REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on the Implementation of EU Trade Agreements 1 January 2019 - 31 December 2019
Date: 2020-11-12
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: agricultural trade, goods and services, international commercial arbitration, public procurement, sustainable development, third country, trade agreement, trade agreement (EU), trade dispute, trade policy

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 12.11.2020  COM(2020) 705 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on the Implementation of EU Trade Agreements    1 January 2019 - 31 December 2019 {SWD(2020) 263 final}  
 
 
TABLE OF CONTENTS 

1. INTRODUCTION ......................................................................................................................................... 4 

2. OVERVIEW OF MAIN FINDINGS: TRADE FLOWS ....................................................................................... 6 

3. OVERVIEW OF MAIN FINDINGS PER REGION .......................................................................................... 10 

3.1 ASIA ................................................................................................................................................... 10 

3.1.1 South Korea ................................................................................................................................ 10 

3.1.2 Japan .......................................................................................................................................... 11 

3.1.3 Singapore (preparations for entry into force) ........................................................................... 13 

3.2  THE AMERICAS ................................................................................................................................. 13 

3.2.1 Canada ....................................................................................................................................... 13 

3. 2.2 Latin American partner countries ............................................................................................. 16 

3.3 EU NEIGHBOURING COUNTRIES ....................................................................................................... 19 

3.3.1 Mediterranean and Middle Eastern partners ............................................................................ 19 

3.3.2  Georgia, Moldova, Ukraine ....................................................................................................... 21 

3.3.3 Western Balkans ........................................................................................................................ 23 

Switzerland .......................................................................................................................................... 23 

3.3.5 Norway ....................................................................................................................................... 25 

3.3.6 Turkey ........................................................................................................................................ 25 

3.4  

AFRICA, CARIBBEAN AND PACIFIC COUNTRIES ........................................................................... 26 

4. TRADE AND SUSTAINABLE DEVELOPMENT ............................................................................................. 28 

5. AGRI-FOOD TRADE UNDER EU TRADE AGREEMENTS ............................................................................. 31 

6.  SERVICES, PUBLIC PROCUREMENT, INTELLECTUAL PROPERTY RIGHTS ................................................. 36 

6. 1 Services and Foreign Direct Investment (FDI) .................................................................................. 36 

6.2 Public Procurement........................................................................................................................... 40 

6.3 Intellectual Property Rights (IPR) ...................................................................................................... 43 

7. SMALL AND MEDIUM-SIZED ENTERPRISES ............................................................................................. 44 

8. LEGAL ENFORCEMENT ............................................................................................................................ 47 

8.1  

Trade and Sustainable Development dispute settlement with South Korea ............................. 47 

8.2 

8.3 

Dispute settlement with Ukraine ................................................................................................ 48 

Dispute settlement with the Southern African Customs Union (SACU) ..................................... 48 

9.  CONCLUSIONS ........................................................................................................................................ 49 

1 

 
 
 
TRADE AGREEMENTS COVERED BY THIS REPORT 

(Agreement/date of application)1 

ASIA 

Economic 

EU-Japan 
Agreement 
EU-South Korea Free Trade Agreement 

Partnership 

1 February 2019 

1 July 2011 

THE AMERICAS 

EU-Canada Comprehensive Economic and 
Trade Agreement  
EU-Colombia-Peru-Ecuador 
Agreement 
EU-Central 
Agreement  

Association 

America 

Trade 

EU-Chile Association Agreement 
EU-Mexico Global Agreement 

21 September 2017 

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. 
1 February 2003 
Applied  for  goods  since  1  July  2000; 
applied for services since 1 March 2001. 

EU NEIGHBOURING COUNTRIES 
Mediterranean and Middle East countries - Free Trade Areas 

EU-Algeria  
EU-Egypt  
EU-Lebanon  
EU-Jordan  
EU-Morocco  
EU-Tunisia  
EU-Palestine2  
EU-Israel  

1 September 2005 
21 December 2003 
1 March 2003 
1 May 2002 
18 March 2000 
1 March 1998 
1 July 1997 
1 January 1996 

Eastern countries – Deep and Comprehensive Free Trade Areas 

EU-Ukraine  

EU-Georgia  

EU-Moldova 

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

1 For sake of consistency this report uses the short names for EU trading partners as listed in the inter-institutional 
guide, available at https://publications.europa.eu/code/en/en-5000500.htm 
2  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 

 
 
 
 
 
 
 
                                                           
TRADE AGREEMENTS COVERED BY THIS REPORT 

(Agreement /date of application) 

Western Balkans – Stabilisation and Association Agreements 

EU-Kosovo*3  
EU-Serbia  

EU-Bosnia and Herzegovina  
EU-Montenegro 

EU-Albania  

EU-North Macedonia 

1 April 2016 
Interim  Agreement  on  trade  for  Serbia:  1 
February  2009;  for  the  EU:  8  December 
2009 
Interim Agreement on trade 1 July 2008  
Interim  Agreement  on  trade1  January 
2008 
Interim  Agreement  on  trade  1  December 
2006 
Interim Agreement on trade 1 June 2001 

Switzerland, Norway, Turkey 

EU-Switzerland Free Trade Agreement 
EU-Norway Free Trade Agreement 
EU-Turkey Customs Union  

1972 
1 July 1973 
Association  Agreement  signed  in  1963; 
final  phase  of 
the  customs  union 
completed on 1 January 1996. 

AFRICA, CARIBBEAN AND PACIFIC – Economic Partnership Agreements  

EU-Ghana (interim) 
EU-Southern 
Community (SADC)  

African 

Development 

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

EU-CARIFORUM 

15 December 2016 
10  October  2016  for  Botswana,  Eswatini, 
Lesotho,  Namibia  and  South  Africa;  4 
February 2018 for Mozambique. 
3 September 2016 
4 August 2014 for Cameroon 
14  May  2012  for  Madagascar,  Mauritius, 
Seychelles and Zimbabwe4 
20  December  2009  for  Papua  New 
Guinea; 28 July 2014 for Fiji.5 
for  Antigua  & 
29  December  2008 
Barbuda;  Belize;  Bahamas;  Barbados; 
Dominica; Dominican Republic; Grenada; 
Guyana; Jamaica; St. Kitts & Nevis; Saint 
Lucia;  St.  Vincent  &  the  Grenadines; 
Suriname; and Trinidad & Tobago. 

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 

 
 
 
 
 
 
                                                           
1. INTRODUCTION 

European trade policy made good progress in 2019. The EU advanced its bilateral trade agenda 
by  ratifying  its  trade  agreements  with  Singapore  and  Vietnam,  which  entered  into  force  in 
November  2019  and  August  2020,  respectively.  In  2019,  the  EU  applied  44  trade  agreements 
with 76 partners6; trade with these partners amounted to €1.345 billion, representing 33% of EU 
external trade (34% of total exports and 33% of total imports).  

At the same time, looking at 2020, the coronavirus pandemic can be expected to have a severe 
dampening effect on trade between the EU and its trading partners, including preferential ones. 
The European Commission  estimates that EU exports to  third countries  could  fall between 9% 
and 15% and 11% and 14% for imports (goods and services combined). The EU’s large network 
of  trade  agreements  can  contribute  to  counter  and  mitigate  these  negative  effects,  to  build 
resilience and diversify supply chains. The European Commission is strengthening its efforts to 
further improve implementation and enforcement of these agreements, ensuring all companies, in 
particular smaller ones, can benefit. The first Chief Trade Enforcement Officer, nominated by 
the  College  on  24  July7,  will  provide  direction  to  these  efforts,  in  close  collaboration  with  all 
stakeholders concerned, as well as Member States and the EU institutions. 

This  report  provides  an  update  of  36  of  the  EU’s  major  trade  agreements  with  65  trading 
partners8.  The  agreements  cover  91%  of  EU  trade  with  preferential  partners  and  account  for 
30.4% of EU total external trade.  

6  Alphabetical  list  of  agreements  available  on  DG  TRADE’s  website:  https://ec.europa.eu/trade/policy/countries-
and-regions/negotiations-and-agreements/  
7 https://ec.europa.eu/commission/presscorner/detail/en/IP_20_1409 
8 The EU-Singapore Free Trade Agreement only entered into force on 21 November 2019.   

4 

 
 
 
                                                           
The  report  highlights  the  implementation  of  EU  agreements  in  Asia,  the  Americas,  the  EU’s 
neighbouring  countries  (Eastern  and  Southern  Neighbourhood  countries  and  Western  Balkans) 
and  African,  Caribbean  and  Pacific  countries.  In  addition  to  sections  on  trade  and  sustainable 
development, agri-food trade and small and medium-sized businesses, this year’s report includes 
a  separate  section  on  services,  investment,  public  procurement  and  intellectual  property  rights. 
The  accompanying  Staff  Working  Document9  consists  of  36  country  information  sheets10.  It 
looks at how effectively agreements are being implemented, provides statistics and has an update 
on  the  implementation  of  the  European  Commission’s  15-point  action  plan  on  trade  and 
sustainable development11. 

Statistics for trade in goods 

General  statistics  on  trade  in  goods  and  services  and  on  foreign  direct  investment  for  each 
partner country can be found in the staff working document. Statistics on the evolution of trade 
and  investment  flows  are  based  on  Eurostat  data  for  the  EU27  in  March  2020,  except  where 
indicated otherwise. The most recent annual data for trade in goods are for 2019, except where 
indicated otherwise.  

The European Commission/DG TRADE will publish statistics on preference utilisation on EU 
exports  and  EU  imports  for  each  trading  partner  for  the  EU  and  each  Member  State  on  its 
website  on  the  day  this  report  is  adopted,  together  with  an  explanation  of  the  sources  and 
methodology.  

NB.  Figures  for  preference  use  on  EU  imports  and  EU  exports  are  based  on  different  datasets 
from  distinct  sources.  Preference  utilisation  rates  on  imports  use  Eurostat  figures  and  are 
harmonised.  Preference  utilisation  rates  on  EU  exports  use  data  submitted  by  EU  trading 
partners’ customs authorities, which apply different methods and practices: the data are therefore 
not harmonised and not comparable.  

Statistics for trade in servcies 

The  main  sources  for  trade  in  services  data  are  balance  of  payments  statistics  (BoP)  and 
Eurostat’s  database  on  activities  of  multinationals  (FATS).  The  first  covers  Mode  1  (cross-
border), 2 (consumption abroad) and 4 (supply by natural persons in the other country), while the 
second  covers  Mode  3  (establishment).  The  most  recent  annual  data  available  for  trade  in 
services are for 2018, except where indicated otherwise. 

NB. BoP data have a limited breakdown of trade flows by sector and there is no breakdown of 
flows  of  trade  in  services  by  modes  of  supply.  FATS  data  give  a  detailed  break-down,  but  to 
obtain the actual value of Mode 3 services (or goods) trade the figures need to be corrected for 

9  https://trade.ec.europa.eu/doclib/docs/2020/september/tradoc_158926.pdf 
10 The Free Trade Agreement between the EU and Singapore only entered into force on 21 November so this report 
and its staff working document only give an overview of preparatory work. A full report will be in the 2021 edition. 
11 The 15 points action plan is available at https://trade.ec.europa.eu/doclib/docs/2018/february/tradoc_156618.pdf 

5 

 
 
 
 
 
                                                           
re-exports (e.g FATS  provides the turnover of EU multinationals  in  US, to  obtain the value of 
local sales, Mode 3 exports, the data need to exclude the exports of the EU companies located in 
the US.).  

Statistics for Foreign Direct Investment (FDI) 

For  data  on  FDI  flows  and  stocks,  the  main  sources  are  Eurostat  and  UNCTAD.    The  most 
recent annual data available for trade in services are for 2018, except where indicated otherwise.  

2. OVERVIEW OF MAIN FINDINGS: TRADE FLOWS 

This  section  covers  development  of  trade  between  the  EU  and  65  major  preferential  trading 
partners in 2019, representing 29% of total EU imports and 32 % of total EU exports, resulting in 
an EU trade surplus of €113 billion, a 12% increase on the previous year.  

Switzerland  remained  the  EU’s  largest  preferential  partner,  accounting  for  21%  of  trade, 
followed by Turkey with 11%, Japan with 10% and Norway with 8.5%.  Together, these partners 
accounted for half of EU preferential trade.  

6 

469,3467,4516,2547,7561,9593,1596,6635,9648,3674,9123,8129,2119,8100,5113,020152016201720182019Figure 2: EU trade under agreements, 2015-2019, in billion EURImportsExportsBalance 
 
 
 
 
 
In 2019, EU trade in goods with the 65 partners grew by 3.4%. This is more than EU trade with 
the rest of the world (i.e. all the EU trading partners, +2.5%) and more than the EU’s trade with 
its non-preferential partners taken separately (rest of the world minus the 65 preferential partners, 
+2.1%.  Growth in preferential exports (+4.1%) and preferential imports (+2.6%) of goods grew 
more strongly than exports and imports with the rest of the world, 3.5% and 1.4% respectively.  

Trends in exports of goods  

In  2019,  92%  of  all  EU  exports  to  preferential  partners  were  industrial products.  Machinery, 
chemicals and transport equipment remained the EU’s top exports and saw growth rates of 1.5%, 
6.3%  and  5.7%  respectively.  Machinery  and  appliances  remained  the  single  most  important 
category, accounting for roughly 25% of exports under preferential agreements. Machinery and 
mechanical  appliances  and  motor  vehicles  remained  the  most  important  in  terms  of  value, 
accounting  for  around  30%  of  total  exports  of  non-agricultural  products  to  the  65  preferential 
partners. Electrical  machinery  and  equipment,  and pharmaceutical  products  each  accounted for 

7 

Switzerland20,8%Turkey11,2%Japan10,0%Norway8,5%South Korea7,3%Mexico5,0%Canada4,8%Other preferential partners32,4%Figure 3: EU trade in goods by preferential partner (2019)1,4%2,6%1,0%3,5%4,1%3,2%2,5%3,4%2,1%All partnersFTA partnersNon-FTA partnersFigure 4: Annual trade growth by partner (2018-2019)ImportsExportsTotal trade 
 
 
 
 
roughly  9%.  The  largest  annual  increases  in  exports  were  for  aircraft  (+50%),  leather  (+43%) 
and pearls and precious stones (+35%). 

EU exports in agri-food products grew by 8.7% in 2019.  Beverages were top in terms of value, 
accounting for 15% of preferential agri-food exports (+8.6%). Cereals, dairy products and meat 
accounted for roughly 8% each and grew by 39%, 13.2% and 0.7%, respectively.   

This report cannot examine preference use for EU exports due to the late availability of data 
and  the  number  of  agreements  covered.  The  European  Commission  uses  ex-post  evaluation 
studies12 or implementation studies to look at preference use and will intensify its efforts in this 
area. The European Commission is collecting data on preference use from its partner countries.  
It will publish it on its website to enhance transparency and encourage business associations and 
Member States to conduct their own reseach. The European Commission continues working with 
trading  partners  to  get  reliable  data  on  preferential  exports  and  continues  its  dialogue  with 
Member States, business associations and sectors to better understand why tariff preferences are 
not used to the full. 

Trends in imports of goods 

91% of all imports from the 65 preferential partners are industrial products; these increased by 
2% in 2019.  The top three categories were machinery and appliances (+3%), chemicals (+16%) 
and mineral products (- 7%). Agri-food imports rose by 8.3%.  The top imports were edible fruits 
and nuts (+3.9%), cocoa preparations (+6.5%), coffee and tea (- 0.2%) and cereals (+22.9%).13 

Industrial goods and agri-food 

Trade in industrial products with the 65 partners saw 3% growth, while agri-food trade grew at 
8.5%.  EU  trade  in  industrial  products  had  a  surplus  of  €106.6  billion,  a  rise  of  €11.8  billion 
compared  to  2018.  EU-agri-food  trade  had  a  surplus  of  €6.4  billion,  a  rise  of  €651  million 
compared to 2018. 

12 See for example ex-post evaluation of the EU-South Korea FTA (final report, section 10.7); Ex-post evaluation of 
the  Association  Agreements  with  6  Mediterranean  countries  (interim  report,  pp.  16,  106,  198-200);  Ex-post 
evaluation of the EU-Cariforum EPA (draft interim report, section 4.5)  
13 For more information on developments in agri-food trade see section 6. 

8 

 
 
 
 
 
 
 
                                                           
Trends in trade in services  

For trade in services the latest figures are those for 2018. Trade in services with the 65 partners 
covered  by  this  report  grew  by  1.7%  in  2018,  slower  than  total  EU  trade  in  services  (+2.3%), 
while producing a trade surplus of €80 billion, an increase of 11.5% compared to 2017. Many of 
the  agreements  concluded  before  the  2007  Global  Europe  Communication14  do  not  contain 
ambitious disciplines on services – for example, the EU’s trade agreement with its second most 
important  trading partner for services, Switzerland. Trade in  services with  preferential  partners 
covered  by  this  report  that  took  commitments  in  services15  grew  by  3.3%  in  2018,  thus  more 
strongly than EU total trade in services. Trade in services grew noticeably more with preferential 
partners of more recent trade agreements (+7.6%) than with earlier partners (+0.8%).  

14  https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2006:0567:FIN:en:PDF  
15 Norway, Ukraine, Moldova, Georgia, Chile, Central America, the Andean countries, Mexico, Canada, Cariforum, 
South Korea and Japan.  

9 

2,6%8,3%2,1%-7,1%15,7%3,1%8,4%4,1%8,7%3,7%-3,1%6,3%1,5%5,7%3,4%8,5%3,0%-5,8%10,0%2,1%6,8%All sectorsAgrifoodIndustrialMineral productsChemicalsMachinery and appliancesTransport equipmentFigure 5: Annual trade growth of main sectors with EU preferential partners (2018-2019)ImportsExportsTotal trade 
 
 
 
 
                                                           
3. OVERVIEW OF MAIN FINDINGS PER REGION 

3.1 ASIA 

In 2019, the EU applied preferential trade agreements with three Asian economies: South Korea, 
Japan  and  Singapore.16  These  agreements  help  EU  companies  stay  competitive  in  view  of 
recently  concluded  trade  agreements  among  third  countries  such  as  the  Comprehensive  and 
Progressive Agreement  for Trans-Pacific Partnership17  to  which both  Japan and Singapore  are 
parties. They also contribute to strengthening international standards, which are the backbone of 
the  non-tariff  related  commitments  in  the  three  agreements.  In  particular,  the  most  recent 
agreements with Singapore, a member of the Association of South East Asian Nations (ASEAN) 
and  with  Japan  represent  important  pivots  to  the  entire  region,  from  which  EU  business  can 
expand  operations  into  neighbouring  countries.  The  Free  Trade  Agreement  (FTA)  between  the 
EU and South Korea has been applied for eight years and, according to its ex-post evaluation18 
published in March 2019, resulted in gains for both the EU economy (+€4.4 billion) and for the 
South Korean economy (+€4.9 billion) despite a difficult post-financial crisis period, dampening 
demand and international trade.  

3.1.1 South Korea  

In  2019,  economic  growth  in  South  Korea  remained  subdued  as  the  global  slowdown  and 
trade tensions held back exports, while high uncertainly weighed on investment. The decrease in 
EU  industrial  exports  to  South  Korea  by  1.3%  could  be  explained  to  some  extent  by  weak 
domestic  demand  due  to  the  downturn  in  the  semi-conductors  cycle  and  the  US-China  trade 
dispute, among others. Trade in services continued to expand by 3.6% in 2018 when compared 
to 2017, more strongly than the EU’s trade with the rest of the world. The EU-South Korea FTA 

16 The EU agreement with Singapore entered into force on 21 November 2019.  
17 https://www.mti.gov.sg/Improving-Trade/Free-Trade-Agreements/CPTPP  
18 https://trade.ec.europa.eu/doclib/docs/2019/march/tradoc_157716.pdf 

10 

-0,1%-0,2%1,0%8,1%7,1%-19,9%4,3%3,0%0,8%7,3%7,9%9,6%2,3%1,7%0,8%7,6%7,6%-9,2%All partnersFTA partnersFTAs 1st generationFTAs 2nd generationDCFTAsEPAsFigure 6: Annual services trade growth rate under EU FTAs (2017-2018)ImportsExportsTotal trade 
 
 
                                                           
has also stimulated growth in FDI between the two partners. Latest available data shows that in 
2018  the  stock  of  EU  FDI  in  South  Korea  rose  by  4%  to  reach  €46  billion  while  the  stock  of 
South Korean FDI in the EU grew by 1% to €25 billion.   

Progress in implementation in 2019   

- South Korea allowed beef exports from Denmark and the Netherlands;  

 -  The  EU-South  Korea  GIs  Working  Group  has  eased  the  way  towards  extension  of  the 
geographical indications’ (GI) list protected by the agreement. 

Outstanding issues  

- 10 Member States are still waiting to export beef to South Korea; South Korea does not accept 
the principle of regionalisation for animal diseases, which is relevant for creating predictable and 
stable trade conditions for meat and poultry products.   

- South  Korea still needs to  establish an effective remuneration system  for public performance 
rights. 

-  The  EU  pursued  its  case  against  South  Korea  under  the  Trade  and  Sustainable  Development 
chapter  of  the  agreement,  because  of  Korea’s  non-compliance  with  its  commitments  to  ratify 
core  ILO  conventions  and  protect  labour  rights.  In  July,  the  EU  requested  a  panel  of  experts, 
which was established in December.19   

3.1.2 Japan  

2019  was  the  first  full  calendar  year  the  EU-Japan  Economic  Partnership  Agreement  was 
applied.20 Japan is the EU’s seventh largest trading partner, accounting for 3% of its external 
trade.  

In  2019,  trade  in  goods  between  the  parties  grew  by  5.8%.  Traditional  EU  exports  to  Japan, 
such  as  pharmaceuticals,  transport  equipment  and  machinery  benefitted  from  steady  growth. 
Product categories benefitting from tariff cuts saw higher growth, including textiles, clothing and 
footwear, which grew on average by about 10%.  

Japan was the 2nd largest destination among preferential partners covered by this report for EU 
agri-food  exports,  which  grew  by  16%  in  2019.  The  agreement  is  thus  starting  to  realise  its 
huge potential for increasing EU exports of many products, such as pork, beef, cheese, processed 
agricultural products and wine. One noticeable achievement is Japan’s step-by-step approval and 
recognition of EU oenological practices.  

19 For more information on the pending dispute, see section 8, “Legal Enforcement”. 

20  A  Summary  of  the  main  achievements  on  the  first  anniversary  of  the  agreement  is  available  at: 
https://trade.ec.europa.eu/doclib/press/index.cfm?id=2107    

11 

 
 
 
 
 
 
 
                                                           
 
German fruit wines a winner in the land of the rising sun 

German  fruit  wine  producer  Katlenburger  Winery,  a  company  with  90  employees  founded  in 
1925,  welcomes  the  EU-Japan  trade  agreement. It  has  removed  the  tariff  on  Katlenberger's 
products,  which  used  to  be  33  eurocents  per  litre,  helping  the  company  to  compete  in  an 
increasingly price-sensitive market. 

"Small  businesses  in  particular  depend  on  exports  because  the  domestic  market  is 
becoming more challenging and dominated by larger firms with big advertising budgets." 

Klaus Demuth, CEO, Katlenburger Kellerei GmbH & co. KG 

In  2019,  more  than  half  of  all  EU  goods  eligible  for  tariff  preferences  under  the  EU-Japan 
Economic Partnership Agreement actually benefitted from tariff preferences (53%). Most EU 
agricultural exports enjoyed the tariff preferences (86% on average), with particularly high rates 
for meats (99%) and wine (93%). The rates for industrial goods, due to complex supply chains 
and relatively smaller preference margins,  were significantly lower for both Japan and the EU, 
i.e. in the order of 35%, on average. By way of example, EU exports of chemicals and textiles 
could have saved an additional €115 million and €92 million, respectively. Preference utilisation 
typically grows over the years as businesses often need some time to adjust to the new trading 
conditions  –  for  example  by  reviewing  supply  chains  and  internal  accounting  mechanisms.  To 
raise awareness, the European Commission also intensified cooperation with Member States and 

12 

8,7%9,6%11,3%13,5%40,0%Food preparations andbeverages(16% of agrifood exports)Cheese(7% of agrifood exports)Pork meat(20% of agrifood exports)Wine(14% of agrifood exports)Non-edible (20% of agrifood exports)Figure 7: Annual growth of EU27 main agrifood exports to Japan (2018-2019) 
 
 
 
 
 
 
 
 
 
business, and engaged in joint undertakings with Japan, notably information actions by the EU-
Japan Centre for Industrial Cooperation.21  

Progress in implementation in 2019  

-  Japan  agreed  to  apply  a  simplified  customs  procedure  for  claiming  and  obtaining  tariff 
preferences, addressing initial difficulties experienced by businesses.22  

-  Japan  improved  the  quota  management  procedures  for  importing  certain  agricultural 
commodities and processed agricultural products to make it easier to use quotas.  

-  Japan  took  concrete  steps  for  preparing  to  implement  the  trade  and  sustainable 
development  provisions,  including  establishing  a  domestic  advisory  group.  Japan  still  has  to 
ratify two fundamental ILO conventions on non-discrimination and on forced labour.  

3.1.3 Singapore (preparations for entry into force) 

The EU-Singapore Free Trade Agreement has been in  force since 21  November 2019.   It is 
expected  to  benefit  EU  exports  and  investors,  including  the  more  than  10,000  EU  companies 
established  in  Singapore.  Singapore  is  the  EU’s  largest  trading  partner  in  Southeast  Asia, 
accounting  for  one-third  of  EU  trade  with  the  region  and  over  two-thirds  of  EU  foreign  direct 
investment stock in the region.  

In 2019, the European Commission stepped up preparations for the entry into force of the 
agreement  through  communication  to  stakeholders  on  both  sides  and  already  enhancing  its 
monitoring role towards the Singaporean authorities in the pre-implementation phase. Among the 
early  achievements  was  the  registration  and  protection  in  Singapore  of  the  names  of  138  EU 
Geographical Indications under Singaporean law. 

3.2  THE AMERICAS 

3.2.1 Canada  

The  EU-Canada  Comprehensive  Economic  and  Trade  Agreement  (CETA)  has  been 
provisionally applied since 21 September 2017, with the exception of a few provisions, notably 
those relating to the investment court system. In 2019, an important step forward was made on 
the future implementation of the Investment Court System (ICS)23:  in October, the European 

21 https://www.eu-japan.eu/ 
22  Actions 
customs 
https://trade.ec.europa.eu/doclib/docs/2019/july/tradoc_157973.pdf  
23 The ICS provisions are not provisionally applied and they will only enter into force when all EU Member States 
have ratified CETA  

implemented 

authorities 

consulted 

here: 

can 

the 

by 

be 

be 

to 

13 

 
 
 
 
 
                                                           
Commission adopted four proposals24 that will help to ensure the ethics and integrity standards 
of the ajudicators and the system’s effective appeal function. This will be the first such appeal 
function to become operational in international investment agreements.  

During  CETA’s  second  year  of  provisional  application  the  European  Commission  made 
further progress in effectively implementing the agreement, building on the 20 Committees 
and  Dialogues  set  up  in  2018.  The  European  Commission  raised  some  trade  irritants,  mainly 
concerning agricultural exports. In parallel, the European Commission continued to intensify and 
enrich its cooperation agenda with Canada on issues of common interest (such as SMEs, gender 
and climate change) at a bilateral and at a multilateral level.  

Progress in implementation in 2019 

- Cheese tariff rate quotas: work continued with Canada to review the CETA Tariff Rate Quota 
(TRQ), so as to improve its functioning. Canada is now the EU’s fourth largest market for cheese 
exports by value. 
- Discriminatory practices in  the wines and spirits  sector25:  these were discussed in  the Wines 
and  Spirits  Committee.  Some  progress  was  achieved  as  British  Columbia  removed  the 
regulations  which  only  allowed  British  Columbian  wine  to  be  sold  in  grocery  stores.  Barriers 
remain however in other provinces. 

-  Cost  of  Services  Charges:  as  a  result  of  audits  carried  out  in  Ontario  and  in  Quebec  at  the 
request of the EU side, the Cost of Service charges applied on EU wines and spirits products in 
these  provinces  should  decrease.  These  charges  relate  to  the  cost  differences  incurred  by 
provinces in handling imported and domestic products. 

EU-Canada cooperation in areas of common interests 

- Climate change:  following a conference in January to discuss how best to use CETA to meet 
the EU’s and Canada’s commitments under the Paris Agreement, a workshop took place for EU 
and Canadian clean tech companies in November, bringing together SMEs active in sectors such 
as solar, waste, energy efficiency, and carbon capture and storage.  

-Regulatory  Cooperation:  the  EU  and  Canada  began  exchanging  information  on  consumer 
products safety alerts and Canada’s revised regulatory framework for transporting live animals, 
which  entered  into  force  in  February  2020.  Canada  agreed  to  stop  double  testing  for  EU 
sunscreens imported to Canada.  

24 The proposals concern 1) the rules for the Appellate Tribunal, (2) the code of conduct for Members of Tribunals, 
(3) the rules for mediation and (4) the procedure to adopt binding interpretations. 
25 The tax on imported spirits was challenged in the World Trade Organization by Australia with the EU as a third 
party. 

14 

 
 
 
 
 
                                                           
French pepper spices up Canadian cuisine 

Maritxu and Eric Amestoy have been  growing chili  peppers on their small farm in  the Basque 
Country for 10 years and have been exporting their ‘piment d’Espelette’ to Canada since 2016.  
They have diversified their production to include vegetables and eggs. The farm does not use any 
chemical products. 

CETA  cut  tariffs,  simplified  administrative  procedures  and  reinforced  the  protection  of  the 
Geographical  Indication  (GI)  for  ‘piment  d’Espelette’.  As  a  result,  demand  has  grown  and 
Amestoy’s production grew from 30 to 200 kg. 

Bilateral trade – trends in 2019  

Faciliated by CETA, bilateral trade in goods and services continued to grow,  reaching €92 
billion,  a  24.5% increase  compared  to  pre-CETA  trade,  which  averaged  €73.9  billion  in  2015-
2017.  Among  industrial  goods,  machinery  and  pharmaceuticals  recorded  the  highest  growth  in 
EU exports compared to 2018, up 15% and 18%, respectively.  

The preference utilisation rate on EU goods’ exports to Canada for EU27 rose from 38% in 
2018 to 48%.  The overall preference utilisation rate or PUR continues to be affected by the low 
preference  utilisation  on  EU  exports  of  cars  and  car  parts  (26%),  constituting  39%  of  EU27 
eligible  exports  to  Canada.  The  European  Commission  proactively  engaged  with  sectoral 
industry  associations,  interested  companies  and  experts  to  better  understand  the  reasons.  
Industry, especially the auto industry, explained that the agreement remained relatively new and 
companies needed more time to put in place the processes and IT systems to get the necessary 
data  from  suppliers.  The  auto  industry  also  confimed  that  it  intended  to  claim  the  tariff 
preferences  retroactively,  as  CETA  allowed  this  for  up  to  three  years.  Overall,  industry 
highlighted the need to further strengthen outreach towards EU companies on CETA’s benefits 

15 

8,8%6,0%9,1%11,9%12,3%All productsAgrifoodNon-agrifoodChemicalsMachinery and appliancesFigure 8: Annual growth of EU27 exports to Canada (2018-2019) 
 
 
 
 
 
and how to use them. To make it easier to use preferences, in 2019 the European Commission 
continued  to  provide  specialised  guidance,  publishing  a  guide  on  Rules  of  Origin  in  CETA  in 
September 201926 and a fact sheet on textiles and clothing, available in multiple EU languages27.  

3.2.2 Latin American partner countries  

The EU has  four trade  agreements with  11 countries in Latin America:  Mexico, Chile, the 
Andean partners Colombia, Ecuador and Peru, and the 6 Central American partners (Costa Rica, 
El Salvador, Guatemala, Honduras, Nicaragua and Panama). Once the Mercosur agreement is in 
place,  the  EU  will  have  preferential  trade  relationships  with  virtually  all  Latin  American 
countries,  except  for  Bolivia  and  Venezuela  –  more  than  any  other  region,  and  on  a  par  with 
EFTA.  The  agreement  with  Mexico  for  example  dates  back  to  the  early  2000s  and  was 
modernised so as to increase trade, promote SME participation and bring in new disciplines such 
as  on  services  (digital,  maritime,  financial,  etc.),  energy  or  investment  that  will  increase 
opportunities for EU businesses and benefit consumers, while trade and sustainable development 
chapters set out commitments on labour and environment, including on the Paris Agreement and 
the fundamental ILO conventions. A similar modernisation is ongoing with Chile. 

For  Latin  American  partners,  the  EU’s  removal  of  its  tariffs  on  most  products  helps  them  to 
diversify their exports and to better integrate into value chains and the global economy. For EU 
companies,  the  agreements  bring  new  opportunities  in  emerging  markets  with  high  growth 
potential, as well as access to critical raw materials and inputs for industry and agriculture.  

The EU’s role in Latin America remains strong: The EU is the largest source of development 
cooperation and of Foreign Direct  Investment  in  Latin America  and is  the third largest  trading 
partner after the US and China. While the US has maintained its long-standing position as Latin 
America’s largest  trading partner, China has overtaken the  EU as the second largest  partner in 
recent  years.  Patterns  vary,  with  Mexico  and  Central  America  most  closely  tied  to  the  US 
economy, the mineral-rich Andean countries strengthening trade with China, while China and the 
EU are the most important partners for Mercosur countries. 

Bilateral trade: Trends in 2019 

EU trade agreements have, over time, helped to solidify the position of the EU as an investor 
and trading partner in the region. The agreements also helped to counter the erosion of tariff 
preferences  that  have  resulted  from  trade  agreements  Latin  American  partners  have  concluded 
with countries such as the US or China. 

26 https://ec.europa.eu/taxation_customs/sites/taxation/files/ceta_guidance_en.pdf 
27 https://trade.ec.europa.eu/doclib/docs/2019/november/tradoc_158417.pdf  

16 

 
 
 
 
 
                                                           
Trade  between  the  EU  and  its  current  EU  Latin  American  trading  partners  plus  Mercosur 
amounted to €192 billion, with the EU having a surplus of €22 billion.  EU exports of goods to 
the  11  Latin  American  countries  with  which  it  has  trade  agreements  increased  by  12%,  from 
just under €59 billion in 2015 to €66 billion.  The EU has kept a market share in imports of these 
countries of around 12%, while that of the US has decreased slightly from 42.5 to 40.3 % and 
that of China has also been steady at around 19%28.  

Trade  agreements  can  open  new  markets  for  EU  agri-food  products.  In  the  last  decade, 
exports of EU agricultural products to Latin American countries with trade agreements with 
the EU more than  doubled. This  is  largely due to removal of or cuts  in  tariffs under the trade 
agreements, which were often at relatively high levels for agricultural products.  

Bananas  continue  to  be  the  main  commodity  exported  to  the  EU  by  Central  America  and  the 
Andean community and exports were subject to a stabilisation mechanism, which expired at the 
end of December 2019. According to this mechanism, when the annual trigger volume of imports 
per country as  set  in  the Agreement is  met, the European Commission  examines the impact  of 
these  imports  on  the  situation  of  the  Union  market  for  bananas  and  takes  a  decision  to  either 
temporarily  suspend  the  preferential  customs  duty  or  determine  that  such  suspension  is  not 
appropriate. In 2019, the total annual imports of fresh bananas from Latin and Central American 
countries  subject  to  the  banana  stabilisation  mechanism  accounted  for  72.9%  of  the  cumulated 
trigger  level.  Among  the  partner  countries  concerned,  only  Peru,  Nicaragua  and  Guatemala 

28 Source: IMF DOTS Trade 

17 

010.00020.00030.00040.00050.00060.00070.00020152016201720182019Figure 9: Merchandise trade EU27 with Latin American partners (mio €)ImportsExportsBalance 
 
 
 
 
                                                           
exceeded  their  trigger  volumes.  The  European  Commission  concluded  that  a  temporary 
suspension  was  not  appropriate,  as  as  the  share  of  imports  from  these  countries  in  the  overall 
imports of bananas was very small at the moment the respective thresholds were exceeded.    

In 2019, at the request of the Andean and Central American partners, discussions took place, 
based  on  provisions  in  the  respective  Agreements,  to  examine  further  tariff  liberalisation  for 
bananas. After considering all relevant factors, including the stability of the EU market, it was 
from  Central  American  countries  and 
fresh  bananas 
concluded 
Colombia/Ecuador/Peru should be maintained at their current level of €75/tonne.  

tariffs 

that 

for 

Progress in implementation in 2019  

Examples for progress on trade and sustainable developmment 

- Thanks to a new EU-funded support programme, civil society representatives from the EU 
and from Colombia, Ecuador and Peru met in Bogotá, Colombia, while representatives from the 
EU and from the six Central American countries met in Antigua, Guatemala.   

-  An  EU-funded  programme  on  responsible  business  conduct  in  Latin  America  was 
launched,  implemented  in  a  partnership  with  the  OECD29,  International  Labour  Organization30 
and United Nations Office of the High Commissioner for Human Rights31.  

Advancing on market access issues in 2019  

-  Ecuador  removed  additional  duties  (‘fiscal  stamps’)  on  imported  alcoholic  beverages,  thus 
allowing EU alcoholic beverages to compete on an equal footing with local beverages. 

- Mexico relaxed restrictions  on importing pears  from  Belgium  and kiwi  fruits from  Italy,  and  
authorised imports of pork from the Netherlands.   

-  The  EU  initiated  a  WTO  dispute  against  Colombia’s  anti-dumping  measures  on  frozen 
potatoes from Belgium, Germany and the Netherlands.32  

EU trade agreements help forge partnerships between the EU and Latin America, be it on 
multilateralism  or  sustainability  goals,  as  do  the  broader  association  agreements  the  EU 
concluded with Latin American countries. Latin American countries played and continue to play 
an important role at the WTO:  over a third of the countries that support the EU’s proposal for a 
WTO  Multi-Party  Interim  Appeal  Arbitration  Arrangement  are  in  the  region.  The  EU  and  the 
Andean countries and Central America also discussed nationally determined contributions under 
the Paris Agreement, even though the trade agreements predate the latter.  

29 http://mneguidelines.oecd.org/rbclac.htm  
30 https://www.ilo.org/americas/programas-y-proyectos/WCMS_735906/lang--en/index.htm  
31 https://www.ohchr.org/EN/Issues/Business/Pages/JointProjectResponsibleBusinessConduct.aspx  
32 https://trade.ec.europa.eu/doclib/press/index.cfm?id=2083  

18 

 
 
 
 
 
                                                           
3.3 EU NEIGHBOURING COUNTRIES 

3.3.1 Mediterranean and Middle Eastern partners 

The Free Trade Areas concluded under the broader Association Agreements with the Southern 
Mediterranean and Middle Eastern countries (the ‘trade agreements’) entered into force in early 
2000.  The  EU  and  the  eight  Southern  Mediterranean  and  Middle  Eastern  countries  Algeria, 
Egypt, Jordan, Lebanon, Israel, Palestine33, Morocco and Tunisia are traditionally very close 
partners linked by historical and cultural ties and geographical proximity. The EU is the number 
one  trading  partner  for  all  countries  except  for  Jordan  and  Palestine,  and  for  the  region  as  a 
whole. Under the European Neighbourhood Policy, the EU offers these countries a privileged 
relationship,  building  on  a  mutual  commitment  to  common  values  –  democracy  and  human 
rights,  the  rule  of  law,  good  governance,  market  economy  principles  and  sustainable 
development.  

Most  industrial  goods  between  the  EU  and  these  partners  are  now  traded  duty  free.34  Egypt 
finalised  the  process  of  fully  dismantling  tariffs  on  industrial  goods  on  1  January  2019  by 
removing duties on EU car exports. In January, the European Commission launched an ex-post 
evaluation  of  six  of  the  trade  agreements.  The  interim  report35  was  published  in  April  2020. 
Preliminary findings show that removing customs duties has brought economic benefits for the 
Southern  Mediterranean  and  Middle  Eastern  countries.  The  final  report  is  expected  for 
December 2020. 

Given  that  the  existing  trade  agreements  focus  on  trade  in  goods,  a  number  of  bilateral 
negotiations are on-going or being initiated in the region, notably with Tunisia and Morocco, to 
deepen  the  commitments  and  to  extend  the  scope  to  other  areas,  such  as  agriculture,  services, 
investment, trade rules, regulatory convergence, and trade and sustainable development.  

Bilateral trade: Trends in 2019 

Although the region only represents 4% of EU external trade, it is a very important market for 
EU  exports,  with  opportunities  especially  for  SMEs  in  some  traditional  sectors,  such  as 
textiles and ceramics.  The region also remains an important source for imports, especially in the 
energy and agri-food sectors.  

33  This  designation  shall  not  be  construed  as  recognition  of  a  State  of  Palestine  and  is  without  prejudice  to  the 
individual positions of the Member States on this issue. 
34 Only Algeria was allowed to postpone the last stage of the tariff dismantling on  a number of industrial products 
for which custom duties were still levied, albeit in reduced form, until September 2020 (instead of September 2017). 

35https://case-research.eu/en/ex-post-evaluation-of-the-impact-of-trade-chapters-of-the-euro-mediterranean-
association-agreements-with-six-partners-algeria-egypt-jordan-lebanon-morocco-and-tunisia-interim-technical-
report-101329  

19 

 
 
 
 
                                                           
In  2019,  trade  between  the  EU  and  the  region  amounted  to  roughly  €150  billion  in  industrial 
goods and €15 billion in agricultural goods. Trade slightly decreased year-on-year by 0.17% 
or  €248  million.  Between  2018  and  2019,  EU  exports  to  the  region  fell  by  0.38%,  from  €100 
billion  to  €99  billion,  mainly  due  to  trade  restrictive  measures  imposed  by  some  countries.  
Morocco, Israel and Algeria remained the EU’s largest trading partners in the region.   

In 2019, Morocco was the region’s main market for EU exports, followed by Israel and Egypt. 

Looking  at  trade  by  sector,  90%  of  EU  trade  with  the  region  is  in  industrial  goods  (energy 
sector  and  manufactured  goods),  with  exports  decreasing  by  0.5%  and  imports  stagnating.  By 
contrast,  agri-food  trade  rose  by  6.2%  –  6.4%  for  EU  exports  or  €623  million  and  6%  for 
imports.  This  shows  there  is  unused  potential  in  further  liberalising  agricultural  trade, 
especially  for  Tunisia  and  Algeria.36  Algeria  and  Israel  were  the  EU’s  biggest  agri-food 
destinations in the region. The main EU exports were wheat and other cereals, infant food and 
live animals.  

According  to  the  World  Bank’s  Doing  Business  Index  2020,  the  business  climate  for  most 
Southern  Mediterranean  countries  improved  in  2019,  in  particular  for  Jordan,  which  was 
among the top 10 improvers.37 In 2018, the EU remained the largest investor in many of these 

36 Additional agreements on agricultural, processed agricultural and fisheries products are already in force between 
the EU and Egypt, Israel, Jordan, and Morocco, but not yet Tunisia. 
37 Algeria’s index score remained the same with very low ranking, while Lebanon and Palestine’s index deteriorated. 

20 

Morocco     23.359 23%Israel20.101 20%Egypt       19.061 19%Algeria     16.930 17%Tunisia     10.944 11%Lebanon     5.776 6%Jordan      3.436 4%Palestine Territory263 0%Figure 10 : EU27exports to MED8 in 2019 (million €) 
 
 
 
                                                           
countries, representing more than half of FDI in Morocco38 and 85% in Tunisia.39 In Egypt, the 
EU is the second largest foreign investor with 21% of FDI after the UK (39%), exceeding $15 
billion  (around  €12.7  billion),  with  the  6,339  companies  active  there  providing  more  than 
192,000  jobs.40  In  Morocco,  the  automotive  sector  generated  more  than  85.000  direct  jobs  in 
2014-2018, bringing the sector’s total 163, 000 by 2018.  Some countries, notably Israel, are an 
important source of FDI in the EU.  

Progress in implementation in 2019:  

-  Egypt,  as  a  result  of  reinforced  dialogue  at  political  and  technical  level,  removed  the 
requirement of veterinary checks of live animals in the EU, destined for export to the country; 
Egpyt  also  accepted EU standards for most of the requirements  for seed potatoes,  and made it 
easier to import infant formula.  

- Tunisia, following EU interventions in the WTO and bilaterally, lifted non-automatic import 
licenses  on  a  wide  variety  of  products  affecting  a  huge  chunk  of  bilateral  trade  with  the  EU; 
these measures were incompatible with both the bilateral agreement and WTO rules.  

Main outstanding issues - examples 

- Algeria kept its import ban on vehicles (since 2015) and medicines for which there exists a 
locally-produced  equivalent.  Charges  having  an  effect  equivalent  to  custom  duties  remain  in 
place on over 900 products, while on another 129 tariff lines it levies higher custom duties than 
allowed under the free trade agreement.  

-  Egypt  kept  and  extended  its  registration  scheme  and  pre-shipment  inspections  for  25 
categories  of  manufactured  goods  (in  place  since  2016).  However,  the  creation  of  a  special 
Registration  Committee  in  Egypt’s  Ministry  of  Trade  and  Industry  in  April  2019  was  a  step 
forward as it allowed for advancing the registration of some EU exporters. 

Frequent  contacts  at  technical  but  also  ministerial  level  over  the  past  decade  and  a  half  have 
helped  to  forge  a  closer  partnership  between  the  EU  and  its  Mediterranean  and  Middle  East 
partners at multilateral level. By way of example, the EU is helping Algeria and Lebanon with 
their applications to join the WTO, and is supporting Palestine's request for observer status at the 
WTO General Council and its subsidiary bodies.  

3.3.2  Georgia, Moldova, Ukraine  

The  Deep  and  Comprehensive  Free  Trade  Areas  (DCFTAs)  applied  between  the  EU  and 
Georgia  and  Moldova  since  2016  and  the  Ukraine  since  2017  form  part  of  the  wider  Eastern 
Partnership  framework,  a  joint  policy  initiative  that  began  in  2009  to  deepen  and  strengthen 

38 Office des Changes 
39 OECD Investment Policy Reviews:  Tunisia 2012 
40 Egypt’s General Authority for Investment and Free Zones 

21 

 
 
 
 
 
                                                           
relations between the EU and its Member States and their six Eastern neighbours41.  DCFTAs are 
essential tools not only for mutual market access, but also to pursue a values agenda, to further 
democracy and transparent and independent institutional structures, and to help partner countries 
transform  their economies and engage more in  international  trade. The  DCFTAs have two key 
elements:  trade liberalisation and regulatory approximation. 

Trade  liberalisation  (the  ‘free  trade’  component  of  the  DCFTAs)  means  removing  tariffs  and 
reducing  non-tariff  barriers  to  trade  in  goods,  services  and  investment,  thus  increasing  market 
access  for  goods  and  services  for  both  sides.  The  parties  to  each  of  the  agreements  regularly 
exchange  information  and  monitor  developments  in  trade.  For  all  three  DCFTA  countries,  the 
EU  is  the  biggest  trading  partner.  Total  trade  with  the  DCFTA  countries  has  overall  slightly 
increased year on year, reaching €50.6 billion in 2019. EU-Ukraine bilateral trade has increased 
steadily  in  both  directions  and  reached  €  43.3  billion  in  2019.  Ukraine  is  also  the  4th  largest 
exporter towards the EU of agriculture products. In 2019, the overall trade between the EU and 
Georgia decreased on a year-on-year-basis by 3%, amounting to €2.6 billion and the total trade 
between  the  EU  and  Moldova  grew  by  3.9%  compared  to  2018,  to  reach  slightly  over  €4.7 
billion. 

Regulatory approximation is the ‘deep and comprehensive’ component of the DCFTAs. The 
EU partner countries commit to approximate their legislation to the EU legislation (the ‘acquis’) 
in  a number of trade-related policy areas, such  as sanitary and phytosanitary matters, technical 
specifications and standards (lowering technical barriers to trade), public procurement, services 
and  customs  procedures.  The  relevant  EU  laws  are  listed  in  the  annexes  to  the  Association 
Agreement/DCFTAs,  which  are  regularly  updated.  The  European  Commission  monitors  the 
process,  taking  into  account  the  development  of  the  EU  acquis  in  the  areas  covered  by  the 
Association Agreement /DCFTA. 

Progress in regulatory approximation in 2019 – examples  

-  Ukraine  adopted  a  Sanitary  and  Phytosanitary  strategy,  containing  over  240  EU  laws 
currently  being  implemented  by  Ukraine,  and  for  the  first  time  including  animal  welfare 
standards. The EU is providing both human and financial support to Ukraine with this. Georgia 
and Moldova have also committed to bring their national legislation in line with that of the EU.   

- The EU and Moldova agreed to broaden some of their tariff concessions, the latter increasing 
tariff-rate  quotas  originally  agreed  under  the  review  mechanism  foreseen  in  the  DCFTA.  This 
will provide additional export opportunities for local farmers and producers.  

-  Georgia  made  good  progress  on  labour  reforms:  Amendments  to  the  national  labour 
legislation  (Labour  Code  and  Law  on  occupational  safety  and  health)  were  adopted  in  2019, 

41 Georgia, Moldova, Ukraine, Armenia, Azerbaijan and Belarus.  

22 

 
 
 
                                                           
bringing it closer to fundamental ILO conventions and EU standards, including regarding labour 
inspections.   

3.3.3 Western Balkans 

The  EU  has  concluded  Stabilisation  and  Association  Agreements  (SAAs)  with  all  six  of  the 
Western  Balkans:  Albania,  Bosnia-Herzegovina,  North  Macedonia,  Montenegro,  Serbia  and 
Kosovo. All of the Western Balkans have a clear European perspective, most recently reaffirmed 
at  the  Western  Balkans  Summit  of  6  May  2020.  This  is  reflected  in  the  content  and  scope  of 
SAAs,  which  have  elements  going  beyond  other  preferential  trade  agreements  as  they 
foresee alignment of legislation with the EU acquis. The SAAs also provide for removal of all 
quantitative restrictions.  However, they do not contain certain other elements found in the EU’s 
more  recent  preferential  trade  agreements,  such  as  provisions  on  trade  and  sustainable 
development. 

Over  the  last  10  years,  the  SAAs  have  facilitated  trade  between  the  EU  and  the  region, 
contributing to  an increase by almost 130%, reaching €55 billion in 2019, an increase of 3.8% 
compared to 2018. The most traded products are machinery, base metals, mineral and chemical 
products. In 2019, EU exports to the Western Balkans grew by 4.4%, resulting in a trade surplus 
for the EU of €8.9 billion.  Imports from the Western Balkans grew by 3%.  

Although the six Western Balkan countries together only represent 1.4% of the EU’s total trade, 
effective implementation of the SAAs is an extremely important means of bringing about further 
integration  of  these  neighbouring  countries  into  the  EU  market,  improving  the  business  and 
investment climate and promoting EU standards. For each of the Western Balkan countries, the 
EU is the leading trading partner, accounting for almost 70% of the region's total trade.  

3.3.4 Switzerland 

In  2019,  total  bilateral  trade  in  goods  with  Switzerland  reached  over  €257  billion,  making 
Switzerland the EU’s fourth biggest trading partner overall, and the EU’s top trading partner 
country under preferential trade agreements. Compared to 2018, bilateral trade flows grew by 
9% and the EU maintained a trade surplus in the order of €36 billion. 

23 

 
 
 
 
With trade in services valued at over €170 billion in 2018, Switzerland is the EU’s third most 
important trading partner for services. The EU has a surplus of €39.5 billion. 

Given the very high level of integration between the EU and Switzerland, the latter is also a very 
important partner in terms of investment. In 2018, Swiss stocks of Foreign Direct Investment 
in  the  EU  reached  €750  billion,  a  58%  increase  since  2014,  while  the  EU’s  FDI  stocks  in 
Switzerland  reached  over  a  trillion  euros,  a  40%  increase  since  2014.  Switzerland  gets  about 
12% of total EU27 FDI. 

With trade in services valued at over €170 billion in 2018, Switzerland is the EU’s third most 
important trading partner for services. The EU has a surplus of €39.5 billion. 

Given the very high level of integration between the EU and Switzerland, the latter is also a very 
important partner in terms of investment. In 2018, Swiss stocks of Foreign Direct Investment 
in  the  EU  reached  €750  billion,  a  58%  increase  since  2014,  while  the  EU’s  FDI  stocks  in 
Switzerland  reached  over  a  trillion  euros,  a  40%  increase  since  2014.  Switzerland  gets  about 
12% of total EU27 FDI. 

The  EU’s  Free  Trade  Agreement  with  Switzerland  is  its  longest  standing  one  and  has  limited 
scope42,  shallower  disciplines  and  lacks  an  effective  dispute  settlement  mechanism  when 
compared  to  the  EU’s  modern  trade  agreements,  some  of  which  were  concluded  with  more 
distant  partners  of  lesser  economic  relevance.  Despite  the  flourishing  trade,  however,  in  2019 
Switzerland  was  unable  to  make  further  progress  on  adopting  the  negotiated  Institutional 
Framework Agreement (IFA). The IFA would pave the way for further modernising EU-Swiss 
trade  relations,  as  it  would  introduce  an  independent  dispute  settlement,  legal  certainty  and  a 
level-playing  field,  which  will  benefit  EU  and  Swiss  market  operators  on  the  internal  market. 
The IFA would also mean further market access in new areas (e.g. electricity) and establish state 

42 Only trade in industrial products is covered. For the rest (services, intellectual property rights, trade in agricultural 
products), the situation is of either no rules (beyond WTO rules) or they are split between different agreements. 

24 

 
 
 
  
 
 
                                                           
aid rules as well as a commitment by the parties to modernise the free trade agreement of 
1972 and other trade-related agreements.  

3.3.5 Norway 

Trade relations between the EU and Norway are conducted both under the European Economic 
Area  (EEA)  and  the  bilateral  Free  Trade  Agreement  of  1973.  Although  still  in  force,  the 
bilateral trade agreement has in practice been superseded in many respects by the Agreement on 
the EEA, which allows for the free movement of goods, services, capital and people. 

In 2019, total bilateral trade in goods between the EU and Norway amounted to €106 billion, a 
drop  by  5%  compared  to  2018,  mainly  resulting  from  the  16.5%  drop  in  mineral  oil  imports 
from  Norway.  Overall,  Norway’s  total  exports  to  the  EU-27  went  down  by  11%  while  EU-27 
exports to Norway rose by 3%. The fall in Norway’s exports to the EU and the UK’s exit from 
the EU meant Norway moved from being the EU’s sixth largest trading partner to the eighth. 

Trade in agricultural goods between the EU and Norway reached almost €5 billion, with a clear 
surplus  for  the  EU,  which  exports  more  than  eight  times  the  value  of  the  agricultural  goods  it 
imports from Norway. Both imports and exports have increased steadily since 2009.    

The review of the trade regime for processed agricultural products remains an open issue. 
It was raised in the joint committee in 2019 in an effort to address the high customs tariffs that 
hinder EU exports of some processed agricultural products to Norway. The EU also continued to 
insist on resuming negotiations on the protection of geographical indications. 

Norway is the EU's eighth-largest trading partner country for services. Of the €40 billion of trade 
between them in 2018, Norway’s exports were €14 billion and the EU’s €26 billion, giving the 
EU a surplus, a position that has remained stable over the last five years. 

3.3.6 Turkey 

Turkey  is  the  EU’s  oldest  and  second-largest  preferential  trading  partner  country  and  its  sixth 
largest trading partner overall. The Turkish economy recovered faster than expected from the 
currency crisis that began in summer 2018 but remained in recession for much of 2019 and GDP 
growth was weak at 0.9%. Due to the depreciation of the Turkish lira, Turkey significantly cut its 
global trade deficit. Trade in goods with the EU moved to a deficit of €1.5 billion in favour of 
Turkey,  following  long-standing  EU  surpluses,  with  EU  exports  to  Turkey  falling  by  1.3%  to 
€68.3 billion while imports from Turkey rose by 4.4% to €69.8 billion. 

Trade  relations  between  the  EU  and  Turkey  are  governed  by  the  Customs  Union  of  1995  for 
industrial goods and certain processed agricultural products, plus two bilateral preferential trade 
agreements covering agricultural and coal and steel products, respectively. 82% of EU trade with 
Turkey is in industrial goods. Due in large part to these trade agreements and in particular the 
Customs Union, bilateral trade has increased more than fourfold since the mid-nineties. To 
extend  the  scope  of  bilateral  preferential  trade  and  modernise  the  Customs  Union,  on  21 
December 2016 the European Commission adopted a Recommendation for a Council Decision 
authorising the opening of negotiations with Turkey. However, discussions are currently on hold 
following General Affairs Council Conclusions of 26 June 2018 and of 18 June 2019. 

25 

 
 
 
 
In 2019, Turkey upheld trade barriers in breach of the Customs Union agreement, notably 
in continuing – and broadening – its longstanding deviation from the Common Customs Tariff, 
through the imposition of additional duties on products originating outside the EU or Turkey’s 
preferential  trading  partners.  Because  of  these  duties,  Turkey  requires  information  and 
documents, such as proof of origin, contrary to the principle of free circulation instituted by the 
Customs Union. In 2019, Turkey also failed again to open its tariff rate quota on beef. 

The European Commission raised these issues in the annual Joint Committee meetings as well as 
frequent bilateral exchanges. The Commission also continued to demand the non-discriminatory 
implementation  of  the  Additional  Protocol  to  the  Association  Agreement  towards  all  Member 
States, including the Republic of Cyprus. On 2 April 2019, the EU initiated WTO proceedings 
against Turkey’s measures for forced localisation of manufacturing of pharmaceuticals.43  

3.4   AFRICA, CARIBBEAN AND PACIFIC COUNTRIES 

For more than a decade, African, Caribbean and Pacific (ACP) countries have been among the 
fastest  growing  economies  in  the  world.  Trade  between  the  EU  and  Sub-Saharan  Africa,  in 
particular,  has  doubled  over  the  past  decade  and  European  companies’  investments  in  Africa 
stand at €200 billion with enormous potential for expansion. The EU remains the biggest trading 
and investment partner for most ACP countries, especially for those implementing an Economic 
Partnership Agreement (EPA) with the EU. 

In 2019, 31 ACP countries were implementing EPAs with the EU: 14 in Sub-Saharan Africa, 
14 in the Caribbean and three in the Pacific44. EPAs are development-oriented trade agreements, 
under  which  the  EU  provides  duty-free  and  quota-free  access  to  its  market45,  while  partner 
countries  liberalise  at  least  80%  of  their  imports  over  a  period  of  10  to  20  years.  EPAs  also 
include  special  safeguards  to  ensure  the  protection  of  food  security,  infant  industries  or 
environmental and social objectives. Importantly, significant development assistance is provided 
by the EU for capacity building on trade policy and making local production more competitive.  

Implementation  of  EPAs  has  gained  cruising  speed,  despite  challenges  such  as  limited 
capacity  of  public  authorities,  a  weak  business  climate  and  limited  awareness  and  ability  of 
companies to make use of the Agreements. While an overall appraisal is still premature, there is 
a  positive  trend  regarding  export  growth  and  diversification.  In  2019,  the  EU  and  five 
countries46 of the Eastern and Southern Africa (ESA) EPA  launched negotiations to add rules on 
trade in services, investment, public procurement, intellectual property rights, and, importantly, 
trade and sustainable development. 

43 More information on this dispute settlement case can be found in section 8, “Legal Enforcement”. 
44 Solomon Islands signed the Agreement in May 2020, bringing the number to four. 
45 The exception is South Africa, party to the EU-SADC EPA, where the EU has fully or partially removed customs 
duties on 98.7% of South African imports.  
46 Comoros, Madagascar, Mauritius, Seychelles and Zimbabwe 

26 

 
 
 
 
 
 
                                                           
Progress in implementation in 2019 – examples  

- EU and the Southern African Development Community (SADC) held their first ministerial-
level Joint Council and put in place procedural rules for the agreement’s full operation.  

- Ghana and Cote d’Ivoire adopted domestic legislation to fully implement their commitments 
and engaged in first discussions with the EU on sustainability aspects in the cocoa value chain.  

- The EU and Cameroon worked closely together to evaluate the effects of three years of tariff 
cuts and to design accompanying measures.  

- The EU and CARIFORUM countries held a Business Forum in Frankfurt in September 2019 
and also intensified dialogue on sustainable development and the European Green Deal. 

Bilateral trade: Trends in 2019  

EU  imports  from  the  31  EPA  partner  countries  increased  by  4.6%  in  2019.  For  example, 
Eswatini,  Fiji,  Cameroon,  South  Africa  and  the  Dominican  Republic  experienced  double-digit 
growth rates in their exports to the EU. CARIFORUM’s agri-food exports to the EU increased 
by 11% in 2019, driven by strong exports of rice, beer, cigars, tropical fruit and rum. While these 
imports remain resource-dependent, diversification is growing for some countries. For example, 
imports from South Africa are diverse, dominated by vehicles, machinery and fruits, as well as 
mineral products. Mauritius and the Dominican Republic both recently started exporting medical 
and laboratory equipment. CARIFORUM countries are also diversifying their exports. 

EU exports to EPA countries increased by 5%, driven by stronger exports to South Africa and, to 
a  lesser  extent,  Mauritius  and  Fiji.  EU  exporters  are  increasingly  making  use  of  preferences 
granted under EPAs, in particular by South Africa, the biggest economy among EPA countries.  

The EU is working to solve trade disputes. In June, it began a formal dispute avoidance and 
settlement procedure against the Southern African Customs Union (SACU) to address safeguard 
measures imposed in 2018 on EU poultry products, leading to formal consultations in September 
2019 where, unfortunately, the parties could not reconcile their differences.47    

47 For further details, see the section 8 on Legal Enforcement.  

27 

 
 
 
 
                                                           
 White asparagus from Namibia  

The  Spanish  Asparagus  Agro-Processing  Factory  in  Namibia’s  region  of  Omusati  exports 
white asparagus to local and international markets, particularly Spain and other EU countries.  
It  employs  600  people,  mainly  women  from  the  local  communities.  Tariff  cuts  under  the 
SADC  EPA  have  been  key  for  the  business.  Cutting-edge  technology  to  minimise  water 
consumption helps ensure sustainability.   

“Thanks  to  the  SADC  EPA,  we  can  import  capital  goods  and  inputs  duty-free  into 
Namibia, and secured long-term access to the EU market. The impact of this project on the 
local community is very significant.” 

Carlos  Lertxundi  Aretxaga,  General  Manager,  Asparagus  Agro-Processing  Project  representing 
Otjimbele Agriculture PTY 

4. TRADE AND SUSTAINABLE DEVELOPMENT 

Objectives and challenges  

Trade and sustainable development chapters aim to maximise the leverage of increased trade and 
investment  to  achieve  progress  on  key  issues,  like  the  promotion  of  decent  work  and 
environmental protection or the fight against climate change. Provisions in trade and sustainable 
development  chapters  promote  compliance  with  International  Labour  Organization  (ILO) 
standards and multilateral environmental agreements.   

The implementation of trade and sustainable development chapters has specific challenges. 
For example, there remain gaps regarding the universal ratification and effective implementation 
of  ILO  fundamental  conventions,  including  among  EU  trading  partners.  Complying  with  trade 
and  sustainable  development  commitments  often  involves  tackling  long-standing  and  deeply 
rooted domestic issues  and different policy priorities. This  calls for  a long-term perspective 
on  implementation,  supported  by  enforcement  and  the  active  involvement  of  civil  society  and 
business. Therefore, the implementation work focuses also on building platforms for cooperation 
and  joint  initiatives  on  issues  ranging  from  fair  remuneration,  working  in  a  safe  and  healthy 
environment to promoting climate-friendly technologies. 

28 

 
 
 
 
 
 
 
Rolling out the European Commission’s 15-point action plan48  

The rolling out of the 15-point action plan49 of February 2018 is facilitating a more systematic 
and  structured  approach  to  implementing  trade  and  sustainable  development  commitments. 
Building  on  lessons  from  the  negotiation  phase  and  earlier  implementation  experiences,  the 
European  Commission  has  been  putting  in  place  a  set  of  targeted  actions  consistent  with  the 
specific priorities defined for each trading partner.  

Coordinated  and  mutually  supportive  actions  by  the  European  Commission,  the  European 
Parliament and the ILO prior to implementation have worked well, for example in Vietnam. 

Progress in implementing trade and labour commitments – example of Vietnam 

-  Vietnam  ratified  ILO  Convention  98  on  collective  bargaining  in  June  2019  and  adopted  a 
revised Labour Code in November 2019, thereby launching an extensive reform of labour laws.  

- Vietnam confirmed a concrete timeline for ratifying the two remaining fundamental ILO 
Conventions on forced labour and freedom of association (by 2020 and 2023 respectively). 

- Vietnam reported on steps to eradicate child labour. Preliminary results of the most recent 
national survey are promising, showing a reduction in child labour of more than 40% since the 
last survey in 2012. 

The  15-point  action  plan  also  fosters  closer  partnerships  between  the  European  Commission 
and  Member  States,  the  European  Parliament  and  international  bodies  like  the  International 
Labour Organisation (ILO), which have proven key for the careful monitoring of progress.  

Examples of Commission-Member States complementary actions  
- The Netherlands adopted a Child Labour Due Diligence Act50 that applies to all companies 
based in the country. For the Act to apply in practice, more detailed implementing legislation is 
being  developed.  In  parallel,  the  Netherlands  evaluated51  the  sector-specific  voluntary 
agreements on due diligence initiatives. 

-  Sweden’s  National  Board  of  Trade  published  a  handbook  to  help  with  the  early  stages  of 
implementing trade and sustainable development measures in Ecuador. 

48  Details  of  implementation  work  in  2019  by  cluster  of  the  action  plan  can  be  consulted  in  the  Staff  Working 
Document: https://trade.ec.europa.eu/doclib/docs/2020/september/tradoc_158926.pdf 
49 The 15 points action plan is available at https://trade.ec.europa.eu/doclib/docs/2018/february/tradoc_156618.pdf 
50  Two  core  ILO  conventions  address  child  labour:    the  ‘Minimum  Age  Convention’,  1973  (No.  138)    and  the 
‘Worst Forms of Child Labour Convention’, 1999 (No. 182) 
51  The  survey  is  available  at  https://www.government.nl/topics/responsible-business-conduct-rbc/evaluation-and-
renewal-of-rbc-policy 

29 

 
 
 
 
 
                                                           
 
Examples of Commission-ILO cooperation on technical assistance  

- The European Commission and ILO supported labour reforms in Vietnam and contributed to 
the strengthening of labour inspection in rural areas of Colombia.  

- The European Commission supported ILO actions in El Salvador and Guatemala to improve 
compliance with international labour standards. 

Empowering civil society organisations in the EU and its trading partners is another pillar of 
the 15-point action plan.  In 2019, the European  Commission continued providing assistance to 
the Domestic Advisory Groups (DAGs) created to monitor agreements.  The aim is to create the 
conditions for their participation in the implementation process to be more efficient. Under the 
Partnership Instrument, the European Commission continued to provide funds for DAG members 
to participate in meetings with counterparts and other civil society representatives, including the 
social  partners.  The  project,  which  began  in  2018,  also  sponsored  the  organisation  of  capacity 
building workshops to increase DAG members’ expertise, notably to  identify and develop their 
own implementation priorities.  

The European Commission also continued to create conditions for businesses to play a more 
active  role  in  ensuring  that  trade  and  sustainability  go  hand  in  hand  by  promoting 
responsible  business  practices.  The  launching  in  January  2019  of  a  new  technical  assistance 
project  for  Latin  America  enabled  the  European  Commission  to  promote  concrete  actions  and 
ensure  buy-in  from  governments  and  stakeholders,  building  on  the  recognised  expertise  and 
long-standing  experience  of  the  International  Labour  Organisation  (ILO),  the  OECD  and  the 
Office of the United Nations High Commissioner for Human Rights (OHCHR). 

In  2019,  the  European  Commission  continued  its  policy  of  assertive  enforcement  to  address 
challenges  with  the  implementation  of  trade  and  sustainable  development  commitments.  The 
government  consultations  and  panel  proceedings  in  the  bilateral  case  the  European 
Commission initiated against South Korea is a case in point. Since the entry into force of the 
EU-South  Korea  trade  agreement  in  2012,  the  EU  has  consistently  raised  Korea’s  non-
implementation  of  the  agreement’s  labour  provisions.  Since  these  interventions  were  not 
successful,  in  December  2018  the  European  Commission  requested  government  consultations, 
which  were  held  in  January  2019  and,  in  July  of  the  same  year,  the  EU  requested  the 
establishment of a panel of experts52. With Peru, in 2019 the European Commission enhanced 
bilateral  engagement  at  technical  and  political  level  on  the  implementation  of  trade  and 
sustainable  development  commitments.  At  the  October  meeting  of  the  Trade  and  Sustainable 

52 For more detailed information on the dispute see section 8, ‘Legal Enforcement’ 

30 

 
 
 
                                                           
Development Sub-Committee, Peru reported on the advances made on various fronts to address 
the EU’s substantive concerns53.  

5. AGRI-FOOD TRADE UNDER EU TRADE AGREEMENTS54 

Agri-food trade with preferential partners is on the rise 

In  2019,  EU  agri-food  trade  with  preferential  partners  rose,  both  in  absolute  terms  (value  of 
products traded) and relative terms compared to overall EU agri-food trade. EU agri-food trade 
with preferential trading partner countries accounted for roughly 35% of EU agri-food trade with 
third  countries  –  30%  and  40%  of  total  EU  agri-food  exports  and  imports,  respectively.  This 
share has been rising over the past 10 years.  

In  2019,  the  three  top  export  markets  for  EU  agri-food  exports  among  preferential  trading 
partners were Switzerland, Japan and Norway, together representing roughly 11% of agri-food 
exports. Canada came at the 4th place. Around 19% of EU exports were food preparations, such 
as chocolate, infant formula and pasta, and 12% were wine, vermouth, cider and vinegar.  

For 

more 

detail 

53 
https://trade.ec.europa.eu/doclib/docs/2019/november/tradoc_158481.pdf 
54  For  the  sake  of  this  report,  the  WTO  definition  for  "agri-food  products"  was  used,  i.e.  agricultural  products 
including the chapters 1-24 of the Harmonised System as well as a number of headings in chapters 33, 35, 38, 41, 43 
and 51-53, but excluding fish and fish products.   

information, 

meeting: 

minutes 

see 

the 

the 

of 

31 

 
 
 
 
                                                           
Bohemian hops for premium beers  

Czech company BOHEMIA HOP is a small company owned by Czech hop growers. Employing 
10 people, it exports traditional  Bohemian hops to several  countries outside the EU. Under the 
EU-Japan Economic Partnership agreement, it can now export its products to Japan duty free. 

“Japanese breweries are traditional customers for Czech hops and when it comes to trade we 
like simple solutions.” 

Zdenek Rosa, Chairman, Bohemia Hop 

In  2019,  the  top  three  countries  for  EU  agri-food  imports  from  preferential  trading  partner 
countries were Ukraine (cereals, other than wheat and rice, and vegetable oils, other than palm 
and olive oils), Switzerland (roasted coffee and tea, and food preparations) and Turkey (tropical 
fruits, nuts and spices, and preparations of vegetables and fruits). Together, these made up 13% 
of total EU agri-food imports. 

32 

United Kingdom23%USA12%China8%Russia4%Saudi Arabia2%Rest21%Switzerland5%Japan4%Norway2%Canada2%Turkey2%Other FTA partners15%FTA partners30%Figure 12: EU agri-food exports, by partner (2019) 
 
 
 
 
Trends and developments in agri-food trade flows 

In  2019,  EU  exports  of  agri-food  products  under  preferential  agreements  grew  by  8.7%  (+ 
€4.4 billion), as  compared to  overall agri-food exports to  the rest  of the world,  which grew by 
7.6%.  

EU  imports  of  agri-food  products  under  preferential  agreements  grew  at  a  similar  rate  to 
exports  (8.3%),  compared  to  a  growth  in  agri-food  imports  from  the  rest  of  the  world  of  only 
2.3%.  The  agri-food  trade  balance  under  preferential  agreements  remained  at  +€6.4  billion. 
Imports from preferential partners remain of strategic importance to the EU agri-food sector, 
providing  necessary  supplies  of  products  not  grown  in  the  EU  for  climatic  reasons  (tropical 
fruits,  cocoa,  coffee  and  other  beverages)  and  inputs  of  products,  where  the  EU  is  less 
competitive  or  does  not  produce  enough  to  meet  EU  demand  (oil  seeds,  animal  or  vegetable 
fats/oils). 

33 

United Kingdom14%Brazil9%USA8%China4%Argentina4%Rest21%Ukraine6%Switzerland4%Turkey3%Ivory Coast3%Morocco2%Other FTA partners22%FTA partners40%Figure 13: EU agri-food imports, by partner (2019) 
 
 
Free trade promotes natural products 

Hamburg-based company Worlée NaturProdukte GmbH is part of the Worlée Group, a family-
run  medium-sized  business  that  employs  about  200  people.    The  EU’s  trade  agreement  with 
Chile  cut  customs  duties  on  imports  of  rose  hips  from  Chile  to  zero,  saving  Worlée  about 
€24,000 per year. 

“Free trade allows us to pass on high-quality raw materials to our clients at competitive prices. 
The cheaper we can import a product, the more competitive we can be in the marketplace.”  

Reinhold von Eben-Worlée, CEO Worlée Group 

EU  trade  agreements  take  into  account  sensitivities  of  the  EU  agricultural  sector.  Sensitive 
products,  such  as  beef,  poultry  or  sugar,  are  either  excluded  from  preferential  trade  or 
preferential access is granted through carefully calibrated tariff-rate quotas of limited volumes. 
EU  trade  agreements  also  create  new  export  opportunities  for  some  of  these  sensitive 
products  exported  by  the  EU.  A  notable  example  is  beef.  EU  beef  and  live  cattle  exports  to 
preferential trading partners grew by more than 30% (from €406 million to €529 million) over 
the past five years, despite a slight decrease in 2019.  

Geographical indications (GIs) 

EU trade agreements pay special attention to the protection of geographical indications. In 2019, 
five  new  EU  food  GIs  (Piave,  Pancetta  piacentina,  Salame  piacentino,  Coppa  piacentina  and 
Vinagre de Jerez) were granted protection in Canada through a procedure of direct application 
for  GI  registration  established  under  the  EU  trade  agreement  with  Canada,  CETA.  Since  the 
entry into force of the EU-Japan Economic Partnership Agreement on 1 February 2019, 211 GIs 
have been protected in Japan.  

Protection of GIs in EU trade agreements is becoming more important as the share of protected 
GIs  in  EU  exports  is  rising.  In  2019,  a  European  Commission  study55  showed  that,  between 
2010  and  2017  the  share  of  GI+TSG  (Traditional  Speciality  Guaranteed56)  products  in  EU 
exports to third countries by value grew by 56%, representing €17 billion for the EU28 in 2017 
and  23%  of  total  EU  GI/TSG  product  sales.  Wines  remained  the  most  important  product 
category  in  terms  of  extra-EU  trade  (50%)  GI/TSG  trade,  followed  by  spirits  (39%)  and  other 
agricultural  products  and  foodstuffs  (10%).  The  two  largest  GI  agri-food  product  categories 
exported to non-EU countries were cheeses and meat products. 

55 Study on economic value of EU quality schemes:  
https://op.europa.eu/en/publication-detail/-/publication/a7281794-7ebe-11ea-aea8-01aa75ed71a1   

56 Although it was not possible to separate GIs and TSGs for the purposes of the study, only the former (GIs) are 
covered by EU trade agreements.  

34 

 
 
 
                                                           
  
Promoting EU agri-food products 

In  the  context  of  trade  agreements,  programmes  take  place  in  the  partner  countries  to  promote 
agri-food products. In addition to the High Level Mission to Japan (May 2019), headed by then 
EU Commissioner for Agriculture and Rural  Development,  Phil Hogan, the EU participated in 
the  major  business-to-business  agri-food  fair  in  Asia  (Foodex  Japan),  with  an  EU  booth 
dedicated to the authenticity, safety and quality of EU products. At the same time, a seminar on 
the opportunities under the EU-Japan Economic Partnership Agreement (EPA) for the European 
and  Japanese agri-food  businesses  was  organised  and  the  EU-Japan  Centre  for  Industrial 
Cooperation created an  EPA  Helpdesk to  address questions from  SMEs, many of which  are in 
the agri-food sectors. Promotional activities were also launched in Mexico and Singapore, among 
others. 

Monitoring sanitary and phytosanitary measures 

Trade agreements support exchanges and cooperation between the partners, in particular through 
regular  contacts  between  experts  on  sanitary  and  phytosanitary  measures.  This  can  help  to 
address potential and existing trade barriers.  

Progress in market access for EU agri-food products in 2019 

-  Canada  opened  its  market  to  tomatoes  from  another  EU  Member  State  and  for  plants  for 
planting. 
- Chile opened its dairy and beef markets to four more Member States57  

- South Korea opened its beef market for two more Member States. 

- South Africa lifted country-wide bans due to avian influenza outbreaks for two out of six 
Member States, while keeping bans in force for four others.  

Animal welfare 

Since  2002,  has  the  EU  consistently  considered  that  animal  welfare  should  belong  to  the 
objectives  pursued  in  EU  bilateral  agreements  by  developing  appropriate  cooperation 
mechanisms  where  best  European  practices  could  be  shared  and  promoted  with  the  partner 
countries. 

57 Chile opened its dairy market to four additional Member States (20 Member States authorised) and  
four additional Member States for beef (14 Member States authorized). Chile also authorised the imports of fresh 
poultry meat (8 Member States authorised). 

35 

 
 
 
 
                                                           
 
 
Results of bilateral cooperation on animal welfare - examples 

- The EU-Canada cooperation and the dialogue between Canadian and EU experts contributed 
to  the  revision  by  Canada  of  its  legislation,  which  since  2020  includes  stronger  animal 
transportation requirements.  

- The EU-Chile trade agreement has been a driving force for developing Chilean legislation on 
animal  welfare.  Over  time,  cooperation  on  standards  for  animal  welfare  at  slaughter  has 
translated  into  Chilean  measures  mostly  based  on  OIE  standards.  These  exchanges  have  also 
facilitated the development of animal welfare standards during transport.  

-  The  EU–Ukraine  agreement  includes  provisions  on  animal  welfare  seeking  a  common 
understanding  on  animal  welfare  standards  taking  into  account  developments  in  the  World 
Organisation for Animal Health (OIE). 

6.  SERVICES, PUBLIC PROCUREMENT, INTELLECTUAL PROPERTY RIGHTS 

 6. 1 Services and Foreign Direct Investment (FDI) 

Services account for approximately 75% of EU GDP58, industry for 25% and agriculture for 2%.  
The EU is the largest exporter of services in the world. Trade in services accounts for 25% of 
EU GDP, with EU services exports exceeding €900 billion per year. Trade in services supports 
21 million EU jobs directly or indirectly. 60% of all EU FDI to the rest of the world is in services 
as is nearly 90% of all FDI coming into the EU.  

Services and investment provisions in EU trade agreements 

EU  trade  agreements  with  provisions  on  services  and  digital  trade  ensure  that  EU  service 
providers  are  allowed  to  supply  services  in  the  partner  countries’  markets  and  are  not 
discriminated against compared to national or foreign businesses in the same sector.  

Investment liberalisation provisions follow the same principle, in both services (establishment) 
and  non-services  areas  (manufacturing,  mining,  agriculture,  etc.),  in  tackling  restrictions  on 
market  access,  foreign  ownership  and  types  of  commercial  presence.  They  also  tackle 
discriminatory  screening,  licensing  and  approval  procedures,  constraints  on  foreign  personnel, 

58  https://ec.europa.eu/growth/single-market/services_en 

36 

 
 
 
 
 
 
 
                                                           
economic needs tests and discriminatory treatment privileging domestic businesses over foreign 
companies.  

All the EU’s more recent trade agreements have provisions on services, helping to establish and 
bolster  a  regulatory  framework  to  facilitate  the  provision  of  services,  while  protecting 
consumers.  

In  the  ‘schedules  of  commitments’,  parties  list  the  conditions  for  market  access  and  national 
treatment that they grant each other in their respective territories.  Specific commitments have an 
effect  similar  to  a  tariff  binding:  they  are  a  guarantee  to  businesses  in  other  countries  that  the 
conditions of entry and operation in the market will not change to their disadvantage.  

EU-Canada Comprehensive Economic and Trade Agreement (CETA) includes some of the most 
far-reaching  provisions  on  services  trade  negotiated  by  the  EU  so  far  and,  for  the  first  time,  a 
negative list for commitments. EU exports of services to Canada rose from €16,926 million in 
2017 to €19,000 million in 2018, an annual growth of 12.3%.  Total trade in services increased 
by 15.2%. 

A Dutch IT company puts Canada on the map  

Dutch  company  Spotzi  offers  an  interactive  mapping  platform  that  shows  the  world’s 
demographic  composition  and  people’s  behaviour,  like  travel  patterns  and  shopping  habits.  
Initially  based  in  the  Netherlands,  Spotzi  has  developed  operations  in  Canada  to  benefit  from 
local  talent  and  knowledge  in  Big  Data.  CETA  makes  it  easier  for  firms  to  send  staff  for 
temporary work to the other side of the Atlantic. Easier procedures for processing visas of staff 
have been a particular help, making it easier for the Dutch and Canadian teams to work together. 

”I surround myself with good people who make me feel great and give me positive energy.” 

Remco Dolman, CEO at Spotzi 

Unlike the provisions in trade agreements on trade in goods, those on services and digital trade 
mostly  bind  existing  levels  of  openness.  Trading  partners  do  not  normally  need  to  change  or 
adjust legislation or regulation or take other measures to implement the agreement, beyond the 
need to avoid any roll-back on the possibilities for EU firms to offer services and invest in their 
territory.  The  only  exception  so  far  is  CETA,  where  Canada  went  beyond  binding  its  existing 
level of market openness in two areas. 

37 

 
 
 
 
New markets for EU services providers:  EU-Canada Trade Agreement  

 -  EU  shipping  companies  can  now  offer  some  maritime  transport  activities  (feedering) 
between Halifax and Montreal, which were previously limited to national operators. 

-  EU  services  providers  can  compete  for  services  of  commercial  dredging  and  the 
repositioning  of  empty  containers.  The  commitments  have  since  then  been  implemented  as 
Canada has updated its coastal shipping laws accordingly.  

-  A  change  in  the  ‘Investment  Canada  Act’  has  increased  the  threshold  for  reviewing 
acquisitions of Canadian companies by non-Canadians from €658 million to €987 million.  This 
now applies to all EU investors other than those that are state-owned enterprises. 

Starting  with  CETA,  provisions  in  EU  trade  agreements  on  regulating  services  have  been 
substantially  strengthened.  The  EU-Japan  agreement,  for  example,  includes  comprehensive 
commitments on services and investment.  

Ambitious disciplines on services trade:  The EU-Japan EPA 

-  Japan  agreed,  for  the  first  time,  to  apply  domestic  regulation  principles  on  licensing  and 
qualification  requirements  and  on  procedures  and  technical  standards,  not  only  to  services 
sectors  but  also  to  investments  in  non-services  sectors,  such  as  agriculture,  manufacturing, 
mining etc. 

-  Japan  opened  additional  distribution  channels  for  EU  private  insurance  companies:    the 
latter can now also offer their insurance products through Japan’s network of post offices 

-  For  postal  and  courier  services,  rules  were  agreed  to  address  anti-competitive  practices  of 
universal service providers, such as cross-subsidisation. 

Monitoring the effectiveness of services provisions in EU trade agreements 

Since there are no ‘tariffs’ on services and investments, assessing the implementation of services 
and  investment  commitments  in  EU  trade  agreements  is  less  straightforward  than  for  goods. 
Together  with  the  monitoring  of  trends  of  services  trade  and  investment  flows  and  in  order  to 
gauge the effectiveness  of EU trade agreements, the European Commission primarily  relies on 
complaints by individual companies or business associations reporting problems in accessing a 
partner  country’s  market.  EU  companies  can  report  these  issues  to  the  EU  or  their  national 
authorities.  The  European  Commission  may  then,  in  turn,  raise  the  problems  with  its  trading 
partners, for example in the Services and Investment Committees set up by the agreements.  

38 

 
 
 
 
 
 
 Raising trade concerns in services – examples in 2019 

-  EU-Japan  Economic  Partnership  Agreement:  the  European  Commission  raised  concerns 
with  the  Japanese  authorities  about  access  conditions  to  the  Japanese  market  for  postal  and 
courier services. 

-  EU-South  Korea  Trade  Agreement:  the  European  Commission  raised  concerns  with  the 
Korean authorities about measures taken in the maritime transport sector and for used car sales 
and repair. 

-  EU-Colombia/Peru/Ecuador  Trade  agreement:  the  European  Commission  raised  concerns 
about  measures  taken  by  Ecuador  in  the  individual  life,  group  life,  personal,  health  and  motor 
reinsurance, which discriminated against foreign reinsurance companies. 

Finally,  EU  trade  agreements,  if  implemented  effectively,  tend  to  strengthen  the  economic 
relationship  between  the  EU  and  the  respective  partner,  resulting  in  increased  mutual 
investment  in  both  services  and  non-services  sectors.  This  also  applies  to  trade  agreements 
without  specific  provisions  on  services  and  investment.  For  example,  the  EU’s  Economic 
Partnership  Agreements  with  African  countries  for  now  cover  only  trade  in  goods  but 
contribute to making African economies more attractive for EU investment, notably in view of 
local  transformation  and  the  development  of  industrial  capacity.  Similarly,  EU  investment  in 
Morocco steadily increased after the EU-Morocco Association Agreement entered into force in 
2000, linking with local value chains, particularly in the automotive sector.  

EU trade agreements enhancing investment in Morocco 

- EU stocks of foreign direct investment in Morocco increased by 17% over the first five years of 
implementation  of  the  EU-Morocco  Association  Agreement59.  According  to  a  recent  analysis, 
“the EU-Morocco Association Agreement appears to have increased investor confidence in the 
Moroccan economy, inter alia by locking in liberalisation of services and by establishing greater 
policy discipline in realms ranging from macroeconomic stability to labour markets and product 
regulations.” 60  

-  EU  investment  in  Morocco  was  especially  prominent  in  the  automotive  sector,  which  has 
become  the  country’s  biggest  exporting  sector  (27%  of  Morocco’s  total  exports  in  2019), 
creating  116.000  jobs  between  2014  and  2018,  and  with  a  60%  integration  rate  of  local 
manufacturers.61 

59 Eurostat, 2012-2017, EU 28 
60  Policy  Center  for  the  New  South,  Has  Morocco  Benefited  from  the  Free  Trade  Agreement  with  the  European 
Union?, February 2020 
61 Source:  Moroccan Ministry for Industry http://www.mcinet.gov.ma/en/content/automotive-0  

39 

 
 
 
 
 
                                                           
6.2 Public Procurement 

The EU public procurement market62 shows strong signs of openness across all three modes of 
supply63. 

The below chart shows the value of cross-border public procurement contracts awarded directly 
or  indirectly  to  companies  outside  the  EU  in  2017.  All  three  modes  combined,  the  amount 
corresponded to € 50 billion.64  

Figure 14: EU openness in foreign procurement, by modes of supply (€ billion) 

Modality  1

Modality  2

Modality  3

Total

50

40

30

20

10

0

Modality  1

Modality  2

Modality  3

Total

Public procurement represents on average 10-25% of GDP65. Looking at the most recent Eurostat 
and OECD national accounts data in the EU, public procurement expenditure in respect to GDP 

62 Source: Tenders Electronic Daily (TED) database  (2017) 
63  Mode  1:  Direct  cross-border  international  procurement;  Mode  2:  commercial  presence  procurement ;  Mode  3: 
 indirect international procurement: 
64 See also “Public Procurement: How open is the European Union to US firms and beyond?”; Article by Lucian 
Cernat  and  Zornitsa  Kutlina-Dimitrova  in  CEPS,  March  2020;  https://www.ceps.eu/ceps-publications/public-
procurement/ 
65 Source: OECD (2002); see also WTO GPA staff working document of Robert Anderson (2011) and DG TRADE 
website: https://ec.europa.eu/trade/policy/accessing-markets/public-procurement/  

40 

 
 
 
 
 
 
                                                           
account for 13.7% of EU GDP or in absolute terms to some €2,015.3 billion (excluding utilities 
and defence contracts). 

Provisions on public procurement in EU trade agreements 

EU  trade  agreements’  chapters  on  public  procurement  provide  EU  companies  access  to  public 
contracts used to buy goods and services, including public works. Market access or coverage of 
the agreement defines the scope of the opening up of one country’s public procurement market 
to  EU bidders,  goods and services.  Applicable rules determine conditions of market  access  to 
ensure the transparency of procedures and provide for non-discrimination and equal treatment 
between the parties, allowing local suppliers and suppliers of the other Party to tender under the 
same conditions and securing effective review in case of public procurement complaints. Some 
concrete examples include: 

EU-South Korea FTA:  the agreement expands the market access commitments of both parties 
to  areas  not  provided  to  each  other  under    the  WTO  Agreement  on  Government  Procurement, 
namely  public  works  concessions  in  the  EU  and  Build-Operate-Transfer  (BOT)  contracts  in 
South Korea, which include building and operation of roads.  

CETA:  it  covers  a  wide  range  of  sub-central  government  procurements,  particularly  public 
procurement done by municipalities.66  

EU-Japan  EPA:  Japan  grants  non-discriminatory  access  for  EU  suppliers  to  the  procurement 
markets  of  48  cities  of  around  300,000  inhabitants,  representing  roughly  15%  of  the  Japanese 
population.  At national level, Japan agreed to open up tenders to EU bidders for 87 hospitals and 
academic  institutions  and  29  electricity  distribution  entities.  The  EU  also  got  greater  access  to 
the Japanese market for railway equipment and infrastructure. 

Implementation of public procurement provisions – working in Trade Committees  

The  European  Commission  continued 
implementation  of  procurement 
to  monitor 
commitments in its preferential trade agreements, working closely with its trading partners in the 
joint  procurement  and  trade  committees  set  up  under  EU  trade  agreements,  as  well  as  through 
specific dialogues.  

the 

66  The 
4/en/pdf#page=11 

full 

list 

is  available  here:  http://data.consilium.europa.eu/doc/document/ST-10973-2016-ADD-

41 

 
 
 
 
 
                                                           
Monitoring implementation of public procurement commitments – examples in 2019 

- With Colombia, the EU reiterated its concerns that EU suppliers lacked national treatment at 
sub-central  level.  Both  sides  agreed  to  continue  technical  discussions  with  a  view  to  finding  a 
mutually agreeable solution.  

- With Peru, the EU raised concerns about technical specifications in some tenders and stressed 
the need to ensure equivalence of standards as stipulated by the agreement. Peru agreed to raise 
awareness  on  the  need  to  set  non-discriminatory  technical  specifications  and  to  accept 
international standards in procurement procedures. 

-  With  Ukraine,  the  EU  proactively  supported  its  counterparts  in  developing  a  new  public 
procurement law that conforms to the relevant EU rules.  It was adopted on 19 September 201967 
and,  for  the  first  time,  it  provides  the  tools  for  more  strategic  public  procurement,  taking  on 
board  sustainability  aspects,  such  as  life-cycle  costs,  environmental,  innovative  and  social 
considerations. 

In  addition,  the  European  Commission  made  significant  efforts  to  promote  transparency  in 
public procurement procedures by establishing one-stop-shop electronic platforms for tenders.  
For example, at the second CETA Committee on Government Procurement,  Canada reported 
on progress made to  date in  establishing a  Single  Point of Access  (SPA), which will provide 
companies access to all public tender procedures covered by CETA.   

The  European  Commission  took  further  steps  to  improve  communication  on  public 
procurement  in  EU  trade  agreements.  In  2019,  the  European  Commission  published  a  new 
guidebook  on  Government  Procurement  in  Canada.68  The  EU-Japan  Centre  for  Industrial 
Cooperation,  sponsored  by  the  European  Commission  and  the  Japanese  Ministry  of  Economic 
Affairs,  launched  an  EPA  Helpdesk  to  support  and  guide  EU  SMEs  looking  for 
information. In addition to running webinars, the Centre published a factsheet and a guideline on 
public procurement69. The European Commission has  also  offered guidance to  the EU’s public 
buyers  on  treatment  of  bids  from  third  countries70,  underlying  the  respect  of  the  commitments 
taken by the EU in the different trade agreements. 

To  inform  EU  trade  negotiations  on  public  procurement,  the  European  Commission 
presented  its  new  database  ‘International  Public  Procurement  Initiative  (IPPI)’,  the  world’s 
first  comprehensive  database  of  detailed  procurement  data  and  barriers  to  international 

67 New Edition of the Law on Public Procurement (as adopted on 19/09/2019 with № 114-IX), replacing Law No. 
922 of 2015; the new law entered into force on 20 April 2020. 

68 https://trade.ec.europa.eu/doclib/docs/2020/february/tradoc_158655.pdf  
69  The  fact  sheet  and  guideline  can  be  accessed  at  https://www.eubusinessinjapan.eu/library/publication/infopack-
epa-government-procurement#  

70 C(2019) 5494 final, adopted on 24 July 2019 “Guidance on the participation of third country bidders and goods in 
the EU procurement market” 

42 

 
 
 
                                                           
 
 
procurement.  The  database  is  the  most  complete  of  its  kind,  with  information  on  nearly  40 
million public contracts. To date, only one preferential trading partner, Canada, is covered by the 
database. 71  

Innovative solutions from Southern Europe enter Peru 

Portuguese construction equipment manufacturer BERD/“One bridge-One Solution” is building 
125 modular bridges in Peru, helping the country to re-build roads and infrastructure following 
the El Niño Costero natural disaster. BERD was able to do so after winning a €15 million public 
tender published by Peru’s Ministry of Transport and Communications. 

Through  its  affiliate  Green  Power  Peru,  Italian  company  Enel  operates  10  power  production 
plants  (hydro,  wind  and  solar)  and  in  2019  carried  out  37  sustainability  projects  with  8,000 
beneficiaries  in  Peru. Enel  Peru  won contracts  in Peru for the two largest renewables projects, 
the Rubi solar park and the Wayra I wind farm.  

Both companies benefit from the EU-Peru Trade Agreement, in force since 2013. It has created a 
more solid and transparent legal framework for public procurement and investment, and ensures 
European suppliers  and their products  are not  discriminated against compared to  local  bidders.  
The agreement also promotes trade schemes for sustainable energy policies.   

6.3 Intellectual Property Rights (IPR)72  

93  %  of  all  goods  and services  that  the  EU  exports  are  covered  by  at  least  one  intellectual 
property right.73 A study74 by the European Patent Office and the European Union Intellectual 
Property Office published in September 2019 concluded that in 2016 IPR-intensive industries in 
goods and services sectors accounted for 86% of EU imports and 93% of EU exports.75 

IPR in EU trade agreements 

EU trade agreements aim to ensure EU right holders’ intellectual property rights are effectively 
protected  in  trading  partner  countries  and  rightholders  can  enforce  their  rights.  Instead  of 
eliminating tariffs, the agreements bind the parties to the rules and principles set out in the IPR 

71 The other key EU trading partners covered by IPPI are Australia, Brazil, China, India, Indonesia, New Zealand, 
Thailand and the United States. 
72  For  detailed  information  on  IPR  protection  and  enforcement  see  the  EU  Commission’s  Third  Country  Report 
https://trade.ec.europa.eu/doclib/docs/2020/january/tradoc_158561.pdf 
the  EU  Counterfeit  and  Piracy 
Watchlist: https://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157564.pdf  
73 Some goods and services are covered by several IPRs at the same time.  This is called complementary protection. 
Examples are cars, furniture, watches and foodstuffs.   
74 The study is available here: https://www.epo.org/news-events/news/2019/20190925.html 
75 The study identified 356 IPR-intensive industries. 

  and 

43 

 
 
 
 
 
                                                           
 
chapter.  These  cover  copyrights,  trademarks,  designs,  patents,  plant  varieties,  undisclosed 
information  (trade  secrets),  civil  and  border  enforcement,  and  more.  IPR  provisions  in  trade 
agreements  usually  require  the  parties  to  adhere  to  the  relevant  international  treaties  and 
conventions,  such  as  the  WTO  Agreement  on  Trade  Related  Aspects  of  Intellectual  Property 
(TRIPS)  and  the  World  Intellectual  Property  Organization  (WIPO)  or  go  beyond  these 
disciplines.  

Implementation of IPR commitments in EU trade agreements 

To assess the effectiveness of EU trade agreements in protecting IPRs the European Commission 
monitors  its  trading  partners’  legislation  in  this  area,  with  a  special  focus  on  actual 
enforcement.  It  regularly  contacts  business  associations  in  the  EU  and  abroad,  verifies  any 
complaints  and,  if  considered  valid,  raises  them  with  its  trading  partners  in  the  respective 
institutional bodies, such as in the IPR Sub-Committee or IPR Dialogues set up under EU trade 
agreements. 

Examples of issues raised by the European Commission in 2019 include:  

-  EU-South  Korea  Free  Trade  Agreement:  the  EU  raised  concerns  about  the  lack  of 
remuneration for performers and records’ producers for the public performance of their music.  

-  EU-Association  Agreement  with  Colombia,  Peru  and  Ecuador:  the  EU  raised  concerns 
about Ecuador’s localisation requirements for the manufacture of patented products. On the EU’s 
request, Ecuador withdrew the requirements. 

-  EU-Ukraine  Free  Trade  Area:  the  EU  raised  concerns  about  a  number  of  draft  laws 
(ultimately  dropped)  that  would  have  restrictive  patentability  and  denied  protection  to  certain 
substances and new uses of medicines.  

7. SMALL AND MEDIUM-SIZED ENTERPRISES 

Small and medium-sized enterprises (SMEs)76 are a pillar of the EU economy. They represent 
99% of all EU companies and 87% of EU companies exporting.  Exporting SMEs support over 
13 million jobs in the EU, with goods and services having a similar contribution.  

The  below  graphic  shows  EU27  exporters  of  goods  by  company  size,  number  and  value  of 
exports: in  2017 (latest data available) more than 700,000 EU27 enterprises sold goods outside 
of  the  EU,  of  which  615,000  were  SMEs,  which  represented  between  28%  and  30%  in  EU 
exports by value77.  

76 SMEs are commonly defined as enterprises employing less than 250 employees. 
77 These figures are estimates as data received from EU Member States on extra-EU exports include a non-negligible 
number of enterprises of "unknown" size. 

44 

 
 
 
 
                                                           
Figure 15: EU27 exporters of goods by size, number of firms and value of exports, 2017 

Source: Commission/DG Trade Chief Economist Unit; calculations based on the Eurostat TEC database 

There  are  gaps  in  the  information  available  on  SME  exports  to  trading  partners,  including 
preferential  ones,  as  only  about  half  of  the  EU  Member  States  use  to  submit  information  on 
exports  per  company  size  and  trading  partner.  The  Eurostat  TEC  (Trade  by  Enterprise 
Characteristics)  database  is  more  comprehensive  than  the  STEC  (Services  Trade  by  Enterprise 
Characteristics)  database  inter  alia  because  not  all  Member  States  report  data  under  the  STEC 
framework. A Eurostat pilot project on SME participation in services trade (STEC) aims to 
provide more information on firms’ characteristics.78 

Most  recent  empirical  evidence  suggests,  however,  that  the  number  of  EU  SMEs  exporting 
extra EU has been growing steadily between 2014 and 2017, i.e. by 6% on average, whereas the 
total  number  of  EU  firms  exporting  went  down  by  8%.79  For  exporting  SMEs  EU  trade 

78 https://ec.europa.eu/eurostat/web/experimental-statistics/stec 
79  See  Note  of  Chief  Economist  DG  TRADE  of  1  May  2020  (Role  of  SMEs  in  EU  exports),  available  here: 
https://trade.ec.europa.eu/doclib/docs/2020/june/tradoc_158778.pdf  

45 

369,9 86,6 174,5 119,9 70,6 269,6 64,9 231,5 22,7 959,8 0%10%20%30%40%50%60%70%80%90%100%Nb enterprises (x1000)Export value (billion €)LargeUnknown sizeMediumSmallMicro 
 
 
 
 
                                                           
agreements are vital as they make it easier to do business abroad by removing trade barriers and 
inefficiencies, which disproportionally affect smaller companies.  

Progress in 2019 in implementing SME relevant provisions in trade agreements 

-  Canada  and  Japan  set  up  special  websites  with  information  for  SMEs,  in  line  with  their 
commitments in the respective trade agreements. 

-  The  European  Commission’s  Market  Access  Database  (MADB)  was  extended  to  include 
information on the EU’s trade agreements with Canada and Japan relevant for SMEs. 

-  The  EU's  Green  Gateway  to  Japan  Programme  (Green  Gateway)  provided  assistance  to 
European SMEs wanting to export to Japan, helping them find the right partners. 

- The SME  contact  points  for EU’s trade agreements with  Canada and Japan began work in 
areas of common interest. 

Activities in facilitating access by SMEs to EU trade agreements  

In  2019,  the  Commission  continued  its  Market  Access  Day  events  organised  jointly  with  EU 
Member States to raise awareness with local business on the opportunities offered by preferential 
agreements  and  how  the  Market  Access  Partnership  helps  them  overcome  obstacles.    Sessions 
were held in Denmark, Spain, the Netherlands, Lithuania, Portugal, France and Latvia. 

The  Commission  intensified  its  collaboration  with  the  Enterprise  Europe  Network  (EEN)80 
and European Trade Promotion Organisations in EU Member States to explore how business 
consultants and consortia forming the network could disseminate the information to businessmen 
and  women.  In  2019,  the  network  started  to  nominate  specific  EEN  contacts  for  trade 
agreements, who will receive specialised training from the Commission. 

Important  progress  was  also  made  on  the  development  of  a  new  import  and  export  portal, 
which was launched on 13 October 2020. 

The new ‘Access2Markets’ portal offers: 

 -A  single  port  of  call  for  SMEs  looking  for  practical  information  on  exports  and  imports  of 
goods  (tariffs, product  specific information  on import and  export requirements, information  on 
benefits under EU trade agreements, taxes, trade statistics etc.).  

-  Information  on  the  EU´s  trade  agreements  and  step-by-step  guides  on  importing  and 
exporting.  

-  A  Rules  of  Origin  Self-Assessment  tool  with  a  step-by-step  check-list  for  companies  to 
understand whether a product meets the criteria for preferential rules of origin treatment. 

80 https://een.ec.europa.eu/  

46 

 
 
 
 
 
                                                           
8. LEGAL ENFORCEMENT 

Since the end of 2018, the EU has resorted to the bilateral dispute settlement mechanisms set up 
under  the  trade  agreements  with  South  Korea,  Ukraine  and  the  Southern  Africa  Customs 
Union.  As of June 2020, these disputes are still pending; see details below.  

Where the measure at issue appears to be in violation of both the WTO Agreement  and a trade 
agreement between the EU and the partner country, the EU has a choice of forum, to be assessed 
on  a  case-by-case  basis.    The  WTO  remains  a  well-tested  dispute  settlement  system,  ensuring 
coherence  in  interpreting  the  relevant  commitments.    In  2019,  the  EU  resorted  to  the  WTO 
dispute settlement system in two cases.   

On  2  April  2019,  the  EU  requested  WTO  consultations  with  Turkey  and,  following 
consultations  on  9  and  10  May  that  failed  to  settle  the  dispute,  on  2  August  requested  the 
establishment of a WTO panel.81   

On  15  November  2019,  the  EU  initiated  a  WTO  dispute  settlement  procedure  and  requested 
consultations82 with Colombia over its imposition of illegal  anti-dumping duties on imports of 
frozen  fries  from  Belgium,  Germany  and  the  Netherlands.    Consultations  failed  to  settle  the 
dispute.  On 29 June 2020, following a request by the EU,83 the WTO Dispute Settlement Body 
set up a dispute settlement panel.   

Enforcement  of  the  EU’s  rights  under  trade  agreements  is  one  of  the  central  tenets  of  this 
European  Commission’s  trade  policy.    The  European  Commission  is  closely  monitoring  the 
implementation  of  EU  trade  agreements  and  will  consider  using  legal  enforcement  where 
necessary,  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 – for example, the dispute with South Korea on labour rights.  

In the context of the COVID-19 pandemic, it is important to keep in mind that an open and rules-
based  trade  will  sustain  any  future  economic  recovery.    Therefore,  the  European  Commission 
continues  to  take  the  necessary  steps  to  ensure  proper  enforcement  of  its  trade  agreements,  as 
appropriate.  

8.1   Trade and Sustainable Development dispute settlement with South Korea  

Under the Trade and Sustainable Development Chapter of the EU-South Korea 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 

81 https://trade.ec.europa.eu/doclib/docs/2019/august/tradoc_158308.pdf 

82  https://trade.ec.europa.eu/doclib/docs/2020/february/tradoc_158645.pdf 
83 WT/DS591 - Colombia – Anti-Dumping Duties on Frozen Fries from Belgium, Germany and the Netherlands 

47 

 
 
 
 
                                                           
 
and  the  right  to  collective  bargaining.  South  Korea  also  committed  to  make  “continued  and 
sustained efforts” towards ratifying outstanding ILO conventions84.  
In the absence of progress, on 17 December 2018 the EU decided to request consultations85 with 
South Korea under the trade and sustainable development chapter.  Due to the lack of sufficient 
efforts  towards  ratifying  the  ILO  conventions  concerned,  on  4  July  2019  the  EU  requested  the 
establishment  of  a  Panel  of  Experts  86,  which  was  formally  established  on  30  December  2019. 
Proceedings are ongoing.  

8.2 

Dispute settlement with Ukraine 

In  January  2019,  under  the  EU-Ukraine  Association  Agreement’s  bilateral  dispute  settlement 
regime  the  EU  decided  to  request  consultations87  with  Ukraine  on  the  country’s  export 
restrictions on wood.  The restriction initially covered timber and sawn wood of ten species and 
since 2015 has been extended to all unprocessed wood, including since 2017 pinewood. 

The  EU  had  raised  the  issue  with  Ukraine  on  many  occasions,  as  the  export  restriction  is 
incompatible with the Association Agreement.  In 2019, Ukraine made no attempt to repeal the 
ban.    Therefore,  and  following  bilateral  dispute  settlement  consultations  in  February  2019  that 
failed to resolve the matter, the EU requested the formal establishment of a bilateral arbitrarion 
panel  to  adjucate  on  the  matter.    The  request  was  launched  in  June  201988  and  the  arbitration 
panel, the first one under any EU free trade agreement, was formallly established on 28 January 
2020.  Proceedings are ongoing.  

8.3 

Dispute settlement with the Southern African Customs Union (SACU) 

On  14  June  2019,  the  EU  requested  consultations89  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 EU exports of frozen bone-in chicken cuts.  The EU considers that SACU imposed 
the measure in violation of the principles and rules of the EU-SADC EPA.  The safeguard will 
expire on 11 March 2022.  However, it could be extended for a further 4 years. 

Consultations  held  in  September  2019  did  not  lead  to  a  mutually  satisfactory  solution  but 
confirmed  the  EU  position  that  the  safeguard  measure  is  not  in  line  with  the  provisions  of  the 

84  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. 
85 http://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157586.pdf  
86  http://trade.ec.europa.eu/doclib/docs/2019/july/tradoc_157992.pdf 
87 http://trade.ec.europa.eu/doclib/docs/2019/january/tradoc_157625.pdf 
88 https://trade.ec.europa.eu/doclib/docs/2019/june/tradoc_157943.pdf  
89 https://trade.ec.europa.eu/doclib/docs/2019/june/tradoc_157928.pdf  

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EU-SADC EPA.  On 21 April 2020, the EU requested the establishment of an arbitration panel90 
with SACU under the Dispute Avoidance and Settlement Part of the EU-SADC EPA.  

9.  CONCLUSIONS 

In  2019,  notwithstanding  the  protracted  WTO  crisis  and  protectionist  tendencies,  as  well  as  a 
slow-down of global trade and investment, EU trade agreements continued to facilitate fair trade 
in  goods  and  services  and  investment,  solidify  the  framework  of  international  rules,  promote 
sustainability  goals  and  to  contribute  to  the  international  dimension  of  EU  industrial  policy91. 
This shows that these agreements can make an essential  contribution to the recovery following 
the global Covid-19 pandemic, which is expected to result in a contraction of the EU economy of 
8.3%  in  2020.92  In  particular,  EU  trade  agreements  support  diversification  of  European  supply 
chains,  facilitate  digital  trade  and  offer  platforms  for  deeper  engagement  with  EU  trading 
partners  on  multilateralism  and  wider  sustainability  issues.  Efforts  to  improve  the  effective 
implementation  and  enforcement  of  these  agreements  will  be  spearheaded  by  the  new  Chief 
Trade  Enforcement  Officer,  in  close  liaison  with  other  EU  institutions,  Member  States, 
stakeholders and civil society.  

90 https://trade.ec.europa.eu/doclib/docs/2020/april/tradoc_158717.pdf   
91 See COM(2017)479 
92  Source:  Commission’s  2020  Summer  Economic  Forecast:  https://ec.europa.eu/info/sites/info/files/economy-
finance/ip132_en.pdf 

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