107 
3 339 
232 
6 446 

2015 

2 989 
4 340 
1 351 
7 329 

2016 

2 109 
3 996 
1 887 
6 105 

2017 

2 604 
4 118 
1 514 
6 722 

Growth 16-
17 
495 
122 
-373 
617 

Growth 2016-
2017 in % 
-11.4% 
4.7% 

-4.6% 

Growth 16-17 
in % 
23.5% 
3.1% 

10.1% 

Main exports of Caribbean states to the EU in 2017 included oil and gas (around 14% of total 
exports  in  value),  mineral  products  including  gold,  corundum,  aluminium  oxide  and 
hydroxide (14%), fresh and dried bananas (10%), sugar (4%), rum (4%), cocoa beans (3%), as 
well as fertilisers, fish, crustaceans, rice and tobacco products.  

Main  exports  from  the  EU  to  the  Caribbean  in  2017  were  boats,  ships,  yachts  and  other 
vessels (around 14% of total value of exports), cars and other vehicles (4%), machinery and 
parts (9%), milk products (3%) and spirits (3%).  

252 

 
  
 
  
 
Figure 1: Merchandise trade EU with CARIFORUM14 (million EUR) 

6.000

5.000

4.000

3.000

2.000

1.000

0

-1.000

-2.000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

EU-28 imports from CARIFORM

EU-28 exports to CARIFORUM

EU trade balance

Source: Trade G2 Statistics, Eurostat  

The Dominican Republic accounts for 25% of Caribbean exports to  the EU and for 34% of 
EU  exports  to  the  region.  Exports  by  the  Dominican  Republic  to  the  EU  have  increased  by 
23% since 2010 and are the most diversified of the region.  

In terms of agricultural trade, exports of tropical agricultural goods (sugar cane, tropical fruits 
and  rice)  from  CARIFORUM  into  the  EU  have  increased  over  the  past  years.  However, 
Caribbean exports of several agricultural commodities (bananas, cocoa beans, rice) to the EU 
dropped  in  2017,  partly  due  to  heavy  cyclones  that  destroyed  large  parts  of  agricultural 
production.  World  market  prices  of  cocoa  beans  also  declined.  EU  agri-food  exports  to  the 
Caribbean predominantly  consist  of processed food products  and beverages (such as spirits, 
wine, dairy products, pasta,). 

Most of the CARIFORUM countries are not yet implementing the regional preference clause 
which requires countries to grant each other treatment at least as favourable as that accorded 
to the EU (hence a provision that promotes regional trade and economic integration). 

2.2. 

Trade in services 

Trade in services shows a favourable balance for the CARIFORUM states and total volumes 
of  services  imports  from  the  Caribbean  are  increasing.  Services  exports  to  the  EU  are 
dominated  by  the  Bahamas  (In  2016:  EUR 15 638 million).  Other  exporters  are  the 
Dominican  Republic 
(EUR 424 million)  and  Jamaica 
(EUR 402 million).  

(EUR 994 million),  Barbados 

253 

 
Table 3: EU28 services trade with Cariforum-14 (million EUR) 

2011 

2012 

2013 

EU28 imports from CF 
EU28 exports to CF 
EU28 trade balance 
Total trade 
Source: Trade G2 Statistics, Eurostat Balance of Payment Statistics 

3 843 
3 475 
-369 
7 318 

3 803 
2 927 
-876 
6 730 

3 285 
3 390 
105 
6 675 

2014 
13 595 
3 230 
-10 366 
16 825 

2015 
20 980 
2 950 
-18 030 
23 930 

2016 
18 846 
3 423 
-15 422 
22 269 

2.3. 

FDI 

Investment  is  not  covered  under  the  EPA,  nevertheless,  positive  spillover  effects  from 
liberalisation in trade in goods and services may be expected. The European investment stock 
in the Caribbean remained constant over the last three years, while the Caribbean investment 
stock in the EU substantially increased. However, this does not seem to reveal any clear trend 
in productive investment flows.  

Table 4: FDI EU28 with CARIFORUM-14 (million EUR) 

2014 
22 198 
Stocks 
Flows 
5 087 
Source: Trade G2 Statistics, Eurostat Balance of Payment statistics 

2014 
80 298 
4 847 

2016 
85 346 
2 795 

Inward 
2015 
81 330 
-7 552 

Outward 
2015 
72 823 
2 005 

2016 
128 394 
49 829 

3. 

ISSUES ADDRESSED IN THE EPA COMMITTEE MEETINGS 

The  EPA  establishes  a  full  institutional  structure  to  manage  the  implementation  of  the 
agreement,  including  the  Joint  Council  (JC)  (Ministerial  level),  the  Trade  and  Development 
Committee  (TDC)  (Senior  Officials),  the  Parliamentary  Committee  (Parliamentarians  from 
the European Parliament and the Caribbean state’s parliaments), the Consultative Committee 
(civil society representatives from the EU and the Caribbean); and Special Committees which 
meet on an ad hoc basis.  

The JC meeting is the biannual ministerial meeting where the fulfilment of the objectives of 
the EPA is monitored, and the TDC meeting is the annual senior official meeting where the 
main issues concerning the implementation of the EPA are discussed. The last Joint Council 
and  TDC  meetings  took  place  in  Brussels  in  November  2017.  Discussions  took  place  on 
several  issues,  including  CARIFORUM’s  tariff  liberalisation  schedule,  Trade  in  Services, 
technology  transfer,  cultural  cooperation,  intellectual  property  rights,  EPA  monitoring  and 
development cooperation. It was agreed to establish a special committee on Trade in Services 
as a forum to exchange more regularly on the topic. On Agriculture, the Parties referred to the 
progress  achieved  in  the  negotiations  for  the  CARIFORUM-EU  Geographical  Indications 
Agreement.  

The  3rd  meeting  of  the  Consultative  Committee  (CC)  took  place  in  November  2017  in 
Trinidad and Tobago, and its recommendations  and conclusions were presented at  the TDC 
meeting in Brussels in November. The CC emphasized the need to observe the social aspects 

254 

 
  
  
 
 
 
 
  
and the core labour standards in the implementation of the EPA. The CC also called for the 
timely adoption of a monitoring mechanism.  

The 3rd meeting of the Parliamentary Committee (PC) also took place in Trinidad and Tobago 
in  November  and  its  conclusions  were  also  presented  at  the  TDC  meeting  in  Brussels  in 
November. The PC particularly encouraged the Parties to  make efforts  in raising awareness 
around the opportunities provided by the EPA. 

4. 

SPECIFIC AREAS OF IMPORTANCE 

Agriculture: Parties are intensifying their cooperation on agricultural trade and development. 
The Special Committee on Agriculture and Fisheries held its first meeting in the Dominican 
Republic  in  October  2017.  The  meeting  had  a  substantive  agenda,  including  issues  such  as 
agriculture  development  (enhancing  rural  development  and  agribusiness  though  increased 
investment,  value  added  production  and  technology  development),  SPS  measures,  technical 
barriers  to  trade,  climate  change  and  disaster  risk  management.  A  negotiation  directive  to 
negotiate an agreement on GI under the CARIFORUM EPA was adopted by the Council of 
the EU in November 2017; negotiations with CARIFORUM have started and will continue in 
2018. EU delegations in the region  are actively promoting awareness  on GIs through tailor-
made events and workshops with business community and producer groups.  

Services:  The  Services  chapter,  and  in  particular  Mode  4  (movement  of  natural  persons  for 
business purposes), is considered one of the key elements of the EPA. On the implementation 
side,  tangible  steps  have  been  limited  so  far  but  both  Parties  agreed  at  the  JC  meeting  in 
Brussels to establish a Special Committee on Services.  

Monitoring: Both Parties continued working on the establishment of a monitoring mechanism 
for the EPA, exchanging documents and suggestions about the type of monitoring mechanism 
to be put in place. As a result of this work, a joint monitoring mechanism seems achievable.  

Development Cooperation: The EPA is a genuinely pro-development agreement and directly 
linked  to  the  European  Development  Fund  (EDF)  funds.  The  EDF  provides  considerable 
support  to  CARIFORUM  and  Caribbean  governments  for  EPA  implementation  under  the 
Caribbean  Regional  Indicative  Programme  (CRIP).  Under  the  10th  EDF  (2008-2014), 
EUR 140 million  (85%  of  the  total  CRIP,  EUR 165 million)  were  allocated  to  regional 
economic  integration  and  EPA  implementation.  Under  the  11th  EDF  (2014-2020),  the  total 
indicative  allocation  to  CRIP  is  EUR 346 million  which  represents  a  substantial  increase 
compared to the allocation of the 10th EDF. Once again, an important allocation in the CRIP is 
earmarked  to  regional  economic  cooperation  and  integration  (EUR 102 million)  in  the 
Caribbean,  including  the  EPA  implementation.  Support  is  provided  at  different  levels, 
including  institutional  support  to  CARIFORUM  and  OECS  Secretariats,  support  to 
Government  services  at  national  level,  and  support  to  the  private  sector  via  the  Caribbean 
Export Development Agency (CEDA). 

New  programs  were  adopted  in  2016/2017  under  the  11th  EDF,  namely  a  new  private 
sector  development  programme  to  be  implemented  by  Caribbean  Export  Development 

255 

 
Agency  (EUR 24 million)  and  a  new  programme  to  support  CARIFORUM  in  the 
implementation of the EPA for further EUR 6.2 million. A new EPA implementation proposal 
is under discussion by the parties, new forms and themes for cooperation are being explored.  

5. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

Discussions are ongoing on the monitoring system that needs to be established according to 
the  EPA.  Negotiations  on  GIs  are  ongoing.  Parties  also  need  to  achieve  progress  in 
implementing and making use of the Services chapter.  

6. 

CONCLUSIONS AND OUTLOOK 

In 2017 progress was achieved in the implementation of the agreement, including notably on 
agriculture issues and services. Productive meetings of all EPA bodies took place. Continuous 
effort of all partners will be needed to ensure that benefits of the agreement fully materialize.  

Caribbean  exports  to  the  EU  increased  by  12%  in  2017,  although  the  value  of  agricultural 
exports to the EU decreased by 11%, partly due to falling world market prices. The four main 
Caribbean Services exporters maintained a trade surplus with the EU.  

256 

 
 
 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE ECONOMIC 
PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND PACIFIC STATES  

1. 

INTRODUCTION 

Negotiations  for  an  EU-Pacific  EPA  (hereinafter  the  ‘Agreement’)  were  concluded  on  23 
November  2007  with  Papua  New  Guinea  (PNG)  and  Fiji  –  2  of  the  14  Pacific  States186, 
representing the vast majority of regional exports to the EU.187 The EU and PNG signed the 
EPA on 30 July 2009 and Fiji on 11 December 2009. The European Parliament approved the 
Agreement on 19 January  2011 and the PNG Parliament  ratified it on 25 May 2011. Fiji  is 
still to ratify the Agreement but has notified the Council of its provisional application as of 28 
July 2014. 

The  objectives  of  this  Agreement  are  to  promote  sustainable  development  and  the  gradual 
integration of Pacific States into the world economy. The EPA aimes to establish a free trade 
area  between  the  parties,  through  progressive  liberalisation,  taking  into  account  the  specific 
needs and capacity constraints of the Pacific States. The EPA only covers trade in goods. 

The Agreement is open for accession of other Pacific Island States.188 Interested Parties will 
need  to  submit  a  market  access  offer  that  is  compliant  with  GATT  1994  Article  XXIV.  In 
2017, Samoa and Solomon Islands indicated their intentions to accede to the EPA.  

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in goods 

Under the Pacific EPA, the EU provides duty free and quota free market access for the Pacific 
states to the EU market. The Pacific states commit to liberalize 87% (Fiji) and 88% (PNG) of 
trade. PNG has already made all tariff cuts. 

Table 1: EU28 Trade in goods with Fiji and PNG (million EUR) 

EU28 imports from Fiji and PNG 

from Fiji 
from PNG 

EU28 exports to Fiji and PNG 

to Fiji 
to PNG 

EU28 trade balance 
Source: Trade G2 Statistics/Eurostat 

2014 
893 
99 
794 
234 
99 
135 
-659 

2015 
833 
86 
747 
342 
177 
165 
-491 

2016 
743 
61 
682 
279 
64 
214 
-464 

2017 
993 
95 
898 
228 
65 
164 
-765 

186  Of which 5 LDCs (Kiribati, Samoa, Solomon Islands, Tuvalu, Vanuatu) and 9 developing countries (Cook 
Islands,  Fiji,  Marshall  Islands,  Federated  States  of  Micronesia,  Nauru,  Niue,  Palau,  Papua  New  Guinea, 
Tonga). 

187  More on trade with the Pacific: http://ec.europa.eu/trade/policy/countries-and-regions/regions/pacific/  
188  Accession is open to all Pacific Island States that are party to the Cotonou Agreement, and to Pacific Islands 
whose structural characteristics and economic and social situation are comparable to the above mentioned. 

257 

 
 
 
 
 
 
                                                 
Overall, the EU is the Pacific countries’ fifth largest trading partner, but  trade remains very 
small in absolute and relative terms. Exports to the EU account for about 11% of the region’s 
total exports while 3% of the region’s imports come from the EU.  

PNG and  Fiji,  together represent  around 83% of  all EU  - Pacific trade. However, key trade 
partners of both countries are notably Australia, China and Singapore.  

Exports  from  PNG  to  the  EU  have  increased  considerably  over  the  last  four  years,  while 
exports from  Fiji  to  the  EU are much smaller and more volatile. EU trade balance with  the 
two countries continues to be largely negative.  

Figure 1: EU28 Trade in goods with Fiji and PNG (in million EUR) 

1.200

1.000

800

600

400

200

0

-200

-400

-600

-800

-1.000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

EU28 imports from Fiji and PNG

EU28 exports to Fiji and PNG

EU28 Balance of trade

Source: Trade G2 Statistics/Eurostat 

Fiji and PNG’s main exports to the EU are commodities: palm oil, copper, sugar, coconut and 
fish.  Their  main  imports  from  the  EU  are  mechanical  machinery,  electrical  machinery, 
vehicles and oil. 

The Pacific EPA includes improved preferences (or rather a special derogation of the standard 
Rules of Origin) for processed fish products. The ‘global sourcing’ provision allows Pacific 
EPA countries to source fish from any vessel for further processing (regardless of who caught 
the fish, or where it is caught). This exclusive exemption recognises the special importance of 
fisheries,  especially  canned  tuna  (HS  1604),  for  long-term  economic  development  in  the 
region.  Thanks  to  the  provision,  countries  can  further  develop  their  onshore  processing 
capacity, creating local employment and income.  

PNG  has  benefitted  from  the  global  sourcing  provision  since  2008  and  thus  substantially 
increased its exports of processed (canned) tuna to the EU (Figure 2). Processed or prepared 
fish products (HS 1604) accounted for 17.7% of PNG’s total exports to the EU in 2017.  

258 

 
 
The provision comes with a comprehensive reporting requirement to ensure the promotion of 
sustainable  fisheries  and  good  fisheries  governance.  Based  on  the  reports,  the  EU  and  the 
Pacific States hold consultations on the utilisation and effects of the provision.  

Figure 2. EU imports of prepared or preserved fish (HS 1604) from PNG (million EUR) 

180

160

140

120

100

80

60

40

20

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Agricultural products189 constitute the bulk of Fiji and PNG’s export to the EU. Agri-food 
exports from PNG to the EU are dominated by palm oil (over 80% of total PNG’s agri-food 
exports to the EU), with coffee as the second most important agricultural commodity. For Fiji, 
94% of its agricultural exports to the EU consist of cane sugar.  

EU agricultural exports to the region consist mostly of meat preparations and preparations of 
fruits, vegetables and nuts.  

Table 2: EU28 Trade in goods with Fiji and PNG by AMA/NAMA sector (million EUR) 

2014 

2015 

2016 

2017 

Growth 2017 (%) 

EU28 imports from Fiji and PNG 
Agricultural 
Non-Agricultural 
EU28 exports to Fiji and PNG 
Agricultural 
Non-Agricultural 
Source: Trade G2 Statistics/ISDB 

16 
219 

593 
300 

583 
251 

17 
325 

556 
187 

17 
261 

700 
293 

18 
210 

25.9% 
57.0% 

3.6% 
-19.4% 

2.2. 

Trade in services 

At  present,  the  EU-Pacific  EPA  does  not  cover  trade  in  services.  Generally,  Pacific  exports 
have  not  diversified  into  other  non-traditional  exports  or  higher-value  goods.  However, 
services (particularly tourism services) are a major economic sector in many Pacific countries 
and show a high potential for growth, including in Fiji and PNG. 

189  Agricultural (or agri-food) trade considered comprises the HS Chapters 1 to 24, except fish and fish products 

(as defined in the WTO Agreement on Agriculture).  

259 

 
 
 
 
 
                                                 
Table 3: EU28 services trade with Fiji and PNG (million EUR) 

2014 
135.1 
EU28 imports 
227.8 
EU28 exports 
92.7 
Balance 
Total trade 
362.9 
Source:Trade G2 Statistics/Eurostat Balance of Payment Statistics 

2013 
171.9 
633.9 
462 
805.8 

2015 
123.5 
676 
552.5 
799.5 

2016 
96.7 
566 
469.3 
662.7 

2.3. 

FDI 

EU outward investment stocks in both countries have increased over the last three years. The 
EPA does not cover investment.  

In  PNG,  the  biggest  EU  investment  is  SP  Brewery  (a  Dutch-Singaporean  joint  venture 
producing  beer).  Other  investments  are  in  oil  (Spanish)  and  liquid  natural  gas  exports 
(French). A number of smaller investments in Services sectors are linked to the large energy 
infrastructure projects.  

In Fiji, the most prominent EU investments are French investments in the banking sector and 
oil sectors. EU investment is also manifest in the tourism sector.  

Table 4: FDI EU28 with Fiji and PNG (million EUR)  

Stocks 
Flows 

2014 
4 
1 

Inward 
2015 
3 
-1 

2016 
4 
1 

2014 
1 165 
-92 

Outward 
2015 
1 374 
202 

2016 
1 469 
63 

Source: Trade G2 Statistics/Eurostat Balance of Payment Statistics  

3. 

ISSUES ADDRESSED IN THE EPA COMMITTEE MEETINGS 

Five meetings of the Trade Committee established under the EPA have taken place between 
the Parties to the Agreement. The last Committee meeting in 2017 discussed the state of play 
of EPA implementation (particularly PNG and Fiji’s tariff schedules) and ratification, as well 
as  rules  of  procedure,  rules  of  origin,  sustainability  issues  (fisheries  management  and 
regulations,  progress  on  labour  issues,  environmental  protection  reforms,  etc.)  and  possible 
areas for deepening cooperation under the EPA. Accession of other interested Parties was also 
discussed.  Samoa  and  Solomon  Islands  were  invited  and  participated  as  observers  to  the 
Committee meeting. 

4. 

SPECIFIC AREAS OF IMPORTANCE 

EPA  implementation  is  a  top  priority,  with  Fiji  still  to  ratify  and  PNG  having  made  all  its 
tariff cuts and now seeking to extend export diversification beyond the fisheries sector. 

Development cooperation is essential for EPA implementation, although it is not part of the 
Pacific-EU EPA or its accession process. For instance, the European Development Fund will 
be used under the Pacific regional indicative programme (a) to strengthen regional trade and 
business  enabling  environment  and  (b)  to  better  involve  the  private  sector  in  order  to 

260 

 
  
  
  
strengthen the economic integration of the Pacific region. These are in addition to the support 
already  foreseen  under 
the  rural 
entrepreneurship, investment and trade in PNG. 

indicative  programme 

to  strengthen 

the  national 

The EU is supportive of the accession of other Pacific States to the existing Agreement with a 
view to extending EPA benefits to them. 

5. 

MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

It  is  important  to  convene  the  next  Trade  Committee  meeting,  inter  alia  to  follow  up  with 
PNG on the above implementation issues as well as technical matters, while pursuing efforts 
towards Fiji’s effective implementation and ratification of the Agreement. 

The end of 2018 is a target date for Samoa’s accession in view of its graduation out of Least 
Developed Country (LDC) status. 

In addition to Samoa, that graduated from LDC status in 2014, four other Pacific countries are 
projected to graduate soon (Kiribati, Solomon Islands, Tuvalu and Vanuatu) and will lose the 
EU’s  Everything-But-Arms  (EBA)  preferences.  They  will  fall  under  the  less  generous 
General Scheme of Preferences (GSP) unless these countries decide to accede to the current 
EU EPA with PNG and Fiji. The Parties to the Agreement are open to consider each country’s 
accession. 

6. 

CONCLUSIONS AND OUTLOOK 

Although the overall volume of trade in goods with the EU is small, the EPA is an important 
tool for the Pacific States in order to develop non-traditional exports. In particular they have a 
strong  interest  in  safeguarding  their  rights  to  sell  processed  fisheries  to  the  EU  market  by 
exploiting  the  improved  rules  of  origin,  subject  to  compliance  with  sustainable  fisheries 
management, technical standards and food safety requirements. 

Effective implementation, coupled with corresponding domestic reforms  (especially in areas 
of  trade  facilitation  and  improvement  of  value  chains  and  business  climate)  will  enable  Fiji 
and PNG to take full advantage of the EPA, including to attract EU investment.  

The EU remains open to extend the benefits of the EPA to acceding countries. 

261 

 
 
 
ANNUAL INFO SHEET ON THE IMPLEMENTATION OF THE INTERIM 
ECONOMIC PARTNERSHIP AGREEMENT (IEPA) BETWEEN THE EU AND 
EASTERN AND SOUTHERN AFRICAN (ESA) STATES  

INTRODUCTION 

1. 
Pending  an  EPA  with  the  full  Eastern  and  Southern  African  region190,  an  interim  EPA  was 
signed in 2009 by four ESA countries (Madagascar, Mauritius, Seychelles and Zimbabwe).191 
This  ESA-EU  interim  EPA  (iEPA;  hereinafter  ‘The  Agreement’)  is  provisionally  applied 
since 14 May 2012. In 2017, Comoros also signed it. It will become a Party to the agreement 
after  it  has  ratified  it.  An  established,  functioning  EPA  Committee  serves  as  a  platform  for 
dialogue in a spirit of partnership to oversee and monitor the agreement’s implementation and 
to take appropriate decisions. In 2017, the four ESA states expressed their interest to deepen 
the  agreement  beyond  trade  in  goods.  Scoping  missions  and  studies  in  that  regard  will  be 
conducted in 2018. 

2. 

EVOLUTION OF TRADE 

2.1. 

Trade in Goods  

Total  trade  with  the  four  ESA  iEPA  countries  (ESA4)  increased  by  24.1%  since  its 
provisional application. The ESA4 exports to the EU increased faster and more (25.3%) than 
the EU exports to the ESA4 (22.6%). The trade balance has always been positive in favour of 
the ESA4.  

Table 1. Total Merchandise Trade EU28 with ESA4, 2012-2018 (million EUR) 

EU28 imports from ESA4 
Madagascar 
Mauritius 
Seychelles 
Zimbabwe 
EU28 exports to ESA4 
Madagascar 
Mauritius 
Seychelles 
Zimbabwe 
EU28 trade balance 

2012 

2 272 
583 
1 050 
221 
417 
1 913 
517 
848 
266 
282 
-359 

2013 
2 505 
738 
1 086 
293 
388 
1 961 
537 
862 
321 
241 
-545 

2014 

2 580 
840 
960 
270 
510 
1 865 
532 
875 
237 
221 
-715 

2015 
2 450 
904 
895 
249 
402 
1 981 
563 
899 
302 
220 
-469 

2016 

2017 

2 469 
986 
866 
282 
334 
1 958 
556 
949 
279 
174 
-511 

2 848 
1 178 
925 
291 
454 
2 347 
685 
1 170 
298 
192 
-501 

Source: Trade G2 Statistics, Eurostat 

In  addition  to  benefitting  from  "the  Everything  but  Arms  Initiative"  Madagascar  has  seen 
clear  benefits  from  EPA  implementation,  as  its  exports  more  than  doubled  over  the  period 
2012-2017,  albeit  from  a  low  start  level,  due  to  the  political  crisis  and  insolation  of 

190  Eastern  and  Southern  Africa  (ESA)  is  a  diverse  EPA  group  including  Indian  Ocean  islands  (Comoros, 
Madagascar,  Mauritius  and  Seychelles),  countries  of  the  Horn  of  Africa  (Djibouti,  Ethiopia,  Eritrea  and 
Sudan) and some countries of Southern Africa (Malawi, Zambia and Zimbabwe). 
191  More on trade with ESA: http://ec.europa.eu/trade/policy/countries-and-regions/regions/esa/  

262 

 
 
                                                 
Madagascar  between  2009  and  2013,  before  a  return  to  stability  and  democracy  as  of 
2013/2014.  Main export products are textiles, followed by vanilla, fisheries, fruits and cobalt. 
Seychelles’ exports (mostly fishery products) followed the same trend and increased by one 
third in the same period. For Zimbabwe, an 8.9% increase of its exports to the EU over the 
period  is  a  particular  success  compared  to  the  sharp  decline  of  its  exports  to  the  rest  of  the 
world (2017 exports to the rest of the world were almost down to one third of 2012 exports 
level).  Zimbabwe’s  main  exports  to  the  EU  are  tobacco,  sugarcane,  fruit,  hides  and  leather, 
tea, flowers, metals and granite. Higher value agricultural products have been added (berries, 
stone  fruit,  peppers  and  peas)  as  a  renewed  diversification  that  may  boost  further  its  export 
values in the future. Exports of Mauritius destined for the EU saw a relatively steep decrease 
(-17.5%)  in  the  first  years  2012-2016  (attributed  to  the  global  economic  conditions). 
However,  this  trend  is  now  clearly  reversing,  with  exports  increasing  by  7%  in  2017, 
exceeding the level in 2016. Mauritius’ exports to the EU remain concentrated on three main 
products,  that  is,  sugar,  textiles  and  fisheries  making  up  90%  of  total  exports.  Exports  are 
starting  to  diversify  slightly  in  recent  years,  including  also  pharmaceutical  and  beauty 
products, watches and medical devices.  

Total agricultural trade between the parties has been growing stronger (+36% on average) 
than  non-agricultural  trade  (+18.5%)  since  implementation  of  the  EPA.  For  ESA4, 
agricultural exports to the EU grew by 43% annually, while non-agricultural exports grew by 
only 17.6% annually. ESA4 countries have a high trade surplus for agricultural goods while 
the EU has a slight surplus for non-agricultural goods.  

The EU exports to ESA4 increased by 23% over the period 2012-2017 reflecting the market 
access liberalisation implemented by all ESA4 countries.  

Table 2: EU28 merchandise trade by AMA/NAMA sector with ESA4 (million EUR) 

2012 

2013 

2014 

EU28 imports from ESA4 

Total 
  Agricultural 
  Non-Agricultural 

2 272 
641 
1 630 

2 505 
723 
1 782 

EU28 exports to ESA4 

Total 
  Agricultural 
  Non-Agricultural 

Total 
  Agricultural 
  Non-Agricultural 
Source: Trade G2 Statistics/ISDB 

-359 
-439 
80 

1 913 
203 
1 710 

1 961 
208 
1 753 
EU28 trade balance 
-545 
-516 
-29 

2 580 
743 
1 837 

1 865 
239 
1 626 

-715 
-504 
-212 

2015 

2 450 
725 
1 725 

1 981 
259 
1 726 

-469 
-466 
1 

2016 

2 469 
783 
1 685 

1 958 
275 
1 683 

-511 
-508 
-1 

2017 

2 848 
919 
1 928 

2 347 
308 
2 036 

-501 
-611 
108 

The EU is the largest trade partner of ESA4 for its exports and the second largest partner 
for  its  imports.  Seen  from  the  individual  countries,  the  EU  is  the  largest  trade  partner  for 
Seychelles and Mauritius for both their exports and imports, while for Madagascar the first for 
its exports and second for its imports. As for Zimbabwe, the EU is the fourth and third largest 
partner for its exports and imports respectively; Zimbabwe trades mainly with South Africa.  

263 

 
 
 
 
 
ESA4 countries have high PURs in their exports to the EU. A large share of their exports are 
raw materials and hence duty-free on an MFN basis. The remainder of exports are imported 
under  EPA  preferences,  with  the  exception  of  1-2%  of  exports  where  the  MFN  tariff  is 
positive but low enough to offset compliance costs for the preferential rate. 

Figure 1: EU28 Merchandise trade with ESA4 (million EUR) 

3.500

3.000

2.500

2.000

1.500

1.000

500

0

-500

-1.000

-1.500

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

EU28 Imports from ESA4

EU28 Exports to ESA4

EU Balance of trade

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 tons 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  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.  

2.2. 

Trade in Services and Investment  

The iEPA does not cover trade in services. Trade in services between the EU and ESA4 has 
shown some variation between countries and over the last years. In the last years, the EU had 
a  negative  net  balance  with  all  ESA4  but  Zimbabwe.  However,  this  trend  varies  between 
them, showing that there are different patterns of trade.  

Table 3: EU28 Services trade with ESA4 (million EUR) 

EU28 imports 
EU28 exports 

2011 
2 416 
1 506 

2012 
2 143 
1 638 

2013 
2 030 
1 407 

2014 
2 355 
1 821 

2015 
2 476 
1 599 

2016 
2 336 
1 873 

264 

 
 
 
EU28 balance 
Total trade 
Source: Trade G2 Statistics/ISDB from Eurostat BOP statistics 

-624 
3 437 

-910 
3 922 

-505 
3 781 

-534 
4 176 

-877 
4 075 

-463 
4 209 

2.3. 

FDI  

The  Agreement  does  not  cover  investment.  On  FDI,  no  clear  pattern  emerges  either  at 
regional or at  country level.  Investment  flows have fluctuated for all countries, though they 
have increased for Zimbabwe in the last three years. Mauritius accounts for more than 90% of 
EU FDI stocks in ESA4.  

Table 4: FDI EU28 with ESA4 (million EUR) 

2014 
6 289 
1 410 

Inward 
2015 
6 301 
-1 474 

2016 
6 412 
1 142 

2014 
21 506 
183 

Outward 
2015 
22 336 
2 428 

2016 
20 017 
-3 911 

Stocks 
Flows 

Source: Trade G2 Statistics/ISDB from Eurostat BOP statistics 

ISSUES ADDRESSED IN THE ANNUAL EPA COMMITTEE MEETING 

3. 
The  main  issues  addressed  by  the  6th  Meeting  of  the  EPA  Committee  in  October  2017  (in 
Madagascar) were: 

  Continuous support to EPA implementation under both the 10th and the 11th European 

Development Fund (EDF); 

  Agreement on modernisation of rules of origin; 
  Agreement to hold a dedicated meeting in 2018 to discuss the scope and objectives of 
the  envisioned  deepening  of  the  agreement  (covering  additional  topics)  which  the 
ESA4 have asked for. The deepening may evolve around the issues mentioned in the 
rendezvous clause of the interim agreement.  

4. 

SPECIFIC AREAS OF IMPORTANCE 

Development cooperation is essential for EPA implementation and for ensuring the long-term 
sustainable  development  impact  of  the  agreement.  In  this  context,  it  was  an  important 
achievement  when  envelopes  of  EUR 10 million  were  allocated  to  each  of  the  four  EPA 
countries under the SADC regional programme.  

Through this support, Mauritius is now already implementing a project to improve the ease-
of-doing-business  and  investment  regulatory  framework.  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 addition, Regulatory Impact Assessments (RIA) will 
be conducted for the first time to aid the improvement of policy formulation with regards to 
investment,  trade  and  business  regulation.  Technical  assistance  is  also  provided  for  the 
implementation of the Intellectual Property Rights (IPR) reform, a key reform to support the 
transformation to a knowledge-based economy.  

265 

 
 
 
 
 
 
 
In  Seychelles,  the  programme  will  focus  on  trade  policy  capacity  building,  private  sector 
development in manufacturing and agriculture & fisheries, with a focus on niche sectors that 
could generate exports, and business to business trade promotion.  

Projects  are  being  finalised  in  the  remaining  ESA  countries,  with  both  Zimbabwe  and 
Madagascar  focusing  on  SMEs  development  and  trade  facilitation  in  selected  value-chains. 
With  EU  support,  Madagascar  has  successfully  set  up  a  well-functioning  dialogue  platform 
where business and government come together to discuss issues surrounding the EPA, export 
performance and the business climate.  

5. 

PROGRESS MADE, MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

All ESA4 countries are implementing the Agreement and have made tariff cuts according to 
their liberalisation schedule.  

The  ESA  States  expressed  their  interest  in  ‘deepening’  (new  issues)  and  ‘widening’  (new 
members) the existing iEPA192. Both sides agreed to jointly define the scope and objectives of 
the deepening before launching the negotiation process.  

As for widening, the EPA is open for accession by other ESA states193. Comoros has already 
signed  the  agreement  in  July  2017  and  is  expected  to  ratify  it  in  2018.  Zambia  can,  at  any 
time, also sign and ratify the agreement that it initialled in 2007. The other ESA States will 
first need to submit market access offers before eventually joining the agreement.  

There  are  challenges  raised  by  non-tariff  measures  that  need  to  be  tackled  by  constructive 
dialogue between the competent services and by appropriate EU support. The prospects of an 
ESA4 Business Forum, an awareness-raising EPA seminar in Zimbabwe and specific training 
on GIs have been raised.  

6. 

CONCLUSIONS AND OUTLOOK 

In  2017,  all  the  four  ESA  countries  implemented  their  commitments,  culminating  in 
significant tariff cuts. The trade balance remained positive in favour of the ESA4, and there 
was  sustained  growth  of  exports,  in  particular  from  Madagascar,  whereas  exports  from 
Zimbabwe  started  growing.  Exports  have  further  potential  through  the  implementation  of 
domestic reforms and accompanying measures. Comoros signed the agreement in July 2017 
and is expected to ratify it in 2018. Uncertainty remains as to the intentions of Zambia to sign 
the iEPA.  

192  The  full  name  of  the  agreement,  ‘Interim  Economic  Partnership  Agreement’  reflects  the  fact  that  the 
objective  on  both  sides  for  an  agreement  in  Eastern  and  Southern  Africa  was  a  comprehensive,  regional 
agreement.  However, negotiations  for a  regional EPA  with the ESA4 and  seven other ESA countries  have 
come to a halt, and the Commission focused its efforts on the agreement already implemented by the ESA4. 

193  Comoros, Djibouti, Ethiopia, Eritrea, Sudan, Malawi and Zambia 

266 

 
 
 
                                                 
ANNEX – LIST OF ABBREVIATIONS 

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 

267