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 2018 - 31 December 2018
Date: 2019-10-14
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: association agreement (EU), cooperation agreement (EU), free-trade agreement, investment, preferential agreement, service, sustainable development, tariff quota, third country, trade agreement (EU)

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 14.10.2019  COM(2019) 455 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on Implementation of Free Trade Agreements    1 January 2018 - 31 December 2018 {SWD(2019) 370 final}  
 
 
Table of Contents 

INTRODUCTION ............................................................................................................................. 4 
1. 
OVERVIEW OF MAIN FINDINGS ............................................................................................... 6 
2. 
General overview ................................................................................................................................ 6 
2.1 
Progress achieved and key open issues ............................................................................................... 7 
2.2 
NEW GENERATION OF FREE TRADE AGREEMENTS ......................................................... 9 
3. 
EU - South Korea Trade Agreement ................................................................................................... 9 
3.1 
EU Trade Agreement with Colombia, Ecuador and Peru .................................................................. 10 
3.2 
EU Association Agreement with Central America ............................................................................ 12 
3.3 
EU- Canada Comprehensive Economic and Trade Agreement (CETA) ........................................... 12 
3.4 
DEEP AND COMPREHENSIVE FREE TRADE AREAS (DCFTAS) ...................................... 15 
4. 
4.1 
Georgia .............................................................................................................................................. 15 
4.2  Moldova ............................................................................................................................................ 16 
Ukraine .............................................................................................................................................. 16 
4.3 
FIRST GENERATION FREE TRADE AGREEMENTS ........................................................... 17 
5. 
Switzerland ........................................................................................................................................ 17 
5.1 
5.2 
Norway .............................................................................................................................................. 18 
5.3  Mediterranean and Middle Eastern countries .................................................................................... 18 
5.4  Mexico .............................................................................................................................................. 19 
Chile .................................................................................................................................................. 20 
5.5 
Customs Union with Turkey ............................................................................................................. 20 
5.6 
Stabilisation and Association Agreements with the Western Balkans countries ............................... 21 
5.7 
6. 
ECONOMIC PARTNERSHIP AGREEMENTS (EPAS) WITH AFRICAN, CARIBBEAN 
AND PACIFIC COUNTRIES ........................................................................................................ 22 
Economic Partnership Agreement with the Southern African Development Community (SADC) .. 22 
Interim Economic Partnership Agreement with Eastern and Southern Africa (ESA) ....................... 23 
Interim Economic Partnership Agreement with Côte d’Ivoire .......................................................... 23 
Interim Economic Partnership Agreement (EPA) with Ghana .......................................................... 24 
Economic Partnership Agreement (EPA) with Central Africa (Cameroon) ...................................... 24 
Economic  Partnership  Agreement  with  the  Forum  of  the  Caribbean  Group  of  ACP  countries 
(CARIFORUM) ................................................................................................................................ 25 
Economic Partnership Agreement (EPA) with the Pacific countries ................................................ 25 
TRADE AND SUSTAINABLE DEVELOPMENT: UPDATE ON RECENT ACTIVITIES ... 26 
AGRI-FOOD  TRADE  UNDER  EU  TRADE  AGREEMENTS:  UPDATE  ON  RECENT 
DEVELOPMENTS ......................................................................................................................... 29 
9.  WORK ONGOING IN SPECIFIC AREAS .................................................................................. 32 
Small and medium-sized enterprises (SMEs) .................................................................................... 32 
9.1 
Services ............................................................................................................................................. 34 
9.2 
The EU-Japan Economic Partnership Agreement – preparatory work .............................................. 35 
9.3 
Improving the uptake of EU trade agreements .................................................................................. 36 
9.4 
10. 
LEGAL ENFORCEMENT ............................................................................................................ 37 
10.1  Dispute settlement with South Korea ................................................................................................ 37 
10.2  Dispute settlement with Ukraine ....................................................................................................... 37 
10.3  Dispute settlement with the Southern African Customs Union ......................................................... 38 
11. 
CONCLUSIONS.............................................................................................................................. 38 
ANNEXE 1: PREFERENCE UTILISATION RATES ON EU IMPORTS ........................................... 39 
ANNEXE 2: PREFERENCE UTILISATION RATES ON EU EXPORTS ........................................... 40 

6.1 
6.2 
6.3 
6.4 
6.5 
6.6 

6.7 
7. 
8. 

1 

 
 
 
 
OVERVIEW OF THE AGREEMENTS COVERED BY THIS REPORT  

'New generation' of preferential trade agreements 

Partner 
EU-South Korea Free Trade Agreement 
EU-Colombia-Peru-Ecuador Trade 
Agreement 
EU-Central America Association 
Agreement  

Applied since 
1 July 2011 
1 March 2013 for Peru; 1 August 2013 for 
Colombia; 1 January 2017 for Ecuador. 

1 August 2013: trade pillar applies with 
Honduras, Nicaragua and Panama; 1 
October 2013: Costa Rica and El 
Salvador; 1 December 2013: Guatemala. 
21 September 2017 

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

EU-Georgia  

EU-Moldova 

EU-Ukraine 

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

'First generation' of preferential trade agreements 
Partner 
EU-Turkey Customs Union 

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

EU-Chile Association Agreement 
EU-North Macedonia SAA2 
EU-Albania SAA 

Applied since  
Association Agreement signed in 1963; 
final phase of the customs union 
completed on 1 January 1996. 
1972 
1 July 1973 
1 January 1996 
1 May 2002 
1 July 1997 
1 March 1998 
18 March 2000 
1 March 2003 
21 December 2003 
1 September 2005 
Applied for goods since 1 July 2000; 
applied for services since 1 March 2001. 
1 February 2003 
Interim Agreement on trade 1 June 2001 
Interim Agreement on trade 1 December 
2006 

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

individual positions of Member States on this issue. 

2 

Stabilisation and Association Agreement 

2 

 
 
 
                                                 
EU-Montenegro SAA 

EU-Serbia SAA 

EU-Bosnia and Herzegovina SAA 
EU-Kosovo3 SAA 
Economic Partnership Agreements with African, Caribbean and Pacific States 
EU-Southern African Development 
Community (SADC)  

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

10 October 2016 for Botswana, Eswatini, 
Lesotho, Namibia and South Africa; 4 
February 2018 for Mozambique. 
14 May 2012 for Madagascar, Mauritius, 
Seychelles and Zimbabwe4 
3 September 2016 
15 December 2016 
4 August 2014 for Cameroon 
29 December 2008 for Antigua & 
Barbuda; Belize; Bahamas; Barbados; 
Dominica; Dominican Republic; Grenada; 
Guyana; Jamaica; St. Kitts & Nevis; Saint 
Lucia; St. Vincent & the Grenadines; 
Suriname; and Trinidad & Tobago. 
20 December 2009 for Papua New 
Guinea; 28 July 2014 for Fiji5. 

EU-Eastern and Southern African States 
(interim) 
EU-Cote d’Ivoire (interim) 
EU-Ghana (interim) 
EU-Central Africa (Cameroon) 
EU-CARIFORUM 

EU-Pacific countries (interim) 

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

ICJ Opinion on the Kosovo Declaration of independence. 

4   The agreement applies to Comoros since 7 February 2019.  

5   The agreement applies also to Samoa since 31 December 2018. 

3 

 
 
 
 
 
                                                 
INTRODUCTION 

1. 
In its 2015 Trade for All communication6, the Commission committed itself to report annually 
on the implementation of the European Union’s (EU) most significant  trade agreements. This 
is now the third report on this matter7.   

Since  2015,  European  trade  policy  has  significantly  evolved  and  the  EU  has  concluded  and 
started  applying  new  trade  agreements  with  Ecuador,  Canada,  Japan,  the  Economic 
Partnership Agreement (EPA) with the Southern African Development Community (SADC), 
the interim EPAs with Ghana and Côte d’Ivoire and the Deep and Comprehensive Free Trade 
Area  (DCFTA)  with  Ukraine.  Ratifications  of  trade  agreements  concluded  with  Singapore 
(2012) and Vietnam (December 2015) are pending. In 2018, 31% of EU trade in goods with 
the rest of world was covered by preferential trade agreements. This figure rises to 39% when 
the  agreement  with  Japan,  which  entered  into  force  on  1  February  2019,  and  those  with 
Singapore  and  Vietnam,  which  were  signed  on  19  October  2018  and  on  30  June  2019, 
respectively,  are  included.  Adding  the  EU  Mercosur  political  agreement  of  28  June  2019 
would increase the figure to 41%. 

Trade agreements now also follow the better regulation principles and are subject in particular 
to regular ex-post evaluations. Since 2015, three ex-post evaluations were completed for the 
EU's  trade  agreements  with  Mexico,  Chile  and  South  Korea.  Ex-post  evaluations  of  the 
agreements with CARIFORUM8 and six Mediterranean countries9 are currently ongoing and 
will  soon  begin  for  the  EU-Colombia,  Ecuador  and  Peru  agreement  and  the  EU-Central 
America agreement.  

This report provides an update on the implementation of 35 major trade agreements with 62 
partners, including the first full year report on the EU-Canada Comprehensive Economic and 
Trade Agreement (CETA). In addition, the report describes the work undertaken prior to the 
entry into force of the EU-Japan Economic Partnership Agreement.  
According to a study on EU Exports to the World: Effects on Employment10 36 million EU 
jobs  depend  on  exports  outside  the  EU,  out  of  which  13.7  million  are  occupied  by  women. 
Between 2000 and 2017, EU jobs supported by exports to the rest of the world increased by 
66%.  This  represents  14.3  million  additional  jobs  supported  by  exports.  The  share  of  EU 
employment  supported  by  sales  of  goods  and  services  to  the  rest  of  the  world  over  total 
employment  increased  from  10.1%  in  2000  to  15.3%  in  2017.  Export-related  jobs  are,  on 
average,  12%  better  paid  than  jobs  in  the  rest  of  the  economy.  European  workers  from  all 
Member  States  benefit  from  EU  exports.  These  additional  jobs  are  created  by  businesses 
directly involved in exports of goods and services as well as EU companies supplying goods 
and services to exporting companies. 

As with previous reports, the agreements have been grouped into four categories, according to 
their content and objectives.  

'New  generation  agreements',  such  as  those  with  South  Korea  or  Canada,  include  both 
commitments  on  liberalisation  of  trade  in  goods,  as  well  as  commitments  on  services  and 

6   http://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153846.pdf  

7   The first report was published on 9 November 2017, the second one on 31 October 2018.   

8   Antigua  &  Barbuda;  Belize;  Bahamas;  Barbados;  Dominica;  Dominican  Republic;  Grenada;  Guyana; 
Jamaica; St. Kitts & Nevis; Saint Lucia; St. Vincent & the Grenadines; Suriname; and Trinidad & Tobago. 

9   Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia. 

10   http://trade.ec.europa.eu/doclib/docs/2018/november/tradoc_157516.pdf  

4 

 
 
                                                 
investments,  public  procurement,  competition  and  subsidies  and  regulatory  issues.  These 
agreements  aim  to  develop  stronger  rules-based  and  values-based  trade  regimes  with  the 
trading partner countries concerned and include dedicated provisions on trade and sustainable 
development. The most recent ones also have specific provisions to address challenges faced 
by modern economies and societies, such as the Economic Partnership Agreement with Japan, 
which  includes  a  chapter  on  small  and  medium-sized  enterprises,  as  well  as  dedicated 
provisions on information and telecommunication services, and e-commerce.  

'First generation' trade agreements’, most of them concluded before 2006, tend to focus on 
tariff liberalisation. 'Deep and Comprehensive Free Trade Areas' (DCFTAs) aim to deepen 
economic  relations between  the respective neighbouring countries and the EU and focus on 
approximating their legislation to EU legislation, notably in trade-related areas.  The EU has 
DCFTAs  with  Georgia,  Moldova  and  Ukraine  and  is  negotiating  one  with  Tunisia. 
'Stabilisation  and  Association  Agreements'  with  six  Western  Balkan  partners11,  concluded 
between 2001 and 2016, aim to support regional integration and stability in the region and its 
economic integration into the EU market. 

Economic  Partnership  Agreements  (EPAs)  with  African,  Caribbean  and  Pacific  (ACP) 
States  and  regions  have  an  explicit  development  objective.  They  are  asymmetric  trade 
agreements,  with  the  ACP  side  liberalising  around  80%  of  trade  over  a  period  of  15  to  20 
years, while the EU grants duty-free, quota-free access from day one. For the time being, most 
of  these  agreements  cover  trade  in  goods  and  development  cooperation.  The  EPA  with  the 
Caribbean  also  includes  provisions  on  services,  investment  and  other  trade-related  topics. 
Under EPAs, the EU provides substantial trade-related assistance to support partner countries 
in  implementing  the  Agreements,  strengthening  export  competitiveness  and  building 
economic infrastructure.12 

This  report  is  complemented  by  a  comprehensive  staff  working  document  with  detailed 
information  sheets  for  each  individual  agreement,  including  statistics,  descriptions  of  key 
trade  developments  and  reports  on  the  work  of  committees.  With  this  report  and  its 
accompanying staff working document, the Commission meets its reporting obligations on the 
implementation of the anti-circumvention mechanism for South Korea, Georgia and Moldova 
and for the banana stabilisation mechanism for Central America and Columbia, Ecuador and 
Peru.  

11   Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia. 

12    More information on individual agreements can be found in the accompanying Staff Working Document.  

5 

 
 
 
 
                                                 
Statistics 
The  trade  statistics13  used  in  this  report  and  the  attached  staff  working  document  on  the 
evolution of trade and investment flows are based on Eurostat data as available on 30 March 
2019,  except  where  indicated  otherwise.  The  most  recent  annual  data  available  for  trade  in 
goods  are  for  2018,  and  for  services  and  investment  for  2017,  except  where  indicated 
otherwise.  

Statistics  on  preference  utilisation  rates  are  based  on  administrative  data  collected  by  the 
importing  country.  The  preference  utilisation  rate  reflects  the  share  of  imports  or  exports 
entering under trade preferences as a share of the total value of imports or exports eligible for 
preferences  by  partner  country,  i.e.  imports  or  exports  that  actually  entered  under  the 
preference  scheme  divided  by  the  imports  or  exports  eligible  for  use  of  preferences. 
Preference-eligible  imports  exist  if  the  applied  preferential  tariff  is  lower  than  the  applied 
most favoured nation (MFN) tariff. As a consequence, MFN-duty-free trade is not included in 
the calculations.  

The  preference  utilisation  rate  for  imports  into  the  EU  from  partner  countries  is  based  on 
Eurostat  figures.  Eurostat  merges  tariffs  and  trade  flows  to  build  a  dataset  from  which  the 
Commission extracts information on both the treatment for which a product is eligible and the 
extent  to  which  this  preferential  treatment  is  used.  The  dataset  obtained  is  harmonised  and 
consistent14 and allows for comparison across partner countries and years.  

In  contrast,  to  calculate  the  preference  utilisation  rates  on  exports  from  the  EU  to  partner 
countries  the  Commission  uses  administrative  data  collected  by  the  importing  country 
concerned.  These  statistics  are  not  harmonised.  Hence,  direct  comparisons  between  partner 
countries  or  with  EU  imports  should  be  seen  as  indicative.  Preference  utilisation  rates  on 
exports  from  the  EU  are  only  provided  in  this  report  where  sufficiently  reliable  data  was 
available. 

2. 

OVERVIEW OF MAIN FINDINGS 

2.1  General overview   
In 2018, reflecting the challenging situation at global level, trade in goods15 grew more slowly 
than in 2017: EU trade with the rest of the world grew by 5% (down from 8%) while total EU 
trade under preferential agreements grew by 3% (down from 7%). EU exports to preferential 
trade partners grew by 2% in 2018, somewhat slower than EU exports to the rest of the world, 
which  grew  by  4%  over  the  same  period.  Imports  from  preferential  trade  partners  grew  by 
4.6%, compared to 6.6% for total EU imports.  

13  General  statistics  on  trade  flows  in  goods  and  services  and  on  foreign  direct  investment  for  each  partner 

country can be found in the accompanying staff working document. 

14  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 and post-release of the 
goods. 

15   All subsequent statistics refer to trade in goods only unless otherwise specified. 

6 

 
 
 
                                                 
In  2018,  33%  of  EU  exports  and  29%  of  EU  imports  were  covered  by  preferential  trade 
agreements.  These  agreements  continued  to  produce  a  solid  trade  surplus  of  €84.6  billion, 
while EU trade with the rest of the world showed a slight trade deficit of €24.6 billion for the 
first time since 2014.  

As was  the case in  2017, the EU's largest  preferential  trade partner  was  Switzerland, where 
24% of EU preferential exports went, followed by Turkey (12%) and Norway (8%).  

In 2018, looking at EU exports under preferential trade agreements by sector and category, we 
observe  that  non-agricultural  exports  increased  by  1.9%.  Among  these,  machinery  and 
transport  equipment  remained  the  top  EU  export  sectors  by  value  (stagnating),  followed  by 
chemicals,  the  latter  recording  a  2.5%  increase.  EU  exports  of  agri-food  products  grew  by 
2.2%, the top export sectors being beverages, food preparations and preparations of cereals.   

Looking  at  EU  imports  under  preferential  trade  agreements,  non-agricultural  imports 
increased  by  5.2%.  Among  these,  mineral  products  and  machinery  and  appliances  were  the 
top  import  items.  Imports  of  agri-food  products  decreased  by  0.5%.  The  top  import  items 
were plant products.  

Over  the  reporting  period,  European  companies  made  good  use  of  EU  trade  agreements. 
Preference  utilisation  remained  strong  for  EU  exports  to  Switzerland,  Turkey  and  increased 
for  South  Korea.  Preference  utilisation  also  improved  for  Colombia,  Ecuador,  Egypt  and 
Jordan.  In  2018,  the  preference  utilisation  rate  on  EU  exports  to  Canada  stood  at  37%,  up 
from  30%  after  the  first  nine  months  of  provisional  application.  The  overall  preference 
utilisation rates for 2018 should increase in the future, in view of the fact that, under CETA, 
preferential tariffs can be claimed retroactively (for a period up to three years). In particular, 
the utilisation rate can be increased in future by improving preference utilisation on the EU’s 
exports of cars and spare parts for which tariff dismantling is gradually being phased in; for 
this segment which represents 41% of EU eligible exports, preference utilisation rates stood at 
only 10% in 2018. Cars  and spare parts  excluded, the average preference  utilisation rate on 
EU exports to Canada would be in the order of 55%.  

EU  trading  partner  countries  continued  to  make  good  use  of  preferences  in  2018,  with  an 
average  utilisation  rate  of  87%.  Information  on  preference  utilisation  in  EU  imports  can  be 
found in Annex 1; that on preference utilisation in EU exports can be found in Annex 2.  

Preference utilisation rates are a means to assess the extent to which tariff preferences were 
used  over  the  reporting  period  by  companies  on  both  sides  (see  box  on  page  6).  Although 
preference  utilisation  rates  on  EU  exports  remain  imperfect  proxies  for  assessing  the 
functioning  of  trade  agreements,  they  provide  a  rough  indication  of  the  uptake  of  EU  trade 
agreements by exporters from the EU and partner countries. It should be noted that changes in 
preference  utilisation  rates  can  have  a  variety  of  reasons,  such  as  a  lowering  of  margin  of 
preferences or changes in market conditions, new entrants, etc., not all of which are linked to 
the implementation of the trade agreement in question.  

2.2  Progress achieved and key open issues 
An update on progress on sanitary and phytosanitary measures and geographical indications16 
is provided in section 8 (“Agri-food trade”). More information on trade barriers can be found 
in the Commission’s 2019 Trade and Investment Barrier Report17.  

16   Geographical  indications  protect  the  names  of  specific  products  to  promote  their  unique  characteristics 
linked to their geographical origin. Product names can be granted with a 'geographical indication' protection 

7 

 
 
                                                 
Technical and administrative barriers to trade 

In the automotive sector, several significant barriers were removed in 2018, notably by Egypt 
and South Korea. In addition, the EU textile and leather sectors now have easier access to the 
Egyptian market following the relaxation of labelling rules. 

However, EU products continue to face barriers to accessing a number of markets in partner 
countries  with  a  trade  agreement  with  the  EU.  A  significant  source  of  concerns  relates  to 
restrictions imposed by some Mediterranean countries on EU imports.  

In addition, European alcoholic beverages, in particular wines, beers and spirits, continue to 
be subject to a range of discrimination by some EU trading partner countries, such as Canada, 
Costa  Rica,  Ecuador  and  Peru.  The  EU  continues  to  engage  these  partners  with  a  view  to 
ensuring that discriminatory practices are removed.  

In 2018, the Commission reported on the ban imposed by Ukraine on exports of unprocessed 
wood.  In January 2019,  in  the absence of progress,  the EU requested bilateral  consultations 
with  Ukraine,  triggering  the  dispute  settlement  mechanism  provided  under  the  Association 
Agreement between the EU and Ukraine (see also section 10, 'Legal Enforcement').  

Public procurement 

The provisional application of the agreement with Canada (CETA) provides for a significant 
further opening of the Canadian procurement market, including at provincial and local levels, 
which represent a significant share of the public procurement market in Canada.  

Some progress could also be observed in Ukraine and some of the Western Balkan countries, 
when it comes to increased transparency of public calls for tenders and alignment with the EU 
public procument legal  and institutional framework. However, more work will be needed in 
this domain.  

Main issues raised by EU trading partner countries 

Certain EU trading partner countries also raised issues related to implementation on the EU 
side.  These  include  in  particular  the  EU's  decision  to  impose  safeguard  measures  on  steel 
imports  adopted  in  July  2018,  which  the  EU  had  to  take  to  shield  EU  industry  from  the 
collateral effect of US steel tariffs18. Some EU sanitary and phytosanitary measures, notably 
the pesticide policy but  also the newly adopted regulation  on veterinary products, were also 
subject to criticism from some of the EU’s trading partner countries, despite the fact that these 
measures are not discriminatory and have been designed to ensure a high level of food safety 
in the EU.  

if  they  have  a  specific  link  to  the  place  where  they  are  made.  Recognised  as  intellectual  property, 
geographical indications play an increasingly important role in trade negotiations between the EU and other 
countries. 

17   COM(2019) 271 Final of 17.6.209. 

18   This issue is discussed in detail in the 37th Annual Report from the Commission to the European Parliament 
and the Council on the EU’s anti-dumping, anti-subsidy and safeguard activities and the use of trade defence 
instruments by third countries targeting the EU in 2018. COM(2019) 158 final of 27.3.2019. 

8 

 
 
 
                                                                                                                                                         
3. 

NEW GENERATION OF FREE TRADE AGREEMENTS  

3.1  EU - South Korea Trade Agreement 

Evolution of trade  

The agreement has been in force since July 2011. In 2018, overall merchandise trade between 
the EU and South Korea decreased by 1.5% (1.2% decrease in EU imports and 2.2% decrease 
in EU exports), which is in line with slower economic growth in South Korea in 2018 and the 
overall slowdown in international trade. The slight decline in EU exports appears to be driven 
by a 7% decrease in exports of machinery and mechanical appliances, which are the EU’s top 
export  items  to  South  Korea.  At  the  same  time,  exports  in  this  category  have  increased  by 
31%  since  2010.  For  transport  equipment,  which  is  the  second-largest  export  category,  EU 
exports decreased slightly in 2018, while EU exports of passenger cars continued their healthy 
growth  with  a  more  than  9%  increase.  Transport  equipment  remains  the  sector  with  the 
strongest growth (+187%) since the agreement entered into force.  

In  2018,  for  the  second  consecutive  year,  the  EU  had  a  merchandise  trade  deficit  of  €1.8 
billion.  At  the  same  time,  in  spite  of  a  difficult  regulatory  environment,  agri-food  trade 
remained dynamic and EU exports increased by almost 5%, resulting in an EU trade surplus 
of more than €2.8 billion, largely driven by foodstuffs and beverages.  

Trade in services continued to expand, by 8.3% in 2017, with a positive trade balance of €5.6 
billion  for  the  EU.  Since  the  entry  into  force  of  the  agreement,  trade  in  services  has  grown 
consistently in both directions. Inward and outward foreign direct investment flows remained 
positive between the two partners.  

First five-year evaluation 
The  Commission  presented  its  first  five-year  evaluation  of  the  agreement  in  March  201919. 
The  evaluation  suggested  that  the  agreement  has  been  generally  effective  in  achieving  its 
objectives to  liberalise trade in  goods, services and investments.  The  economic gains  of the 
agreement  have  been  symmetrically  distributed  between  the  EU  and  South  Korea.  The 
agreement generated €4.4 billion in growth in EU Gross Domestic Product (GDP) during the 
first  five  years  of  its  implementation.  It  also  contributed  to  the  protection  of  intellectual 
property rights, in particular the enforcement and protection of EU geographical indications. 
Furthermore,  non-tariff  trade  costs  were  reduced,  although  further  work  is  needed  with 
respect  to  standardisation,  conformity  assessment,  labelling,  and  sanitary  and  phytosanitary 
measures.  The  evaluation  also  found  that  the  agreement  resulted  in  a  stronger  increase  in 
stocks of foreign direct investment. One of the unexpected effects of the agreement found in 
the evaluation has been a limited but notable reduction of global CO2 emissions as a result of 
trade diversion20. 

Outstanding issues  

The complex and non-transparent sanitary and phytosanitary approval procedures applied by 
South Korea for imports of agricultural products from EU Member States remain of concern. 
For example, approvals of beef imports from some EU Member States have been pending for 
more than ten years.  

19   SWD(2019) 103 final of 7.3.2019  

20   See Section 9 of the Final Evaluation Report – IFO Institute and Civic Consulting (May 2018). 

http://trade.ec.europa.eu/doclib/docs/2019/march/tradoc_157716.pdf 

9 

 
 
                                                 
In  the  area  of  intellectual  property,  South  Korea  still  needs  to  establish  an  effective 
remuneration system for the rights to perform music protected by copyright in public places, 
such as karaoke. There are also concerns about an increased support to shipbuilding by South 
Korea. 

Trade and sustainable development 

The  main  outstanding  issue  concerns  the  lack  of  progress  on  labour  reform  and  non-
compliance with the trade and sustainable development chapter in the agreement. In 2018, the 
EU  requested  consultations  under  the  chapter  on  trade  and  sustainable  development  of  the 
agreement (for more detail see Section 10.1, 'Legal Enforcement'). 

Ethical EU-made clothes finding a home around the world 

ASKET – a Swedish online-only mens’ wear brand – like many other modern companies is 
used to a world without borders, communicating seamlessly with customers around the world. 
Trade agreements can help break down customs barriers, allowing their goods to move just as 
freely. 

"As  we  grow  as  a  company,  we  are  increasingly  looking  outside  of  the  European  market. 
However,  tariffs  on  clothes  make  this  more  difficult  and  expensive  for  our  customers.  By 
opening up foreign markets like Canada, South Korea and Japan, trade agreements make our 
products more competitive there." 

August Bard Bringéus, 
Co-Founder 

3.2  EU Trade Agreement with Colombia, Ecuador and Peru 

Evolution of trade  

Between 2017 and 2018, overall merchandise trade decreased by 2.4% between the EU and 
its  three  Andean  trading  partner  countries.  EU  exports  and  EU  imports  decreased  by  1% 
(€140  million)  and  3%  (by  €500  million),  respectively.  This  result  was  largely  owed  to  a 
decline  in  Colombia’s  exports  to  the  EU  by  9%,  following  a  fall  in  international  prices  for 
coffee, a key export product for Colombia.  

Looking at trade flows by sector, machinery, chemicals and transport equipment still made up 
more than 50% of EU exports. Agricultural products (notably tropical fruit such as bananas), 
minerals and ores represented nearly 50% of imports into the EU from the three countries. In 
2018,  EU  imports  of  minerals  decreased  most  (by  €700  million),  as  did  EU  exports  of 
machinery (by €350 million). 

In  contrast,  EU  agri-food  exports  grew  by  8.5%  in  2018.  However,  they  still  remain  small 
compared to agri-food imports. 

The EU's trade deficit in the order of €2 billion has been on a decreasing trend since 2016. 
The EU has a trade surplus with Colombia.  

Progress and outstanding issues 

Progress  has  been  made  in,  among  other  areas,  with  regard  to  market  access  for  some  EU 
agricultural  products,  notably  dairy  products  in  the  case  of  Peru  and  certain  animal-based 
products in the case of Colombia. At the same time, a number of outstanding issues remain to 
be addressed. These include:  

10 

 
 
 
  Colombia:  the  de  facto  lack  of  national  treatment  in  public  procurement  at  sub-
national  level,  the  antidumping  measures  taken  in  2018  against  frozen  potatoes, 
restrictions  on  the  import  of  lorries,  some  remaining  discriminatory  measures  on 
alcoholic beverages (beers and spirits), usurpation of EU geographical indications and 
the absence of recognition of regionalisation for animal diseases. 

  Ecuador:  tax  discrimination  on  imported  alcoholic  beverages  as  well  as  the 
cumbersome and trade-restrictive system of import licensing and management of tariff 
rate quotas granted to the EU. 

  Peru:  persistent  discriminatory  measures  affecting  trade  of  alcoholic  beverages,  on-
going  work  to  address  usurpation  of  EU  geographical  indications,  technical  barriers 
affecting the imports of pharmaceutical products and medical devices.  

Finally, all three Andean countries still maintain a ban on the import  from  the EU of  cattle 
and beef on grounds of BSE21 concerns.  

On their side, Colombia, Ecuador and Peru conveyed their concerns in regard to EU measures 
fixing  the  maximum  level  of  cadmium  in  cocoa  products  and  maximum  residue  levels  in 
pesticides,  which,  according  to  our  trading  partner  countries,  may  affect  their  exports  of 
agricultural products.  

Trade and sustainable development  

Despite  the  existing  challenges  in  all  three  countries  (regarding  the  informal  labour  market, 
freedom  of  association  rights,  labour  inspection  and  environmental  protection),  in  2018  the 
three Andean partners made progress in implementing the trade and sustainable development 
chapters. The positive momentum reflected the more assertive and focused efforts by the EU, 
based  on  a  closer  partnership  with  EU  Member  States  and  the  International  Labour 
Organization (ILO) and on the greater involvement of civil society, in accordance with the 15-
point action plan22. EU engagement was particularly intense with Peru and both parties agreed 
on a way forward, formalised in the minutes of the meeting of the sub-committee on trade and 
sustainable  development.  This  should  pave  the  way  for  a  renewed  impetus  on  the 
implementation of the trade and sustainable development provisions with Peru. Good progress 
was  also  made  regarding  the  involvement  of  civil  society,  including  through  dedicated 
consultative mechanisms in both Colombia and Ecuador. 

21   Bovine spongiform encephalopathy, known colloquially as ‘mad cow disease’. 

22   The action plan is a road map resulting from an eight-month debate with the European Parliament, Member 
States and civil society for a more assertive enforcement of trade and sustainable development commitments 
under  bilateral  trade  agreements.  Section  7  provides  further  details  on  the  implementation  of  trade  and 
sustainable development provisions in bilateral trade agreements. 

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

11 

 
 
                                                 
 
3.3  EU Association Agreement with Central America 

Evolution of trade 

2018 was the sixth  year  of implementation  of the trade pillar of the Association  Agreement 
between  the  EU  and  six  Central  American  countries  (Costa  Rica,  El  Salvador,  Guatemala, 
Honduras, Nicaragua and Panama). 

Trade  between  the  two  blocs  has  developed  well,  increasing  from  around  €11.4  billion  in 
2014  to  €12  billion  in  2018.  In  2018,  the  Central  American  partner  countries  had  a  small 
overall trade surplus of around €100 million. In the region, Panama remains the main trading 
partner country for the EU, followed by Costa Rica.  

Central American exports remained largely driven by agri-food products (which represent two 
thirds of their exports to the EU), mainly fruit, which in 2018 recorded a 3.6% increase year-
on-year (i.e. €1.9 billion, out of which €1.2 billion are bananas). Bananas continue to be the 
main  commodity  exported  to  the  EU  by  Central  American  partners  and  these  exports  are 
subject  to  a  stabilisation  mechanism  until  the  end  of  2019.  In  2018,  Guatemalan  and 
Nicaraguan exports to the EU exceeded the trigger levels, but their share in total EU imports 
remained  below  6%.  The  impact  of  these  imports  on  EU  banana  market  was  considered 
negligible and no action under the stabilisation mechanism was taken.  

In  2018,  EU  exports  increased  by  11%  compared  to  2017.  They  were  dominated  by  non-
agricultural products. The EU’s trade surplus in this category was in the order of €7.4 billion. 

In  2017,  trade  in  services  remained  strong  and  accounted  for  around  40%  of  total  trade 
between  the  EU  and  Central  America,  as  in  previous  years.  Thanks  to  the  Agreement,  EU 
companies  enjoy  improved  market  access  to  services  and  investment  and  government 
procurement.  The  EU  continues  its  close  cooperation  with  its  Central  American  partner 
countries to make sure that all the commitments, including those relating to transparency of 
proceedings, are respected. 

Trade and sustainable development   

Implementation of the trade and sustainable development chapter was pursued in line with the 
15-point  action  plan  of  February  2018.  Actions  included,  among  other  things,  engagement 
with  the  International  Labour  Organization  (ILO)  and  partner  governments  regarding  the 
labour  situation  in  some  Central  American  countries,  particularly  Guatemala,  as  well  as 
actions  on  responsible  business  conduct,  including  a  workshop  with  the  ILO  and  the 
Organisation for Economic Cooperation and Development (OECD) in Guatemala. In addition, 
support  was  provided  to  Costa  Rica  in  the  development  of  its  national  responsible  business 
conduct  plan  and  a  responsible  business  conduct  programme  was  launched  involving  Costa 
Rica and Panama.  

3.4  EU- Canada Comprehensive Economic and Trade Agreement (CETA) 

2018  marked  the  first  full  calendar  year  of  CETA  implementation.  All  management 
instruments, such as the rules of procedures for the various committees, were put in place and 
almost all the committees met for the first time23. The new EU transparency policy was fully 
deployed:  agendas  as  well  as  joint  reports  of  committees  and  working  groups  agreed  with 

23   Only  the  Mutual  Recognition  of  Professional  Qualification  Committee  did  not  meet  in  2018.  The  first 

meeting of this Committee took place in April 2019.  

12 

 
 
                                                 
Canada  are  available  on  the  Commission  website24.  Committee  meetings  contributed  to 
improving  the  mutual  understanding  of  the  parties'  perspectives,  which  is  important  for  the 
implementation of the agreement. 

Evolution of trade  

Total  bilateral  trade  reached  €72  billion  in  2018,  corresponding  to  a  4.5%  increase  when 
compared  to  2017.  Chemicals  recorded  the  highest  EU  export  growth  by  €1.5  billion  (23% 
increase), followed by the machinery and appliance sector with €850 million (10% increase). 
Agri-food  exports  were  also  up,  by  4%,  accounting  for  9%  of  EU  exports  to  Canada.  The 
EU's trade surplus increased to more than €10 billion in 2018 (up from €6 billion in 2017). 

In  2018,  Canada’s  exports  to  the  EU  recorded  a  small  decrease,  by  1.7%  (€521  million) 
compared  with  2017,  largely  driven  by  a  decrease  in  exports  of  oilseeds  (by  €300  million). 
However,  when  compared  to  the  2015-2017  average,  Canadian  exports  to  the  EU  grew  by 
5%.   

Progress made in the first year of implementation  

In its first meeting in September 2018, the Joint Committee had a formal exchange of views 
on  the  implementation  of  CETA.  The  meeting  also  provided  an  opportunity  to  appraise 
progress in the context of the early review of the trade and sustainable development chapter, 
following  the  October  2016  agreement  on  the  Joint  Interpretative  Instrument25.  The 
Committee adopted three important Recommendations on: 

(i) 
(ii) 
(iii) 

trade, climate action and the Paris Agreement26 
trade and gender27 
small and medium-sized enterprises28.  

These recommendations paved the way for enhanced cooperation under CETA on these key 
issues.  The  Joint  Committee  also  reviewed  the  work  carried  out  by  the  various  specialised 
committees, including issues requiring further attention, such as, for the EU, management of 
the  cheese  tariff-rate  quotas,  access  to  the  Canadian  wine  and  spirits  market,  and 
implementation and enforcement of CETA provisions on geographical indications. 

In the context of the Regulatory Cooperation Forum, Canada and the EU adopted a work plan, 
which  includes  cooperation  activities  on  cyber-security,  animal  welfare,  cosmetics  and 
pharmaceuticals, as well as the safety of consumer products. In addition, in the committee on 
sanitary and phytosanitary measures, Canada and the EU agreed to strengthen cooperation on 
combating anti-microbial resistance. 

The amendment of Canada's Trade-Mark Act to protect the geographical indications of food 
products,  which  was  introduced  as  a  result  of  CETA,  established  a  procedure  for  its  direct 
application  by  EU  rights-holders  for  the  protection  of  geographical  indications.  The  new 
system  delivered  its  first  result  in  2018  with  the  protection  of  the  name  ’Prosciutto  di 
Carpegna’. European producers who are interested in exporting to Canada now have access to 
an effective and easy mechanism to protect their geographical indications. The Commission 

24   http://trade.ec.europa.eu/doclib/press/index.cfm?id=1811  

25   https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:22017X0114(01)&from=EN  

26   http://trade.ec.europa.eu/doclib/docs/2018/september/tradoc_157415.pdf  

27   http://trade.ec.europa.eu/doclib/docs/2018/september/tradoc_157419.pdf  

28   http://trade.ec.europa.eu/doclib/docs/2018/september/tradoc_157417.pdf  

13 

 
 
                                                 
has produced a practical business guide to geographical indications in Canada29 to help them 
with this. 

Finally, work continued on the creation of the Investment Court System established in CETA, 
although the provisions related to the system do not apply yet pending ratification by all EU 
Member States. In its Opinion 1/1730 delivered on 30 April 2019, the Court of Justice of the 
EU  confirmed  the  compatibility  of  CETA  provisions  on  the  Investment  Court  System  with 
EU law. 

Trade and sustainable development 

In  the  first  year  of  implementation,  both  sides  intensified  efforts  to  implement  trade  and 
sustainable  development  provisions.  Apart  from  preparing  the  three  above-mentioned 
recommendations  (on  trade  and  climate,  trade  and  gender  and  small  and  medium-sized 
enterprises),  the  EU  and  Canada  carried  out  their  first  steps  to  implement  them.  These 
included  the  EU-Canada  joint  work  plan  on  trade  and  gender  and  a  conference  ‘CETA: 
Taking  Action  for  Trade  and  Climate’  that  took  place  on  24  January  2019.  The  conference 
explored  with  stakeholders,  including  green-tech  companies,  how  to  best  leverage  CETA’s 
institutional  and  legal  framework  to  support  the  implementation  of  the  Paris  Agreement. 
Canada and the EU continued engaging on joint priorities for co-operation agreed during the 
first  trade  and  sustainable  development  committee  and  facilitated  the  establishment  of  the 
civil society structures on each side to monitor the implementation. 

Outstanding issues 

The first full year of implementation was successful for both parties and no negative impacts 
were observed. Nevertheless, several outstanding issues still need to be addressed. 

One of these issues is the administration system put in place by Canada to manage the cheese 
quotas. Although the 2018 fill-rates of cheese quotas were excellent at 99.1% and 71.1% for 
premium cheese and industrial cheese, respectively, the EU remains concerned about how the 
quotas are filled as this has a significant impact on the value of the quotas for EU exporters. 
The quota uptakes were back-ended, with significant surges of imports into Canada during the 
last two months of 2018. The Commission considers that the allocation of 50% of the high-
value cheese quota to Canadian cheese manufacturers has a significant distortive effect on the 
uptake  and  value  of  the  quota  and  is  not  compatible  with  CETA  provisions.  Under  CETA, 
quotas  should  be  allocated  to  “those  persons  that  are  most  likely  to  use  [the  quotas]”31.  In 
April  2019,  the  EU  requested  a  mid-term  review  of  the  CETA  cheese  quota  administration 
system.  

Another  key  concern  from  an  EU  perspective  is  the  existence  of  discriminatory  practices 
affecting trade in EU wines and spirits. The EU considers that a number of Canadian practices 
applied at federal and provincial levels are not compatible with Canada’s commitments under 
CETA.   

For  its  part,  Canada  raised  concerns  on  the  EU’s  implementation  of  the  CETA  Protocol  on 
mutual  acceptance  of  the  results  of  conformity  assessments  and  the  EU’s  administrative 
management  of  tariff  rate  quotas.  Canada  also  expressed  concerns  that  its  ability  to  benefit 
from CETA would be affected by country of origin labelling requirements at national and EU 
level, and by some EU sanitary and phytosanitary standards.  

29   http://trade.ec.europa.eu/doclib/docs/2019/april/tradoc_157873.pdf  

30   https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:62017CV0001(02)  

31   Annex 2B of CETA 

14 

 
 
                                                 
Porcelanosa (Spain) Cross-Atlantic Ceramics 

Porcelanosa is a ceramics company that sells high quality tiles for kitchens and bathrooms and 
benefits from improved business opportunities in Canada. 

Porcelanosa has benefited from easier export conditions, leading to a substantial opening-up 
of  the  Canadian  market,  including  the  large  Canadian  public  procurement  market  at  federal 
and state levels. 

"We’ve big hopes for the Canadian market. For example, we recently opened a new store in 
one of the most exclusive commercial areas in Toronto. CETA has enabled us to improve our 
prices and become more competitive. It’s also cut the amount of paperwork for EU exports to 
Canada.  For  Porcelanosa's  operations  in  Canada  the  agreement  is  definitely  very 
favourable."   

Silvestre Segarra Soriano, 
Export Manager at Porcelanosa Group 

Stella Milano 1952 – Italian jewellery that tells a story 

Stella Milano 1952 has a tradition of jewellery making. In 1952, in the shadow of the Milan 
Duomo Cathedral, four brothers set up the company producing and selling jewellery.  

Before CETA, Canada imposed import tariffs of up to 8.5% on jewellery. With CETA’s tariff 
cuts, Stella Milano has seen its exports to Canada grow by 30%. 

"CETA  has  helped  us  expand  our  sales  to  Canada  by  nearly  a  third.  With  more  and  more 
importers in Canada contacting us, we’re looking forward to even more growth." 

Dimitri Stella,  
CEO Stella Milano 1952 

4. 

DEEP AND COMPREHENSIVE FREE TRADE AREAS (DCFTAS) 

4.1  Georgia 

The DCFTA with Georgia has been in force since September 2014 and its implementation is 
on  good  track.  Overall,  bilateral  trade  in  goods  grew  by  3%  in  2018  but  Georgian  exports 
decreased by 1.6%, leading to a slight increase of EU trade with Georgia. 

Georgia  made  progress  with  implementing  its  sanitary  and  phytosanitary  strategy  in  2017. 
However, it is still not authorised to export meat and dairy products to the EU and Georgian 
companies  still  have  difficulties  complying  with  EU  safety  standards  for  products  such  as 
hazelnuts. The EU continues to  support Georgia in  upgrading its sanitary  and phytosanitary 
system.  

With  respect  to  public  procurement,  Georgia  still  needs  to  establish  an  independent  public 
procurement review body and the country also needs to further align its public procurement 
legislation with that of the EU.  

The  2018-2019  support  programme  for  small  and  medium-sized  enterprises  continues  to  be 
implemented. It is complemented by a project on market surveillance32 to support Georgia in 

32   €1.5 million for the period from January 2018 to December 2018. 

15 

 
 
 
                                                 
aligning its regulatory framework with EU legislation. The EU also continues to support the 
Georgian Competition Agency. 

Finally, in  2018 Georgia adopted a work plan on trade and sustainable development  for the 
2018-2020 period, covering key elements required for implementing the chapter on trade and 
sustainable development (including labour inspection and social dialogue, wildlife trafficking, 
sustainable  forest  management,  fighting  trade  in  products  of  illegal  logging  and  effective 
implementation of climate action commitments).  

4.2  Moldova 

The  DCFTA  has  been  applied  since  September  2014.  Since  this  date,  trade  has  increased 
continuously. In 2018, overall trade increased by 14% and the trade balance remained positive 
for the EU.  

In 2018, work on legal approximation continued, with progress made in regard to sanitary and 
phytosanitary  measures,  the  energy  sector,  public  procurement  and  technical  legislation. 
Moldova is  also  preparing  a new Customs  Code. Moldova still needs to  change its national 
legislation to meet its obligation as regards State aid rules. The EU intends to put in place a 
new  project  to  support  the  functioning  of  civil  society  consultation  mechanisms  established 
under the trade and sustainable development chapters of its trade agreements that will benefit 
both the EU’s and Moldova’s Domestic Advisory Groups. 

4.3  Ukraine 

Trade between Ukraine and the EU has been growing since the provisional application of the 
agreement in 2016. Bilateral trade reached €40 billion in 2018, a 9% increase when compared 
to 2017. In 2018, the EU received 42% of Ukraine's worldwide exports. The EU maintained a 
€4 billion trade surplus. 

Ukraine has made progress in a number of sectors. The EU welcomes in particular the new 
draft  law  on  public  procurement,  which  the  Ukrainian  government  intends  to  present  to  the 
Parliament in 2019. Ukraine is also making progress in aligning its regulatory framework and 
standards to EU law while approximation is ongoing in regard to sanitary and phytosanitary 
measures, customs cooperation and trade facilitation. However, Ukraine needs to improve its 
enforcement  of  intellectual  property  rights  and  the  country  needs  to  put  in  place  legislation 
that meets international standards. In addition, Ukraine needs to improve the alignment of its 
legislation with EU State aid rules. 

The Commission responded to  rapidly increasing  imports of non-standard poultry cuts  from 
Ukraine, which started in 2016. To eliminate the risk of unlimited imports, the Commission, 
following  authorisation  by  the  Council,  negotiated  with  Ukraine  an  amendment  to  the 
Association Agreement, limiting these imports and reinstating the most favoured nation duty 
for imports exceeding the limits. Progress is ongoing to formally finalise this amendment.  

The EU continues to monitor and raise with Ukraine a number of other trade irritants, such as 
the new value added tax law enacted by Ukraine in  2018, which denies the refund of value 
added tax on exports of rapeseed and soybean.  

Given the lack of progress  on the wood export ban, the EU launched  a request  for bilateral 
dispute  settlement  consultations  under  the  Association  Agreement  (see  section  10  on  'Legal 
Enforcement'). 

16 

 
 
In time for the second trade and sustainable development sub-committee meeting between the 
EU and Ukraine on 13 November 2018, which was followed by an open Civil Society Forum 
on  14  November  2018,  the  Ukraine  Advisory  Group  was  set  up  to  start  discussions  and 
concrete work with the EU Advisory Group.  

In line with the 15-point action plan of February 2018 on trade and sustainable development, 
in  particular  its  theme  of  'country  priorities',  discussions  in  the  trade  and  sustainable 
development  sub-committee  focused  on  the  key  areas  of  EU-Ukraine  trade  and  sustainable 
development  implementation  work,  including  trade  and  labour  issues  (labour  inspection, 
modernisation of labour relations, social dialogue) as well as trade and environmental issues 
(sustainable  forest  management  and  related  wood  production,  sales,  processing  and  trade). 
Following  the  meeting  of  the  sub-committee,  the  EU  and  Ukraine  published  operational 
conclusions, as well as a joint statement to civil society33. 

5. 

FIRST GENERATION FREE TRADE AGREEMENTS 

5.1  Switzerland 

In 2018, Switzerland, the EU’s third largest trading partner country overall (capturing 7% of 
the  EU's  trade  in  goods  with  non-EU  countries),  remained  the  EU’s  top  trading  partner 
country under preferential trade agreements. In 2018, the EU recorded a strong trade surplus 
with Switzerland in the order of €48 billion.  

Switzerland is the EU’s second most important trading partner country for services. The value 
of  services  provided  by  the  EU  in  Switzerland  has  been  on  a  constant  rise  in  the  past  five 
years,  reaching  €119  billion  in  2017,  an  increase  of  2%  when  compared  to  2016.  Services 
provided  by  Switzerland  in  the  EU  were  worth  €72  billion  in  2017,  a  decrease  of  23% 
compared to the previous year. The EU maintained a trade surplus in services.  

With respect to foreign direct investment (FDI), Switzerland is also a key partner, taking 13% 
of  the  EU's  foreign  direct  investment.  The  stocks  of  FDI  in  the  EU  held  by  Switzerland 
reached €802 billion in 2017 and have shown an annual average increase of 15% over the past 
four  years.  EU  FDI  stocks  held  in  Switzerland  amounted  to  €979  billion  in  2017,  with  an 
average annual increase of 10% over the same period of time.  

In  September  2018,  the  long-awaited  company  tax  reform,  modifying  the  discriminatory 
cantonal  fiscal  status  of  companies,  which  was  also  problematic  from  a  State  aid  point  of 
view, was approved by the Swiss Parliament. The new legislation should enter into force on 1 
January 2020.  

Negotiations  between  the  EU  and  Switzerland  on  a  institutional  framework  agreement, 
including independent dispute settlement, State aid rules, and a commitment to modernise the 
free trade agreement of 1972 and other trade-related agreements, were concluded at political 
level  in  November  2018.  However,  the  Swiss  Federal  Council  still  has  not  endorsed  the 
agreement, which the EU considers a pre-condition for the conclusion of future agreements on 
Swiss  participation  in  the  EU’s  internal  market  and  also  an  essential  element  for  deciding 
upon further progress towards mutually beneficial market access.  

33   http://trade.ec.europa.eu/doclib/cfm/doclib_section.cfm?sec=144 

17 

 
 
                                                 
5.2  Norway 

Norway is the EU’s third-largest preferential trading partner country. Bilateral trade remained 
strong in  2018, with  a nearly 11% increase when compared to  2017. The EU's trade deficit 
with Norway reached nearly €30 billion. The increasing overall deficit was largely driven by 
higher imports of mineral products, which recorded an almost €6 billion increase.  

EU  exports  of  non-agricultural  products  grew  by  more  than  €3  billion,  which  amounts  to  a 
6.3%  increase  when  compared  to  2017.  EU  agri-food  exports  also  remained  strong  and 
recorded a nearly €4 billion trade surplus.  

A new agreement further liberalising trade in some agricultural products entered into force in 
2018. The  review of the trade regime for processed agricultural  products  should now be on 
the  agenda.  Furthermore,  the  EU  is  ready  to  resume  negotiations  on  the  protection  of 
geographical indications. 

Norway is the EU's  sixth-largest  trading partner  country  for services.  Trade in  services was 
stable in 2017 with a total trade of €44 billion and a slightly higher trade surplus for the EU 
than in  2016, i.e. above €13 billion.  The trade balance in  services remained positive for the 
EU – as it has been over the last years. 

5.3  Mediterranean and Middle Eastern countries 

The  EU  is  a  key  trading  partner  region  for  most  South  Mediterranean  and  Middle  Eastern 
countries. In this context, the EU's preferential trade agreements with eight partner countries 
in  the  region  (Algeria,  Egypt,  Israel,  Jordan,  Lebanon,  Morocco,  the  occupied  Palestinian 
Territories  and  Tunisia)  have  been  in  place  for  many  years.  These  agreements  include 
elements  of  asymmetry  for  most  countries  so  as  to  promote  economic  development  in  the 
region and closer integration into the EU internal market, including provisions on competition 
and public aid. 

In 2018, total trade between the EU and the eight partners reached €175 billion (i.e. 4% of EU 
trade with the rest of the world), a 2% increase compared to 2017. The EU maintains a trade 
surplus  with  the  eight  South  Mediterranean  and  Middle  Eastern  preferential  trading  partner 
countries  taken  together,  although  the  surplus  decreased  by  10%  compared  to  2017  (i.e. 
slightly less than the 13% decrease observed over the previous reporting period). This trend is 
explained by the increase in exports from those countries to the EU and, in part, by the effect 
of the trade restrictive measures that some of them have been imposing in the recent years, in 
an effort to improve their trade balance: since the EU is the main exporter to the region, its 
exports are often affected.   

In agri-food trade, the EU registered a surplus with the region of almost €5 billion in 2018. At 
the  same  time,  some  partner  countries  saw  their  agri-food  exports  increasing,  like  Tunisia 
(+44%, largely driven by olive oil), the occupied Palestinian Territories (+25%) and Morocco 
(+5%). Morocco and Tunisia run a trade surplus with the EU in the agri-food sector. 

The  EU  raised  concerns  with  its  trading  partner  countries  about  the  multiplication  of  trade 
restrictive measures that several of them have adopted, in particular Algeria, Egypt and, more 
recently,  Tunisia34.  The  EU  continues  to  raise  these  issues  at  every  occasion  with  its  South 

34   In  July  2019,  the  Commission  was  informed  that  the  import  restrictive  measures  imposed  by  Tunisia  in 
November 2018 have been removed. The Commission will continue to monitor the situation to ensure that 
this barrier is effectively eliminated. 

18 

 
 
                                                 
Mediterranean and Middle Eastern partner countries, since trade relations must remain rules-
based and the EU expects its partners to comply with their commitments.   

The  EU  stands  ready  to  continue  to  support  its  trading  partners’  reforms,  with  a  view  to 
increasing  the  competitiveness  and  export  capacity  of  the  South  Mediterranean  and  Middle 
East region. The negotiations for extending and modernising the trade agreements are ongoing 
with Tunisia and may soon be relaunched with Morocco. The modernisation and deepening of 
the existing agreements should contribute to improve the economic integration with the EU’s 
Southern neighbourhood, which contains a very important partners for the EU. Moreover, the 
ongoing revision of the pan-Euro-Mediterranean Convention on rules of origin, will introduce 
more flexible rules and facilitate economic integration and trade within the region. 

5.4  Mexico 

Mexico is the second-biggest trading partner country of the EU in Latin America, after Brazil. 
A comprehensive trade agreement entered into force in 2000 for goods and 2001 for services. 
Over  the  close  to  twenty  years  of  the  agreements  application,  bilateral  goods  trade  between 
the EU and Mexico has more than tripled. In 2018, trade between the EU and Mexico grew by 
nearly 6% and the EU maintained a trade surplus of €13 billion, albeit slightly lower than in 
2017. EU exports to Mexico grew by 4%. Imports from Mexico grew by almost 9%, largely 
driven by non-agricultural products. 

Trade in services grew by 7% in 2017 and the EU recorded a trade surplus close to €5 billion.  

In recent years, the EU and Mexico have concentrated on negotiating the modernisation of the 
agreement and so the Joint Committee did not meet in 2018. However, some progress has still 
been made in opening new market opportunities, in particular in the agricultural sector with 
the approval  of additional  EU Member States for exports of pig  meat  and pork products.  A 
meeting of the Joint Committee has been scheduled for 2019.  

The modernised agreement, once ratified, is expected to boost trade relations with Mexico and 
provide new market access opportunities.  
Giving Mexicans a taste for Belgian chocolates 
Galler is a famous chocolate producer which bear the name of its founder Jean Galler. 

Most recently, the company has entered the Mexican market by teaming up with Belimport, a 
medium-sized  business  based  in  the  city  of  San  Miguel  de  Allende  in  the  central  state  of 
Guanajuato. This location means Galler can now be easily distributed in stores and hotels all 
over Mexico, notably in the hubs of Querétaro and the capital, Mexico City. 

"We currently have higher costs than Mexican chocolate manufacturers due to the high tariffs 
that we face when importing our Belgian products. The new EU-Mexico trade deal will scrap 
Mexican customs tariffs on EU chocolate, allowing us to compete more effectively." 

Thibaud Mariage, 
Galler representative in Mexico, Director of Belimport. 

19 

 
 
 
 
5.5  Chile 

During  the  15  years  of  application  of  the  EU-Chile  Association  Agreement’s  trade  pillar, 
there has been continuous work and cooperation by both sides to implement the agreement.  

In 2018, trade between Chile and the EU grew by more than 8%, with a strong 13% growth in 
EU exports, notably exports of machinery and appliances (+14%) and transport equipment, in 
particular aircrafts and parts of aircrafts35 (+27%). Over the same period, imports into the EU 
from Chile grew by 3%. The EU had a trade surplus of more than €1.5 billion.  

With respect  to  trade in  agri-food products,  in 2018 Chile had  a trade surplus of more than 
€1.7 billion, up by 4% compared to 2017. Chilean exports to the EU remained dominated by 
fruit  (mainly  counter-season  products)  and  wines,  which  represented  40%  and  24%, 
respectively, of its agri-food exports to the EU.  

In  2018,  the  longstanding  swordfish  issue  was  resolved.  Following  Chile’s  accession  to  the 
Inter-American  Tropical  Tuna  Commission  as  a  cooperating  non-contracting  party  in  July 
2017, there were no longer any restrictions on EU swordfish vessels accessing Chilean ports. 

While some EU Member States continue to  face problems exporting fruit and vegetables to 
Chile and delays in the approval of products of animal origin, the country opened its dairy and 
meat  markets  for  additional  Member  States,  in  particular  for  beef  and  pig  meat.  Chile  also 
harmonised the certificate for hatching eggs and egg products and simplified its market access 
approval procedures by taking into account the fact that EU Member States are subject to  a 
strict and harmonised EU food safety and veterinary system.  

Finally, the EU-Chile Agreement on trade in organic products entered into force on 1 January 
2018.  Although  not  linked  to  the  association  agreement,  the  equivalence  recognition 
agreement  for  organic  products  will  open  new  opportunities  for  trade  in  organic  products 
between the two parties.  

Since  November  2017,  the  EU  and  Chile  have  been  engaged  in  negotiating  an  ambitious, 
comprehensive and progressive modernised agreement. 

5.6  Customs Union with Turkey 

Turkey  is  the  EU’s  second-largest  preferential  trading  partner  country.  After  a  period  of 
strong economic growth since 2013, Turkey's economy slowed down drastically in 2018. The 
sharp depreciation of the Turkish lira and the resulting high inflation significantly affected EU 
exports, which decreased by almost 9%. On the other hand, Turkish imports into the EU grew 
by  9%  over  the  same  period,  which  led  to  almost  balanced  trade,  reducing  the  EU  surplus 
from  €15  billion  in  2017  to  €1  billion  in  2018.  Trade  in  non-agricultural  products  was  the 
most affected in value. 

Contractual  trade  relations  between  the  EU  and  Turkey  date  back  to  1963  when  the  parties 
agreed to progressively establish a customs union, which was completed in 1996. The union 
aims  to  ensure  the  free  movement  of  all  industrial  goods  and  certain  processed  agricultural 
products  between  the  EU  and  Turkey.  However,  for  several  years  its  functioning  has  been 
hampered by a continuing trend of mounting trade barriers in Turkey. A notable example is 
Turkey’s  deviation  from  the  common  customs  tariff  for  imports  from  non-EU  countries  by 

35   It  should  be  noted  that,  even  in  the  absence  of  the  increase  in  purchases  of  aircrafts  or  aircraft  parts,  EU 
exports  would  still  have  grown  by  6%,  which  reflects  the  diversification  of  EU  exports  over  the  last  five 
years.   

20 

 
 
                                                 
imposing additional duties on a continuously expanding range of products, and also requiring 
proof  of  origin  for  EU  goods.  The  Commission  also  continues  to  demand  the  non-
discriminatory  implementation  of  the  Additional  Protocol  to  the  Association  Agreement 
towards all Member States, including the Republic of Cyprus. 

In  December  2016  the  Commission  adopted  a  proposal  to  modernise  the  Customs  Union. 
However, preparations in this regard are currently on hold as the Council has concluded that 
no further work towards the modernisation of the EU-Turkey Customs Union would be foreseen. 
This  modernisation,  once  conditions  permit,  remains  an  important  priority  for  the  EU  trade 
agenda. 

On 2 April 2019, the EU requested WTO consultations with Turkey in response to measures 
adopted by Turkey that result in a progressive forced localisation in Turkey of the production 
of  a  substantial  part  of  the  pharmaceutical  products  exported  to  Turkey.  These  measures 
appear to also be in contradiction with Turkey’s commitments under the customs union. The 
case is ongoing. 

5.7  Stabilisation  and  Association  Agreements  with  the  Western  Balkans 

countries 

In  2018,  the  EU  remained  the  number  one  trading  partner  region  for  Albania,  Bosnia 
Herzegovina,  Kosovo36,  Montenegro,  North  Macedonia  and  Serbia.  Total  trade  between  the 
EU  and  the  five  Western  Balkan  countries  increased  by  10%.  The  EU  trade  surplus  was 
stable, slightly above €9 billion.  

In 2017, the EU was also a major provider of foreign direct investment in the region, while 
the total outward stocks remained stable at around €25 billion. 

However,  issues  related  to  the  informal  economy  and  corruption  continue  to  affect  the 
business environment. Lack of effective State aid rules remains an issue, and more generally, 
competition  law needs  to  be improved. The EU  believes  – and insists in its policy dialogue 
with  the  Western  Balkans  partners  –  that  progress  on  business  environment,  regulatory 
convergence  and  fight  against  corruption  is  closely  linked  to  progress  in  the  rule  of  law.  In 
addition,  transparency  and  accountability  of  public  procurement  procedures  still  need  to  be 
improved.  On  a  positive  note,  the  Commission  welcomes  the  new  Public  Procurement  Law 
enacted by North Macedonia in early 2019, which should lead to increased transparency and 
competition  and  the  efforts  taken  by  Serbia  and  Montenegro  to  modernise  its  public 
procurement legislation in line with the EU requirements.  

Although further progress should be sought on regional integration, the signing of a regional 
roaming  agreement  in  April  2019  aimed  at  establishing  a  roaming-free  region  across  the 
region  by  2021,  which  should  pave  the  way  for  reducing  telecommunication  costs  in  the 
region, serves as a good example. 

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

Opinion of the International Court of Justice on the Kosovo Declaration of independence. 

21 

 
 
                                                 
6. 

ECONOMIC PARTNERSHIP AGREEMENTS (EPAS)  WITH AFRICAN, CARIBBEAN  AND 
PACIFIC COUNTRIES 

6.1  Economic  Partnership  Agreement  with  the  Southern  African  Development 

Community (SADC)  

2018 was the first year of the full application of the EU-SADC EPA37 by all parties, after the 
agreement  entered  into  provisional  application  for  Mozambique  on  4  February  2018.  All 
SADC EPA countries have now started to implement the agreed cuts.  

Total  merchandise  trade  between  the  EU  and  SADC  EPA  countries  grew  by  2.7%  in  2018. 
Growth was driven by a 5.5% increase in EU imports from SADC EPA countries, while EU 
exports  recorded  a  small  decrease.  The  trade  balance  remained  in  surplus  for  SADC  EPA 
countries.  Growing  exports  from  SADC  EPA  countries  were  mostly  driven  by  increased 
exports of motor vehicles from South Africa and diamonds and precious  metals from South 
Africa  and  Lesotho.  Exports  of  wine  and  sugar  from  South  Africa,  cashew  nuts  from 
Mozambique, grapes from Namibia and rum from Eswatini also increased.  

At its first meeting in February 2019, the Joint Council adopted the institutional set-up of the 
agreement, including institutional provisions for dispute settlement and the list of arbitrators. 
This  will  help  to  address  challenges  with  regard  to  implementation  in  the  future.  The  Joint 
Council  also  established  the  foundations  for  a  joint  monitoring  mechanism  and  for  the  full 
involvement of non-state actors in the implementation of the agreement.  

In 2018, South Africa lifted the import ban on poultry meat for two out of eight EU Member 
States, without indicating how it plans to proceed with the remaining six on which it is still 
imposing  a  ban.  The  EU  considers  that  the  remaining  import  bans  should  be  lifted  without 
further  delay.  The  Southern  African  Customs  Union  (SACU)  also  continued  to  apply 
safeguard  measures  on  the  import  of  poultry  products  from  the  EU  and  tariffs  on  specific 
textile  imports,  which  the  EU  keeps  raising  with  its  counterparts  as  it  considers  these 
measures  as  being  inconsistent  with  the  agreement.  On  14  June  2019,  the  EU  requested 
consultations with the SACU on the safeguard measure imposed on frozen poultry products 
(for more detail, see section 10.3). 

The possibility to 'cumulate origin' between SADC EPA countries, one of the key benefits of 
the Agreement, has not yet been activated by EPA partner countries. Cumulating origin would 
allow SADC EPA States to fulfil origin requirements jointly and would hence boost regional 
value chains. The EU encourages its partners to make progress on this issue.  

37   This is an agreement between the EU and  six (out of 15) members of the Southern  African Development 
Community  (SADC):  Botswana,  Eswatini,  Lesotho,  Namibia,  South  Africa  (which  together  form  the 
Southern African Customs Union, SACU) and Mozambique.  

22 

 
 
                                                 
Women wine makers in South Africa 

Wine  has  been  made  in  South  Africa  for  more  than  three  centuries.  Yet,  until  the  end  of 
apartheid  there  were  no  qualified  black  wine  makers.  Young  women  are  now  breaking  this 
barrier and using the EPA (with its large tariff rate quota for wine granted to South Africa) to 
export their products to the EU. 

Thokozani  Wines  is  a  black  empowerment  company  launched  fifteen  years  ago  by 
Diemersfontein  Wines to  turn their farm workers into shareholders and  contribute to  broad-
based black economic empowerment. 85 out of its 115 staff are now Thokozani shareholders, 
many of them women, and receive mentorship and business and life skills training. Thokozani 
wines are being exported to the Netherlands, Germany, Sweden, Denmark and Czechia. 

"Exports of Thokozani wines to the EU have improved after the entry into force of the SADC 
EPA  but  we  need  to  scale  up  our  efforts  if  we  want  to  benefit  fully  from  it.  EU  support  to 
historically disadvantaged producers is very critical and welcome." 

From Denise Stubbs, Director of Thokozani Wines 

6.2 

Interim  Economic  Partnership  Agreement  with  Eastern  and  Southern 
Africa (ESA)  

In  2018,  the  interim  EPA  between  the  EU  and  Madagascar,  Mauritius,  the  Seychelles  and 
Zimbabwe went into its seventh year of provisional application. Comoros has been applying 
the  agreement  since  7  February  2019.  The  four  original  ESA  partners  will  fully  implement 
their liberalisation commitments by 2022, in accordance with their respective schedules under 
the agreement. 

In  2018,  total  trade  between  the  EU  and  ESA4  was  highest  with  Madagascar  (€1.9  billion) 
and Mauritius (€1.8 billion), followed by Zimbabwe (€689 million) and the Seychelles (€596 
million).  EU  imports  from  the  four  partners  decreased  by  3.5%  in  2018.  This  was  mainly 
caused by a sharp fall in the volume of sugar imported from Mauritius and Zimbabwe.  

Diversification  of  exports  has  advanced  for  Madagascar  and  Mauritius  but  has  been  so  far 
limited for the Seychelles and Zimbabwe.  

Following the expression of interest by ESA partners to deepen the agreement beyond trade in 
goods, a scoping exercise was launched in 2018 and finalised in May 2019. The negotiations 
for  the  deepening  of  the  agreement  should  start  by  the  end  of  2019  and  they  will  cover 
services, investments and other trade-related topics. 

6.3 

Interim Economic Partnership Agreement with Côte d’Ivoire  

The interim EPA with Côte d’Ivoire has been provisionally applied since September 2016. It 
is a self-standing trade agreement, which will be substituted by the regional EU-West Africa 
EPA once the latter enters into force. After being signed by Gambia and Mauritania, 15 out of 
16 West African partners38 have now signed the regional EU-West Africa EPA.  

38   Nigeria is the only country in West Africa which has not yet signed the agreement.  

23 

 
 
 
 
 
 
                                                 
In 2018, the trade balance was positive for Côte d’Ivoire and the EU continues to be its most 
important trading partner region. However, in 2018, EU imports from Côte d’Ivoire decreased 
by  5%  due  to  a  drop  in  the  value  of  raw  and  processed  cocoa,  as  well  as  rubber  imports. 
Cocoa and processed cocoa goods accounted for 64% of total EU imports from Côte d’Ivoire 
in  2018.  EU  exports  to  Côte  d’Ivoire  were  stable  and  consisted  mainly  of  machinery  and 
mechanical appliances, electrical appliances and motor vehicles.  

Côte d’Ivoire, with  the support  of the EU, carried out  a study  to  measure the impact  of the 
interim  EPAs  (Côte  d’Ivoire  and  Ghana)  on  regional  integration.  The  assessment 
demonstrated  that  the  possible  disruptions  (e.g.  due  to  EU  liberalised  inputs  in  processed 
products  circulating  within  the  region)  will  affect  only  very  few  traded  products  and 
countries. The study also provides pragmatic solutions to mitigate the risk of distortion. 

Under the interim EPA, Côte d’Ivoire started to liberalise its market for EU imports as of 1 
January 2019, with further rounds of tariff cuts foreseen until 2029. 

6.4 

Interim Economic Partnership Agreement (EPA) with Ghana 

The interim EPA with Ghana has been provisionally applied since December 2016, and is still 
in  its  early  stages.  Ghana  has  announced  that  it  will  start  to  liberalise  its  market  for  EU 
imports  as  of  2020.  Just  like  the  interim  EPA  with  Côte  d’Ivoire,  this  interim  EPA  will  be 
replaced by the regional West Africa EPA once the latter enters into force. 

EU  imports  from  Ghana  grew  by  almost  50%  in  2018,  to  reach  €3.1  billion,  mostly  due  to 
increasing  exports  of  mineral  oil  from  Ghana  to  the  EU.  Ghanaian  exports  of  cocoa, 
aluminium,  vegetable  fats  and  oils,  preserved  tuna,  as  well  as  coconut  and  bananas  also 
increased in  2018. EU exports to  Ghana (mainly machinery, mineral  oils and meat) slightly 
decreased  in  2018.  The  balance  of  trade  for  both  agricultural  and  non-agricultural  goods  is 
positive for Ghana.  

As Ghana moves to implement its market access commitments, close attention will be paid to 
the effects the interim EPA might have on Ghana's economy in terms of trade and investment 
flows, government revenue and sustainable development. 

6.5  Economic Partnership Agreement (EPA) with Central Africa (Cameroon) 

The  agreement,  which  is  open  for  accession  to  all  Central  African  countries,  has  been 
provisionally applied by Cameroon since August 2014. Cameroon will liberalise 80% of its 
imports  from  the  EU  over  15  years,  until  2029.  The  first  rounds  of  tariff  cuts  took  place 
already  in  2016  and  2017.  The  products  in  which  trade  is  liberalised  are  mainly  industrial 
machinery and equipment, construction material and intermediate industrial products,  which 
are not produced locally and which are used by Cameroon’s industry. 

In  2018,  EU  imports  from  Cameroon  saw  a  7%  decrease,  back  to  the  level  of  2016  after  a 
spike in 2017. This was due to a decrease in Cameroonian exports of mineral oil, cocoa beans, 
bananas and rubber to the EU. Aluminium and wood exports to the EU increased in 2018. The 
balance of trade remains positive for Cameroon. Mineral oil is the dominant export product.  

24 

 
 
 
Cheaper inputs help to strengthen local production and employment  

La  Société  Anonyme  des  Brasseries  du  Cameroun  (SABC)  is  a  brewery  and  soft  drinks 
producer  in  Cameroon.  It  is  the  largest  private-sector  employer  in  the  country,  employing 
about  10,000  people  across  the  group  and  its  subsidiaries.  Brasseries  du  Cameroun  holds  a 
75% share of the Cameroonian market for beer and soft drinks.  

SABC is  to  date the biggest  beneficiary of EPA preferences.  It imports a range of products 
from the EU, e.g. larger machinery used to bottle its beverages, as well as ingredients such as 
yeast, hop, aromas and colorants used in their production. 

While benefiting from EPA preferences, SABC is also increasingly trying to source locally. 
The company has a local subsidiary producing bottles and also buys 100% of Maïscam’s (one 
of the large agro-industrial companies of the country) production of maize every year (10,000 
tonnes).  

6.6  Economic Partnership Agreement with the Forum of the Caribbean Group 

of ACP countries (CARIFORUM) 

2018 was the tenth year of provisional application of the CARIFORUM agreement between 
the EU and 14 Caribbean countries. In February 2019, the Commission launched an ex post 
evaluation of the agreement, which is expected to be completed in 2020. The results will feed 
into  the  Joint  EU-CARIFORUM  Review  of  the  agreement  and  will  be  reported  to  the  next 
meeting of the EU-CARIFORUM Joint Council.  

In  2018,  total  trade  between  the  EU  and  CARIFORUM  increased  by  7%,  to  €9  billion.  EU 
imports from CARIFORUM countries increased by 11% to €3.9 billion, driven by an increase 
in  mineral  oil  and  chemicals  imports.  EU  imports  of  fish  and  crustaceans,  tobacco,  and 
beverages and spirits from CARIFORUM countries also increased in 2018, while sugar and 
banana imports declined. EU exports to CARIFORUM increased by 4.6%, to €5.1 billion. 
Under  the  11th  European  Development  Fund,  the  EU  provides  €102  million  in  support  of 
regional  economic  cooperation  and  integration,  including  private  sector  development,  trade-
related capacity building and EPA implementation in the Caribbean. This support entails, for 
example, mini-grants to small and medium-sized Caribbean firms to help them start exporting 
to the EU.  

Given  the  particular  interest  of  CARIFORUM  partners  in  trade  in  services  with  the  EU,  in 
2018 the parties established a Special Committee on Services.  

Finally, progress was also made in the ongoing negotiations on an agreement on geographical 
indications under the EU-CARIFORUM EPA.   

6.7  Economic Partnership Agreement (EPA) with the Pacific countries 

2018  was  the  eighth  year  of  application  of  the  agreement  between  the  EU  and  Papua  New 
Guinea.  Fiji  started  to  apply  the  agreement  provisionally  in  July  2014  and  Samoa  has  been 
provisionally applying it since 31 December 2018. 

In 2018, total trade between the EU and Fiji and Papua New Guinea recorded a 9% decrease. 
The two Pacific states still recorded a €700 million trade surplus with the EU. 

25 

 
 
 
 
 
EU  imports  of  sugar  from  Fiji  continued  to  decrease  as  was  the  case  for  several  ACP 
countries. Exports of palm  oil from  Papua New  Guinea to  the EU, which is  by far its  main 
agri-food export to the EU, decreased by 16%.  

So far, little diversification of Pacific countries' exports to the EU has been observed.  

The agreement is open for accession by other Pacific Island countries. Samoa joined in 2018, 
and procedures for the accession of the Solomon Islands and Tonga are on-going.  

7. 

TRADE AND SUSTAINABLE DEVELOPMENT: UPDATE ON RECENT ACTIVITIES 

Since the publication of  the 2018 report, the Commission  continued to  significantly step up 
efforts and actions to implement the trade and sustainable development chapters of EU trade 
agreements  to  follow  up  on  its  15-point  action  plan  of  February  2018.  The  plan’s  overall 
objective  is  to  ensure  more  effective  and  assertive  implementation  and  enforcement  of  the 
chapters  on trade and sustainable development.  Results are starting to  emerge as the plan is 
rolled  out.  The  main  initiatives  under  the  plan’s  four  broad  fields  of  activity  were  the 
following:   

1.  Working  together  (with  Member  States,  the  European  Parliament  and  international 
organisations)  

The Commission intensified work with Member States. The dedicated Expert Group on trade 
and sustainable development met four times in 2018. This was complemented by the work of 
EU  delegations  and  Member  States’  embassies  in  partner  countries.  This  helped  promote 
synergies with Member States on specific implementation actions, such as a partnership with 
Sweden  to  assist  Ecuador’s  implementation  process  of  trade  and  sustainable  development 
commitments.  

The  Commission  continued  to  engage  with  the  European  Parliament  including  through 
monitoring  groups,  agenda  points  of  the  Committee  on  international  trade,  technical 
debriefings,  and  individual  contacts.  Among  other  things,  these  contacts  helped  to  provide 
information for the visit of Members of the European Parliament to Japan in September 2018. 

The Commission strengthened cooperation with international organisations. The Commission 
and  the  International  Labour  Organization  (ILO)  made  strides  towards  a  more  strategic  and 
flexible cooperation, notably by signing, at the end of 2018, the umbrella project ‘Trade for 
Decent  Work’.  This  project  will  support  actions  to  improve  the  application  of  the  ILO 
fundamental Conventions in EU trading partner countries. The Commission also continued its 
ongoing  cooperation  with  the  ILO  in  a  number  of  partner  countries.  In  relation  to  the 
environment,  the  Commission  has  worked  with  the  trade  partner  countries  within  the 
Multilateral  Environment  Agreements  and  has  been  supporting  their  implementation, 
including through the dedicated cooperation agreement with the United Nations Environment 
Programme.  

2.  Enabling civil society, including the social partners, to play their role in implementation 

The Commission and each of the EU Domestic Advisory Groups established under the trade 
agreements  with  a  trade  and  sustainable  development  chapter  held  regular  meetings 
throughout  the  year  to  inform  civil  society  representatives  about  progress  and  challenges  in 
trade and sustainable development implementation, and learn about their views and opinions.  

The  Commission  mobilised  €3  million  through  a  new  Partnership  Instrument-financed 
project: 'Support to civil society participation in the implementation of EU trade agreements'. 
Since  November  2018,  the  project  has  been  providing  logistical  and  technical  support  to 

26 

 
 
Domestic  Advisory  Groups  in  the  EU  and  in  some  trading  partner  countries39.  This  project 
also  facilitates  joint  discussions  in  the  form  of  annual  workshops  on  trade  and  sustainable 
development matters.  

The  Commission  also  reached  out  to  civil  society  in  countries  covered  by  Economic 
Partnership  Agreements  (EPAs)  to  raise  awareness  of  the  agreements  and  stimulate 
engagement and discussion. In November 2018, non-state actors from the EU and SADC EPA 
countries held a second Civil Society Dialogue meeting in Namibia. In April 2019, the civil 
society advisory body established domestically in Côte d’Ivoire met with both parties of the 
agreement.  Discussions  also  took  place  with  the  Commission,  as  well  as  the  European 
Economic and Social Committee, to explore the possibility of building a civil society platform 
including both Ivorian and European civil society. 

Increasing  the  business  community’s  involvement  in  the  implementation  of  trade  and 
sustainable development chapters is another key objective. To promote and support the uptake 
of  corporate  social  responsibility/responsible  business  conduct,  the  Commission  and  the 
European  External  Action  Service  launched  a  €9  million  programme  with  the  ILO,  the 
Organisation  for  Economic  Co-operation  and  Development  (OECD)  and  the  Office  of  the 
United  Nations  High  Commissioner  for  Human  Rights (OHCHR)  through  the  Partnership 
Instrument40.  This  programme  will  fund  outreach  and  capacity  building  activities  in  Latin 
America,  complementing  similar  ongoing  work  in  Asia.  The  Commission  also  organised  a 
regional event on this topic in Guatemala, with the participation of the ILO, the OECD and a 
range of stakeholders from the region.  

3.  Delivering 

The  Commission  developed  (pre-implementation  and  implementation)  trade  and  sustainable 
development  priority  topics  for  each  partner  in  order  to  focus  efforts.  These  priorities  were 
shared with Member States through the Expert Group on trade and sustainable development 
and with civil society through the Domestic Advisory Groups. This process is ongoing. 

The  Commission  sharpened  its  monitoring  and  analysis  of  compliance  with  trade  and 
sustainable development commitments in some trade partners, notably Peru and South Korea. 
In  the  case  of  Peru,  the  Commission  engaged  intensely  with  public  authorities  and  civil 
society representatives, including during a fact-finding mission to Lima in October 2018. The 
EU and Peru reached an understanding on how to address the issues of concern as reflected in 
the  minutes  of  the  trade  and  sustainable  development  sub-committee  meeting  of  December 
201841.  In  the  case  of  South  Korea,  in  December  2018  the  Commission  requested  formal 
consultations  under  the  Agreement’s  trade  and  sustainable  development  dispute  settlement 
mechanism, based on longstanding EU concerns about South Korea’s failure to implement its 
commitments under the free trade agreement on multilateral labour standards and agreements 
(for more detail, see Section 10.1). 

The  Commission  strengthened  its  efforts  to  support  partner  countries  in  the  early  stages  of 
implementation  of  the  commitments  on  trade  and  sustainable  development.  These  efforts 
included  the  development,  in  partnership  with  Sweden’s  National  Board  of  Trade,  of  a 
handbook for trade and sustainable development implementation for Ecuador. In Vietnam and 
Singapore  the  focus  was  on  respecting  fundamental  labour  principles,  both  through  labour 

39   Currently  Central  America,  Colombia-Ecuador-Peru,  CARIFORUM,  Georgia,  Moldova,  SADC  and 

Ukraine. 

40   https://ec.europa.eu/fpi/what-we-do/partnership-instrument-advancing-eus-core-interests_en  

41   http://trade.ec.europa.eu/doclib/docs/2019/february/tradoc_157701.pdf  

27 

 
 
                                                 
reforms  and  through  the  ratification  of  fundamental  ILO  conventions.  Vietnam  recently 
ratified ILO Convention 98 and indicated that it would adopt a new labour code, including the 
fundamental labour principles. In September 2018, Mexico ratified ILO convention 98 on the 
right to organise and collective bargaining, thus delivering on one of its commitments in the 
trade and sustainable development chapter of the future EU-Mexico Trade Agreement. Other 
activities focused on preparing the institutional set-up of government bodies as well as civil 
society structures. 

To  mobilise  resources  for  the  implementation  of  trade  and  sustainable  development 
commitments  and  promote  complementarities  and  synergies,  the  Commission  began 
compiling an inventory of all relevant projects, reaching out to Member States in EU capitals 
and their embassies in partner countries.  

On 23 January 2019, following the adoption of the Recommendation on Trade and Climate in 
the  CETA  context,  the  Commission  hosted  a  trade  and  climate  workshop  with  the 
participation  of  civil  society  and  businesses  to  discuss  the  nexus  between  trade  and  climate 
and to identify possible further initiatives on the topic. 

The  Commission  successfully  introduced  reinforced  trade  and  climate  provisions  (including 
commitments  to  implement  the  Paris  Agreement  and  cooperation  and  joint  actions  with 
respect  to  the  objectives  of  the  United  Nations  Framework  Convention  on  Climate  Change 
(UNFCCC)  in  the  trade  and  sustainable  development  chapters  of  the  agreements  concluded 
with  Mexico,  Vietnam,  Japan  and  Singapore.  Similar  provisions  are  part  of  ongoing 
negotiations. 

The EU carried out circular economy outreach activities to Chile, Colombia, Japan, Mexico, 
Morocco,  Peru  and  Singapore  to  promote  green  business  and  investment  partnership  and 
exchange knowledge on circular economy-related policies and best practices. These activities 
have contributed to  the inclusion of specific  circular economy provisions in  the modernised 
agreement  with  Mexico.  In  addition,  two  regional  projects  on  plastics  targeting  South  East 
Asia and Latin America countries have been financed.  

4.  Transparency and communication 

The Commission is working on improving its webpages on trade and sustainable development 
to make the relevant information more easily accessible. The European Economic and Social 
Committee is undertaking a similar exercise in relation to the work of the Domestic Advisory 
Groups.  

Following  a  submission  in  October  2017  by  civil  society  organisations  expressing  their 
concerns  about  Peru’s  lack  of  compliance  with  its  trade  and  sustainable  development 
commitments,  the  Commission  engaged  in  technical  meetings  with  the  Peruvian  authorities 
and  civil  society  stakeholders.  The  issues  raised  in  the  submission  were  also  part  of  the 
discussions at the December 2018 trade and sustainable development sub-committee meeting. 
In  March  2019,  the  Commission  informed  the  civil  society  organisations  that  filed  the 
submission about the outcome of the increased engagement with the Peruvian authorities on 
the issues of concern. 

28 

 
 
8. 

AGRI-FOOD  TRADE  UNDER  EU  TRADE  AGREEMENTS:  UPDATE  ON  RECENT 
DEVELOPMENTS 

Evolution of trade flows 

In 2018, agri-food trade under EU preferential trade agreements continued to grow, in contrast 
to  the  EU's  overall  agri-food  trade  with  the  rest  of  the  world,  which  slightly  decreased.  EU 
exports of agri-food products under preferential  agreements grew by 2.2% (+€1 billion) and 
contributed to  the success  of EU agri-food exports. EU agro-food imports slightly declined, 
by 0.6%.  

Over  the  reporting  period,  EU  agri-food  trade  with  preferential  trading  partner  countries 
accounted  for  30%  of  total  EU  agri-food  exports  and  40%  of  imports.  With  an  €11  billion 
surplus,  first-generation  trade  agreements contributed more than half of the  growing overall 
agri-food  trade  surplus  of  the  EU  with  the  rest  of  the  world.  Spirits,  wine,  pasta  and  pastry 
were  the  biggest  contributors  to  EU  export  growth.  At  the  same  time,  imports  of  wheat, 
unroasted coffee and sugar declined.  

Export  growth  was  particularly  strong  with  partner  countries  of  second-generation  trade 
agreements (+5%) and Deep and Comprehensive Trade Areas (+11%). CETA, in its first full 
year of implementation, contributed with a 4% growth rate in exports to Canada (particularly 
high in citrus fruit, cheese and chocolate). 

The three main export destinations for EU agri-food exports among preferential trade partners 
were  Switzerland,  Norway  and  Canada,  representing  12%  of  agri-food  exports  in  2018. 
Around  47%  of  exports  were  food  preparations  such  as  chocolates,  infant  formula,  pasta 
(22%), processed food such as cheeses and wine (15%) and other beverages (9%).   

French confectioner finds a sweet deal in Canada 

La Confiserie du Roy René is a French confectioner specialised in calissons, sweets made of 
candied fruit and almonds, since 1920. The company adopted a strategy of internationalisation 
in 2014 by taking advantage of EU trade deals with partners around the world.  

The company has already doubled its turnover from exports since 2015, which now make up 
over 9% of its total turnover.  

The ratification of the EU’s trade agreement with Canada enables the confectioner to offer its 
calissons at more competitive prices because of the reduction of trade tariffs.  

The  top  three  countries  of  origin  of  agri-food  imports  among  preferential  trading  partner 
countries  were  Ukraine,  Switzerland  and  Turkey,  supplying  13%  of  total  EU  agri-food 
imports. Primary products built the bulk of the EU agri-food imports (~63%), mainly tropical 
fruits (18%), fresh and dried fruits (13%) and unroasted coffee (5.6%).  

EU  trade  agreements  include  provisions  on  the  protection  of  EU  producers  of  sensitive 
products,  such  as  beef,  poultry  or  sugar.  These  are  either  fully  excluded  from  preferential 
trade  or,  if  they  are  partially  excluded,  they  are  covered  by  carefully  calibrated  tariff  rate 
quotas.  For  sensitive  fruit  and  vegetables  an  entry  price  system  is  applied  during  the  peak 
harvest season in the EU.  

Although  often  looked  at  critically  during  negotiations,  EU  trade  agreements  offer  great 
potential for EU exports in agricultural products. For example, Japan and South Korea are the 
number  two  and  three  markets  for  EU  pig  meat  exports  and  have  significant  potential  for 

29 

 
 
 
 
growth. These markets represent 42 % of total EU pork exports. Exports to South Korea have 
been  growing  since  the  implementation  of  the  trade  agreement,  with  an  additional  12% 
increase in 2018, despite the fact that exports from three EU Member States are banned due to 
African swine fever outbreaks. 

Sensitive  agricultural  products  from  the  EU  continue  to  benefit  from  trade  agreements.  For 
example,  in  2018,  the  EU  exported  close  to  162,000  tonnes  of  beef  to  preferential  partner 
countries, a 20% increase compared to 2017. Preferential trading partner countries absorb two 
thirds  of  total  EU  beef  exports,  with  main  partners  being  Turkey,  Bosnia  &  Herzegovina, 
Israel and Switzerland. This shows that when trade is not hindered by unfair and unjustified 
sanitary  measures  or  prohibitive  import  duties,  European  beef  is  valued  on  key  export 
markets.  

Similarly, European sugar producers performed well in 2018 with more than 3 million tonnes 
of  sugar  exports  (+48%  compared  to  2017),  a  record  level  since  2014.  While  the  export 
performance  of  EU  sugar  was  largely  boosted  by  the  completion  of  the  reform  of  the  EU 
sugar  regime,  bilateral  trade  agreements  also  contributed  to  this  result.  By  way  of  example, 
Egypt  was  the  main  export  market  for  EU  sugar  in  2018.  The  country  imported  more  than 
500,000  tonnes  of  European  sugar  at  zero  duty,  thanks  to  the  existing  EU-Egypt  trade 
agreement42. 

In  the  case  of  Japan,  EU  agri-food  exports  intensified  already  in  2018  (e.g.  poultry  meat 
export +78%), partly thanks to accelerated cooperation to resolve a number of issues related 
to  sanitary  and  phytosanitary  measures.  Duties  for  pig  meat  and  for  beef  will  be  totally 
eliminated or significantly reduced over time43.   

Geographical indications 

In 2018, progress was made on the protection of EU geographical indications in some partner 
countries, for instance through the registration of 'Prosciutto di Carpegna' in Canada. Mexico 
agreed to protect a shortlist of 340 EU geographical indications in the modernised agreement. 
In  early  2019,  Singapore  passed  a  new  act  on  geographical  indications,  which  opened  the 
possibility for EU rights-holders to submit their applications before the entry into force of the 
agreement. 

The  Commission  launched  a  study  on  the  value  of  exports  of  EU  geographical  indications. 
This  study  will  update  a  2013  study44,  which  found  that,  at  that  time,  20%  of  European 
geographical  indication  products  were  exported  outside  the  EU,  representing  a  value  of 
around €11.5 billion per year.  

42    In the absence of a preferential trade agreement, Egypt applies a 20% tariff on raw sugar.  

43   See  EU-Japan  EPA  Factsheet  Meat  Products  https://www.eubusinessinjapan.eu/sites/default/files/meat-

factsheet.pdf  

44   https://ec.europa.eu/agriculture/newsroom/106_en  

30 

 
 
                                                 
Sanitary and phytosanitary measures 

Sanitary  and  phytosanitary  measures  continue  to  pose  significant  obstacles  to  EU  agri-food 
exports  and  trade  agreements  are  important  tools  to  address  these  barriers.  Progress  can 
sometimes already be achieved during the negotiations, as trading partner countries develop a 
better understanding of their respective systems. This is best illustrated by Mexico's approval 
of  exports  of  fruit  from  some  EU  Member  States  without  pre-clearance  requirements45. 
Progress was also made on Japan's country-wide ban on poultry imports that it had imposed 
on  a  number  of  EU  Member  States  in  response  to  avian  influenza  outbreaks.  Japan  finally 
lifted  the  ban  on  the  imports  of  poultry  products  from  27  Member  States.  Furthermore, 
Vietnam authorised the import of beef from two additional EU Member States. 

However, a number of problematic issues remain. The South Korean market is still closed to 
European beef and little progress was made in 2018 on the processing of EU Member States’ 
applications, some of them pending since 2014. A similar situation prevails with some other 
EU trading partner countries, such as Colombia and Peru. The EU uses every opportunity to 
raise the issue of unjustified lack of market access for European beef. 

Another  important  issue  is  that  several  trading  partner  countries  still  do  not  recognise  the 
principle of regionalisation and of EU regionalisation measures. This would be important to 
enable  European  farmers  to  fully  benefit  from  EU  trade  agreements,  in  particular  in  the 
European poultry and pig meat sectors. In addition, reacting to the outbreak of African swine 
fever in Belgian wild boar in 2018, 16 countries, including Japan, South Korea and Mexico 
imposed country-wide import bans which affected several other EU Member States. The EU 
requested  these  countries  to  lift  the  restrictions,  which  are  in  contradiction  of  international 
standards and principles.  

The EU is by far the biggest exporter of pork in the world. However, the presence of African 
swine fever in wild boar and domestic pigs in some EU Member States had a strong impact on 
EU pig producers because many trading partner countries imposed country-wide bans on the 
affected  EU  Member  States.  These  trade  restrictions  are  not  in  line  with  WTO  provisions, 
unjustified  from  a  risk  point  of  view  and  unnecessary  because  EU  control  measures  are 
effective in preventing the transmission of the disease through trade. So far, the affected EU 
Member  States  represent  around  18%  of  EU  pork  exports  before  the  outbreaks,  and 
compensation  has  been  possible.  However,  outbreaks  in  the  major  pork-producing  EU 
Member  States  would  be  difficult  to  compensate  if  the  import  policies  of  major  trading 
partner countries were to remain unchanged.   

Animal welfare 

In 2018, the Commission adopted a report to the European Parliament and the Council on the 
impact of animal welfare activities on the competitiveness of European livestock producers in 
a globalised world46. The report provides an overview of the Commission’s cooperative work 
to  promote  animal  welfare  internationally.  It  concluded  that  the  global  promotion  of  EU 
animal welfare standards contributes to the long-term objective of improving animal welfare 
in the world, while reducing unfair trading practices. The report confirmed the important role 

45   Preclearance refers to a requirement from some trading partner countries to have their inspectors posted in 
the  country  of  export  to  check  the  consignment  before  shipment.  The  costs  are  usually  charged  to  the 
exporter, which often makes trade unprofitable. In the modernised agreement, Mexico committed itself to no 
longer request preclearance for EU shipments.  

46   COM(2018) 42 Final, 26.1.2018. 

31 

 
 
                                                 
of international cooperation on animal welfare, including in the context of preferential trade 
agreements.  

Promoting agri-food products  

To help EU companies to benefit from export opportunities under EU trade agreements in the 
agri-food  sector,  the  EU  budget  allocated  €179  million  to  the  promotion  of  EU  products, 
including in Canada, Colombia, Mexico and South Korea. Programmes cover a wide range of 
issues  from  general  campaigns  on  healthy  eating  to  specific  market  sectors.  Promotion 
activities also include the organisation of seminars (e.g. in South Korea), with the objective of 
promoting  the  EU’s  high  sanitary  and  phytosanitary  standards,  geographical  indications  or 
organic farming.  

Jobs and agri-food trade  

The  Commission  published,  on  its  data  portal  for  agro-economics  modelling  (DataM),  an 
interactive tool47 to calculate the jobs generated by agri-food trade in the EU. This tool is open 
to  the  public  and  will  help  determine  the  link  between  agri-food  exports  and  jobs  in  the 
different sectors of the economy. 

9. 

 WORK ONGOING IN SPECIFIC AREAS 

9.1  Small and medium-sized enterprises (SMEs) 

Although exact statistics about the participation of SMEs in EU trade are not available to the 
Commission48, research suggests their role in international trade has been increasing. On the 
basis of a survey conducted by DG TRADE's Chief Economist in 201649, SMEs accounted for 
an estimated 30% of EU goods exports to the rest of the world and 86% of all EU exporters 
were  SMEs50.  Over  the  period  from  2012  to  2016,  the  value  of  SME  exports  increased  by 
almost  20%,  slightly  faster  than  the  overall  value  added  by  SMEs  to  the  EU  economy.  In 
2016, 80% of all imports into the EU from non-EU countries came from SMEs, representing 
38% of the overall value of EU imports.  

The  cost  of  entering  new  markets  weighs  more  heavily  on  SMEs  than  on  larger  firms.  For 
example,  overcoming  trade  and  investment  barriers  is  not  easy  for  any  company,  but  it  can 
pose  unsurmountable  challenges  for  SMEs.  EU  trade  policy  caters  to  the  specific  needs  of 
SMEs,  in  particular  when  it  comes  to  increasing  transparency  and  making  information  on 
trade agreements more user-friendly and accessible.  

To create a more SME-friendly trade environment, the Commission is producing guidance to 
explain how trade agreements work, for example in relation to: 

 
rules of origin; 
  public tenders; 
 

the protection of intellectual property rights; 

47   https://data.jrc.ec.europa.eu/collection/datam  

48   EU Member States are not obliged to provide import and export data per company size. 

49   https://ec.europa.eu/eurostat/statistics-explained/index.php/International_trade_in_goods_by_enterprise_size 

50   Other sources mention higher numbers for SMEs because Eurostat statistics show a category of companies 
of  'unknown'  size.  A  report  by  DG  Trade's  Chief  Economist  estimates  that  at  least  619,000  SMEs  were 
exporting outside the EU in 2012 (http://trade.ec.europa.eu/doclib/docs/2015/april/tradoc_153348.pdf) 

32 

 
 
                                                 
  acceptance of international standards; 
 
  visa facilitation.  

recognition of professional qualifications; 

A single rulebook for international trade would be the best solution to creating a level playing 
field  for  SMEs,  but  multilateral  efforts  are  moving  forward  very  slowly.  Therefore,  trade 
agreements are a major tool for helping SMEs engage in international trade. 

Since  the  "Trade  for  All"  Communication,  the  EU  has  included  SME  provisions  in  all  new 
trade  agreements  and  proposes  to  include  a  specific  SME  chapter  to  ensure  that  the  entire 
agreement  works  better  for  SMEs.  This  chapter  typically  includes  commitments  for  the  EU 
and  the  partner  countries  to  provide  information  on  the  contents  of  the  respective  trade 
agreement  on  a  dedicated  website  that  has  a  database  searchable  by  tariff  code,  with 
information  on  tariffs,  import  requirements,  rules  of  origin,  etc.  In  addition,  the  chapter 
provides  for  a  SME  Contact  Point  on  each  side  to  facilitate  bilateral  cooperation  at 
government  level  and  interaction  with  the  committees  established  under  the  agreement, 
ensuring  that  the  needs  of  SMEs  are  adequately  addressed.  Moreover,  the  Commission  is 
negotiating simplified and similar rules in new trade agreements and those in the process of 
modernisation, for example in the area of rules of origin. 

The  EU-Japan  Economic  Partnership  Agreement  is  the  first  to  include  a  dedicated  SME 
Chapter51. Negotiations on SME chapters were also concluded at technical level with Mexico 
and  Mercosur  in  2018.  Negotiations  are  ongoing  with  Indonesia,  Australia,  New  Zealand, 
Chile and Tunisia. Although CETA does not  include a distinct chapter on SMEs, a specific 
'SME recommendation'52 was agreed between the EU and Canada on 26 September 2018. It 
requires both parties to provide market access information and to set up SME Contact Points.  

The Commission, EU Member States and business associations continue working to increase 
awareness of the opportunities offered by EU trade agreements. The Commission provides on 
its  website  information  on  preferential  trade  agreements.  One  recent  example  is  the  SME-
specific  webpage  on  the  EU-Japan  Economic  Partnership  Agreement53.  In  line  with  its 
commitments under the SME Chapter, Japan’s Ministry for Foreign Affairs has also published 
information on its website. Furthermore, the EU Market Access Database54 offers information 
for SMEs,  who want  to  export from  the EU, while the  Trade Helpdesk55 offers information 
relevant for importers into the EU. The Commission is currently developing a new one-stop-
shop web portal, which should provide improved services to SMEs. 

51   http://trade.ec.europa.eu/doclib/docs/2018/august/tradoc_157228.pdf#page=503  

52   http://trade.ec.europa.eu/doclib/docs/2018/september/tradoc_157417.pdf  

53   http://ec.europa.eu/trade/policy/in-focus/eu-japan-economic-partnership-agreement/  

54   https://madb.europa.eu/madb/  

55   https://trade.ec.europa.eu/tradehelp/  

33 

 
 
                                                 
German manufacturer lifts export volumes across the globe 

The  trade  agreement  between  the  EU  and  South  Africa  entered  into  force  in  2000.  It  has 
enabled a small machinery manufacturer in the German region of Swabia to take advantage of 
new  export  opportunities,  boost  employment  and  share  technological  innovation  with  its 
trading partner countries. 

AERO-LIFT  exports  vacuum  lifters  to  South  Africa,  ranging  from  components  to  entire 
machines.  These  are  used,  for  example,  in  industry,  for  lifting  heavy  loads.  Since  the 
conclusion of the trade agreement, the export value of one product type alone has increased 
from €15,000 to €100,000. At the same time, the company is benefiting from reduced customs 
and administrative costs amounting to approximately 5% of the product value. 

"Without  a  trade  agreement  we  would  not  be  in  South  Africa"  says  Tobias  Pauli,  CEO  of 
AERO-LIFT Vakuumtechnik GmbH, a small family business from Binsdorf in Swabia. 

9.2  Services  

Opening up trade in services is about addressing quantitative and discriminatory restrictions 
in domestic legislation. Negotiations in this field aim to ensure that EU service providers are 
allowed to supply services in foreign markets and are not discriminated against compared to 
other firms in the same sector. 

All  'new  generation'  trade  agreements  and  agreements  on  Deep  and  Comprehensive  Free 
Trade  Areas  contain  provisions  on  services,  helping  to  establish  and  solidify  a  regulatory 
framework  that  facilitates  the  supply  of  services,  while  protecting  consumers.  Among  the 
agreements  in  place  with  African,  Caribbean  and  Pacific  countries,  only  the  Economic 
Partnership Agreement (EPA) with the Caribbean covers services, whereas other EPAs have 
review clauses' for negotiations at a later stage.  

There has been significant progress in recently negotiated agreements (such as the ones with 
Japan or Mexico) as they include state-of-the art provisions on both services and digital trade. 
Agreements  that  are  currently  being  negotiated  (such  as  the  ones  with  Australia  and  New 
Zealand) are expected to build on these ambitious provisions. 

The  EU-Japan  Economic  Partnership  Agreement  includes  comprehensive  commitments  on 
services and investment, based on a full negative list (i.e., the parties listed only those sectors 
that  they  exclude  completely  or  to  which  restrictions  apply).  The  agreement  also  contains 
important  regulatory  provisions,  going  beyond  the  World  Trade  Organization’s  General 
Agreement  on  Trade  in  Services  (GATS).  These  additional  improvements  will  help  EU 
companies seeking to enter the Japanese market but also those who are already active on the 
Japanese  market,  to  get  the  necessary  licenses  or  authorisations  swiftly.  In  addition,  the 
agreement  with  Japan  offers  a  framework  for  closer  regulatory  cooperation  in  financial 
services  and  has  led  to  an  understanding  between  the  EU  and  Japan  on  the  movement  of 
natural persons for business purposes. 

Another telling sectoral example is that of the digital trade chapter included in modern trade 
agreements.  Digital  trade  issues  have  been  addressed  in  agreements  in  the  past  but  more 
comprehensive  provisions  were  included  in  the  EU-Canada  agreement  (CETA)  with  further 
improvements  made  in  the  EU-Japan  Economic  Partnership  Agreement.  The  recently 
concluded  negotiations  with  Mexico  establish  disciplines  applying  to  all  sectors  covered  by 
the agreement, which respond to the challenges of the digital economy and are indispensable 

34 

 
 
 
 
 
for  the  good  functioning  of  online  trade  in  goods  and  services.  Rules  prohibiting  customs 
duties  on  electronic  transmissions  or  mandatory  source  code  disclosure,  as  well  as  trust-
enhancing  rules,  such  as  electronic  trust  services,  electronic  contracts,  spam  and  consumer 
protection can be found in this agreement.  

The  effects  of  trade  agreements  on  EU  services  trade  with  third  countries  are  not  easily 
quantifiable but available data demonstrate an increase in EU services exports. For example, 
services exports to South Korea and Chile grew by 7% and 17%, respectively, between 2016 
and 2017, while exports to Canada increased by 7% over the same period. Moreover, services 
trade in 2017 reached almost 35% of the total trade value between the EU and Canada, more 
than  50%  for  EU-CARIFORUM  and  almost  65%  for  EU-Panama  (the  average  for  EU- 
Central America being around 30%). 

9.3  The EU-Japan Economic Partnership Agreement – preparatory work56 

The  EU-Japan  Economic  Partnership  Agreement  entered  into  force  on  1  February  2019.  In 
2018, to prepare for the application of this important new trade agreement, the Commission 
produced information packages catering to individual EU Member States, to business and the 
public  at  large,  including  general  descriptions  of  the  contents  of  the  agreement,  tailor-made 
infographics for each EU Member State and several guidance documents on customs matters 
and agricultural outcome. Practical information specifically relevant for SMEs has been added 
to  the  EU  Market  Access  Database.  The  Commission  participated  in  a  large  number  of 
awareness-raising events to support EU Member States in their communication activities. 
Furthermore,  the  EU-Japan  Centre  for  Industrial  Cooperation57  (an  EU  Japan  co-financed 
platform)  has  created  a  Helpdesk  for  supporting  the  implementation  of  the  agreement.  The 
Helpdesk is a practical tool particularly aimed at SMEs. It receives individual queries on the 
agreement and offers SMEs access to various additional information sources and other free-
of-charge services. The Centre organises training webinars on specific topic and also regularly 
releases sectoral information packs ('factsheets') with information on the changes and export 
opportunities  brought  about  by  the  EU-Japan  Economic  Partnership  Agreement.  The 
Helpdesk  is  closely  connected  with  other  activities  of  the  Centre  such  as  the  public 
procurement helpdesk or the intellectual property helpdesk. 

Before  the  Agreement  entered  into  force,  the  EU  and  Japan  worked  together  to  finalise  the 
administrative set-up necessary for its implementation. This included:  

 
information exchanges on the initial procedure for administration of tariff rate quotas; 
  approval  procedures  for  several  oenological  practices  to  facilitate  exports  of  EU 

wines;  

  some technical aspects concerning the customs requirements for the granting of tariff 

 

 

preferences (e.g. treatment of confidential business information);  
the establishment of governance structures for implementing the trade and sustainable 
development chapter;  
the  development  of  procedural  and  other  rules  necessary  for  the  functioning  of  joint 
committees, as well as the dispute settlement system of the Agreement. 

56   See section dedicated to the EU-Japan Economic Partnership Agreement on the Commission’s website. 

57   https://www.eu-japan.eu/  

35 

 
 
                                                 
Work  continues  with  regard  to  some  of  the  above-mentioned  aspects  as  well  as  other  key 
issues to strengthen the EU-Japan economic partnership.  

Bord Bia, Irish Food Board (Ireland) 

Bord Bia, the Irish Food Board won a grant to promote EU beef, a project of €3.7 million that 
is  80%  co-financed  by  the  EU58.  Between  2017  and  2019,  Bord  Bia  participated  in  several 
promotional campaigns, seeking to highlight the EU’s high standards of food safety, quality 
and sustainability in Japan. 

"Winning  the  right  to  drive  this  EU  campaign  is  recognition  of  Ireland  as  an  exporting 
country  with  a  strong  history  of  promoting  and  supplying  quality  beef  that  is  sustainably 
produced. This programme allows us to expand our activities at a time when diversification 
into  international  markets  was  never  more  important...  this  campaign  affords  us  the 
opportunity to deploy each of these to the benefit of Irish and EU producers."  

Tara McCarthy CEA, Bord Bia 

9.4 

Improving the uptake of EU trade agreements 

EU  and  partner  countries’  companies  can  only  reap  the  benefits  of  EU  trade  agreements  if 
they have pertinent  information  on the contents  of these  agreements and understand how to 
benefit  in  practice.  Following  up  on  activities  described  in  the  previous  report,  in  2018  the 
Commission  intensified  its  efforts  to  raise  awareness  on  EU  trade  agreements  and  facilitate 
their uptake.  

Among  other  efforts,  the  Commission  has  been  advancing  its  work  on  an  online  portal  that 
will offer a single access point for exporters and importers in the EU. This portal will make it 
easier for companies, in particular small and medium-sized companies, to understand market 
access requirements in partner countries (in total over 120 export destinations) and on the EU 
market. Thanks to the intended integration of two databases, the Market Access Database and 
the  Trade  Helpdesk,  companies  will  have  better  access  to  information  on  tariff  preferences 
and regulatory requirements that apply to their products under a particular trade agreement, as 
well as the rules of origin. The new portal will include information on a first batch of trade 
agreements and will be gradually extended over time.  

Furthermore,  in  2018,  the  Commission  strengthened  its  collaboration  with  the  Enterprise 
Europe  Network  (EEN)59  and  trade  promotion  organisations  in  the  EU  Member  States  in 
order to reach small and medium-sized companies and better target its awareness raising and 
information  campaigns.  The  Commission  set  up  a  new  EEN  working  group  for 
implementation  of  free  trade  agreements,  which  has  been  developing  a  set  of  information 
material  for  trade  agreements.  The  network  will  nominate  trade  agreement  contacts  and 
organise training sessions for EEN partners in all EU Member States on how to promote the 
benefits of trade agreements amongst European companies.  

58   Regulation  (EU)  No  1144/2014  of  the  European  Parliament  and  of  the  Council  of  22  October  2014  on 
information provision and promotion measures concerning agricultural products implemented in the internal 
market and in third countries and repealing Council Regulation (EC) No 3/2008. 

59   The  network,  co-financed  by  the  EU  COSME  programme,  is  active  in  more  than  60  countries  and  brings 
together  3000  experts  from  600  member  organisations.  Its  objective  is  to  help  small  and  medium-sized 
businesses in their international activities.    

36 

 
 
 
 
 
                                                 
10. 

LEGAL ENFORCEMENT 

Since  the  publication  of  the  2018  report,  the  EU  has  resorted  to  the  dispute  settlement 
mechanisms  established  under  the  agreements  with  South  Korea,  Ukraine  and  the  Southern 
Africa  Customs  Union.  The  state  of  play  of  these  disputes  as  of  August  2019  is  explained 
below.  In addition,  on 2 April 2019, the EU requested WTO  consultations60 with  Turkey in 
response  to  measures  adopted  by  Turkey  that  result  in  a  progressive  forced  localisation  in 
Turkey  of  the  production  of  a  substantial  part  of  the  pharmaceutical  products  exported  to 
Turkey.  These  measures  appear  to  be  also  in  contradiction  of  Turkey’s  commitments  under 
the customs union. The case is ongoing.  

The Commission is closely monitoring the implementation of EU trade agreements and will 
consider  using  legal  enforcement,  in  particular  in  cases  of  major  economic  or  systemic 
importance.  The  EU’s  preferential  trade  agreements  provide  for  robust  enforcement  of 
commitments with a view to ensuring an efficient and timely resolution of disputes, including 
on  matters  which  go  beyond  the  WTO  Agreement  (e.g.  the  dispute  with  South  Korea  on 
labour  rights).  Where  the  measure  at  cause  appears  to  be  in  violation  of  both  the  WTO 
Agreement  and  a  trade  agreement  applicable  between  the  EU  and  the  partner  country,  the 
WTO remains a well-tested and transparent dispute settlement system of first choice, ensuring 
coherence in the interpretation of the relevant commitments.  

10.1  Dispute settlement with South Korea 

Under  the  Trade  and  Sustainable  Development  Chapter  of  the  EU-South  Korea  Free  Trade 
Agreement,  South  Korea  committed  to  “respect  and  realise  in  their  laws  and  practices”  the 
fundamental  rights  of  the  International  Labour  Organization  (ILO),  notably  the  right  of 
freedom  of  association  and  the  right  to  collective  bargaining.  In  addition,  South  Korea 
committed to make “continued and sustained efforts” towards the ratification of outstanding 
ILO conventions61.  
In the absence of progress, on 17 December 2018 the EU decided to  request consultations62 
with South Korea under the bilateral dispute settlement regime. Due to the lack of sufficient 
efforts  towards  the  ratification  of  the  concerned  ILO  convention,  the  EU  requested  the 
establishment of a Panel63 on 2 July 2019. 

10.2  Dispute settlement with Ukraine 

In January 2019, the EU decided to  request  consultations with Ukraine on Ukrainian export 
restrictions  on  wood  under  the  bilateral  dispute  settlement  regime  provided  by  the  EU-
Ukraine  Association  Agreement.  The  export  restriction  initially  covered  timber  and  sawn 
wood  of  ten  species  and  since  2015  has  been  extended  to  all  unprocessed  wood  (including 
pine wood since 2017.) 

The  EU  had  raised  the  issue  with  Ukraine  on  many  occasions,  as  the  export  restriction  is 
incompatible with the Association Agreement. Consultations were held in February 2019 but 

60   http://trade.ec.europa.eu/doclib/docs/2019/april/tradoc_157821.pdf  

61   Convention 87 on freedom of association; Convention 98 on the right to organise and collective bargaining; 

Convention 29 on forced labour; and Convention 105 on abolition of forced labour. 

62   http://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157586.pdf  

63   http://trade.ec.europa.eu/doclib/docs/2019/july/tradoc_157992.pdf  

37 

 
 
                                                 
they  failed  to  resolve  the  issue.  In  June  2019  the  EU  therefore  decided  to  request  the 
establishment of an arbitration panel64 to examine and rule on the matter.  

10.3  Dispute settlement with the Southern African Customs Union 
On 14 June 2019, the EU requested consultations65 with the Southern African Customs Union 
(SACU)  under  the  Dispute  Avoidance  and  Settlement  Part  of  the  EU-SADC  Economic 
Partnership  Agreement  (EU-SADC  EPA).  The  request  concerned  the  safeguard  measure 
imposed on frozen bone-in chicken cuts exported from the EU. The EU considers that SACU 
imposed the measure in violation of the principles and rules of the EU-SADC EPA. 

The EU had repeatedly raised its concerns with SACU at various levels and occasions. As the 
EU’s  concerns  have  not  been  satisfactorily  addressed,  the  EU  decided  to  step  up  the 
engagement with SACU by requesting consultations, which must be held within 40 days from 
the notification of the request.  

11. 

CONCLUSIONS 

In  2018,  while  global  trade  growth  slowed  down  and  protectionism  was  on  the  rise,  EU 
preferential  trade  agreements  continued  to  have  trade-facilitating  effects.  Beyond  total  or 
partial tariff eliminations, the agreements continue to contribute to developing a rules-based 
trading system and they improved market access for EU products and investments in partner 
countries. They also contribute to economic diversification and growth in developing partner 
countries. Other positive effects of EU trade agreements included increased legal certainty in 
areas such as trade in services and public procurement, as well as a better protection of key 
EU interests, such as intellectual property rights, including geographical indications. 

In  addition,  the  new  generation  of  preferential  trade  agreements  are  also  an  important 
instrument  for  promoting  European  values  related  to  workers’  rights  and  environmental 
protection, including climate change.  

At the same time, many trade barriers which stand in the way of using the opportunities of EU 
trade agreements were still in place and 2018 saw the emergence of new barriers. The EU will 
continue to take the steps necessary to remove these barriers, including the use of bilateral or 
multilateral enforcement tools, as appropriate.  

In  its  effort  to  improve  transparency  and  accountability,  the  Commission  will  continue  to 
report  annually  on  the  implementation  of  EU  preferential  trade  agreements  with  non-EU 
countries.  

64   http://trade.ec.europa.eu/doclib/press/index.cfm?id=2034  

65   http://trade.ec.europa.eu/doclib/press/index.cfm?id=2031  

38 

 
 
 
 
                                                 
ANNEXE 1: PREFERENCE UTILISATION RATES ON EU IMPORTS  

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

2015 

2016 

2017 

2018 

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

83% 
91% 
87% 

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

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

95% 
52% 

71% 
86% 

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

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

80% 
88% 
89% 

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

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

95% 
58% 

66% 
83% 

92% 
83% 
97% 
98% 
98% 
97% 
99% 

97% 
96% 
97% 
90% 
93% 
92% 
93% 
82% 
96% 
88% 
28.7% 

98% 
96% 
99% 
91% 
97% 
91% 
88% 
82% 
96% 
88% 
49.6% 

76% 
85% 
80% 

96% 
96% 
90% 
76% 
74% 
98% 
65% 
93% 

84% 
94% 
92% 
92% 
73% 
91% 

94% 
74% 

69% 
85% 

86% 
88% 
96% 
98% 
99% 
98% 

77% 
85% 
87% 

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

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

96% 
70% 

69% 
85% 

91% 
82% 
96% 
98% 
96% 
99% 
81% 

Source: Eurostat 

39 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEXE 2: PREFERENCE UTILISATION RATES ON EU EXPORTS

66

Importing country 
'New generation' Free Trade Agreements 
Colombia 
Peru 
Costa Rica 
El Salvador  
Guatemala 
Honduras 
Ecuador 
South Korea 
Canada 
DCFTAs 
Georgia 
Ukraine 

'First generation' Free Trade Agreements 
Mediterranean Partners 
Turkey 
Egypt 
Israel 
Lebanon 
Morocco 
Jordan 

Western Balkans 
Albania 
Bosnia-Herzegovina 
North Macedonia 
Kosovo 
Montenegro 
Serbia 
Latin American Partners 
Chile 
Mexico 

EFTA States 
Switzerland 

EPAs 
Dominican Republic 
Mauritius 
South Africa 

Sources: Partner countries 

2015 

2016 

2017 

2018 

63% 
28% 
n/a 
21% 
21% 
40% 
n/a 
68% 
n/a 

72% 
n/a 

n/a 
36% 
n/a 
74% 
n/a 
n/a 

77% 
91% 
n/a 
n/a 
86% 
89% 

77% 
76% 

71% 
47% 
38% 
26% 
32% 
56% 
n/a 
71% 
n/a 

81% 
n/a 

95% 
66% 
89% 
74% 
76% 
78% 

80% 
88% 
90% 
44% 
85% 
91% 

87% 
76% 

70% 
52% 
n/a 
27% 
31% 
55% 
57% 
74% 
n/a 

83% 
70% 

94% 
64% 
86% 
58% 
77% 
72% 

78% 
88% 
89% 
60% 
86% 
91% 

88% 
75% 

72% 
56% 
59% 
33% 
33% 
55% 
68% 
81% 
37% 

83% 
74% 

90% 
67% 
n/a 
n/a 
77% 
76% 

80% 
86% 
n/a 
66% 
86% 
90% 

85% 
70% 

79% 

79% 

78% 

77% 

46% 
n/a 
60% 

49% 
n/a 
63% 

62% 
n/a 
60% 

58% 
28% 
64% 

66   There  are  differences  between  some  of  the  data  reported  in  this  report  and  the  two  previous  editions  in 
regard  to  the  preference  utilisation  rates  on  EU  exports  to  certain  trading  partner  countries  for  the  years 
2015, 2016 and 2017. Where this is the case, the Commission has received updated data from the partner 
country in question and adjusted the figure.  

40