COMMISSION STAFF WORKING DOCUMENT Individual reports and info sheets on implementation of EU Free Trade Agreements Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on Implementation of 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  SWD(2020) 263 final  COMMISSION STAFF WORKING DOCUMENT Individual reports and info sheets on implementation of EU Free Trade Agreements Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS  on Implementation of EU Trade Agreements          1 January 2019 - 31 December 2019      {COM(2020) 705 final}  
 
 
DATA USED FOR THE COMPILATION OF INDIVIDUAL REPORTS AND 
INFORMATION SHEETS .................................................................................................... 15 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE 15 
POINTS ACTION PLAN ON TRADE AND SUSTAINABLE DEVELOPMENT ......... 16 

1. 

Introduction ...................................................................................................................... 16 

2.  Working together strand ................................................................................................... 16 

3.  Enabling civil society to play their role in implementation ............................................. 17 

4.  Delivering ......................................................................................................................... 18 

5.  Transparency .................................................................................................................... 20 

PART I:   ASIA .................................................................................................................. 21 

ANNUAL INFORMATION SHEET ON PREPARATIONS FOR THE 
IMPLEMENTATION OF THE FREE TRADE AGREEMENT BETWEEN THE EU 
AND ITS MEMBER STATES AND SINGAPORE ............................................................ 22 

1. 

Introduction ...................................................................................................................... 22 

2.  The agreements in summary ............................................................................................ 23 

3.  Preparatory work for the entry into force ......................................................................... 24 

4. 

early achievements and up-coming implementation activities ........................................ 25 

5.  Statistics ........................................................................................................................... 26 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE 
ECONOMIC PARTNERSHIP AGREEMENT BETWEEN THE EU AND JAPAN ..... 27 

1. 

Introduction ...................................................................................................................... 27 

2.  Main implementation issues ............................................................................................. 27 

2.1   Main open issues, progress and follow-up ................................................................ 27 

2.2 

Progress in the implementation of trade and sustainable development provisions ... 28 

3.  Activities of the implementation bodies ........................................................................... 29 

4.  Specific Areas of Importance ........................................................................................... 32 

5.  Evolution of bilateral trade ............................................................................................... 32 

5.1  Economic environment .............................................................................................. 32 

5.2  Trade in goods ........................................................................................................... 34 

5.3  Trade in agricultural products .................................................................................... 35 

5.4  Trade in services and Foreign Direct Investments .................................................... 36 

6.  Conclusions ...................................................................................................................... 36 

7.  Statistics ........................................................................................................................... 37 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE EU-
SOUTH KOREA FREE TRADE AGREEMENT .............................................................. 38 

1. 

Introduction ...................................................................................................................... 38 

2.  Main implementation issues ............................................................................................. 38 

2.1   Main open issues, progress and follow-up ................................................................ 38 

2.2 

Progress in the implementation of trade and sustainable development provisions ... 39 

1 

 
 
3.  Activities of the implementation bodies ........................................................................... 40 

4.  Activities subject to specific monitoring and Specific Areas of Importance ................... 44 

5.  Evolution of bilateral trade ............................................................................................... 44 

5.1  Economic environment .............................................................................................. 44 

5.2  Trade in goods ........................................................................................................... 45 

5.3  Trade in agricultural products .................................................................................... 46 

5.4  Trade in services and Foreign Direct Investments .................................................... 47 

6.  Conclusions ...................................................................................................................... 48 

7.  Statistics ........................................................................................................................... 50 

PART II:   THE AMERICAS ............................................................................................. 51 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE 
COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT (CETA) BETWEEN 
THE EU AND ITS MEMBER STATES AND CANADA .................................................. 52 

1. 

Introduction ...................................................................................................................... 52 

2.  Main implementation issues ............................................................................................. 53 

2.1   Main open issues, progress and follow-up ................................................................ 53 

2.2 

Progress in the implementation of trade and sustainable development provisions ... 55 

3.  Activities of the implementation bodies ........................................................................... 57 

4.  Specific Areas of Importance ........................................................................................... 61 

5.  Evolution of bilateral trade ............................................................................................... 61 

5.1  Economic environment .............................................................................................. 61 

5.2  Trade in goods ........................................................................................................... 63 

5.3  Trade in agricultural products .................................................................................... 65 

5.4  Trade in services and Foreign Direct Investments .................................................... 68 

6.  Conclusions ...................................................................................................................... 68 

7.  Statistics ........................................................................................................................... 70 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE EU-
COLOMBIA/ECUADOR/PERU TRADE AGREEMENT ................................................ 71 

1. 

Introduction ...................................................................................................................... 71 

2.  Main implementation issues ............................................................................................. 72 

2.1   Main open issues, progress and follow-up ................................................................ 72 

2.2 

Progress in the implementation of trade and sustainable development provisions ... 73 

3.  Activities of the implementation bodies ........................................................................... 76 

4.  Activities subject to specific monitoring and specific areas of importance ..................... 80 

4.1  Banana Stabilisation Mechanism ............................................................................... 80 

4.2  Colombian anti-dumping duties on frozen fries ........................................................ 82 

4.3  Ex post evaluation of the implementation of the Trade Agreement .......................... 82 

5.  Evolution of bilateral trade ............................................................................................... 83 

2 

 
 
5.1  Economic environment .............................................................................................. 83 

5.2  Trade in goods ........................................................................................................... 84 

5.3  Trade in agricultural products .................................................................................... 88 

5.4  Trade in services and Foreign Direct Investments .................................................... 96 

6.  Conclusions ...................................................................................................................... 97 

7.  Statistics ........................................................................................................................... 99 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF PART IV OF 
THE ASSOCIATION AGREEMENT BETWEEN THE EU AND ITS MEMBER 
STATES AND CENTRAL AMERICA .............................................................................. 102 

1. 

Introduction .................................................................................................................... 102 

2.  Main implementation issues ........................................................................................... 102 

2.1   Main open issues, progress and follow-up .............................................................. 102 

2.2 

Progress in the implementation of trade and sustainable development provisions . 103 

4.  Activities subject to specific monitoring ........................................................................ 108 

5.  Evolution of bilateral trade ............................................................................................. 109 

5.1  Economic environment ............................................................................................ 109 

5.2  Trade in goods ......................................................................................................... 110 

5.3  Trade in agricultural products .................................................................................. 114 

5.4  Trade in services and Foreign Direct Investments .................................................. 116 

6.  Conclusions .................................................................................................................... 117 

7.  Statistics ......................................................................................................................... 119 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE TRADE 
PILLAR OF THE EU-CHILE ASSOCIATION AGREEMENT .................................... 125 

1. 

Introduction .................................................................................................................... 125 

2.  Main open implementation issues, progress and follow-up actions ............................... 125 

3.  Activities of the implementation bodies ......................................................................... 126 

4.  Specific Areas of Importance ......................................................................................... 126 

5.  Evolution of bilateral trade ............................................................................................. 127 

5.1  Economic environment ............................................................................................ 127 

5.2  Trade in goods ......................................................................................................... 128 

5.3  Trade in agricultural products .................................................................................. 128 

5.4  Trade in services and Foreign Direct Investments .................................................. 130 

6.  Conclusions .................................................................................................................... 130 

7.  Statistics ......................................................................................................................... 132 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE TRADE 
PILLAR OF THE EU-MEXICO ASSOCIATION AGREEMENT ................................ 133 

1. 

Introduction .................................................................................................................... 133 

2.  Main open implementation issues , progress and follow-up actions .............................. 133 

3 

 
 
3.  Activities of the implementation bodies ......................................................................... 134 

4.  Specific Areas of Importance ......................................................................................... 136 

5.  Evolution of bilateral trade ............................................................................................. 136 

5.1  Economic environment ............................................................................................ 136 

5.2  Trade in goods ......................................................................................................... 137 

5.3  Trade in agricultural products .................................................................................. 137 

5.4  Trade in services and Foreign Direct Investments .................................................. 139 

6.  Conclusions .................................................................................................................... 139 

7.  Statistics ......................................................................................................................... 141 

PART III: EU NEIGHBOURING COUNTRIES ............................................................. 142 

PART III.I ............................................................................................................................. 143 

SWITZERLAND, NORWAY AND TURKEY ................................................................. 143 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE EU-
SWITZERLAND TRADE AGREEMENT ........................................................................ 144 

1. 

Introduction .................................................................................................................... 144 

2.  Main open implementation issues, progess and follow-up actions ................................ 145 

3.  Activities of the implementation bodies ......................................................................... 146 

4.  Specific Areas of Importance ......................................................................................... 147 

5.  Evolution of bilateral trade ............................................................................................. 147 

5.1  Economic environment ............................................................................................ 147 

5.2  Trade in goods ......................................................................................................... 148 

5.3  Trade in agricultural products .................................................................................. 149 

5.4  Trade in services and Foreign Direct Investments .................................................. 152 

6.  Conclusions .................................................................................................................... 152 

7.  Statistics ......................................................................................................................... 153 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE EU-
NORWAY TRADE AGREEMENT ................................................................................... 154 

1. 

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

2.  Main open implementation issues, progess and follow-up actions ................................ 154 

3.  Activities of the implementation bodies ......................................................................... 155 

4.  Specific Areas of Importance ......................................................................................... 156 

5.  Evolution of bilateral trade ............................................................................................. 156 

5.1  Economic environment ............................................................................................ 156 

5.2  Trade in goods ......................................................................................................... 157 

5.3  Trade in agricultural products .................................................................................. 157 

5.4  Trade in services and Foreign Direct Investments .................................................. 159 

6.  Conclusions .................................................................................................................... 159 

7.  Statistics ......................................................................................................................... 160 

4 

 
 
ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE EU-
TURKEY CUSTOMS UNION AND TRADE AGREEMENTS ...................................... 161 

1. 

Introduction .................................................................................................................... 161 

2.  Main open implementation issues, progress and follow-up actions ............................... 162 

3.  Activities of the implementation bodies ......................................................................... 162 

4.  Specific Areas of Importance ......................................................................................... 163 

5.  Evolution of bilateral trade ............................................................................................. 164 

5.1  Economic environment ............................................................................................ 164 

5.2  Trade in goods ......................................................................................................... 164 

5.3  Trade in agricultural products .................................................................................. 164 

5.4  Trade in services and Foreign Direct Investments .................................................. 167 

6.  Conclusions .................................................................................................................... 167 

7.  Statistics ......................................................................................................................... 169 

PART III.2 ............................................................................................................................ 170 

TRADE AGREEMENTS WITH WESTERN BALKAN PARTNERS .......................... 170 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE TRADE 
PILLAR OF THE EU-ALBANIA STABILISATION AND ASSOCIATION 
AGREEMENT ...................................................................................................................... 171 

1. 

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

2.  Main open implementation issues, progress and follow-up actions ............................... 171 

3.  Activities of the implementation bodies ......................................................................... 172 

4.  Evolution of bilateral trade ............................................................................................. 172 

4.1  Economic environment ............................................................................................ 172 

4.2  Trade in goods ......................................................................................................... 173 

4.3  Trade in agricultural products .................................................................................. 174 

4.4  Trade in services and Foreign Direct Investments .................................................. 175 

5.  Conclusions .................................................................................................................... 175 

6.  Statistics ......................................................................................................................... 177 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE TRADE 
PILLAR OF THE EU-BOSNIA AND HERZEGOVINA STABILISATION AND 
ASSOCIATION AGREEMENT ......................................................................................... 178 

1. 

Introduction .................................................................................................................... 178 

2.  Main open implementation issues, progress and follow-up actions ............................... 178 

3.  Activities of the implementation bodies ......................................................................... 179 

4.  Specific Areas of Importance ......................................................................................... 179 

5.  Evolution of bilateral trade ............................................................................................. 179 

5.1  Economic environment ............................................................................................ 179 

5.2  Trade in goods ......................................................................................................... 180 

5 

 
 
5.3  Trade in agricultural products .................................................................................. 180 

5.4  Trade in services and Foreign Direct Investments .................................................. 181 

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

7.  Statistics ......................................................................................................................... 182 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE TRADE 
PILLAR OF THE STABILISATION AND ASSOCIATION AGREEMENT BETWEEN 
THE EU AND NORTH MACEDONIA ............................................................................. 183 

1. 

Introduction .................................................................................................................... 183 

2.  Main implementation issues, progress and follow-up actions ....................................... 183 

3.  Activities of the implementation bodies ......................................................................... 184 

4.  Specific Areas of Importance ......................................................................................... 184 

5.  Evolution of bilateral trade ............................................................................................. 185 

5.1  Economic environment ............................................................................................ 185 

5.2  Trade in goods ......................................................................................................... 186 

5.3  Trade in agricultural products .................................................................................. 186 

5.4  Trade in services and Foreign Direct Investments .................................................. 186 

6.  Conclusions .................................................................................................................... 187 

7.  Statistics ......................................................................................................................... 188 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE TRADE 
PILLAR OF THE EU-KOSOVO STABILISATION AND ASSOCIATION 
AGREEMENT ...................................................................................................................... 189 

1. 

Introduction .................................................................................................................... 189 

2.  Main open implementation issues, progress and follow-up actions ............................... 189 

3.  Activities of the implementation bodies ......................................................................... 190 

4.  Evolution of bilateral trade ............................................................................................. 191 

4.1  Economic environment ............................................................................................ 191 

4.2  Trade in goods ......................................................................................................... 191 

4.3  Trade in agricultural products .................................................................................. 192 

4.4  Trade in services and Foreign Direct Investments .................................................. 192 

5.  Conclusions .................................................................................................................... 192 

ANNUAL INFORMATION SHEET ON IMPLEMENTATION OF THE TRADE 
PILLAR OF THE EU-MONTENEGRO STABILISATION AND ASSOCIATION 
AGREEMENT ...................................................................................................................... 194 

1. 

Introduction .................................................................................................................... 195 

2.  Main open implementation issues, progress and follow-up actions ............................... 195 

3.  Activities of the implementation bodies ......................................................................... 196 

4.  Evolution of bilateral trade ............................................................................................. 196 

4.1  Economic environment ............................................................................................ 196 

4.2  Trade in goods ......................................................................................................... 197 

6 

 
 
4.3  Trade in agricultural products .................................................................................. 197 

4.4  Trade in services and Foreign Direct Investments .................................................. 198 

5.  Conclusions .................................................................................................................... 198 

6.  Statistics ......................................................................................................................... 200 

ANNUAL INFORMATION SHEET ON IMPLEMENTATION OF the TRADE 
PILLAR OF THE EU-SERBIA STABILISATION AND ASSOCIATION 
AGREEMENT ...................................................................................................................... 201 

1. 

Introduction .................................................................................................................... 201 

2.  Main open implementation issues, progress and follow-up actions ............................... 201 

3.  Activities of the implementation bodies ......................................................................... 202 

4.  Specific Areas of Importance ......................................................................................... 202 

5.  Evolution of bilateral trade ............................................................................................. 203 

5.1  Economic environment ............................................................................................ 203 

5.2  Trade in goods ......................................................................................................... 203 

5.3  Trade in agricultural products .................................................................................. 204 

5.4  Trade in services and Foreign Direct Investments .................................................. 204 

6.  Conclusions .................................................................................................................... 204 

7.  Statistics ......................................................................................................................... 206 

PART III.3 ............................................................................................................................ 207 

DEEP AND COMPREHENSIVE FREE TRADE AREAS WITH ................................. 207 

GEORGIA, MOLDOVA AND UKRAINE ........................................................................ 207 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE DEEP 
AND COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN THE EU AND 
ITS MEMBER STATES AND GEORGIA ........................................................................ 208 

1. 

Introduction .................................................................................................................... 208 

2.  Main implementation issues ........................................................................................... 208 

2.1   Main open issues, progress and follow-up .............................................................. 208 

2.2 

Progress in the implementation of trade and sustainable development provisions . 211 

3.  Activities of the implementation bodies ......................................................................... 212 

3.1 Joint decisions of the Association Bodies ................................................................ 212 

3.2 Meetings of the Association Bodies ......................................................................... 213 

4.  Specific Areas of Importance ......................................................................................... 215 

5.  Evolution of bilateral trade ............................................................................................. 215 

5.1  Economic environment ............................................................................................ 215 

5.2  Trade in goods ......................................................................................................... 216 

5.3  Trade in agricultural products .................................................................................. 217 

5.4  Trade in services and Foreign Direct Investments .................................................. 218 

6.  Conclusions .................................................................................................................... 219 

7 

 
 
7.  Statistics ......................................................................................................................... 221 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE DEEP 
AND COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN THE EU AND 
ITS MEMBER STATES AND MOLDOVA ...................................................................... 222 

1. 

Introduction .................................................................................................................... 222 

2.  Main implementation issues ........................................................................................... 222 

2.1   Main open issues, progress and follow-up .............................................................. 222 

2.2 

Progress in the implementation of trade and sustainable development provisions . 224 

3.  Activities of the implementation bodies ......................................................................... 224 

4.  Specific Areas of Importance ......................................................................................... 225 

5.  Evolution of bilateral trade ............................................................................................. 225 

5.1  Economic environment ............................................................................................ 225 

5.2  Trade in goods ......................................................................................................... 226 

5.3  Trade in agricultural products .................................................................................. 227 

5.4  Trade in services and Foreign Direct Investments .................................................. 228 

6.  Conclusions .................................................................................................................... 229 

7.  Statistics ......................................................................................................................... 230 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE DEEP 
AND COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN THE EU AND 
ITS MEMBER STATES AND UKRAINE ........................................................................ 231 

1. 

Introduction .................................................................................................................... 231 

2.  Main implementation issues ........................................................................................... 231 

2.1   Main open issues, progress and follow-up .............................................................. 231 

2.2 

Progress in the implementation of trade and sustainable development provisions . 234 

2.3  Legal enforcement – dispute settlement case .......................................................... 234 

3.  Activities of the implementation bodies ......................................................................... 235 

4.  Specific Areas of Importance ......................................................................................... 235 

5.  Evolution of bilateral trade ............................................................................................. 236 

5.1  Economic environment ............................................................................................ 236 

5.2  Trade in goods ......................................................................................................... 236 

5.3  Trade in agricultural products .................................................................................. 237 

5.4  Trade in services and Foreign Direct Investments .................................................. 241 

6.  Conclusions .................................................................................................................... 241 

7.  Statistics ......................................................................................................................... 242 

PART III.4 ............................................................................................................................ 243 

ASSOCIATION AGREEMENTS WITH .......................................................................... 243 

MEDITERRANEAN AND MIDDLE EAST PARTNERS ............................................... 243 

8 

 
 
ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE EU-
ALGERIA ASSOCIATION AGREEMENT ..................................................................... 244 

1. 

Introduction .................................................................................................................... 244 

2.  Main implementation issues ........................................................................................... 244 

2.1  Main open issues, progress and follow-up .............................................................. 244 

2.2   

Legal enforcement – dispute settlement case ....................................................... 245 

3.  Activities of the implementation bodies ......................................................................... 245 

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

5.  Evolution of bilateral trade ............................................................................................. 246 

5.1  Economic environment ............................................................................................ 246 

5.2  Trade in goods ......................................................................................................... 247 

6.  Conclusions .................................................................................................................... 250 

7.  Statistics ......................................................................................................................... 251 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE EU-
EGYPT ASSOCIATION AGREEMENT .......................................................................... 252 

1. 

Introduction .................................................................................................................... 252 

2.  Main open implementation issues, progress and follow-up actions ............................... 252 

3.  Activities of the implementation bodies ......................................................................... 253 

4.  Specific Areas of Importance ......................................................................................... 254 

5.  Evolution of bilateral trade ............................................................................................. 255 

5.1  Economic environment ............................................................................................ 255 

5.2  Trade in goods ......................................................................................................... 256 

5.3  Trade in agricultural products .................................................................................. 256 

5.4  Trade in services and Foreign Direct Investments .................................................. 257 

6.  Conclusions .................................................................................................................... 258 

7.  Statistics ......................................................................................................................... 259 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE EU-
ISRAEL ASSOCIATION AGREEMENT ......................................................................... 260 

1. 

Introduction .................................................................................................................... 260 

2.  Main open implementation issues, progress and follow-up actions ............................... 261 

3.  Activities of the implementation bodies ......................................................................... 261 

4.  Specific Areas of Importance ......................................................................................... 262 

5.  Evolution of bilateral trade ............................................................................................. 263 

5.1  Economic environment ............................................................................................ 263 

5.2  Trade in goods ......................................................................................................... 264 

5.3  Trade in agricultural products .................................................................................. 264 

5.4  Trade in services and Foreign Direct Investments .................................................. 268 

6.  Conclusions .................................................................................................................... 268 

9 

 
 
7 

Statistics ......................................................................................................................... 269 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE EU-
JORDAN ASSOCIATION AGREEMENT ....................................................................... 270 

1. 

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

2.  Main open implementation issues, progress and follow-up actions ............................... 270 

3.  Activities of the implementation bodies ......................................................................... 271 

4.  Specific Areas of Importance ......................................................................................... 271 

5.  Evolution of bilateral trade ............................................................................................. 273 

5.1  Economic environment ............................................................................................ 273 

5.2  Trade in goods ......................................................................................................... 274 

5.3  Trade in agricultural products .................................................................................. 275 

5.4  Trade in services and Foreign Direct Investments .................................................. 275 

6.  Conclusions .................................................................................................................... 276 

7 

Statistics ......................................................................................................................... 277 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE EU-
LEBANON ASSOCIATION AGREEMENT .................................................................... 278 

1. 

Introduction .................................................................................................................... 278 

2.  Main open implementation issues, progress and follow-up actions ............................... 278 

3.  Activities of the implementation bodies ......................................................................... 279 

4.  Specific Areas of Importance ......................................................................................... 279 

5.  Evolution of bilateral trade ............................................................................................. 280 

5.1   Economic environment ............................................................................................ 280 

5.2  Trade in goods ......................................................................................................... 280 

5.3  Trade in agricultural products .................................................................................. 281 

5.4  Trade in services and Foreign Direct Investments .................................................. 282 

6.  Conclusions .................................................................................................................... 283 

7.  Statistics ......................................................................................................................... 284 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE EU-
MOROCCO ASSOCIATION AGREEMENT .................................................................. 285 

1. 

Introduction .................................................................................................................... 285 

2.  Main open implementation issues, progress and follow-up actions ............................... 286 

3.  Activities of the implementation bodies ......................................................................... 286 

4.  Specific Areas of Importance ......................................................................................... 287 

5.  Evolution of bilateral trade ............................................................................................. 287 

5.1   Economic environment ............................................................................................ 287 

5.2  Trade in goods ......................................................................................................... 288 

5.3  Trade in agricultural products .................................................................................. 289 

5.4  Trade in services and Foreign Direct Investments .................................................. 290 

10 

 
 
6.  Conclusions .................................................................................................................... 290 

7.  Statistics ......................................................................................................................... 292 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE EU-
PALESTINE INTERIM ASSOCIATION AGREEMENT .............................................. 293 

1. 

Introduction .................................................................................................................... 293 

2.  Main open implementation issues, progress and follow-up actions ............................... 293 

3.  Activities of the implementation bodies ......................................................................... 294 

4.  Specific Areas of Importance ......................................................................................... 294 

5.  Evolution of bilateral trade ............................................................................................. 295 

5.1  Economic environment ............................................................................................ 295 

5.2  Trade in goods ......................................................................................................... 296 

5.3  Trade in agricultural products .................................................................................. 296 

5.4  Trade in services and Foreign Direct Investments .................................................. 297 

6.  Conclusions .................................................................................................................... 297 

7.  Statistics ......................................................................................................................... 298 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE EU-
TUNISIA ASSOCIATION AGREEMENT ....................................................................... 299 

1. 

Introduction .................................................................................................................... 299 

2.  Main open implementation issues, progress and follow-up actions ............................... 299 

3.  Activities of the implementation bodies ......................................................................... 300 

4.  Specific Areas of Importance ......................................................................................... 300 

5.  Evolution of bilateral trade ............................................................................................. 302 

5.1  Economic environment ............................................................................................ 302 

5.2  Trade in goods ......................................................................................................... 302 

5.3  Trade in agricultural products .................................................................................. 303 

5.4  Trade in services and Foreign Direct Investments .................................................. 304 

6.  Conclusions .................................................................................................................... 305 

7.  Statistics ......................................................................................................................... 306 

PART IV: AFRICAN, CARRIBEAN AND PACIFIC COUNTRIES ............................ 307 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE 
ECONOMIC PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND THE 
SOUTHERN AFRICAN DEVELOPMENT COMMUNITY (SADC) ............................ 308 

1. 

Introduction .................................................................................................................... 308 

2.  Main implementation issues ........................................................................................... 308 

2.1   Main open issues, progress and follow-up .............................................................. 308 

2.2 

Progress in the implementation of trade and sustainable development provisions . 309 

2.3  Legal enforcement – dispute settlement case .......................................................... 309 

3.  Activities of the implementation bodies ......................................................................... 310 

11 

 
 
4. 

trade and Development Cooperation and Specific Areas of Importance ....................... 312 

5.  Evolution of bilateral trade ............................................................................................. 316 

5.1  Economic environment ............................................................................................ 316 

5.2  Trade in goods ......................................................................................................... 317 

5.3  Trade in agricultural products .................................................................................. 319 

5.4  Trade in services and Foreign Direct Investments .................................................. 321 

6.  Conclusions .................................................................................................................... 322 

7.  Statistics ......................................................................................................................... 324 

1. 

Introduction .................................................................................................................... 325 

2.  Main implementation issues ........................................................................................... 325 

2.1   Main open issues, progress and follow-up .............................................................. 325 

2.2   Trade and sustainable development goals ............................................................... 326 

3.  Activities of the implementation bodies ......................................................................... 326 

4. 

trade and Development Cooperation and Specific Areas of Importance ....................... 327 

5.  Evolution of bilateral trade ............................................................................................. 330 

5.1  Economic environment ............................................................................................ 330 

5.2  Trade in goods ......................................................................................................... 331 

5.3  Trade in agricultural products .................................................................................. 335 

5.4  Trade in services and Foreign Direct Investments .................................................. 335 

6.  Conclusions .................................................................................................................... 336 

7.  Statistics ......................................................................................................................... 340 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE 
ECONOMIC PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND COTE 
D’IVOIRE ............................................................................................................................. 341 

1. 

Introduction .................................................................................................................... 341 

2.  Main implementation issues ........................................................................................... 342 

2.1  Main steps in implementation .............................................................................. 342 

3.  Activities of the implementation bodies ......................................................................... 346 

4. 

trade and Development Cooperation and Specific Areas of Importance ....................... 346 

5.  Evolution of bilateral trade ............................................................................................. 348 

5.1 Economic environment ................................................................................................ 348 

5.2 Trade in goods .............................................................................................................. 349 

5.3  Trade in agricultural products .................................................................................. 351 

5.4  Trade in services and Foreign Direct Investments .................................................. 351 

6.  Conclusions .................................................................................................................... 352 

7.  Statistics ......................................................................................................................... 354 

12 

 
 
ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE 
ECONOMIC PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND 
GHANA ................................................................................................................................. 355 

1. 

Introduction .................................................................................................................... 355 

2.  Main implementation issues ........................................................................................... 355 

2.1   Main steps in implementation .................................................................................. 355 

2.2  Trade and sustainable development goals ............................................................... 358 

3.  Activities of the implementation bodies ......................................................................... 358 

4. 

trade and Development Cooperation and Specific Areas of Importance ....................... 359 

5.  Evolution of bilateral trade ............................................................................................. 361 

5.1  Economic environment ............................................................................................ 361 

5.2  Trade in goods ......................................................................................................... 361 

5.3  Trade in agricultural products .................................................................................. 364 

5.4  Trade in services and Foreign Direct Investments .................................................. 364 

6.  Conclusions .................................................................................................................... 365 

7.  Statistics ......................................................................................................................... 366 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE 
ECONOMIC PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND 
CAMEROON ........................................................................................................................ 367 

1. 

Introduction .................................................................................................................... 367 

2.  Main implementation issues ........................................................................................... 367 

2.1   Main steps in implementation .................................................................................. 367 

2.2  Trade and sustainable development goals ............................................................... 368 

3.  Activities of the implementation bodies ......................................................................... 368 

4.  Trade and Development Cooperation............................................................................. 369 

5.  Evolution of bilateral trade ............................................................................................. 370 

5.1  Economic environment ............................................................................................ 370 

5.2  Trade in goods ......................................................................................................... 371 

5.3  Trade in agricultural products .................................................................................. 373 

5.4  Trade in services and Foreign Direct Investments .................................................. 374 

6.  Conclusions .................................................................................................................... 374 

7.  Statistics ......................................................................................................................... 376 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE 
ECONOMIC PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND 
CARIFORUM ....................................................................................................................... 376 

1. 

Introduction .................................................................................................................... 377 

2.  Main implementation issues ........................................................................................... 377 

2.1   Main open issues, progress and follow-up .............................................................. 377 

2.2 

Progress in the implementation of trade and sustainable development provisions . 379 

13 

 
 
3.  Activities of the implementation bodies ......................................................................... 381 

4.  Trade and Development Cooperation............................................................................. 382 

5.  Evolution of bilateral trade ............................................................................................. 384 

5.1  Economic environment ............................................................................................ 384 

5.2  Trade in goods ......................................................................................................... 386 

5.3  Trade in agricultural products .................................................................................. 387 

5.4  Trade in services and Foreign Direct Investments .................................................. 388 

6.  Conclusions .................................................................................................................... 389 

7.  Statistics ......................................................................................................................... 391 

ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE 
ECONOMIC PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND 
PACIFIC STATES ............................................................................................................... 392 

1. 

Introduction .................................................................................................................... 392 

2.  Main implementation issues ........................................................................................... 392 

2.1   Main steps in implementation .................................................................................. 392 

2.2  Trade and sustainable development goals ............................................................... 393 

3.  Activities of the implementation bodies ......................................................................... 393 

4. 

trade and  development Cooperation and Specific Areas of Importance ....................... 394 

5.  Evolution of bilateral trade ............................................................................................. 395 

5.1  Economic environment ............................................................................................ 395 

5.2  Trade in goods ......................................................................................................... 396 

5.3  Trade in agricultural products .................................................................................. 398 

5.4  Trade in services and Foreign Direct Investments .................................................. 398 

6.  Conclusions .................................................................................................................... 398 

7.  Statistics ......................................................................................................................... 401 

14 

 
 
 
 
DATA  USED  FOR  THE  COMPILATION  OF  INDIVIDUAL  REPORTS  AND 
INFORMATION SHEETS 

The  trade  statistics  used  in  this  staff  working  document  on  the  evolution  of  trade  and 
investment  flows  are  based  on  EUROSTAT  data  as  available  on  30  March  2020  for  EU17, 
except where indicated otherwise. The most recent annual data available for trade in goods are 
for 2019, and for services and investment for 2018, except where indicated otherwise. GDP 
growth  figures  for  partner  countries  for  2019  in  sections  5.1  Economic  Environment  of  the 
country sheets reflect World Bank national accounts data and OECD National Accounts data 
files, except where indicated otherwise 1.   

1 https://www.worldbank.org/ 

15 

 
 
 
 
 
 
                                                 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF 
THE  15  POINTS  ACTION  PLAN  ON  TRADE  AND  SUSTAINABLE 
DEVELOPMENT 

1. 

INTRODUCTION 

In  2019,  the  Commission  continued  to  improve  the  implementation  and  enforcement  of  the 
Trade and Sustainable Development (TSD) chapters of EU trade agreements, in line with its 
15-point action plan of February 20182.   

The  present  section  provides  an  overview  of  the  main  activities  undertaken  by  the 
Commission  as  per  the  four  strands  of  the  action  plan:  “working  together”,  “enabling  civil 
society”, “delivering” and “transparency”. More detailed information on the advances in the 
context of the implementation of the TSD chapter of the various trade agreements3,  including 
summary  accounts  of  the  meetings  of  the  respective  TSD  committees,  can  be  found  in  the 
country sheets. notably section 2.2, “Progress in the implementation of trade and sustainable 
development provisions”.     

2. 

WORKING TOGETHER STRAND 

In 2019, the Commission continued to partner with Member States, the European Parliament, 
as well as international organisations to advance on the implementation of TSD chapters. The 
main activities are outlined below. 

The  meetings  of  the  TSD  Expert  Group  continue  to  be  the  main  channel  for  engagement 
between  the  Commission  and  Member  States  on  TSD  issues.  In  the  three  meetings  held  in 
2019  the  Commission  updated  Member  States  on  the  advances  made  in  the  different 
implementation  processes.  These  meetings  were  also  opportunities  for  the  Commission  and 
Member  States  to  exchange  information  on  relevant  developments  in  the  partner  countries, 
and to coordinate actions to ensure complementarity. 

In  2019,  the  Commission  also  continued  to  engage  with  the  European  Parliament  through 
monitoring  groups,  INTA  Committee  agenda  points,  and  by  providing  technical  debriefs  as 
requested.   

With international organisations it is to highlight the close collaboration with the International 
Labour Organisation (ILO), which has become a key component of TSD implementation. To 
make this collaboration as operational as possible the Commission and the ILO met twice in 
2019 to exchange views on the effective implementation of fundamental ILO Conventions by 
trade  partners.  These  meetings  also  allowed  the  Commission  and  the  ILO  to  take  stock  of 
technical  assistance  needs,  and  identify  synergies  building  on  the  experience  gained  with 
other projects with similar objectives.  

To  be  able  to  swiftly  activate  technical  assistance  actions  the  Commission  and  the  ILO 
launched  the  ‘Trade  for  Decent  Work’  project  in  the  end  of  2018.  This  project  has  since 
become  a  crucial  instrument  to  support  the  advances  in  the  implementation  of  labour 
commitments in TSD Chapters as well as for enacting pre-implementation efforts. 

2 http://trade.ec.europa.eu/doclib/docs/2018/february/tradoc_156618.pdf 
3 South Korea, Central America, Colombia-Peru-Ecuador, Georgia, Moldova, Ukraine, Canada and Japan. 

16 

 
 
                                                 
In 2019, the project  funded technical  assistance  actions in  Vietnam in  support of the labour 
reforms necessary to comply with TSD commitments under the EU-Vietnam trade agreement. 
The  project  also  funded  actions  to  enhance  the  capacity  of  ILO  constituents  (including  the 
Vietnamese  government,  employers  and  workers’  organizations)  to  advance  in  the 
implementation the TSD Chapter with regards to the effective implementation of international 
labour  standards.  The  Commission  and  the  ILO  agreed  that  in  2020,  the  project  will  fund 
additional  activities  in  Vietnam  as  well  as  new  actions  to  strengthen  labour  inspection  in 
Ecuador and Peru.  

The Commission and the ILO also cooperated closely in Central America. The Commission 
continued  to  fund  the  implementation  of  an  ILO  project  on  compliance  with  international 
labour standards in El Salvador and Guatemala. In El Salvador, this project provided support 
to the reactivation of the High Labour Council (tripartite labour consultation body), which had 
been inactive since 2012. 

3. 

ENABLING CIVIL SOCIETY TO PLAY THEIR ROLE IN IMPLEMENTATION 

In 2019, in addition to regularly interacting with EU civil society, notably by participating in 
the  regular  meetings  of  the  EU  domestic  advisory  groups  (DAGs)  created  under  each  trade 
agreement,  the  Commission  also  continued  to  take  actions  to  facilitate  monitoring  by  civil 
society and to further promote responsible business conduct. The main activities are outlined 
below. 

Enabling monitoring by civil society   

In 2019, the Commission continued to use the Partnership Instrument-funded project (worth 3 
EUR million) launched in 2018 to support the DAGs and ensure that they can carry out their 
monitoring  role.  More  specifically,  with  this  project  the  Commission  covered  the  travelling 
costs of a number of members of DAGs from the EU and from trade partners to enable them 
to participate in Civil Society Fora. The project also financed capacity-building workshops for 
members of the DAGs of the EU-Georgia DCFTA in March 2019, of the DAGs of the EU-
Central  America FTA in June 2019, of the DAGs of the EU-Ukraine DCFTA in  November 
2019,  as  well  as  for 
the  EU-
Colombia/Ecuador/Peru  Trade  Agreement  in  October  2019.  In  January  2020,  the  project 
financed the organisation of a workshop for civil society organisations in Tokyo to explain the 
commitments  in  the  TSD  Chapter  of  the  EU-Japan  EPA.  All  these  events  created 
opportunities for DAG members to receive training and to exchange views among themselves 
about the nature of TSD commitments and their monitoring role. 

the  consultation  mechanisms  of 

the  members  of 

As  part  of  its  pre-implementation  engagement  with  Vietnam,  in  December  2019  the 
Commission  also  organised  workshops  in  Hanoi  for  representatives  of  the  government  and 
civil  society  to  prepare  the  ground  for  the  setting  up  of  a  local  DAG  to  monitor  the  EU-
Vietnam FTA.  

Promoting the involvement of business 

To mobilise the role of the business community in support of the sustainable trade agenda, the 
Commission  continued  to  promote  Corporate  Social  Responsibility/Responsible  Business 

17 

 
 
 
 
Conduct  (CSR/RBC),  notably  via  the  multiple  activities  set  up  under  two  large  (9  million 
euros worth) EU-funded projects: one focused on Asia4 (launched in 2018) and one for Latin 
America.  These  projects  offer  practical  support  to  governments’  efforts  to  create  enabling 
conditions  for sustainable businesses by promoting CSR/RBC practices and by  encouraging  
and  assisting  the  uptake  by  businesses  of  international  due  diligence  guidelines,  following 
international standards. 

The project for Latin America was launched in January 2019. It allowed the Commission to 
join forces with the ILO, OECD and OHCHR, which are the leading institutions in the field. 
The  4-year  project  will  count  on  their  recognised  expertise  and  long-standing  experience  in 
the field to create leverage and ensure the active involvement and buy-in from governments 
and stakeholders in Latin America.  

In the first 6 months of the project, the inception phase led to the identification of the several 
initiatives  to  be  implemented  at  the  regional  and  country  level,  in  close  consultation  with 
authorities  and  stakeholders.  These  initiatives  will  cover  inter  alia  the  development  of  tools 
for governments to promote CSR/RBC and the setting up of training activities and awareness 
raising  actions  for  officials,  businesses  and  stakeholders.  As  the  project  covers  several 
countries that are party to existing and future EU trade agreements5, these initiatives will be  
deliverables for the implementation of the TSD Chapters. They will eventually constitute key 
contributions  to  ensure  that  the  trade  liberalisation  is  led  by  inclusive  and  sustainable 
businesses.  

4. 

DELIVERING 

In  2019,  the  Commission  continued  to  put  in  place  initiatives  aimed  to  deliver  material 
advances in the areas that have been identified as TSD priorities for each trade partner. The 
setting  up  of  these  priorities  allows  the  Commission  to  focus  on  the  issues  that  matter  the 
most for each partner.  

These initiatives ranged from advocacy and technical assistance to efforts to ensure the early 
ratification  of  ILO  fundamental  conventions,  to  more  assertive  actions  to  enforce 
commitments  where  shortcomings  are  identified.  The  Commission  also  partnered  with 
Member  States  to  produce  materials  to  build  capacity  for  TSD  implementation  and  raise 
awareness.  One  area  that  is  now  receiving  increasing  attention  is  the  design  of  concrete 
actions to use TSD implementation to promote climate action. The main actions in 2019 are 
outlined below. 

Encouraging early ratification of fundamental ILO conventions 

With  partners  in  “pre-FTA  implementation”  and  “early  FTA  implementation”  phase,  the 
Commission  focused on the ratification of outstanding  ILO conventions.  With Vietnam, the 
Commission  engaged  closely  with  the  authorities  and  civil  society  via  regular  contacts, 
including  two  missions  to  Hanoi  in  May  and  December  2019.  Such  efforts  led  to  concrete 
results  as  Vietnam  embarked  in  far-reaching  labour  reforms  to  be  in  line  with  the  TSD 
commitments  in  the  FTA.  In  June  2019,  Vietnam  announced  the  ratification  of  the  ILO 
Convention #98 on Right to Organise and Collective Bargaining. Furthermore, the authorities 

4 China, Japan, Myanmar, the Philippines, Thailand and Vietnam. 
5 Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Panama and Peru. 

18 

 
 
                                                 
presented  a  calendar for the ratification of  ILO  Convention #87 on Freedom  of Association 
and  ILO  Convention  #105  on  Forced  Labour.  In  November  2019,  Vietnam  adopted  a  new 
Labour  Code.  The  EU  is  working  closely  with  Vietnam’s  authorities  to  support  further 
necessary reforms of the labour legislation, building on a very close cooperation with the ILO. 

The  Commission  also  engaged  with  Singapore  on  the  need  to  ratify  the  outstanding  ILO 
conventions (#87 on Freedom of Association, #105 on Abolition of Forced Labour, and #111 
on Discrimination in Employment and Occupation) and to observe the Fundamental Rights at 
Work principles. Similarly, the EU passed strong messages to Japan about the need to ratify 
the  two  missing  ILO  conventions  (#105  on  Abolition  of  Forced  Labour  and  #111  on 
Discrimination  in  Employment  and Occupation).  The Commission  raised these issues at  the 
bilateral discussions held during the missions to Singapore and Tokyo in May 2019 to prepare 
the start of the implementation work of the two FTAs.   

Capacity building - Handbook 

The  Commission  continued  to  support  partners  in  their  efforts  to  put  in  place  institutional 
frameworks that match the specificities of TSD implementation, which require high levels of 
internal  coordination  across  several  ministries  and  close  monitoring  of  civil  society. 
Culminating  a  process  that  lasted  more  than  one  year,  in  August  2019,  Sweden’s  National 
Board  of  Trade  published  the  handbook  for  TSD  implementation  for  Ecuador,  which  was 
developed in partnership with the Commission6. This tool can also assist TSD implementation 
processes by other partners in the future.    

Assertive enforcement 

The  Commission  sharpened  its  monitoring  and  analysis  of  partners’  compliance  with  TSD 
commitments.  The  two  most  prominent  examples  of  the  increased  assertiveness  by  the 
Commission  in  this  regard  continue  to  be  Peru  and  South  Korea.  With  both  partners,  there 
were important developments.  

With  Peru,  the  Commission  continued  the  close  engagement  aimed  to  improve  TSD 
implementation.  The  bilateral  understanding  reached  in  Quito  in  December  2018  to  address 
the EU’s substantive concerns allowed for a renewed momentum for TSD implementation in 
2019.  At  the  meeting  of  the  TSD  Sub-committee  of  the  EU-Colombia/Ecuador/Peru  Trade 
Agreement    in  Bogota  in  October  2019,  the  EU  and  Peru  took  stock  of  the  progress  made. 
Peru was keen on showing advances by listing a number of concrete policy developments in 
the  areas  of  labour  and  environment.  The  Commission  will  continue  to  monitor  closely  the 
situation in Peru, notably on the need to further improve the effectiveness of consultation of 
civil society on TSD-relevant issues. 

With  South  Korea,  the  EU  resorted  for  the  first  time  to  a  bilateral  dispute  settlement 
mechanism for TSD issues. In January 2019, the EU and South Korea held consultations in 
Seoul  over  the  lack  of  implementation  by  Korea  on  the  commitments  to  ratify  pending 
fundamental  ILO  conventions  and  to  respect  in  law  and  practice  the  core  principles  of  the 
ILO,  notably  on  freedom  of  association  and  right  to  collective  bargaining.  As  consultations 
did not resolve matters, a panel of experts was officially established on 30 December 2019. 

6 https://www.kommerskollegium.se/en/publications/guides/tsd-handbook 

19 

 
 
                                                 
 
This is a major step by the EU, which already triggered concrete political reactions in Korea. 
In October 2019, the Korean Government submitted to the National Assembly bills to pursue 
ratification of three fundamental ILO Conventions (#87 and #98 on Freedom of Association 
and #29 on the Forced Labour) and related reforms on freedom of association. However, the 
National Assembly has not managed to advance so far.  

Climate action 

As climate change becomes an ever more important component of international engagement, 
the  Commission  is  using  the  implementation  of  TSD  Chapters  to  promote  concrete  joint 
actions  with  partners in  this field.  The  work under CETA is  leading the  way, following the 
adoption  of  the  Recommendation  on  Trade  and  Climate.  On  24  January  2019,  the 
Commission  hosted  a  trade  and  climate  workshop  that  brought  together  civil  society  and 
businesses to discuss the nexus between trade and climate. As a follow up initiative, on 6 and 
7 November 2019, Canada and the EU organised in Montreal a workshop for clean tech firms. 
The  EU  and  Japan  are  currently  planning  on  actions  along  these  lines  for  early  2021  in  the 
context of the EU-Japan Agreement. 

5. 

TRANSPARENCY 

The  Commission  continued  its  efforts  to  improve  transparency  on  issues  related  to  the 
implementation  and  enforcement  of  TSD  provisions  in  EU  trade  agreements,  notably  by 
making information more easily accessible on the TSD webpage7 in the Commission website.  

In  addition,  the  Commission  is  putting  in  place  efforts  to  agree  with  all  partners  the 
publication of relevant TSD implementation documents. As a result, in 2019 the Commission 
made  the  joint  reports/statements  and/or  minutes  of  the  TSD  committees  of  most  trade 
agreements available in its website.  

On 29 April 2019 the Commission organised a Civil Society Dialogue session fully dedicated 
to TSD to give an account of the progress made so far with the implementation of the 15-point 
action plan. All the information related to that meeting, including the minutes are publically 
available8. 

The Commission also remains committed to act in full transparency with regard to inputs filed 
by civil society.   

7 https://ec.europa.eu/trade/policy/policy-making/sustainable-development/ 

8 https://trade.ec.europa.eu/doclib/docs/2019/may/tradoc_157891.pdf 

20 

 
 
 
 
 
 
                                                 
 
 
PART I:   ASIA 

21 

 
 
 
 
 
 
 
 
INFORMATION 

FOR  THE 
ANNUAL 
IMPLEMENTATION  OF  THE  FREE  TRADE  AGREEMENT  BETWEEN  THE  EU 
AND ITS MEMBER STATES AND SINGAPORE 

PREPARATIONS 

SHEET  ON 

1. 

INTRODUCTION 

The  economic  partnership  between  the  EU  and  Singapore  is  made  up  of  two  distinct 
agreements,  namely  a  free  trade  agreement  (henceforth  the  ‘trade  agreement’)  and  an 
investment protection agreement. Negotiations began in 2009, with negotiations for the trade 
agreement  and  the  investment  protection  agreement  being  completed  in  2012  and  2017, 
respectively9. The EU-Singapore Investment Protection Agreement sets out rules that give EU 
investors and their investments in Singapore a high level of protection, while safeguarding EU 
governments'  right  to  pass  new  laws  and  update  existing  ones.  It  will  replace  and  upgrade 
bilateral  investment  treaties  that  several  Member  States  currently  have  in  place  with 
Singapore. Once ratified, the Investment Protection Agreement will replace investor-to-state 
dispute  mechanism  under  existing  bilateral  investment  treaties  with  an  Investment  Court 
System.  The  trade  agreement  entered  into  force  on  21  November  2019,  and  the  investment 
agreement  will  enter  into  force  once  ratified  domestically  by  the  EU  Member  States.  This 
information sheet reports about preparations for the entry into force of the trade agreement.   

Singapore is a major developed economy. In 2018 it had a GDP of €326 billion and a GDP 
per capita of €57,900. Over 10,000 EU companies are established in Singapore which is the 
EU’s  largest  trade  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. The trade and 
investment  agreements  are  expected  to  contribute  to  solidify  this  situation  by  removing 
remaining  obstacles  and  protecting  EU  investments.  EU  trade  in  goods  and  services  with 
Singapore in 2018 was worth €118 billion, with the free trade agreement expected to facilitate 
further growth.  

Singapore is an important regional economic actor, and is part of a number of major regional 
trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific 
Partnership CPTPP10, the China-Singapore Free Trade Agreement CSFTA11 and the ASEAN 
Free Trade Area AFTA12. As member of ASEAN, Singapore is also actively engaged in the 
negotiations  for  the  Regional  Comprehensive  Economic  Partnership  (RCEP)  comprising 
ASEAN  and  its  6  major  FTA  partners13.  Singapore’s  membership  of  ASEAN  also  gives  it 
notable political as well as economic influence in the South East Asia region.  

The  EU-Singapore  trade  and  investment  agreements,  therefore,  represents  an  important 
success to solidify and uphold the EU’s presence in the region. These are the first agreements 
on  trade  and  investment  the  EU  ever  concluded  with  an  ASEAN  member  state.  The 
agreements  also  offer  new  opportunities  for  EU  companies  to  expand  into  other  Southeast 

9   The  decision  to  “split”  the  agreement  into  a  free  trade  agreement  and  an  investment  protection  agreement 
was  made  following  the  Opinion  2/15  of  the  European  Court  of  Justice  on  the  allocation  of  competences 
between the European Union and the Member States. 

10   https://www.mti.gov.sg/Improving-Trade/Free-Trade-Agreements/CPTPP  
11   https://www.enterprisesg.gov.sg/non-financial-assistance/for-singapore-companies/free-trade-

agreements/ftas/singapore-ftas/csfta  

12   https://asean.org/  
13   Australia, China, India, Japan, Korea, New Zealand 

22 

 
 
 
 
 
                                                 
Asian markets, as it will provide them with even more opportunities and stronger protection to 
do business with or establish itself in Singapore, which is the central hub in South East Asia. 
The Agreements could be seen as an inspiration for trade and investment agreements between 
the EU and other ASEAN Member States and as a step towards a region to region agreement.   

2. 

THE AGREEMENTS IN SUMMARY 

Together,  the  agreements  cover  trade  in  goods  (including  electronics,  pharmaceuticals, 
petrochemicals  and  processed  agricultural  products),  services  and  establishment  (including 
telecommunications,  finance,  transport  and  manufacturing),  public  procurement,  intellectual 
property and investment protection.  

In  terms  of  tariff  liberalisation,  the  trade  agreement  eliminates  84%  of  customs  duties  on 
Singaporean exports to the EU within the first  year, and by the third  year 90% of tariffs on 
Singaporean  exports  to  the  EU  will  be  removed.  Customs  duties  on  remaining  qualifying 
exports  will  be  removed  over  a  period  of  5  years.  Singapore  eliminated  all  its  remaining 
customs  duties  for  beer,  samsu  and  stout  upon  entry  into  force  of  the  agreement  and 
committed to fully bind its current level of duty-free access for all products originating in the 
EU. 

The trade agreement provides enhanced market access for service providers, professionals and 
investors, and creates a level-playing field  for businesses  in  each other’s  markets,  including 
through certain sector specific rules on non-discrimination and transparency, covering a wide 
range  of  services  such  as  financial  services,  professional  services,  computer  and  related 
services, research and development, business services and telecommunication services. 

With  regard  to  public  procurement  the  trade  agreement  will  improve  market  access  for  EU 
suppliers  and  for  EU  goods  and  services  on  the  basis  of  a  set  of  rules  and  principles  of 
transparency, non-discrimination and fairness in public procurement procedures. As party to 
the WTO Agreement on Government Procurement (GPA), Singapore has already opened up a 
large  part  of  its  procurement  market  to  EU  bidders.  The  Free  Trade  Agreement  increased 
market  access  opportunities  for  EU  businesses  as    Singapore  included  additional  entities  as 
well as subjected more services contracts to rules; the applicable thresholds are also lowered. 
Additional  coverage by  Singapore include, for instance, financial services, computer related 
services,  telecommunication  services,  sewage  and  refuse  disposal,  architectural  and 
engineering services. 

To  continue  encouraging  innovation,  the  trade  agreement  includes  a  comprehensive 
intellectual  property  rights  chapter  covering  provisions  on  copyright,  designs,  enforcement 
and  geographical  indications  (GIs).  Upon  entry  into  force,  Singapore  enhanced  its  border 
enforcement measures against goods infringing IPR, covering copyrights and trade marks.  

The trade agreement will also promote sustainable development and the involvement of civil 
society  in  trade  and  investment  matters.  It  does  so  by  setting  out  strong,  legally-binding 
commitments  on  environmental  protection  and  respect  for  labour  rights.  As  such,  parties 
commit to respecting, promoting and effectively implementing the principles concerning the 
fundamental rights at work and to make continued and sustained efforts towards ratifying and 
effectively  implementing  the  fundamental  ILO  conventions.  The  agreement  includes 
commitments  by  the  EU  and  Singapore  on  the  effective  implementation  of  Multilateral 
Environmental  Agreements  to  which  the  EU  and/or  Singapore  have  signed  up  to.  Specific 

23 

 
 
 
 
 
 
 
 
provisions  on  climate  change  further  underline  the  EU’s  and  Singapore’s  efforts  to  tackle 
climate change. The agreement also promotes cross-cutting schemes such as Corporate Social 
Responsibility, Responsible Business Conduct, fair trade and green procurement, and creates 
a  mechanism  to  foster  civil  society  involvement,  related  to  the  implementation  of  TSD  and 
consultative mechanisms.  

Non-tariff  barriers  to  trade  will  be  dealt  with  in  electronics,  motor  vehicles/parts, 
pharmaceuticals and medical devices and renewable energy.   

Under  the  EU-Singapore  trade  agreement,  the  EU  and  Singapore  have  committed  to 
strengthen cooperation in customs procedures to facilitate EU exports to enter the country. In 
addition,  the  trade  agreement  includes  a  Chapter  on  Sanitary  and  Phytosanitary  Measures, 
which  will  further  streamline  the  approval  for  meat  exports,  with  time  limits  for  the 
application process and prelisting for establishments to apply.  

Furthermore, Singapore has already set up a geographical indications (GI) registry, allowing 
EU rights-holders to apply for registration. The 2014 GI Act and implementing rules entered 
into application on 1 April 2019, which opened the procedure for application and subsequent 
registration of European GI names.  

At  the  beginning  2020,  139  European  GI  names  have  been  registered  and  are  protected  in 
Singapore under the domestic legislation. They will eventually also be protected under the EU 
Singapore trade agreement.   

3. 

PREPARATORY WORK FOR THE ENTRY INTO FORCE  

General preparations for the entry into force 

During the course of 2019, the EU Delegation in Singapore organised several outreach events 
to promote and raise awareness on the benefits of the FTA. A joint brochure on the agreement 
was  published  between  DG  Trade  and  the  Singapore  Ministry  for  Trade  and  Industry: 
https://trade.ec.europa.eu/doclib/docs/2019/february/tradoc_157684.pdf.  

Before entry info force of the FTA the Commission published the adjusted list of TRQs for 
the remainder of the year. 

With  regard  to  government  procurement,  a  project  is  in  place  under  the  Policy  Support 
Facility  of  the  Partnership  Instrument  that  will  help  monitoring  the  implementation  of  the 
government  procurement  chapter.  In  addition  Commission  services  and  EU  delegation  in 
Singapore have carried  out  preparatory  work to  identify the actions that  Singapore needs to 
take  with  a  view  to  comply  with  the  obligations  of  the  GP  Chapter  of  the  Free  Trade 
Agreement.    

Preparing for the protection of EU geographical indications 

An  important  part  of  preparatory  work  concerned  the  preparations  for  the  protection  of  EU 
geographical indications in Singapore. Instead of being protected within the agreement itself, 
it was agreed that Singapore would allow for the registration of EU geographical indications 
after the European Parliament’s consent, but before conclusion of the agreement. Successfully 

24 

 
 
 
 
 
 
 
 
 
registered geographical indications would then be given protection under the trade agreement 
subject  to  a  decision  by  the  EU-Singapore  Trade  Committee  set  up  under  the  agreement. 
During the preparatory phase it became apparent that this protection could be challenged via a 
so-called  “Qualification  of  Rights”  provision  in  the  Singaporean  legislation.  Before  the 
Council decision to adopt the Free Trade Agreement, Singapore gave additional guarantees to 
safeguard the protection of registered GIs and clarified the limited scope of this Qualification 
of Rights procedure. 

In  July  2019  the  Commission  organised  a  seminar  for  senior  EU  GI  rights-holders  and  EU 
Member  States  on  Geographical  Indications  for  Agri-food  products,  during  which  the 
provisions related to geographical indications under the EU Singapore trade agreements were 
explained. 

4. 

EARLY ACHIEVEMENTS AND UP-COMING IMPLEMENTATION ACTIVITIES  

Geographical indications  

Following the consent given by the European Parliament on the conclusions of the Agreement 
in February 2019, and in accordance with Article 10.17(2)(a) of the EU-Singapore Free Trade 
Agreement (EUSFTA), Singapore set up a geographical indications (GI) registry allowing EU 
GI  holders  to  apply  for  registration.  The  implementing  rules  entered  into  application  on  1st 
March 2019, which opened the procedure of GI registration and led to the subsequent official 
applications  of  European  GI  names.  At  the  end  of  August  2019,  the  domestic  registration 
process of the EU GIs was finalised and 138 GIs were registered. They are protected under 
the EU Singapore trade agreement.  

Upcoming activities by the Trade Committee  

In  2020,  the  Trade  Committee  will  adopt  a  decision  on  the  list  of  protected  GIs  within  the 
scope  of  the  Free  Trade  Agreement,  so  as  to  provide  successfully  registered  GIs  direct 
protection under the agreement. The Trade Committee will also establish the list of arbitrators 
tasked to deal with eventual future disputes. The Trade and Sustainable Development Board, 
the  institutional  body  of  the  Free  Trade  Agreement  overviewing  the  implementation  of  the 
Trade and Sustainable Development Chapter, is also to be set up within the first year of entry 
into force of the agreement.  

25 

 
 
 
 
 
 
 
 
 
5. 

STATISTICS 

SINGAPORE 

26 

 
 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE 
ECONOMIC PARTNERSHIP AGREEMENT BETWEEN THE EU AND JAPAN 

1. 

INTRODUCTION 

This is the first time that the Commission reports on the implementation of the Agreement for 
an  Economic  Partnership  between  the  EU  and  Japan  (hereafter  “the  agreement”).  The 
reporting  covers  the  implementation  of  EU-Japan  trade  over  11  months:  from  February  to 
December 2019. Implementation reports in coming years will cover full-year periods.  

The agreement entered into force on 1 February 2019. It is one of the most ambitious trade 
agreements concluded by the EU so far, providing for broad-based trade liberalisation coupled 
with rules and disciplines on aspects such as labour rights, environmental protection, antitrust, 
corporate governance and the commercial activities of state-owned enterprises, among other 
topics. The agreement thus pursues and develops the EU strive towards comprehensive trade 
agreements, and it provides a sound basis for the development of economic relations between 
the Parties.14  

The agreement is  particularly important  for the EU agri-food sector, offering huge potential 
for  increasing  EU  exports  of  a  large  number  of  products,  such  as  wine,  pork,  beef,  cheeses 
and processed agricultural products. One noticeable achievement is the step by step approval 
and recognition of oenological practices of the other Party.  

A  brief  overview  of  activities  of  the  Working  Groups  and  Committees  set  up  by  the 
agreement  is  also  included  in  the  report.  The  EU  implements  a  policy  of  transparency  as 
regards the work of these bodies. Their agendas, minutes and decisions are publicly accessible 
on the Europa website15.  

2. 

MAIN IMPLEMENTATION ISSUES 

2.1   Main open issues, progress and follow-up  

The  EPA  Joint  Committee  –  the  highest  body  under  the  agreement  –  which  meets  at 
ministerial level – gathered for the first time in Tokyo on 10 April 2019 and it laid the ground 
for the various specialised committees and working groups to start their work. All specialised 
committees and working groups, as well as the joint Dialogue with Civil Society and the EU-
Japan joint Financial Regulatory Forum, met within the first year of implementation. 

In 2019, there were also several  events  and  initiatives aimed at raising awareness  among 
stakeholders,  with  a  view  to  supporting  their  use  of  the  opportunities  opened  up  by  the 
agreement. Many prominent public and private organisations at national or regional level in 
Europe,  such  as  chambers  of  commerce,  organised  seminars  and  conferences  to  present  the 
agreement to the business community. The European Commission supported such efforts by 

14   A summary of the main achievements on the  occasion of the first anniversary of the agreement can be found 

at https://trade.ec.europa.eu/doclib/press/index.cfm?id=2107.   

15   https://trade.ec.europa.eu/doclib/press/index.cfm?id=2042  

27 

 
 
 
 
 
 
 
 
                                                 
providing  speakers  and  information  materials.  The  EU  Delegation  in  Tokyo  consistently 
engaged  with  representatives  of  European  companies  in  Japan,  as  well  as  with  Japanese 
importers, in order to gather their practical experiences and to convey the latest information 
on implementation steps. Furthermore, the EU-Japan Centre for Industrial Cooperation, which 
is jointly supported by the EU and Japan, set up a specific “Helpdesk”16 to address questions 
from  SME,  drafted  targeted  factsheets  for  the  EU  operators  and  organised  “webinars”  to 
provide  information  on  key  areas  of  the  agreement  (agri-food  sector,  customs  procedures, 
procurement etc.). 

In  view  of  the  importance  of  the  agreement  for  the  agri-food  sector,  several  specific 
awareness raising and promotion activities were organised with a specific focus on that area:  

  A high level mission was organised in May 2019 with 70 businessmen from the EU 
agri  food  sector:  training  and  targeted  information  on  the  Japanese  market  was  
provided, back-to-back with political discussions at ministerial level; 
In  March  2019  EU  representatives  participated  in  the  major  B-to-B  agri  food  fair  in 
Asia  (Foodex)  with  an  EU  booth  dedicated  to  the  authenticity,  safety  and  quality  of 
EU products; a seminar on the opportunities stemming from the EPA for the European 
and Japanese agri-food operators was organised on that occasion; 

 

  Several promotion activities in various places of Japan were organised to follow up to 

the participation to the Foodex fair; 

  The EU-Japan Centre for Industrial Cooperation, through its EPA Helpdesk, addressed 
questions  from  SMEs  in  the  agri  food  sectors;  it  also  issued  targeted  factsheets  and 
organised  specialised  “webminars”17  to  provide  information  on  key  areas  of  the 
agreement for the agri-food sector.  

2.2 

Progress in the implementation of trade and sustainable development provisions 

Preparations for the implementation of the TSD chapter  

The  agreement  has  the  most  comprehensive  chapter  on  trade  and  sustainable  development 
ever  concluded by the  EU. Therefore, the initial  focus over the first  months after  entry into 
force of the Agreement was on the joint clarification of actions and mechanisms needed for 
implementation, on the basis of the provisions of the chapter.  

Prior  to  the  entry  into  force  of  the  agreement,  Japan  commenced  its  preparation  for 
implementing the trade and sustainable development (TSD) provisions by setting up an inter-
ministerial coordination group, led by the Ministry of Foreign Affairs. Later, Japan designated 
two  existing  bodies  to  operate  as  “domestic  advisory  groups”  for  the  purposes  of  the 
agreement: the “Central Environmental Council” and the “Labour Policy Council”.  

In May 2019, EU and Japanese officials had already started consultations to prepare the kick-
off meetings of the TSD Committee and the Joint Civil Society Dialogue. Discussions on the 
agendas of both meetings, as well as practical organisational and operational details were held 
over the course of the second half of the year, leading to the formal meetings in January 2020.  

16   https://www.eu-japan.eu/information-desk  
17   https://www.eu-japan.eu/epa-helpdesk  

28 

 
 
 
 
 
 
 
                                                 
The Committee on Trade and Sustainable Development met in Tokyo on 29-30 January18. 
The  Committee  reached  an  understanding  on  the  organisational  modalities  of  the  Joint 
Dialogue  with  Civil  Society.  It  addressed  topics  pertaining  to  labour  rights,  environmental 
protection  and  horizontal  sustainability  issues.  In  particular,  it  discussed  the  streamlining  of 
bilateral activities on Corporate Social Responsibility and Responsible Business Conduct; the 
Parties  exchanged  information  about  developments  concerning  multilateral  environmental 
agreements and other international environmental initiatives, including in the areas of climate 
change, sustainable forest management, oceans and marine litter, and circular economy; and 
they  exchanged  views  on  how  to  strengthen  the  implementation  of  the  Agreement  through 
joint  or  coordinated  activities  in  these  and  other  areas.  Both  sides  presented  an  update  on 
ratification and implementation of International Labour Organization (ILO) conventions. The 
EU informed Japan about recent social policy developments in Europe, notably on the social 
fairness  package.  Japan  reiterated  its  commitment  to  the  activities  of  the  ILO  and  also 
informed about ongoing discussions regarding the ratification of the ILO C10519 and C11120, 
referring  to  the  Resolution  of  Japan’s  legislative  chambers  of  26  June  “on  Japan's  further 
commitment toward ILO, on the occasion of 100 year anniversary of ILO”. 

EU  and  Japan  held  the  first  Joint  Dialogue  with  Civil  Society  on  31  January  202021. 
Representatives  from  governments  and  civil  society  organisations  discussed  crosscutting 
issues such as corporate social responsibility, Society 5.0 for Sustainable Development Goals, 
issues  related  to  trade  and  environment  such  as  trade-related  aspects  of  circular  economy, 
climate  change  and  low  carbon  society  as  well  as  trade  and  labour,  including  updates  on 
ratifications  and  implementations  of  ILO  conventions  update,  and    female  participation  in 
labour market. 

Steps taken to promote sustainability goals  

Domestically and internationally both sides undertook actions to support their ongoing efforts 
with regard to sustainability goals. Japan positively used its G20 chairmanship to give further 
prominence  to  issues  related  to  the  circular  economy  and  the  prevention  of  marine  litter  – 
issues  on  which  the  EU  has  an  active  agenda.  On  labour  issues,  on  26  June  the  Japanese 
House  of  Councillors  and  the  House  of  Representatives  adopted  a  “Resolution  on  Japan's 
further  commitment  toward  ILO,  on  the  occasion  of  100  year  anniversary  of  ILO”, 
emphasising the importance of the fundamental rights at work and of making efforts towards 
ratification or implementation of all ILO core conventions. 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The  agreement  establishes  ten  specialised  committees  and  two  working  groups.  The  annual 
meeting of the Joint Committee at ministerial level plays a supervisory role and ensures that 
the agreement operates properly. In addition, the agreement establishes a Joint Dialogue with 
Civil Society and a Joint Financial Regulatory Forum.  

18   Minutes available at https://trade.ec.europa.eu/doclib/docs/2020/march/tradoc_158664.pdf 
19   On abolition of forced labour 
20   On professional discrimination 
21   Report available at https://trade.ec.europa.eu/doclib/docs/2020/june/tradoc_158782.pdf 

29 

 
 
 
 
 
 
 
                                                 
The  agendas,  minutes  and  decisions  of  specialised  committees  and  working  groups  are 
publicly  accessible  on  the  Commission’s  website22.  This  report  presents  only  some  of  the 
main important issues that were addressed. 

The Joint Committee adopted two decisions. Decision no.1 laid down the Rules of Procedure 
of the Joint Committee, which apply mutatis mutandis to all the bilateral bodies that report to 
it. Decision no.1 also endorsed several legal texts to render the dispute settlement mechanism 
of  the  agreement  fully  operational:  rules  of  procedure  of  arbitration;  code  of  conduct  of 
arbitrators; and mediation rules. Subsequently, through its Decision no.2, the Joint Committee 
established a list of individuals that are willing and able to serve as arbitrators. 

The  Parties  worked  intensively  throughout  2019  and  were  able  to  tackle  some  initial 
difficulties experienced in the area of Customs and Rules of Origin procedures (see further 
below in section 4).  

The  committees  responsible  for  Trade  in  Goods;  Trade  in  Services,  Investment 
Liberalisation  and  E-commerce;  and  Technical  Barriers  to  Trade  met  back-to-back  in 
Brussels in November 2019. The committees allowed an overview of the implementation of 
the relevant chapters of the Agreement.  

In  the  Trade  in  Goods  Committee  the  Parties  focused,  among  others,  on  the  quota 
management  procedures  for  the  import  into  Japan  of  certain  agricultural  commodities  and 
processed agricultural products, which were adjusted by Japan in summer 2019 to allow for a 
better utilisation of the quotas by importers in Japan. In particular, work has been done in the 
first  year  to  improve  the  administration  of  tariff  rate  quotas  (TRQs)  by  Japan  in  order  to 
allocate TRQs to importing companies with a proper record of marketing the goods at stake. 
Indeed,  following  the  first  phase  of  allocation,  too  many  non-genuine  agri-food  business 
operators had applied to obtain quotas, particularly in the cheese sector which raised concerns. 
It  is  expected  that  the  quota  utilisation  rates,  i.e.  the  fill  rate,  will  steadily  increase  in  the 
coming  months,  thanks  to  the  improvement  in  management  procedures  and  regular 
monitoring by the EU Commission.  

The  TBT  committee  mainly  exchanged  information  about  respective  regulatory  plans 
concerning  the  potential  restriction  of  certain  chemical  substances,  revisions  to  respective 
medical devices legislation  and the EU raised the issue about the alteration of lot numbers on 
products in Japan.23  
In the first meeting of the Committee on Trade in Services, Investment Liberalisation and 
Electronic Commerce, the EU reported market access issues in Japan for postal and courier 
services while Japan reported difficulties regarding mode 4 (delays in issuing visas) in some 
EU Member States. 

The  Committee  on  SPS  Measures  met  in  Tokyo  on  28-30  October  2019.  EU  and  Japan 
discussed their respective priorities: for the EU prioritised market access applications on beef 
and certain fruits (cherry, pear and kiwi), regionalisation on African Swine Fever and Avian 

22 https://trade.ec.europa.eu/doclib/press/index.cfm?id=2042  
23 The issue refers to the modification by distributors of the labels originally affixed by producers on the goods. 
For goods produced in the EU, the labels typically include a number or code identifying the production lot. 
Such numbers or codes are useful for identification and traceability purposes, particularly in case of product 
recalls. 

30 

 
 
 
 
 
 
 
                                                 
Influenza;  for  Japan  prioritised  market  access  applications  on  poultry  meat  and  black  pine 
bonsai plants and change of classification on poultry and pork products. 

The  Parties  also  discussed  ways  to  simplify,  expedite  and  complete  approval  procedures 
without  undue  delay,  e.g.  using  experience  gained  from  assessment  results  of  already 
approved  EU  Member  States  in  view  of  the  EU  harmonised  legislation;  the  possibility  to 
evaluate EU Member States in  groups when conducting the risk assessment  and to  simplify 
the  procedures  of  risk  assessment  on  plant  quarantine.  Food  contact  materials  and  additives 
were among other topics discussed where Parties looked to enhance coorperation during 2020. 

The  Parties  discussed  next  steps  regarding  the  project  for  the  mutual  recognition  on 
regionalisation in the area of animal health, and confirmed their willingness to proceed with 
the  examination  through  video  conferences  and  other  means  of  communication  in  order  to 
move forward the discussion and achieve tangible deliverables within the deadlines mutually 
agreed  in  advance.  Parties  agreed  that  the  results  will  be  reported  to  the  next  EPA  Joint 
Committee  meeting.  It  was  also  agreed  to  establish  a  technical  group  dealing  with  animal 
health issues whose progress and results will be referred to the SPS Committee. 

EU and Japan committed to closely follow up on the progress on the prioritised market acess 
applications, through video and audio conferences at regular intervals. 

The  first  exchange  of  possible  cooperation  on  animal  welfare  issues  took  place  in  2019, 
although  these  aspects  will  be  explored  during  2020.The  parties  are  now  considering  the 
scope of such cooperation and how it could be organised in the future. 

The  committees  responsible  for  Government  Procurement  and  for  Intellectual  Property 
Rights (IPR) met back-to-back in Tokyo in November 2019. Both committees went through a 
long list of issues related to the implementation of the two chapters and the latest legislative 
and policy developments.  

The  IPR  Committee  had  an  exchange  on  the  process  toward  extension  of  the  list  of 
geographical indications (GIs) as foreseen in the Agreement, on IPR enforcement (including 
actions  to  guarantee  the  enforcement  of  specific  GIs)  as  well  as  on  several  issues  that 
remained open during the negotiations (the public performance right and the resale right for 
the EU; grace period for patents for Japan).  

The Public Procurement committee met back-to-back with the Railways Industrial Dialogue 
and  focussed  in  particular  on  four  major  issues  related  to  the  implementation  of  the 
agreement: the implementation of an obligation to publish all procurement notices on a Single 
Point of Access (Art. 10.4 of the EPA); the communication of legal measures adopted to give 
effect to the market access commitments under the Procurement Chapter under the FTA; the 
access  of European bidders to  Government  Procurement in Japan relating to  the operational 
safety of railways and measures to disseminate information relating to the correct application 
of the EPA Procurement chapter among procuring entities, in particular at sub-central level.  

The Committee on Cooperation in the Field of Agriculture met in July 2019 in Tokyo (link 
to  report).  It  was  an  opportunity  to  exchange  information  on  agricultural  issues  of  common 
interest.  Exchanges on agricultural  policy  reforms aimed at addressing the environment and 
climate change dimension of agricultural activities, as well as organic farming policy reform 

31 

 
 
 
 
 
 
 
 
 
 
in the EU and implications for the equivalence arrangements between the EU and Japan took 
place.   

Two bodies held meetings remotely, by videoconference. These were the Working Group on 
Wine  in  February  201924  and  the  Committee  on  Regulatory  Cooperation  on  20  January 
202025.  The  videoconference  of  the  Committee  on  Regulatory  Cooperation  was  devoted  to 
organisational  issues, with  the aim of establishing a common understanding on the  role and 
functioning  of  the  committee  and  its  relationship  with  other  specialised  committees  and 
bilateral fora. The Working Group on Wine adopted two decisions, as envisaged in the EU-
Japan  Agreement,  on  the  forms  to  be  used  for  certificates  for  the  import  of  wine  products 
originating in Japan into the European Union and the modalities concerning self-certification, 
and  on  the  modalities  for  cooperation  between  Contact  Points.  It  has  also  endorsed  the 
notifications  of  both  sides  confirming  the  approval  of  several  oenological  practices  as 
described  in  Annex  2-E of  the  Agreement,  thus  facilitating  trade  through  the  recognition  of 
each other’s regulations. 

Finally, the Working Group on Motor Vehicles and Parts26 addressed ongoing regulatory 
issues of international relevance, including cooperation in the context of the UNECE WP29, 
as well as  other car-related issues  and technical  regulations. The Working  Group concluded 
on  the  desirability  to  amend  the  appendices  of  the  Agreement  concerning  UNECE 
Regulations  implemented  by  both  Parties,  in  order  to  reflect  the  most  recent  developments 
and commit bilaterally to the application of the relevant regulations, which facilitate trade.  

4. 

SPECIFIC AREAS OF IMPORTANCE   

To ease the utilisation of tariff preferences under the agreement, the authorities responsible 
for  Customs  matters  in  the  EU  and  Japan  engaged  intensively  throughout  the  first  year  of 
implementation in order to ensure a common approach to the application of trade preferences. 
In June 2019, the Committee on Rules of Origin  and Customs-Related Matters developed a 
roadmap  of  actions  to  tackle  initial  difficulties  experienced  by  economic  operators27.  The 
actions  were  gradually  rolled  out  by  both  sides.  A  simplified  procedure  for  claiming  and 
obtaining  tariff  preferences  was  put  in  place  by  Japan  in  two  phases  –  in  August  and 
November, having a positive effect on the ease with which operators can effectively utilise the 
agreed tariff preferences.  

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

Japan  is  the  world’s  third  largest  national  economy  but  it  faces  significant  challenges  to 
generate  and  sustain  growth.  Over  the  past  decade,  Japan’s  economy  moderately  expanded 
but in recent years and up to 2019 real GDP growth was on a declining trend. In 2019 Japan’s 

24  See report at https://trade.ec.europa.eu/doclib/docs/2019/july/tradoc_157970.pdf 
25   See report at https://trade.ec.europa.eu/doclib/docs/2020/march/tradoc_158667.pdf 
26   See report at https://trade.ec.europa.eu/doclib/docs/2020/february/tradoc_158628.pdf 
27   https://trade.ec.europa.eu/doclib/docs/2019/july/tradoc_157973.pdf  

32 

 
 
 
 
 
 
 
                                                 
GDP grew by 0.7%. Like for other countries, the COVID-19 crisis will have a marked effect 
on economic activity.  

Public and private investments have been an important growth driver of growth, supported by 
rising  corporate  earnings.  However,  Japan's  gross-debt-to-GDP  ratio  has  reached  239%. 
Central  government  debt  stood  at  a  record  JPY  1,110  trillion  as  of  December  2019,  having 
more than doubled in size since 1997. The consumption tax was increased from 8% to 10% in 
October  2019,  with  the  intention  to  use  the  proceeds  to  finance  free  education.  Headline 
inflation  continues  to  fluctuate  around  0.5%  y-o-y,  reflecting  downward  pressures  from  the 
recent  yen  appreciation  and  upward  pressures  from  the  rise  in  food  prices.  Real  effective 
exchange rate of the yen is much below long-term averages and further yen appreciation can 
be expected, which could undermine corporate profitability, investments and exports. 

Japan faces the need to address labour shortages and invest in AI and digital upgrading of its 
businesses, for it to tackle the pressures resulting from negative demographic growth global 
competition. 

As regards Japan’s trade with the world, in 2019 the total value was about €1,300 bl (€ 1,298 
bl). The top three trading partners of Japan were China (21% of total trade), USA (15.3% of 
total trade) and EU27 (10.3% of total trade). 

Japan's  main  import  products  include:  petroleum,  LNG,  clothing  and  accessories,  medical 
products  and  communication  equipment.  Japan  is  a  major  exporter  of  transport  equipment, 
machinery and chemicals (including medical products). 

In 2019, Japan had a trade deficit of JPY1.6 trillion. Japan's exports fell 5.6% from 2018 to 
JPY76.9 trillion (the US-China and Japan-Korea trade tensions both had a significant negative 
impact on Japanese trade). Japan's overall imports dropped 5.0% to JPY78.6 trillion primarily 
due  to  lower  energy  prices.  On  a  bilateral  basis,  Japan  enjoyed  a  trade  surplus  of  JPY6.6 
trillion with the US. Meanwhile, Japan posted a deficit of JPY756.4 billion with the EU28. 

18 Economic Partnership Agreements (EPAs) have entered into force or been signed with 21 
countries/regions  to  date[1].  On  30  December  2018,  the  Comprehensive  and  Progressive 
Agreement for Trans-Pacific Partnership (CPTPP or TPP11 Agreement) with 10 other trading 
partners entered into force[2]. At the end of 2019, USA and Japan concluded a trade agreement 
which  comprises  an  Agreement  on  Trade  in  Goods,  focused  on  tariff  liberalisation  on  a 
relatively small amount of bilateral trade[3]; and an Agreement on Digital Trade. 

Japan  is  also  engaged  in  other  initiatives,  including  the  Regional  Comprehensive  Economic 
Partnership (RCEP) agreement; bilateral negotiations with Colombia and Turkey; as well as 
negotiations for the trilateral Japan-China-Korea FTA.  

[1]  ASEAN,  Australia,  Brunei,  Chile,  India,  Indonesia,  Malaysia,  Mexico,  Mongolia,  Peru,  Philippines, 
Singapore,  Switzerland,  Thailand  Vietnam,  the  US,  CPTPP  and  the  EU-Japan  EPA.  51.6  %  of  Japan’s 
overall trade is conducted with countries which have EPAs entered into force or signed with Japan. 

[2]   CPTPP  Parties  are  as  follows:  Japan,  Australia,  Brunei,  Canada,  Chile,  Malaysia,  Mexico,  New  Zealand, 

Peru, Singapore, Vietnam. 

[3] USA provides for tariff elimination or reduction on 241 tariff lines. The affected agricultural products include 
perennial plants and cut flowers, persimmons, green tea, chewing gum, and soy sauce.  USA will also reduce 
or  eliminate  tariffs  on  certain  industrial  goods  from  Japan  such  as  certain  machine  tools,  fasteners,  steam 
turbines, bicycles, bicycle parts, and musical instruments. 

33 

 
 
 
 
 
 
 
 
 
                                                 
5.2 

Trade in goods 

Since 1 February 2019, bilateral trade with Japan takes place in a new context. On that date, 
the  EPA  entered  into  force  and  eliminated  tariffs  for  a  large  number  of  goods,  in  particular 
those  that  were  previously  subject  to  relatively  low  import  duties.  In  addition,  for  those 
categories  with  higher  import  duties,  the  EPA  initiated  a  tariff  phase-out  period  that  will 
eventually  lead  to  full  liberalisation.  In  2019,  Japan  implemented  two  successive  tariff 
reductions pursuant to the EPA, on 1 February and 1 April. 

The EPA thus improved trading conditions for most goods traded between the EU and Japan. 
However, important areas had already been fully or very significantly liberalised beforehand 
because of Japan’s and the EU’s WTO commitments. Some of the most important EU export 
products, such as pharmaceuticals, cars or machinery have benefitted from zero duties when 
imported into Japan for a long time. Therefore, the EPA was not expected to lead to a sudden 
and radical surge in EU exports. Rather, its intended effect was to spur trade growth for those 
goods  that  were  previously  subject  to  moderate  or  high  tariffs  and  to  support  overall  trade 
more  gradually  through  non-tariff  mechanisms,  such  as  cooperation  on  customs  issues  and 
regulatory matters. In the longer term, the EPA should thus contribute to increasing economic 
links between the EU and Japan, preserving or increasing their respective shares in trade with 
each other. 

In 2019, trade with Japan pursued an upward trend that started after the financial crisis. It is 
hoped  that  the  new  economic  partnership  will  facilitate  a  rapid  resumption  of  that  upward 
trend once the Covid-19 crisis is fully under control.  

Merchandise trade with Japan increased by 5.8% in 2019 compared to the previous year, in a 
balanced manner for both EU exports and imports.  

Traditional EU exports to Japan, such as pharmaceuticals, transport equipment and machinery 
benefitted  from  steady  growth.  Product  categories  for  which  the  EPA  led  to  tariff  cuts 
generally experienced higher growth: this is clearly the case for EU agri-food exports such as 
wine, meat, dairy and tobacco leaves (see following point), but also for industrial goods such 
as textiles, clothing and footwear (approximately +10% on average).  

As  regards  imports  from  Japan,  in  2019  there  were  noticeable  increases  for  chemicals  and 
transport  equipment,  in  particular  passenger  cars  (+16%).  As  regards  the  latter,  however, 
strong yearly fluctuations linked to market and industry circumstances are rather common: the 
increase  in  2019  can  only  be  partly  attributed  to  the  EPA,  as  other  factors  had  an  arguably 
bigger impact (e.g. shifts in production of some models between international manufacturing 
sites of a same company). 

Japan has communicated an average Preference Utilisation Rate (PUR) for imports of EU 
goods  of  52.9  %  for  the  period  February  to  December  2019,  calculated  as  the  ratio  of  EU 
exports to Japan benefitting from  a trade preference under the EPA divided by total exports 
eligible  for  a  preference  under  the  EPA.  This  means  that  more  than  half  of  all  EU  goods 
eligible for tariff preferences actually benefitted from those preferences, which is a promising 
result for the first year of implementation. At sectoral level, most EU agricultural exports by 
and  large  enjoyed  the  tariff  preferences  (86.3%  on  average)  with  particularly  high  rates  for 

34 

 
 
 
 
 
 
 
 
 
 
meats  (99%)  and  wine  (93%),  dairy  products  (77%)  and  cheeses  (77%).  The  rates  for 
industrial goods, owing to usually more complex supply chains and often smaller preference 
margins, were significantly lower both in Japan and in the EU.  

It should be noted that PURs typically grow over the years, as economic operators often need 
some  time  to  adjust  to  the  new  trading  conditions  (review  of  supply  chains,  internal 
accounting mechanisms, etc.). A better awareness about relevant customs practices in the EU 
and Japan, which were the object of intensive work in 2019, should also have positive effects. 
It is therefore expected that, particularly for industrial goods, preference utilisation will grow 
over time. 

The  trade  balance  between  the  EU  and  Japan  remained  broadly  stable  and  in  line  with  the 
situation in previous years. Exports and imports display gradual growth at a similar pace and 
are broadly commensurate in value.  

Similarly, the EU and Japan’s share of the other Party’s trade with the world remained stable 
and  broadly  in  line  with  long-term  trends.  In  2019,  Japan  accounted  for  3%  of  the  EU’s 
external trade; while the EU accounted for 10.3% of Japan’s trade with the world. There is a 
very gradual upward trend as regards the importance of Japan as an export market for the EU 
– something, which the EPA will surely support, in particular in areas such as agri-food. 

5.3 

Trade in agricultural products 

The EU-Japan Economic Partnership Agreement (EPA) is a major agreement for the EU agri-
food  sector  offering  big  potential  for  increasing  EU  exports  on  a  large  number  of  products. 
The Commission is particularly committed to ensuring a correct implementation of the EPA 
so that benefits for the agri- food sector materialise. In particular, work has been done in 2019 
to seek improvements in the administration of the tariff rate quotas (TRQs) by Japan in order 
to grant import licenses to established agri-food operators, to support and advance requests for 
access  to  the  Japanese  market  upon  completion  of  sanitary  and  phytosanitary  (SPS) 
procedures, and to agree on the implementation and recognition of regionalisation measures. 

In  2019,  total  trade  in  agricultural  goods  between  the  EU  and  Japan  reached  €7.62  billion, 
with the EU having a large trade surplus of almost €7 billion. Both imports and exports grew 
by around 15%  compared to  2018.  In 2019 Japan was the 5th  country of destination of EU 
exports of agricultural goods.  

EU  exports  of  agricultural  goods  accounted  in  2019  for  €7.28  billion  (11.9%  of  EU  total 
exports  to  Japan  in  2019).  The  main  categories  of  agricultural  goods  exported  to  Japan  in 
2019 were pork meat  (19.1%, for a value of €1.39 billion), cigars  and cigarettes (18%) and 
wine, vermouth and vinegar (13.2%).  

EU  imports  reached  in  2019  €347  million  (an  increase  of  14.9%  compared  to  2018)  and 
consisted  mainly  of  spirits  and  liqueurs  (17%),  soups  and  sauces  (15%)  and  fatty  acids  and 
wax (14%). 

For  sensitive  agricultural  products,  the  EU-South    Korea  FTA  foresees  specific  tariff  rates 
quotas (TRQs) the parties grant each other.  

TRQs granted by Japan to the EU 

35 

 
 
 
 
 
 
 
 
 
 
For  agricultural  products sensitive for Japan, the  agreement  provides  25 specific tariff rate 
quotas (TRQs) reserved for EU exports. At the end of the first full fiscal year after the entry 
into force of the agreement (1 April 2019 – 31 March 2020), EU exporters were able to make 
use of the preferencial treatment granted by Japan under these TRQs to a large extent. For the 
most significant of them (starch; glucose and fructose; various food preparations, notably of 
cereals, cocoa and edible fats and oils; some dairy products), the fill rate during the fiscal year 
was typically comprised between 40% and 70%. For the iconic cheese TRQs, the fill rate by 
EU exporters reached 47%, probably suffering from the initial difficulties stemming from the 
administration  system  set  up  by  the  Japanese  authorities  and  which  was  reviewed  after  the 
first  quota allocation period.  The two most successful TRQs for EU exporters were “butter, 
skimmed  milk  powder,  milk  powder,  butter  milk  powder  and  condensed  milk”  and  “milk 
powder for the preparation of chocolate”, with a joint fill rate of 86%[1]. 

The EU did not grant any TRQs to Japan under the agreement.  

5.4 

Trade in services and Foreign Direct Investments 

In  2018,  total  trade  in  services  between  the  EU  and  Japan  has  increased  by  6%.  There  are 
reasons  to  believe  that  this  trend  has  continued  in  2019.  As  for  FDIs,  EU-Japan  total 
transactions related to direct investment in 2018 were rather constant while compared to 2017, 
with the EU outward transactions on the rise in 2018.  

6. 

CONCLUSIONS 

Year  2019  marked  the  start  of  the  implementation  of  the  EU-Japan  Agreement.  The  Parties 
focused on operationalising the institutional structure set up by the Agreement, kicking-off the 
specific  implementation  work  in  the  context  of  specialised  committees,  and  ensuring  the 
correct  and  smooth  application  by  their  respective  Customs  authorities  of  the  agreed  trade 
preferences.  In  addition,  there  were  important  awareness-raising  efforts  at  EU  and  national 
level,  as  well  as  through  joint  undertakings  with  Japan  (notably  information  actions  by  the 
EU-Japan  Centre  for  Industrial  Cooperation).  In  relation 
trade  and  sustainable 
development, Japan’s domestic efforts and the identification by the EU of TSD priorities for 
cooperation  with  Japan,  in  line  with  the  European  Commission’s  15-point  action  plan, 
allowed a focused approach to the early stages of implementation. Setting up the mechanisms 
for  engagement  with  civil  society,  for  each  Party  domestically  but  also  through  a  joint 
dialogue, was an important achievement On labour, the EU in its discussions with Japan in 
the  TSD  committee  focussed  on  the  ratification  by  Japan  of  two  fundamental  ILO 
Conventions (C105 on forced labour and C111 on non-discrimination). On environment, the 
EU engaged with  Japan to  focus on circular  economy and climate  action. Finally,  emphasis 
was  also  placed  on  horizontal  issues,  notably  the  uptake  of  corporate  social  responsibility 
(CSR) practices in line with the recognised international guidelines. 

to 

[1] These two TRQs have been merged only for purposes of statistical reporting. 

36 

 
 
 
 
 
 
 
 
 
 
                                                 
7. 

STATISTICS 

JAPAN 

37 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Japan (mio €)Imports51 09654 65357 11259 43062 849Exports50 71352 29754 06557 72461 134Balance-383-2 356-3 048-1 706-1 714Share Japan in EU27 trade with Extra-EU27Imports3.1%3.4%3.2%3.1%3.2%Exports2.7%2.8%2.7%2.8%2.9%Total (I+E)2.9%3.1%3.0%3.0%3.0%Share EU27 in trade Japan with worldImports10.0%11.3%10.6%10.6%10.8%Exports8.8%9.3%9.1%9.4%9.7%Total (I+E)9.4%10.3%9.8%10.0%10.3%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Japan: IMF DotsTotal merchandise trade EU27 with Japan (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports59 43062 8493 4195.8%Imports1 907 5651 934 94427 3791.4%Exports57 72461 1343 4115.9%Exports2 059 8822 132 01572 1333.5%Balance-1 706-1 714-8Balance152 317197 07144 754Total trade117 154123 9836 8305.8%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Japan (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports3023474514.9%Imports118 891121 6442 7532.3%Exports6 2767 2801 00316.0%Exports169 000181 82512 8257.6%Balance5 9756 933958Balance50 10960 18110 072Total trade6 5787 6271 04915.9%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Japan (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports59 12862 5023 3745.7%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports51 44853 8552 4074.7%EU27 exports1 890 8821 950 19059 3093.1%Balance-7 681-8 647-967Balance102 208136 89034 682Total trade110 576116 3575 7815.2%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Japan (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports14 20614 6114052.8%Imports824 543824 015-528-0.1%Exports25 76627 8782 1128.2%Exports928 420968 64840 2284.3%Balance11 56013 2681 708Balance103 877144 63340 756Total trade39 97242 4892 5176.3%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Japan (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports11 75212 85414 54114 20614 611Imports642 682776 924784 743824 543824 015Exports18 77921 30223 16025 76627 878Exports750 713849 023855 477928 420968 648Balance7 0278 4488 61811 56013 268Balance108 03172 09970 734103 877144 633Total trade30 53134 15537 70139 97242 489Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Japan (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward115 078150 373181 336177 422191 964Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward68 05079 95098 31397 541104 847Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward8 35818 10123 2059 1144 061Inward143 012803 285328 703209 462-67 421Outward-471 8175 931Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsJapanJapan20182019Extra-EU27Japan2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Japan-10 000010 00020 00030 00040 00050 00060 00070 00020152016201720182019Merchandise trade EU27 with Japan (mio €)ImportsExportsBalance 
 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE  EU-
SOUTH KOREA FREE TRADE AGREEMENT 

1. 

INTRODUCTION 

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

The EU-South Korea FTA is the first of a new generation of comprehensive trade agreements 
which, apart from market opening commitments also offers a basis for regulatory co-operation 
in  key  sectors  as  well  as  a  substantial  chapter  on  sustainable  development  with  binding 
provisions upholding and promoting social and environmental standards.  
According  to  the  ex-post  evaluation  of  the  EU-South  Korea  FTA28  conducted  by  an 
independent  contractor,  published  in  March  2019,  the  EU  economy  gained  additional  €4.4 
billion and the South Korean economy €4.9 billion through the FTA. This happened despite 
the  fact  that  the  external  environment,  notably  the  post  financial  crisis  period  was  not 
particularly supportive, weighing on demand and international trade. 

2. 

MAIN IMPLEMENTATION ISSUES  

2.1   Main open issues, progress and follow-up  

Year 2019 marked the eighth anniversary of the EU-Korea FTA. The implementation of the 
agreement  continues  to  progress  smoothly  in  many  areas,  benefiting  substantially  European 
and  Korean  business  and  consumers,  as  illustrated  by  the  ex-post  evaluation  study.  At  the 
same time, progress on some long standing issues that have been discussed regularly over the 
last several years remains limited and unsatisfactory. 

A key concern remains the access of EU beef  to the South Korean market, which has been 
closed to EU imports since early 2000s. In 2019, South Korea approved the application of two 
Member States (Denmark and The Netherlands), who can now export beef to Korea, however 
other Member States are still waiting for the finalisation of their approval process. In addition, 
South Korea is yet to accept the principle of regionalisation for animal diseases. This issue 
continues to be discussed between the parties, and is highly relevant to create predictable and 
stable trade conditions for meat and poultry products.  

In  the  area  of  Intellectual  Property,  South  Korea  still  needs  to  establish  an  effective 
remuneration system for public performance rights. Lack of progress in this area remains a 
concern to the EU. The revised Presidential Decree, which entered into force in August 2018 

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

38 

 
 
 
 
 
 
                                                 
did not sufficiently address the problematic exemption of the majority of retail venues from 
paying  remunerations,  neither  the  low  level  of  fees.  The  extension  of  the  geographical 
indications’ (GI) list protected by the FTA is also still pending. However, the adoption of the 
Rules of Procedure of the EU-South Korea GIs Working Group in 2019 should ease the way 
towards  adding  further  EU  and  South  Korean  geographical  indications  to  the  Annex  of  the 
FTA. 

In addition to the main issues mentioned above, numerous technical barriers to trade in key 
sectors – as discussed in the last sectoral Working Groups in February 2020 - keep impeding 
progress  towards  reaching  the  full  potential  of  the  agreement.  Improvements  in  the  area  of 
customs  procedures  could  contribute  to  an  increase  in  the  preference  utilisation  rates,  and 
further facilitate the participation of small and medium sized enterprises (SMEs). Exchanges 
on customs issues continued in 2019 between the EU and Korea. In particular, discussions on 
a  mutual  understanding  of  Article  27  of  the  Origin  Protocol  concerning  the  verification 
procedure have been finalized, which should be formally agreed between the EU and Korea in 
2020 in the form of a Recommendation made by the Customs Committee. 

2.2 

Progress in the implementation of trade and sustainable development provisions  

In 2019, there the Committee on Trade and Sustainable Development  did not  meet.  As was 
the case in 2018, the main pending issue was the ratification of the four core ILO conventions 
and  protection  of  labour  rights  by  Korea,  progress  on  which  was  still  not  satisfactory. 
Consequently,  the  Commission  stepped  up  the  engagement  with  South  Korea  and  launched 
dispute settlement proceedings under the FTA in order to address these issues. The panel of 
experts was formally established on 30 December 2019 to examine the matters and to solve 
the dispute.  

In 2018 the Commission initiated its first dispute settlement procedure under a bilateral trade 
agreement,  following  serious  concerns  in  relation  to  compliance  by  South  Korea  with  the 
provisions  dedicated  to  labour  rights  (ratification  of  three  core  ILO  conventions  and 
enforcement).  During  the  reporting  period,  the  proceedings  in  the  dispute  with  Korea  on 
labour obligations under the Trade and Sustainable Development (TSD) Chapter of the FTA 
continued.  On  17  December  2018,  the  Commission  had  formally  requested  government 
consultations under Article 13.14 of the FTA raising concerns regarding Korea’s compliance 
with  the  ILO  principle  of  freedom  of  association  and  regarding  Korea’s  efforts  towards  the 
ratification of four outstanding fundamental ILO Conventions.  

  The  EU  held  government  consultations  with  Korea  on  21  January  2019  that  did  not 
solve all the issues raised in consultations. Therefore, the EU requested on 4 July 2019 
the establishment of a panel of experts to examine the matters and to solve the dispute. 
  The  panel  of  experts  was  formally  established  on  30  December  2019.    An 
organisational meeting between the Parties and the Panel took place in January 2020. 
In  the  first  half  of  January  2020  interested  parties  had  the  opportunity  to  submit 
amicus  curiae  submissions.  A  hearing  was  scheduled  to  take  place  in  April  2020  in 
Geneva but had to be cancelled due to restrictions on meetings related to COVID 19. 
The EU will publish the report. The parties will also transmit the panel report to their 

39 

 
 
 
 
respective  Domestic  Advisory  Groups  established  under  Article  13.12(4)  of  the  EU-
Korea trade agreement  

The parties shall make their best efforts to accommodate view of the Panel of Experts on the 
implementation of the Trade and Sustainable Development Chapter of the agreement.   

The Committee on Trade and Sustainable Development established under the EU-Korea trade 
agreement shall monitor the implementation of the recommendations of the panel of experts. 
It is expected to convene again in 2020.  

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The  institutional  provisions  of  the  EU-South  Korea  FTA  (Article  15)  established  seven 
Specialised  Committees,  seven  Working  Groups  and  an  Intellectual  Property  (IP)  Dialogue. 
The annual meeting of the Trade Committee at ministerial level plays a supervisory role and 
ensures that the FTA operates properly. The chronological summary below presents activities 
of FTA Committees and Working Groups that took place over 2019.   

The ministerial Trade Committee met  on 9 April 2019 in Seoul. Both sides agreed that the 
FTA was a success that had significantly increased bilateral trade and investment even though 
some concerns on implementation persist, on the EU side, the main points of concern include 
the long delayed market access for EU beef and the non-ratification by South Korea of four 
fundamental  ILO  Conventions.  Furthermore,  the  deteriorating  business  climate  in  South 
Korea  remains  a  challenge  for  businesses  to  fully  benefit  from  the  FTA.29  The  main  areas 
discussed in the ministerial meeting were the following: 

  EU  beef  exports:  While  recognising  some  positive  developments  related  to  the  beef 
issue,  the  EU  highlighted  that  the  Korean  market  remained  closed  for  EU  beef;  in 
response,  South  Korea  agreed  to  rapidly  complete  the  technical  steps  for  the  most 
advanced applicants.  

  Trade  and  sustainable  development:  The  EU  recognized  that  some  efforts  had  been 
made  by  the  South  Korean  government  but  the  question  remained  whether  progress 
had been sufficient to avoid moving to the next stage in dispute settlement under the 
FTA.  

  Car  sector:  With regard to  the car sector, both  sides endorsed the finalisation of the 
administrative amendment of the car annexes under the written procedure. This update 
of  EU  and  Korean  rules  will  increase  predictability  and  legal  certainty  for  car 
producers  and  related  industries.  The  EU  side  also  raised  the  concerns  that  the  car 
sector has highlighted regarding the difficult business climate.  
IPR:  The  EU  also  reiterated  its  Intellectual  Property  Rights  related  concerns  (i.e. 
public performance rights and geographical indications, see explained above)  
Issues presented by South Korea: South Korea repeated its request for market access 
for Samgyetang (chicken ginseng soup) and asked for a solution for the long-standing 

 

 

29 According to the ECCK Business confidence survey, European companies overall value Korea as an important 
market,  at  the  same  time  62%  of  responding  companies  feel  that  conducting  business  has  become  more 
difficult: https://ecck.eu/wp-content/uploads/2020/03/Business-Confidence-Survey-2019_20200302.pdf  

40 

 
 
 
                                                 
surimi issue30. South Korea also expressed concerns about the adverse effect of the EU 
steel safeguards measures on Korean producers. 

The 6th meeting of the Trade Remedy Cooperation Working Group was held on 20 May 
2019 in Seoul, back-to-back with the International Seoul Forum on Trade Remedies organised 
by the Korea Trade Commission (KTC)31, in which the EU side participated. During the 6th 
meeting of the Trade Remedy Cooperation Working Group, the two sides updated each other 
on  latest  developments  in  domestic  trade  remedy  laws,  policies  and  practice.  The  EU  side 
notably  debriefed  South  Korea  on  the  entry  into  force  and  implementation  of  the  two  latest 
amendments  to  the  EU  Trade  Remedy  basic  legislation,  namely  the  ‘new  anti-dumping 
methodology’  and the ‘modernisation of trade defence instruments’, which had entered into 
force  in  December  2017  and  June  2018  respectively.  South  Korea  expressed  concerns  with 
respect to the EU steel safeguard measures and the EU briefed South Korea on the upcoming 
review  investigation  of  the  steel  safeguard  measures.  The  EU  expressed  concerns  with  the 
respect of general fairness and transparency principles in an investigation conducted by South 
Korea against Italian exports of stainless steel bars. The EU invited South Korea to revise its 
policy  and methodology accordingly. The two sides also  shared statistics on Trade Defence 
cases and exchanged views on global trends in trade remedy investigations, and related WTO 
litigation. 

The  6th  EU-South  Korea  Cultural  Cooperation  Committee  convened  on  13  May  2019  in 
Seoul,  followed  by  a  2  day  study  visit  to  various  South  Korean  cultural  institutions.  The 
topics  discussed  included  performing  arts,  culture  and  cities,  new  developments  in  cultural 
and  creative  sectors-  namely  cultural  entrepreneurship,  the  cultural  content  industry  and  the 
connections  between  arts,  science  and  technology-  architecture  and  audio-visual  co-
productions.  

The  Committee  on  SPS  Measures  met  in  Sejong  City  on  4  September  2019  to  discuss  a 
number  of  pending  SPS  issues  that  concern  bilateral  trade.  In  particular,  the  EU  raised  the 
pending applications for access of EU beef to Korea, where Korea confirmed the approval of 
applications  from  two  Member  States  (Netherlands  and  Denmark).  The  recognition  of 
regionalisation  measures  and  import  rules  related  to  pesticide  residues  were  discussed,  in 
addition.  South  Korea  requested  clarifications  about  the  state  of  play  on  their  pending 
application  for  export  of  chicken-ginseng  soup  to  the  EU.  The  Committee  meeting  was 
preceded by a one-day seminar to discuss the control of African swine fever. 

The 7th meeting of Intellectual Property (IP) Dialogue was held in Seoul, on 6 November 
2019.  

Update  on  legislative  developments:  Both  sides  informed  each  other  of  the  latest  domestic 
legislative  and  policy  developments  concerning  industrial  property  rights.  The  EU  provided 
details on definitions of online content-sharing service providers in the EU regulations and the 
relationship with the Korea-EU FTA.  

30    The  issue  relates  to  the  interpretation  of  the  content  of  Alaska  Pollack  as  the  “primary  ingredient”  in  the 

surimi paste. For the EU, this means a content of at least 85%, while Korea seeks a lower percentage. 

31   South Korea’s authority dealing with trade defense.  

41 

 
 
                                                 
Public performance rights: Views were exchanged on the current state of play regarding the 
implementation of the Korea-EU FTA in relation to public performance rights. The EU raised 
concerns with regard to the full FTA implementation of the related provisions. 

“Infringing”  goods:  Both  sides  shared  the  measures  taken  to  resolve  problems  related  to 
infringing goods and views on the issue of online platforms and the circulation of counterfeit 
products. Korea informed the EU about the recent crackdown on websites circulating pirated 
copyright contents and on counterfeit products in street markets. On ‘Counterfeit and Piracy 
Watch  List’,  Korea  asked  the  EU  about  the  selection  of  the  listed  online  and  offline 
marketplaces and any procedures for objections, and the EU provided the procedures in detail. 
Both  sides  discussed  the  importance  of  participation  and  cooperation  by  right  holders  in 
actions to control counterfeit goods.  

On  6  November  2019,  the  7th  meeting  of  the  Working  Group  on  Geographical 
Indications (GIs) took place in Seoul.  

Addition of geographical indications: Both sides discussed the issue of the addition of GIs in 
line with the Rules of Procedures and relevant procedures to include additional  GIs in Korea 
and  the  EU.  Parties  gave  a  short  overview  on  their  respective  GI  systems,  highlighting  the 
similarities  and  differences.  Discussions  also  covered  the  procedure  of  the  addition  of  GI 
names such as the trademark/earlier rights monitoring, examination procedure, publication in 
the  respective  official  journals,  the  opposition  procedure.  Korea  introduced  the  domestic 
regulation regarding the addition of GIs, ‘Regulations on Procedures for Oppositions to GIs 
Protected under Trade Agreements.’ The EU side confirmed that the 46 EU GI names were to 
be  added  to  the  list  and  all  relevant  documents  on  the  EU  names  had  been  once  again 
provided to the Korean authorities.  

Update  on  legislative  developments:  Both  sides  updated  each  other  on  the  latest  legislative 
and international developments related to quality policy, newly available databases as well as 
respective ongoing trade negotiations and recently signed agreements. As concerns timeline, 
both  sides  were  committed  to  reach  a  positive  outcome  and  work  expeditiously  to  avoid 
unjustified delays.  

The  5th  meeting  of  the  Working  Group  on  Government  Procurement  took  place  on  6 
November 2019 in Seoul. Both sides updated each other on the latest developments related to 
public  procurement  (PP)  and  on  their  respective  ongoing  trade  negotiations  (and  recently 
signed agreements). As far as potential trade barriers are concerned, the discussion covered, 
among other topics, access to the parties’ respective high-speed rail markets, where both sides 
saw the need for improvements. The EU also raised the issue of use of Korean standards in its 
public procurement tenders. As a conclusion, both parties were committed to ensure the FTA 
implementation  and  the  correction  of    any  irregularity  in  the  effective  public  procurement 
market access. 

With regard to cooperation issues, it was agreed to start discussions on SME support policies 
and mutual exchange of best practices. The issues of enhancing e-procurement and of access 
to  reliable  procurement  statistics  and  the  need  to  exchange  the  relevant  data  were  also 
discussed. 

Four important FTA committee meetings took place in early February 2020. In order to keep 
the annual frequency, these meetings will take place again in late 2020. 

42 

 
 
The 8th meeting of the Working Group on Pharmaceuticals and Medical devices was held 
in Seoul on 4 February 2020. Both sides discussed procedural transparency concerning rules 
governing both sectors. In light of EU concerns, Korea informed about recent efforts made to 
ensure  that  pricing  and  reimbursement  decision-making  procedures  take  place  in  a  fair, 
transparent  and  reasonable  manner  in  both  sectors.  Concerning  medical  devices,  Korea 
informed  about  revisions  made  to  the  Integrated  Medical  Device  Information  System 
(IMDIS).  Upon  request  from  Korea,  the  EU  informed  about  the  EU’s  organisation  and 
structure  related  to  delivery  of  health  services  and  medical  care.  Further  discussions 
concerned i.a. the EU Medical Devices Regulation, the KC certification for components used 
in  medical  devices,  the  revised  premium  pricing  policy  that  amended  the  conditions  for 
rewarding innovations for new pharmaceutical products. 

The  Dialogue  on  Electronics  met  in  Seoul  on  5  February  2020.  Both  Parties  exchanged 
information  on the evolution of trade flows and  on the technical  workshop organised on 20 
September  2019.  With  a  view  to  ensuring  a  higher  level  of  symmetry  in  the  respective 
commitments, discussions were held on the review of appendix 2-B-3 to reduce the number of 
items listed (which are not subject to simplified conformity assessment procedures) and on the 
need of enlarging the scope of Annex 2-B of the Agreement to cover radio equipment testing. 
The EU informed about its new product specific eco-design implementing regulation. Finally, 
both Parties agreed to have another technical workshop in the second half of 2020. 

The Working Group on Motor Vehicles and Parts met in Seoul on 6 February 2020. In the 
first  part  of  the  discussion,  the  Parties  reviewed  the  state  of  play  of  existing  market  access 
issues. Main issues discussed were the technical update of Annex 2-C (on motor vehicles and 
parts) of the Agreement, the business climate in Korea, the impact of the Korean Special Act 
on  the  Protection  and  Support  of  Microenterprises,  the  restriction  of  access  to  the  Korean 
market for certain vehicles (based on the vehicle width) as well as the Korean certification of 
car  parts  regime.  New  market  access  issues  discussed  included  a  potential  substantial 
amendment  of  Annex  2-C  to  uphold  its  level  of  ambition,  new  requirements  for  tyres  by 
Korea,  rules  of  origin  related  issues  (e.g.  the  interpretation  by  the  Parties  of  “products 
originating”),  emission  standards  and  pollutant  emissions  (including  the  emission-related 
components  certificate  applied  by  Korea)  and  the  future  introduction  of  the  EU  Whole 
Vehicle Type Approval applying to medium and large-sized commercial vehicles.   

Finally,  the  Trade  in  Goods  Committee  was  held  on  6  February  in  Seoul,  giving  an 
opportunity  to  take  stock  of  issues  not  covered  by  specific  sectoral  Working  Groups. 
According  to  established  practice,  the  Committee  was  debriefed  on  the  outcome  of  the 
Electronics dialogue held on 5 February and it was agreed to continue joint work with a view 
to  ensuring  a  higher  level  of  symmetry  in  the  respective  commitments  of  the  Parties.  The 
other areas discussed by the Committee were the following:  

Competition:  The  EU  reiterated  its  concerns  with  regard  to  an  increased  support  to 
shipbuilding by the government and the EU requested more transparency and to continue the 
dedicated dialogue. Korea mentioned an ongoing EU in-depth investigation on subsidies to a 
Korean company in Hungary, while the EU reiterated its proposal for the full implementation 
of the FTA’s provisions on competition, including on subsidies.  

43 

 
 
Other  issues:  While  Korea  underlined  the  importance  of  digital  trade  as  a  way  to  boost 
bilateral  economic  cooperation,  the  EU  raised  several  market  access  issues  concerning 
cosmetics, baby clothing and the new labelling criteria of packages.  

4. 

ACTIVITIES  SUBJECT  TO  SPECIFIC  MONITORING  AND  SPECIFIC  AREAS  OF 
IMPORTANCE  

In line with Article 14 of the FTA Protocol on Rules of Origin, South Korea’s imports of key 
car  parts  and  electronics  from  the  most  important  suppliers  (outside  the  EU)  have  been 
monitored.  Like in the past, China and Japan remain the largest car parts suppliers. Japan still 
pays full duty on car parts while China benefits from tariff reduction (within the South Korea-
China agreement most car parts will be liberalised in 10 or 15 years). 

Source: KITA 

The import pattern has not fundamentally changed since the EU-South Korea FTA has been 
signed  and  there  has  been  no  significant  increase  in  imports  of  car  components  and  key 
electronics from the largest suppliers into South Korea in 2019 compared to 2018. Based on 
these  trade  statistics,  it  is  not  possible  to  establish  a  link  between  the  allowance  of  duty 
drawback and the increase in EU imports of cars from South Korea. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

South Kore’s GDP grew by 2% in 2019 and thus remained subdued as the global slowdown 
and  trade  tensions  held  back  exports,  while  high  uncertainly  weighted  on  investment, 
according  to  the  OECD32.  A  gradual  recovery  in  global  semiconductors  and  expansionary 
fiscal  policy  were  considered  as  the  main  factors  supporting  the  economy  at  that  time.  The 

32 http://www.oecd.org/economy/korea-economic-snapshot/  

44 

 
 
 
 
 
 
 
 
                                                 
current  pandemic  has  dramatically  changed  the  economic  environment  in  South  Korea  and 
worldwide  and  the  April  2020  IMF  forecast  suggests  a  recession  of  1.2%  of  GDP  in  South 
Korea in 2020.33 This expected drop in output remains mild compared to forecasts for other 
developed economies and can be explained to some extent by the successful containment of 
the COVID-19 crisis in early spring 2020 in South Korea.  

5.2 

Trade in goods 

Both  the  EU  and  South  Korea  are  strongly  integrated  in  global  value  chains  and  remain 
valuable trading partners in the bilateral context. The EU-South Korea annual trade in 2019 
amounted  to  almost  €91  billion.  In  2019,  South    Korea  was  the  EU's  ninth  largest  trading 
partner overall and it accounted for 2.2% of the EU’s total trade in goods. The EU was South 
Korea’s  third  largest  trading  partner  in  the  same  year  (after  China  and  the  US).    The 
liberalisation of trade in goods has been beneficial for both partners. EU exports in goods rose 
from €25.5 billion in 2010 to €43 billion in 2019 while EU imports of South  Korean products 
also  grew  significantly  over  the  same  period,  albeit  at  a  slightly  slower  pace,  as  values 
increased from a higher starting point of €36 billion in 2010 to €47 billion in 2019. 

EU merchandise exports to South Korea continued to decrease in 2019 (by 1%, recording 
€43.3  billion).  EU  imports  from  South  Korea  increased  by  3%,  amounting  to  €47.4  billion. 
This lead to an almost double EU’s trade deficit with South Korea of €4 billion, compared 
to the previous year, and in contrast to the development of the EU’s overall trade balance with 
the rest of the world, which increased in the same year. 

Relatively  weak  EU  exports  to  South  Korea  could  be  explained  to  some  extent  by  weak 
domestic demand. Amid the downturn in the semi-conductors cycle and the US-China trade 
dispute,  South  Korea's  domestic  demand  continued  to  be  slow.  Annual  growth  of  South 
Korea's  domestic  demand  in  2019  was  only  1.2%  -  following  its  sharp  slowdown  to  2%  in 
2018 from 5.6% in 2017.  

As  was  the  case  in  2018,  the  EU’s  trade  deficit  with  South  Korea  in  2019  came  mainly 
from  trade  in  industrial  products.  Industrial  products  account  for  99%  of  EU  imports  from 
South  Korea  and  93%  of  EU  exports  to  South  Korea;  and  EU  exports  to  South  Korea  of 
industrial products decreased 1.3% while imports from South Korea increased 3%.  

Sector wise, machinery and appliances was the largest sector in trade in goods between the 
EU and South Korea, accounting for 33% of total bilateral trade in value terms.  EU exports to 
South Korea in this sector fell by 9% in 2019 year on year (as compared to a 7% drop over the 
previous  reporting  period),  while  EU  imports  from  South  Korea  increased  3%.  By  contrast, 
EU exports to South Korea in the sector of transport equipment, accounting for 21% of total 
bilateral trade and the second largest export category, increased by 4% while imports rose by 
5%.  

33 https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020 

45 

 
 
 
 
                                                 
 
Source: Eurostat 

5.3 

Trade in agricultural products 

Overall trade in agriculture goods between the EU and South Korea increased by some 5% 
in 2019, in line with the EU trade with the rest of the world. EU exports of agricultural goods 
to  South  Korea  grew  by  4.6%  in  2019,  and  stood  at  €2.96  billion.  Imports  of  agricultural 
goods from South Korea grew by 11% and stood at €181 million, resulting in a trade surplus 
for the EU of €2.78 billion. 

In terms of exports of agricultural goods, the EU exported to South Korea mainly pork meat 
(22%), chocolate, confectionery and ice cream (5.7%) and cheese (5.4%). While the exports 
of  pork  meat  decreased  by  12%  compared  to  2018,  the  exports  of  chocolate,  confectionery 
and ice cream and of cheese grew by respectively 16.6% and 20.5% over the same period.  

Imports  of  agricultural  goods  from  South  Korea  in  2019  were  concentrated  in  three  main 
categories:    pasta,  pastry,  biscuits  and  bread  (24.9%),  waters  and  soft  drinks  (20.4%)  and 
preparations of vegetables, fruits or nuts (15.5%).  

The  main  impediments  to  expanding  trade  in  agricultural  goods  remain  unchanged  when 
compared to the previous reporting period. First, with the exception of two EU Member States 
(NL and DK who were granted access in 2019), approvals of EU beef34 remained pending for 
10  Member  States.  With  regard  to  poultry,  there  was  no  progress  in  revising  the  South 
Korean  policy  of  country-wide  import  bans  in  the  event  of  an  outbreak  of  avian  influenza. 
Similarly, the country-wide bans  of  pork imposed on Belgium, Hungary  and Poland due to 
African Swine Fever (ASF) were not lifted by South  Korea. South  Korea filed applications 
for  beef  exports  to  the  EU  in  2018  which  might  indicate  a  stronger  trade  orientation  in  the 
South  Korean administration with regard to this sector. 

34 The ban was introduced by South Korea in early 2000s due to a Bovine Spongiform Encephalopathy (BSE). 

46 

 
 
 
 
 
 
 
 
 
                                                 
For  sensitive  agricultural  products,  the  EU-South    Korea  FTA  foresees  specific  tariff  rates 
quotas (TRQs) the parties grant each other. The tables below show the rate of utilisation of 
these  quotas  by  the  EU  and  South  Korea,  respectively.  The  fill  rate  of  these  import  quotas 
applied  by  South  Korea  to  goods  originating  in  the  EU  decreased  for  3  out  of  10  product 
groups. Only in case of oranges the TRQ was not used in the two reference periods. 

TRQs granted by South Korea to the EU 

Milk Powder, Condensed 
milk (cream) 
Butter 
Food Whey 
Cheeses 
Prepared dry milk 
Natural honey 
Oranges 
Marling barley, malt 
Supplementary feed 
Dextrin 

Utilisation Rate (%) 

7/2017 to 6/2018 
100.0 

7/2018 to 6/2019 
100.0 

99.9 
99.0 
99.1 
60.5 
49.1 
0.0 
80.8 
99.2 
70.6 

100.0 
98.1 
99.0 
79.7 
16.6 
0,0 
90.7 
99.9 
73.5 

TRQs granted by the EU to South Korea  
South Korea did not use its quotas in 2019.  

5.4 

Trade in services and Foreign Direct Investments 

Total trade in services between the EU and South Korea stood at €19 billion in 2018, up 4% 
year on year, as compared to 8% in 2017. Since the entry into force of the agreement, trade in 
services has been growing in both directions. In 2018, EU exports of services to South Korea 
increased by 1% to € 11.4 billion, while imports from South Korea rose by 8% (€ 7.6 billion) 
over the same period. Although trade in services has grown in both directions since the entry 
into  force  of  the  agreement,  the  EU  has  consistently  held  a  trade  surplus  with  South  Korea 
that peaked at €4.8 billion in 2015. The EU surplus fell to €4.2 billion in 2017 and 3.8 billion 
in 2018, due to the stronger increase in imports. 

As is the case with goods and services, the EU- South Korea FTA has also stimulated growth 
in  FDI  between  the  two  partners.  Latest  available  data  shows  that  the  stock  of  EU  FDI  in 
South Korea rose by 4% in 2018 and stood at €46 billion while the stock of South Korean FDI 
in the EU also registered an increase of 1% to €25 billion in the same year.   

47 

201720182019PreparationsBiscuits270t0%0%0%TobaccoCigarettes250t0%0%0%Utilisation rate of TRQs opened by the EU to South KoreaSectorTRQ descriptionTRQ QuantityUnitUtilisation in TRQ period ending in: 
 
 
 
 
 
 
 
 
 
 
 
EU-South Korea services trade and investment stocks (2014-2018) 

6. 

CONCLUSIONS  

For  more  than  nine  years,  the  EU-South  Korea  FTA  has  offered  a  sound  institutional 
framework  for  bilateral  trade  and  investment  between  the  EU  and  South  Korea.  In  the 
majority of areas, the implementation works well, supporting economic development on both 
sides, even though some long-standing implementation issues persist, as outlined in section 2. 
In contrast, positive examples of areas in which progress was achieved thanks to bilateral co-
operation are illustrated in the box below. 

Preference  utilisation  rates  for  EU  exports  to  South  Korea  have  increased  gradually  and 
reached  over  80%  in  2019  marking  a  positive  trend  over  the  entire  implementation  period. 
Regular meetings of the numerous FTA committees and working groups help in this respect, 
serving as a valuable channel of communication that allow clarifying implementation issues 
and  exchanging  information,  including  on  regulatory  developments  in  the  EU  and  South 
Korea. The current COVID-19 pandemic has imposed immense economic challenges on both 
the EU and South Korea. In such a context, the role of a stable FTA framework that defends 
free and fair trade is more important than ever. 

48 

 
 
 
 
 
 
 
 
49 

 
 
 
 
 
7. 

STATISTICS 

SOUTH KOREA 

50 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with South Korea (mio €)Imports35 57634 64844 02845 96447 352Exports41 38338 80143 51243 74843 334Balance5 8074 153-516-2 216-4 018Share South Korea in EU27 trade with Extra-EU27Imports2.2%2.2%2.5%2.4%2.4%Exports2.2%2.1%2.2%2.1%2.0%Total (I+E)2.2%2.1%2.3%2.3%2.2%Share EU27 in trade South Korea with worldImports11.7%11.5%10.9%10.4%10.2%Exports7.7%8.0%8.1%8.5%8.7%Total (I+E)9.5%9.6%9.3%9.4%9.4%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade South Korea: IMF DotsTotal merchandise trade EU27 with South Korea (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports45 96447 3521 3883.0%Imports1 907 5651 934 94427 3791.4%Exports43 74843 334-414-0.9%Exports2 059 8822 132 01572 1333.5%Balance-2 216-4 018-1 802Balance152 317197 07144 754Total trade89 71290 6869741.1%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with South Korea (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports1631811810.9%Imports118 891121 6442 7532.3%Exports2 8382 9691314.6%Exports169 000181 82512 8257.6%Balance2 6752 788113Balance50 10960 18110 072Total trade3 0013 1491495.0%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with South Korea (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports45 80147 1711 3703.0%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports40 91040 365-545-1.3%EU27 exports1 890 8821 950 19059 3093.1%Balance-4 891-6 806-1 915Balance102 208136 89034 682Total trade86 71187 5368251.0%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with South Korea (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports7 0527 5965447.7%Imports824 543824 015-528-0.1%Exports11 27411 3901161.0%Exports928 420968 64840 2284.3%Balance4 2223 794-428Balance103 877144 63340 756Total trade18 32618 9866603.6%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with South Korea (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports5 8096 3856 5337 0527 596Imports642 682776 924784 743824 543824 015Exports9 87511 18110 80811 27411 390Exports750 713849 023855 477928 420968 648Balance4 0664 7974 2754 2223 794Balance108 03172 09970 734103 877144 633Total trade15 68317 56617 34118 32618 986Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with South Korea (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward14 93415 95322 08624 58224 903Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward36 83637 94440 28044 01745 996Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward1 3881 7602 743Inward143 012803 285328 703209 462-67 421Outward7 2382 4061 209Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsSouth KoreaSouth Korea20182019Extra-EU27South Korea2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018South Korea-10 000010 00020 00030 00040 00050 00020152016201720182019Merchandise trade EU27 with South Korea (mio €)ImportsExportsBalance 
 
 
 
 
PART II:   THE AMERICAS 

51 

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

1. 

INTRODUCTION 

The  EU-Canada  Comprehensive  Economic  and  Trade  Agreement  (“CETA”)  has  been 
provisionally applied since 21 September 2017. At the time of writing, 14 Member States had 
notified  the  completion  of  their  ratification  process  (Austria,  Czech  Republic,  Denmark, 
Estonia,  Spain,  Croatia,  Latvia,  Lithuania,  Luxembourg,  Malta,  Portugal,  Finland,  Slovakia 
and Sweden). The ratification process is still ongoing in other Member States.  

In  2019,  work  continued  on  the  foundations  of  the  Investment  Court  System  (ICS)  already 
established in CETA. Although the ICS provisions are not provisionally applied, the contours 
of  the  further  work  on  the  ICS  have  been  agreed  between  EU  and  Canada  in  the  Joint 
Interpretative Instrument on CETA35. In particular, the Commission adopted in October 2019 
four proposals for specific rules putting in place the CETA’s ICS provisions in the following 
strands  of  action:  (1)  the  rules  regarding  the  functioning  of  the  Appellate  Tribunal,  (2)  the 
code  of  conduct  for  the  Members  of  the  Tribunals,  (3)  the  rules  for  mediation  and  (4)  the 
procedure to adopt binding interpretations.  

These rules prepare the ground to put in place in CETA a reformed approach to investment 
dispute settlement and implement the ground-breaking path established by the EU’s reforms 
of investment dispute policy. In particular, they will ensure an effective appeal function, the 
first such appeal function to become operational in international investment agreements. They 
will    ensure  the  implementation  of  the  highest  ethics  standards  included  in  the  agreement. 
They  put  in  place  rules  on  mediation  for  investment  disputes,  an  area  which  traditional 
investment  agreements  have largely overlooked.  Finally, they flesh out  a  framework for the 
adoption  of  binding  interpretations  (already  foreseen  in  the  agreement),  facilitating  the 
Parties’ maintenance of control of the interpretation of the agreement. 

The Commission proposals were adopted by the Council, representing EU Member States, in 
May 2020. The European Parliament has been kept informed of the discussions. They can be 
formally  agreed  with  Canada  in  the  relevant  CETA  committees.  They  will  only  enter  into 
force when the ratification of CETA is completed by all EU Member State thus allowing the 
implementation of the ICS. 

The  Commission  continues  to  be  engaged  with  Member  States  and  stakeholders  to  create 
awareness of the opportunities that CETA offers to ensure EU companies big and small are 
able  to  derive  the  benefits  from  the  agreement.  As  part  of  these  efforts,  the  Commission 
developed specific guides and webinars to assist EU businesses, which are or want to become 
active  on  the  Canadian  market  (notably  on  the  protection  of  geographical  indications  and 
public  procurement).  More  such  guides  are  in  the  process  of  being  developed.  The 

35    Para. 6 (“Investment Protection”) of the Joint Interpretative Instrument on the Comprehensive Economic and 
Trade  Agreement  (CETA)  between  Canada  and  the  European  Union  and  its  Member  States  (OJ  L  11,  14 
January 2017, pp. 3–8) 

52 

 
 
 
 
                                                 
 
Commission also updated its Market Access Data Base to provide more information useful to 
EU  exporters  to  Canada,  in  particular  SMEs  for  whom  access  to  information  is  a  critical 
barrier to access the international markets. 

2. 

MAIN IMPLEMENTATION ISSUES  

2.1   Main open issues, progress and follow-up  

In  2019,  the  EU  continued  to  engage  with  Canada  in  the  relevant  CETA  Committees  to 
resolve its implementation concerns on CETA.  For the EU, the implementation issues relate 
mainly to agricultural exports. Although, the EU exporters are fully using new market access 
opportunities,  there  are  a    few  challenges  in  some  sectors.  At  the  same  time,  Canada  is 
concerned  that  the  EU  has  not  been  able  to  fully  implement  the  CETA  Conformity 
Assessment Protocol yet.  

Tariff rate quotas for cheese 

The  quotas  offered  by  CETA  constitute  an  important  market  access  opportunity  for  EU 
exporters  (i.e.  a  137%  increase  of  the  pre-CETA  tariff-free  quota).    The  quotas  have  been 
filled completely since the provisional application of CETA. The quota fill rate was 96.4% in 
2018 and 96% in 2019. The increased access to the Canadian market under CETA enabled the 
value  of  EU  cheese  exports  to  Canada  to  increase  by  27%  or  €167  million  in  2018  and  by 
another 15% in  2019,  compared to  2018. With CETA, Canada has become the EU’s fourth 
largest market for cheese exports (in value).  

At the same time, the EU still has some concerns on the management by Canada of the new 
Tariff Rate Quotas (TRQ) for cheese. While the fill rate is excellent, the EU considers that the 
Canadian  quota  management  system  could  be  improved.  The  quota  uptakes  are  currently 
concentrated in the second half of the calendar year and there appear to be an important rate 
of quota transfers  potentially indicating that the quotas did not go to those most likely to use 
it, contrary to what is required under the terms of CETA. Half the quota is held by Canadian 
cheese producers themselves. The EU is engaging with Canada on the CETA TRQ review in 
the context of the CETA Agriculture Committee as foreseen by the Agreement. Furthermore, 
the EU has contributed to a recent public consultation by Canada on a comprehensive review 
of its Tariff Rate Quotas Management system.  

Discriminatory practices in the wine and spirits sector 

Canada in 2019 continued to apply discriminatory practices in the wines and spirits sector at 
provincial  level  and  at  federal  level.  Although  individually  the  effect  of  some  of  the  many  
measures  may not  be significant,  the combination of them has distorting  effect  on imported 
products. The EU is concerned in particular about the federal Excise Act that introduces levies 
which are only imposed on imported wines while wines made from 100% Canadian-sourced 

53 

 
 
 
 
 
 
 
 
grapes  are  fully  exempted.  Unfortunately,  the  tax  has  been  maintained  in  the  2020  budget. 
The tax has also been challenged in the World Trade Organisation by Australia and the EU is 
active as a third party in the case.  

At  the  same  time  in  2019  some  progress  was  achieved  through  bilateral  discussions  with 
Canada on provincial measures: 

  With effect  of 8 July 2019, British Columbia has removed the regulations requiring 
only British Columbian wine to be sold on grocery store shelves, which were in place 
since  2015.  The  government  of  Ontario  is  currently  reviewing  and  modernising  the 
rules  on  retail  of  alcoholic  beverages  and  the  EU  is  closely  following  these 
developments.  

  At  the  request  of  the  EU,  Canada  carried  out  in  2019  new  audits  on  the  Cost  of 
Service Differentials (COSD) for the provinces of Ontario and Quebec and shared the 
results of the audits with the Commission. The results of the audits should lead to a 
decrease in the cost of services charged on EU products in both provinces.  

Overall,  the  EU  wines  and  spirits  exports  have  significantly  increased  since  the  provisional 
application  of  CETA.  Removing  the  existing  barriers  will  allow  the  sector  to  use  the  full 
potential of CETA.  

Implementation of CETA recommendations 

In  2019,  the  EU  and  Canada  made  progress  in  the  implementation  of  the  three 
recommendations  adopted  by  the  first  CETA  Joint  Committee  in  September  2018  and 
addressing notably: (i) the EU’s and Canada’s joint commitment to effectively implement the 
Paris  Agreement;  (ii)  the  importance  of  making  trade  policies  more  responsive  to  gender; 
and (iii) the support for SMEs so that they benefit from  the trade opportunities offered by 
CETA.  

Concerning  SMEs,  the  EU  and  Canada  established  the  respective  SME  Contact  Points  and 
published  dedicated  online  websites  for  SMEs  in  April  2019.  The  websites  include 
information such as (i) a user friendly summary of the CETA text for SMEs; (ii)  links to the 
equivalent  website  of  the  other  Party;  and  (iii)  information  on  access  to  its  market,  import 
requirements and other information that the EU and Canda consider of assistance to SMEs of 
the other Party. 

The SME Contact  Points held  two meetings in  July and  October 2019, via videoconference 
and in  person in  Brussels. During these meetings, the Contact  Points shared information  on 
their  policies  related  to  SMEs,  including  their  utilization  of  CETA.  They  also  shared 
information  on  their  work  regarding  awareness  of  trade  agreements,  capacity  building  for 
businesses,  practical  tools  for  exporters  such  as  the  EU’s  Trade  HelpDesk  and  Enterprise 
Europe Network and Canada’s Tariff Finder.  

More  detailed 
information  on 
recommendations is available in section 2.2 below.  

the  work  carried  out 

to 

implement 

the  first 

two 

54 

 
 
 
 
 
2.2 

Progress in the implementation of trade and sustainable development provisions 

The second meeting of CETA’s Trade and Sustainable Development (TSD) Committee took 
place on 13 November in Ottawa. The EU and Canada met in a collaborative atmosphere and 
took stock of the various threads of the extensive implementation work on-going under all the 
three  TSD  chapters  (Chapter  22  -  Trade  and  Sustainable  Development;  Chapter  23  –  Trade 
the 
and  Labour;  and  Chapter  24  –  Trade  and  Environment)  and  under 
Recommendations by the Joint Committee (on trade and gender and trade and climate). The 
Recommendations on gender and climate were adopted at the first meeting of the CETA Joint 
Committee in September 2018. 

two  of 

On  trade  and  gender,  the  EU  and  Canada  reviewed  the  very  intensive  work  reflecting  the 
Joint  trade  and  gender  workplan.  The  plan’s  objectives,  consisting  mainly  in  sharing 
information,  experiences  and  best  practices  concerning  policies  and  programmes  related  to 
trade and gender  have been almost fully met through a series of meetings and workshops, the 
only outstanding items are exchanges on gender-based analysis and  gender-responsive trade 
agreements.  The  EU  and  Canada  also  identified  additional  ideas  for  potential  future  action, 
including  follow-up  to  the  gender  declaration  in  WTO MC 11,  encouraging  the  Domestic 
Advisory Groups (DAGs) to engage more actively on trade and gender issues and a possible 
exchange  on  gender  aspects  across  the  agreement,  starting  with  the  TSD  committee  for 
climate, environment, labour, corporate social responsibility (CSR) and other relevant CETA 
committees. 

On CSR/responsible business conduct (RBC), the EU and Canada took stock of what was 
done in terms of raising awareness of business on both sides and facilitating business’ uptake 
of  CSR  as  well  as  in  terms  of  promoting  uptake  of  CSR  in  third  countries  (notably  Latin 
America  and  Asia).  The  parties  agreed  to  further  consider  whether  they  can  support  the 
proposal presented by the Canadian business organization for CSR. The EU reminded Canada 
of the increased attention in the EU and some Member States on mandatory due diligence and 
referred Canada to the on-going impact assessment led by the Commission. 

On environment and climate action, the EU gave an overview of the European Green Deal 
(link  where  further  information  can  be  found).  Canada  confirmed  that  climate  and 
environment  were  important  political  priorities.  Possible  future  joint  actions  were  identified 
by  both  parties,  as  follows:1)  sharing  information  on  environmental  cooperation  with  third 
parties, 2) follow-up from the TSD committee chairs to other CETA committees with a view 
to sharing experiences on climate, and possibly other TSD areas, 3) developing a proposal for 
a  joint  initiative/event  with  a  trade  link  during  the  World  Circular  Economy  Forum  to  be 
hosted by Canada in September 2020, 4) involving Canada in the EU’s trade and biodiversity 
study, (5) retaining plastics as priority for cooperation. Clean-tech, climate adaptation and just 
transition  were  discussed  as    crosscutting  items  for  the  cooperation  on  climate  and  the 
environment.  

On  labour,  the  EU  and  Canada  exchanged  views  on  three  areas:  comparison  of  domestic 
legislation/policy  developments,  multilateral  and 
third  country  cooperation.  Under 
multilateral, the EU and Canada agreed to continue their leadership roles in ILO, G7 and G20. 
On  third  country  co-operation,  the  parties  recapped  their  on-going  cooperation  in  Vietnam, 

55 

 
 
 
Peru, Colombia and identified additional third countries where an exchange on labour issues 
would be useful (e.g. Ukraine and Honduras).  

On the early review of the provisions of the TSD chapter, the EU and Canada reviewed the 
steps  that  were  taken  (in  line  with  the  discussions  held  in  the  1st  TSD  committee  meeting, 
including  a  dedicated  video-conference  in  February  2019  followed  by  an  exchange  of 
proposals. Canada considers that the review should lead to a prompt strengthening of the legal 
enforceability of the TSD provisions by introducing trade sanctions or fines (in line with its 
own enforcement model) and submitted a written proposal in this respect. The EU considers 
that the Parties should jointly review the implementation and enforcement of all CETA TSD 
provisions and only on the basis of such a comprehensive review, to be carried out on a yearly 
basis, identify potential shortcomings and define the best solution to address them. The TSD 
committee discussed the substance and form of the reporting to the Joint committee as regards 
the  early  review.  In  response  to  the  request  from  DAGs  for  a  closer  involvement  and 
transparency,  it  was  agreed  to  share  the  proposals  with  the  respective  DAGs  and  to  hold 
dedicated sessions on each side to explain the proposals to the DAGs.36 

In  the  spirit  of  transparency  and  following  well  established  practice,  the  TSD  committee 
finished  with  a  session  including  the  chairs  of  the  DAGs  to  debrief  them  about  the 
government-to-government  discussions.  The  issues  discussed  included:  climate,  trade  and 
biodiversity,  just  transition  in  relation  to  the  climate  action  and  early  review.  The  DAGs 
welcomed the successful Civil Society Forum (see further below) of the 12 November which 
preceded the meeting of the TSD committee on 13 November, and conveyed their assesment 
that  the  discussions  were  meaningful  and  allowed  for  ample  opportunity  for  discussion  and 
questions.  

In  the  run  up  to  the  TSD  committee  several  preparatory  meetings  with  civil  society  took 
place. The first meeting between the EU and Canadian DAGs was organised and allowed both 
groups  to  have  productive  interactions  and  discussions.  On  12  November  2019,  the  second 
CETA Civil Society Forum37 took place. The forum consisted of a full day programme with 
dedicated sessions on labour, climate and environment, the early review, and an open session 
(in which coroporate social responsibility and gender were discussed). For each session, the 
Commission and the Canadian government set the scene and appointed moderators facilitated 
discussions. A great variety of comments and interventions were expressed and allowed civil 
society representatives to exchange views and raise questions concerning the implementation 
of  CETA’s  TSD  and  other  chapters  and  the  meeting  was  live  streamed  to  ensure  greater 
participation. 

36   On the EU side, the first discussion with the EU DAG on the two proposals took place on 20 February 2020. 
37   See report at https://trade.ec.europa.eu/doclib/docs/2020/march/tradoc_158679.pdf  

56 

 
 
                                                 
3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

In 2019, 14 of the 20 the committees and dialogues established under CETA met. For more 
details, the agendas and reports of these meetings can be found on the Commission’s "CETA 
– Meetings and documents" webpage38.  

Committees 

The CETA Joint Committee meeting did not take place in 2019. In the EU, elections for the 
European Parliament were held in May 2019, a new Commission President was elected by the 
Parliament  in  July  and  the  College  of  Commissioners  entered  into  service  in  December.  In 
Canada,  federal  elections  were  held  in  October  and  the  new  cabinet  was  appointed  in 
November. As a consequence of these political transitions, the new European Commissioner 
for  Trade  and  the  new  Canadian  Minister  for  International  Trade  were  appointed  to  their 
function  only    at  the  end  of  the  year,  leaving  little  time  for  the  organisation  of  the  second 
meeting of the CETA Joint Committee. The second meeting of the Joint Committee, initially 
planned for the first half of 2020, had to be postponed because of the COVID crisis. The EU 
and  Canada  are  committed  to  organise  this  meeting  at  the  earliest  possible  as  soon  as  the 
conditions permit it.  

The activities of the other committees and dialogues were as follows: 

The  second  Sanitary  and  Phytosanitary  Joint  Management  Committee  (SPS  JMC) 
meeting took  place in  February  2019. Based on  the priorities identified at  the first  meeting, 
the Committee agreed follow-up actions on several pending market access issues, as reflected 
in  more  detail  in  the  public  report39.  Both  sides  shared  information  on  the  latest  regulatory 
developments in the area of SPS, planning of upcoming audits, communication of new disease 
outbreaks and ongoing work related to e-certification. 

As an outcome of the discussion on animal issues, both sides agreed to continue to work at 
the  technical  level  to  resolve  pending  issues  related  to  Schmallenberg  virus  and  Epizootic 
Hemorrhagic Disease virus in order to facilitate trade of live animals and germplasm.  

The need for further simplification of the process to list export-approved establishments was 
also  discussed  and the EU informed about  recent amendments  regarding the certification of 
fish landed in Canada by EU-approved vessels and re-exported to the EU.  

Exchanges also took place on specific issues related to plant health, where Canada confirmed 
its follow-up on the application of Italy and some Member States for imports of fresh tomato 
with  vines,  stems,  and  calyces  into  Canada  and  on  potato  minitubers.  Both  sides  also 
committed  to  continue  working  together  on  a  project  on  alternatives  to  the  use  of  methyl 
bromide.   

Under  the  framework  of  the  EU-Canada  Regulatory  Cooperation  Forum  (see  below)  an 
expert meeting on animal welfare took place on 6 June 2019 by video conference. It focused 
in  particular  on  long  distance  animal  transport  and  the  state  of  play  concerning  the 
developments on animal welfare regulations in the EU and Canada. It was agreed to further 
continue the dialogue focusing on topics of mutual interest.  

38  http://trade.ec.europa.eu/doclib/press/index.cfm?id=1811  
39   http://trade.ec.europa.eu/doclib/docs/2019/march/tradoc_157809.pdf 

57 

 
 
 
 
                                                 
The  CETA  committee  on  Agriculture  met  on  23  September  2019  in  Ottawa.  Reviewing 
their  respective  trade  data,  both  Parties  welcomed  increased  bilateral  trade  across  most 
agricultural goods. Canada raised concerns about the EU’s beef and pork quota management 
system  but  acknowledged that the low fill  rate of the quotas were essentially due to  lack of 
capacity in Canada to produce according to EU standards. . The EU expressed concerns about 
the Canadian cheese quota administration and Canada announced that it would publish new 
draft tariff rate quota administration rules in early 2020. Other issues discussed were Canada’s 
price  class  for  milk  protein  ingredients  as  well  as  European  national  measures  on  origin 
labelling. 

The  CETA  committee  on  Wines  and  spirits  met  on  24  September  2019  in  Ottawa.  The 
Parties  had  a  detailed  discussion  on  the  implementation  of  the  CETA  Joint  Declaration  on 
wines and spirits. Canada reported on recent policy changes in Ontario and British Columbia, 
which were expected to reduce discriminatory treatment in accessing certain segments of the 
retail market in those provinces. The EU expressed concerns about the discriminatory nature 
of  Canada’s  excise  duty  on  wines,  and  about  enforcement  of  the  protection  of  certain  EU 
Wines and Spirits GIs,  which the Canadian counterparts explained they were resolving. The 
EU  provided  an  overview  of  its  legislation  on  certain  duty  reductions  and  wine  import 
certificates. 

The  Committee  on  Geographical  Indications  (GIs)  convened  on  26  November  2019  by 
videoconference. The EU raised concerns about the enforcement of the protection of certain 
EU GIs and the lack of a list of companies entitled to use the grandfathering clause. Canada 
enquired about the EU-China 100-for-100 GI Agreement and asked for an update on the latest 
developments on EU legislation on GIs, on the process to reclassify GI territories in the EU 
and on EU quality schemes. 

On 21 November 2019, the Joint Sectoral Group (JSG) on Pharmaceuticals convened by 
videoconference.  The  Committee  took  note  of  administrative  arrangements  signed  between 
DG  SANTE  and  Health  Canada  on  23  May  2019  to  facilitate  the  effective  implementation 
and  monitoring  of 
the  CETA  Good  Manufacturing  Practices  Protocol  (GMP)  on 
Pharmaceuticals.  Both  sides  discussed  future  areas  of  cooperation  including  the  possible 
extension  of  the  scope  of  the  CETA  Protocol  on  Pharmaceuticals  to  include  active 
pharmaceutical  ingredients  as  well  as  an  assessment  of  the  inspections  conducted  by  the 
parties outside their respective territories.  

On 11 December 2019, the Trade in Goods Committee convened via videoconference. The 
Committee  welcomed  the  ongoing  cooperation  and  exchange  of  information  on  non-food 
consumer product safety and encouraged further collaboration on this matter. The Parties had 
discussions on preferential utilisation rates and the challenges associated with measuring and 
interpreting  them.  The  Parties  also  discussed  the  implementation  of  the  Protocol  on 
conformity  assessment  and  Canada  reiterated  concerns  with  the  delay  on  the  EU  side  for 
recognizing  the  Standards  Council  of  Canada  pursuant  to  the  Protocol.  Furthermore,  the 
Parties  sought  information  on  new  policy  developments  in  particular  the  following:  Health 
Canada  regulatory  changes  related  to  “front  of  pack  labelling”,  the  EU  regulatory  changes 
related  to  the  classification  of  cobalt  and  titanium  dioxide  as  well  as  the  EU  Regulation 
2019/1020 on market surveillance and on compliance of products. The Parties also  reported 
on the discussions  of the Joint Sectoral  Group on Pharmaceutical  products,  the Agricultural 
Committee, the Geographical Indications Committee and the Wines & Spirits Committee.   

58 

 
 
 
 
The Committee on Government Procurement met on 22 February 2019 in Brussels. Canada 
reported on progress made to date in establishing a Single Point of Access where information 
on all public tenders in Canada would be stored and informed the EU of the technical updates 
that need to be made  to Annex 19-8 of Canada’s market access schedule so as to ensure that 
relevant  publication  media  contacts  are  correct  and  both  Parties  discussed  the    process  for 
such  updates.  Furthermore,  the  EU  and  Canada  shared  information  concerning  promotional 
activities,  in  particular  the  publication  of  guidance  documents,  to  facilitate  the  access  and 
participation of suppliers in each Party’s respective procurement markets; they also discussed 
the modalities for the exchange of statistics and information about procurements awarded to 
suppliers  in  the  Parties’  respective  jurisdictions.  The  EU  provided  a  comprehensive 
presentation of its policies regarding “Green Procurement”.  

The  Joint  Committee  on  Mutual  Recognition  of  Professional  Qualifications  met  in 
Brussels on 16 April 2019. The Committee officially acknowledged the receipt of documents 
submitted by the Canadian Architectural Licensing Authorities and the Architects’ Council of 
Europe with a view to providing a joint recommendation on a Mutual Recognition Agreement 
between  Canada  and  the  EU  concerning  the  profession  of  architects.  The  Committee 
discussed  the  joint  submission  in  light  of  Article  11  of  CETA  and  exchanged  views  on 
procedural  next steps related to a possible future mutal recognition agreement. In this regard, 
the EU and Canada had further exchanges in the course of 2019.  

The Committee on Financial Services met in Ottawa on 12 June 2019. The EU and Canada 
discussed the respective financial sector regulatory developments and policy priorities. Other 
topics discussed included resolution and stress-testing the resilience of financial institutions, 
the implementation of Basel III standards, recent developments in financial services trade and 
multilateral  institutions  such  as  the  G7,  G20  and  the  Financial  Stability  Board,  capital 
markets, financial technologies, open banking, modernization in payments infrastructure and 
consumer protection, cybersecurity and sustainable finance. 

The second meeting of CETA’s Regulatory Cooperation Forum took place in Ottawa on 3 
and 4 February 2020. The EU and Canada reviewed the five work plan items for regulatory 
cooperation  that  had  been  selected  as  priority  areas  at  the  first  meeting  of  the  forum  in 
December  2018:  (i)  exchange  of  information  on  the  safety  of  consumer  products;  (ii)  re-
testing  of  cosmetics-like  drug  products;  (iii)  co-operation  on  pharmaceutical  inspections  in 
third  countries;  (iv)  cybersecurity  and  the  internet  of  things;  and  (v)  animal  welfare  – 
transportation  of  animals.  These  items  were  developed  and  successfully  implemented  over 
2019  due  to  the  ongoing  work  of  Canadian  and  EU  regulators.  Regulators  provided  the 
regulatory forum Co-chairs with updates and next steps for the current work plan items. By 
way of example, concerning consumer products’ safety, the ongoing exchange of information 
providing  Canadian  and  European  regulators  detailed  information  about  dangerous  products 
placed on their respective market was now operational and the work plan completed in 2019. 
Regulators in Canada and the EU organised, in November and December 2019, a coordinated 
awareness-raising  campaigns  on  the  risks  of  button  batteries  to  children.  Additional  joint 
communication campaigns are planned for 2020. Concerning re-testing of cosmetics-like drug 
products, in February 2019, Canada and the EU agreed to a common pilot project to eliminate 
quarantine and confirmatory re-testing of sunscreen products imported from the EU. The pilot 
was  successful  in  engaging  a  number  of  EU  exporters.  In  2020,  Canada  is  supportive  of 

59 

 
 
expanding  the  pilot  to  other  types  of  low-risk  cosmetic-like  drug  products,  such  as  anti-
dandruff shampoo and toothpaste. 

The EU and Canada also explored potential opportunities for further cooperation, on the basis 
of  stakeholder  input  and  feedback  from  EU  and  Canadian  regulators.  Of  the  three  selected 
topics, one (wood pellet boilers) required further discussions, and two (Standards Council of 
Canada and CEN-CENELEC agreement and paediatric medicines) were adopted as additional 
work plan items that would be developed over the coming year. 

Following the discussion with regulators, the regulatory forum Co-chairs and regulators from 
the  EU  and  Canada  debriefed  civil  society  stakeholders  about  the  forum’s  activities  and 
results. Audiences from multiple physical locations participated in this exchange: stakeholders 
participating in person in Ottawa, in Brussels via video link, and from desks and conference 
rooms via video or teleconferencing. Stakeholders in Ottawa and Brussels commented on the 
successes of the current work plan items over 2019. Stakeholders stressed the importance of  
continuing work in this forum on animal welfare. Co-chairs expressed openness to receiving 
suggestions from stakeholders for new topics, specifically regarding new and emerging issues. 
It was further stressed that all regulatory cooperation activities were voluntary, and required 
mutual interest from both Canada and the EU to be considered for an regulatory cooperation 
forum  work plan.  In that light,  stakeholders were encouraged to  communicate  any potential 
issues to the EU or Canada at their convenience.  

Dialogues 

The  Dialogue  on  Biotechnology  took  place  on  4  March  2019  in  Brussels  and  by 
videoconference.  The  EU  updated  Canada  on  the  status  of  two  GMO  applications.  The  EU 
provided policy updates on “Precision Breeding Techniques”, on the legislative proposal on 
Transparency and sustainability of Risk Assessments of the European Food Safety Authority 
and  on  Member  States’  GM  Food  and  Feed  Opt-Out  Proposal.  Canada  provided  policy 
updates on GMOs and new techniques in agricultural biotechnology, on traceability of GMOs 
and exports to the EU as well as on Low Level Presence and precision biotechnology. 

The  Bilateral  Dialogue  on  Raw  Materials  took  place  on  6  March  2019  in  Toronto  and 
discussed  aspects  of  the  raw  materials  life  cycle,  with  a  particular  focus  on  critical  raw 
materials,  minerals  and  metals,  clean  tech  /  clean  growth,  climate  neutral  economy, 
innovation, investment opportunities, and responsible business conduct. The EU and Canada 
also  agreed  to  continue  discussions  on  EU-Canada  coordination  in  international  fora  and  to 
exchange best practices on sustainable mining as well as to find synergies to boost investment 
opportunities  in  exploration  and  mining  in  the  EU  and  Canada.  Stakeholders  presented  the 
outcomes  of  the  stakeholder’s  forum  held  on  the  previous  day  and  indicated  an  interest  in 
better understanding how they could support the dialogue. 

The Bilateral Dialogue on Forest Products held a productive meeting on 24 May 2019 by 
videoconference,  discussing  trade  in  forest  products,  sustainable  forests  in  the  fight  against 
climate change, the implementation of the EU bioenergy sustainability criteria post-2020 and 
EU-Canada co-operation on research and innovation. 

The  meeting  of  the  Bilateral  Dialogue  on  Motor  Vehicle  Regulations  was  held  via 
videoconference  on  20  June  2019  and  focused  on  regulatory  developments  with  respect  to 
motor vehicles. The Parties discussed vehicle safety issues, real driving emissions and future 

60 

 
 
emission  standards,  connected  and  automated  driving,  automated  shuttles,  exemptions 
processes on both sides and global technical regulation updates. 

4. 

SPECIFIC AREAS OF IMPORTANCE  

In 2018, the preference utilisation rate for EU27 exports to Canada was at 38%. In 2019, this 
figure  increased  to  48%.  Preference  utilisation  rates  for  EU  exports  of  cars  and  car  parts, 
which constitute 39% of EU27 eligible exports, are still relatively low at 26% and foregone 
duty savings for this sector represents one third of all foregone duty savings in relation to EU 
exports to Canada. The Commission has engaged with the industry to understand the reasons 
for  this  relatively  low  and  slow  uptake  of  CETA  preferences  in  the  sector.  It  appears  that 
different factors play a role in this context, need for greater time for industry to put in place 
necessary  IT  systems  across  their  supply  chain  to  enable  the  preparation  of  the  necessary 
origin  documentation.  Industry  has  also  confirmed  that  the  fact  that  preferences  can  be 
claimed retroactively for a period of three years provides this sector greater leeway to claim 
tariff preferences that have not been claimed to date in the future. Other reasons provided by 
industry are the relatively low tariffs applied by Canada on imports of cars and car parts, the 
gradual  phase-in  of  tariff  dismantling  and  some  difficulties  encountered  in  reconciling 
administrative work on CETA’s rule of origin for cars with work on rules of origin provisions 
in  other  EU  FTAs.  On  the  other  hand,  preference  utilisation  rates  for  clothing  and  apparel 
articles, knitted and not knitted, which stood at 53% and 50% in 2018, increased to 61% and 
53% respectively in 2019. Taking into account feedback from the textile industry on possible 
ways  to  improve  preference  utilisation  rates  in  the  sector,  the  Commission  has  prepared  a 
practical guide on rules of origin for clothing and apparel in CETA published in 2019 on DG 
TRADE’s  website  in  multiple  EU  languages.  Preference  utilisation  rates  for  footware, 
representing the fifth most important eligible exports, went from 65% in 2018 to 72% in 2019. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

With  a  population  of  36.3  million,  Canada  has  the  10th  largest  GDP  by  nominal  and  16th 
largest  by  PPP  in  the  world.  As  with  other  developed  nations,  the  country's  economy  is 
dominated by the services industry, which employs about three quarters of the workforce. But 
Canada has also the third highest estimated value of natural resources - Canada is among the 
world’s  leading  exporters  of  potash,  uranium,  nickel  and  zinc,  and  a  major  producer  of 
aluminium,  cadmium,  cobalt,  copper  and  gold,  the  world's  third  largest  proven  petroleum 
reserves, and is the fourth largest exporter of natural gas. The oil and gas sector accounts for 
5.6 per cent of Canada’s GDP and between 11 and 20 per cent of its exports, depending on the 
year.  The  agriculture  and  agri-food  manufacturing  sector  accounts  for 2.6%  of  total  GDP. 

61 

 
 
 
 
 
 
 
With the world's longest coastline, Canada has the 8th largest commercial fishing and seafood 
industry in the world. 

Canada’s economy has been growing steadily for years, with a GDP growth that jumped up to 
3% in 2017, was of 2% in 2018, and 1.7% in 2019. Before the COVID-19 crisis hit, economy 
was operating at near capacity and GDP was expected to grow by 1.6 % in 2020 and 1.8 % in 
2021.  In  November  2019,  the  manufacturing  PMI  hit  a  nine-month  high  amid  faster  output 
growth.  Employment  was  low  (5.6%  overall,  with  many  sectors  in  the  fastest-growing 
Provinces (Ontario, Quebec) signalling acute labour shortages) and inflation close to the Bank 
of Canada’s 2% target. The October 2019 federal election left the Liberals to govern with a 
minority caucus and highlighted the economic and political divide  - in particular on climate 
change  policies  and  the  transition  from  being  an  oil-based  economy  to  a  green  economy  - 
between the Prairies, relying on a resources-based economy, particularly fossil fuels, and the 
other Canadian provinces. Before the outbreak of COVID-19, climate change was expected to 
be a central focus of the federal government’s 2020 budget. 

The Canadian economy is heavily influenced by the fortunes of its southern neighbour, with 
close  financial  links  and  75%  of  Canadian  exports  headed  to  the  US.  In  September  2018, 
Canada signed up on a revised NAFTA (or so-called USMCA or CUSMA) in which it had to 
make important concessions. For Canada, the passage of the deal through Congress in 2019 
was the opportunity to bring back into the discussion some of their negotiating asks. The four 
issues  the  Democrats  raised  (ensuring  stricter  labour  standards  in  Mexico;  stronger  dispute 
settlement;  more  flexible  patent  protection  terms  for  biologics,  leading  to  cheaper  drugs; 
commitment of USMCA partners to environment protection) were supported by Canada, and 
the renegotiated NAFTA - is considered as satisfactory by Canada.  

Canada is one of the world’s most open economies, and although the US will always be the 
first commercial partner, Canada has put sustained efforts into diversifying its markets. As of 
2019,  Canada  had  14  free  trade  agreements  in  force  with  51  countries.  When  the 
Comprehensive  and  Progressive  Agreement  for  Trans-Pacific  Partnership  (CPTPP40)  came 
into force at the end of 2018, Canada became the only G7 country with free trade agreements 
with  all  of  the  other  partners.  The  declared  focus  of  Canada’s  trade  policy  is  now  the 
implementation of its trade agreements, in particular CETA and CPTPP, and ensuring Canada 
reaps their full benefits. 

In its Fall Economic Statement 2018, the Government of Canada set a target of increasing by 
50 percent Canada’s overseas (non-US) exports by 2025. In 2019, Canadian exports of goods 
and  services  to  overseas  markets  grew  1.1  percent,  underperforming  the  5.2  percent  growth 
rate required to reach said target. Lower exports to China due to diplomatic tensions between 
Canada  and  China  leading  for  instance  to  a  ban  on  Canadian  canola,  was  one  of  the  main 
factors for this underperformance as exports to overseas markets outside of China grew by 3.7 
percent.  The  growth  in  Canada’s  services  exports  to  overseas  markets  remained  consistent, 
reaching 5.2 percent  in  2018 and 6.0 percent  in  2019. However, services still accounted for 
only 29 percent of overall overseas exports in 2019. 

40    The  CPTPP  entered  into  force  for  Australia,  Canada,  Japan,  New  Zealand,  Mexico  and  Singapore  on  30 

December 2018, and for Vietnam on 14 January 2019. 

62 

 
 
                                                 
The EU is Canada's second-biggest trading partner, behind the US. Most of CETA has been 
provisionally  applied  since  21  September  2017.  Although  trade  has  increased  on  both  sides 
since  CETA  provisional  application  in  September  2017,  EU  companies  have  been  faster  on 
the take-up. 

5.2 

Trade in goods 

In  terms  of  total  trade  in  goods  (imports  and  exports),  in  2019  Canada  was  the  EU’s  12th  
largest trading partner, with trade flows worth 59 billion euros, or 1.5% of the EU’s total trade 
with  third countries.  The EU has a positive trade balance of 17.6 billion euros, this is  a 1.9 
billion euros improvement compared to 2018. In 2019, Canada was the country with the 7th 
largest positive trade balance for the EU. 

EU exports to Canada 

In 2019, EU goods exports to Canada totalled 38.3 billion euros, which is an increase of 3.1 
billion  euros  or  9%  when  compared  to  2018  (35.2  billion  euros).  This  is  a  much  stronger 
increase than the total EU goods exports to third countries, which went up by 3.5% during the 
same  period.  Canada  is  the  EU’s  10th  largest  export  destination  for  goods  and  is  the 
destination  for  1.8%  of  all  goods  exported  to  countries  outside  the  EU.  The  EU's  most 
important export sectors in its trade relations with Canada are the following: 

63 

 
 
 
 
 
 
 
 
The most important export sectors in the EU’s trade relation with Canada have all performed 
positively in 2019: 
•  Machinery and mechanical appliances:  +15% (+952 million euros) 
•  Vehicles and parts: 
•  Pharmaceuticals: 
•  Agricultural goods: 
•  Mineral fuels and oils: 
•  Electrical machinery: 
•  Organic chemicals: 

+2% (+92 million euros) 
+18% (+696 million euros) 
+6% (+202 million euros) 
+8% (+186 million euros) 
+3% (+64 million euros) 
+6% (+100 million euros) 

EU imports from Canada 

EU  imports  from  Canada  increased  during  the  same  period  by  6%  or  1.2  billion  euros, 
from 19.5 billion euros in 2018 to 20.7 billion euros in 2019. Imports from Canada grew at a 
faster pace than overall EU imports from third countries, which in the same period grew by 
1.42%. Canada is the EU’s 18th largest source of imported goods, and accounts for 1.1% of all 
goods imported from countries outside the EU. The EU's most important import sectors in its 
trade relations with Canada are the following: 

Imports from Canada in some of these sectors increased significantly in 2019: 

  Agriculture: 
  Ores, slag and ash: 
  Jewellery, pearls, precious metals: 
  Aircraft and spacecraft: 

+ 25.8% (+421 million euros) 
+20% (+764 million euros) 
+72%, (+561 million euros) 
+30% (+421 million euros) 

64 

 
 
 
 
 
  
 
 
 
 
 
 
 
While other sectors have experienced import reductions in the same year: 

  Mineral fuels and oils: 
  Machinery and mechanical appliances: 
  Pharmaceuticals: 

-12% (-288 million euros) 
-5%, (-126 million euros) 
-2% (-31 million euros) 

5.3 

Trade in agricultural products 

Before CETA, Canada was the EU’s 9th or 10th largest export market for agri-food products. 
In 2019, it became its 7th export market. Canada ranked 14th as the EU’s source of imports 
in 2019. 

Under CETA, Canada has eliminated its import duties on most of EU foods and beverages. 
That has allowed EU food product exports from many Member States to grow.  The main 
category of agricultural goods that was exported to Canada in 2019 is beverages, spirits and 
vinegar (41.5%, €1.47 billion). EU bovine meat exports to Canada were worth €15.8 million, 
up from  only €2.5 million per  year on average in  2015-2017, and the EU has become a net 
exporter of bovine meat to Canada. 

More than 60% of the EU's agricultural imports from Canada consist of two products: Cereals 
(increase by 2.7% or €12 million) and  oil seeds (increase by 82.7% or €383 million) in 2019. 
The  import  of  wheat  increased  by  60%  from  2018,  up  to  €292  million, while  the  import  of 
other cereals  decreased  by 38%.  Imports  of oilseeds other than soybeans (essentially canola 
(rapeseed))  increased  by  168%,  from  €150  million  in  2018  to  €402  million  in  2019),  the 
import of soybeans increased by 42% (from €286 million to €405 million. 

CETA creates new market access through tariff elimination for the bulk of agricultural trade; 
however, for the most sensitive agricultural products, Parties have agreed on limited tariff 
rate  quotas  as  an  alternative  to  full  liberalisation.  This  is  the  case  notably  for  EU  cheese 
exports to Canada, and for imports of beef, pork and sweet corn from Canada.  

In  line  with  high  fill  rates  seen  in  2018,  the  2019  CETA  quotas  for  EU  cheese  exports  to 
Canada were almost entirely filled (96%). The utilisation rate of the quotas for imports from 
Canada remained low: 10% for sweet corn, 3% for bison and fresh beef, and less than 1% for 
all of the other duty-free quotas and origin quotas for agricultural products. For beef and pork, 
the utilised quantities even fall short of the quotas agreed under WTO rules and were already 
in place well before CETA. 

65 

 
 
 
 
 
 
 
 
 
 
 
 
TRQs granted by the EU to Canada  

Utilisation rate of TRQs opened by the EU to Canada 

Sector 

TRQ description 

TRQ 
Quanti
ty 

Unit 

Utilisation in TRQ 
period ending in: 

Beef 

Beef & veal 

19.580 

Beef 

Bison meat 

3.000 

Beef 

Beef (Frozen) 

7.500 

Pigmeat 

Pigmeat  

43.049 

F&V 

Sweetcorn  

4.000 

Cereals 

Common wheat 
(low & medium 
quality) 

100.000 

Sugar 
products 

High sugar 
content products 

30.000 

Sugar 
products 

Preparations 

10.000 

35.000 

Sugar 
confectionery, 
chocolate & food 
preparations 
containing cocoa 

Preparations of 
cereals; pastry; 
cranberry & 
blueberry juice 

Animal feed  Dog or cat food 

60.000 

2017 

2018 

2019 

2% 

3% 

3% 

2% 

5% 

3% 

0% 

0% 

0% 

0% 

2% 

0% 

9% 

11% 

10% 

30% 

10% 

0% 

0% 

0% 

0% 

0% 

0% 

0% 

0% 

0% 

0% 

1% 

1% 

1% 

t (carcass weight 
eq.) 

t (carcass weight 
eq.) 

t (carcass weight 
eq.) 

t (carcass weight 
eq.) 

t 

t 

t 

t 

t 

t 

66 

 
 
 
 
 
 
TRQs granted by Canada to the EU 

 In 2019, the CETA quotas for EU cheese were almost entirely filled (96%).  

Utilisation of the CETA quota for EU cheese in 2019 

Tariff 
Code 

0406 

Product 

Quota 
(tonnes) 

Utilisation 
(tonnes) 

Utilisation 
rate 

Cheese 
of which: 

cheese of all type 
industrial cheese 

8 850 

8 000 
850 

8 472 

7 812 
660 

95,7% 

97,6% 
77,6% 

Source: Global Affairs Canada 

Geographical indications 

 Under  CETA,  143  EU  food  geographical  indications  (GIs)  enjoy  full  protection  from 
imitations  in  Canada,  at  a  level  comparable  to  that  under  EU  law.  The  amendment  of 
Canada’s Trade-Mark Act to protect the geographical indications of food products, which was 
introduced  as  a  result  of  CETA,  established  a  procedure  for  the  direct  application  for 
protection by EU right holders. In 2019, five EU food GIs (Piave, Pancetta piacentina, Salame 
piacentino,  Coppa  piacentina,  Vinagre  de  Jerez)  gained  protection  in  Canada  and  joined 
Prosciutto  di  Carpegna,  the  first  EU  food  GI  which  was  successfully  registered  via  that 
system,  in  2018.  Thus,  the  total  number  of  EU  food  names  protected  in  Canada  as 
geographical indications reached 149 by 31 December 2019. 

As  explained  above,  the  EU  continues  to  raise  in  the  relevant  CETA  Committees 
implementation  issues  relating  to  its  agricultural  exports.  The  EU  is  also  engaging  with 
Canada to ensure that the protection of GIs is fully enforced.  

SPS measures   

Currently 17 EU Member States are authorised to export meat to Canada. Work is ongoing to 
ensure that the remaining EU Member States will also have access to this market. At the end 
of 2018, a process was agreed for Canada to recognise the EU Meat inspection system, based 
on an additional set of audits of a selection of EU Member States, which took place in 2019. 
The report and the outcome of these audits is expected to be received from Canada in 2020. If 
the audit reports are satisfactory for all audited EU Member States, Canada would allow the 
exports of meat from all EU Member States for bovine, swine and poultry. This process will 
not affect ongoing trade for those EU Member States currently authorised to export meat to 
Canada. 

Work on the harmonisation of EU export certificates continues, with priorities put forward by 
both sides aiming at some tangible initial results in 2019. 

For some plant commodities, Canada imposes a lengthy procedure to recognise alternatives to 
the use of methyl bromide as a pest mitigating measure for trade. In 2018, an EU project on 
the Canadian procedure to recognise alternatives to the use of methyl bromide was launched 
in close cooperation with Canadian authorities with the objective to identify risk measures not 
based  on  the  use  of  a  pesticide  which  is  known  to  be  an  ozone  depleting  compound.  A 
workshop  with  experts  on  both  sides  took  place  in  March  2019.  The  outcome  of  this 

67 

 
 
 
 
 
 
 
 
cooperation resulted in a guidance document for EU exporters of plants and plant products for 
the Canadian market. This guide41 together with a webinar42 on the presentation of the guide 
were published in March 2020. 

Several  other  SPS  issues  are  still  outstanding  and  are  being  further  discussed  with  Canada 
with a view to finding a solution. For example, the export of EU bovine semen is limited only 
to  Schmallenberg  Virus  serologically  negative  animals,  while  there  is  no  scientific  basis  to 
justify this restriction. Exports from the EU to Canada are also not authorised for potatoes for 
planting (called also “potato mini tubers” by Canada) and fresh tomato with vines, stems, and 
calyces,  due  to  restrictive  plant  health  requirements  for  Canadian  imports.  Discussions  are 
ongoing with the Canadian authorities to identify appropriate solutions.  

Some positive results were achieved on EU market access issues. For example, Spain received 
market  access  for  tomatoes  without  vines,  stems,  and  calyces  to  the  Canadian  market;  on  2 
December  2019  Canada  recognised  country-freedom  for  21  EU  Member  States  of  the 
following  pests:  Asian  longhorn  beetle  and  Citrus  longhorn  beetle.  Further  work  is  needed 
with Canada to additionally recognise the pest free areas in the other six EU Member States 
affected  with  these  pests.  This  recognition  opens  opportunities  to  EU  seedling  and  nursery 
producers  as  it  allows  for  exports  of  certain  plants  for  planting  with  a  stem  diameter  larger 
than 1 cm. 

5.4 

Trade in services and Foreign Direct Investments 

Global trade in services between the EU and Canada amounted to 33 billion euros in 2019, a 
1.5% increase compared to  2018. EU services exports amounted to  20.5 billion euros (+8% 
compared to 2018), EU services imports to 12,5 billion euros (-7.4% compared to 2018) and 
the  EU  surplus  in  trade  in  services  with  Canada  was  8  billion  euros  (+45%  compared  to 
2019). 

In 2018, Foreign Direct Investment stocks between the EU and Canda were almost perfectly 
balanced, with an inward stock of 397 billion euros and an outward stock of 392 billion euros 

6. 

CONCLUSIONS  

In the second year of provisional application of CETA, the positive trends observed during 
the first year were confirmed. Bilateral trade, EU exports to Canada and the positive trade 
balance  of  the  EU  all  improved  compared  to  2018.  The  improvement  compared  to  the 
situation prior to CETA entering into force is even more significant, as bilateral trade (goods 
and services taken together) has increased by almost 25% since CETA has been provisionally 
applied.  This  increase  is  particularly  important  in  the  agricultural  and  food  sector,  with 

41   Guide available at: https://trade.ec.europa.eu/doclib/docs/2020/march/tradoc_158662.pdf  
42   Webinar material can be consulted at https://trade.ec.europa.eu/doclib/docs/2020/march/tradoc_158690.pdf  

68 

 
 
 
 
 
 
                                                 
Canada becoming in 2019 the 7th largest export market worldwide for EU agri-food products. 
Marked progess can also be observed in industrial sectors, particularly those sectors for which 
duties have been reduced or eliminated through CETA. Trade in services has also grown and 
constitutes an important part of the EU’s exchanges with Canada. 

Besides the positive results in terms of bilateral trade flows, the implementation of CETA has 
allowed  the  already  solid  cooperation  existing  between  the  EU  and  Canada  to  be  further 
strengthened. Through the formal  meetings of CETA committees  and continued dialogue  at 
all levels, progress has been made in addressing some trade irritants and in implementing the 
first  agreement  ever  that  allows  for  an  exchange  of  information  between  EU  and  Canadian 
authorities  on  dangerous  products  with  a  view  to  increasing  consumer  protection  in  both 
parties’ territories. Cooperation has also reinforced the parties’ commitments to work together 
bilaterally and on a global level on a number of topical issues, such as trade and gender, trade 
and  climate,  and  the  involvement  of  SMEs  in  international  trade.  Importantly  both  EU  and 
Canada have a shared objective in ensuring transparancy and inclusiveness in implementing 
CETA; all agendas and joint reports of CETA Committees are publicly available. The EU has 
regularly  briefed  and  consulted  civil  society  in  its  implementation  endeavours  in  particular 
through the CETA Domestic Advisory Group. 

The  Commission  will  continue  its  work  to  ensure  a  fruitful  implementation  of  CETA  in  all 
areas and will collaborate with EU Member States and stakeholders in order to make sure that 
EU  companies  and  citizens  take  full  advantages  of  the  benefits  created  by  CETA.  The 
Commission  is  also  committed  to  leverage  CETA’s  potential  to  build  a  strong  partnership 
with  Canada  serving  as  a  basis  for  action  at  multilateral  level  and  to  help  the  post-COVID 
economic and social recovery on both sides of the Atlantic. 

69 

 
 
 
 
7. 

STATISTICS 

CANADA 

70 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Canada (mio €)Imports16 02616 68218 16019 48620 720Exports29 88129 64132 19935 23238 324Balance13 85512 95914 03915 74617 603Share Canada in EU27 trade with Extra-EU27Imports1.0%1.0%1.0%1.0%1.1%Exports1.6%1.6%1.6%1.7%1.8%Total (I+E)1.3%1.3%1.3%1.4%1.5%Share EU27 in trade Canada with worldImports9.7%9.9%10.2%10.8%11.3%Exports4.2%4.4%4.1%4.6%4.7%Total (I+E)7.1%7.3%7.3%7.8%8.1%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Canada: IMF DotsTotal merchandise trade EU27 with Canada (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports19 48620 7201 2346.3%Imports1 907 5651 934 94427 3791.4%Exports35 23238 3243 0928.8%Exports2 059 8822 132 01572 1333.5%Balance15 74617 6031 857Balance152 317197 07144 754Total trade54 71859 0444 3267.9%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Canada (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports1 6282 04441625.6%Imports118 891121 6442 7532.3%Exports3 3473 5492026.0%Exports169 000181 82512 8257.6%Balance1 7191 505-214Balance50 10960 18110 072Total trade4 9755 59361812.4%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Canada (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports17 85818 6768184.6%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports31 88534 7742 8909.1%EU27 exports1 890 8821 950 19059 3093.1%Balance14 02716 0982 072Balance102 208136 89034 682Total trade49 74353 4513 7087.5%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Canada (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports11 30713 5162 20919.5%Imports824 543824 015-528-0.1%Exports16 92619 0082 08312.3%Exports928 420968 64840 2284.3%Balance5 6195 493-126Balance103 877144 63340 756Total trade28 23232 5244 29215.2%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Canada (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports9 03210 60210 16311 30713 516Imports642 682776 924784 743824 543824 015Exports12 54414 63115 57016 92619 008Exports750 713849 023855 477928 420968 648Balance3 5134 0305 4075 6195 493Balance108 03172 09970 734103 877144 633Total trade21 57625 23325 73228 23232 524Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Canada (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward224 630397 252Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward249 937263 225291 584273 307392 214Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward21 66349 75283 145Inward143 012803 285328 703209 462-67 421Outward22 4633 50896 925Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsCanadaCanada20182019Extra-EU27Canada2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Canada010 00020 00030 00040 00050 00020152016201720182019Merchandise trade EU27 with Canada (mio €)ImportsExportsBalance 
 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE  EU-
COLOMBIA/ECUADOR/PERU TRADE AGREEMENT 

1. 

INTRODUCTION 

The  Trade  Agreement  with  Colombia  and  Peru  (hereinafter  the  ‘Trade  Agreement’)  has 
been provisionally applied with Peru since 1 March 2013 and with Colombia since 1 August 
2013. Negotiations on a Protocol of Accession of Ecuador to the Agreement were concluded 
in July 2014 and the Protocol is provisionally applied since 1 January 2017. Ratifications by 
Member States of both the Trade Agreement and the Ecuador Protocol are ongoing.  

The Trade Agreement was also amended through the Protocol of Accession of Croatia to the 
EU. The Protocol  entered into force with  Peru on 1 May 2017. Ratification by Colombia is 
ongoing. 

The Trade Agreement contains a set of comprehensive disciplines covering trade in goods and 
services,  intellectual  property  rights,  including  the  protection  of  more  than  100  EU 
geographical  indications,  competition,  procurement,  trade  and  sustainable  development, 
among other.  It fully liberalizes trade in industrial goods and also a large part of agriculture 
trade.  The  Parties  meet  on  an  annual  basis  to  discuss  implementation  issues  in  the  Trade 
Committee and eight specialised Sub-committees established by the Trade Agreement.  

On  16  January  2019, 
the  European  Parliament  adopted  a  Resolution  on  the 
implementation  of  the  Trade  Agreement  between  the  European  Union  and  Colombia 
and Peru (2018/2010(INI)). The resolution stressed the importance of the EU-Colombia and 
Peru  Trade  Agreement  and  noted  its  potential  for  having  a  strong  positive  impact  on  the 
socio-economic development of the Parties. It expressed concerns on some outstanding trade 
irritants, and stressed the need for effective implementation of the provisions of the Trade and 
Sustainable  Development  (TSD)  Chapter  of  the  Agreement.  On  28  May  2019,  the 
Commission communicated to the Parliament its follow up to the Resolution (SP(2019)355) 
outlining the number of actions and initiatives  taken, or intended to be taken, to address the  
points raised in  the Parliament’s Resolution.43  

In accordance with Article 13 of Regulation (EU) No 19/2013 of the European Parliament and 
of  the  Council  of  15  January  2013  implementing  the  bilateral  safeguard  clause  and  the 
stabilisation mechanism for bananas of the Trade Agreement between the European Union 
and its Member States, of the one part, and Colombia, Ecuador and Peru, of the other part44 
(‘Regulation’),  the  Commission  committed  to  submit  an  annual  report  to  the  European 
Parliament and the Council on the application, implementation and fulfilment of obligations 
of the Agreement and the Regulation. The information under Chapter 4.1 below responds to 
this requirement.  

43    Link to EP Resolution and Commission follow up: 

https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2018/2010(INI)&l=en 

44  OJ L 17, 19.1.2013, p. 1. 

71 

 
 
 
 
 
 
                                                 
2. 

MAIN IMPLEMENTATION ISSUES  

2.1   Main open issues, progress and follow-up  

2019 marked the sixth year of application of the Trade Agreement with Colombia and Peru 
and  the  third  year  with  Ecuador.  The  results  continue  to  be  positive.  EU  exports  to  the 
three Andean partners increased. Although EU imports from Colombia and Peru decreased 
by  value  compared  to  2018  (in  part  due  to  the  decrease  in  commodity  prices),  the  Trade 
Agreement continues to further the diversification of Colombian and Peruvian exports to the 
EU, i.e. promoting a gradual shift away from reliance on mineral products towards a range of 
agricultural  products;  the  latter  today  account  for  almost  half  of  Colombian  and  Peruvian 
exports to the EU, compared to less than 25% in 2013, i.e. the year before the application of 
the Trade Agreement. Ecuadorian exports have stayed relatively stable and remain dominated 
by agricultural and fishery products. 

The  work  on  implementation  progresses  steadily  and  2019  saw  a  number  of  advances.  An 
important achievement was the elimination by Ecuador of the discriminatory cost of fiscal 
stamps  applied  to  imported  alcoholic  beverages.  The  EU  also  initiated  a  WTO  dispute 
settlement procedure against Colombia’s anti-dumping measures on frozen potatoes from 
Belgium,  Germany  and  the  Netherlands.  In  respect  to  tariff  liberalisation  for  bananas, 
adiscussion was initiated at the request of the Andean partners on the clause in the Agreement 
to examine in 2019 improvement in tariff liberalization for bananas. It was concluded in the 
Trade  Committee  of  October  2019,  resulting  in  no  changes  to  the  current  situation, 
maintaining the €75/tonne customs duty established under the Trade Agreement. 

Regarding  Technical  Barriers  to  Trade,  through  its  Supreme  Decree  021-2020-AS  of  12 
June  2020,  Peru  partially  addressed  EU  request  to  allow  indefinitely  the  use  of  stickers  for 
health warnings on food products. The possibility to use stickers is now extended until June 
2021.  Though  this  is  a  positive  development,  the  EU  will  continue  to  advocate  for  the 
indefinite use of stickers.  

Yet,  some  implementation  challenges  persist,  such  as  the  insufficient  progress  on  the 
Andean side in implementing some important provisions of the Sanitary and Phytosanitary 
measures (SPS) Chapter of the Agreement. For example, some of the Andean partners have 
yet to introduce protracted processes to approve harmonised certificates to allow prelisting for 
EU  establishments;  this  is  the  case  notably  for  EU  trade  in  dairy  and  meat  products  with 
Colombia and for EU trade in processed meat products and deboned bovine meat with Peru. 
Furthermore,  the  lack  of  recognition  by  Colombia  and  Peru  of  the  regionalisation  principle 
enshrined in the Agreement is of strong concern. Colombia has in place a ban on exports of 
live pigs and pigmeat from Belgium and de facto restrictions on exports from Poland due to 
African Swine Fever. Since early 2020 Peru has in place a ban of all exports of live pigs and 
pigmeat  from  12  Member  States.  On  the  positive  side,  Colombia  approved  applications  for 
exports of apples from Poland and kiwis from Italy. It is now important to achieve progress on 
a number of Member State applications still pending with the three Andean countries.  

With  regard  to  intellectual  property  rights  (IPR),  progress  is  needed  for  the  resolution  of 
cases of usurpation of EU Geographical Indications (GIs) in the three countries.   

With regard to public procurement, the EU and Colombia continue discussions in order to 
find a solution to the question of national treatment at sub-central level. On the positive side, 

72 

 
 
 
 
Colombia  agreed  to  extend  coverage  to  seven  newly-created  agencies,  who  were  formerly 
under a central authority, and to work with the EU on its implementation. EU industry issued 
a Position Paper presenting the main challenges they face in public procurement procedures in 
Colombia  and  identifying  practical  solutions  in  line  with  the  provisions  of  the  government 
procurement  chapter  that  was  helpful  in  discussions  with  the  authorities.  As  to  Peru,  some 
concerns persist with excessively restrictive technical specifications in some public tenders. 

The  EU  and  the  Andean  countries  continued  to  build  a  positive  agenda  through  the 
implementation  of  a  number  of  cooperation  activities,  in  the  area  of  intellectual  property 
through the IP Key Latin America45 and in the area of SPS, with a number of seminars Since 
2019, a project is in place (funded by the Partnership Instrument) in each Andean country to 
support the implementation of the Trade Agreement.  

2.2 

Progress in the implementation of trade and sustainable development provisions 

In  general,  the  Parties  continued  to  make  progress  on  the  implementation  of  the  Trade  and 
Sustainable Development (TSD) Chapter in 2019. Regular contacts took place throughout the 
year  and  there  was  good  engagement  at  the  meeting  of  the  TSD  Sub-committee  in  October 
2019.  It  is  also  important  to  highlight    the  increasing  depth  of  the  exchanges  between  the 
parties,  including  on  environmental  issues,  notably  linked  to  deforestation.  There  was  also 
good progress on cooperation; several initiatives are ongoing and/or planned to support TSD 
implementation. 

The  identification  by  the  EU  of  TSD  priorities  per  partner,  in  line  with  the  European 
Commission’s  15-point action plan on trade and sustainable development46, allowed a more 
focused  approach  to  implementation.  On  labour,  for  the  three  Andean  partners,  priorities 
areas  include  freedom  of  association,  the  fight  against  high  levels  of  informal  employment 
and child labour and increasing labour inspection capacity. On environment, a common area 
in need of action for the three countries is the enforcement aspect of environmental policies. 
For Peru, priorities also  include the upholding of environmental standards, and for Ecuador, 
the  need  to  address  the  shortcomings  related  to  illegal,  unreported,  and  unregulated  (IUU) 
fishing. For all three partners, the EU included as a horizontal issue promoting the uptake of 
corporate  social  responsibility  (CSR)  practices  in  line  with  the  recognised  international 
guidelines. For Peru, further improvement of the use of domestic mechanisms for consultation 
on TSD related issues is also of high importance.  

The  increasingly  open  and  regular  dialogue  between  the  Parties  offered  a  good  basis  to 
continue  to  address  some  key  challenges,  notably  with  Peru.  In  2019,  Peru  continued  to 
advance with the implementation  of policies and initiatives to address EU concerns regarding 
freedom  of  association,  labour  informality,  child  labour,  labour  inspection,  monitoring  and 
enforcement  of  environmental  standards  and  consultation  of  civil  society,  in  line  with  the 
bilateral understanding achieved in December 201847.  

On 30 October 2019, as a result of identified shortcomings about Ecuador’s ability to comply 
with  agreed  standards  under  international  law  of  the  sea  as  flag,  port  and  market  state,  the 

45 https://ipkey.eu/en/latin-america 
46  See https://trade.ec.europa.eu/doclib/docs/2018/february/tradoc_156618.pdf  
47  Details 

fifth  meeting 

the  minutes 

available 

the 

are 

of 

in 

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

73 

of 

the  TSD 

Sub-committee: 

 
 
 
 
 
                                                 
European Commission issued a “yellow card” to Ecuador, in line with the EU regulation on 
Illegal,  Unreported  and  Unregulated  fishing  (IUU).  With  this  first  step,  called  pre-
identification, the Commission warned Ecuador of the possibility of being identified as non-
cooperating third country in fighting IUU fishing (second step or “red card”). The yellow card 
triggers a formal dialogue in which the Commission and the third country cooperate with the 
view of addressing issues of concern.  
Sub-committee on Trade and Sustainable Development - 21-23 October 2019  

While  there  were  regular  contacts  during  the  year,  the  Trade  and  Sustainable  Development 
(TSD) Sub-committee meeting was the main occasion for the Parties to take stock on progress 
and  engage  in  substantial  discussions.  The  minutes  can  be  consulted  on  DG  TRADE’s 
website48.   

With  Peru,  the  focus  was  on  reviewing  progress  made  on  the  understanding  reached  at  the 
TSD  Sub-committee  of  December  2018  in  Quito.  Peru  listed  a  number  of  concrete  policy 
developments.  On  labour,  Peru  highlighted  the  achievements  in  strengthening  labour 
inspection  capacity  and  reported  on  the  implementation  of  the  strategy  for  labour 
formalisation as well as on the advances in addressing child labour and ensuring freedom of 
association.  On  environment,  Peru  informed  about  advances  on  air  quality  and  on 
environmental  impact  assessment,  evaluation  and  monitoring.  Peru  also  highlighted  the 
efforts  made  to  allow  discussions  on  the  implementation  of  the  TSD  Chapter  with  civil 
society, using its existing domestic consultation mechanisms. The EU urged Peru to continue 
to make further progress in all these areas. 

Colombia  and  Ecuador  presented  progress  made  in  labour-related  priority  areas.  With  both 
partners, freedom of association remains the main challenge. Colombia gave an account of the 
efforts to address violence against trade union and social leaders, which focused on ensuring 
protection and on fighting impunity. Vis-à-vis Ecuador, the EU reiterated its concerns notably 
in relation to the legal restrictions to the formation of trade unions and continued to insist on 
the need for Ecuador to follow up on the observations made by the supervisory bodies of the 
ILO. It was also noted that such concerns had been raised by the Trade Union Association of 
Banana Plantation, Agricultural and Rural Workers49 and the Institute of Ecuadorian Studies50 
in a complaint addressed to the Ecuadorian Government. In addition, the EU noted that both 
Colombia and Ecuador need to continue to intensify efforts to reduce employment informality 
and to strengthen labour inspection. Both partners reported on advances in the implementation 
initiatives to address child labour.  

On environment, the Parties gave updates on advances relevant to the implementation of the 
Paris Agreement, of the Convention on Biological Diversity (CBD) and of the Convention on 
International  Trade  in  Endangered  Species  of  Wold  Fauna  and  Flora  (CITES).  There  were 
also  in-depth  discussions  on  progress  made  in  fighting  deforestation.  Colombia  informed 
about  its  ratification  of  the  Minamata  Convention  and  on  initiatives  to  promote  circular 
economy.  Ecuador  reported  on  the  adoption  of  a  regulation  to  accompany  the  new 
environmental code. 

Ecuador also gave an update on the state of play of the reform of the fisheries law to address 
shortcomings  in  the  fight  against  illegal,  unreported,  and  unregulated  (IUU)  fishing.  To 
note  that  on  19  February  2020,  the  fisheries  law  was  approved  by  Ecuador’s  National 

48 https://trade.ec.europa.eu/doclib/docs/2019/november/tradoc_158481.pdf 
49 Asociación Sindical de Trabajadores Agrícolas Bananeros y Campesinos (ASTAC) 
50 Instituto de Estudios Ecuatorianos (IEE) 

74 

 
 
                                                 
Assembly and and  entered into force on 21 April, day of its publication in the Supplement of 
Ecuador’s  Official Register51. 

The  TSD  Sub-committee  also  discussed  several  cooperation  activities  ongoing  and/or 
planned.  In  line  with  the  TSD  priorities  and  the  15-point  action  plan,  the  Parties  paid 
particular  attention  to  the  roll  out  of  the  project  (in  place  since  January  2019)  to  support 
corporate  social  responsibility  uptake  in  the  Latin  America  region.  One  of  the  activities 
implemented was a roundtable organised by the OECD and FAO in Lima in September 2019 
that  brought  together  authorities  and  stakeholders  from  Colombia,  Ecuador  and  Peru  to 
discuss the sustainability of production chains in the banana sector.  

In  Colombia,  the  EU  continued  to  fund  and  monitor  the  implementation  of  a  technical 
assistance project led by ILO to support labour inspection in rural areas and agreed to fund a 
UNIDO  project  aimed  to  promote  sustainable  (notably  mercury-free)  artisanal  gold  mining 
and alternative sources of income in the Chocó department.  

In Ecuador a handbook to support TSD implementation, drafted in partnership with Sweden, 
was  published  in  August  201952.  The  EU  and  Ecuador  also  agreed  to  work  with  ILO  to 
develop a technical assistance project to support labour inspection capacity.  

The EU and Peru agreed to set up cooperation activities to support implementation efforts on 
TSD priorities. Consequently, on 27 February 2020 the EU  and Peru organised a  workshop 
with  ILO  on  the  strategic  strengthening  of  labour  inspection.  They  also  agreed  to  set  up  a 
training  session  financed  by  the  EU  instrument  TAIEX  on  labour  conflict  resolution  and 
social dialogue.     

Engagement with civil society continued extensively throughout the year. The EU project to 
support civil society monitoring ensured participation of civil society representatives from all 
Parties at the Open Session organised on 23 October in Bogota, back to back with the meeting 
of  the  TSD  Sub-committee.  The  same  project  also  funded  the  organisation  of  a  capacity-
building  workshop  for  the  civil  society  consultation  mechanisms  of  the  four  Parties  on  21 
October  in  Bogota.  In  2019,  the  Commission  also  participated  in  two  meetings  (March  and 
October)  of  the  EU  Domestic  Advisory  Group  to  discuss  the  implementation  of  the  TSD 
Chapter.  In the October  meeting there was an exchange on the TSD priorities identified for 
Colombia, Ecuador and Peru. 

At the meeting of the Trade Committee (see further below), the EU welcomed the increasing 
open  dialogue  between  the  Parties  on  TSD,  noting  that  this  process  helps  addressing  the 
challenges.  The Parties welcomed the public session with civil society, which allowed for a 
broad  and  constructive  discussion  of  environmental  and  labour  topics  covered  by  the  TSD 
Chapter. The EU expressed its concern over the murders of leaders of trade unions and social 
organisations in Colombia. The EU called upon Ecuador to follow up on the observations of 
the ILO and to respect and protect the right of association. In relation to Peru, the EU stressed 
the importance of continuing to provide civil society with the opportunity to discuss the Trade 
and Sustainable Development Title.  

51 Ley Orgánica para el Desarrollo de la Acuicultura y Pesca (Suplemento I del Registro Oficial Nº 187 – del 21 

de abril de 2020) 

52   https://www.kommerskollegium.se/globalassets/publikationer/guider/2019/handbook-tsd-en.pdf 

75 

 
 
                                                 
 
3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The annual meetings of the implementation bodies under the Trade Agreement (Trade 
Committee and eight specialised Sub-committees) took place between 14 October and 25 
October 2019 in Bogota (Colombia). The minutes of all meetings are publicly available.53  

Trade Committee – 24-25 October 2019 

The  Trade  Committee  had  a  detailed  discussion  on  bananas,  notably  the  clause  in  the 
Agreement  “to  examine  in  2019  improvement  in  tariff  liberalization  for  bananas”.  The 
Andean countries had insisted that a working party should be set up to carry out the relevant 
analysis. Notwithstanding the request, the EU noted that the examination had been exhaustive, 
that it could not reduce the tariff to below €75 per tonne, and that the exercise was concluded.  

Furthermore,  the  EU  gave  an  update  on  the  state  of  ratification  process  in  EU  Member 
States of both the Agreement and the Protocol of Accession of Ecuador. Colombia informed 
about the ratification process regarding the Protocol to the Agreement to take account of the 
accession of the Republic of Croatia to the European Union.  

The  Trade  Committee  was  also  able  to  take  stock  of  progress  achieved  in  the  eight  Sub-
committees.    This  includes  the  elimination  by  Ecuador  of  the  discriminatory  cost  of  fiscal 
stamps levied on imported alcoholic beverages.  

The EU reiterated some of its main remaining concerns, notably: 

  With  Colombia:  the  anti-dumping  measures  against  frozen  fries;  the  lack  of  national 
treatment  in  some  government  procurement  contracts  at  sub-central  level  despite  the 
signature  of  the  Decision  of  the  Trade  Committee  in  2017;  the  negative  impact  of  any 
increase of the mix of biofuels in diesel on export of EU diesel vehicles.  

  With  Peru:  the  long-standing  tax  discrimination  for  alcoholic  beverages favouring 

local Pisco; and the lack of indefinite use of stickers in food health labeling.  

  With  Ecuador: the need to  process  smoothly Member States applications for exports 
of  EU  agri-food  products  to  allow  for  pre-listing  of  EU  establishments;  the 
cumbersome  import  licensing  and  tariff  rate  quota  (TRQ)  management;  the  need  to 
adopt  implementing  regulations  of  the  Intellectual  Property  Code  to  create  legal 
certainty on matters relating to plant varieties, patents and public performance rights; 
preoccupations concerning the existence of a trademark with the EU GI “Feta”.  

The EU also expressed concerns on insufficient progress on SPS matters with the three countries, 
notably on the approval of harmonised procedures (certificates), prelisting of EU establishments 
or  long  delays  or  deviations  from  international  standards  attributed  to  Community  of  Andean 
Nations  legislation  and  procedures.  The  EU  called  specifically  upon  Colombia  to  lift  trade 
restrictions  imposed  on  exports  of  live  pigs  and  pig  meat  from  Belgium  due  to  outbreaks  of 
African Swine Fever in wild boars. 

53   https://trade.ec.europa.eu/doclib/press/index.cfm?id=2100  

76 

 
 
 
 
  
 
 
 
                                                 
Colombia  and  Ecuador  raised  concerns  about  the  Renewable  Energy  Directive  and  the 
potential impact on their exports of palm oil. Colombia also expressed concerns about palm 
oil-free  labeling.  Ecuador  reiterated  its  interest  to  negotiate  a  bilateral  agreement  on  the 
recognition of organic products. 

Sub-committee on Sanitary and Phytosanitary Measures (SPS) –  14-16 October 2019  

The Sub-Committee completed a year of intense contacts and frequent exchanges. These led 
to  some  tangible  progress,  such  as  the  approval  by  Colombia  of  applications  for  exports  of 
apples from Poland and kiwis from Italy. Towards the end of 2019, there was some progress 
with  Ecuador to  pave the way towards the application of the prelisting principle, which has 
yet to materialise. 

The  EU  continued  to  press  for  a  swift  approval  of  the  harmonised  certificates  to  export 
animal products from the EU to Colombia and Peru under prelisting:  namely for meat and 
dairy products with Colombia and for processed meat products and deboned bovine meat with 
Peru.  The EU also pressed the Andean partners to recognize the EU regionalisation measures 
for  animal  diseases,  in  particular  African  Swine  Fever.  This  lack  of  recognition  still 
translates into a ban by Colombia on imports of live animals and pigmeat from Belgium and 
de facto restrictions on imports of pigmeat from Poland. Of concern, early 2020, Peru banned 
all  imports  of  pigs  and  products  thereof  from  12  Member  States  (and  from  other  trading 
partners) also for concerns related to African Swine Fever .  

The EU also pushed for progress on several market access applications, for which Colombia, 
Ecuador  and  Peru  refer  to  SPS  legislation  or  procedures  at  Community  of  Andean  Nations 
(CAN)  level  to  justify  long  delays  or  deviations  from  international  standards.  While 
respecting the role of CAN, the EU noted that the CAN legislation would not supersede the 
Trade  Agreement  and  invited  its  Andean  partners  to  comply  with  their  commitments  under 
the Agreement. 

On  their  side,  the  Andean  countries  raised  concerns  about  the  impact  of  EU  policy  on 
pesticides on their exports of tropical fruits, namely the Maximum Residue Levels (MRLs) 
on pesticides, together with the related issue of endocrine disrupters. They considered that EU 
measures,  which  resort  to  the  precautionary  principle  do  not  follow  a  risk-based  approach. 
The  Andean  partners  also  expressed  preoccupations  about  the  rules  on  cadmium  level  in 
chocolate and cocoa powder. The EU reiterated the scientific basis for these measures.  With 
regard  to  cadmium  the  EU  recalled  the  very  comprehensive  set  of  measures  put  in  place  to 
mitigate  the  impact  on  producers,  including  a  4-year  transition  period,  authorisation  of 
blending and the existence of multiple cooperation programmes.  

The Andean partners also questioned the new EU rules on plant health aiming at limiting the 
entry  on the EU territory  of  exotic plant pests, in  force since September 2019. The Andean 
partners consider that the new measures can have negative impact on their exports of mangoes 
and citrus. The EU provided explanations as to the rational of the new measures. 

The  EU  presented  a  summary  of  the  numerous  cooperation  and  capacity  building  activities 
carried  out  in  2019  in  the  region,  including  but  not  limited  to  events  organised  under  the 
programme “Better Training for Safer Food” (BTSF).  

Both  sides  agreed  on  an  agenda  and  actions  plans  for  the  main  points  raised  in  the  SPS 
committee meeting. 

77 

 
 
 
Sub-committee on Government Procurement – 17 October 2019  

With  Colombia,  the  EU  reiterated  its  concerns  that  EU  suppliers  are  not  granted  national 
treatment  in  some  government  procurement  contracts  at  sub-central  level.  The  EU  and 
Colombia  disagree  as  to  the  scope  of  coverage  by  Colombia  of  sub-central  entities  in  the 
Agreement as modified by Decision 1/2017 of the Trade Committee. The two Parties agreed 
to continue technical discussions with a view to find a mutually agreeable solution.  

The  EU  also  discussed  the  lack  of  granting  of  national  treatment  in  procurement  by  some  
agencies  (such  as  for  example  Agencia  de  Desarrollo  Rural).  Colombia  clarified  that  seven 
newly-created agencies have competences that were previously exercised by covered entities 
(such as line Ministries or other central authorities) and therefore that these agencies are  not 
currently reflected in Colombia’s coverage under the Agreement. Colombia agreed to extend 
its coverage to  include these seven newly created agencies  and to  work  with  the EU to  this 
effect.  

With Peru, the EU raised concerns about technical specifications in some tenders and stressed 
the need to ensure equivalence of standards in line with Article 191 of the Agreement. Peru 
agreed to raise awareness on the need to set non-discriminatory technical specifications and to 
accept international standards in procurement procedures. 

Ecuador  reiterated  its  interest  in  exchanging  information  about  the  EU  public  procurement 
platform SIMAP-TED.  

Sub-committee on Customs, Trade facilitation and Rules of Origin – 18 October  2019 

The  Parties  confirmed  that,  in  order  to  allow  for  regional  cumulation  between  the  Andean 
countries  and  Central  America,  an  adequate  customs  cooperation  agreement  was  reached 
between  the  blocks  by  way  of  a  letter  dated  19  June  2019  co-signed  by  the  Community  of 
Andean  Nations  (CAN)  and  the  Secretariat  for  Central  American  Economic  Integration 
(SIECA).  This  letter  replaces  the  agreement  that  existed  between  the  two  regions  under  the 
Generalised Scheme of Preferences (GSP). 

Work  continued  on  updating  the  product  specific  rules  of  origin  and  origin  quotas  for  the 
Harmonised System 2012 and 2017. 

Sub-committee on Agriculture – 21 October 2019  

The Parties exchanged information on their bilateral flows in agri-food trade (including on the 
use  of  preferences  and  tariff-rate  quotas),  as  well  as  concerning  the  Banana  Stabilisation 
Mechanism.  

With Colombia, the EU raised the issue of the methodology for the calculation of retail prices 
on alcoholic beverages and received assurance from Colombia that the methodology will not 
be  subject  to  further  changes  and  will  not  include  criteria,  which  the  EU  considered 
problematic.  The  EU  reiterated  the  importance  to  avoid  that  any  new  certification  of  Good 
Manufacturing Practices places additional burden on EU exports.  

With  Ecuador,  the  EU  reiterated  concerns  about  the  import  licencing  system  and  the 
administration  of  tariff-rate  quotas,  which  the  EU  considers  not  fully  in  line  with  the 
provisions  of  the  Agreement  and  invited  Ecuador  to  provide  EU  agri-food  exports  with  a 
more predictable and less cumbersome environment.  

78 

 
 
 
 
With Peru, the EU raised concerns on the long-standing tax discrimination against spirits.  

From their side, Colombia and Ecuador expressed concerns in regard to the potential impact 
that EU initiatives aiming to counter deforestation could have on their exports of some of their 
main export products such as coffee, cocoa or palm oil.  

Sub-committee on Market Access – 21 October 2019  

Vis-à-vis Colombia, the EU reiterated its objections to the anti-dumping measures on frozen 
fries. The EU also asked Colombia to eliminate the discriminatory fiscal stamps imposed on 
imported beers in 14 departments. Colombia noted that it would continue to work with the 
departments  towards  a  solution.  The  EU  also  asked  Colombia  to  remove  the  discriminatory 
2% exploitation charges levied on imported alcoholic beverages. Colombia argued that this 
charge  was  not  discriminatory  as  it  also  applied  to  Colombian  beverages  produced  in  other 
departments of Colombia. On import policy for trucks, the EU raised the discriminatory fee 
of  15%  for  imported  trucks  of  over  10.5  tonnes,  reminding  Colombia  of  its  OECD  pre-
accession commitments to eliminate it. 

Vis-à-vis Ecuador, the EU welcomed the adoption by Ecuador’s National Customs Service of 
Resolution  SENAE-SENAE-2019-0079-RE  of  16  September  2019,  whereby  the  USD  0.13 
cost  of  the  discriminatory  fiscal  stamp  levied  on  imported  alcoholic  beverages  was 
eliminated. The elimination became effective on 25 September 2019. 

At  the  joint  request  of  the  all  three  Andean  partners,  the  Parties  discussed  the  clause  in  the 
Agreement to examine improvement in tariff liberalisation for bananas. The EU referred to 
the  issue  having  thoroughly  discussed  and  the  mandate  for  examination  in  the  Agreement 
having been fully respected (including in two discussions by videoconference). Although the 
Andeans  insisted  on  continuing  examining  this  matter  in  the  future  and  asked  the 
establishment  of  a  Working  Group,  the  EU  stated  that  it  was  not  possible  to  envisage  any 
improvement of tariff liberalisation and considered the examination closed.  

Colombia raised concerns about palm oil-free labelling in the EU, arguing that it undermines 
the reputation of palm oil. The EU reminded that this use of labelling is a voluntary practice 
decided by the manufacturers. 

Sub-committee on Technical Barriers to Trade (TBT) - 22 October 2019  

Vis-à-vis  Peru,  the  EU  raised  concerns  about  the  publication  of  a  manual  on  labelling 
requirements  for  health  warnings  on  food  products,  which  would  not  allow  the  use  of 
stickers  beyond  a  period  of  12  months  (until  June  2020).  In  practice,  this  would  mean  that 
foreign manufactures would have to print details on the product package itself before shipping 
the  products,  which  the  EU  considers  would  be  an  unnecessary  obstacle  to  trade.  On  a 
positive  development,  on  12  June  2020,  Peru  adopted  Supreme  Decree  N°021-2020-SA 
extending the possibility to use stikers until June 2021. The EU will continue to push for the 
indefinite use of stickers. 

With Colombia, the EU also raised concerns related to the possible future increase of the mix 
of  biofuels  in  diesel  above  10  %,  which  would  have  a negative  impact  on  EU  exports  of 
diesel vehicles. 

Colombia and Ecuador raised concerns about EU legislation on renewable energy and other 
related palm oil initiatives that, in their view, may have a negative impact on their exports of 
palm  oil  to  the  EU.  Colombia  also  enquired  about  the  recently  adopted  EU  Directive 
2019/904 on the reduction of the impact of certain plastic products on the environment. 

79 

 
 
 
Sub-Committee on Intellectual Property – 22-23 October 2019  

With  regard  to  Geographical  Indications  (GIs),  the  EU  pressed  Colombia  to  finalize  the 
investigation  of  cases  of  usurpation  of  some  EU  GIs  (cheese).  With  Peru,  discussions 
continued towards a solution in relation to the finalisation of the protection of a number of EU 
GIs  under  the  initial  list  as  well  as  the  correction  of  some  registered  EU  GIs  and  regarding 
some cases of usurpation for which a request for action was addressed to Peru. Concerns were 
raised  with  Ecuador  concerning  the  existence  of  a  trademark  with  in  relation  to  the  EU  GI 
“Feta”. Colombia and Peru expressed concerns on the possibility under the EU legislation to 
register trademarks that in their view would affect their GIs.  

Colombia  and  Peru  expressed  concerns  on  the  possibility  in  EU  legislation  to  register 
trademarks in the EU that in their view would affect their GIs.  

Other issues discussed  with  the three Andean partners included the  overall enforcement of 
intellectual  property  rights  (IPR),  including  on-line  and  at  the  border.  With  Ecuador,  the 
issues  raised  related  to  the  protection  of  copyright  and  related  rights,  the  exploitation  of 
patents and the effective protection of plant variety rights, notably in the context of pending 
implementing regulations of its  Intellectual Property Code (“Codigo de  Ingenios”). Ecuador 
noted that this remained a priority of the competent authority and that the delay was due to its 
stakeholder consultation process. 

There  were  exchanges  on  possible  cooperation  projects,  following  successful  activities 
financed by the EU in Peru, Colombia and Ecuador in the context of  IP Key Latin America 
Programme54,  in  particular  with  a  view  to  continue  supporting  the  implementation  of  IPR 
commitments in the Trade Agreement.  

4. 

ACTIVITIES  SUBJECT  TO  SPECIFIC  MONITORING  AND  SPECIFIC  AREAS  OF 
IMPORTANCE  

4.1 

Banana Stabilisation Mechanism 

The  Trade  Agreement  provides  for  a  preferential  customs  duty  on  bananas  under  heading 
0803.00.19 (fresh bananas), progressively reduced since the date of provisional application of 
the Agreement until the year 2020 (following a schedule indicated in a tariff reduction table). 
This  special  treatment  is  linked  to  a  ‘stabilisation  clause’  that  sets  out  an  annual  trigger 
volume for imports from each Andean country during the transition period.  
Article 15 of Regulation (EU) No 19/201355 provides for the stabilisation mechanism. When 
the  annual  trigger  volume  of  imports  per  country  as  set  in  the  Agreement  is  met,  the 
Commission  examines  the impact  of these imports on the situation of the Union market  for 
bananas  and  take  a  decision  to  either  temporarily  suspend  the  preferential  customs  duty  or 

54   https://ipkey.eu/en/latin-america 
55   Regulation  (EU)  No  19/2013  of  the  European  Parliament  and  of  the  Council  of  15  January  2013  implementing  the 
bilateral  safeguard  clause  and  the  stabilisation  mechanism  for  bananas  of  the  Trade  Agreement  between  the  European 
Union and its Member States, of the one part, and Colombia and Peru, of the other part as amended by Regulation (EU) 
2017/540 of the European Parliament and of the Council of 15 March 2017. 

80 

 
 
 
 
 
                                                 
determine that such suspension is not appropriate. The stabilisation mechanism applies until 
31 December 2019.  

In  this  context  and  in  accordance  with  Articles  3  and  13  of  Regulation  19/2013,  the 
Commission has been monitoring the evolution of imports of fresh bananas from Colombia, 
Ecuador and Peru.  

2019 imports of fresh bananas56 

Country 

Total imports  

(tonnes) 

Trigger level (tonnes)  % 

Colombia  

Ecuador  

Peru  

Total 

1 336 611  

1 408 207  

104 073  

2 848 891 

1 957 500   68.3% 

1 957 500   71.9% 

101 250   102.8% 

4 016 250  70.9% 

In 2019, EU imports of fresh bananas from Colombia amounted to 1 336 611 metric tons, i.e. 
32% below the trigger volume of 1 957 500 metric tonnes established by the Agreement.  

Ecuador  exported  1 408 207  metric  tons  of  fresh  bananas  to  the  EU,  i.e.  28%  below  the 
trigger level of 1 957 500 metric tonnes, established for Ecuador in the Agreement.  

On  18 December  2019,  Peru  exceeded  by  2.8%  its  trigger  volume  established  in  the 
Agreement (101 250 metric tonnes). In this context, it is recalled that, by Regulation (EU) No 
19/2013,  any  suspension  of  preferential  customs  duties  cannot  go  beyond  the  end  of  the 
calendar year, and that the mechanism in itself expired on 31 December 2019.  

The Commission examined the impact on the EU market taking into account, inter alia, 
the effects on the price level, developments of imports from other sources and the overall 
stability of the EU market and came to the following conclusions:  

1.  The share of imports from Peru (2.3%) in the overall imports of fresh bananas over 
the  period  1  January  2019  –  31  December  2019  was  very  small  and  the  price 
development  of  imports  from  Peru  remained  higher  than  the  average  of  other 
import prices;  

2.  At  the  same  time,  imports  from  large  exporting  countries  with  whom  the  Union 
also  has  trade  agreements,  notably  Colombia,  Ecuador  and  Costa  Rica  remained 
largely below their defined trigger volume (they reached respectively 68.3 %, 71.9 
%  and  75.2  %  of  their    defined    volumes).  Actually  the  total  annual  imports  of 
fresh  bananas  from  countries  subject  to  the  banana  stabilisation  mechanism 
accounted for 72.9% of the cumulated trigger level. 

56   Statistics are based on EU28.  

81 

 
 
 
 
 
 
 
 
                                                 
3.  Peruvian imports did not show any negative effect on the EU wholesale price for 
bananas, which has remained fairly stable during the period, and has even showed 
an increasing trend.  

Therefore, there was no indication that the stability of the EU market or the situation of the 
EU producers was affected by the level of Peruvian exports.  

In  line  with  the  commitment  undertaken  in  the  Joint  declaration  to  Regulation  (EU) 
2017/54057,  the  Commission  will  continue  to  carry  out  regular  analysis  of  the  state  of  the 
market and the  Union banana producers and, if need be, examine the situation together with 
Member States and the stakeholders. 

4.2 

Colombian anti-dumping duties on frozen fries 

In November 2018, Colombia imposed definitive anti-dumping (AD) measures on imports of 
frozen fries from Belgium,  Germany and the  Netherlands, with  duties ranging from  ~3% to 
~8%, imposed for 2 years and affecting 75% of EU exports to the country. The investigation 
showed serious shortcomings, notably with regard to dumping, injury and causality links. In 
March  2019,  the  Commission  requested  the  revocation  of  the  measures  through  an 
administrative  procedure  in  Colombia  (‘revocatoria  directa’)  in  an  attempt  to  reach  a  quick 
settlement of the case. Colombia rejected the revocation of the measures on 13 May 2019. On 
15  November  2019,  the  EU  initiated  a  WTO  dispute  settlement  procedure  and  requested 
consultations58.  Consultations  failed  to  settle  the  dispute.  The  EU  requested  the  Dispute 
Settlement Body (DSB) to establish a panel at its meeting of 28 February 2020 to rule on the 
legality of Colombia’s anti-dumping measures. The Panel was established by the DSB on 29 
June 2020.59    

4.3 

Ex post evaluation of the implementation of the Trade Agreement 

In 2 April 2020, the Commission hired a contractor to carry out an ex post evaluation of the 
implementation of the Trade Agreement between the EU and Colombia, Peru and Ecuador60. 
The  project  will  analyse  the  impact  of  the  implementation  of  the  Agreement  on  sustainable 
development  in  its  economic,  social  and  environmental  dimensions,  as  well  as  on  human 
rights  including  labour  rights.  Stakeholder  consultations  are  an  important  element  of  this 
evaluation and will include a number of activities, such as civil society dialogue in Brussels, 
online  public  consultation,  targeted  surveys/interviews/roundtables  and  workshops  in  the 
three Andean countries and in the EU. The project will last 15 months. 

57   https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32017R0540&qid=1579189798344&from=EN 

58  https://ec.europa.eu/commission/presscorner/detail/en/ip_19_6221  
59 https://trade.ec.europa.eu/wtodispute/show.cfm?id=792&code=1 
60 https://ec.europa.eu/trade/policy/policy-making/analysis/policy-evaluation/ex-post-evaluations/ 

82 

 
 
 
 
 
 
                                                 
 
5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

Colombia 

Colombia’s economy withstood the regional downward trend in 2019 and grew by 3.3%, the 
highest rate since 2014. On the supply side, services, mining, and to a lesser extent agriculture 
contributed  to  the  expansion,  while  higher  real  wages  contributed  to  sustained  domestic 
demand. However,  the  quarter-on-quarter  trend  in  2019  was  slightly  negative,  which 
announced a more challenging macroeconomic environment for 2020.  

Consumer  price  inflation  stayed  within  the  2-4%  target  range  of  the  central  bank,  but  has 
neared the upper bound at 3.8% at the end of 2019.  

The fiscal deficit in 2019 stood at an estimated 2.5% of GDP, and meeting the medium term 
fiscal deficit target of 1.4% by 2022 will be challenging, and would require further reform to 
boost revenue. In line with prudent macro-economic policies – and provided the government 
sticks to the fiscal rule - the debt/GDP ratio has risen rise slightly in recent years, peaking at 
52.7% in 2019. 

The unemployment rate has increased to 10.5% during 2019, and labour informality stands at 
almost  50%,  which  shows  that  positive  GDP  trends  have  not  yet  benefitted  the  most 
vulnerable parts of the population. While immigration from Venezuela (ith many immigrants 
working  in  the  informal  sector)  is  one  of  the  reasons  of  the  high  unemployment  rate,  the 
overall impact of immigration is positive, not least for the agricultural sector. 

Lower  oil  prices  negatively  affect  Colombia’s  external  sector  and  will  further  increase  the 
already substantial current account deficit, which stood at 4.3% in 2019.61 Positively, capital 
inflow, mainly foreign direct investment, continue to cover the deficit.  

Ecuador 

In 2019, Ecuador’s economic growth slowed down to 0.1% of GDP (2018: +1.4% of GDP). 
It  exhibited  negative  annual  inflation  (-0.07%)  reflecting  a  weak  demand  and  a  domestic 
economy which is decelerating and leading to a rise in unemployment rates to 46%.62 

Despite minor efforts to lower public spending, the fiscal gap increased from 3% of GDP in 
2018 to 4% in 2019. Revenues were lower than expected (VAT collection and import tariffs) 
and  expenditures  could  not  be  contained  at  the  expected  level  (social  spending  and  debt 
service).  Government  debt  jumped  to  53%  of  GDP  in  2019  (2018:  46%);  debt  service 
increased  to  3.2%  of  GDP  in  2019  up  from  2.9%  in  2018.  Financial  needs  for  2020  are 
estimated at USD 10 billion (a 25% increase over last year), an almost impossible goal with a 
country risk index bordering 1000 points at the end of 2019.  

61 Source: Banco de la República (2020). Balanza de pagos. Subgerencia de Estudios Económicos; Available at: 

https://www.banrep.gov.co/es/estadisticas/balanza-pagos 
62  Source: Instituto Nacional Nacional de Estadísticas y Censos  
https://www.ecuadorencifras.gob.ec/institucional/home/;  This 

rate 
underemployment (17%) and other non-full employment (24.3%);  

includes  unemployment 

rate 

(4.9%), 

83 

 
 
 
                                                 
2019  was  a  crucial  year  as  the  International  Monetary  Fund  (IMF)  approved  a  36-month 
Extended Fund Facility (EFF) amounting US$ 4.2 billion for Ecuador to implement a much-
needed  fiscal  consolidation  program.  The  program  entails  fundamental  structural  reforms  to 
reduce  the  fiscal  deficit,  among  them  cuts  in  public  spending  and  fuel  subsidies,  and 
addressing changes  in  labor legislation (cuts  to  the public wage bill  and labor flexibility) to 
increase productivity and competitiveness.  

Some of these reforms have faced considerable resistance, such as the failed attempt to scrap 
fuel  subsidies  in  October  2019  that  ended  up  in  a  violent  social  outbreak.  In  view  of  the 
legislative and Presidential elections in February 2021, it is likely that labour reforms will be 
postponed.  On  the  positive  side,  a  revised  version  of  the  tax  code  to  raise  revenues63  was 
approved on 31 December 2019.  

In light  of the difficulties in  adhering to  the goals  established in  the EFF program,  the  IMF 
agreed  to  lower  fiscal  consolidation  requirements.  The  economic  situation  in  the  country 
remains very difficult.  

Peru 

GDP growth reached 2.16% in 2019, Peru’s lowest annual growth rate since 2009 and below 
estimates  by  most  forecasters.  Private  consumption  was  the  major  driver  of  growth  (+2.8% 
YOY). Government consumption grew by +3.2%. Public investment continued to suffer amid 
budget  underexecution  by  local  governments.  Private  mining  investment  grew  by  +27%, 
whereas nonmining investment contracted by nearly -4%.  

As a share of GDP, the fiscal deficit narrowed from 2.3% in 2018 to 1.6% in 2019 and public 
revenue  rose  by  6.5%.  Inflation  remained  at  1.9%  at  the  end  of  2019.  The  Central  Bank’s 
policy rate currently stands at 2.25%, the lowest in the region. 

Peru's basic consensuses across the political spectrum are openness to trade, macroeconomic 
stability  and  fiscal  responsibility.  The  country  aspires  to  OECD  membership  and  already 
works with the Organisation in many policy areas.  

Global trade tensions and the political crisis that resulted in early Congressional elections held 
on  20  January  2020  had  a  negative  impact  on  the  economic  performance.  The  expected 
rebound  in  economic  activity  is  though  likely  to  be  dampened  by  the  global  outbreak  of 
COVID 19.   

5.2 

Trade in goods 

Colombia 

The  EU  as  EU27  remains  Colombia´s  third  trading  partner,  after  the  US  and  China,  as 
bilateral  trade  amounted  to  €  10.4  billion,  compared  to  €  10.1  billion  in  2018,  a  2.7% 
increase.  In 2019, the EU accounted for  12.8%  of total  merchandise trade of Colombia,  up 
from 12.6% in 2018.  

63 Ley de Simplicidad y Progresividad Tributaria. 

84 

 
 
 
 
                                                 
Since 2015, the EU has been running a trade surplus with Colombia, a tendency that has 
since  then  amplified  reaching  €  1.9  billion  in  2019.  However,  the  growing  deficit  can  be 
almost  exclusively  explained  by  the  drop  in  exports  of  coal  and  oil,  which  decreased  from 
€5.5 billion in 2013 (the year the Agreement entered into force) to € 0.9 billion in 2019.  

EU  exports  to  Colombia  increased  by  10.7%  in  2019  to  €  6.1  billion,  representing  EU’s 
peak export in the last five years. The headings that recorded the largest increases were motor 
vehicles,  pharmaceutical  products,  aircrafts  and  articles  of  iron  and  steel,  while  exports  of 
electrical machinery and organic chemicals suffered the greatest declines.  

EU imports  from  Colombia amounted  to € 4.3 billion in  2019, down from  € 4.6 billion in 
2018, representing a 7% decrease, and the lowest export value since 2015. It is noteworthy 
that  the  share  of  mineral  products  on  total  Colombian  exports  to  the  EU  continues  a  strong 
downward trend, and that EU-Colombia trade is much less dominated by coal and petroleum 
products than Colombia's trade with China and the US.  

EU-Colombia trade in non-agricultural products (NAMA) 

EU exports to Colombia of NAMA products amounted to  € 5.7 billion in 2019, increasing 
by 10.2%. The most important categories in 2019 were:  

•  Machinery  and  mechanical  appliances,  representing  the  largest  share  of  EU  exports  at 

16.8%, amounting to € 1 billion, an increase of 14% compared to 2018.  

•  Pharmaceutical products, totalling € 872 million, or 14.2% of EU exports, increasing by 

13.5%;  

•  Motor vehicles, registered a 24.5% increase up to € 628 million, now representing 10.2% 

of EU exports 

EU  imports  from  Colombia  of  NAMA  products  amounted  to  €  2.3  billion  in  2019, 
decreasing by 14.3% compared to the previous year. The main categories in 2019 were:  

•  Minerals, € 807 million, representing 18.9% of EU imports from Colombia, versus 43.5% 

in 2018;  

•  Precious  stones  and  minerals  (mainly  emeralds  and  gold);  increased  by  152.8%,  now 

representing € 621 million, a 14.6% of imports,   

• 

Iron and steel, amounted to € 55 million, decreasing by 29,7% and now representing 1.3% 
of EU imports. 

Ecuador 

In 2019, the EU remains Ecuador’s second trade partner with 16% of the country’s market 
share, after the US (27%) and before China (15%). Ecuador´s exports to the EU contracted by 
7% while exports to China almost doubled (+92%)64 and exports to the US grew by just 2%. 

64 This is the result of the deepening of the Comprehensive Strategic Partnership between Ecuador and China (December 2018) and the vast 

increase of direct exports of shrimps to China.  

85 

 
 
 
                                                 
On the import side, the US continued to be Ecuador´s main supplier although imports fell by 
5% followed by China (4%) and the EU (-3%). 

In  2019,  bilateral  trade  amounted  to  €  5.2  billion,  compared  to  €  5.1  billion  in  2018,  a 
1.3% increase. 

Bilateral trade between the EU and Ecuador has grown steadily for the last five years despite 
a  temporary  slump  in  2016  (-4%  of  GDP).  Trade  growth  reached  a  peak  in  2017  (+18%), 
following the application of the Agreement. Since 2018 trade exchanges have been growing 
but at a slower pace (2018: +3.4%; 2019: +1.3%).  Three factors explain this slow-down: i) a 
strong dollar, which  reduces Ecuadorian products´  competitiveness  in  international  markets; 
ii)  a  sluggish  domestic  growth,  which  puts  a  break  on  domestic  consumption;  and  iii) trade 
diversion  towards  other  trade  partners,  namely,  Central  America  and  China.  Nonetheless, 
Ecuador enjoys a positive, although shrinking trade balance with the EU amounting to EUR 
549 million in 2019 (2018: EUR 619 million).  

EU exports to Ecuador in 2019 grew by +3% year-on-year amounting to EUR 2.3 billion, 
reaching  its  peak  export  value  of  the  fie  past  years.  The  most  demanded  EU  products  were 
machinery and mechanical appliances, mineral fuels and pharmaceutical products. 

EU  imports  from  Ecuador  remained  steady  (-0.1%)  year-on-year  representing  EUR  2.9 
billion and concentrated in agricultural and fishery products.  

EU-Ecuador trade in non-agricultural products (NAMA)  

EU27  exports  to  Ecuador  of  NAMA  products  increased  by  2.2%  amounting  to  EUR  2.1 
billion in 2019 compared to 2018. The most important categories in 2019 were:  

  Machinery  and  mechanical  appliances  (HS  84),  worth  EUR  429  million,  or  19%  of 

total EU27 exports to Ecuador, increased by 4%; 

  Mineral fuels (HS 27), amounting to EUR 218 million, or 10% of total EU27 exports, 

contracted by 38%;  

  Pharmaceutical products (HS 30), totalling EUR 63 million, or 7% of EU27 exports, 

grew by 10%;  

Vehicles and parts (HS87) and Electrical machinery (HS85), totalling EUR 141 
million ad 133 million respectively , and each 6% of EU27 exports; 
Railways and trams (HS86), amounting to EUR 111 million, or 5% of EU27 exports, 
increased by 629% as a result of public purchases for the public transportation system 
(the metro in Quito, the tramway in Cuenca, and the cableway in Guayaquil).  

EU27  imports  from  Ecuador  of  NAMA  products  increased  by  5%  amounting  to  EUR  1.4 
billion in 2019. The main categories in 2019 were: 

  Preparation  of  fish  (tuna)  (HS  16)  worth  EUR  652  million,  or  23%  of  total  EU 

imports, increased by 10%. 

  Fish  and  crustaceans  (HS  03),  amounting  to  EUR  641  million,  or  22%  of  total  EU 

imports from Ecuador . 

86 

 
 
 
 
  Wood  and  articles  of  wood  (HS  44)  reached  EUR  43  million,  or  2%  of  total  EU 

imports from Ecuador, increased by13%. 

Peru 

The EU is  Peru’s third largest trading partner (11% of total Peruvian trade), after China 
(28%)  and  the  US  (12%).  In  2019,  bilateral  trade  with  the  EU27  amounted  €9  billion, 
decreasing by -1.7% compared to 2018, while Peru’s overall trade with the rest of the world 
decreased by -0.5% over the same period.  

While EU exports increase, Peru exports decrease. This negative trend is mainly due to a 25% 
reduction  of  mineral  products  exports,  52%  of  which  were  copper  affected  by  lower 
international prices (lower demand from China) decreasing by 17% as well as zinc decreasing 
by  37%.  Exports  of  natural  gas  also  strongly  contributed  to  this  negative  result  with  a 
decrease of 54% compared to 2018. Instead exports of vegetable products increased by 11%, 
fishing products by 5% and prepared foodstuffs products by 28%.   

Since  2015,  the  EU  has  been  running  a  trade  deficit  with  Peru.  Although  since  2015  the 
deficit had been increasing peaking at EUR 2.1 billion in 2018, this trend has slowed down in 
2019 with a deficit of EUR 1.5 billion.  

EU27 exports to Peru amounted to €3.8 billion, an 6.4% increase when compared to 2018. 
94%  of  EU  exports  are  industrial  products,  mostly  machinery  and  appliances,  chemical 
products and transport equipment. 

EU27  imports  from  Peru  amounted  to  €5.3  billion  decreasing  -6.7%  compared  to  2018. 
Peru decreased its exports to the rest of the world by -0.4%. Key import items from Peru are 
ores,  slag  and  ashes,  minerals,  fruits,  coffee  and  fishery  products.  The  share  of  agri-food 
products in imports from Peru into the EU continued to increase and now represents 43% of 
total imports from Peru. 

EU-Peru trade in non-agricultural products (NAMA)  

EU27  exports  to  Peru  of  non-agricultural  products  amounted  to  €3.53  billion  in  2019,  a 
+6.3% increase (from €3.32 billion in 2018). The most important categories in 2019 were: 

  Machinery,  mechanical  appliances  (HS  84),  amounting  to  €1.04  billion  representing 

28% of total EU27 exports to Peru, with a 21.4% increase compared to 2018; 

  Electrical  machinery  and equipment  (HS 85), or  €336 million,  accounting for 9% of 

total EU27 exports to Peru, and with an increase of 5.8% compared to 2018; 

  Motor vehicles (HS 87), worth €255 million or 7% of EU exports, decreasing by 6.1% 

compared to 2018; 

  Medical  devices  (HS90)  and  Pharmaceutical  products  (HS30),  amounting  to 
respectively €206 million (+10.4%) and €203 million (+17.7%), and accounting each 
for 5% of EU27 exports. 

EU  imports  from  Peru  of  non-agricultural  products  on  the  contrary  decreased  by  -18% 
amounting to €3 billion in 2019 (from €3.7 billion the previous year). The main categories in 
2019 were: 

87 

 
 
  Ores  (HS  26),  amounting  to  €1.3  billion  representing  25%  of  total  EU27  imports 

from Peru, versus 29% in 2018, with a -17.2% decrease; 

  Mineral fuels (HS27) mainly natural gas, worth €207 million, representing 4% of EU 

imports, a -54% decrease compared to 2018; 

  Fish and crustaceans (HS 03), amounting to €322 million or 6% of EU imports, with a 

5.3% increase compared to 2018. 

5.3 

Trade in agricultural products 

In  all  three  Andean  partners,  the  existence  of  SPS  issues,  associated  with  slow  and 
cumbersome  administrative  procedures  for  the  approval  of  agri-food  imports  from  the  EU, 
constitutes  a  main  concern.  In  addition,  a  ban  is  still  in  place  on  imports  of  cattle  and  beef 
from  the  EU  on  grounds  of  BSE.  Moreover,  there  is  no  de  facto  recognition  of  the 
regionalisation principle for African Swine Fever, which has a negative impacts on potential 
exports from a number of Member States.  

The Agreement provides for the protection of 116 EU GIs (115 in the case of Peru) related to 
wine, cheeses, beer, meat products and spirits. A number of GIs from Colombia, Ecuador and 
Peru  related  to  coffee,  flowers,  cacao  and  spirits  are  protected  in  the  EU.  The  EU  works 
closely with the relevant authorities in Colombia, Ecuador and Peru to ensure that the EU GIs 
are adequately protected.  

Colombia 

EU  exports  to  Colombia  of  agricultural  products  increased  by  18.6%  amounting  to  €442 
million in 2019, and were dominated by:  

•  Beverages  and  spirits  (HS22)  at  €  67  million,  or  15.1%  of  EU  exports  of  agricultural 

products to Colombia;  

•  Miscellaneous  edible  preparations  (HS21)  at  €  62  million  accounted  for  1%  of  total 

exports.  

•  Preparations of vegetables, fruits and nuts (HS20) increased 37.2%, representing 0.9% of 

EU exports;  

EU imports of agricultural products from Colombia amounted to € 1.9 billion, increasing by 
3.6% from 2018 to 2019. The most important categories in 2019 were:  

•  Fruits  (HS08),  accounted  for  20.6%  of  total  imports,  up  by  6.6%  compared  to  2018. 

Bananas represented 77.5% of all fruits exported, followed by avocados with 4.3%.  

•  Coffee (HS09), increased by 6.3%, represented 11% of EU imports;  

•  Animal or vegetable fats and oil (HS15), almost all consisting of  palm oil, decreased by 

13.9% but still accounted for 6.8% of imports.  

88 

 
 
 
 
In  2019,  Colombia’s  exports  of  agrifood  products  to  the  EU27  accounted  for  45%  of  total 
Colombian  exports  to  the  EU,  compared  to  19%  for  2013  the  year  before  the  Trade 
Agreement.  

For certain sensitive products, the Trade Agreement provides tariff rate quotas for EU exports 
to Colombia and vice-versa. The tables below provide the utilisation rate of these quotas by 
EU exports and by exports from Colombia, respectively. 

89 

 
 
 
 
TRQs granted by Colombia to the EU  

Utilization of TRQs by the EU28  in 2019  

List 

AZ 

DB 

Product 

Raw sugar 

Bovine meat 

HE 

Ice cream 

TX 

Textured protein substances 

LC 

Condensed milk 

LP1  Milk and cream in powder 

LP2  Milk and cream in powder 

LM 

Infant formula 

PA 

Sugar confectionery 

Q 

Cheese 

YG 

Yoghourt 

MA 

Sweetcorn 

HO  Mushrooms 

Source:  DIAN (Colombia’s customs)  

TRQs granted by the EU to Colombia  

2018 

2019 

0% 

0% 

0% 

0% 

86,8% 

99,3% 

0% 

0% 

0,6% 

Illimited 

100% 

100% 

0% 

Illimited 

99% 

100% 

4,7% 

2,5% 

13% 

16,8% 

17,4% 

0% 

100% 

100% 

100% 

99,9% 

Utilization of TRQs by Colombia  in 2019  

90 

201720182019BeefBeef, boneless8.960t (product weight)0%0%0%DairyMilk, concentrated130t0%0%0%DairyYogurt130t0%0%0%F&VSweetcorn260t0%0%0%MushroomsMushrooms (Agaricus), prepared or preserved130t0%0%0%SugarSugar73.160t (in raw sugar eq.)95%65%97%Sugar productsHigh sugar content products23.600t1%1%2%AlcoholsRum2.100hl (pure alcohol eq.)0%59%0%Utilisation rate of TRQs opened by the EU to ColombiaSectorTRQ descriptionTRQ QuantityUnitUtilisation in TRQ period ending in: 
 
 
 
 
 
 
Ecuador 

Bilateral trade of agricultural products between the EU and Ecuador decreased by 3%  year-
on-year reaching a total of EUR 1,663 million compared to EUR1,617 million in 2018. The 
analysis of the figures shows that:  

EU27  exports  of  agricultural  products  to  Ecuador  increased  by  17%  year-on-year  and 
reached EUR 155 million in 2019, although the implementation of the SPS chapter has yet to 
deliver its potential. Agricultural products represented 7% of total EU exports to Ecuador. The 
most dominant categories in 2019 were: 

  Miscellaneous  edible  preparations  (HS21),  worth  EUR  22  million,  or  14%  of  total 

EU27 agricultural exports;   

  Beverages  and  spirits  (HS22)  amounting  to  EUR  19  million,  or  12%  of  total  EU 

agricultural exports (and just 1% of total EU27 exports) increased by 24%; 

  Residues and waste from food industry (HS23) amounting to EUR 17 million, or 11% 

of total EU27 agricultural exports, increased by 5%; 

EU27 imports  of  agricultural  products  from  Ecuador  decreased  by 4.5%  year-on-year and 
reached EUR 1.46 billion in 2019. The most important categories in 2019 were: 

  Fruits  (HS08),  amounting  to  EUR  897  million,  decreased  by  7%.  However,  fruits  are 
61%  of  total  EU27  imports  of  AMA  and  31%  of  total  EU27  imports  from  Ecuador. 
Bananas  remain  at  the  top  of  the  fruit  imports  (94%  of  the  total)  although  imports 
contracted  year-on-year  (-9%).  Other  fruits  increased  their  presence  in  the  EU:  fresh 
plantains  (+17%),  pineapples  (+19%),  fresh  tamarinds  (+10%),  and  frozen  fruits 
(+36%).  Only  papayas  and  apricots/apples  and  peaches  decreased  by  10%  and  28%, 
respectively.  

  Live trees and other plants, mainly fresh cut flowers (HS06) worth EUR 211 million or 

14% of total EU27 AMA imports, increased year-on-year by 4%. 

  Cocoa  and  cocoa  preparations  (HS18)  amounting  to  EUR186  million  or  13%  of  total 
EU27 AMA imports, increased by 17% (and rate at the 7th position of total Ecuador’s 
exports to the EU27). 

Agricultural  products  account  for  more  than  half  of  total  EU27  imports  from  Ecuador 
(51%), turning the EU into Ecuador´s prime market for non-oil exports.   

For certain sensitive products, the Trade Agreement provides tariff rate quotas for EU exports 
to Ecuador and vice-versa. The tables below provide the utilisation rate of these quotas by EU 
exports and by exports from Ecuador, respectively.   

TRQs granted by Ecuador to the EU  

With  regard  to  Ecuador’s  tariff  quotas  granted  to  the  EU,  despite  slight  changes  to  the 
TRQ  management  system  in  2019,  EU  exporters  continue  deploring  the  complexity  of  the 
system.  Adding  to  this,  the  lengthy  approval  process  on  the  homologation  of  sanitary  and 

91 

 
 
 
phytosanitary conditions of Member States and EU establishments increases the frustration of 
exporters.  

Nevertheless,  in  2019 the EU28 increased significantly the use of  TRQs for preparations of 
animal feeding, some dairy products and processed sweet corn. Other products such as other 
dairy products, frozen potatoes and confectionary products slightly fell compared to 2018. 

92 

 
 
 
 
Utilization of TRQs by the EU28  in 2019  

Use of TRQ by the EU 

2018 

2019 

B.   Preparations for animal feeding 

B1. Preparations for animal feeding 

D.   Bovine guts 

L1. Dairy products: Powder milk, butter milk serum, 

whey 

L2. Dairy products: Evaporated milk, condensed milk   

L3. Diary products: Yoghourt, cheeses: grated or 

powdered, melted, others 

L4. Dairy products: Blue-veined cheese, mature cheese 

M.   Fresh sweet corn: Sweet corn, fresh, refrigerated 

MC. Processed sweet corn: Sweet corn: frozen, canned 

P. Pork products: cured ham, bellies (streaky) sausages 

and similar meat products 

PA. Frozen potatoes 

SP. Confectionary product (high sugar content): Juices, 

chocolate, coffee, tea and others 

Source:  Ministry of Agriculture and Livestock of Ecuador 

8.1% 

2.7% 

0% 

35.7% 

3% 

19% 

7% 

0% 

32.8% 

18.9% 

1.9% 

0.1% 

18.4% 

93.2% 

0% 

49.3% 

3% 

15.3% 

12.7% 

0% 

62.7% 

18.6% 

0% 

0.59% 

93 

 
 
 
 
TRQs granted by the EU to Ecuador  

In the third  year of application of the Agreement, Ecuador has  yet to take full advantage of 
tariff quotas granted by the EU.  

Utilization of TRQs by Ecuador  in 2019  

Product  

Sweet corn, uncooked, or cooked (09.7526) 

Mushrooms (09.7527) 

Sweet corn provisionally preserved (09.7528) 

Maize (09.7529) 

Rice (09.7530) 

Manioc (09.7531) 

Raw cane sugar not containing added flavouring or colouring (09.7532) 

Sugar and sugar products (09.7533) 

Rum (09.7534) 

Source: TAXUD, Surveillance Database 

Peru 

2018 

2019 

9.5% 

6.7% 

0% 

0.7% 

0% 

1% 

0% 

0,008% 

0.3% 

0.08% 

0% 

0% 

8.3% 

0.6% 

0% 

9.5% 

0.06% 

0% 

EU  exports  to  Peru  of  agrifood  products  in  2019  increased  by  7.3%  compared  to  2018 
totaling €230 million. The most important categories were: 

  Miscellaneous edible preparations  (HS21), representing 16.5% of EU agrifood exports 

to Peru (€38 million) increased by 9.5% compared to 2018; 

  Preparations of vegetables (HS20), representing 14.3% of total EU exports of agrifood 

products to Peru (€33 million) increased by 20.8% compared to 2018; 

  Dairy  products  (HS04),  posting  a  small  decrease  -0.6%  compared  to  2018.  Dairy 
exports represent 11% of total EU exports of agrifood products to Peru (€26 million); 

  Beverages  and  spirits  (HS22),  accounting  for  11%  of  total  EU  exports  of  agrifood 

products to Peru (€26 million) have increased by 14% compared to 2018. 

EU imports of agrifood products from Peru increased by 15.2% from 2018 to 2019, totaling 
€2.25 billion. The most important categories were: 

  Fruits (HS08), accounted for 49% of total EU imports of Peruvian agrifood products 
(€1.1  billion),  up  14.4%  compared  to  2018;  35%  were  avocados  (+18%  compared  to 
2018), 16% table grapes (-2%), 15% blueberries (+61%), 15% mangoes frescos (+8%), 
7% bananas (-14%), and 3% were citrus fruits (+9%). Export diversification continues 
with new products especially so-called “power fruits” such as pomegranates +11%). 

94 

 
 
 
 
 
  Coffee  (HS09)  represents  15.4%  of  total  EU27  imports  of  agriculture  products  from 
Peru (€348 million) increasing by 3.2% from 2018. The EU remains the first destination 
of Peruvian coffee (50% of total exports).  

  Preparations  of  vegetables  (HS20),  which  account  for  10%  of  total  of  agriculture 

products from Peru (€224 million) raised by 4.7%. 

  Edible vegetables (HS 07) which account  for 7% of total of agriculture products from 
Peru  (€164  million)  raised  by  8.6%.  The  key  export  product  remains  fresh  asparagus 
(66% of total  vegetable  exports) with  an increase of 8%,  followed by onions  (11% of 
total  vegetables  and  increasing  by  32%),  artichokes  (8%  of  total  vegetables)  and  peas 
(almost 4% of total vegetables with a 24% increase). New products are now exported to 
the  EU,  such  as  dried  mushrooms  and  sweet  potatoes  increasing  respectively  +128% 
and 1+91% compared to 2018.  

  Cocoa  (HS  18)  which  represents  5,5%  of  total  exports  to  the  EU  (€124  million)  have 
increased by 16.9% compared to 2018 and revert the negative trend of previous years. 
Cocoa beans constitutes the bulk of cocoa exported (increasing by 7% and 62% of total 
cacao  exports),  followed  by  cocoa  fat  (increasing  by  29%  and  35%  of  total  cocoa), 
while cocoa powder registerd a 31% decrease.  

In  2019,  Peru  exports  of  agrifood  products  to  the  EU  accounted  for  43%  of  total  exports 
compared to 27% in 2013, the year before the Trade Agreement. 

For certain sensitive products, the Trade Agreement provides tariff rate quotas for EU exports 
to  Ecuador  and  vice-versa.  The  tables  below  provide  the  utilisation  rate  of  these  quotas  by 
exports the EU and from Peru, respectively.   

TRQs granted by Peru to the EU 

Utilization of TRQs by the EU28  in 2019  

Butter 
Cheese 
Ice cream 
Milk powder 
Milk for babies 
Sugar confectionery 
Coffee 
Sugar 
Rum 

2018 
100% 
5% 
100% 
100% 
0% 
2% 
0% 
0% 
27% 

2019 
0% 
0.06% 
86% 
52% 
0% 
0% 
0% 
0% 
100% 

Source: SUNAT (Peruvian customs) 

95 

 
 
 
 
 
 
 
 
TRQs granted by the EU to Peru 

Utilization of TRQs by Peru in 2019  

5.4 

Trade in services and Foreign Direct Investments 

Trade in Services 

Colombia 

Bilateral  trade  in  services  between  the  EU  and  Colombia  increased  by  3.1%  in  2018 
compared to 2017, totaling € 4.9 billion. Both EU exports and Colombian exports increased 
during this period of time by 1.3% and 7.3% respectively. 

Ecuador 

In 2018, bilateral trade in services between the EU and Ecuador increased by 1.6% amounting 
to EUR 1.6 billion, a much slower rate than in the previous period (+8.5% in 2017/2016). EU 
exports of services amounted to EUR 1 billion, a 5% increase year-on-year while Ecuadorian 
exports (EUR 588 million) fell by  4.4%, in contrast  with  the  growing trend of the previous 
five years. These results have increased the EU trade in services surplus by 20%.   

Peru 

In 2018, EU-Peru bilateral trade in services amounted to € 3.05 billion. While EU exports 
(€1.9  billion)  increased  5%,  Peruvian  exports  (€1.16  billion)  decreased  by  -8.7%.  Balance 
remains positive for the EU. 

96 

201720182019BeefBeef3.440t (carcass weight eq.)0%0%0%PigmeatPigmeat6.400t0%0%0%PoultryPoultry12.000t0%0%0%DairyMilk powders & concentrated4.800t0%0%0%DairyMilk, concentrated9.600t0%0%0%DairyYogurt48t0%0%0%DairyButtermilk3.040t0%0%0%DairyButter800t0%0%0%DairyCheese4.000t0%0%0%F&VGarlic1.200t54%0%6%F&VSweetcorn1.120t96%98%95%MushroomsMushrooms (Agaricus), prepared or preserved160t0%0%0%CerealsMaize16.000t13%15%10%CerealsRice54.400t0%0%0%SugarSugar25.960t (in raw sugar eq.)100%9%17%Sugar productsHigh sugar content products11.800t0%0%0%PreparationsIce cream240t0%0%0%AlcoholsRum1.600hl (pure alcohol eq.)0%6%0%Utilisation rate of TRQs opened by the EU to PeruSectorTRQ descriptionTRQ QuantityUnitUtilisation in TRQ period ending in: 
 
 
 
 
 
 
 
 
 
 
Foreign Direct Investment (FDI) 

Colombia 

The EU - as EU27 - remains the first foreign investor in Colombia, totaling € 16.7 billion 
of  FDI  stocks  in  2018.  Colombian  FDI  stocks  in  the  EU  increased  by  20.4%  since  2017 
totaling € 5.6 billion in 2018. 

Ecuador 

EU27 FDI stocks in Ecuador amounted to EUR5.7 billion, an increase of 14% compared to 
the previous year. Ecuadorian FDI stocks in the EU barely increased by 0.7% reaching EUR 
151 million,  at the same level as in 2017, but 38% less than in 2016.  

According to the Central Bank of Ecuador, the EU remained, for the fourth year in a row, 
the  largest  foreign  investor  in  Ecuador  (USD  337  million)  representing  35%  of  the  total 
FDI inflows to Ecuador in 2018 (USD 996 million).  

Peru 
In 2018, total EU27 FDI outward stocks to Peru remain almost the same as in 2017, namely 
€16.2 bio.  Instead inwards FDI stocks from Peru decreased by 14%.The EU27 remains the 
first investor in Peru.  

On  the  contrary,  FDI  flows  registered  significative  changes  on  this  period.  For  EU27 
investments  in  Peru  flows  decreased  -38%  while  flows  of  Peruvian  investments  in  the  EU 
increased +57%.   

6. 

CONCLUSIONS  

The  Trade  Agreement  offers  a  sound  institutional  framework  for  bilateral  trade  and 
investment  between  the  EU  and  the  three  Andean  partners.  The  implementation  works 
well  overall  with  progress  on  many  areas,  although  some  challenges  persist  as  outlined  in 
section  2.  Regular  meetings  of 
institutional  bodies  are  valuable  channels  of 
communication that allow advancing on implementation issues and exchanging information. 
Since 2019, the joint minutes of all committee meetings are publicly available on the Europa 
website65. 

the 

The Trade Agreement supports economic development by providing new outlets for exports, 
diversifications and opportunities for SMEs. Work has also intensified on the implementation 
of the Trade and Sustainable Development (TSD) chapter of the Agreement. In line with the 
15- points action plan on trade and sustainable development66, the Commission sharpened its 
monitoring and analysis of compliance with TSD commitments, with Peru a concrete example 
of the increased assertiveness by the Commission in this regard.  

The ex post evaluation of the Trade Agreement started in 2020 will analyse the economic, 
the 
social,  human  rights  (including 

labour  rights)  and  environmental 

impacts  of 

65 They can be found here:   https://trade.ec.europa.eu/doclib/press/index.cfm?id=2100  
66 The plan can be consulted here: https://trade.ec.europa.eu/doclib/docs/2018/february/tradoc_156618.pdf  

97 

 
 
 
                                                 
implementation  of  the  Agreement  and  will  provide  useful  analysis  and  insight  for  the 
implementation work.67 

67 More information on the ongoing ex post evaluation can  be  found here:  https://ec.europa.eu/info/law/better-
regulation/have-your-say/initiatives/2085-Ex-post-evaluation-of-the-EU-Colombia-Ecuador-Peru-Trade-
Agreement  

98 

 
 
 
 
                                                 
7. 

STATISTICS 

 COLOMBIA 

99 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Colombia (mio €)Imports5 8514 8555 0444 5814 260Exports6 0375 0845 4555 5546 151Balance1852294109731 891Share Colombia in EU27 trade with Extra-EU27Imports0.4%0.3%0.3%0.2%0.2%Exports0.3%0.3%0.3%0.3%0.3%Total (I+E)0.3%0.3%0.3%0.3%0.3%Share EU27 in trade Colombia with worldImports14.3%12.6%13.7%13.9%14.0%Exports14.9%11.3%12.3%11.0%11.1%Total (I+E)14.5%12.0%13.1%12.6%12.8%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Colombia: IMF DotsTotal merchandise trade EU27 with Colombia (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports4 5814 260-321-7.0%Imports1 907 5651 934 94427 3791.4%Exports5 5546 15159610.7%Exports2 059 8822 132 01572 1333.5%Balance9731 891918Balance152 317197 07144 754Total trade10 13610 4112752.7%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Colombia (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports1 8671 934673.6%Imports118 891121 6442 7532.3%Exports3734426918.6%Exports169 000181 82512 8257.6%Balance-1 494-1 4923Balance50 10960 18110 072Total trade2 2412 3771366.1%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Colombia (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports2 7142 326-388-14.3%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports5 1815 70852710.2%EU27 exports1 890 8821 950 19059 3093.1%Balance2 4683 383915Balance102 208136 89034 682Total trade7 8958 0341391.8%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Colombia (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports1 4241 5281037.3%Imports824 543824 015-528-0.1%Exports3 3313 376451.3%Exports928 420968 64840 2284.3%Balance1 9071 848-59Balance103 877144 63340 756Total trade4 7554 9041483.1%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Colombia (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports1 4751 3371 3311 4241 528Imports642 682776 924784 743824 543824 015Exports2 2032 5202 6433 3313 376Exports750 713849 023855 477928 420968 648Balance7281 1831 3121 9071 848Balance108 03172 09970 734103 877144 633Total trade3 6773 8573 9744 7554 904Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Colombia (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward3 4014 6425 588Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward15 44521 32515 09015 83516 776Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward-665815882Inward143 012803 285328 703209 462-67 421Outward-1081 940-34367Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsColombiaColombia20182019Extra-EU27Colombia2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Colombia01 0002 0003 0004 0005 0006 0007 00020152016201720182019Merchandise trade EU27 with Colombia (mio €)ImportsExportsBalance 
 
 
 
 
ECUADOR 

100 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Ecuador (mio €)Imports2 4392 5852 8312 8622 860Exports1 9121 5902 1032 2422 311Balance-527-995-728-619-549Share Ecuador in EU27 trade with Extra-EU27Imports0.1%0.2%0.2%0.2%0.1%Exports0.1%0.1%0.1%0.1%0.1%Total (I+E)0.1%0.1%0.1%0.1%0.1%Share EU27 in trade Ecuador with worldImports11.2%11.2%12.5%12.5%12.4%Exports14.2%16.0%15.6%14.3%11.0%Total (I+E)12.6%13.6%14.0%13.3%11.7%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Ecuador: IMF DotsTotal merchandise trade EU27 with Ecuador (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports2 8622 860-2-0.1%Imports1 907 5651 934 94427 3791.4%Exports2 2422 311683.0%Exports2 059 8822 132 01572 1333.5%Balance-619-54970Balance152 317197 07144 754Total trade5 1045 170671.3%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Ecuador (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports1 5311 462-69-4.5%Imports118 891121 6442 7532.3%Exports1321552317.3%Exports169 000181 82512 8257.6%Balance-1 399-1 30891Balance50 10960 18110 072Total trade1 6631 617-46-2.8%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Ecuador (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports1 3311 397675.0%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports2 1102 156462.2%EU27 exports1 890 8821 950 19059 3093.1%Balance780758-21Balance102 208136 89034 682Total trade3 4413 5531133.3%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Ecuador (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports615588-27-4.4%Imports824 543824 015-528-0.1%Exports1 0131 065525.2%Exports928 420968 64840 2284.3%Balance39847779Balance103 877144 63340 756Total trade1 6271 653251.6%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Ecuador (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports394420526615588Imports642 682776 924784 743824 543824 015Exports9641 0209741 0131 065Exports750 713849 023855 477928 420968 648Balance570600447398477Balance108 03172 09970 734103 877144 633Total trade1 3581 4401 5001 6271 653Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Ecuador (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward245150151Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward5 1338 5315 9454 9635 663Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward-93-1100Inward143 012803 285328 703209 462-67 421Outward1 027251375Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsEcuadorEcuador20182019Extra-EU27Ecuador2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Ecuador-2 000-1 00001 0002 0003 0004 00020152016201720182019Merchandise trade EU27 with Ecuador (mio €)ImportsExportsBalance 
 
 
 
 
PERU

101 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Peru (mio €)Imports4 6864 8095 7715 6635 284Exports3 4803 4243 8513 5343 759Balance-1 206-1 385-1 920-2 129-1 526Share Peru in EU27 trade with Extra-EU27Imports0.3%0.3%0.3%0.3%0.3%Exports0.2%0.2%0.2%0.2%0.2%Total (I+E)0.2%0.2%0.3%0.2%0.2%Share EU27 in trade Peru with worldImports10.9%11.3%11.6%11.4%11.4%Exports14.6%13.3%13.1%13.7%13.5%Total (I+E)12.6%12.3%12.4%12.6%12.5%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Peru: IMF DotsTotal merchandise trade EU27 with Peru (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports5 6635 284-378-6.7%Imports1 907 5651 934 94427 3791.4%Exports3 5343 7592256.4%Exports2 059 8822 132 01572 1333.5%Balance-2 129-1 526603Balance152 317197 07144 754Total trade9 1979 043-154-1.7%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Peru (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports1 9562 25429815.2%Imports118 891121 6442 7532.3%Exports215230167.3%Exports169 000181 82512 8257.6%Balance-1 741-2 023-282Balance50 10960 18110 072Total trade2 1702 48431414.4%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Peru (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports3 7073 031-676-18.2%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports3 3193 5282096.3%EU27 exports1 890 8821 950 19059 3093.1%Balance-388497885Balance102 208136 89034 682Total trade7 0266 559-467-6.6%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Peru (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports1 2721 161-111-8.7%Imports824 543824 015-528-0.1%Exports1 7981 888905.0%Exports928 420968 64840 2284.3%Balance527727200Balance103 877144 63340 756Total trade3 0703 049-21-0.7%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Peru (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports7529331 0231 2721 161Imports642 682776 924784 743824 543824 015Exports1 2171 5501 4961 7981 888Exports750 713849 023855 477928 420968 648Balance465618473527727Balance108 03172 09970 734103 877144 633Total trade1 9702 4832 5193 0703 049Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Peru (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward2 7043 1273 8293 298Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward9 44912 91016 61016 23516 171Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward1 626735132208Inward143 012803 285328 703209 462-67 421Outward-1 4092 3804 016682420Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsPeruPeru20182019Extra-EU27Peru2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Peru-4 000-2 00002 0004 0006 0008 00020152016201720182019Merchandise trade EU27 with Peru (mio €)ImportsExportsBalance 
 
 
 
ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF PART IV OF 
THE  ASSOCIATION  AGREEMENT  BETWEEN  THE  EU  AND  ITS  MEMBER 
STATES AND CENTRAL AMERICA 

1. 

INTRODUCTION 

The  Association  Agreement  between  the  EU  and  its  Member  States,  on  the  one  hand,  and 
Central America, on the other (hereinafter referred to as the "Association Agreement") was 
signed  on  29  June  2012.  The  trade  pillar  (Part  IV)  of  the  Association  Agreement  has  been 
provisionally  applied  for  six  years,  i.e.  since  1  August  2013  with  Honduras,  Nicaragua  and 
Panama, since 1 October 2013 with Costa Rica and El Salvador, and since 1 December 2013 
with Guatemala.  

Under Article 13 of Regulation (EU) No 20/2013 implementing the bilateral safeguard clause 
and the stabilisation mechanism for bananas of the Association Agreement68, the Commission 
committed  to  submit  an  annual  report  to  the  European  Parliament  and  the  Council  on  the 
application,  implementation  and  fulfilment  of  obligations  of  the  Agreement  and  the 
Regulation. This information sheet also responds to this requirement.   

2. 

MAIN IMPLEMENTATION ISSUES 

2.1   Main open issues, progress and follow-up 

In  2019,  the  EU  continued  to  monitor  compliance  with  the  commitments  under  the 
Association Agreement  to ensure its effective implementation. Last year, the EU and Central 
America continued their regular meeings to discuss implementation issues. The EU pursued a 
number of  market access issues  with Central America that have a particular impact on  EU 
exports  of  agricultural  products  to  these  countries.  This  includes  discriminatory  tax 
treatment of imported beer to Costa Rica, the slow approval process in certain cases of export 
applications of EU Member States in the area of sanitary and phytosanitary (SPS) measures as 
well  as  occasional  measures  or  irritants  that  may  impede  the  full  utilisation  of  trade 
preferences (e.g. measures on the administration of tariff rate quotas, transparency issues and 
non tariff barriers).  

To address problems in claiming preferential tariffs through the EUR.1 movement certifcates, 
both parties have worked out a compromise on the interpretation of the provisions pertaining 
to  the  rules  of  origin,  in  such  a  way  so  as  to  expedite  the  process  without  unnecessary 
administrative  hurdles.  The  EU  and  Central  America  finalised  the  last  details  of  these 
explanatory notes  for Customs that will be used  as common interpretative rules to  facilitate 
documentary  proofs  for  preferential  origin.  In  addition,  as  a  trade  facilitating  measure  at 
import,  Central  America  as  a  block,  introduced  a  single  administrative  document  for 
customs  declarations,  which  allows  them  to  meet  their  commitment  under  the  Association 
Agreement in this area. 

68 OJ L 17, 19.1.2013, p. 13. 

102 

 
 
 
 
 
 
 
                                                 
2.2 

Progress in the implementation of trade and sustainable development provisions 

The implementation of the Trade and Sustainable Development (TSD) chapter of Association 
Agreement  gained  traction  in  2019.  The  meeting  of  the  Board  on  Trade  and  Sustainable 
Development took place in June 2019 (see details below).  

As  per  the  approach  developed  for  other  trade  agreements,  the  EU  worked  on  a  basis  of 
priority issues established for each partner country, in line with the European Commission’s 
15-Point Action Plan on Trade and Sustainable Development69 released in February 2018. In 
Central America, the emphasis is on the labour dimension where particular challenges exist. 
Priorities focused on El Salvador, Guatemala, Honduras and Nicaragua, where labour issues 
(as  identified  by  the  International  Labour  Organisation)  are  more  prominent.  Priority  issues 
discussed with all six countries related mostly to freedom of association, social dialogue, child 
labour and forced labour.  

On  environment,  engagement  between  the  Parties  focused  on  the  implementation  of 
provisions  under  the  seven  Multilateral  Environmental  Agreements  (MEAs)  covered  under 
the  TSD  chapter,  with  a  particular  focus  on  the  Parties’  efforts  in  the  domain  of  climate 
change,  in  line  with  their  commitments  under  the  United  Nation  Framework  Convention 
Climate Change (UNFCCC).  

A  number  of  cooperation  activities  accompanied  the  regular  TSD  implementation  work. 
Among others, activities continued on the implementation of a project funded by the EU and 
carried  out  by  the  ILO,  with  the  objective  of  promoting  compliance  with  international 
labour standards in El Salvador and Guatemala. The project included a number of activities 
in both countries, focussing in particular on supporting tripartite consultation mechanisms. In 
El Salvador, the project provided key support to the reactivation of the High Labour Council. 
Meanwhile,  Costa  Rica  and  Panama  were  two  of  nine  Latin  American  countries  to  benefit 
from activities under a new project on responsible business conduct, set to last from 2019 – 
2022. The project, implemented in partnership with the OHCHR, OECD and ILO, initiated a 
number  of  activities  aimed  at  supporting  national  action  plans  on  responsible  business 
conduct, and capacity building on themes related to due diligence and decent work. 

TSD Board Meeting 

The  main  occasion  for  the  Parties  to  take  stock  on  the  progress  achieved  was  at  the  annual 
meeting of the Board on Trade and Sustainable Development, which took place on 24 and 
25  June  2019  in  Antigua  (Guatemala),  alongside  the  Association  Committee  meeting.  The 
detailed minutes of the TSD Board meeting are available on the Commission’s website70.   

With Nicaragua, the EU focused on the alignment of some of the country’s labour provisions 
with  ILO  standards,  including  in  relation  to  Convention  117  on  social  policy,  as  well  as 
aligning the age of compulsory education (12 years ) with the minimum age of employment 
(14  years).  Nicaragua  also  highlighted  policy  actions  taken  to  ensure  labour  rights,  with  a 
focus on gender, child labour, health and safety and work, and freedom of association. 

69 Available at https://trade.ec.europa.eu/doclib/docs/2018/february/tradoc_156618.pdf 
70https://trade.ec.europa.eu/doclib/docs/2019/july/tradoc_158201.%20201906%20TSD%20joint%20minutes
%20EN.pdf 

103 

 
 
 
 
 
 
 
 
 
                                                 
Costa Rica highlighted progress in the areas of collective rights, eradication of forced labour 
and child labour, and non-discrimination. The EU welcomed progress made in particular on 
gender equality, whilst also focusing, as an issue of ongoing work, on actions taken to boost 
transition from the informal to the formal economy. 

With  Guatemala,  the  focus  was  on  freedom  of  association  and  collective  bargaining  rights. 
Guatemala referred to the decision reached by the ILO governing body to close a complaint 
concerning a breach of ILO Convention No. 87. Guatemala highlighted a number of actions 
taken to address concerns in these areas, including the establishment of a Tripartite National 
Commission on Labour Relations and Freedom of Association, and a roadmap on freedom of 
association  and  collective  bargaining.  The  EU  welcomed  the  progress  made,  noting  the 
importance of full  implementation of the roadmap and advancing on  full implementation  of 
fundamental ILO conventions. 

With Honduras, the focus was on ILO Convention No. 29 (forced labour) and No. 182 (worst 
forms  of  child  labour).  Honduras  highlighted  a  number  of  policy  initiatives  taken  under  a 
Strategic  Plan  against  Sexual  Exploitation  and  Trafficking  of  Persons,  as  well  as  the 
implementation  of  the  Second  National  Plan  of  Action  on  child  labour.  The  country  also 
highlighted  initiatives  taken  with  a  view  of  improving  labour  inspections,  notably  the 
implementation of the Labour Inspection Law. The EU welcomed progress in these areas, and 
highlighted  the  need  to  address  the  ILO  case  on  Honduras  regarding  Convention  No.  87 
(freedom of association). 

With El Salvador, the discussion centred on ILO Convention No. 144 (tripartite consultation). 
El  Salvador  explained  that,  although  the  new  government  lacked  time  to  implement  the 
envisaged  actions,  it  was  committed  to  the  reactivation  of  the  High  Labour  Council  on 
Tripartite Labour Consultation, which had been inactive since 2012. Following the meeting of 
the  TSD  Board,  the  High  Labour  Council  was  reactivated  in  September  2019.  The  EU 
welcomed this step, while noting the need to ensure the proper functioning of the reactivated 
tripartite  body,  as  well  as  the  need  for  further  measures  to  address  child  and  forced  labour, 
gender discrimination and violence against trade unionists. 

Panama reported on progress made in implementing ILO Conventions No. 29 and 105 (forced 
labour), No. 87 and 98 (Freedom  of  Association), and No. 81 (labour inspections). The EU 
welcomed  progress  in  particular  within  the  area  of  child  labour,  and  requested  further 
information  on  actions  within  the  realm  of  collective  labour  relations  and  tripartite 
consultation. 

On environment, the discussion focused on efforts taken by all parties on climate change, in 
line  with  the  UNFCCC.  Costa  Rica  highlighted  its  Decarbonisation  Plan,  which  focuses  on 
five  sectors,  aiming  at  carbon  neutrality  by  2050.  Guatemala  noted  work  on  changing  the 
energy matrix and development  of renewable  energy, highlighting  alignment with  the UN’s 
Sustainable  Development  Goals.  Panama  also  highlighted  national  strategies  on  climate 
change, biodiversity,  and  forests. All  parties provided updates on the implementation  of the 
CITES  and  Basel  Conventions;  El  Salvador  and  Honduras  noted  efforts  on 
the 
implementation of the Stockholm Convention. 

104 

 
 
 
 
Civil Society Dialogue 

Engagement with civil society also continued throughout the year, most notably with the Civil 
Society  Dialogue  held  back-to-back  with  the  meeting  of  the  TSD  Board.  For  the  first  time 
ever, members from all six Central American Domestic Advisory Groups were present at the 
event, with financial assistance from the EU project supporting civil society monitoring and 
participation in FTA implementation.  

The  TSD  implementation  work  carried  out  in  2019  centred  around  the  EU’s  more  assertive 
and focused efforts, in line with its 15-point action plan. In 2020, implementation efforts will 
continue  based  on  this  approach,  further  addressing  key  labour  concerns,  which  remain 
outstanding in several partner countries. 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The body implementing the agreement is the Association Committee. The fifth meeting of the 
Association  Committee  and  of  its  sub-committees  (Market  access,  Customs  and  rules  of 
origin,  Technical  Barriers  to  Trade  (TBT),  SPS,  Intellectual  Property  Rights  (Geographical 
Indications), Board on Trade and Sustainable Development, Government  Procurement) took 
place  between  18  and  27  June,  2019,  in  Guatemala.  An  important  outcome  of  that  meeting 
was the final technical approval of the text of a Protocol on the incorporation of Croatia to the 
Association  Agreement.  EU  internal  administrative  procedures  for  the  adoption  of  the 
Protocol began soon thereafter and are still ongoing. 

Central American parties have successfully engaged with the EU in the collection of relevant 
and reliable statistical  data to  assess the use of tariff preferences by  EU  exporters.  In 2019, 
Central  America  made  a  substantial  effort  in  this  regard  and  provided  with  data  for  each 
country in the region. 

The  Sub-committee  on  customs,  trade  facilitation  and  rules  of  origin  focused  on  the 
preparation  of  several  pending  decisions  for  approval  by  the  Association  Council,  which  in 
particular adopted explanatory notes that would set out the procedure for the wording used on 
EUR1  movement  certificates  where  it  differs  slightly  from  the  specimen  in  the  Association 
Agreement. Work on this issue continued in the second half 2019. A technical agreement was 
reached on updates for the product specific rules of origin for the Harmonised System 2012 
and 2017 and the process of adoption of the decision wawas launched and it is still ongoing. 
The use of tariff rate quota for products such as tuna and textiles imported into the EU was 
also discussed. 

Central  America  informed  the  EU  about  the  conclusion  of  an  administrative  cooperation 
agreement with countries of the Andean Community (Bolivia, Colombia, Ecuador and Peru), 
which would provide an up-to-date legal base for cumulation of origin with these countries, 
pursuant  to  the  Agreement.  In  addition,  as  a  trade  facilitating  measure  at  import,  Central 
America,  as  a  block,  introduced  a  single  administrative  document  for  customs  declarations, 
which allows them to meet their commitment under the Association Agreement in this area. 

105 

 
 
 
 
 
In  the  sub-committee  on  market  access  the  Parties  exchanged  information  on  agri-food 
trade flows, including the use of preferences and the Banana Stabilisation Mechanism state of 
play.  The  parties  also  agreed  to  exchange  information  on  the  use  of  tariff  rate  quotas  -on  a 
monthly basis- to improve controls and agreed on the need to enhance their utilization.  
The EU reiterated its longstanding call to discontinue the discriminatory nature of the taxation 
scheme  applicable  on  alcoholic  beverages  and  beers  in  line  with  Costa  Rica’s  commitment 
under the Joint Declaration to the Association Agreement to revise the scheme by 2014. The 
EU  also  continued  to  insist  on  cooperation  by  Costa  Rica  in  respect  of  commitments 
regarding  the  spirits  sector  in  order  to  assess  its  domestic  taxation  scheme.  This  sector  was 
also  subject  to  a  review  commitment  by  Costa  Rica  by  2017.  For  spirit  drinks  Costa  Rica 
considers that there is no discrimination between nationally produced and imported products, 
concerning the regime applicable to beer. However, a case was brought before Costa Rica’s 
Constitutional Chamber and the conclusion of the proceedings is still pending. 

In  the  case  of  Panama,  the  EU  raised  concerns  over  an  initiation  of  an  investigation  on 
safeguard measures concerning the importation of pig meat. Concerns were also raised by the 
EU with Honduras, El Salvador, Nicaragua and Panama on their procedures for the import of 
EU agri-food products (onions, wine and cheeses).  

Following  from  commitments  in  the  Agreement71,  and  pursuant  to  a  request  by  the  Central 
American  countries,  the  preferential  treatment  for  bananas  in  the  Central  American  region 
was  examined.  The  examination  concluded  without  the  possiblity  to  improve  the  existing 
preferential  treatment.  The  preferential  customs  duty  for  fresh  banana  remains  fixed  at  €75 
per tonne (see also Section 4 below reporting on the stabilisation mechanism).  

The  sub-committee  on  Sanitary  and  Phytosanitary  Measures  (SPS)  delivered  positive 
outcomes and consolidated progress was made to date. El Salvador started to implement the 
prelisting  principle  for  EU  establishments  exporting  products  of  animal  origin.  El  Salvador 
indicated that all the establishments that are approved by the EU are automatically approved 
by the sanitary authority of El Salvador. Thus all EU listed establishments of animal products 
are eligible to export products covered by the prelisting procedure to El Salvador. 

Both parties raised a number of trade irritants.  

  The EU flagged significant concerns with the lack of progress on a number of Member 
States’  applications  approvals  for  exporting  to  Panama.  In  addition,  Panama  has 
imposed  restrictions  on  exports  from  certain  Member  States  due  to  the  presence  of 
African Swine Fever for products from certain Member States, and has not applied the 
regionalisation provisions in the Association Agreement and did not take into account 
the strict control measures applied EU-wide. 

  The prelisting mechanism is not yet applied consistently and in a transparent manner 

by Honduras, Guatemala and Nicaragua. 

  Central America, on its part, expressed concerns over the EU policy on the Maximum 
Residue Levels (MRLs) for certain pesticides in agriculture products, which are lower 
than  those  established  by  Codex  Alimentarius.  Central  America  claims  that  the  new 
requirements  risk  having  a  major  impact  on  their  exports  of  bananas,  a  major 

71 Cf. paragraph 3, Appendix 3, Annex 1 of the Agreement 

106 

 
 
 
 
 
                                                 
agricultural  export  product.  The  six  countries  (Costa  Rica,  El  Salvador,  Panama, 
Honduras,  Nicaragua,  Guatemala)  tabled  a  joint  declaration  on  pesticides’  MRLs  to 
express their concerns. The new EU plant health rules were also the subject of lenghty 
discussions. 

More generally, the EU highlighted the following core issues: 

i) 

ii) 

iii) 

The  importance  for  Central  America  to  fulfill  procedures  established  in  the 
Association  Agreement  to  ensure  that  market  access  requests  are  handled  in  a 
timely  and  transparent  manner,  including  the  approval  of  lists  of  establishments 
and their publication, among others. 
The importance of complying with standards, guidelines and recommendations of 
the international standard setting organisations. 
The  need  to  eliminate  from  health  certficates  any  requirement  imposing  that  the 
animals from which the products orginate are born and raised in the exporting EU 
Member State. 

Central America made several requests of technical assistance, including to provide support to 
fulfill the requirements to export beef to the EU.  

At  the  sub-committee  on  Technical  Barriers  to  Trade,  Central  America  claimed  that  the 
sustainability  requirements  set  out  by  the  new  EU  Renewable  Energy  Directive  (REDII) 
applicable to biofuels would affect their exports of palm oil (an issue of concern in particular 
for  Guatemala).  The  EU,  on  its  part,  expressed  concerns  in  regard  of  the  incomplete 
implementation of the regional technical regulations as set out in Annex XX of the Agreement 
(Central America has 18 regulations in force out of 20 and Panama only 12). 

As  regards  Intellectual  Property  Rights/Geographical  Indications  (GIs),  Parmigiano 
Reggiano is the only EU GI out of 114 GIs for which the recognition process is not finalised 
in Guatemala. The EU expressed its opposition to Guatemala’s initial administrative decision 
to declare the individual terms ‘Parmigiano’ (and its translation ‘Parmesano’) and ‘Reggiano’ 
as generic. The case is now pending before Guatemala’s Constitutional Court and no timeline 
with  regard to  an expected decision could  be provided. The EU also  reiteraited its concerns 
about  the  decision  taken  by  Honduras  in  2016  to  declare  several  names  relating  to  EU  GIs 
(such  as  ‘Grana  Padano’)  as  generic.  The  matter  was  raised  at  the  IPR  sub-committee 
meetings in 2018 and 2019 and the lists of “ generic terms” were withdrawn later in the year. 

Furthermore, the parties continued their work in a text that clarifies the internal procedures for 
future incorporation of Geographical Indications in the respective Central American countries 
and in the EU. 

At  the  meeting  of  the  ad  hoc  sub-committee  on  government  procurement  the  EU 
reminded the Central American partners of the importance of transparency obligations in the 
procurement process. EU companies had been facing a number of issues in this regard in the 
past, in particular in Panama the vast majority of which were successfully resolved following 
intervention from the EU. The Association Agreement provides for a single contact point of 
access  at  the  regional  level  for  all  six  partners,  in  the  form  of  a  webpage  that  would  allow 
companies  to  access  all  necessary  information  on  the  procurement  processes  and  tenders. 

107 

 
 
Central  American  partners  still  have  not  established  this  contact  point.  Central  America 
requested  technical  assistance  to  establish  the  single  contact  point  and  EU  is  favourably 
considering it. 

4. 

ACTIVITIES SUBJECT TO SPECIFIC MONITORING 

Article 15 of Regulation (EU) No 20/201372 (the ‘Regulation’) provides for the stabilisation 
mechanism for fresh bananas (HS code 08 03 90 10). When the annual trigger volume of 
imports per country  in  the agreement is  met, the Commission  examines the impact  of these 
imports  on  EU’s  market  for  bananas  and  takes  a  decision  to  either  temporarily  suspend  the 
preferential  customs  duty  or  determines  that  such  suspension  is  not  appropriate.  The 
stabilisation mechanism applied until 31 December 2019.   

The Association  Agreement  provides a preferential  customs duty on bananas under heading 
0803.00.19  (fresh  bananas),  progressively  reduced  since  the  date  of  application  of  the 
Agreement until the  year 2020 (following the schedule indicated in a tariff reduction table). 
This special treatment is linked to a stabilisation clause that sets out an annual trigger volume 
for imports from each Central American country during the transition period. If, as a result of 
the reduction of customs duties, the level of imports of bananas is such as to cause or threaten 
to cause injury to the EU banana sector, the Regulation establishes the appropriate procedures 
to be adopted to avoid serious harm to this sector.   

In this context, and in accordance with Articles 3 and 13 of the Regulation, the Commission 
has  been  monitoring  the  evolution  of  imports  of  fresh  bananas  from  the  Central  American 
countries party to the free trade agreement (Guatemala, Honduras, Nicaragua, Panama, Costa 
Rica and El Salvador).  

% 

Trigger level 
(tonnes) 

Total imports 
(tonnes) 

2019 Imports of 
fresh bananas 
(Central American 
Countries) 
Guatemala 
Honduras 
Nicaragua 
Panama 
Costa Rica 
Salvador 
Total  
Banana  imports  from  both  Guatemala  and  Nicaragua  exceeded  their  individual  trigger  level 
for  2019,  as  they  did  in  previous  years.  In  line  with  Article  15(3)  of  the  Regulation,  at  the 
moment when the trigger level was reached, the Commission examined the impact on the EU 

195 277.556 
20 088.362 
71 512.201 
274 452.272 
1 117 081.976 
0 
1 753 920.000 

72 500 
72 500 
14 500 
543 750 
1 486 250 
2 900 
2 192 400 

269.3% 
27.7% 
493.2% 
50.5% 
75.2% 
0% 
80% 

72  Regulation  (EU)  No  20/2013  of  the  European  Parliament  and  of  the  Council  of  15  January  2013 
implementing  the  bilateral  safeguard  clause  and  the  stabilisation  mechanism  for  bananas  of  the  Agreement 
establishing an Association between the European Union and its Member States, on the one hand, and Central 
America  on the other, of the  other part as amended by  Regulation (EU) 2017/540 of the European Parliament 
and of the Council of 15 March 2017.  

108 

 
 
 
 
 
 
                                                 
 
market taking into account, inter alia, the effects on the price level, developments of imports 
from other sources and the overall stability of the EU market.  

Based  on  this  examination,  the  Commission  concluded  that  the  suspension  of  the 
preferential duty on imports of fresh bananas originating in Guatemala and Nicaragua 
was not appropriate as the share of imports from these two countries in the overall imports 
of  bananas  was  very  small  at  the  moment  the  respective  thresholds  were  exceeded.  Imports 
from  the  other  countries  remained  far  below  the  thresholds  defined  for  them;  and  these 
imports  did  not  show  any  negative  effect  on  the  EU  wholesale  price  for  bananas,  which 
remained fairly stable in 2019. The overall volume of imports of the region was slightly above 
1.75  million  tonnes  which  represent  only  80%  of  the  cumulated  trigger  level  (2.19  million 
tonnes).  

The  Commission  continued  to  closely  monitor  the  situation  until  year-end.  Despite  the  fact 
that  imports  from  Guatemala  and  Nicaragua  continued  to  increase,  the  situation  did  not 
change in substance (e.g. the share of imports from Guatemala and Nicaragua in the overall 
imports  of  bananas  remained  very  low:  1.6%  for  Nicaragua  and  4.3%  for  Guatemala)  and 
there was no indication of any negative impact on the EU market for bananas.  

At  the  end  of  2019,  the  overall  total  import  volume  that  had  benefitted  from  preferential 
treatment  in  Central  America  reached  80%  of  the  total  trigger  level.  These  import  volumes 
were at the same level of the previous year, and did not threaten the EU banana sector. The 
stabilisation mechanism has now expired. In line with the commitment undertaken in the Joint 
declaration to Regulation (EU) 2017/54073 the Commission will continue to carry out regular 
analysis of the state of the market and the  Union banana producers and, if need be, examine 
the situation together with Member States and the stakeholders. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

Even though Central America as a whole exhibited a slowdown in growth, manifested in the 
deceleration in Costa Rica, Honduras and Panama, and the continued recession in Nicaragua, 
the  economic  performance  was  superior  to  that  of  the  South  American  countries.  This  is 
primarily due to favourable conditions in the United States, their main export market, and the 
relative stability of the macro prices, inflation and exchange rates. Inflation targeting in Costa 
Rica, Guatemala and Honduras has contributed to price stability over the past year, while the 
dollarized  economies  of  El  Salvador  and  Panama  have  continued  importing  low  inflation. 
Finally, exchange rates have remained stable in most countries because of the regular inflow 
of foreign currency into the economies, combined with favourable prices for oil and other raw 
materials that have eased the pressure on foreign currency reserves.  

The evolution of macroeconomic variables for the Central American countries was somewhat 
asymmetric. In the case of Costa Rica, economic growth remained moderate with a downward 
trend,  falling  from  2.6%  in  2018  to  2.1%  in  2019,  partly  due  to  a  slowdown  in  aggregate 

73   https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32017R0540&qid=1579189798344&from=EN 

109 

 
 
 
 
 
 
 
                                                 
 
demand  stemming  from  the  fiscal  reform  in  place  since  December  2018.  Meanwhile, 
unemployment  reached  a  relatively  high  12.4%  by  the  end  of  2019.  In  El  Salvador,  GDP 
growth  rose  from  2.5%  in  2018  to  2.9%  in  2019,  with  unemployment  reaching  4.1%  at  the 
end  of  2019.  Guatemala  experienced  higher  growth  in  2019  (3.5%)  as  compared  to  2018 
(3.1%), with unemployment at a low 2.5% in the third quarter of 2019. 

In the case of Honduras, economic growth reached 4.7% in 2018, dropping to 2.7% in 2019 – 
a  result  of  worsening  terms  of  trade.  During  the  third  quarter  of  that  year,  unemployment 
reached 5.7%. Nicaragua is the only country in the area that experienced a recession, due to 
the continued civil unrest prevalent in the nation: economic growth went from -3.8% to -3.9% 
between 2018 and 2019. Finally, Panama exhibited a growth rate of 3.7% in 2018 compared 
to  3.0%  in  2019  (partly  explained  by  a  slowdown  in  the  construction  sector),  with 
unemployment reaching 7.1% at the end of 2019. 

With respect to the nominal variables, there have been more similarities across countries: the 
two  economies  that  have  adopted  inflation  targeting,  Costa  Rica  and  Guatemala,  have 
achieved levels of inflation consistent with their policy goals (2.2% and 2.1% for Costa Rica 
in  2018  and  2019  respectively;  and  3.7%  for  both  years  in  the  case  of  Guatemala). 
Meanwhile,  the  dollarized  economies  –  El  Salvador  and  Panama  –  have  had  low  and  even 
negative  rates  of  inflation  (1.1%  and  0.1%  for  El  Salvador  in  2018  and  2019,  respectively; 
and  0.8%  and  -0.4%  of  Panama  in  2018  and  2019  respectively).  Finally,  Honduras  and 
Nicaragua have had inflation rates hovering 4  –  5.4%:  For  Honduras, inflation  in  2018 was 
4.4%, and in 2019 it went down to 4.0%, whereas Nicaragua had an inflation rate of 4.9% in 
2018, which went up to 5.4% in 2019. 

During 2019, all countries bar Nicaragua experienced an appreciation of their currency with 
respect to the Euro. For both El Salvador and Panama, the gain in value of 2.6% mirrored that 
of  the  US  dollar/Euro  exchange  rate.  The  appreciation  of  the  Guatemalan  currency  was 
similar at 2.7%, while for Honduras the gain in value was 1.0%. Costa Rica experienced the 
largest appreciation: the local currency gained 7.8% of its value, while for Nicaragua, as noted 
above, the depreciation was -2.6% with respect to the Euro. 

It is noteworthy that all countries have substantial deficits in their trade for goods. These 
have been  countered by  the inflow of foreign currency resulting from  surpluses  in  the trade 
for services (in particular, tourism for all countries, and the income derived from the operation 
of the Canal for Panama); net remittances and foreign direct investment. For all countries and 
years the main export destination is the United States (except for Panama in 2018, when the 
main destination was the Netherlands); while the United States is the principal place of origin 
for all imports from the six countries. 

5.2 

Trade in goods 

Overview  

During the last years, the Central American parties have successfully engaged with the EU in 
the collection of relevant and reliable statistical data to assess the use of tariff preferences by 
EU exporters. In 2019, Central America made a substantial effort in this regard and provided 
data for each country of the region.  

Total exports of merchandise from the EU to the Central American countries  continued to 
enjoy robust growth, reaching EUR 6,219 million in 2019, an 8.8% increase with respect to 

110 

 
 
 
 
 
2018.  Imports  also  showed  a  positive  trend,  amounting  to  EUR  5,864  million  in  2019,  a 
growth of 5.2% over 2018.  

As  shown  in  Table  1,  imports  have  been  steadily  increasing  over  the  past  five  years,  while 
exports have had positive growth for all  years excluding 2016. Also, for all years bar 2017, 
the EU has registered a modest trade surplus with Central American countries. 

Table 1: Merchandise trade EU27 - Central America 2015-2019 (million EUR) 

Central 
America 

Costa Rica 

El Salvador 

Guatemala 

Honduras 

Nicaragua 

Panama 

Imports 
Exports 
Balance 
Imports 
Exports 
Balance 
Imports 
Exports 
Balance 
Imports 
Exports 
Balance 
Imports 
Exports 
Balance 
Imports 
Exports 
Balance 
Imports 
Exports 
Balance 

* Source: EUROSTAT  

2015 
4,493 
5,283 
790 
1,840 
872 
-967 
180 
522 
342 
755 
909 
154 
904 
479 
-425 
277 
213 
-64 
537 
2,287 
1,750 

2016 
4,874 
4,980 
106 
2,121 
973 
-1,147 
194 
449 
255 
806 
871 
66 
933 
438 
-495 
263 
227 
-36 
557 
2,021 
1,464 

2017 
5,458 
5,133 
-325 
2,350 
1,019 
-1,331 
233 
457 
224 
932 
954 
22 
1,135 
425 
-710 
310 
236 
-73 
499 
2,042 
1,543 

2018 
5,575 
5,714 
139 
2,422 
974 
-1,449 
201 
732 
532 
899 
948 
48 
1,026 
469 
-557 
334 
184 
-150 
692 
2,407 
1,715 

2019 
5,864 
6,219 
355 
2,576 
1,088 
-1,488 
186 
802 
616 
980 
1,000 
20 
976 
464 
-512 
343 
186 
-157 
803 
2,678 
1,875 

It should be pointed out that if the trade statistics were to include the U.K., there would be a 
change in some of the main observations. The U.K. has had a persistent trade deficit with the 
CA countries throughout the period 2015-2019, averaging almost EUR 300 million each year. 
The  U.K.’s  primary  source  of  imports  within  the  area  is  Costa  Rica  (between  EUR  269 
million  and  EUR  411  million  during  the  last  five  years),  and  its  main  export  destination  is 
Panama (between EUR 154 million and EUR 233 million over that same span).  

111 

 
 
 
 
 
 
 
Trade flows between EU-27 and CA and annual growth in 2019 (million EUR) 

Total flow 

11.8% 
9.5% 
5.5% 
-1.1% 
1.0% 
11.3% 
8.8% 

EU Exports(*) 
1,088 
802 
1,000 
464 
186 
2,678 
6,219 

EU Imports(*) 
6.3% 
2,576 
-7.5% 
186 
9.0% 
980 
-4.9% 
976 
2.7% 
343 
16.1% 
803 
5.2% 
5,864 

Country 
Costa Rica 
El Salvador 
Guatemala 
Honduras 
Nicaragua 
Panama 
TOTAL 
* Source: EUROSTAT  
As shown in Table 2, the main destination of EU exports in CA in 2019 continues to be 
Panama  (EUR  2,678  million,  up  11.8%  from  2018),  while  the  main  country  of  origin  of 
Central America in imports by the EU in 2019 was Costa Rica (EUR 2,576 million; a 6.3% 
increase  from  2018).  Between  2018  and  2019,  EU  exports  to  Central  America  rose  for  all 
countries  except  Nicaragua  and  Honduras,  as  did  imports  from  all  countries,  except  El 
Salvador and Honduras, when compared to figures for 2018. 

30.3% 
3,664 
8.2% 
988 
16.4% 
1,980 
11.9% 
1,439 
4.4% 
530 
3,482 
28.8% 
12,083  100.0% 

Balance 
-1,488 
616 
20 
-512 
-157 
1,875 
355 

Country-by-Country analysis 

Costa  Rica’s  primary  exports  to  the  EU  fall  under  the  category  of  edible  fruits  and  nuts 
(mainly bananas and pineapples). This category saw a slight decrease in the value of exports, 
from EUR 1,253 million in 2018 to EUR 1,202 million in 2019 [46.7% of total exports]  – a 
loss  of  4%.  Meanwhile,  Costa  Rican  exports  of  prepared  vegetables  and  fruits  to  the  EU 
remained unchanged at  EUR 137 million in both 2018 and 2019. Finally, exports of optical, 
surgical and medical equipment have continued their surge reaching EUR 866 million in 2019 
[33.6% of total], representing a 22.5% increase from their level of EUR 706 million in 2008. 
If these trends continue in future years, this product category may become the most important 
of Costa Rica’s exports to the EU showing its lead in diversifying and increasing the added 
value to its export range. 

Mechanical  machinery  remained  the  main  category  of  EU  exports  to  Costa  Rica  – 
EUR 160 million – but fell EUR 10 million with respect to 2018, a decrease of 5.8%; while 
exports  of  electrical  machinery  decreased  by  EUR  20  million  to  EUR 61 million  in  2019. 
Traditionally,  the  second  most  important  export  item,  motor  vehicles,  fell  by  11.9%  from 
EUR 84 million in 2018 to EUR 74 million in 2019. Finally, there was a substantial increase 
in EU exports of mineral fuels and mineral oils to Costa Rica: from EUR 6 million in 2018 to 
EUR 131 million in 2019. 

In the case of El Salvador, all three main export categories to the EU suffered a decrease in 
2019.  Electrical  machinery  and  equipment  fell  from  EUR  53  million  in  2018  to  EUR  38 
million  in  2019.  Meat  preparations  went  from  EUR  53  million  to  EUR  47  million  between 
2018 and 2019, while fish and crustaceans decreased from EUR 29 million to EUR 25 million 
over the same period.  Finally,  exports of coffee  remained  essentially unchanged at EUR 27 
million.  

EU  Exports  to  El  Salvador  took  a  substantial  boost  from  the  purchases  of  aircraft  by  a 
national airline in 2019: jumping from EUR 281 million to EUR 352 over the course of a year 
[44% of all EU exports]. Exports of machinery and mechanical appliances, the second main 

112 

 
 
  
 
 
 
category,  increased  by  9.6%:  from  EUR  101  million  in  2018  to  EUR  111  million  in  2019 
[14% of total].  

Guatemala’s exports of palm oil to the EU went from EUR 254 million in 2018 to EUR 240 
million  in  2019  [24%  of  total  exports],  representing  a  5.6%  decline.  Exports  of  coffee  also 
experienced  a  slight  decrease,  going  from  EUR 134 million  in  2018  to  EUR  128  million  in 
2019  –  linked  to  the  fall  in  international  prices  for  the  commodity  in  that  year.  In  contrast, 
exports of edible fruits and nuts (mainly bananas) had a substantial increase of 41.8%: from 
EUR 94 million to EUR 134 million. Exports of beverages also rose from EUR 59 million to 
EUR 97 million. 

In  2019,  there  was  an  increase  of  5.8%  in  the  EU  exports  of  mechanical  equipment  to 
Guatemala.  The  total  amount  went  from  EUR  189  million  in  2018  to  EUR  199  million  in 
2019  [20%  of  all  exports].  Pharmaceutical  products  also  experienced  a  considerable  gain 
(19.1%), going from EUR 79 million to EUR 94 million. 

Honduras was the only Central American country that experienced a decrease of both exports 
and imports to and from the EU during 2019. Coffee exports to the EU went from EUR 529 
million in 2018 to EUR 513 million in 2019 [52.6% of all exports] – a fall of 2.9%. Similarly, 
exports of palm oil fell by 16.8%, going from EUR 262 million in 2018 to EUR 218 million 
in 2019 [22.3% of total]. An important  category showed a marked improvement: exports of 
apparel and knitted clothing went from EUR 29 million in 2018 to EUR 43 million in 2019; 
while  edible  fruits  and  nuts  (mainly  bananas)  remained  basically  unchanged  at  EUR  48 
million in 2019. 

Machinery  and  mechanical  equipment  continued  to  be  the  main  category  of  EU  exports  to 
Honduras, with a value of EUR 164 million experiencing almost no change between 2018 and 
2019.  However,  exports  of  electrical  machinery  and  equipment  did  suffer  a  17.3%  drop,  as 
sales  went  from  EUR  51  million  in  2018  to  EUR  42  million  in  2019  [9%  of  all  exports]. 
Finally, pharmaceutical products received an 18.5% boost, with exports going from EUR 22 
million in 2018 to EUR 27 million in 2019. 

In the case of Nicaragua, the total flow of trade had a relatively small growth in 2019. The 
behaviour of the three main exports to the EU was mixed. On the one hand, exports of coffee 
experienced a tenuous gain, going from EUR 103 million in 2018 to EUR 105 million in 2019 
[30.6%  of  all  exports].  Meanwhile,  fish  and  crustaceans  had  a  13.1%  growth  –  an  increase 
from  EUR  80  million  in  2018  to  EUR  90  million  in  2019  [26%  of  exports].  As  for  edible 
fruits and nuts (mainly bananas), the volume shrank from EUR 38 million in 2018 to EUR 31 
million in 2019. 

The  EU’s  main  export  to  Nicaragua,  machinery  and  mechanical  appliances,  registered  an 
increase  of  13.1%  rising  from  EUR  35  million  in  2018  to  EUR  40  million  in  2019.  As  for 
electrical machinery and equipment, EU exports remained unchanged at EUR 30 million over 
the period.  

Panama’s main exports to the EU in 2018 – ships, boats and floating structures – suffered an 
important reduction of 46.2%, declining from EUR 225 million in 2018 to EUR 121 million 
in 2019. In contrast, edible fruits and nuts experienced a 5.4% growth, rising from EUR 241 
million in 2018 to EUR 254 million in 2019 [31.6% of total exports]. It is also worthwhile to 
note  that  exports  of  ores,  slag  and  ash,  while  non-existent  in  2018,  amounted  to  EUR  143 

113 

 
 
 
 
 
 
 
 
 
million in 2019. The opening of a large copper mine in Panama in 2019 is expected to result 
in increasing levels of EU imports under this category from the country. 

Exports  from  the  EU  to  Panama  continued  to  be  well  diversified.  The  sales  of  aircraft 
observed an important 86.3% growth: from EUR 242 million in 2018 to EUR 451 million in 
2019 [16.8 of total exports]. Pharmaceutical products went from EUR 326 million in 2018 to 
EUR 395 million in 2019 – an increase of 21.3% [14.7% of EU exports]. As for machinery 
and mechanical appliances, 2019 registered a fall to EUR 209 million, compared to EUR 244 
million in 2018. Overall, the EU continued to register a sizeable trade surplus with Panama. 

5.3 

Trade in agricultural products 

Agriculture  products  continue  to  largely  dominate  Central  American  exports  to  the  EU. 
They  amounted  to  €  3,7  billion  in  2019  that  is  64%  of  total  exports  to  the  EU.  The  figure 
remained stable compared to 2018. In 2019, The main Central American agriculture exports 
were bananas (€ 1 billion), coffee (€ 799 million), pineapple (€ 511), palm oil (€455 million), 
melon  and  water  melons  (€  111  million)  and  vegetables  (€  71  million).  Fish  products 
amounted  to  €  351  million  in  2019  that  is  6%  of  total  exports  to  the  EU.  Fishery  products 
exports  increased  by  7%  compared  to  2018.  Central  American  fishery  exports  to  the  EU  in 
2019, were dominated by frozen shrimps (€132 million) and tuna (€ 75 million),  

EU agriculture exports to Central America amounted to € 630 million in 2019 that is 10% 
of total exports to Central America. EU Agriculture exports to Central America increased by 
5% compared to 2018. In 2019 EU agriculture exports to Central America were dominated by 
wine and spirits (€ 124 million), food preparations (€ 84 million), preparation of cereals (€59 
million), malt starches, inulin (€ 54 million), preparation of vegetable (€ 53 million) and dairy 
products (€ 43 million). Fishery products exports of the EU amounted to (€ 9,5 million) and 
are mainly processed food products.  

The  Agreement  provides  for  tariff  rate  quotas  (TRQs)  which  grant  the  other  party  a 
preferential  tariff  treatment  up  to  the  quota’s  quantitative  threshold.  Above  this  threshold, 
imports are subject to the applicable Most-Favoured Nation (MFN) tariff. 

TRQ granted by the EU to Central American Countries  

The Association  Agreement grants  eight  TRQs to  Central  America on products  that did  not 
have any preferential access to the EU market prior to the entry into force of the Agreement. 
In  2019,  Central  America  used  the  available  TRQs  for  products  originating  in  Central 
America for as outlined in the table below.  

114 

 
 
 
 
 
 
 
 
 
 
n
i
g
i
r
O

Central America 

Central America 
except Panama 

t
i
n
U

ton 

s
t
c
u
d
o
r
P

Garlic 

Rice 

Bovine meat* 

Mushroom 

Manioc starch 

Sweetcorn 

Sugar 

Rum in container > 2 l 

Litre Pure Alcohol 

e
m
u
l
o
v

Q
R
T

t
r
o
p
m

I
U
E

550 

26,000 

12,350 
275 

5,000 

2,160 

177,000 

8,800 

n
o
i
t
a
s
i
l
i
t

U

e
t
a
r

0% 

0% 

0% 

0% 

2% 
0% 

0 

0 

0 

0 

98 

0 

178,616  100% 

8,800  100% 

TRQ statistics based on TAXUD surveillance database.  
*except Nicaragua which has its own beef quota 

TRQ granted by Central America to the EU74 

Central America granted the EU TRQs on four specific products. EU exporters made use of 
the opportunities offered by these TRQs in 2019, although there continues to be a margin of 
growth given that current utilisation rates remain under 50% in the best of cases: 

TRQ statistics submitted by Central America countries. To be noted TRQ granted by Central America for EU imports on cured hams and 
Prepared swine meat are regional while Powdered Milk and Cheese is set country by country. 

74  Information is missing from Nicaragua, Honduras and Panama. 

115 

 
 
 
 
 
 
 
 
 
 
                                                 
 
 
 
 
 
 
 
 
 
 
 
Geographical indications 

The  Agreement  provides  for  the  protection  of  114  EU  GIs  relating  to  wine,  cheeses,  beer, 
meat  products  and  spirits.  With  the  exception  of  Parmigiano  Reggiano,  on  which  a  case  is 
ongoing before Guatemala's Constitutional Court, the process for the protection of EU GIs has 
been completed. On the other hand, all nine Central American GIs that were requested, were 
effectively recognised by the EU and relate to coffee, bananas and spirits. The EU monitors 
the situation on the ground and works closely with the relevant authorities of Central America 
to ensure that the EU GIs are adequately protected.  

5.4 

Trade in services and Foreign Direct Investments 

Trade in Services 

Trade  in  services  between  the  two  regions  continued  its  upward  trend,  and  in  2018  it 
represented over 40% of the value of total trade in goods and services. As depicted in Table 4, 
total trade in services in that year amounted to EUR 8,225 million, an increase of 3.7% with 
respect to 2017. As in previous years, it is concentrated on the two main markets – Panama 
and Costa Rica – the former with nearly 60% of the share, and the latter situated above 20% 
of the total of the six countries.  

Trade in services between the EU and CA in 2017 and 2018 (million EUR) 

Country 

EU 
Exports 

Costa 
Rica 
El 
Salvador 
Guatemala 
Honduras 
Nicaragua 
Panama 
Total 
Source: Eurostat 

760 

250 

307 
195 
172 
2,104 
3,788 

2017 
EU 
Imports 

Total 

EU 
Exports 

2018 
EU 
Imports 

Total 

Share 

907 

1,667 

86 

336 

335 
160 
142 
2,516 
4,146 

642 
355 
314 
4,620 
7,934 

830 

241 

369 
231 
135 
2,150 
3,956 

908 

1,738 

21.1% 

102 

343 

4.2% 

307 
128 
107 
2,717 
4,269 

676 
359 
242 
4,867 
8,225 

8.2% 
4.4% 
2.9% 
59.2% 
100% 

Noticeably,  exports  of  services  from  the  EU  between  2017  and  2018  have  grown  in  all 
countries except  for El  Salvador  and – quite substantially  –falling for Nicaragua as  well;  in 
the case of this last country, this most probably reflects the economic recession and political 
uneasiness prevalent since 2017. In the case of imports of services, only Panama, and to some 
extent  El  Salvador,  registered  a  significant  increase  between  2017  and  2018.  Costa  Rica’s 
exports  of  services  to  the  EU  in  2018  remained  largely  unchanged,  while  Guatemala, 
Honduras and Nicaragua all suffered a fall in their exports of services to the EU. 

116 

 
 
 
 
 
 
 
Development of FDI  

In  2018,  three  countries  (Panama,  Guatemala  and  Costa  Rica)  concentrated  94%  of  all  EU 
FDI in the region. Table 5 portrays the stocks and flows for the region in 2018. In the case of 
FDI  stocks  of  the  EU  in  the  six  Central  American  countries,  these  represented  during  2018 
totalled EUR 22,497 million. 

Regarding the flows, there was more of a mixed performance. There was a sizeable outward 
flow  of  FDI  for  the  case  of  Costa  Rica  (EUR  1,254  million),  while  Panama  experienced  a 
negative  outward  flow  in  2018  (negative  EUR  1,370)  –  partly  due  to  the  publication  of  the 
Panama  papers  and  the  subsequent  changes  of  European  investors’  portfolios.  Guatemala 
registered an increase in FDI stemming from EU countries of the order of EUR 135 million, 
while El Salvador, Honduras and Nicaragua all suffered FDI outflows; in the latter case it was 
quite important, and a likely outcome from the economic and political situation in Nicaragua. 

FDI flows and stocks in 2018: inward and outward (million EUR) 
Stocks 
FDI 
outward 
4,617 

Flows 
FDI 
outward 
1,254 

FDI 
inward 
110 

FDI 
inward 
1,245 

Tot. 
Flow 
1,364 

Country 

Tot. 
Stock 
5,862 

Share 

16.4
% 
3.3% 

-38 

135 

182 

177 

387 

213 

784 

1,171 

2,149 

2,362 

6.6% 

-46 
-82 
-1,370 

48 
88 
1,543 

26 
82 
11,310 

272 
332 
14,343 

298 
414 
25,653 

-147 

3,402 

13,263 

22,497 

35,760 

0.8% 
1.2% 
71.7
% 
100
% 

Costa 
Rica 
El 
Salvador 
Guatemal
a 
Honduras 
Nicaragua 

Panama 

Total 

Source: Eurostat 

144 

42 

2 
6 
173 

477 

6. 

CONCLUSIONS  

As to trade flows between the two regions governed by the Association Agreement between 
the EU and the six Central America countries, overall there have been a significantly upward 
trend the trade of both goods and services over 2019. This trend was experienced despite 
the  ongoing  recession  in  Nicaragua  since  2017,  and  the  slowdown  of  economic  growth 
experienced by both Costa Rica and Honduras. 

EU exports to Central  America crossed  the EUR 6,000 million milestone in 2019 and a 
large  part  of  it  as  a  result  of  increased  exports  of  machinery  and  mechanical  appliances, 
electric  machinery  and  large  aircraft  purchases  made  in  both  El  Salvador  and  Panama.  The 
pharmaceutical sector also thrived, and there was a sizeable increase in EU exports of mineral 
fuels and mineral oils to Costa Rica. 

117 

 
 
 
 
 
Central  America  continues  to  enjoy  large  trade  surplus  with  the  EU  in  terms  of 
agriculture goods. Central America agriculture exports remained stable with a value of  EUR 
3,7 billion in 2019. Central America agriculture exports remain dominated by bananas, coffee, 
pineapple, palm oil, and melon. EU agriculture exports to Central America amounted to € 630 
million  in  2019  and  increased  by  5%  compared  to  2018.  In  2019  EU  agriculture  exports  to 
Central  America  were  driven  by  wine  and  spirits,  food  preparations,  preparation  of  cereals, 
malt starches, inulin, preparation of vegetable and dairy products.  

Trade in services also saw growth between 2017 and 2018. Panama and Costa Rica continue 
to  be  the  most  important  trade  partners  in  services.  The  picture  for  FDI  flows  yields  some 
mixed results.  Most of the inflows of capital  went  to  Costa Rica, with  Panama  exhibiting a 
comparable outflow in FDI coming from the EU. 

An  ex  post  evaluation  will  be  launched  in  the  second  semester  of  2020  to  analyse  the 
economic,  social,  human  rights  (including  labour  rights)  and  environmental  impacts  of  the 
implementation  of  the  Agreement  and  should  provide  useful  analysis  and  insight  for  the 
implementation work.  

118 

 
 
 
 
 
7. 

STATISTICS    

COSTA RICA   

119 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Costa Rica (mio €)Imports1 8402 1212 3502 4222 576Exports8729731 0199741 088Balance-967-1 147-1 331-1 449-1 488Share Costa Rica in EU27 trade with Extra-EU27Imports0.1%0.1%0.1%0.1%0.1%Exports0.0%0.1%0.1%0.0%0.1%Total (I+E)0.1%0.1%0.1%0.1%0.1%Share EU27 in trade Costa Rica with worldImports8.4%8.8%9.2%8.8%10.7%Exports16.9%19.1%18.9%19.2%19.1%Total (I+E)11.6%12.8%13.1%13.0%14.1%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Costa Rica: IMF DotsTotal merchandise trade EU27 with Costa Rica (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports2 4222 5761546.3%Imports1 907 5651 934 94427 3791.4%Exports9741 08811511.8%Exports2 059 8822 132 01572 1333.5%Balance-1 449-1 488-39Balance152 317197 07144 754Total trade3 3963 6642687.9%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Costa Rica (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports1 5541 55950.3%Imports118 891121 6442 7532.3%Exports11312176.6%Exports169 000181 82512 8257.6%Balance-1 441-1 4383Balance50 10960 18110 072Total trade1 6671 679120.7%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Costa Rica (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports8681 01714917.2%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports86096810712.5%EU27 exports1 890 8821 950 19059 3093.1%Balance-8-50-42Balance102 208136 89034 682Total trade1 7291 98525614.8%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Costa Rica (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports90790810.1%Imports824 543824 015-528-0.1%Exports760830719.3%Exports928 420968 64840 2284.3%Balance-147-7870Balance103 877144 63340 756Total trade1 6671 739724.3%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Costa Rica (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports432547606907908Imports642 682776 924784 743824 543824 015Exports573598770760830Exports750 713849 023855 477928 420968 648Balance14151164-147-78Balance108 03172 09970 734103 877144 633Total trade1 0051 1451 3761 6671 739Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Costa Rica (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward8508501 1221 2551 245Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward2 0902 5033 5263 3384 617Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward2012334547110Inward143 012803 285328 703209 462-67 421Outward5181 254Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsCosta RicaCosta Rica20182019Extra-EU27Costa Rica2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Costa Rica-2 000-1 00001 0002 0003 00020152016201720182019Merchandise trade EU27 with Costa Rica (mio €)ImportsExportsBalance 
 
 
EL SALVADOR  

120 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with El Salvador (mio €)Imports180194233201186Exports522449457732802Balance342255224532616Share El Salvador in EU27 trade with Extra-EU27Imports0.0%0.0%0.0%0.0%0.0%Exports0.0%0.0%0.0%0.0%0.0%Total (I+E)0.0%0.0%0.0%0.0%0.0%Share EU27 in trade El Salvador with worldImports6.0%4.3%6.0%7.4%6.1%Exports2.7%2.6%2.8%2.4%2.7%Total (I+E)4.9%3.7%4.9%5.7%5.0%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade El Salvador: IMF DotsTotal merchandise trade EU27 with El Salvador (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports201186-15-7.5%Imports1 907 5651 934 94427 3791.4%Exports732802709.5%Exports2 059 8822 132 01572 1333.5%Balance53261685Balance152 317197 07144 754Total trade933988545.8%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with El Salvador (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports42541227.6%Imports118 891121 6442 7532.3%Exports5157612.6%Exports169 000181 82512 8257.6%Balance93-5Balance50 10960 18110 072Total trade931111819.4%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with El Salvador (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports159132-27-16.8%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports682745639.3%EU27 exports1 890 8821 950 19059 3093.1%Balance52361390Balance102 208136 89034 682Total trade840877364.3%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with El Salvador (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports861021719.6%Imports824 543824 015-528-0.1%Exports250241-9-3.7%Exports928 420968 64840 2284.3%Balance164138-26Balance103 877144 63340 756Total trade33634382.3%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with El Salvador (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports84829186102Imports642 682776 924784 743824 543824 015Exports239248252250241Exports750 713849 023855 477928 420968 648Balance154166160164138Balance108 03172 09970 734103 877144 633Total trade323330343336343Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with El Salvador (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward4112106341387Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward9421 0931 070811784Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward7-1477307144Inward143 012803 285328 703209 462-67 421Outward142-38Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsEl SalvadorEl Salvador20182019Extra-EU27El Salvador2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018El Salvador02004006008001 00020152016201720182019Merchandise trade EU27 with El Salvador (mio €)ImportsExportsBalance 
 
 
 
 
GUATEMALA 

121 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Guatemala (mio €)Imports755806932899980Exports9098719549481 000Balance15466224820Share Guatemala in EU27 trade with Extra-EU27Imports0.0%0.1%0.1%0.0%0.1%Exports0.0%0.0%0.0%0.0%0.0%Total (I+E)0.0%0.0%0.1%0.0%0.0%Share EU27 in trade Guatemala with worldImports7.3%7.0%7.2%7.2%6.8%Exports7.0%8.0%8.2%8.5%8.4%Total (I+E)7.2%7.4%7.6%7.6%7.4%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Guatemala: IMF DotsTotal merchandise trade EU27 with Guatemala (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports899980819.0%Imports1 907 5651 934 94427 3791.4%Exports9481 000535.5%Exports2 059 8822 132 01572 1333.5%Balance4820-29Balance152 317197 07144 754Total trade1 8471 9801347.2%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Guatemala (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports708764578.0%Imports118 891121 6442 7532.3%Exports1251441914.8%Exports169 000181 82512 8257.6%Balance-582-621-38Balance50 10960 18110 072Total trade833908759.0%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Guatemala (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports1922162412.6%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports822856344.1%EU27 exports1 890 8821 950 19059 3093.1%Balance63164110Balance102 208136 89034 682Total trade1 0141 072585.7%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Guatemala (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports335307-28-8.3%Imports824 543824 015-528-0.1%Exports3073696220.2%Exports928 420968 64840 2284.3%Balance-296190Balance103 877144 63340 756Total trade642676345.3%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Guatemala (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports207228258335307Imports642 682776 924784 743824 543824 015Exports529307283307369Exports750 713849 023855 477928 420968 648Balance3227925-2961Balance108 03172 09970 734103 877144 633Total trade736535541642676Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Guatemala (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward118220185183213Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward1 6592 9992 5192 2332 149Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward38186-18-242Inward143 012803 285328 703209 462-67 421Outward614362-279135Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsGuatemalaGuatemala20182019Extra-EU27Guatemala2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Guatemala02004006008001 0001 20020152016201720182019Merchandise trade EU27 with Guatemala (mio €)ImportsExportsBalance 
 
 
 
 
HONDURAS 

122 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Honduras (mio €)Imports9049331 1351 026976Exports479438425469464Balance-425-495-710-557-512Share Honduras in EU27 trade with Extra-EU27Imports0.1%0.1%0.1%0.1%0.1%Exports0.0%0.0%0.0%0.0%0.0%Total (I+E)0.0%0.0%0.0%0.0%0.0%Share EU27 in trade Honduras with worldImports6.8%6.6%5.8%6.1%6.5%Exports21.9%22.9%31.3%26.7%24.4%Total (I+E)11.2%11.5%13.9%12.1%11.9%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Honduras: IMF DotsTotal merchandise trade EU27 with Honduras (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports1 026976-51-4.9%Imports1 907 5651 934 94427 3791.4%Exports469464-5-1.1%Exports2 059 8822 132 01572 1333.5%Balance-557-51246Balance152 317197 07144 754Total trade1 4951 439-56-3.7%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Honduras (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports885835-50-5.6%Imports118 891121 6442 7532.3%Exports545623.3%Exports169 000181 82512 8257.6%Balance-831-77951Balance50 10960 18110 072Total trade939891-48-5.1%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Honduras (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports142141-1-0.7%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports415408-7-1.6%EU27 exports1 890 8821 950 19059 3093.1%Balance273268-6Balance102 208136 89034 682Total trade557549-8-1.4%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Honduras (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports160128-32-19.9%Imports824 543824 015-528-0.1%Exports1952313618.3%Exports928 420968 64840 2284.3%Balance3510267Balance103 877144 63340 756Total trade35535941.1%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Honduras (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports80117108160128Imports642 682776 924784 743824 543824 015Exports156174162195231Exports750 713849 023855 477928 420968 648Balance76575435102Balance108 03172 09970 734103 877144 633Total trade236291270355359Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Honduras (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward9220135826Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward272Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward-8-97532Inward143 012803 285328 703209 462-67 421Outward19-16-46Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsHondurasHonduras20182019Extra-EU27Honduras2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Honduras-1 000-50005001 0001 50020152016201720182019Merchandise trade EU27 with Honduras (mio €)ImportsExportsBalance 
 
 
 
 
NICARAGUA 

123 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Nicaragua (mio €)Imports277263310334343Exports213227236184186Balance-64-36-73-150-157Share Nicaragua in EU27 trade with Extra-EU27Imports0.0%0.0%0.0%0.0%0.0%Exports0.0%0.0%0.0%0.0%0.0%Total (I+E)0.0%0.0%0.0%0.0%0.0%Share EU27 in trade Nicaragua with worldImports7.2%5.1%5.2%4.9%4.4%Exports5.2%6.9%8.7%6.3%5.5%Total (I+E)6.3%5.6%6.2%5.5%4.9%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Nicaragua: IMF DotsTotal merchandise trade EU27 with Nicaragua (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports33434392.7%Imports1 907 5651 934 94427 3791.4%Exports18418621.0%Exports2 059 8822 132 01572 1333.5%Balance-150-157-7Balance152 317197 07144 754Total trade519530112.1%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Nicaragua (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports224222-2-1.0%Imports118 891121 6442 7532.3%Exports2428414.6%Exports169 000181 82512 8257.6%Balance-200-1946Balance50 10960 18110 072Total trade24925010.5%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Nicaragua (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports1101211110.2%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports160158-2-1.1%EU27 exports1 890 8821 950 19059 3093.1%Balance5037-13Balance102 208136 89034 682Total trade270280103.5%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Nicaragua (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports142107-35-24.7%Imports824 543824 015-528-0.1%Exports172135-37-21.6%Exports928 420968 64840 2284.3%Balance3028-2Balance103 877144 63340 756Total trade314242-72-23.0%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Nicaragua (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports899378142107Imports642 682776 924784 743824 543824 015Exports116147153172135Exports750 713849 023855 477928 420968 648Balance2855753028Balance108 03172 09970 734103 877144 633Total trade205240231314242Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Nicaragua (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward1360559882Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward332332Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward-15113-18536Inward143 012803 285328 703209 462-67 421Outward38126-82Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsNicaraguaNicaragua20182019Extra-EU27Nicaragua2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Nicaragua-200-100010020030040020152016201720182019Merchandise trade EU27 with Nicaragua (mio €)ImportsExportsBalance 
 
 
 
 
PANAMA 

124 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Panama (mio €)Imports537557499692803Exports2 2872 0212 0422 4072 678Balance1 7501 4641 5431 7151 875Share Panama in EU27 trade with Extra-EU27Imports0.0%0.0%0.0%0.0%0.0%Exports0.1%0.1%0.1%0.1%0.1%Total (I+E)0.1%0.1%0.1%0.1%0.1%Share EU27 in trade Panama with worldImports11.0%10.4%10.1%9.5%13.5%Exports26.2%27.4%26.3%27.6%23.6%Total (I+E)11.8%11.3%10.9%10.3%14.2%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Panama: IMF DotsTotal merchandise trade EU27 with Panama (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports69280311216.1%Imports1 907 5651 934 94427 3791.4%Exports2 4072 67827111.3%Exports2 059 8822 132 01572 1333.5%Balance1 7151 875160Balance152 317197 07144 754Total trade3 0993 48238312.4%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Panama (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports275291165.8%Imports118 891121 6442 7532.3%Exports235225-10-4.2%Exports169 000181 82512 8257.6%Balance-40-66-26Balance50 10960 18110 072Total trade51051661.2%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Panama (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports4175129522.9%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports2 1722 45328113.0%EU27 exports1 890 8821 950 19059 3093.1%Balance1 7551 941186Balance102 208136 89034 682Total trade2 5892 96537714.6%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Panama (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports2 5162 7172008.0%Imports824 543824 015-528-0.1%Exports2 1042 150462.2%Exports928 420968 64840 2284.3%Balance-412-566-154Balance103 877144 63340 756Total trade4 6214 8672465.3%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Panama (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports1 6732 5492 3772 5162 717Imports642 682776 924784 743824 543824 015Exports1 4051 9482 0572 1042 150Exports750 713849 023855 477928 420968 648Balance-268-601-321-412-566Balance108 03172 09970 734103 877144 633Total trade3 0794 4974 4344 6214 867Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Panama (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward3 1124 22624 67811 69211 310Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward14 343Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward261 9935 080-622173Inward143 012803 285328 703209 462-67 421Outward1 877-1 370Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsPanamaPanama20182019Extra-EU27Panama2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Panama05001 0001 5002 0002 5003 00020152016201720182019Merchandise trade EU27 with Panama (mio €)ImportsExportsBalance 
 
 
 
 
ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE TRADE 
PILLAR OF THE EU-CHILE ASSOCIATION AGREEMENT 

1. 

INTRODUCTION 

The  trade  pillar  of  the  EU-Chile  Association  Agreement  (hereinafter  ‘the  Agreement’) 
entered into force on 1 February 2003 and all ratifications were completed on 1 March 2005. 
During the following 16  years the Agreement  has worked well and provided the basis for a 
good cooperation between both sides, which have continously worked to implement it so that 
its  benefits  can  be  reaped  to  the  maximum  extent  possible.  The  Agreement  with  Chile  was 
considered  highly  ambitious  at  the  time  of  its  conclusion.  It  was  the  first  trade  agreement 
subject  to  an  ex-post  evaluation,  that  was  completed  in  2016.75  Another  study,  in  2017, 
showed the need for modernising the agreement, to adapt its provisions to make them fit for 
the  new  challenges  of  trade  and  investment  and  to  avoid  the  EU  losing  ground  to  other 
partners, such as the US and China.    

In 2013, the EU and Chile agreed to explore options for a comprehensive modernisation of 
the Agreement to bring it up to date to recent trade policy developments and to avoid the risk 
of  trade  erosion  after  both  Parties  had  conclude  more  modern  FTAs  with  othe  partners.  A 
scoping  exercise  was  successfully  concluded  with  Chile  in  January  2017.  Negotiations  for 
modernising the Agreement were launched on 16 November 2017 in Brussels, following the 
adoption of the negotiating directives by the Council. The EU and Chile are now negotiating 
an  ambitious,  comprehensive  and  progressive  modernised  agreement.  The  most  important 
areas  include  (1)  further  liberalisation  in  agriculture  and  food  products,  (2)  rules  of  origin, 
customs  and  trade  facilitation  provisions,  (3)  non-tariff  barriers  for  industrial  and  agri-food 
products,  (4)  market  access  for  services  sectors  of  key  EU  and  Chilean  interest,  (5) 
comprehensive  investment  liberalisation  and  protection  disciplines,  (6)  improved  public 
procurement  rules  and  coverage  in  terms  of  entities,  (7)  improved  rules  on  intellectual 
property rights,  including the protection of  geographical  indications (GIs) on foodstuffs,  (8) 
Trade  and  Sustainable  Development,  (9)  competition  and  subsidies  disciplines  and  (10)  for 
the  first  time,  trade  and  gender  equality,  which  is  a  pilot  case  for  the  EU  with  the  aim  of 
identifying and addressing those barriers faced by women to benefit from trade opportunities, 
building  on  sustainable  development  goals  and  reaffirming  commitments  of  international 
conventions . 

2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGRESS AND FOLLOW-UP ACTIONS  

Economic  and  trade  relations  with  Chile  continued  to  develop  in  a  positive  manner  during 
2019.  The  Commission  continued  to  address  the  six  registered  market  access  barriers 
(copyright  legislation,  IPR  enforcement,  non-recognition  of  EU  certification,  registration  of 
cosmetics and hygiene products and procurement and rejection of products containing starch) 
through  the  appropriate  joint  meetings,  demarches  of  the  EU  Delegation  in  Chile  and  the 
modernisation negotiations. The process  for adopting new Chilean  legislation on medicines, 
the  “Farmacos  II”  bill,  currently  under  consideration  in  the  Chilean  Congress,  was  also 
closely monitored.  

75   https://trade.ec.europa.eu/doclib/docs/2012/august/tradoc_149881.pdf 

125 

 
 
 
 
 
 
                                                 
3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

Both  sides  have  invested  substantial  resources  in  the  implementation  and  institutional  work 
under  the  Agreement.  Consequently,  the  meetings  under  the  Agreement  have  been  very 
regular  since  it  came  into  force,  the  16th  EU-Chile  Association  Committee  was  held  in 
Santiago on 12 July 2019 with a focus on the overall bilateral political  relations. The Trade 
Coordinators meeting and Subcommittees on trade related matters were so far organised 
practically every year until 2017. The Trade Coordinators did not meet in 2019 as the focus of 
discussions revolved around the negotiations on the modernisation of the current Agreement. 
Work on the implementation of the current Agreement continues and the dialogue with Chile 
remains fluid. The modernisation negotiations offer also a good opportunity to address issues 
of concern on both sides. 

The  Joint  Management  Committee  on  Sanitary  and  Phytosanitary  Meassures  met  in 
2019  and  progress  was  achieved  in  terms  of  market  access  for  EU  agri-food  products.  For 
example,  in  2019,  Chile  opened  its  dairy  market  for  four  additional  Member  States  (20 
Member States authorised now), four additional Member States for beef (total authorised 14), 
two for pork (total 14 Member States), three for meat products (total 15 Member States), one 
for bovine semen (total 14 Member States), eleven Member States for processed poultry meat  
and one more for casing (total 10 Member States). Chile also authorised the imports of fresh 
poultry  meat  (eight  Member  States),  honey,  eggs  and  horse  meat  and  harmonised  the 
certificate  for  hatching  eggs  and  egg  products  and  reviewed  the  certificate  for  permanent 
import of live horses. 

However,  similar  progress  has  not  yet  been  achieved  for  the  export  of  EU  fruits  and 
vegetables to Chile in 2019, but work continues to allow the export of EU apples and pears to 
Chile.  

The  Special  Committee  on  Standards,  Technical  Regulations  and  Conformity 
Assessment  Procedures  met  in  2019  and  discussed  market  access  issues  related  to  three 
Chilean regulatory initiatives in the area of  pharmeaceuticals (Farmacos II bill), and labelling  
for  dairy  products  and  alcoholic  drinks.  Chile  and  the  EU  also  discussed  the  Chilean 
regulation  on  the  use  of  potato  starch  in  cold  meats  and,  at  the  request  of  Chile,  the 
developments on the French Grenelle II law.  

The  Joint  Committee  on  Trade  in  Wine  and  Spirits/Aromatised  drinks  met  last  time  in 
2018 and in 2019 it continued to follow up on the textual modifications to the wine and spirits 
agreement and the update of the list of EU GIs. This work has been on-going since 2015 to 
update the wines and spirits GIs lists covered by the current agreement, which still does not 
include iconic names such as “Prosecco”, and wine and spirits from the Member States that 
joined the EU in 2007 and 2013 (Bulgaria, Romania and Croatia). 

4. 

SPECIFIC AREAS OF IMPORTANCE  

During  2019  the  negotiations  for  the  modernisation  of  the  Trade  part  of  the  EU  –  Chile 
Association Agreement continued. The EU and Chile continued making progress towards the 
ambitious,  progressive  and  comprehensive  agreement  that  they  are  committed  to  achieve. 
There  was  very  good  progress  on  a  significant  number  of  chapters  (e.g.  Rules  of  Origin, 
to  Trade,  Good  Regulatory  Practices, 
Services,  Digital  Trade,  Technical  Barriers 

126 

 
 
 
 
 
 
 
 
Anticorruption,  Trade  and  Gender,  Public  Procurement,  Trade  Defence,  Trade  and 
Sustainable Development and some  Investment  provisions) with  important  progress  on text. 
On other issues, such as market access offers, Intellectual Property Rights, Energy and Raw 
Materials, parts of the Investment chapter (notably the Investment Court System) or Subsidies 
there remains work to be done.  

5. 

EVOLUTION OF BILATERAL TRADE 

Bilateral  merchandise  trade  between  2015  and  2019  increased  10%.  Overall,  the  rise  is 
substantially  sharper  for  EU  exports,  which  increased  31%  over  the  period,  compared  to  a 
12%  decrease  in  EU  imports  from  Chile,  mostly  linked  to  the  decrease  of  copper  prices. 
Chile’s  share  in  total  EU  trade  has  remained  stable  since  2015,  at  around  0.4%  of  total  EU 
trade. In 2019, the EU had a positive trade balance of €3.6 billion. This is the most important 
trade surplus for the EU with Chile since the signing of the Agreement. 

5.1 

Economic environment 

Since the beginning of 2019, the combination of less dynamic economic activity, low copper 
prices,  a  decline  in  FDI  and  a  worsening  external  environment  led  the  economy  to  grow  at 
more moderate rates. Indication of an economic slowdown led the Central Bank of Chile to 
revise  downward  its  growth  expectation  for  2019  from  3.25-4.25%  to  2.75-3.5%  and  to 
decrease  interest  rates  in  June  2019  from  3%  to  2.5%,  the  largest  interest-rate  drop  in  a 
decade, and further to 2% in September 2019.  

The economic situation has worsened since October 2019 when a wave of protests, violence 
and worker strikes hit the country. The current crisis brought huge economic losses for both 
domestic and foreign enterprises. Chile's currency dropped by over 5% on 12 November (one 
of the days that registered most violent incidents) to a record low of 800 CLP to the USD (and 
close  to  1,000  CLP  for  the  euro,  which  used  to  be  at  around  700  CLP).  Yet,  the  arrival  of 
Covid-19 has depreciated the chilean peso even further reaching 842 CLP to USD on 9 March 
2020.  Between  October  2019  and  February  2020  18%  more  companies  have  filed  for 
bankrupcy  in  comparison  to  2018.  By  the  end  of  November  2019  over  6,800  small  and 
medium  enterprises  (SMEs)  in  Chile  faced  losses  that  are  estimated  at  1.4  billion  USD. 
According to Chile's confederation of micro, small and medium enterprises (Conapyme), as of 
22  November  nearly  20,000  businesses  were  at  risk  of  bankruptcy,  owing  to  a  drop  in 
production and retail sales. However, this number is projected to rise in the next few months. 

GDP grew by 1.1% in 2019, half of what was projected before the social outbreak (2.5%) and 
in line with its updated projections (1.2%). The year 2019 is therefore the worst performance 
of the Chilean economy since 2009.  
The current  political  and social  crisis led to  a questioning of the country's  entire neo-liberal 
economic model, including Chile's free trade orientation. Due to social protests and violence 
in the country, the government suspended CPTPP ratification and was obliged to  cancel the 
COP and APEC Summit and to shift its agenda towards the burning domestic problems. In the 
coming year and beyond, Chile is likely to be more focused on domestic issues. 

127 

 
 
 
 
 
 
 
 
 
5.2 

Trade in goods 

In  2019,  EU-Chile  bilateral  trade  amounted  to  €16.6  billion  decreasing  by  0,3%  in  value 
compared to 2018. The EU experienced a trade surplus worth €3.6 billion. While EU exports 
increased 8.6% year-on-year, EU imports decreased by 11,5% following substantial decreases 
in two major Chilean exports, mineral products and base metals. The largest trade surpluses of 
the EU are in machinery and transport equipment.  

EU exports concentrate in three HS sections: 

• 

• 

• 

EU exports in machinery and appliances increased by 8% compared to 2018, reaching 
€3 billion; 

EU  exports  in  transport  equipment  increased  by  28%  when  compared  to  2018, 
reaching 2.6 billion; 

EU  exports  in  chemical  products  amounted  to  €1  billion,  increasing  by  2.5%  when 
compared to 2018. 

Chilean exports concentrate in two HS sections: 

• 

• 

Chilean  exports  in  mineral  products  decreased  by  12%  in  value  between  2018  and 
2019 (€1.5 billion in 2019);  

Chilean exports in base metals and articles thereof decreased by almost 14% in value 
beteen 2018 and 2019 (€1 billion in 2019). 

5.3 

Trade in agricultural products 

In  2019,  EU-Chile  bilateral  trade  in  agricultural  products  reached  €2.6  billion,  with  an  EU 
trade deficit of €1.2 billion. While agri-food products only accounted for less than 10% of 
the  total  EU  exports  to  Chile,  they  represented  around  one  third  of  total  EU  imports  from 
Chile.  

Chile  is  not  an  important  export  market  for  EU  agri-food  products  given  its  size  and 
geographic  location.  However,  as  the  seasons  are  inversed,  there  is  a  complementary  of 
supply between Chile and the EU, notably as regards fruits and vegetables. For Chile, the EU 
is an important agri-food export market, as much as the US.  

Compared  to  2018,  both  EU  exports  and  EU  imports  decreased,  respectively  by  1.6%  and 
2.2%. Both import and exports have seen a steady increase over the past decade. Imports are 
dominated  by  fruit  (58%)  and  wine,  vermouth  cider  and  vinegar  (19%).  The  most  relevant 
categories of EU agri-food exports are preparation of vegetables, fruits or nuts (13.6%), food 
preparations (9%) and pasta, pastry, biscuits and bread (7.5%).  

128 

 
 
 
 
 
 
 
 
 
Tariff rate quotas granted by the EU to Chile  

Chile is not using most of the TRQs granted under the Agreement. However, the poultry TRQ 
has been completely filled in 2018 and 2019, given the fast  growing poultry sector in Chile 
(+17% in last 10 years). Chile has become the fourth EU supplier for poultry meat. As regards 
pigmeat,  the  TRQ  is  currently  not  fully  used  (unlike  a  decade  ago)  due  to  other  export 
opportunities for Chile despite the fact that the sector witnesses a dynamic production growth. 
As regards beef imports from Chile, a major part of the TRQ remains unused, which can also 
be explained by the fact that the cattle herd fell by 2.4% per annum during the last decade in 
Chile.  

Utilisation rate of TRQs opened by the EU to Chile 

Sector 

Beef 

Pigmeat 

Pigmeat 

Poultry 
Dairy 
F&V 

Cereals 

Sugar products 

Sugar products 

Preparations 

F&V 

F&V 

TRQ description 
Beef 
Pigmeat & 
preparations 
Pigmeat & 
preparations 
Poultrymeat & 
edible offal 
Cheese & curd 
Garlic 
Cereal grains, 
otherwise worked 
Sugar 
confectionery, 
not containing 
cocoa 
Chocolate & 
other 
preparations 
containing cocoa 
Sweet biscuits, 
waffles & wafers 
Mushrooms 
(Agaricus), 
prepared or 
preserved 
Cherries, 
containing added 
spirit & sugar 

TRQ 

Quantity  Unit 

2.650 

t 

Utilisation in TRQ period ending in: 
2017 
14% 

2019 
13% 

2018 
13% 

9.100 

t 

24% 

1.000 

t 

18.850 
2.700 
953 

t 
t 
t 

1.800 

t 

0% 

77% 
0% 
2% 

0% 

24% 

0% 

100% 
0% 
0% 

0% 

28% 

2% 

100% 
0% 
10% 

0% 

400 

t 

0% 

0% 

0% 

400 

t 

500 

t 

0% 

0% 

0% 

0% 

900 

t 

0% 

0% 

1.800 

t 

0% 

0% 

0% 

0% 

0% 

0% 

129 

 
 
 
 
 
Tariff rate quotas granted by Chile to the EU 

The EU has fully used the cheese TRQ granted under the FTA and 82% of fish preparations 
TRQ (canned tuna). The TRQ for fresh hake and salmon have not been used.  

Utilisation rate of TRQs opened by Chile to the EU 

Sector 

Dairy 
Fish  
Fish 
Fish preparations  Tuna 

TRQ description 
Cheese 
Hake 
Salmon 

TRQ 

Utilisation in TRQ period ending in: 

Quantity  Unit 

2,700 
5,000 
40 
150 

t 
t 
t 
t 

2017 
100% 
0% 
0% 
97% 

2018 
100% 
0% 
0% 
93% 

2019 
100% 
0% 
0% 
82% 

5.4 

Trade in services and Foreign Direct Investments 

Bilateral trade in services in 2018 stood at €5.7 billion (€3.7 billion in exports and €2 billion 
in imports), compared to €5.6 billion in 2017. Between 2014 and 2018, EU exports of services 
increased 23%, while EU imports increased 32%. 

The  EU  remains  Chile’s  first  FDI  provider,  with  outward  FDI  stocks  worth  €52  billion  in 
2018.  Outward  EU  FDI  flows  in  2018  (€2  billion)  were  10  times  higher  the  outward  flows 
registered  in  2017,  but  only  half  of  those  registered  in  2016.  The  decrease  in  outflows  is 
largely  due  to  the  evolution  in  the  mining  industry,  which  has  historically  represented  over 
45%  of  total  FDI  in  Chile.  In  quantities,  mining  production  increased  in  2018  after  having 
decreased for two consecutive years.  

With  2017  data,  in  2018  Chile  was  the  fourth  recipient  of  FDI  in  Latin  America  overall, 
after  Mexico,  Brazil  and  Argentina,  according  to  UNTACD,  and  is  one  of  the  top  5  host 
regional economies76 . 

Since 1998, Chile has been the World Economic Forum’s most competitive nation in the 
Latin American region (in 2019 it ranked 33 of 141 globally)77 . Chile regained its position 
as regional leader on the World Bank Doing Business Report (DB), leaving Mexico one place 
below.  In  2020,  Chile  ranks  59  of  190  on  DB  and  72.6  on  the  distance  to  frontier  (DTF) 
measure (Mexico ranks 60 and 72.4 respectively)78. 

6. 

CONCLUSIONS  

EU-Chile  relations  are  currently  governed  by  the  2002  EU-Chile  Association  Agreement 
which covers political dialogue, cooperation and a comprehensive free trade agreement. The 
trade  pillar  led  to  a  significant  increase  in  bilateral  trade  in  goods  until  2011.  However, 
despite the Agreement’s successful operation, total bilateral trade in goods has declined since 

76   UNCTAD, World Investment Report 2019 https://unctad.org/en/PublicationsLibrary/wir2019_en.pdf pag 48 
Top 5 economies in hosting FDI flows in 2017 in Latin America were Brasil, México, Colombia, Argentina and 

Peru. However, Chile was top economy on FDI outflows in 2017. 

77   https://www.weforum.org/reports/the-global-competitveness-report-2018 
78   http://www.doingbusiness.org/en/data/exploreeconomies/chile# 

130 

 
 
 
 
 
 
 
 
                                                 
 
then and has slowly recovered to reach €16.6 billion billion in 2019. Over the years, the EU 
has lost ground to both China, which ranked first, and the USA, which ranked second in 2019.  

When it was concluded in 2002, the Association Agreement was a path-breaking agreement, 
providing for deep liberalisation  and WTO-plus rules  across many areas. Evaluations of the 
impact suggest that it worked to support bilateral trade at a time when Chile was highly active 
in  entering  into  free  trade  agreements  with  other  parties,  and  thus  avoided  putting  EU 
suppliers at a competitive disadvantage. Since 2002 considerable trade and investment policy 
developments have taken place and these are not reflected in the trade pillar.  Therefore, the 
EU  and  Chile  decided  to  upgrade  the  existing  trade  and  investment  framework  and  began 
negotiations on a new and ambitious agreement in November 2017. This process is under way 
and four rounds of negotiations took place in 2019.  

131 

 
 
 
 
 
7. 

STATISTICS 

CHILE

132 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Chile (mio €)Imports7 4006 5757 3907 3616 514Exports7 7438 0448 0949 31910 118Balance3431 4687041 9573 604Share Chile in EU27 trade with Extra-EU27Imports0.4%0.4%0.4%0.4%0.3%Exports0.4%0.4%0.4%0.5%0.5%Total (I+E)0.4%0.4%0.4%0.4%0.4%Share EU27 in trade Chile with worldImports14.7%16.2%14.2%13.9%14.7%Exports12.1%11.8%11.9%10.7%9.7%Total (I+E)13.4%14.0%13.0%12.3%12.2%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Chile: IMF DotsTotal merchandise trade EU27 with Chile (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports7 3616 514-848-11.5%Imports1 907 5651 934 94427 3791.4%Exports9 31910 1187998.6%Exports2 059 8822 132 01572 1333.5%Balance1 9573 6041 647Balance152 317197 07144 754Total trade16 68016 632-48-0.3%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Chile (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports1 9721 928-45-2.3%Imports118 891121 6442 7532.3%Exports707696-11-1.5%Exports169 000181 82512 8257.6%Balance-1 265-1 23234Balance50 10960 18110 072Total trade2 6802 624-55-2.1%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Chile (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports5 3894 586-803-14.9%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports8 6129 4228109.4%EU27 exports1 890 8821 950 19059 3093.1%Balance3 2234 8361 613Balance102 208136 89034 682Total trade14 00114 00870.0%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Chile (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports1 7002 00030017.6%Imports824 543824 015-528-0.1%Exports3 9373 728-209-5.3%Exports928 420968 64840 2284.3%Balance2 2371 728-509Balance103 877144 63340 756Total trade5 6375 728911.6%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Chile (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports1 5111 8291 7181 7002 000Imports642 682776 924784 743824 543824 015Exports3 0383 2723 3783 9373 728Exports750 713849 023855 477928 420968 648Balance1 5271 4441 6602 2371 728Balance108 03172 09970 734103 877144 633Total trade4 5485 1015 0965 6375 728Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Chile (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward2 5701 509-7 620Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward41 03546 65554 45552 88952 470Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward-772170-275-443Inward143 012803 285328 703209 462-67 421Outward3 0613 9811872 046Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsChileChile20182019Extra-EU27Chile2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Chile02 0004 0006 0008 00010 00012 00020152016201720182019Merchandise trade EU27 with Chile (mio €)ImportsExportsBalance 
 
 
 
ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE TRADE 
PILLAR OF THE EU-MEXICO ASSOCIATION AGREEMENT  

1. 

INTRODUCTION 

Mexico is the biggest trading partner of the EU in Latin America, followed closely by Brazil. 
Mexico  was  the  first  country  in  Latin  America  to  sign  an  Economic  Partnership,  Political 
Coordination  and  Cooperation  Agreement  with  the  EU  (‘Global  Agreement’).  The  Global 
Agreement  was  signed  in  1997  and  its  trade  provisions  were  later  developed  into  a 
comprehensive Free Trade Agreement that entered into force in March 2000 for goods and in 
February 2001 for services (hereinafter called ‘the FTA’)79. Croatia acceded to the Agreement 
through a Protocol of Accession signed on 27 November 2018.  

Over  the  close  to  twenty  years  of  its  operation,  this  ambitious  agreement  has  yielded  very 
positive results for both parties. Bilateral goods trade between the EU and Mexico has more 
than  tripled  with  exports  from  the  EU  to  Mexico  growing  slightly  faster  than  exports  from 
Mexico  to  the  EU.  Bilateral  trade  in  services  has  also  significantly  expanded  and  the  EU 
remains the main investor in Mexico, after the US.  

In order to adapt the Global Agreement to the new realities of global trade and investment, 
negotiations on its modernisation were launched in 2016. On 21 April 2018, after nine rounds 
of  negotiations,  an  ‘agreement  in  principle’  was  reached  on  the  trade  part  outlining  the 
numerous improvements to the legal framework of EU-Mexico bilateral trade relations. This 
modernisation will bring the trade and investment framework into the 21st century on a basis 
of reciprocity and  promote new opportunities for business,  while including strong  and clear 
commitments on human rights, sustainable development and the fight against corruption (see 
section 6). 

2. 

MAIN OPEN IMPLEMENTATION ISSUES , PROGRESS AND FOLLOW-UP ACTIONS 

Year 2019 marked the 19th year of application of the Trade Agreement with Mexico. While 
the Global  Agreement is  a well-functioning agreement that has  yielded very positive results 
for both parties, a number of implementation challenges still persist. 

In  2019,  progress  was  noted  in  the    area  of  sanitary  and  phytosanitary  measures  (SPS), 
with  the  opening  of  trade  of  kiwis  from  Italy,  pears  from  Belgium,  pig  meat  from  the 
Netherlands  and live horses from  Mexico. However, there  are still a number of outstanding 
issues for EU exports. In particular, these include: 

  securing application of prelisting for EU exports, 
  recognition of the EU regionalization policy on animal health 
  faster progress with market access applications for fruits and  vegetables 

79 The trade pillar was expanded by two decisions of the Joint Council: Decision No 2/2000 of the EC-Mexico 
Joint Council of 23 March 2000 related to trade in goods  and Decision No 2/2001 of the EU-Mexico Joint 
Council of 27 February 2001 on trade in services . 

133 

 
 
 
 
 
                                                 
  increased market access for pigmeat and poultrymeat. 

The implementation of the modernised Trade Agreement will contribute to tackle a number of 
the current implementation issues. 

The EU and Mexico also continue to build a positive agenda through the implementation of a 
number of cooperation activities in the area of intellectual property (IP) through the IP Key 
Latin  America80  a  project  which  support  international  businesses,  especially  EU  firms,  in 
obtaining,  managing  and  enforcing  their  intellectual  property  (IP)  protection  in  Latin 
American  countries.  IP  Key  organised  a  seminar  on  IP  and  and  Green  Technologies  in  the 
margin  of  the  Mexico  Green  Expo  2019  and  a  seminar  on  enforcement  of  Geographical 
Indications. 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

In 2019 the EU and Mexico held the annual meetings of the implementation bodies under the 
Trade Agreement (the Joint Committee on Trade issues, the four special committees and the 
Joint Committee on Spirits). 

The  13th  EU-Mexico  Joint  Committee  on  trade  issues  took  place  on  21  May  2019.  The 
meeting provided an opportunity to cement the strong strategic relations between the EU and 
Mexico,  as  well  as  the  long  history  of  collaboration  at  the  multilateral  level.  The  Parties 
reviewed  the  strong  bilateral  trade  and  investment  relationship  and  hailed  the  important 
achievement  reached  in  April  2018  with  the  political  agreement  on  the  trade  part  of  the 
modernised  Global  Agreement.  On  the  multilateral  issues,  the  Parties  exchanged  views  on 
WTO  reform  issues  and  ongoing  WTO  negotiations,  including  on  UNICITRAL  discussions 
with respect to the Multilateral Investment Court.  

The  Joint  Committee  on  Trade  issues  took  stock  of  progress  achieved  in  the  special 
committees  and  in  the  Joint  Committee  on  Spirits.  Agenda  and  minutes  of  the  Joint 
Committee meeting and of the special committee are all available on DG TRADE’s website81.  

The following special committees met ahead of the Joint Committee: 

Standards and Technical Regulations  

The  discussion  of  the  Special  Committee  on  Standards  and  Technical  Regulations  focused 
both  on  issues  of  interest  to  the  EU  (such  as  honey,  alcoholic  beverages  and  labelling 
requirements for textiles and ceramics) and on issues of Mexico’s interest (such as Titanium 
Dioxide  Regulation,  Public  Health  Bill  on  Alcohol  notified  by  Ireland,  the  Draft  Law  on 
Alcoholic Control of the Republic of Lithuania, the EU Proposal on Market Surveillance and 
Compliance of Products and the joint work between the EU and China for low risk products 
developed under the Codex Alimentarius).  

The  EU  reiterated  its  concerns  on  the  long  standing  issue  of  Mexican  textile  labelling 
requirements, which in EU’s view are excessive and not in line with international practices. 

80 https://ipkey.eu/en/latin-america 
81   https://ec.europa.eu/trade/policy/countries-and-regions/countries/mexico  

134 

 
 
 
 
 
 
                                                 
Mexico took note and also provided an update on the adoption of its technical regulation for 
honey. 

Mexico and the EU agreed to  maintain an open dialogue on the issues raised in  the Special 
Committee and to provide each other answers and clarifications on their respective issues of 
concern. 
Sanitary and Phytosanitary Measures (SPS) 

The  Special  Committee  on  SPS  Measures  met  on  7  May  2019.  Discussions  focused  on 
progress in market access issues, such as pre-listing of EU and Mexican establishments and 
certificates with a view to transitioning to the new bilateral SPS regime under the modernised 
Agreement. Several informal meetings and teleconferences followed throughout the year. The 
modernised Agreement, once in  place, will bring  substantial  facilitations and improved SPS 
procedures, without undermining the level of protection.  

Government Procurement  

During  the  Special  Committee  on  Government  Procurement  held  on  6  May  2019,  experts 
exchanged information on recent developments in the EU and Mexico in the field of public 
procurement  policies.  Mexico  explained  that  the  Decree  of  November  2018  reforming  the 
“Organic Law of the Federal Public Administration” would result in changes of attributions of 
the authorities in charge of public procurement policies at federal level. In addition, Mexico 
pointed  out  that  the  Ministry  of  Economy  will  maintain  its  responsibility  for  international 
negotiations on this topic. 

The EU presented the 2017 EU public procurement package focusing on professionalisation 
of public procurement staff  to ensure they have the needed skills, knowledge and integrity on 
digitalisation  of  procurement  processes,  so  that  EU  Member  States  can  make  use  of  new 
digital  technologies  in  procurement  such  as  E-invoicing  as  well  as  other  rules  to  enhance  
transparency and integrity. 

Both sides recognized the importance to ensure a better use  of public resources and to fight 
against  corruption  in  public  procurement  procedures,  and  that  an  open  and  transparent 
procurement system can contribute to reaching these objectives.  

Intellectual Property Matters  

The Special Committee on Intellectual Property Matters met on 16 May 2019 and addressed 
various  Intellectual  Property  Rights  (IPR)  matters.  The  EU  underlined  in  particular  two 
concerns  raised  by  EU  stakeholders:  the  difficulties  for  innovative  medicines  to  reach  the 
Mexican  market  and  IPR  enforcement  issues,  including  border  enforcement.  The  EU  also 
enquired  about  the  current  organisation  of  marketing  approvals  for  pharmaceuticals,  and 
received explanations  by Mexico. 

Mexico agreed on the importance of progressing on IPR border enforcement and that the new 
commitments taken in the Modernised agreement will be key for this. Mexico also provided 
information  regarding  the  modernisation  of  its  electronic  database  currently  used  for 
trademarks. 

135 

 
 
 
 
 
 
 
Mexico and the EU agreed to continue working on these issues in the Special Committee. 

Joint Committee on Spirits 

The Spirits Committee was established under the 1997 Agreement on mutual recognition and 
protection  of  designations  for  spirit  drinks  (also  referred  as  “Spirits  Agreement”).  The  4th 
Spirits Committee held on 8 May 2019 focused on progress on the update of Annexes I and II 
to the Agreement in relation to spirit drinks. In concrete terms, the parties mainly discussed 
the  amendments,  including  the  update  of  the  current  protection  status  of  the  Mexican 
geographic  indications  (GIs)  and  the  related  technical  specifications.  The  amendment  was 
finalised at the end of 2019 and entered into force on 31 January 2020. It grants protection to 
two additional Mexican GIs and almost 100 additional EU GIs. This brings the total number 
of EU spirits geographical indications protected in Mexico to 232 and the number of Mexican 
spirits geographical indications protected in the EU to six.  

4. 

SPECIFIC AREAS OF IMPORTANCE  

The  Global  Agreement  from  1997  does  not  contain  provisions  on  sustainable  development, 
which  in  the  meantime  have  become  an  integral  part  of  the  new  generation  of  FTAs. 
However, a solid Trade and Sustainable Development Chapter is integrated in the modernised 
Agreement.  Soon  after  the  conclusion  of  the  negotiations,  Mexico  ratified  the  International 
Labour Organization (ILO) Convention No. 98 in November 2018, which guarantees the right 
to  organize  and  collective  bargaining.  With  this  ratification,  Mexico  has  now  ratified  all  8 
fundamental ILO Conventions.  

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

The Mexican economy stagnated in  2019. Growth was driven by sustained private demand, 
increase  of  exports  and  a  strong  services  sector,  which  contrasted  the  drop  in  public 
investments  and  in  the  construction  sector.  The  current  account  deficit,  at  0.3%  of  GDP  in 
2019, was substantially lower than in previous years. While oil exports volume remained low, 
leading to a negative hydrocarbon trade balance, trade deficit turned positive after 5 years of 
recording  negative  values.  Both,  foreign  direct  investment  (FDI,  see  further  below)  and 
remittances remained high, but  the former fell substantially in  2019 (to 2.4% of GDP, from 
3.1% of GDP in 2018). Unemployment was low but the rate of workers earning the minimum 
wage remained high at 43% while as much as 58% of workers are in the informal sector. 

The  year  2019  has  seen  a  slight  decrease  in  FDI  inflows,  according  to  Mexican  data  when 
comparing  to  the  previous  year.  WB  data  reflects  a  stronger  (27%)  drop  of  FDI  in  2019 
compared to 2018. FDI in Mexico is concentrated both in reinvestment and new investments, 
which  show  that  the  country  continues  to  be  a  rather  attractive  for  foreign  investors, 
considering its geopolitical and economic situation. EU 27 FDI in Mexico accounts for 38% 
of total foreign investments, which puts the EU at the first place, followed by the US (37.5%). 

136 

 
 
 
 
 
5.2 

Trade in goods 

In 2019, bilateral trade in goods between the EU and Mexico totalled €61.8 billion, increasing 
by 1% compared to  2018 and tripling trade if compared to 2000 (€21.7 billion). Differently 
from the trend in 2018, Mexican exports to the EU (€24.3 billion) grew faster than EU exports 
to  Mexico  (€37.6  billion),  that  is,  3%  and  -0.2%,  respectively,  due  partly  to  a  decrease  in 
economic activity and decreased Mexican imports of capital goods and inputs.  

The EU continues to register a trade surplus with Mexico, decreasing from €14.1 in 2018   to 
€13.3 in 2019. In 2019, the EU remains Mexico’s second largest export market, with a share 
of 10.7% of total exports and totalling €24.3 billion.  

The structure of Mexico’s trade with the EU maintains a coherent pattern with the respective 
share of the bilateral trade increasing at similar rates over the years resulting in a rather stable 
trade  balance.  Moreover,  as  explained  below,  bilateral  trade  is  concentrated  in  a  number  of 
sectors. 

EU  Imports  from  Mexico:  Mexican  goods  imported  into  the  EU  totalled  €24.3  billion  and 
import increases were observed across most sectors, following the same trend as in 2018. The 
largest export categories of products imported from Mexico to the EU were: 

  machinery and appliances (€6.2 billion – 25.6% of EU imports from Mexico); 
 
transport equipment (€6.1 billion – 25.1% of EU imports from Mexico); 
  mineral products (€3.9 billion – 15.9% of EU imports from Mexico); 
  optical/photographic  instruments  (€3.3billion  –  13.7%  of  EU  imports  from  Mexico 

11.9%). 

EU  Exports  to  Mexico:  European  exports  to  Mexico  totalled  €39.4  billion,  with  increase  in 
exports  widespread  throughout  the  different  sectors.  The  main  export  categories  remain  the 
same in comparison to previous years, namely:  

  machinery and appliances (€12.7 billion – 33.9% of EU exports to Mexico); 
 
  products  of  the  chemical  or  allied  industries  (€5.2  billion  –  14%  of  EU  exports  to 

transport equipment (€6.5 billion – 17.3% of EU exports to Mexico); 

Mexico); 

  base metals (€3.1 billion – 8.2% of EU exports to Mexico). 

5.3 

Trade in agricultural products 

Trade  in  agricultural  and  fisheries  products  totalled  €2.7  billion  in  2019,  consisting  of  €1.2 
billion EU imports from Mexico and €1.5 billion EU exports to Mexico.  

EU  imports  of  agricultural  and  fisheries  products  from  Mexico  were  stable  and  were 
dominated by: 

137 

 
 
 
 
 
 
  Fruits and nuts at €332 million, or 25,7% of EU imports of agricultural and fisheries 

products from Mexico;  

  Beverages  and  spirits  at  €244  million  increased  by  21.2%  compared  to  2018,  now 
representing 18.9% of EU imports of agricultural and fisheries products from Mexico;  
  Fish  and  crustaceans  at  €104  million,  or  8.1%  of  EU  imports  of  agricultural  and 

fisheries products from Mexico. 

EU  exports  to  Mexico  of  agricultural  products  increased  by  12.4%  in  2019,  and  were 
dominated by: 

  Beverages  and  spirits  at  €299  million  increased  by  9.7%  compared  to  2018,  now 
representing 20% of EU exports of agricultural and fisheries products to Mexico;  
  Oil seeds & oleaginous fruits  at €157 million increased by 14.3% compared to 2018, 

or 10.5% of EU exports of agricultural and fisheries products to Mexico;  

  Dairy  produce  at  €135  million,  or  9%  of  EU  exports  of  agricultural  and  fisheries 

products to Mexico.  

TRQs granted by the EU to Mexico  

Three  of  the  TRQs  opened  under  the  agreement  by  the  EU  for  imports  from  Mexico  were 
filled  completely,  namely  those  for  bananas,  asparagus  and  orange  juice.  For  both  frozen 
orange juice and for natural  honey, the  fill  rate  was around two thirds.  Precise numbers  are 
not given for these quotas, since the quota years do not coincide with the calendar year. For 
egg albumin, the fill rate was 11% for the quota year 2018-2019. For other quotas, the fill rate 
was below 3%. 

At  the  time  of  drafting  the  staff  working  document,  data  establishing  the  utilisation  rate  of 
TRQs granted by Mexico to the EU was not readily available. 

Geographical indications 

To prepare for the implementation of the GI provisions in the modernised Global Agreement, 
the  EU  organised  in  December  2019  a  seminar  in  Mexico  City  directed  at  the  Mexican 
Institute for Intellectual Property, Customs Officials and Judiciary departments. 

In March 2019, the EU participated as a ‘guest of honour’ to ANTAD Alimentaria agri-food 
retail fair, with a full pavilion, cooking and mixology shows as well as with the organisation 
of a Round table on Geographical Indications.  

In July 2019, the EU also carried out an Export Seminar in Mexico City to promote the safety, 
quality  and  traditional  aspects  of  EU  agri-food  products,  including  a  GI  exhibition  and  a 
cooking show including GI products.  

138 

 
 
 
 
 
5.4 

Trade in services and Foreign Direct Investments 

In terms of services, EU imports from Mexico are dominated by travel services, and transport 
services.  EU  services  exports  to  Mexico  consist  mainly  of  business  services,  transport 
services,  travel  services  and  telecommunications,  computer  and  information  services.  Latest 
statistics in trade in services show that Trade in services increased from €15.6 billion in 2017 
to €17.1 billion in 2018 (+9.9%), in fact growing faster than trade in goods in the same period 
(+5.8%).  The  EU  has  a  trade  surplus  with  Mexico  that  has  increased  in  2018  (latest  data 
available) as the EU registered a €6.1 billion surplus with Mexico in 2018 compared to €4.9 
billion in 2017.  

As for  foreign direct  investments, according to  Eurostat statistics, the Mexican investment 
stock to the EU accounts for €40.6 billion and EU investment stock to Mexico accounts for 
€158.6 billion in 2018. This positions the EU as the second largest investor in Mexico behind 
the US. 

According  to  report  on  investment  of  the  Mexican  Ministry  of  Economy82,  in  2019  the  EU 
contributed with approximately 40% of the total FDI flows in 2019 making the EU as a whole 
the  largest  contributor  even  above  the  United  States  (36.8%).  Over  50%  of  the  EU’s 
contribution came from two Member States (Spain and Germany). 

6. 

CONCLUSIONS  

In 2019, EU trade relations with Mexico confirmed their positive trends with both goods and 
services showing an upward trend.  

During  the  course  of  2019,  the  EU  and  Mexico  worked  towards  finalising  all  outstanding 
aspects of the modernisation process  and advanced on the legal revision of the trade part of 
the modernised Global Agreement.  

The  outcome  of  negotiations  is  highly  satisfactory  given  that  the  level  of  ambition  of  the 
modernised  Global  Agreement  is  very  high  and  in  line  with  the  most  ambitious  trade 
agreements  signed  by  the  EU.  As  a  result,  the  modernised  Global  Agreement  will  bring 
improvements across the board in the EU-Mexico trade and investment relations, notably as 
regards: 

  Goods: the EU has obtained significant market access on key EU exports (e.g. pork, 
poultry, PAPs and dairy), resulting in the eventual liberalisation of 99% of tariff lines.  

  Services: Mexico committed to open up its services market with comprehensive and 
ambitious  concessions,  including  on  Maritime  Transport,  Financial  Services  and 
Telecommunication, thereby making it easier for EU companies to make business in 
Mexico. 

82 “Inversion Extranjera Directa en Mexico y en el Mundo” Secretaria de Economia 

139 

 
 
 
 
                                                 
  Investment  protection:  Mexico  has  agreed  to  that  investor-State  disputes  are 
adjudicated  under  an  Investment  Court  System  and  to  the  substantive  rules  for 
protection  and  to  replace  the  existing  14  BITs  with  EU  Member  States  by  the 
agreement with the EU. 

  Energy:  Mexico  has  accepted  commitments  in  several  chapters  (Energy  and  Raw 
Material,  Services,  Investment,  State  owned  enterprise)  which  will  give  the  EU 
important market access.  

  SPS: the agreed texts established a high level of cooperation between the Mexican and 
regarding  pre-listing,  pre-clearance  and 

in  particular 

EU  administrations, 
regionalisation. 

  Public Procurement: the outcome is also very ambitious and includes commitments 

at sub-central level, the details of which were finalised in 2020.  

  Geographical Indications: Mexico has agreed to protect the shortlist of 340 EU GIs 
with  a  high  level  of  protection,  and  to  incorporate  the  Spirits  Agreement  under  the 
modernised  Global  Agreement  with  the  same  level  of  protection  for  EU  spirits  GIS 
therein recognised.  

  Trade  and  Sustainable  Development  (TSD):  the  modernised  Agreement  will 
contain  a  fully-fledged  TSD  Chapter  in  which  Mexico  committed  to  effectively 
implement  labour  and  environmental  standards  and  agreements,  including  binding 
provisions on the implementation of the Paris Agreement.   

  Anti-corruption: for the first time ever in an EU agreement there will be an protocol 
on  anti-corruption  to  fight  against  bribery  and  money  laundering  in  trade  and 
investment, including a mechanism for the resolution of disputes.  

  Civil society mechanism: the civil society consultation mechanism which previously 

was limited to the TSD chapter will be extended to the whole agreement.  

140 

 
 
 
 
7. 

STATISTICS 

MEXICO 

141 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Mexico (mio €)Imports17 66518 48221 68923 56224 258Exports31 88632 35236 16037 66937 584Balance14 22113 87014 47114 10613 327Share Mexico in EU27 trade with Extra-EU27Imports1.1%1.2%1.2%1.2%1.3%Exports1.7%1.7%1.8%1.8%1.8%Total (I+E)1.4%1.5%1.5%1.5%1.5%Share EU27 in trade Mexico with worldImports10.5%10.4%11.1%10.9%10.7%Exports4.3%4.3%5.1%5.1%4.6%Total (I+E)7.5%7.5%8.2%8.1%7.8%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Mexico: IMF DotsTotal merchandise trade EU27 with Mexico (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports23 56224 2586953.0%Imports1 907 5651 934 94427 3791.4%Exports37 66937 584-84-0.2%Exports2 059 8822 132 01572 1333.5%Balance14 10613 327-780Balance152 317197 07144 754Total trade61 23161 8426111.0%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Mexico (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports1 0231 18516315.9%Imports118 891121 6442 7532.3%Exports1 3181 48216412.4%Exports169 000181 82512 8257.6%Balance2952961Balance50 10960 18110 072Total trade2 3412 66732613.9%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Mexico (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports22 53923 0725332.4%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports36 35136 103-248-0.7%EU27 exports1 890 8821 950 19059 3093.1%Balance13 81113 030-781Balance102 208136 89034 682Total trade58 89059 1752850.5%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Mexico (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports5 2975 5112144.0%Imports824 543824 015-528-0.1%Exports10 28911 6191 33012.9%Exports928 420968 64840 2284.3%Balance4 9926 1081 116Balance103 877144 63340 756Total trade15 58717 1311 5449.9%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Mexico (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports3 3464 1454 5145 2975 511Imports642 682776 924784 743824 543824 015Exports7 6048 7229 37710 28911 619Exports750 713849 023855 477928 420968 648Balance4 2584 5774 8634 9926 108Balance108 03172 09970 734103 877144 633Total trade10 95012 86713 89115 58717 131Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Mexico (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward35 08244 10440 578Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward127 415151 564138 956144 049158 637Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward7 4358 612-1 781Inward143 012803 285328 703209 462-67 421Outward23 81215 703-9 35610 96510 068Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsMexicoMexico20182019Extra-EU27Mexico2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Mexico05 00010 00015 00020 00025 00030 00035 00040 00020152016201720182019Merchandise trade EU27 with Mexico (mio €)ImportsExportsBalance 
 
 
 
 
PART III: EU NEIGHBOURING COUNTRIES 

142 

 
 
 
 
 
 
PART III.I 

SWITZERLAND, NORWAY AND TURKEY 

143 

 
 
 
 
 
 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE  EU-
SWITZERLAND TRADE AGREEMENT 

1. 

INTRODUCTION 

The  EU-Swiss  trade  relations  are  among  the  deepest  worldwide  outside  the  context  of  a 
customs union/internal market. For Switzerland, the EU is by far the most important trading 
partner.  For  the  EU,  Switzerland  is  the  fourth  overall  trading  partner,  number  three  for 
services.  

The cornerstone of EU-Swiss trade relations is the EU-Switzerland Free Trade Agreement 
of  197283  (hereinafter,  the  “FTA”),  one  of  the  oldest  agreements  signed  by  the  EU.  It 
concerns  goods  only.  It  does  not  contain  provisions  on  services,  investment,  intellectual 
property  rights  (IPR),  government  procurement  or  social  and  environmental  values.  No 
dispute  settlement  mechanism  is  foreseen  beyond  the  regular  annual  dialogue  in  Joint 
Committee  meetings.  As  a  consequence  of  the  rejection  of  European  Economic  Area 
membership  by  the  Swiss  people  in  1992,  Switzerland  and  the  EU  agreed  on  a  package  of 
seven sectoral agreements signed in 1999 (known in Switzerland as ‘Bilaterals I’). Some of 
them are relevant from a trade perspective:  

 

 

 

 

 

The  Free  Movement  of  Persons  Agreement84  allows  for  the  provision  of  services, 
limited in time.  
The  Mutual  Recognition  Agreement  in  relation  to  conformity  assessment85  ensures 
that, in twenty regulated sectors, the conformity assessment provided by one party is 
recognised by the other, which facilitates trade between the parties.   
The  Public  Procurement  Agreement86,  that  builds  on  the  WTO  Government 
Procurement Agreement. 
The  Agreement  on  trade  in  agricultural  products87,  which  includes  sanitary  and 
phytosanitary  rules,  as  well  as  tariffs  and  tariff  rate  quotas  for  agricultural  products, 
except for cheese that is liberalised.  
A protocol on processed agricultural products (protocol 2), which was added to the 
Free  Trade  Agreement  in  2004.  It  includes  a  mechanism  whereby  in  practice 
Switzerland receives compensation for the very  significant  price differential  of basic 
agricultural  products  -  which  serve  as  inputs  to  processed  agricultural  products  - 
between the EU and Switzerland. 

In the last two decades, there was no major evolution to this rather complex setting. The gap 
is growing between the current legal arrangements governing trade relations between the EU 
and Switzerland and the standards of modern and comprehensive trade agreements concluded 
by  the  EU  and  Switzerland/EFTA,  respectively.  A  modernisation  of  the  FTA  is  therefore 
needed to unlock the potential for further bilateral trade. 

83  https://eur-lex.europa.eu/legal-content/en/ALL/?uri=OJ:L:1972:300:TOC  
84  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A22002A0430%2801%29  
85  http://trade.ec.europa.eu/doclib/docs/2013/december/tradoc_152006.pdf  
86  https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:22002A0430(06)  
87  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2002.114.01.0132.01.ENG 

144 

 
 
 
 
 
 
                                                 
Between 2014 and 2018, both parties negotiated an Institutional Framework Agreement to 
streamline the operation of 5 of the 7 existing bilateral agreements between Switzerland and 
the  EU,  covering:  the  Agreement  on  the  Free  Movement  of  Persons;  the  Agreement  on  Air 
Transport;  the  Overland  Transport  Agreement;  the  Agreement  on  Trade  in  Agricultural 
Products; and the Mutual Recognition Agreement. 

This  Institutional Framework Agreement aims at structuring EU-Swiss  relations, notably by 
providing crucial rules and procedures for dynamic take-over and homogenous application of 
internal  market  law,  for  enforcement  of  state  aid  rules  and  for  dispute  settlement.  A  Joint 
declaration is annexed to the agreement, where both parties commit to modernise the trade-
related agreements.  

The  negotiations  were  concluded  in  November  2018.  However,  after  consultations  with  its 
stakeholders  between  January  and  April  2019,  the  Swiss  Federal  Council  came  to  the 
conclusion,  on  7  June  2019,  that  it  could  not  agree  on  the  text,  as  it  felt  that  further 
clarifications  were  needed  on  three  parts  of  the  agreement.  While  the  EU  has  consistently 
stated its readiness to look at the requests for clarifications, it has also been urging for quick 
progress  rebuffing  at  the  same  time  any  opening  of  the  Institutional  Framework  Agreement 
for further negotiations.   

Even  if  the  Institutional  Framework  Agreement  could  be  signed  in  the  course  of  2020, 
negotiations  for  the  modernisation  of  the  FTA  and  other  trade  related  agreements  are  not 
expected  to  start  before  2021.  As  foreseen  in  the  Declaration,  both  parties  will  first  launch 
discussions for agreeing in a more detailed manner on the scope of the modernisation and the 
specific  areas  to  be  covered.  This  will  form  the  basis  of  an  impact  assessment  study  to  be 
launched before a negotiating mandate is proposed to EU Member States.   

2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGESS AND FOLLOW-UP ACTIONS 

In  terms  of  implementation  of  the  FTA  and  sectoral  agreements,  progress  was  made  on 
several issues in 2019, including the following:  

-The long-awaited Company tax reform, modifying the discriminatory cantonal fiscal status 
of companies, which was also problematic from a State aid point of view, was approved by 
the  Swiss  Parliament  in  September  2018  and  entered  into  force  on  1  January  2020.  The 
European  Commission  will  closely  monitor  the  implementation  of  the  reform  at  cantonal 
level, in light of the transitional measures allowed in relation to the abolition of the Cantonal 
tax schemes. 

-Following Switzerland’s 2018 notification to the WTO of its intention to increase the tariffs 
for  “seasoned  meat”,  the  EU  and  Switzerland  reached  an  agreement  in  July  2019.  The 
issue related to the Swiss reclassification of “seasoned meat”, which resulted in significantly 
higher import tariffs, affecting particularly EU exporters of beef. Being the main exporter to 
the  country,  in  May  2018,  the  EU  submitted  a  claim  of  interest  to  Switzerland  in  order  to 
negotiate adequate compensation (Article XXVIII of the GATT).  The negotiated agreement 
includes compensation in the form of an additional 1 200 tonnes to be added to the existing 
WTO meat tariff rate quota (TRQ) of Switzerland. In addition, Switzerland will also open an 
autonomous TRQ of 600 tonnes specifically for beef seasoned meat. The Decision was signed 

145 

 
 
 
 
 
 
in  December 2019  and the European Parliament  gave its consent  in  June 2020. Switzerland 
will implement the compensation once having finalised its own legislative procedures, most 
likely in 2021.  

-Solutions  were  found  in  the  context  of  the  EU-Swiss  Institutional  Framework  Agreement, 
which includes State aid rules for existing and future market access agreements between 
the  EU  and  Switzerland  and  a  compromise  solution  to  deal  with  Switzerland’s  so-called 
“flanking  measures”  relating  to  the  posting  of  workers.  As  explained  above,  however,  this 
Institutional Framework Agreement remains to be signed.    

Some of the main outstanding issues include the following:  

-The 2019 process of adapting the reference prices of basic agricultural products needed in 
the  context  of  the  price  compensation  mechanism  for  processed  agricultural  products 
(protocol  2  to  the  FTA)  encountered  some  delays.  However,  there  was  progress  in  the 
development  of  a  methodological  handbook  aiming  at  bringing  more  transparency  and 
simplicity  in  this  annual  adaptation  of  protocol  2,  notably  on  the  change  of  the  reference 
period to better reflect the realities of the market for basic agricultural goods. 

-Market  access  in  the  services  sector  remains  a  major  issue.  The  so-called  “flanking 
measures”  that  the  Swiss  put  in  place  to  accompany  the  implementation  of  the  EU-
Switzerland  Free  Movement  of  Persons  Agreement88  are  a  long-standing  trade  issue,  as  the 
EU  considers  them  burdensome  and  disproportionate.  The  lack  of  a  level  playing  field  as 
regards  state  aid  also  remains  an  issue,  as  existing  agreements  between  the  EU  and 
Switzerland do not include effective state aid rules.  

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The  66th  Joint  Committee  meeting  under  the  EU-Swiss  FTA  took  place  on  21  November 
2019.  The meeting provided the opportunity, on the one hand, to underline the high level of 
integration of both parties’ economies and the shared commitment to the multilateral  trading 
system  and, on the other hand, to  revisit  a wide  range of issues  from  processed agricultural 
products to certain market access issues for EU service providers in Switzerland. 

Joint  committees  under  other  bilateral  agreements  of  trade  relevance  also  take  place  on  a 
regular  basis.  The  Annual  Joint  Committee  meeting  on  Agriculture  took  place  on  7 
November  2019  and  several  working  groups  met  on  technical  issues  such  as  Geographical 
Indications, organics and wine & spirits drinks. More recently, the 15th meeting of the Joint 
Committee  established  under  the  EU-Switzerland  Agreement  on  Mutual  Recognition  in 
relation to conformity assessment took place in Brussels on 24 January 2020.  The main issue 
discussed in the meeting related to the technical  work for the update of the EU-Switzerland 
Mutual Recognition Agreement (MRA) in the sector of medical devices. 

88  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A22002A0430%2801%29 

146 

 
 
 
 
 
 
 
 
 
                                                 
4. 

SPECIFIC AREAS OF IMPORTANCE   

Unlike the three EEA EFTA countries (Norway, Iceland and Liechtenstein), Switzerland does 
not have full access to the four freedoms of the EU Internal market and does not dynamically 
integrate  the  EU  acquis.  On  the  basis  of  the  sectoral  bilateral  agreements,  Switzerland  has, 
however, access -to a certain extent- to two pillars of the internal market: the free movement 
of  goods  (with  the  exception  of  most  agricultural  products  and  approximately  half  of 
processed agricultural  products,  where access  is  limited), and the free movement  of persons 
(which includes also cross-border provision of services limited in time).  

Council Conclusions of February 2019 as well as the European Parliament recommendation 
of March 2019 made it clear that the conclusion of the Institutional Framework Agreement 
is  a  precondition for  the  conclusion  of future  agreements  on  Swiss  participation  in  the 
EU’s  internal  market  and  also  an  essential  element  for  deciding  upon  further  progress 
towards  mutually  beneficial  market  access.  In  the  absence  of  this  agreement,  existing 
preferential access may therefore erode over time, as sectoral bilateral agreements may not be 
updated.   

This was, for example, the case in July 2019 when the EU decided not to renew Switzerland’s 
stock  market  equivalence.  The  issue  of  the  timely  update  of  the  EU-Switzerland  Mutual 
Recognition  Agreement  (MRA)  on  Medical  devices  was  also  the  subject  of  recurring 
discussions in the past months.  To maintain the MRA in operation after the entry into force of 
the new EU Regulations on medical devices89, the revision of the Chapter on Medical devices 
would indeed need to be finalised before the entry into application of the new EU Regulations 
initially  planned  on  26  May  2020.  In  the  absence  of  such  revision,  mutual  recognition  of 
conformity assessment results between the EU and Switzerland would cease due to a lack of 
legal basis. However, in the wake of the Covid-19 pandemic, the EU decided to  postpone by 
one  year  the  date  of  application  of  its  Medical  Devices  Regulation  to  ensure  the  continued 
availability  of  vitally  important  medical  devices. This  means  that the  EU-Switzerland  MRA 
Chapter on medical devices will continue to apply for one additional year, until 26 May 2021. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

Switzerland figures amongst the most competitive economies in the world. In terms of GDP 
per capita, Switzerland figures amongst the world's top three. Around 75% of the Swiss GDP 
is  generated  in  the  services  sector  whilst  25%  go  to  industry.  The  contribution  from  the 

89 Regulation (EU) 2017/745 on medical devices and Regulation (EU) 2017/746 on in vitro diagnostic medical 

devices. 

147 

 
 
 
 
 
 
                                                 
agricultural  sector  is  less  than  1%.  Over  99%  of  Swiss  companies  are  small-  and  medium-
sized companies.  

Financial services are an important pillar of the Swiss economy. The banking and insurances 
sector account for around 9% of Switzerland's GDP and provides for around 6% of total jobs 
in  Switzerland.  Following  the  Eurozone  crisis,  the  Swiss  Franc  appreciated  remarkably  and 
nearly  reached  parity  with  the  euro.  The  strong  franc  is  notably  a  challenge  for  the  Swiss 
export  industry.  Over  the  last  years,  the  Swiss  National  Bank  has  tried  to  depreciate  the 
currency with negative interest rates and continuous devaluation but only had limited success. 

Switzerland's foreign economy is very important. Around 2 out of 5 Swiss Francs are earned 
abroad  and  exports  make  up  66%  of  its  GDP.  In  fact,  Switzerland  is  highly  integrated  in 
global  value  chains  and  serves  as  a  supplier  of  highly  specialized  pre-products  to  various 
other  countries.  Its  top  three  export  categories  are  chemical  &  pharmaceutical  products, 
precious metals & gemstones, precision instruments & machinery and watches & jewellery.  

As for agricultural trade, Switzerland's main export products are coffee, chocolate and cocoa-
based products. Switzerland further exports food preparations and sauces. Switzerland's major 
agricultural imports are animal products, tea, coffee, spices and beverages (including alcohol). 
Switzerland’s agricultural trade balance is regularly negative. 

Switzerland  relies  on  an  extensive  FTA  network,  which  covers  more  than  75  countries. 
Most recent additions include EFTA-Indonesia-FTA (signed in 2018 and ratified in 2019) and 
the EFTA-Mercosur FTA (negotiations  concluded in  2018). Switzerland also  has a bilateral 
FTA with China (since 2014). However, the EU is the country’s most important partner with 
49.9% of its exports going to the EU  and 59% of its imports originating in the EU in 2019.  

In  2019,  Switzerland’s  GDP  grew  only  moderately  by  0.9  %  (after  2.8  %  in  2018).  The 
cyclical weakness is particularly evident in the Swiss industry which is sensitive to demand. 
In industrial branches of machinery and metals, the poor development of the previous quarters 
has continued until the end of the year. The fall in turnover also affected the labour market: 
unemployment and partial unemployment continued to increase in these sectors. On the other 
hand, the pharmaceutical sector, which is less sensitive to cyclical conditions, has once again 
been  affirmed  as  a  pillar  of  growth.  Switzerland  is  thus  in  line  with  the  weak  international 
development  of  the  industrial  sector,  but  its  structure  of  industries  constitutes  a  stabilising 
factor. 

5.2 

Trade in goods 

The EU remains Switzerland’s main trading partner, representing 53% of its imports and 
41% of its exports in 2019. Following BREXIT, Switzerland on the other hand is now the 
fourth  largest  trading  partner  of  the  EU,  after  the  US,  China  and  the  UK,  representing 
roughly 7% of the EU’s exports of goods, and 6% of its imports. Overall, both imports and 
exports grew by approximately 9% in 2019 with the total bilateral trade reaching €257 billion. 
The trade balance remains positive for the EU at around €36.5 billion in 2019.  

In 2019, the top  three products  imported from  Switzerland concerned chemicals  and related 
products (41%), machinery and appliances (14.5%) and optical and photographic instruments 

148 

 
 
 
 
 
(10%).  It  is  worth  noting  that  Swiss  exports  of  chemicals  grew  by  nearly  23%  since  2018, 
contributing almost exclusively to Switzerland’s exports growth to the EU in 2019. 

EU exports  to Switzerland mainly included the following product  categories:  chemicals  and 
related  products  (22%),  machinery  and  appliances  (16%)  and  transport  equipment  (9%).  
Almost 80% of the EU’s exports growth to Switzerland in 2019 can be attributed to chemicals 
(+7.5%), transport equipment (+12.6%), pearls and precious metals (+40%) and raw hides and 
skins (+74.5%). 

5.3 

Trade in agricultural products 

In  2019,  trade  in  agricultural  goods  totalled  nearly  €13  billion,  with  a  clear  surplus  in  the 
trade  balance  of  agricultural  goods  for  the  EU  (€3.8  billion).  With  EU  exports  reaching 
€8.4 billion in 2019, Switzerland is the 4th destination for EU’s agricultural products. On 
the import side, Switzerland is the 6th origin country for agricultural goods imported to 
the EU, as EU imports reached €4.6 billion in 2019. Total bilateral trade in agricultural goods 
has been steadily growing for the past decade.  

The  EU’s  imports  were  dominated  by  roasted  coffee  and  tea  (31%),  waters  and  soft  drinks 
(14%)  and  chocolate,  confectionery  and  ice  cream  (12.2%).  In  2019,  the  EU  exported  to 
Switzerland  mainly  wine,  vermouth,  cider  and  vinegar  (13%),  followed  by  pasta,  pastry, 
biscuits and bread (6.5%) and vegetables (5.5%).  

149 

 
 
 
 
 
 
 
TRQs granted by the EU to Switzerland 

Utilisation rate of TRQs opened by the EU to Switzerland 

Utilisation in TRQ period ending in: 

2017 

0% 

17% 

100% 
100% 
15% 
0% 

0% 

0% 
1% 
0% 

0% 
0% 
0% 
0% 
0% 
1% 
0% 

0% 
2% 
0% 
0% 
36% 
10% 
0% 
0% 
0% 
0% 
0% 
0% 

0% 
11% 

0% 

2018 

0% 

20% 

72% 
15% 
6% 
0% 

0% 

0% 
1% 
3% 

0% 
0% 
0% 
0% 
0% 
1% 
0% 

0% 
2% 
0% 
0% 
35% 
10% 
1% 
0% 
6% 
0% 
0% 
0% 

0% 
21% 

0% 

2019 

0% 

16% 

100% 
15% 
46% 
8% 

0% 

0% 
1% 
8% 

0% 
0% 
0% 
0% 
0% 
1% 
0% 

0% 
2% 
0% 
0% 
38% 
55% 
13% 
0% 
1% 
0% 
0% 
0% 

0% 
20% 

1% 

Sector 

TRQ description 

Beef 

Pigmeat 

Beef 
Dairy 
F&V 
F&V 

F&V 

F&V 
F&V 
F&V 

F&V 
F&V 
F&V 
F&V 
F&V 
F&V 
F&V 

F&V 
F&V 
F&V 
F&V 
F&V 
F&V 
F&V 
F&V 
F&V 
F&V 
F&V 
F&V 

F&V 
F&V 

Cereals 

Bovine animals 
Sausages; hams in 
brine, smoked 
chops and pork 
neck 
Beef (Viande des 
Grisons) 
Cream & Yogurt 
Potatoe seed 
Tomatoes 
Onions, leeks & 
other 
Cabbages (except 
Brussels sprouts) 
Lettuce & chicory 
Carrots & turnips 
Edible root 
vegetables 
Cucumbers 
Beans 
Aubergines 
Celery 
Spinach 
Courgettes 
Pumpkins & Other 
vegetables 
Salad vegetables 
Chard & cardoons 
Fennel 
Potatoes, prepared 
Apples 
Pears & quinces 
Apricots 
Cherries, sweet 
Plums & sloes 
Strawberries 
Raspberries 
Blackberries, 
mulberries & 
loganberries 
Cherries, frozen 
Flour, meal & 
powder of bananas 

TRQ 
Quantity 

4.600 

Unit 
Number 
of items 

1.900  T 

1.200  T 
2.000  T 
4.000  T 
1.000  T 

5.000  T 

5.500  T 
3.000  T 
5.000  T 

3.000  T 
1.000  T 
1.000  T 
500  T 
500  T 
1.000  T 
1.000  T 

1.000  T 
1.000  T 
300  T 
1.000  T 
3.000  T 
3.000  T 
3.000  T 
500  T 
1.500  T 
1.000  T 
200  T 
100  T 

100  T 
500  T 

5  T 

150 

 
 
 
 
 
 
TRQs granted by Switzerland to the EU90 

90 The information is only available in French language.  

151 

Nr.ProduitsContingentunité201720182019 (provisoire)Remplissage 2017-201932Aliments pour chiens et chats6.000         tonnes5.0186.0006.00095%101Jambon salé ou séché à l'air1.100         tonnes1.0991.0981.095100%102Viande bovine séchée dont Bresaola220            tonnes220218220100%104Plants, arbres60.000       unités60.00060.00060.000100%105Fleurs coupées1.000         tonnes70986975678%106Tomates10.000       tonnes10.00010.00010.000100%107Salade iceberg2.000         tonnes2.0002.0002.000100%108Chicorées witloofs2.000         tonnes76783374239%109Aubergine1.000         tonnes1.0001.0001.000100%110Courgettes2.000         tonnes2.0002.0002.000100%111Abricots2.100         tonnes2.1002.1001.32388%112Fraises (01.09 - 14.05)10.000       tonnes10.00010.00010.000100%115Porto100.000     litres100.000100.000100.000100%116Retsina (vin blanc grec)50.000       litres26.65127.50017.31948%119Chevaux vivants100            têtes801009291%120Poitrines de poulet congelées2.100         tonnes1.0591.6341.59168%121Morceaux et abats de poulet congelé1.200         tonnes5729711.01071%122Poitrine de dinde congelée800            tonnes76280080098%123Poitrine de dinde congelée600            tonnes1309012019%124Canards congelés700            tonnes53850953475%125Foies gras20              tonnes202020100%126Viandes de canard et d'oie congelées100            tonnes100100100100%127Viande de lapin1.700         tonnes83678870146%128Viande de gibier100            tonnes100100100100%129Oeufs d'oiseaux150            tonnes150150150100%130Miel d'acacia200            tonnes129857949%131Miel non d'acacia50              tonnes505050100%132Concombres pour conserve (21.10  - 14.04)100            tonnes0000%133Concombres pour conserve (15.04 - 20.10)2.100         tonnes82557157731%134Cornichons800            tonnes2271238418%135Poivrons (01.04 - 31.10)1.300         tonnes1.3001.3001.300100%136Légumes et mélanges de légumes150            tonnes13914215096%137Oignons100            tonnes100100100100%138Pois fourragers1.000         tonnes1.0001.0001.000100%139Pois non fourragers1.000         tonnes96873555875%140Prunes (01.07 - 30.09)600            tonnes600600600100%141Fraises (15.05 - 31.08)200            tonnes200200200100%142Framboises (01.06 - 14.09)250            tonnes250250250100%143Fraises de transformation (*)1.000         tonnes144Framboises, mûres de transformation (*)1.200         tonnes145Myrtilles200            tonnes16010017172%146Autres fruits1.000         tonnes1.0001.0001.000100%147Piments du genre Capsicum ou Pimenta150            tonnes150150150100%148Blé et méteil fourrager50.000       tonnes50.00050.00050.000100%149Maïs fourrager13.000       tonnes13.00013.00013.000100%150Champignons du genre Agaricus1.700         tonnes1.6881.6821.49095%151Viande de chèvre100            tonnes100100100100%152Concombres pour salade (21.10. - 14.04)200            tonnes200200200100%153Fruits à coque100            tonnes23201720%301Jambon saumuré, saucisses et cou de porc4.087         tonnes4.0844.0514.070100%sources : OFAG (KIC) et AFD le 12.05.2020(*) Le taux NPF avec allègement douanier est plus petit que le taux préférentiel.Tableau : Taux de remplissage 2017-2019 (2019 prov.) des contingents tarifaires offerts par la Suisse à l'UE28 classés par numéro de contingent 
 
 
 
 
                                                 
5.4 

Trade in services and Foreign Direct Investments 

With  trade  in  services  valued  at  over  €170  billion  in  2018,  Switzerland  is  the  third  trading 
partner of the EU after the US  and the UK. Following a constant  rise over five  years, 2018 
saw  a  1%  decline  in  the  EU’s  exports  of  services  to  Switzerland.  The  services  provided  by 
Switzerland in the EU were worth  €65.5 billion in 2018, a decrease of 4% compared to  the 
previous  year.  The  balance  of  trade  in  services  remains  favourable  to  the  EU,  with  an 
excedent of €39.5 billion. 

Given the very high integration between the two economies, Switzerland is a very important 
partner to the EU in terms of investment.  In 2018, the stocks of Foreign Direct Investment in 
the  EU  held  by  Switzerland  reached  €750  billion,  which  represents  a  58%  increase  since 
2014, while the EU’s FDI stocks in Switzerland reached over a trillion euros, amounting to a 
40%  increase  since  2014.  Switzerland  gathers  about  12%  of  the  total  EU27  stocks  invested 
outside the EU27.  

6. 

CONCLUSIONS  

Trade  between  the  EU  and  Switzerland  is  flourishing:  the  EU  is  Switzerland's  main  trading 
partner,  whereas  Switzerland  is  the  EU's  fourth  trading  partner  after  the  US,  China  and  the 
UK. However, since its entry into force in 1972, the FTA has not been updated to reflect the 
evolution  of  international  trade  law  and  standards,  such  as  new  provisions  from  WTO 
agreements  or  modern  bilateral  FTAs  and  introduction  of  a  binding  and  automatic  dispute 
settlement mechanism. 

On 23 November 2018, the negotiations on the EU-Swiss Institutional Framework Agreement 
(IFA)  came  to  a  close.  Since  the  1972  FTA  is  not  covered  by  the  IFA,  it  includes  a  Joint 
Declaration where parties commit to a future modernisation of the trade relationship. 

Council  Conclusions  adopted  in  February  2019  as  well  as  the  European  Parliament 
recommendation  adopted  in  March  2019  make  it  clear  that  the  adoption  of  the  IFA  is  a 
precondition  for  the  conclusion  of  future  agreements  on  Swiss  participation  in  the  EU’s 
internal  market  and  also  an  essential  element  for  deciding  upon  further  progress  towards 
mutually beneficial market access.  Given the ligh level of uncertainty around the timing of 
the  adoption  of  the  IFA  on  the  Swiss  side,  the  launch  of  the  negotiations  to  modernise  the 
FTA is also difficult to predict.  

152 

 
 
 
 
 
 
 
 
7. 

STATISTICS 

SWITZERLAND 

153 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Switzerland (mio €)Imports93 57095 73599 119101 658110 261Exports121 292124 842132 238134 674146 775Balance27 72229 10833 11933 01636 515Share Switzerland in EU27 trade with Extra-EU27Imports5.7%6.0%5.6%5.3%5.7%Exports6.5%6.7%6.6%6.5%6.9%Total (I+E)6.1%6.4%6.1%6.0%6.3%Share EU27 in trade Switzerland with worldImports51.9%48.7%52.4%53.4%53.3%Exports38.7%37.7%39.6%40.9%40.9%Total (I+E)44.8%42.9%45.6%46.8%46.7%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Switzerland: IMF DotsTotal merchandise trade EU27 with Switzerland (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports101 658110 2618 6038.5%Imports1 907 5651 934 94427 3791.4%Exports134 674146 77512 1019.0%Exports2 059 8822 132 01572 1333.5%Balance33 01636 5153 498Balance152 317197 07144 754Total trade236 332257 03620 7048.8%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Switzerland (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports4 4664 5981312.9%Imports118 891121 6442 7532.3%Exports8 0988 3762783.4%Exports169 000181 82512 8257.6%Balance3 6323 778146Balance50 10960 18110 072Total trade12 56512 9744093.3%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Switzerland (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports97 192105 6638 4728.7%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports126 576138 39911 8239.3%EU27 exports1 890 8821 950 19059 3093.1%Balance29 38432 7363 352Balance102 208136 89034 682Total trade223 767244 06220 2959.1%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Switzerland (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports68 06565 528-2 537-3.7%Imports824 543824 015-528-0.1%Exports106 033105 110-924-0.9%Exports928 420968 64840 2284.3%Balance37 96939 5821 613Balance103 877144 63340 756Total trade174 098170 637-3 461-2.0%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Switzerland (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports59 01867 10688 90268 06565 528Imports642 682776 924784 743824 543824 015Exports93 55799 480100 695106 033105 110Exports750 713849 023855 477928 420968 648Balance34 53932 37311 79337 96939 582Balance108 03172 09970 734103 877144 633Total trade152 575166 586189 596174 098170 637Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Switzerland (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward475 379634 955720 338748 126751 184Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward722 489870 876979 152970 0611 014 519Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward39 29299 640116 24415 68145 502Inward143 012803 285328 703209 462-67 421Outward-2 38843 55491 05934 61863 391Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsSwitzerlandSwitzerland20182019Extra-EU27Switzerland2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Switzerland050 000100 000150 000200 00020152016201720182019Merchandise trade EU27 with Switzerland (mio €)ImportsExportsBalance 
 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE  EU-
NORWAY TRADE AGREEMENT 

1. 

INTRODUCTION 

The  Free  Trade  Agreement  (FTA)  between  Norway  and  the  EU  entered  into  force  on  1 
July 1973. It concerns goods only and is one of the oldest trade agreements signed by the EU.  

Although  still  in  force,  it  has  been  superseded  in  many  respects  by  the  Agreement  on  the 
European Economic Area  (EEA),  which entered into force on 1 January  1994, and brings 
together the EU Member States and the three EEA EFTA States — Iceland, Liechtenstein and 
Norway — in the internal market. The EEA agreement ensures the free movement of goods, 
services, capital and persons between Norway and the EU and is the backbone of EU-Norway 
cooperation. Members of the EEA fully apply the whole acquis communautaire related to the 
"four  freedoms"  through  dynamic  incorporation  of  the  relevant  legislative  acts  into  the 
Protocols and Annexes of the EEA Agreement via Joint Committee Decisions. 

The  EEA  Agreement  does  not  cover  the  common  agricultural  and  fisheries  policies,  which 
means that agricultural and fisheries products are not in free circulation between the EU and 
Norway and quotas exist in a number of areas. Processed agricultural products are covered by 
a dedicated protocol to the EEA agreement but are also not in free circulation.  

2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGESS AND FOLLOW-UP ACTIONS 

Processed agricultural products 

Trade in processed agricultural products is regulated by Protocol 3 to the EEA agreement and 
to  a  certain  extent  by  Protocol  2  to  the  1973  FTA.  Protocol  3  of  the  EEA  foresees  the 
possibility to  levy customs  duties based on the cost  of the basic agricultural  products  in  the 
EU and in Norway. In practice, EU exports of processed agricultural products are hindered by 
high customs tariffs and this has been a long-standing trade barrier.  

In the Joint Working Group on processed agricultural products  which took place on 14 
November  2019,  the  Commission  recalled  the  EEA  Council  Conclusions,  which  welcomed 
the Contracting Parties’ intention of conducting before the summer of 2019 a new review of 
the trade regime for processed agricultural products within the framework of Article 2(2) and 
Article  6  of  Protocol  3  in  order  to  further  promote  trade  in  this  area.  The  Commission 
reaffirmed  its  wish  to  revise  Protocol  3  and  the  duties  therein  to  mutually  improve  market 
access  in  line  with  the  spirit  of  market  integration  of  the  EEA  Agreement.  The  Norwegian 
delegation  however  stated  that  the  purpose  of  the  reviews  under  Protocol  3  is  not 
liberalization but rather the establishment of a level playing field. The Norwegian delegation 
therefore  expressed  its  wish  to  keep  Protocol  3  unchanged  and  was  unwilling  to  make  any 
commitments towards further liberalization in processed agricultural products considering the 
perceived positive results of the Protocol.    This  divergence of views, did not allow to make 
progress beyond certain technical aspects (identifying code lines and updating the figures for 
the processed agricultural products relevant for any review). 

154 

 
 
 
 
 
 
Geographical Indications 

The EU and Norway agreed to encourage trade in agricultural products through Geographical 
Indications (GIs). The GIs negotiations were launched in 2013 and suspended at the request of 
Norway in April 2016. The Council of the European Union in its Conclusions of December 
2018  called  on  Norway  to  “resume  the  negotiations  on  the  protection  of  geographical 
indications, which is an important element of international trade in agricultural products and 
foodstuffs ”.  

Accordingly, in the context of the Joint Working Group on processed agricultural products of 
14  November  2019,  the  Commission  urged  the  Norwegian  delegation  to  consider  resuming 
the  negotiations  on  Geographical  Indications.  The  Norwegian  delegation  explained  that  it 
would consult back with relevant authorities on the possibility to resume these negotiations. 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

In  practice,  since  the  signing  of  the  EEA  agreement,  the  bilateral  agreement  has  been  less 
active  and  no  FTA  Joint  Committee  meetings  have  been  called  in  the  last  years.  Joint 
committee  decisions,  often  of  technical  nature  and  limited  in  number,  are  taken  by  written 
procedure. Bilateral trade issues such as trade irritants are discussed on a case-by-case basis, 
at technical and political level. 

The  EEA  Joint  Committee,  where  the  European  External  Action  Service  represents  the  EU 
side,  meets  six  to  eight  times  per  year91.  Four  subcommittees  assist  the  Joint  Committee92. 
They mainly deal with the incorporation of the EU acquis into the legal system of Norway.  

The EEA Council meets twice a year to discuss at political level a series of issues related to 
the EEA agreement. 
On the 25th anniversary of the entry into force of the EEA agreement, on 19 November 2019, 
the EEA Council recognised that the Agreement has been a solid basis for a broad and strong 
relationship among the parties. 

More  specifically  in  relation  to  trade,  the  EEA  Council  “expressed  concerns  regarding  the 
current  challenges  in  international  trade  and  reconfirmed  its  commitment  to  open  and  fair 
trade and rule-based trade relations. In particular, the EEA Council underlined the importance 
of  predictable  trade  conditions  for  economic  operators  within  the  EEA.  In  this  regard,  the 
exemption  of  Iceland,  Liechtenstein  and  Norway  from  the  EU’s  safeguard  measures 
concerning imports of a number of steel products is a good example”93. These exemptions, it 
is  reminded,  are  compatible  with  both  the  EU’s  bilateral  and  multilateral  World  Trade 
Organisation (WTO) obligations.  

91   https://eeas.europa.eu/diplomatic-network/european-economic-area-eea/348/european-economic-area-eea_en 

92   These  four  subcommittees  are  on  the  free  movement  of  goods,  the  free  movement  of  capital  and  services 

including company law, the free movement of persons and on horizontal and flanking policies. 

93  https://www.consilium.europa.eu/en/press/press-releases/2019/11/19/conclusions-of-the-52nd-meeting-of-the-

eea-council/  

155 

 
 
 
                                                 
 
4. 

SPECIFIC AREAS OF IMPORTANCE  

The integration in the internal market via the EEA agreement is a main achievement of 
EU-Norway  relations  and  the  main  driver  of  the  bilateral  trade  relations.  Norwegian 
companies  participate  in  the  single  market  almost  under  the  same  conditions  as  Member 
States, and vice-versa. The same rules apply to ensure a level-playing field, such as technical 
requirements  of  certain  products  or  competition  rules.  EU  Internal  Market  rules  are 
dynamically integrated into Norwegian law through the EEA agreement. This creates a stable 
and predictable environment. Norway has a say in the EEA decision-shaping process,  albeit 
without  a  vote  on  the  final  decision.  A  relatively  high  number  of  legal  acts  pending 
incorporation  into  the  EEA  Agreement  has  created  the  so-called  "backlog"  in  this  dynamic 
approximation. A joint effort of both the EU and the EEA EFTA States resulted in a historical 
decrease of this backlog, with the number of outstanding legal acts reduced to less than 350 
by  December  2019.  This  is  the  lowest  number  since  2013,  when  these  figures  were  first 
produced. 

As Norway is not part of the EU Customs Union, nor linked with the EU by a customs union 
agreement,  customs  procedures  apply  to  goods  exchanged  between  EU  Member  States 
and Norway. Norway is free to negotiate its own trade agreements and is not bound by the 
European  Common  Customs  Tariff.  If  goods  originating  in  third  countries  are  imported  in 
Norway before being re-exported to the EU, the customs procedure in place between Norway 
and the EU will ensure that the duties applicable to the end-destination are being levied. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

Growth in the Norwegian economy has been solid since 2016. The global upturn, improved 
cost-competitiveness and higher oil prices have helped lift activity, as have low interest rates. 
Norwegian GDP only grew by 1.2% in 2019. Inflation remained close to target at 2.17%. The 
policy rate is kept stable at 1.5% and unemployment remains low. 

The  krone  exchange  rate  has  reached  record-low  levels,  both  against  the  euro  and  other 
measures. Persistent uncertainty about global developments may have contributed to a weaker 
krone  over  time  than  projected  and  it  is  expected  to  remain  weak  in  the  years  ahead.  The 
krone  depreciation  also  improves  Norwegian  firms’  cost-competitiveness  and  may  pull  up 
demand for Norwegian goods and services. Goods from abroad are however becoming more 
expensive, which might impact imports. 

As a small open economy, Norway is affected by trade tensions. At the same time, growth in 
the  Norwegian  economy  has  been  solid  in  recent  years  in  spite  of  weaker  growth  among 
trading partners. It is likely that the direct impact of trade tensions on the Norwegian economy 
has so far been limited. Lower growth among Norway’s trading partners will however lead to 
lower demand for Norwegian exports. 

In  addition,  lower  global  growth  could  reduce  the  demand  for  oil,  resulting  in  a  lower  oil 
price. Norway also has substantial exports related to the car industry. These include car parts, 

156 

 
 
 
 
 
aluminium and ferro-alloys, which make up close to 10% of total mainland exports. There is 
therefore reason to believe that an increase in tariffs on cars and car parts imported from and 
exported to  the US  might  have a stronger direct  effect  on the Norwegian economy than the 
measures introduced so far. 

In  August  2019  EFTA  and  Mercosur  concluded  a  comprehensive  Free  Trade  Agreement 
covering,  among  other  things,  trade  in  goods,  trade  in  services,  investments,  intellectual 
property  rights  and  sustainable  development.  Agricultural  issues  were  negotiated  bilaterally 
and Norway made available some GSP quotas and existing WTO quotas already in use by the 
Mercosur states and increased quotas for input factors to the fisheries sector (soy and maize). 

5.2 

Trade in goods 

In  2019  the  EU  remained  the  first  trading  partner  for  Norway,  capturing  57%  of  the 
latter’s total trade.  However, at € 106 billion, total bilateral trade dropped by 5% compared to 
2018, highlighting mainly the sharp drop in mineral imports from Norway (-16.5%). Overall 
Norway’s  total  exports  to  the  EU-27  were  down  by  11%  in  2019  while  EU-27  exports  to 
Norway were slightly up by 3%. Norway’s exports contraction to the EU and the UK’s exit 
from  the  EU  contributed  to  Norway    dropping  two  places  in  the  top  EU  trading  partners 
ranking  (8th  position).  Norway’s  trade  surplus  with  the  EU  also  contracted  by  78% 
reaching  € 2.4  billion  in  2019.  Mineral  products  still  represents  nearly  half  of  EU  imports 
from Norway, despite a decrease of 16% in the reporting period. The largest share of exports 
in value are represented by machinery and appliances, followed by transport equipment and 
chemicals. 

5.3 

Trade in agricultural products 

Trade in agricultural goods between the EU and Norway reached almost €5 billion in 2019, 
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  been  steadily 
increasing since 2009.  

In 2019, the EU exported to Norway mainly cigars and cigarettes (9%), pasta, pastry, biscuits 
and bread (9%), wine, vermouth, cider and vinegar (8%), and vegetables and fruits (7% and 
6%  respectively).  As  for  the  imports,  they  consisted  mainly  of  food  preparations  (11%), 
oilcakes (11%) and raw hides, skins and fur skins (10.5%).   

Norway makes little use of the agri-food TRQs granted by the EU. Only five TRQs are fully 
utilised (whey, waters, potato chips, fish feed, and preparations used in animal feeding) and 
two TRQs are utilised by about 50% (ethyl alcohol, chocolates). 

157 

 
 
 
 
 
 
 
 
TRQs granted by the EU to Norway 

Utilisation rate of TRQs opened by the EU to Norway 

Sector 

TRQ description 

TRQ 
Quantity 

Sheep 
Poultry 
Poultry 
Dairy 
Dairy 
Dairy 
Flowers 
Flowers 

F&V 
F&V 
F&V 
F&V 
F&V 
F&V 
F&V 
F&V 
Oils 
Sausages 

Meat 

Sugar products 
F&V 
Waters 

Ethanol 
Ethanol 
Animal feed 
Animal feed 

Animal feed 
Tobacco 
Albumins 

Sheep or goat meat & 
edibble offal 
Chicken wings, frozen 
Chicken offal, frozen 
Whey 
Whey 
Cheese 
Indoor plants 
Cut flowers, other 
Cauliflowers & headed 
broccoli 
Cabbage lettuce 
Other lettuce 
Cherries 
Plums 
Strawberries 
Strawberries 
Raspberries 
Margarine 
Sausages 
Prepared or preserved 
meat, offal or blood 

Chocolate & other 
preparations containing 
cocoa 
Potato chips 
Waters, with sugar 
Ethyl alcohol, 
undenatured 
Ethyl alcohol, denatured 
Dog or cat food 
Fish feed 
Preparations used in 
animal feeding 
Smoking tobacco 
Milk albumin 

Unit 
t (carcass 
weight 
eq.) 

500 
550  T 
150  T 
1.250  T 
3.150  T 
7.200  T 
544.848  Euro 
500.000  Euro 

2.000  T 
300  T 
300  T 
900  T 
600  T 
900  T 
900  T 
400  T 
2.470  T 
300  T 

Utilisation in TRQ period 
ending in: 

2017 

2018 

2019 

not open yet 
not open yet 
not open yet 
not open yet 
not open yet 
24% 
0% 
not open yet 

0% 
0% 
0% 
0% 
0% 
0% 
0% 
0% 
5% 
9% 

15% 
0% 
0% 
0% 
0% 
26% 
0% 
0% 

0% 
1% 
5% 
0% 
0% 
0% 
0% 
0% 
5% 
3% 

9% 
0% 
0% 
0% 
100% 
31% 
0% 
0% 

0% 
0% 
0% 
0% 
0% 
0% 
0% 
0% 
6% 
6% 

233  T 

not open yet 

14% 

11% 

5.500  T 
350  T 
173.030  Hl 

164.000  Hl 
14.340  Hl 
13.000  T 
1.177  T 

200  T 
370  T 
500  T 

52% 
100% 
100% 

49% 
13% 
31% 
100% 

77% 
67% 
99% 
100% 
100%  100% 

3% 
13% 
1% 
9% 
53% 
25% 
100%  100% 

not open yet 
0% 
not open yet 

100%  100% 

0% 
0% 

0% 
99% 

158 

 
 
 
 
 
 
Utilisation rate of TRQs opened by Norway to the EU  

TRQs granted by Norway for key agricultural products (beef, pork, cheese) have been fully or 
almost  completely  utilised  by  the  EU  since  2012.  The  uptake  of  the  TRQs  for  other 
agricultural products (fruit, sausages, live plants) has been high, ranging from more than 70% 
to almost 100%. The utilisation rate for poultry and turkey meat as well as for eggs has – with 
intermittent  fluctuations  –  decreased  from  100%  in  2012  to  more  than  60%  in  2017;  these 
fluctuations are due to a variety of factors such as the EU internal market's own demand. 

5.4 

Trade in services and Foreign Direct Investments 

With approximately €40 billion of services exchanges between the parties in 2018 (€14 billion 
of services imported and €26 billion exported), Norway and the EU are very important trading 
partners when it comes to services. Norway is in fact the 8th largest recipient  of  EU  services. 
The balance for trade in services between Norway and the EU is positive for the EU – and has 
remained stable over the last five years. 

Foreign  Direct  Investment  (FDI)  is  slightly  more  outward  orientated  in  Norway,  with  €95 
billion worth of stocks in the EU versus a more modest €84 billion of stocks owned by the EU 
in Norway.   

6. 

CONCLUSIONS  

Institutionally, through the EEA agreement, Norway enjoys a very deep economic integration 
with the EU and is thus as closely linked to the Internal Market as a third country can be. This 
unique position allowed Norway to be excluded from the scope of application of the EU steel 
safeguard  measures  in  place  since  the  second  half  of  2018.  This  close  integration  is  also 
reflected  in  the  strong  bilateral  trade  between  the  EU  and  Norway,  still  among  the  top  ten 
trading  partners  of  the  EU  despite  the  loss  of  the  UK  as  a  strong  traditional  partner  of 
Norway.  There  is  however  room  for  further  liberalisation  of  trade  in  basic  and  processed 
agricultural products, with the EU firmly calling on Norway to launch discussions in this area. 

In  multilateral  trade  fora,  in  particular  within  the  WTO,  the  EU  and  Norway  share  the 
objective  of  preserving  a  stable,  predictable  and  rules-based 
trading 
environment.  Norway  was  among  the  first  WTO  parties  to  endorse  the  Commission’s 
initiative on the Multi Party Interim Agreement (MPIA). Politically, Norway and the EU are 
also  close  allies.  Norway  notably  actively  aligns  itself  with  EU  foreign  policy  instruments, 
including  the  EU's  sanction  policy  towards  Russia,  and  is  also  subject  to  the  Russian 
agricultural ban. 

international 

159 

 
 
 
 
 
 
 
 
7. 

STATISTICS 

NORWAY 

160 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Norway (mio €)Imports56 99947 34952 73060 95653 984Exports44 48144 60547 30650 00851 594Balance-12 518-2 743-5 424-10 948-2 390Share Norway in EU27 trade with Extra-EU27Imports3.5%3.0%3.0%3.2%2.8%Exports2.4%2.4%2.4%2.4%2.4%Total (I+E)2.9%2.7%2.7%2.8%2.6%Share EU27 in trade Norway with worldImports56.9%58.3%56.4%56.3%55.9%Exports58.7%57.5%59.1%60.6%58.7%Total (I+E)58.0%57.9%57.9%58.8%57.4%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Norway: IMF DotsTotal merchandise trade EU27 with Norway (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports60 95653 984-6 972-11.4%Imports1 907 5651 934 94427 3791.4%Exports50 00851 5941 5863.2%Exports2 059 8822 132 01572 1333.5%Balance-10 948-2 3908 558Balance152 317197 07144 754Total trade110 964105 578-5 386-4.9%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Norway (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports545532-13-2.3%Imports118 891121 6442 7532.3%Exports4 2924 4571653.8%Exports169 000181 82512 8257.6%Balance3 7473 924177Balance50 10960 18110 072Total trade4 8374 9891523.1%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Norway (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports60 41153 452-6 959-11.5%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports45 71647 1371 4213.1%EU27 exports1 890 8821 950 19059 3093.1%Balance-14 695-6 3158 380Balance102 208136 89034 682Total trade106 128100 589-5 538-5.2%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Norway (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports13 60114 3077055.2%Imports824 543824 015-528-0.1%Exports25 57925 7091300.5%Exports928 420968 64840 2284.3%Balance11 97811 402-576Balance103 877144 63340 756Total trade39 18040 0158352.1%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Norway (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports14 23914 68714 09413 60114 307Imports642 682776 924784 743824 543824 015Exports24 45825 27525 03325 57925 709Exports750 713849 023855 477928 420968 648Balance10 21910 58810 93911 97811 402Balance108 03172 09970 734103 877144 633Total trade38 69839 96239 12739 18040 015Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Norway (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward66 93184 34397 86186 30295 081Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward77 98786 53395 83684 35384 417Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward3 4611 4769 528Inward143 012803 285328 703209 462-67 421Outward5 9053 2824 310-4 444Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsNorwayNorway20182019Extra-EU27Norway2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Norway-20 000020 00040 00060 00080 00020152016201720182019Merchandise trade EU27 with Norway (mio €)ImportsExportsBalance 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE  EU-
TURKEY CUSTOMS UNION AND TRADE AGREEMENTS 

1. 

INTRODUCTION 

The contractual relations between the EU and Turkey date back to 1963 when the European 
Economic  Community  (i.e.  the  EU’s  predecessor)  and  Turkey  signed  an  Association 
Agreement (the ‘Ankara Agreement’), in which both parties agreed to progressively establish 
a  Customs  Union  over  a  period  of  several  years.  An  Additional  Protocol  was  signed  in 
November  1970,  setting  out  a  timetable  for  the  abolition  of  tariffs  and  quotas  on  industrial 
goods circulating between the parties. The final phase of the Customs Union was completed 
on  1  January  1996  in  the  shape  of  the  EU-Turkey  Association  Council  Decision  No  1/95, 
which is currently in force.94 

The Customs Union ensures the free movement of all industrial goods and certain processed 
agricultural  products  between  the  EU  and  Turkey.  It  also  requires  Turkey  to  align  with  the 
EU’s  customs  tariffs  and  rules,  commercial  policy,  competition  policy  and  intellectual 
property  rights,  as  well  as  with  the  EU’s  technical  legislation  related  to  the  scope  of  the 
Customs Union. The Customs Union with Turkey therefore goes well beyond the traditional 
free trade agreements which the EU has concluded with other third countries.  

In  addition  to  the  Customs  Union,  the  EU  and  Turkey  concluded  two  further  bilateral 
preferential  trade  agreements:  The  Agreement  between  the  European  Coal  and  Steel 
Community (ECSC) and Turkey on trade in products covered by the Treaty establishing the 
ECSC  established  a  Free  trade  agreement  for  coal,  iron  and  steel  products95  in  1996, 
along with relevant competition rules. Association Council Decision No 1/9896 (amended by 
Decision  No  2/200697)  provides  for  preferential  concessions  on  trade  in  certain  agricultural 
and fishery products. 

On 21 December 2016, the European Commission adopted a Recommendation for a Council 
Decision authorising the opening of negotiations with Turkey on an Agreement on the 
extension of the scope of the bilateral preferential trade relationship and on the 
modernisation of the Customs Union. The negotiations can start only once the Council adopts 
the related negotiating directives. In this respect, the Council (General Affairs Council 
meeting of 26 June 2018, and repeated on 18 June 2019) noted that "Turkey has been moving 
further away from the European Union. Turkey's accession negotiations have therefore 
effectively come to a standstill and no further chapters can be considered for opening or 
closing and no further work towards the modernisation of the EU-Turkey Customs Union is 
foreseen."  

94  http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:21996D0213(01):EN:HTML  
95  http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:21996A0907(01):en:HTML  
96  http://eur-lex.europa.eu/legal-content/en/ALL/?uri=OJ:L:1998:086:TOC  
97  http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:22006D0999&from=EN  

161 

 
 
 
 
 
 
 
 
 
 
                                                 
2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGRESS AND FOLLOW-UP ACTIONS 

As regards the implementation of the existing bilateral preferential trade framework, limited 
progress  was  achieved  in  2019  on  certain  issues,  such  as  the  lifting  of  divergent  tariffs  on 
selected  product  categories.  However,  on  balance  Turkey  created  further  market  access 
barriers  in  breach  of  the  Customs  Union  rules,  and  aggravated  existing  ones,  affecting 
European companies.  

Turkey has upheld trade barriers in breach of the Customs Union agreement, notably in 
continuing - and broadening - its deviation from the Common Customs Tariff, through the 
imposition of additional duties on products originating outside the EU or Turkey’s FTA 
partners. On the basis of these duties, Turkey requires a proof of origin for affected product 
categories, contrary to Customs Union rules. This issue was exacerbated by customs 
implementation rules introduced in May 2019 that lead to a sharp increase in certificates of 
origin demanded and increased uncertainty on the part of EU exporters. The non-
discriminatory implementation of the Additional Protocol to the Association Agreement 
towards all Member States including the Republic of Cyprus also remains a critical demand. 
In addition, the Turkish Draft Implementing Regulation on Cosmetic Products foresees the 
application of certain administrative procedures to imports of cosmetics products. These 
measures constitute harmful technical barriers to trade that need to be removed urgently in 
line with the commitments under the EU Turkey Customs Union. 

The  European  Commission  has  consistently  raised  concerns  regarding  these  barriers  in 
various  fora,  including  the  Customs  Union  Joint  Committee  and  other  bilateral  meetings  as 
well as in written exchanges. It will continue to follow up on these and any arising issues with 
the Turkish authorities, as well as with all relevant stakeholders.  

Regarding the long-standing issue of the localisation requirements imposed by Turkey in the 
pharmaceutical sector in clear breach not only of bilateral agreements, but also WTO rules, 
the European Commission in April 2019 brought a case to WTO dispute settlement98, as a last 
resort after repeated warnings. At issue are measures the Turkish authorities have adopted 
requiring foreign  producers to commit to localise in Turkey their production of certain 
pharmaceutical  products.   

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The 36th Customs Union Joint Committee (CUJC) meeting took place on 8 and 9 July 2019 
in Brussels. As set out in the public report99, The parties discussed issues linked to the proper 
functioning of the Customs Union, including the following: 

  The  increasing  number  of  trade  barriers  and  breaches  of  the  Customs  Union  by 
Turkey, including measures such as additional duties imposed on imports of products 
from  third countries  and related customs measures,  surveillance measures  of certain 
products,  export  restrictions  on  copper,  certification  and  testing  requirements  on 
imported goods etc.  

98 https://trade.ec.europa.eu/doclib/docs/2019/april/tradoc_157821.pdf  

162 

 
 
 
 
 
 
 
 
                                                 
 
  The shortcomings of the IPR enforcement regime in Turkey and the new international 

exhaustion regime in breach of the Customs Union with the EU. 

  Turkey’s  alignment  to  EU  technical  legislation  in  areas  which  are  essential  for  the 

functioning of the Customs Union. 

  Update on recent EU trade policy developments, in particular as regards negotiations 
of  free  trade  agreements  with  third  countries,  linked  to  Turkey’s  obligation  to  align 
with the EU’s commercial policy.  

  The non-discriminatory implementation of the Additional Protocol to the Association 

Agreement towards all Member States including the Republic of Cyprus. 

  The  conditions  on  import  of  beef  and  live  bovine  animals  into  Turkey.  The  EU 
expressed its concerns about Turkey’s restrictions and encouraged Turkey to improve 
its administrative import and transit requirements. 

In  addition,  the  50th  meeting  of  the  EU-Turkey  Customs  Co-operation  Committee  took 
place in Brussels on 19 November 2019. The main topics addressed by the Committee were 
the following: 

  Recent developments in relation to customs legislation. 

 

 

rules of origin, including the revision of the Pan-Euro Mediterranean Convention. 

Implementation  issues  around  the  electronic  issuance  of  movement  certificates 
(A.TR, EUR.1, and EUR-MED). 

  Trade  barriers  and  breaches  of  the  Customs  Union  by  Turkey  that  affect  customs, 
including  in  particular  the  requirement  of  proof  of  origin  applied  by  Turkey  and 
additional documentation requirements at customs.  

4. 

SPECIFIC AREAS OF IMPORTANCE  

Like  other  trading  partners,  such  as  Serbia,  North  Macedonia  and  Bosnia  and  Herzegovina, 
Turkey  has  raised  concerns  regarding  the  EU’s  steel  safeguard  measures.  Definitive 
safeguard measures on certain steel products are in place since February 2019, preserving as 
much as possible traditional trade flows, in terms of volumes and origins. Since imposition of 
measures,  the  Commission  further  enhanced  the  effectiveness  of  the  measures  following  a 
first Review investigation, concluded end of September 2019. In keeping with the  European 
Coal  and  Steel  Community  FTA  and  the  Customs  Union  agreement,  the  EU  has  organised 
bilateral  consultations  with  Turkey  on  this  issue,  and  will  continue  to  ensure  that  the 
safeguard measures are applied fairly.  

163 

 
 
 
 
 
5. 

EVOLUTION OF BILATERAL TRADE 

The Customs Union has led to substantial increase in trade between the EU and Turkey. Since 
its entry into force in 1996, the value of bilateral trade increased more than fourfold100. The 
rise  in  FDI  to  Turkey  from  the  EU  has  been  similarly  significant,  as  has  been  the  deeper 
integration  in  production  networks  between  Turkish  and  European  firms.  In  2019,  Turkey 
remained the EU’s 6th largest trading partner overall, whilst the EU is by far Turkey’s most 
important trading partner. According to Eurostat data, EU27 goods exports to Turkey fell by 
1.3% to €68.3bn while imports from Turkey rose by 4.4% to €69.8bn. Overall trade in goods 
thus amounted to €138.1 billion in 2019, and moved from a long-standing EU surplus, most 
recently of €2.4 billion in 2018, to a €1.5 billion deficit. 

The share of Turkish  exports to the EU decreased from 43.4% to 42.2%, while the share of 
Turkish  imports  coming  from  the  EU  declined  marginally  from  32.9%  to  32.3%  between 
2018 and 2019.  

5.1 

Economic environment 

Turkey  is  a  large  and  sophisticated  middle-income  economy  driven  by  industry  and 
increasingly  services,  although  agriculture  still  accounts  for  a  large  share  of  employment. 
Exports  are  well  diversified  and  integrated  in  EU  and  global  value  chains.  Turkey  remains 
highly dependent on imported oil and gas.  

While  the  Turkish  economy  recovered  faster  than  expected  from  the  currency  crisis  that 
started in summer 2018, the economy was in recession for much of 2019 and GDP growth 
was weak at 0.9% over the year. This recovery was supported by a large fiscal stimulus, but 
also  a  strong  growth  contribution  of  net  exports.  After  the  sharp  fall  in  the  value  of  the 
Turkish  lira,  worldwide  exports  from  Turkey  rose  by  7.69%  in  euro  terms,  while  imports 
contracted  by  3.87%.  Overall,  Turkey  therefore  decreased  its  trade  deficit,  although  it 
remained sizeable at €27.8 billion. Domestic demand was constrained, partly on the basis of 
higher unemployment, but strengthened somewhat towards the end of 2019. 

5.2 

Trade in goods 

Regarding  the  sectoral  split,  the  EU’s  biggest  export  category  in  2019  continued  to  be 
machinery  and  appliances  (25%  of  overall  EU  exports),  followed  by  transport  equipment 
(13.9%),  chemical products  (13.4%) and base metals and  articles thereof  (12.4%). Turkey’s 
biggest  export  sector  was  transport  equipment  (25.7%),  followed  by  textiles  and  textile 
articles (18.8%) and machinery and appliances (16.3%).  

5.3 

Trade in agricultural products 

In 2019, Turkey was the EU’s 8th largest supplier of agricultural goods at €4.2 billion, and the 
number 10 export destination with €3.4 billion in imports. The EU hence had a trade deficit in 

100  World Bank: Evaluation of the EU - Turkey Customs Union, March 2014  

164 

 
 
 
 
 
 
 
 
 
 
 
                                                 
agriculture  with  Turkey  of  €784  million,  down  from  the  €1  billion  high  in  2018  due  to  a 
recovery in exports.  

Over  the  reporting  period,  EU  agri-food  exports  to  Turkey  rose  by  14%  when  compared  to 
2018  and  were  well  diversified,  consisting  mainly  of:  cereals  –  other  than  wheat  and  rice  – 
(9%),  cotton,  flax  and  hemp  and  plaiting  materials  (8%)  and  food  preparations  (7%).  EU 
imports  from  Turkey  were  up  by  4.3%  compared  to  2018  (€4.19  billion  by  value)  and 
consisted  mainly  of  tropical  fruits,  nuts  and  spices  (22%)  and  preparations  of  vegetables, 
fruits or nuts (21%). 

Given  the  overall  low  volumes  compared  to  industrial  goods,  a  considerable  variation  was 
seen across many categories. While EU cereals exports expanded by 191% and dairy products 
also  increased  significantly,  live  animal  exports  dropped  by  almost  half,  and  meat  exports 
collapsed by 93%. 

Turkey  maintains  certain  SPS  requirements  that  are  not  in  compliance  with  EU  regulations 
and  procedures  and  also  go  beyond  international  standards  thereby  negatively  impacting 
exports of live animals and meat from the EU Member States to Turkey. 

165 

 
 
 
 
Tariff rates quotas granted by the EU to Turkey 

Utilisation rate of TRQs opened by the EU to Turkey 

TRQ 

Quantity  Unit 
1.000  T 
2.300  T 
2.500  T 
2.000  T 
1.000  T 
500  T 
350  T 
100  T 

Utilisation in TRQ period 
ending in: 
2018 
0% 
0% 
20% 
100% 
100% 
100% 
100% 
0% 

2017 
0% 
1% 
100% 
100% 
100% 
100% 
100% 
0% 

2019 
0% 
0% 
43% 
100% 
100% 
100% 
100% 
0% 

100  T 
5.000  T 

100% 
46% 

100% 
65% 

100% 
70% 

10.000  T 

100% 

100% 

100% 

5.000  T 

100% 

100% 

100% 

900  T 
20.000  T 
500  T 
100  T 
10.000  T 
2.500  T 

10.000  T 
3.000  T 
120  T 
10.000  T 

100% 
100% 
100% 
100% 
100% 
99% 

100% 
100% 
100% 
100% 

100% 
100% 
100% 
100% 
100% 
100% 

100% 
100% 
100% 
100% 

100% 
100% 
100% 
100% 
100% 
95% 

100% 
100% 
100% 
100% 

8.900  T 

100% 

100% 

100% 

1.750  T 

100% 

100% 

100% 

100  T 

10% 

31% 

40% 

100  T 

100% 

100% 

100% 

2.100  T 
3.400  T 

6% 
1% 

12% 
0% 

6% 
0% 

4.000  T 

65% 

76% 

82% 

Sector 

TRQ description 

Poultry 
Dairy 
F&V 
F&V 
F&V 
F&V 
F&V 
F&V 

Turkey, frozen 
Cheese (Kashkaval) 
Potatoes 
Onions 
Aubergines 
Courgettes 
Table grapes 
Fruit & nuts, frozen 
Olive oil, virgin, other than 
lampante 

Oils 
Sugar products  Chewing gum 

Sugar products 

Sugar products 

Preparations 
Preparations 
Preparations 
Preparations 
Preparations 
Preparations 

Preparations 
Preparations 
Preparations 
Preparations 

F&V 

F&V 

F&V 

F&V 

F&V 
F&V 

Preparations 

Sugar confectionery, not 
containing cocoa 
Chocolate & other 
preparations containing 
cocoa 
Malt extract; cereal 
preparations 
Pasta 
Roasted cereals 
Roasted cereal flakes 
Bulgar wheat 
Other prepared cereals 
Bread, pastry, cakes, 
biscuits 
Waffles & wafers 
Rusks & toasted bread 
Bread & pastry 
Tomatoes, prepared or 
preserved 
Jams, fruit jellies, 
marmalades, fruit or nut 
purees & pastes 
Jams, jellies, marmalades, 
purees & pastes, sugar 13-
30% 
Other preparations of fruit & 
nuts, sugar >30% 
Fruit & berries, prepared / 
preserved 
Fruit & vegetable juices 
Food preparations; Protein 
concentrates & textured 
protein substances 

166 

 
 
 
 
 
At the time of drafting of this staff working document, information on the use of tariff rates 
quotas opened by Turkey to the EU was not available. 

Geographical indications 

On  geographical  indications  (GIs),  the  EU  continued  the  assessment  of  15  Turkish 
applications  submitted  in  previous  years.  Two  EU  applications  (Gorgonzola  and  Cognac) 
were  under  assessment  by  the  Turkish  IP  authorities.  The  Commission  participated  in  the 
Second International Geographical Indications Summit organised by the Ankara Chamber of 
Commerce and held in Ankara on 19 September 2019. 

5.4 

Trade in services and Foreign Direct Investments 

The EU-Turkey Customs Union only covers trade in  industrial  goods and certain  processed 
agricultural products. Services and investment are not covered under the current agreement. 

As  regards  trade  in  services,  the  latest  data  available  cover  the  year  2018.  Data  available 
shows  a  continued  substantial  and  expanding  trade  deficit  for  the  EU,  to  €1.6  billion.  Total 
trade  of  €24.1  billion  has  not  yet  recovered  its  high  in  2015,  representing  the  important 
tourism sector that was notably hit by political turmoil in 2016 and the aftermath. 

As for foreign direct investment (FDI), the EU remained by far the biggest source in Turkey, 
although  the  total  FDI  stock  continued  to  shrink  significantly  from  recent  highs,  to  €58.5 
billion  in  2018.    FDI  flows  with  Turkey  have  been  subject  to  the  same  politically  induced 
factors that affected trade in 2016 and 2017, with the economic factors described above added 
in 2018. In 2018, EU gross outward FDI flows strengthened to €4.5 billion, however, while 
Turkish FDI in the EU retrenched in 2018. 

6. 

CONCLUSIONS  

Turkey’s  obligation  to  align  with  the  EU’s  common  customs  tariff,  as  well  as  with  EU 
technical  legislation  that  is  crucial  for  the  production    of  industrial  goods,  go  much  beyond 
classic trade agreements and thus make the bilateral trade relationship unique.  

The Customs Union has led not only to a significant increase in bilateral trade over the last 20 
years,  but  also  to  important  investment  and  production  links  between  the  two  parties. 
However, the economic and trading environment has changed substantially since the creation 
of  the  Customs  Union  and  it  has  become  less  well  equipped  to  deal  with  the  modern  day 
challenges of trade integration. This is partly reflected in the open issues discussed above. 

The European Commission therefore adopted on 21 December 2016 a proposal to modernise 
the Customs Union to improve its functioning and to further extend the scope of the bilateral 
preferential trade arrangements in line with its approach to modern free trade agreements, also 
covering areas such as services, public procurement, specific rules for SMEs and sustainable 
development, as well as further liberalisation of agricultural products. A modernised Customs 
Union would also  need to contain an effective dispute settlement  mechanism to  address  the 
increasing number of trade and market  access  problems  faced by European companies. The 

167 

 
 
 
 
 
 
 
 
 
negotiations can start only once the Council adopts the related negotiating directives. In this 
respect, the Council on 18 June 2019 noted that "Turkey has been moving further away from 
the  European  Union.  Turkey's  accession  negotiations  have  therefore  effectively  come  to  a 
standstill  and  no  further  chapters  can  be  considered  for  opening  or  closing  and  no  further 
work towards the modernisation of the EU-Turkey Customs Union is foreseen." 

While  the  Commission  proposal  is  pending  authorisation  by  the  Council  given  political 
circumstances, Turkish measures diverging from the present agreements have to be remedied, 
and the present trend of increasing market access barriers has to be reversed.     

168 

 
 
 
 
 
 
7. 

STATISTICS 

TURKEY 

169 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Turkey (mio €)Imports52 10555 75961 39466 83169 782Exports74 14972 44576 65769 19268 283Balance22 04416 68715 2632 361-1 499Share Turkey in EU27 trade with Extra-EU27Imports3.2%3.5%3.5%3.5%3.6%Exports4.0%3.9%3.8%3.4%3.2%Total (I+E)3.6%3.7%3.7%3.4%3.4%Share EU27 in trade Turkey with worldImports35.3%36.3%33.6%32.9%32.3%Exports37.2%39.8%41.0%43.4%42.4%Total (I+E)36.1%37.8%36.6%37.4%37.0%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Turkey: IMF DotsTotal merchandise trade EU27 with Turkey (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports66 83169 7822 9504.4%Imports1 907 5651 934 94427 3791.4%Exports69 19268 283-909-1.3%Exports2 059 8822 132 01572 1333.5%Balance2 361-1 499-3 860Balance152 317197 07144 754Total trade136 023138 0652 0411.5%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Turkey (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports4 0234 1971754.3%Imports118 891121 6442 7532.3%Exports2 9943 41341914.0%Exports169 000181 82512 8257.6%Balance-1 029-784245Balance50 10960 18110 072Total trade7 0167 6105948.5%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Turkey (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports62 80965 5842 7764.4%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports66 19964 870-1 329-2.0%EU27 exports1 890 8821 950 19059 3093.1%Balance3 390-714-4 105Balance102 208136 89034 682Total trade129 007130 4541 4471.1%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Turkey (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports11 97312 8749017.5%Imports824 543824 015-528-0.1%Exports10 72411 2255014.7%Exports928 420968 64840 2284.3%Balance-1 250-1 649-400Balance103 877144 63340 756Total trade22 69724 0991 4026.2%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Turkey (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports13 91214 10911 94811 97312 874Imports642 682776 924784 743824 543824 015Exports9 09011 18510 76110 72411 225Exports750 713849 023855 477928 420968 648Balance-4 822-2 924-1 186-1 250-1 649Balance108 03172 09970 734103 877144 633Total trade23 00325 29422 70922 69724 099Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Turkey (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward8 68911 59925 53123 88522 846Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward62 21669 54771 18565 75358 481Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward1 7161 4941 0149-593Inward143 012803 285328 703209 462-67 421Outward13 3265473 0114 510Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsTurkeyTurkey20182019Extra-EU27Turkey2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Turkey-20 000020 00040 00060 00080 000100 00020152016201720182019Merchandise trade EU27 with Turkey (mio €)ImportsExportsBalance 
 
 
 
 
PART III.2 

TRADE AGREEMENTS WITH WESTERN BALKAN PARTNERS 

170 

 
 
 
 
 
 
 
ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE TRADE 
PILLAR  OF  THE  EU-ALBANIA  STABILISATION  AND  ASSOCIATION 
AGREEMENT 

1. 

INTRODUCTION 

On  12  June  2006,  the  EU  and  Albania  signed  a  Stabilisation  and  Association  Agreement 
(SAA).  The  SAA  is  the  prime  instrument  of  the  EU’s  overall  policy  towards  the  Western 
Balkan  countries’  Stabilisation  and  Association  process101.  Under  this  process,  all  Western 
Balkans countries, including Albania, are granted a clear perspective to become EU Member 
States.   

The full SAA entered into force on 1 April 2009, although the trade-related part of the SAA 
already  entered  into  force  through  an  Interim  Agreement  on  1  December  2006  (hereinafter 
‘the Agreement’). This  Agreement established a free-trade area over a transitional period of 
ten  years.  As  regards  the  EU,  in  2006,  98.7%  of  its  tariff  lines  were  already  duty-free, 
representing  100%  of  the  value  of  imports  from  Albania.  By  2010,  Albania  had  liberalised 
92.7% of its tariff lines for imports from the EU.  

The  Agreement  covers  products  in  all  Chapters  of  the  Harmonised  System.  Regarding 
agricultural  products,  the  agreement  is  largely  asymmetrical.  EU  agricultural  imports  from 
Albania are almost completely liberalised (with very few exceptions). On the other hand, EU 
agricultural exports to Albania are subject to tariffs and tariff rate quotas (TRQs).    

The  Agreement  also  includes  provisions  concerning  competition  matters,  investment  and 
related  payments,  a  high  level  of  protection  of  intellectual  property  rights  and  strengthened 
co-operation in customs matters. Since the entry into force of the full SAA on 1 April 2009, a 
number  of  additional  disciplines  are  being  implemented  concerning,  notably,  government 
procurement,  legislative  approximation  in  many  areas  including  standardisation,  as  well  as 
provisions regarding services and establishment.  

2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGRESS AND FOLLOW-UP ACTIONS  

Albania has made good progress in implementing the SAA provisions since their entry into 
force. It is notable that there are no significant trade barriers. However a few issues remain to 
be addressed.  

The  business  environment  remains  challenging.  Businesses  are  negatively  affected  by 
inconsistent and arbitrary law enforcement as well as by inefficiencies and weak capacity in 
the  public  administration  (however,  a  public  administration  reform  is  being  implemented), 
and  there  is  unfair  competition  from  the  substantial  informal  economy.  The  far-reaching 
overhaul  of  the  justice  system  progressed  well,  but  is  still  to  translate  into  improved  legal 
certainty  for  business.  The  business  community  highlights  the  continuing  need  to  tackle 
corruption  and  to  enhance  transparency  and  accountability  as  well  as  consistency  in 
implementation and enforcement of legislation. Albanian authorities strengthened operational 

101 See http://ec.europa.eu/trade/policy/countries-and-regions/regions/western-balkans/ for more information 

171 

 
 
 
 
 
 
                                                 
coordination and monitoring capacities in the fight against corruption. Another recent positive 
development has been a proposal to align legislation with the EU’s Late Payments Directive. 

More  efforts  are  needed  to  ensure  the  effective  and  transparent  functioning  of  the  public 
procurement  system.  Although  the  procurement  legislation  has  improved  over  time,  its 
implementation  still  needs  to  be  improved  and  be  made  more  transparent.  In  addition,  the 
enforcement  of  competition  rules  needs  to  be  enhanced,  and  significant  efforts  are  needed 
with  regards  to  the  adoption  of  legislation  and  enforcement  in  the  field  of  state  aid  control, 
including transparency of aid granted. 

Albania’s  National  Plan  on  Trade  Facilitation  shows  promise  but  needs  to  be  supported 
with  sufficient  resources.  The  acceleration  of  the  European  integration  progress  would  give 
further  impetus  to  the  reform  process  and  consequently  have  a  positive  impact  on  the 
investment and business climate in Albania.   

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The latest meeting of the Sub-Committee on Trade, Industry, Customs and Taxation took 
place  in  Tirana  on  23  May  2019.  In  addition  to  reviewing  trade  trends,  the  Commission 
welcomed Albania’s adoption of new legislation on dual-use goods, although further work is 
needed  to  adapt  this  legislation  to  the  EU’s  evolving  legislation.  Albania’s  chairing  of  the 
Central  European  Free  Trade  Agreement  (CEFTA)  in  2019  was  regarded  positively,  and  in 
particular Albania’s ratification of additional Protocol 5 (on Trade Facilitation). It was also 
noted  that  Albania  has  made  progress  on  establishing  an  authorised  economic  operators 
(AEO) scheme and that the implementation of its national plan on trade facilitation should be 
improved  by  the  strengthened  capacity  of  the  Secretariat  of  Albania’s  National  Trade 
Facilitation Committee. 

4. 

EVOLUTION OF BILATERAL TRADE 

4.1 

Economic environment 

After achieving 4.1% growth in 2018, Albania's economy slowed in 2019 to an estimated 3% 
growth. During the first half of 2019 the economy suffered from low hydropower production 
due to drought conditions (electricity production in Albania is almost 95% from hydro-energy 
sources) leading to an increase of electricity imports. However this was compensated by good 
economic  performance  during  the  third  quarter  of  2019,  mainly  due  to  a  strong  tourism 
season. Albania's real GDP growth picked up in the third quarter of 2019 to 3.8 % y-o-y after 
recording a slow-down to 2.3 % in the first half of the year. 

During  the  first  half  of  2019,  the  performance  of  the  processing  industry,  construction  and 
services grew 4 - 6 % y-o-y, with private consumption remaining the main growth driver. The 
labour  market  has  held  up  well  with  2.6  %  y-o-y  growth  in  the  third  quarter.  The  overall 
unemployment  rate  (15-64  years)  declined  to  11.8  %  in  the  third  quarter  compared  with 
12.7 % the same quarter of 2018. 

172 

 
 
 
 
 
 
 
 
 
Albania  has  a  free  floating  exchange  rate  regime.  During  2019  the  real-effective-exchange-
rate index climbed about 4% (compared to 9% in 2018). Average annual inflation dropped to 
1.5 % in 2019. 

Over  the  last  five  years,  rising  exports  have  helped  the  current-account  deficit  to  gradually 
narrow, although it widened again to about 7.3 % of GDP in 2019. The share of remittances in 
GDP has continued to decrease to 5.2 % in 2019 while net FDI inflows (8% of GDP in 2019) 
have fully financed the current account deficit. Albania’s historically large merchandise trade 
deficit  widened  over  2019  because  of  high  electricity  imports  and  low  electricity  exports 
compared with 2018. The surplus in the balance of services, which climbed to 9 % of GDP in 
2019, continued to offset partly the goods trade deficit.   

The  Albanian  economy  is  dominated  by  the  services  sector  (54.7%  GVA),  led  by  trade, 
tourism, education and health; although agriculture remains important (21% GVA). Industry 
has lost some ground (12.2 % GVA), mainly because of a decline in mining and construction. 

In  2019  there  were  slight  declines  (2-2.5%)  of  exports  of  construction  materials,  metals, 
mineral  fuels,  electricity,  textiles  and  footwear;  and  increases  in  exports  of  food,  beverages 
and  tobacco  (1%),  machinery,  equipment  and  spare  parts  (9%),  and  chemical  and  plastic 
products  (+5%).  In  contrast  there  were  slight  increases  in  imports  of  minerals,  fuels  and 
electricity,  food,  beverages  and  tobacco  and  chemical  and  plastic  products;  and  very  small 
decreases  in  imports  of  machinery,  equipment  and  spare  parts,  leather  and  leather 
manufactures, and textile and footwear. 

On  26  November  2019  Albania  experienced  one  of  its  strongest  earthquakes  in  the  last  30 
years.  As  a  result  of  the  disaster,  a  total  of  202,291  people  were  affected  in  the  country, 
including 51 fatalities and at least 913 injuries. Up to 17,000 people were displaced due to the 
loss of their homes. The Albanian government has therefore revised its 2020 budget to set up 
a  reconstruction  fund  of  €150  million.  The  EU  has  provided  assistance  together  with  other 
international  organisations  (€1.15  billion  in  grants  and  loans  were  pledged  for  the 
reconstruction  of  damaged  areas  in  Albania  at  a  donor  conference  held  in  Brussels  in 
February 2020). 

4.2 

Trade in goods  

Although  the  EU  remained  Albania’s  main  trading  partner,  total  bilateral  trade  between  the 
EU  and  Albania  increased  by  less  than  2%  between  2018  and  2019  reaching  a  total  of  €5 
billion. In 2019 the EU accounted for 63.5% of Albania’s total trade in goods (76% of total 
exports  and  58%  of  total  imports).  After  the  EU,  China  and  Turkey  are  Albania’s  most 
significant  trade  partners  (7%  of  Albania’s  total  trade  each).  The  main  traded  products  are 
quite  varied,  covering  the  following  sectors:  machinery  and  appliances,  footwear,  hats  and 
other  headgear,  textiles  and  textile  articles,  base  metals,  chemicals,  mineral  products, 
foodstuffs, beverages and tobacco. The overall trade balance is in favour of the EU, although 
last year the surplus fell slightly to €1.3 billion. This is somewhat offset by Albania’s growing 
surplus in services. 

173 

 
 
 
 
 
4.3 

Trade in agricultural products 

In  2019,  trade  in  agricultural  products  increased  by  11%  reaching  a  total  of  €561  million, 
which  represents  11%  of  the  total  bilateral  trade.  However,  EU  exports  of  agricultural 
products  to  Albania  represented  83%  of  bilateral  trade  and  grew  by  almost  13%  in  2019, 
whereas  Albania’s  exports  to  the  EU  only  grew  by  6%.  The  trade  balance  in  agricultural 
goods is therefore heavily in favour of the EU.  The EU imported mainly edible vegetables, 
fruits, bulbs and live plants, as well as nuts from Albania and exported primarily pasta, pastry, 
biscuits and bread as well as beverages and tobacco to Albania. 

Tariff rates quotas granted by the EU to Albania 

Utilisation rate of TRQs opened by the EU to Albania 

Sector 
Sugar 
Wine 
Wine 

TRQ description 

Sugar 
Wine, ≤ 2L (bottled) 
Wine, > 2L (bulk) 

TRQ 
Quantity 

Unit 
t 

1.000 
5.000  hl 
2.000  hl 

Utilisation in TRQ period 
ending in: 
2018 
0% 
1% 
0% 

2017 
0% 
1% 
0% 

2019 
0% 
0% 
0% 

The Albanian Law No 8/2019 “On quality schemes for agricultural products and foodstuffs”, 
was adopted on 26 February 2019. It establishes quality schemes and responsible bodies for 
the  recognition  and  protection  of  denominations  of  origin,  geographical  indications  and 
traditional specialities guaranteed for agricultural products and foodstuffs. 

TRQs granted by Albania to the EU 

174 

 
 
 
 
 
4.4 

Trade in services and Foreign Direct Investments 

Total  bilateral  trade  in  services  increased  by  11%  in  2018,  reaching  a  total  of  €2.2  billion. 
Albania  enjoys  a  considerable  surplus  of  €112  million  in  its  trade  in  services  with  the  EU, 
mainly resulting from a continued growth of its foreign tourism. It is worth noting that 3 EU 
Member  States  (Italy,  Greece  and  France)  represent  77%  of  imports  and  75%  of  exports  in 
trade in services with Albania.  

The EU remains the main source of Foreign Direct Investment into Albania, holding over half 
of the total FDI stock (€4.9 billion) at the end of 2018. The main EU countries investing in 
Albania  are  Greece,  the  Netherlands,  Italy,  Austria  and  France.  EU  FDI  inflows  to  Albania 
were modest in 2018, reaching only just €100 million. 

5. 

CONCLUSIONS  

Albania and the EU remain close trade partners, despite the very modest increase in bilateral 
trade  during  2019.  This  can  be  partially  attributed  to  rather  sluggish  GDP  growth  in  2019. 
However, over the last 10 years total trade has almost doubled and the EU is Albania’s main 
trading partner, accounting for almost two thirds of Albania’s total trade in goods. In addition 
Albania has a significant surplus in trade in services with the EU, thanks to growing tourism, 
and the EU remains the main source of FDI.  

175 

TRQ identification (name)TRQ availability (quantities)TRQ use (quantities)Remarks (e.g. reason for underfill)Milk and cream, not concentrated nor containing added sugar or other sweetening matter, of a fat content, by weight, not exceeding 1 %, in immediate packings of a net content not exceeding two litresMilk and cream, not concentrated nor containing added sugar or other sweetening matter, of a fat content, by weight, not exceeding 3 %, in immediate packings of a net content not exceeding two litresMilk and cream, not concentrated nor containing added sugar or other sweetening matter, of a fat content, by weight, exceeding 3 %, in immediate packings of a net content not exceeding two litresCommon wheat and meslinOtherMaize (except seeds)10 000 Ton0 TonSparkling wineIn containers holding 2 litres or lessTomato ketchup and other tomato sauces60 Ton60 TonAnnex II: Data submission about TRQ-s10 000 HL10 000 HL790 Ton790 Ton42 000 Ton1716.63 Ton 
 
 
 
 
 
The trade agreement is well implemented by Albania, and there are currently no major trade 
irritants. Albania is also a positive participant in CEFTA and contributes to the development 
of a Regional Economic Area.  

Albania’s competitiveness continues to be hampered by inefficiencies in the energy sector, 
including  insufficient  security  of  supply.  The  dependence  on  hydropower  for  electricity 
generation  (98%)  makes  the  economy  vulnerable  to  climate  change  and  hydrological 
conditions. In addition, the business and investment environment in Albania is hampered by 
structural  weaknesses,  corruption,  difficulties  to  access  finance,  especially  for  SMEs  and  a 
poorly educated workforce. Efforts to improve the business environment lack effective policy 
instruments and a more strategic approach.  

However, it is expected that in the near future Albania will benefit greatly from the renewed 
EU accession perspective and that closer economic, structural and legislative integration with 
the EU will have positive outcomes on trade relations and the business and investment climate 
in Albania.  

176 

 
 
 
 
6. 

STATISTICS 

ALBANIA 

177 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Albania (mio €)Imports1 1601 2861 4991 7511 845Exports2 4982 6852 9613 1783 175Balance1 3381 3981 4621 4271 331Share Albania in EU27 trade with Extra-EU27Imports0.1%0.1%0.1%0.1%0.1%Exports0.1%0.1%0.1%0.2%0.1%Total (I+E)0.1%0.1%0.1%0.1%0.1%Share EU27 in trade Albania with worldImports60.2%62.5%60.6%60.1%57.6%Exports71.9%77.7%77.0%76.0%76.4%Total (I+E)63.9%67.0%65.6%65.3%63.5%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Albania: IMF DotsTotal merchandise trade EU27 with Albania (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports1 7511 845945.4%Imports1 907 5651 934 94427 3791.4%Exports3 1783 175-3-0.1%Exports2 059 8822 132 01572 1333.5%Balance1 4271 331-96Balance152 317197 07144 754Total trade4 9295 020911.8%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Albania (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports899456.0%Imports118 891121 6442 7532.3%Exports4154675212.6%Exports169 000181 82512 8257.6%Balance32637347Balance50 10960 18110 072Total trade5045615811.4%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Albania (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports1 6621 750885.3%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports2 7632 708-55-2.0%EU27 exports1 890 8821 950 19059 3093.1%Balance1 101958-143Balance102 208136 89034 682Total trade4 4254 459330.8%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Albania (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports9811 051697.0%Imports824 543824 015-528-0.1%Exports1 0131 16315014.8%Exports928 420968 64840 2284.3%Balance3211281Balance103 877144 63340 756Total trade1 9942 21321911.0%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Albania (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports7317367879811 051Imports642 682776 924784 743824 543824 015Exports7067087551 0131 163Exports750 713849 023855 477928 420968 648Balance-25-28-3232112Balance108 03172 09970 734103 877144 633Total trade1 4381 4431 5421 9942 213Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Albania (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward39-122191333389Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward5 6875 8565 3875 3865 283Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward19-1622414955Inward143 012803 285328 703209 462-67 421Outward188-20476-149Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsAlbaniaAlbania20182019Extra-EU27Albania2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Albania05001 0001 5002 0002 5003 0003 50020152016201720182019Merchandise trade EU27 with Albania (mio €)ImportsExportsBalance 
 
 
 
 
ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE TRADE 
PILLAR  OF  THE  EU-BOSNIA  AND  HERZEGOVINA  STABILISATION  AND 
ASSOCIATION AGREEMENT 

1. 

INTRODUCTION 

On  16  June  2008,  the  EU  and  Bosnia  and  Herzegovina  signed  a  Stabilisation  and 
Association Agreement (SAA). The SAA is the prime instrument of the EU’s overall policy 
towards  the  Western  Balkan  countries’  Stabilisation  and  Association  process.  Under  this 
process, all Western Balkans countries, including Bosnia and Herzegovina, are granted a clear 
perspective to become EU Member States.  

The  SAA  entered  into  force  on  1  June  2015,  although  the  trade-related  part  of  the  SAA 
already  entered  into  force  through  an  Interim  Agreement  on  1  July  2008.  This  Agreement 
established  a  free-trade  area  over  a  transitional  period  of  five  years.  The  Agreement  covers 
products  in  all  Chapters  of  the  Harmonised  System.  Regarding  agricultural  products,  the 
agreement is largely asymmetrical. EU agricultural imports from Bosnia and Herzegovina are 
almost completely liberalised (with very few exceptions). On the other hand, EU agricultural 
exports to Bosnia and Herzegovina are subject to tariffs and tariff rate quotas (TRQs).  

The Agreement also includes provisions concerning competition and state aid, investment and 
related  payments,  a  high  level  of  protection  of  intellectual  property  rights  and  strengthened 
co-operation in customs matters. Since the entry into force of the full SAA on 1 June 2015, a 
number  of  additional  disciplines  are  being  implemented  concerning,  notably,  government 
procurement,  legislative  approximation  in  many  areas  including  standardisation,  as  well  as 
provisions regarding services and establishment. 

2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGRESS AND FOLLOW-UP ACTIONS  

Bosnia and Herzegovina has made good progress in implementing the SAA provisions since 
their entry into force. However a number of issues remain to be addressed.  

The business environment remains challenging. Businesses are negatively affected by lengthy 
and  cumbersome  market  entry  and  exit  regulations,  in  particular,  as  the  high  degree  of 
regional fragmentation leads to a high number of different rules and different interpretations. 
The  large  size  of  the  informal  economy  distorts  competition  and  the  institutional  and 
regulatory environment is unstable and unpredictable. The business community highlights the 
continuing need to tackle corruption and to enhance transparency and accountability as well 
as consistency in implementation and enforcement of legislation. 

Public  procurement  procedures  are  complex  and  prone  to  corruption  and  there  is  a  lack  of 
adequate enforcement of state aid control. More needs to be done to ensure the effective, 
and  transparent  functioning  of  the  public  procurement  system.  And  in  line  with  SAA 
obligations, enforcement of competition rules needs to be enhanced, and significant efforts are 
needed  with  regards  to  adoption  of  legislation  and  enforcement  in  the  field  of  state  aid 
control.  

178 

 
 
 
 
 
 
 
 
In November 2018, Kosovo imposed a 100% import tariff for goods originating from Serbia 
and  Bosnia  and  Herzegovina,  indirectly  affecting  EU  businesses  operating  in  Serbia  and 
trading in the region. Then Prime Minister Kurti of Kosovo lifted the tariffs on 1 April 2020, 
but introduced reciprocity measures before leaving office. These were revoked by now Prime 
Minister Hoti immediately after taking office (3 June 2020).  

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The latest meeting of the Sub-committee on Trade, Industry, Customs and Taxation took 
place in Brussels on 18 October 2018. Exceptionally, no meetings were held during 2019. At 
that meeting, in  addition to  reviewing trade trends,  the Commission  encouraged  Bosnia and 
Herzegovina  to  intensify  its  WTO  accession  efforts  and  urged  the  country  to  address  key 
issues  faced  by  businesses:  namely,  tackling  infrastructure  bottlenecks;  improving  the 
complex and inefficient administrative structures, and reducing regulatory uncertainty. 

The Commission  also  pressed Bosnia  and Herzogovina to  revise its excise duties which are 
not in line with the SAA.  Excise duties on spirits do not comply with the SAA requirements 
on the prohibition of fiscal discrimination nor the EU acquis that foresees a single rate for all 
spirits.  In  addition,  the  current  excise  duty  structure  for  beer  should  be  aligned  for  small 
breweries with the threshold set by the acquis (200 000 hl).   

4. 

SPECIFIC AREAS OF IMPORTANCE  

Like Serbia and North Macedonia, Bosnia and Herzegovina has raised concerns regarding the 
EU’s steel safeguard measures. In line with the provisions of the SAA, the EU has organised 
bilateral consultations with Bosnia and Herzegovina on this issue, and will continue to ensure 
the safeguard measures are applied fairly, that traditional trade flows are maintained and the 
measures  will  not  have  detrimental  effects  on  Bosnia  and  Herzegovina’s  stabilisation  and 
economic development. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

Following average GDP increases of 3% over 2014-2018, economic growth slowed slightly to 
2.8%  in  2019,  maintained  by  domestic  demand,  which  was  primarily  driven  by  private 
consumption,  and  supported  by  steady  inflow  of  workers  remittances  and  low  inflation. 
External  demand  decelerated  during  2019,  reflecting  weakening  growth  in  some  of  the 
country’s main export markets, but  also resulting from tariff hikes by Kosovo, a key export 
market for certain commodities.  

After a slight drop in the current account deficit during the last five years, to 3.6% of GDP in 
2018,  the  deficit  amounted  to  4.8%  of  GDP  in  2019,  resulting  from  decelerating  exports, 
while solid domestic demand led to high import growth. Higher consumption-driven imports 
kept the trade deficit of goods and services at 23% of GDP in 2019.  

179 

 
 
 
 
 
 
 
The currency board arrangement with the euro as the anchor currency was maintained. This 
approach  has  served  the  economy  well  so  far.  However,  it  also  implies  that  the  burden  of 
adjustment to external shocks has to be accommodated by other policy areas. 

Average  consumer  price  inflation  dropped  to  1.1%  in  2019,  compared  to  1.4%  the  year 
before.  Besides  low  prices  for  imported  energy,  price  declines  for  clothing  and  footwear 
contributed to the low overall inflation rate. However, the inflation measure suffers from an 
outdated consumer basket and insufficient cooperation among key data providers. 

International trade slightly declined during 2019, mainly due to weaker exports, dropping by 
about  3.4% in  2019, while imports remained largely unchanged, increasing by 1.2%. About 
one third of this drop in exports was due to a sharp decline in trade with Kosovo; but weaker 
exports  to  key  trading  partners,  such  as  Germany,  Croatia  and  Turkey,  also  played  an 
important  role.  Exports  to  CEFTA  countries  rose  slightly  during  2019,  by  less  than  1%  to 
16.6% of total exports.  

The country’s openness to trade increased over the last years - the share of total exports and 
imports  in  GDP  amounted  to  nearly  96%  in  2019,  but  is  still  relatively  low  given  the 
country’s  economic  size.  The  range  of  export  commodities  is  not  very  sophisticated.  While 
some further progress has been achieved in addressing non-tariff barriers to trade with the EU, 
such  as  required  phyto-sanitary  and  sanitary  standards,  overall  compliance  with  these 
requirements remains a problem. 

5.2 

Trade in goods 

Total  bilateral  trade between the EU and  Bosnia and Herzegovina fell very slightly (-0.4%) 
between 2018 and 2019 to a total of €10.7 billion. However, over the last 10 years bilateral 
trade has grown by 83% and the EU remains Bosnia and Herzegovina’s first trading partner 
accounting for 65% of total trade (72% of total exports and 61% of total imports of goods). 
After the EU, Bosnia and Herzegovina’s main trade partners are Serbia (11% of total trade), 
China  (5%)  and  Turkey  (4%).  The  main  traded  products  were  in  the  following  sectors: 
machinery  and  appliances;  base  metals  and  articles  and  mineral  products.  The  overall  trade 
balance is in favour of the EU, and increased slightly in 2019 to €1.94 billion. This is offset 
slightly by Bosnia and Herzegovina’s growing surplus in services. 

5.3 

Trade in agricultural products 

In  2019,  trade  in  agricultural  products  remained  almost  static,  at  a  total  of  €1.05  billion, 
which  represents  just  under  10%  of  the  total  bilateral  trade.  Only  4.1%  of  Bosnia  and 
Herzegovina’s  exports  to  the  EU  are  agricultural  products  compared  to  13.9%  of  the  EU’s 
exports  to  Bosnia  and  Herzegovina.  The  total  trade  in  agricultural  products  has  fluctuated 
over the past decade, but since 2009 it has increased by over €200 million. The EU imported 
mainly fruits (20%) and vegetables (10%), as well as raw hides, skins and furs (11%); while 
its  main  exports  to  Bosnia  and  Herzegovina  included  bovine  meat  (11%),  chocolate 
confectionery and ice cream (9%) and food preparations (8%).  

Tariff rates quotas granted by the EU to Bosnia and Herzegovina 

180 

 
 
 
 
 
 
 
 
 
 Utilisation rate of TRQs opened by the EU to Bosnia and Herzegovina 

Sector 

TRQ description 

Baby beef 

Beef 
Sugar  Sugar 
Wine  Wine, ≤ 2L (bottled) 
Wine  Wine, > 2L (bulk) 

TRQ 
Quantity 

1.500 

Unit 
t (carcass 
weight eq.) 

13.200  T 
25.500  Hl 
15.100  Hl 

Utilisation in TRQ period ending in: 
2017 

2019 

2018 

0% 
96% 
39% 
17% 

0% 
90% 
85% 
62% 

0% 
45% 
99% 
24% 

Information regarding the use of tariff rate quotas granted by Bosnia and Herzegovina to the 
EU was not readily available at time of drafting of this staff working document. 

5.4 

Trade in services and Foreign Direct Investments 

In  2018,  total  bilateral  trade  in  services  increased  by  almost  2%  to  just  under  €2  billion. 
However,  Bosnia  and  Herzegovina’s  exports  of  services  to  the  EU  grew  by  7.6%  whereas 
imports  of  services  from  the  EU  fell  by  4%,  resulting  in  an  increase  in  Bosnia  and 
Herzegovina’s surplus with the EU to €112 million. It is worth noting that Croatia represents 
more than one third of the EU’s trade in services with Bosnia and Herzogovina, both in terms 
of  imports  and  exports.  Three  other  Member  States  (Italy,  Austria  and  Slovenia)  represent 
another third. 

The  EU  remains  the  main  source  of  Foreign  Direct  Investment  into  Bosnia  and 
Herzegovina,  holding  €3.7  billion  at  the  end  of  2018.  This  represents  an  increase  of  €408 
million (4.6%). In contrast, total FDI stock from Bosnia and Herzegovina in the EU was only 
€166 million. 

6. 

CONCLUSIONS  

Bosnia and Herzegovina and the EU remain close trade partners, despite the lack of growth in 
bilateral trade during 2019. This can be partially attributed to a slowdown in GDP growth in 
2019. However, over the last 10 years total trade has increased by 83% and the EU is Bosnia 
and  Herzegovina’s  main  trading  partner,  accounting  for  almost  two  thirds  of  Bosnia  and 
Herzegovina’s total trade in goods. In addition Bosnia and Herzegovina has a small surplus in 
trade in services with the EU and the EU remains the main source of FDI.  

Implementation  of  the  trade  agreement  by  Bosnia  and  Herzegovina  is  satisfactory,  but 
progress  on  WTO  accession  seems  to  have  stalled.  The  highly  fragmented  and  complex 
political and administrative strutures in the country contribute to this lack of progress.   

The business and investment climate is negatively affected by the fact that there is no single 
economic space within the country, a sizeable informal economy and the presence of large, 
non-transparent and inefficient state-owned enterprises (SOEs). The situation is compounded 
by the existence of different legal frameworks and implementation practices, a weak rule of 
law,  lengthy  bureaucratic  procedures  and  a  low  quality  of  public  administration.  Country-
wide strategies and coherent solutions to help businesses are long overdue.  

181 

 
 
 
 
 
 
 
 
 
7. 

STATISTICS 

BOSNIA HERZEGOVINA 

182 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Bosnia-Herzegovina (mio €)Imports3 4683 7584 2314 6784 378Exports5 0445 2285 8916 0616 318Balance1 5761 4701 6601 3831 940Share Bosnia-Herzegovina in EU27 trade with Extra-EU27Imports0.2%0.2%0.2%0.2%0.2%Exports0.3%0.3%0.3%0.3%0.3%Total (I+E)0.2%0.3%0.3%0.3%0.3%Share EU27 in trade Bosnia-Herzegovina with worldImports59.7%60.8%60.3%59.7%61.0%Exports72.5%71.0%70.4%72.2%72.3%Total (I+E)64.3%64.6%64.1%64.5%65.1%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Bosnia-Herzegovina: IMF DotsTotal merchandise trade EU27 with Bosnia-Herzegovina (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports4 6784 378-300-6.4%Imports1 907 5651 934 94427 3791.4%Exports6 0616 3182584.3%Exports2 059 8822 132 01572 1333.5%Balance1 3831 940557Balance152 317197 07144 754Total trade10 73810 697-42-0.4%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Bosnia-Herzegovina (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports207180-27-13.1%Imports118 891121 6442 7532.3%Exports851876263.0%Exports169 000181 82512 8257.6%Balance64469653Balance50 10960 18110 072Total trade1 0581 056-1-0.1%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Bosnia-Herzegovina (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports4 4714 198-273-6.1%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports5 2105 4422324.5%EU27 exports1 890 8821 950 19059 3093.1%Balance7391 243505Balance102 208136 89034 682Total trade9 6819 640-41-0.4%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Bosnia-Herzegovina (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports9791 053747.6%Imports824 543824 015-528-0.1%Exports980941-39-4.0%Exports928 420968 64840 2284.3%Balance1-112-113Balance103 877144 63340 756Total trade1 9601 994351.8%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Bosnia-Herzegovina (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports8638479609791 053Imports642 682776 924784 743824 543824 015Exports909867902980941Exports750 713849 023855 477928 420968 648Balance4620-581-112Balance108 03172 09970 734103 877144 633Total trade1 7721 7141 8621 9601 994Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Bosnia-Herzegovina (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward991718952166Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward2 4423 3773 4073 5783 744Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward7384525116Inward143 012803 285328 703209 462-67 421Outward463122225408Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsBosnia-HerzegovinaBosnia-Herzegovina20182019Extra-EU27Bosnia-Herzegovina2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Bosnia-Herzegovina01 0002 0003 0004 0005 0006 0007 00020152016201720182019Merchandise trade EU27 with Bosnia-Herzegovina (mio €)ImportsExportsBalance 
 
 
ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE TRADE 
PILLAR OF THE STABILISATION AND ASSOCIATION AGREEMENT BETWEEN 
THE EU AND NORTH MACEDONIA 

1. 

INTRODUCTION 

On  9  April  2001,  the  EU  and  North  Macedonia  signed  a  Stabilisation  and  Association 
Agreement (SAA). The SAA is the prime instrument of the EU’s overall policy towards the 
Western  Balkan  countries’  Stabilisation  and  Association  process.  Under  this  process,  all 
Western  Balkans  countries,  including  North  Macedonia,  are  granted  a  clear  perspective  to 
become EU Member States.   

The  SAA  entered  into  force  on  1  April  2004,  although  the  trade-related  part  of  the  SAA 
already entered into force through an Interim Agreement on 1 June 2001. Trade liberalisation 
between  the  EU  and  North  Macedonia  was  completed  over  a  period  of  ten  years.  The 
Agreement covers products in all Chapters of the Harmonised System.   

Regarding  agricultural  products,  the  agreement  is  largely  asymmetrical.  EU  agricultural 
imports from North Macedonia are almost completely liberalized (with very few exceptions). 
On  the  other  hand,  EU  agricultural  exports  to  North  Macedonia  are  subject  to  tariffs  and 
Tariff Rate Quotas (TRQs).  

The  Agreement  also  includes  provisions  concerning  competition  matters,  investment  and 
related  payments,  a  high  level  of  protection  of  intellectual  property  rights  and  strengthened 
co-operation  in  customs  matters.  Since  the  full  entry  into  force  of  SAA,  a  number  of 
additional disciplines are being implemented concerning, notably,  government procurement, 
legislative  approximation  in  many  areas  including  standardisation,  as  well  as  provisions 
regarding services and establishment. 

2. 

MAIN IMPLEMENTATION ISSUES, PROGRESS AND FOLLOW-UP ACTIONS  

North  Macedonia  has  made  good  progress  in  implementing  the  interim  agreement  and 
then the SAA provisions since their entry into force, but some non-compliance issues remain. 
The  most  significant  relate  to  non-tariff  barriers,  including  technical  standards  and 
administrative obstacles, as well as relatively high logistical and customs costs.  

In  2019  some  progress  on  alignment  with  EU  product  safety  and  market  surveillance 
legislation  has  been  made,  and  North  Macedonia  has  planned  to  adopt  the  Eurocodes 
(construction standards) relatively quickly. 

In  terms  of  trade  facilitiation,  a  new  Customs  Declarations  and  Excise  Documents 
Processing  System  (CDEPS)  and  an  Authorized  Economic  Operator  (AEO)  Programme 
have been successfully introduced; and a new Customs Terminal with Albania has begun to 
operate. 

183 

 
 
 
 
 
 
 
 
In  connection  with  the  Economic  Reform  Programme,  North  Macedonia  has  introduced  a 
number of strategies for boosting competitiveness and economic growth, including a strategy 
for  SMEs.  North  Macedonia  participates  in  COSME102.  However  the  business  community 
still perceives the country’s approach to be inadequate. The business environment is adversely 
affected  by  the  large  informal  economy,  frequent  legislative  changes  without  proper 
consultation; and perceived corruption. 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The last meeting of the  SAA Sub-committee on Trade, Industry, Customs and Taxation 
took  place  in  Brussels  on  13  November  2019.  In  addition  to  discussing  trade  trends,  the 
Commission  commended  North  Macedonia  for  its  high  level  of  utilisation  of  quotas,  and 
welcomed  its  active  role  in  the  WTO,  including  the  application  of  almost  all  of  the  Trade 
Facilitation  Agreement.  North  Macedonia  thanked  the  Commission  for  its  support  in  North 
Macedonia’s  accession  process  to  the  WTO  Government  Procurement  Agreement  (GPA). 
Regarding regional cooperation, the country was complimented for its active participation in 
the  Central  European  Free  Trade  Agreement  (CEFTA)  and  its  contribution  to  the 
implementation  of the Regional  Economic Area  (REA). Progress  is  also  being  made on the 
implementation of the various CEFTA Protocols.  

North Macedonia explained that it intended to reduce MFN tariffs on certain goods linked to 
the  automotive  components  sector  as  an  incentive  to  companies  to  invest  more  in  the 
automotive industry in the country. 

4. 

SPECIFIC AREAS OF IMPORTANCE  

North Macedonia has raised concerns about the EU’s steel safeguard measures. In line with 
the  provisions  of  the  SAA,  the  EU  has  organised  bilateral  consultations  with  North 
Macedonia  on  this  issue,  and  will  continue  to  ensure  the  safeguard  measures  are  applied 
fairly, that traditional trade flows are maintained and the measures will not have detrimental 
effects on North Macedonia’s stabilisation and economic development.  

With  regard  to  the  Pan-Euro  Mediterranean  Convention  on  Rules  of  Origin  (PEM 
Convention), North Macedonia wishes to maintain the old rules for cigarettes (which require 
70% of originating tobacco, instead of 10% in the new rules), as they see a disadvantage for 
their industry. The Commission is looking at ways to solve this issue. 

102  COSME  is  the  European  programme  (2014-2020)  to  support  the  competitiveness  of  enterprises  including 

small and medium sized snterprises.  

184 

 
 
 
 
 
                                                 
5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

North  Macedonia’s  GDP  growth  rate  in  2019  was  a  healthy  3.5%  (up  from  2.7%  in  2018) 
with a deficit of 2.3% of GDP.  

In November 2019, the IMF completed its regular Article IV mission. The Fund called on the 
government  to  rebuild  the  fiscal  space  and  to  focus  on  a  more  growth-enhancing  public 
expenditure  structure,  to  upgrade  physical  infrastructure  and  to  reform  the  education  sector. 
And in December 2019, Fitch Ratings affirmed the country's debt rating at +BB, citing solid 
economic policies, improved governance and ease of doing business.  

The labour market improved in 2019 with a drop of the unemployment rate to 17.1% (from 
20.7% in 2018). Supported by the government's "Youth Guarantee" programme, the situation 
of young workers continued to improve, even though, at 35.3%, the unemployment rate of the 
population aged 15-24 remains high.  

The  main  drivers  of  growth  in  the  last  years  have  been  public  infrastructure  projects,  the 
manufacturing  sector  in  the  free  economic  zones  and  a  pickup  in  private  consumption.  The 
2017  GDP  per  capita  remained  at  37%  of  EU28.  Long-term  growth  potential  can  only  be 
realized  through  major  structural  reforms  and  improvements  in  education.  The  Government 
needs to  resume reforms to ensure stronger job  creation and a broader sharing of prosperity 
through greater spillover of the foreign investments into the domestic economy.  

There is a high and growing degree of trade openness. The total value of trade in goods and 
services  amounted  to  126%  of  GDP  in  2018.  In  2019,  both  exports  and  imports  grew  by 
10.3%  and  9.6%  respectively.  Import  coverage  by  export  stood  at  75.9%  in  2019  with  the 
trade  deficit  amounting  to  €2  billion.  The  trade  deficit  has  declined  over  the  last  few  years 
leading to a fall in the current account deficit and an easing of the pressure on the exchange 
rate.  

The  export  product  mix  has  been  improving  in  recent  years.  The  share  of  iron,  steel,  and 
clothing  in  total  exports  has  fallen  (to  17.4%  in  2019  compared  to  33.3%  in  2013),  to  the 
benefit  of  chemicals  and  machinery  and  transport  equipment  (57.2%  in  2019  compared  to 
32.8% in 2013). The key  import  products  are platinum and  platinum alloys, petroleum  oils, 
other metals and alloys and flat-rolled iron products. However, exporting companies, notably 
SMEs,  still  face  many  trade  impediments  linked  to  non-tariff  barriers,  including  technical 
standards  and  administrative  obstacles.  Insufficiently  high  quality  of  logistics  is  another 
impediment to further increases in exports.  In 2018 the World Bank’s logistics performance 
indicator ranked North Macedonia 81st out of 160 countries. In World Bank Doing Business 
Trading  Across  Borders  2020,  North  Macedonia  was  ranked  11th  of  all  countries  of  Europe 
and Central Asia. 

185 

 
 
 
 
 
 
 
 
 
 
5.2 

Trade in goods 

Total bilateral trade between the EU and North Macedonia increased by just over 5% between 
2018  and  2019  reaching  a  total  amount  of  €9.9  billion.  This  represents  a  huge  increase  of 
189%  in  the  last  ten  years.  The  EU  remains  North  Macedonia’s  first  trading  partner 
accounting for 63% of its total trade in goods (79% of total exports and 51% of total imports). 
of  goods.  After  the  EU,  North  Macedonia’s  main  trade  partners  are  the  UK  (7.5%  of  total 
trade), Serbia (6%) and China (4%). The main traded products were in the following sectors: 
machinery  and  appliances;  chemicals;  and  mineral  products.  The  overall  trade  balance  is  in 
favour of North Macedonia, and increased significantly in 2019 to €404 million. 

5.3 

Trade in agricultural products 

In  2019,  trade  in  agricultural  products  increased  by  3.7%  reaching  a  total  of  €690  million, 
representing 7% of the total bilateral trade.  

Only  5.6%  of  North  Macedonia’s  exports  to  the  EU  are  agricultural  products  compared  to 
8.4%  of  the  EU’s  exports  to  North  Macedonia.  More  than  one  quarter  (27%)  of  the  EU’s 
imports from North Macedonia were tobacco and tobacco products. The other main imports 
were  vegetables  (17%),  food  preparations  (17%)  and  wine,  vermouth,  cider  and  vinegar 
(9.3%).  The  EU’s  main  exports  to  North  Macedonia  included  food  preparations  (10%), 
chocolate, confectionery and ice cream (7%), bovine meat (7%) and poultry meat (6%).   

Tariff rates quotas granted by the EU to North Macedonia 

Utilisation rate of TRQs opened by the EU to North Macedonia 
TRQ 
description 

TRQ 
Quantity 

2017 

2018 

Utilisation in TRQ period ending in: 

Sector 

Unit 
t (carcass 
weight eq.) 

Beef 
Sugar  Sugar 

Baby beef 

Wine 

Wine 

Wine, ≤ 2L 
(bottled) 
Wine, > 2L 
(bulk) 

1.650 
7.000  T 

121.000  Hl 

359.000  Hl 

0% 
0% 

100% 

92% 

0% 
0% 

97% 

100% 

2019 

0% 
0% 

82% 

94% 

Information regarding the use of tariff rate quotas granted by North Macedonia to the EU was 
not readily available at time of drafting of this staff working document. 

5.4 

Trade in services and Foreign Direct Investments 

In  2018,  total  bilateral  trade  in  services  dropped  by  nearly  10%  to  €1.3  billion.    However, 
while  North  Macedonia’s  imports  of  services  from  the  EU  only  fell  by  1.2%,  exports  of 
services  to  the  EU  fell  by  over  18%,  resulting  in  a  surplus  in  favour  of  the  EU  of  €117 
million. Two Member States (Greece and Bulgaria) represent 25% of imports of services from 
and 51% of exports of services to North Macedonia. 

186 

 
 
 
 
 
 
 
 
 
 
 
The EU remains the main source of Foreign Direct Investment into North Macedonia, holding 
just over €2 billion at the end of 2018. 

6. 

CONCLUSIONS  

North Macedonia and the EU remain close trade partners, seeing a 5% increase in bilateral 
trade during 2019. Over the last 10 years total trade has grown by 189% and the EU is North 
Macedonia’s  main  trading  partner,  accounting  for  almost  two  thirds  of  North  Macedonia’s 
total trade in goods, and the EU remains the main source of FDI.  
The  trade  agreement  is  well  implemented  by  North  Macedonia,  and  there  are  currently  no 
major trade irritants. North Macedonia is also a positive participant in CEFTA and contributes 
to the development of a Regional Economic Area.  

However,  the  size  of  the  informal  economy  in  North  Macedonia  continues  to  be  a 
challenge  for  the  business  environment  as  it  creates  unfair  competition  from  unregistered 
companies. This also deters investments.  

It is expected that in the near future North Macedonia will benefit greatly from the renewed 
EU accession perspective and that closer economic, structural and legislative integration with 
the EU will have positive outcomes on trade relations and the business and investment climate 
in North Macedonia. 

187 

 
 
 
 
 
 
7. 

STATISTICS 

NORTH MACEDONIA 

188 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with North Macedonia (mio €)Imports3 3243 6704 1844 8285 161Exports3 3863 6464 0604 6114 758Balance62-25-124-217-404Share North Macedonia in EU27 trade with Extra-EU27Imports0.2%0.2%0.2%0.3%0.3%Exports0.2%0.2%0.2%0.2%0.2%Total (I+E)0.2%0.2%0.2%0.2%0.2%Share EU27 in trade North Macedonia with worldImports52.0%51.2%52.7%52.8%50.7%Exports74.6%78.7%79.8%80.3%78.7%Total (I+E)61.4%62.6%64.2%64.7%62.8%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade North Macedonia: IMF DotsTotal merchandise trade EU27 with North Macedonia (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports4 8285 1613336.9%Imports1 907 5651 934 94427 3791.4%Exports4 6114 7581463.2%Exports2 059 8822 132 01572 1333.5%Balance-217-404-187Balance152 317197 07144 754Total trade9 4399 9194795.1%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with North Macedonia (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports276290145.2%Imports118 891121 6442 7532.3%Exports389400102.6%Exports169 000181 82512 8257.6%Balance114110-4Balance50 10960 18110 072Total trade665690243.7%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with North Macedonia (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports4 5534 8713197.0%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports4 2224 3581363.2%EU27 exports1 890 8821 950 19059 3093.1%Balance-331-514-182Balance102 208136 89034 682Total trade8 7749 2294555.2%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with North Macedonia (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports683557-126-18.4%Imports824 543824 015-528-0.1%Exports721712-9-1.2%Exports928 420968 64840 2284.3%Balance38155117Balance103 877144 63340 756Total trade1 4041 270-134-9.6%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with North Macedonia (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports560585657683557Imports642 682776 924784 743824 543824 015Exports784757692721712Exports750 713849 023855 477928 420968 648Balance2231723538155Balance108 03172 09970 734103 877144 633Total trade1 3441 3421 3481 4041 270Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with North Macedonia (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward-48-18-33-216Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward2 0372 099Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward1012-292043Inward143 012803 285328 703209 462-67 421Outward179Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsNorth MacedoniaNorth Macedonia20182019Extra-EU27North Macedonia2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018North Macedonia-1 00001 0002 0003 0004 0005 0006 00020152016201720182019Merchandise trade EU27 with North Macedonia (mio €)ImportsExportsBalance 
 
 
ANNUAL INFORMATION SHEET ON THE IMPLEMENTATION OF THE TRADE 
PILLAR  OF  THE  EU-KOSOVO103  STABILISATION  AND  ASSOCIATION 
AGREEMENT 

1. 

INTRODUCTION 

On 27 October 2015, the EU and Kosovo signed a Stabilisation and Association Agreement 
(SAA).  The  SAA  is  the  prime  instrument  of  the  EU’s  overall  policy  towards  the  Western 
Balkan  countries’  Stabilisation  and  Association  process.  Under  this  process,  all  Western 
Balkans partners, including Kosovo, have a clear European perspective.  

The SAA - including the trade-related part - entered into force on 1 April 2016 and foresees:  

  Upgrading  the  existing  trade  relations  by  gradual  establishment  of  a  free  trade  area 

over a period lasting a maximum of 10 years.  

  Almost  unrestricted  market  access  to  the  EU  for  Kosovan  products:  upon  entry  into 
force of the SAA, the EU has abolished all customs duties that had applied to Kosovo, 
with the exception of a few product lines in the agricultural sector, which are subject 
to specific duties or tariff-quotas.  

  Kosovo  has  abolished  the  customs  duties  on  a  number  of  tariff  lines  (industrial, 
agricultural  and  fishery  products),  while  for  the  rest  it  will  reduce  the  duties 
progressively over 10 years.  

The SAA also includes Kosovo’s commitment to ensure the gradual approximation of its laws 
with  the  EU  acquis  in  a  number  of  important  areas,  such  as  public  procurement, 
standardisation,  consumer  protection,  working  conditions  and  equal  opportunities.  It  also 
provides for a gradual liberalisation in the areas of rights of establishment, supply of services 
and  movement  of  capital;  and  it  includes  provisions  on  competition  matters,  state  aid,  and 
intellectual property rights. 

2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGRESS AND FOLLOW-UP ACTIONS  

Kosovo has yet to reap the full benefits of the SAA and many challenges remain regarding 
its implementation. Although Kosovo introduced e-procurement in 2019 and made efforts to 
enhance transparency, the business environment is still difficult due to weak rule of law and 
corruption,  a  lack  of  transparency  in  public  procurement  procedures,  slow  and  inconsistent 
contract enforcement, and a large informal economy, which results in unfair competition from 
unregistered companies.  

Kosovo’s  decision  on  21  November  2018  to  impose  100%  import  tariffs  for  goods 
originating  in  Serbia  and  Bosnia  and  Herzegovina  is  indirectly  affecting  EU  businesses 
established  in  these  two  countries  and  EU  trade  with  Kosovo.  The  tariffs  have  been 
introduced for political reasons and are against the spirit of the SAA. Furthermore they are a 

103  The designation is without prejudice to position on status and is in line with UNSCR 1244/1999 and the ICJ 

Opinion on the Kosovo Declaration of independence.  

189 

 
 
 
 
 
                                                 
violation  of  the  Central  European  Free  Trade  Agreement  (CEFTA)  and  thereby  undermine 
regional  cooperation.  The  EU  has  been  calling  on  Kosovo  to  urgently  lift  these  measures, 
while also proposing its support to mediate in the resolution of the regional trade issues.  

On  9  October  2018,  the  Kosovo  government  introduced  a  double  excise  tax  regime  for 
cigarettes,  differentiating  between  domestically  produced  and  imported  products.  This  new 
excise regime is in clear violation of Article 39 of the SAA prohibiting fiscal discrimination. 
The  EU  has  been  calling  on  Kosovo  to  bring  the  legislation  in  line  with  the  SAA  via  the 
relevant SAA subcommittee structures. 

Enforcement  of  competition  rules  also  needs  to  be  enhanced,  and  significant  efforts  are 
needed  with  regards  to  the  adoption  of  legislation  and  enforcement  in  the  field  of  state  aid 
control.  Kosovo  also  still  excercises  a  non-necessary  homologation  procedure  for  each 
individual EU imported  vehicle. This  is  a superfluous step, as  certificates of conformity  for 
EU manufactured cars should be automatically accepted in Kosovo.   

Finally,  the  high  administrative  costs  linked  to  procedural,  quality,  logistical  and  border 
barriers are affecting EU businesses doing business in Kosovo and are closely monitored and 
followed up through the SAA multidisciplinary subcommittee structures. 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The latest meeting of the SAA Sub-committee on Trade, Industry, Customs and Taxation 
took place in Pristina on 18 June 2019. In addition to discussing trade trends, the Commission 
urged Kosovo to remove the 100% tariffs imposed on goods originating in Serbia and Bosnia 
and  Herzegovina,  and  to  amend  its  discriminatory  tax  regime  for  cigarettes,  outlined  in 
section 2 above. 

The Commission also recalled Kosovo's commitment to the multi-annual action plan for the 
development of a Regional  Economic Area (REA) and stressed, in  particular, the need to 
ratify and implement a number of CEFTA Additional Protocols. The Commission stressed the 
importance of improving the investment climate, and further aligning with EU regulations and 
best  practices  as  well  as  eliminating  non-tariff  barriers.  In  addition  the  Commission 
encouraged  Kosovo  to  boost  competitiveness  and  fully  develop  the  export  potential  of 
Kosovo businesses, to take full benefits of the SAA. 

On  customs,  Kosovo  committed  to  amend  the  Kosovo  Customs  and  Excise  Code  to  further 
align it with EU legislation and practices.  

Kosovo  also  committed to  increase  the  capacity  of  institutions  and  to  further  align  with  the 
EU  acquis  the  legislation  improving  quality  infrastructure  in  the  areas  of  standardisation, 
accreditation,  conformity  assessment,  metrology  and  market  surveillance.  The  Commission 
welcomed the ratification of Kosovo’s participation in COSME104.  

104   

2014-2020 Europe’s programme for small and medium-sized enterprises. 

190 

 
 
  
 
 
 
 
 
 
                                                 
4. 

EVOLUTION OF BILATERAL TRADE 

4.1 

Economic environment 

Kosovo’s economic growth rate reached 4.3% year on year in the first 9 months of 2019, and 
is  estimated  to  have  reached  4.0%  for  2019  as  a  whole.  Growth  was  mainly  supported  by 
private  consumption,  led  by  increases  in  credit  (10%  y-o-y),  public  wages  and  large 
remittances from abroad. Kosovo adopted the euro unilaterally in 2002 and has since used it 
as its de facto currency.   

Kosovo’s  main  exports  are  base  metals  (over  35%  of  total  exports),  followed  by  mineral 
limited 
products,  plastic,  rubber,  prepared  foodstuffs  and  beverages,   reflecting  a 
diversification  in  the  production  sector.  Imports  are  dominated  by  mineral  products, 
machinery,  mechanical  and  electrical  equipment,  and  beverages  and  tobacco  among  others. 
Despite  the  negative  trade  balance  on  goods,  trade  in  services  continues  with  a  positive 
balance, mainly dominated by travel services to the diaspora.  

The persistent trade deficit remains one of the key challenges of the economy, with imports 
of goods covering 89% of the trade balance, while increasing export of services, remittances 
and  FDI  continue  to  finance  the  trade  deficit.  A  100%  tariff  on  imports  from  Serbia  and 
Bosnia and Herzegovina remains in place since November 2018 and has led to a significant 
reduction  of  imports  from  those  countries.  The  measure  goes  against  Kosovo’s  obligations 
under CEFTA, is not in the spirit of the SAA and undermines regional cooperation objectives, 
including the REA.  

In  the  OECD's  2018  Competitiveness  Policy  Outlook,  Kosovo's  trade  facilitation  policies 
were ranked the lowest among the six Western Balkans. Particularly critical are the areas of 
technical standards and sanitary and phytosanitary measures with scores of only 2.0 and 2.5 
(out of 5). The score for import licences was also the lowest in the Western Balkans, whereas, 
regarding  administrative  barriers  to  trade,  Kosovo's  performance  is  comparable  to  other 
countries. 

4.2 

Trade in goods 

Total bilateral trade between the EU and Kosovo increased by almost 25% between 2018 and 
2019 reaching a total amount of €1.4 billion. Over the last 10 years bilateral trade has grown 
enormously by 111% and the EU remains Kosovo’s first trading partner accounting for 47.5% 
of  total  trade  (33%  of  total  exports  and  49%  of  total  imports  of  goods).  After  the  EU, 
Kosovo’s  main trade partners  are Turkey (11% of total  trade), China (9%) and Albania and 
North  Macedonia  (7%  each).  The  main  traded  products  were  in  the  following  sectors:  live 
animals and animal products; animal or vegetable fats and oils; and articles of stone, glass and 
ceramics. The overall trade balance is very strongly in favour of the EU (imports from the EU 
make up 82% of total bilateral trade) reaching a surplus of €1.15 billion in 2019. However,  

191 

 
 
 
 
 
Kosovo’s exports to the EU – though modest in absolute terms – increased by 34% in 2019, 
i.e. at a faster rate than imports from the EU. 

4.3 

Trade in agricultural products 

In  2019,  bilateral  trade  in  agricultural  products  increased  by  47.5%  to  a  total  of  €405 
million, representing 29% of total bilateral trade. This trade growth was entirely accounted for 
by increased exports from the EU to Kosovo, as imports from Kosovo remained very low and 
static  (only  €24  million).  However,  it  should  be  noted  that  from  2009,  the  total  trade  in 
agricultural products between the EU and Kosovo has increased by more than six times. The 
EU’s  exports  to  Kosovo  were  mainly  cigars  and  cigarettes  (11.5%),  waters  and  soft  drinks 
(10.5%)  and  food  preparations  (8%).  Whereas  the  EU’s  imports  from  Kosovo  were  mainly 
fruits (21%), waters and soft drinks (16.7%) and raw hides, skins and furs (12.5%). 

Tariff rates quotas granted by the EU to Kosovo 

Utilisation rate of TRQs opened by the EU to Kosovo 

TRQ 
description 

TRQ 
Quantity 

Unit 
t (carcass weight 
eq.) 

475 

Sector 

Beef 

Baby beef 
Wine, ≤ 2L 
(bottled) 

Wine 
Wine  Wine 

10.000  Hl 
40.000  Hl 

Utilisation in TRQ period ending in: 

2017 

2018 

0% 

5% 
26% 

0% 

0% 
57% 

2019 

0% 

61% 
67% 

Regarding geographical indications, in 2019 Kosovo was in the final phase of registration of 
the "Sharri Cheese" with the help of French experts. 

Information  regarding  the  use  of  tariff  rate  quotas  granted  by  Kosovo  to  the  EU  was  not 
readily available at time of drafting of this staff working document. 

4.4 

Trade in services and Foreign Direct Investments 

At the time of drafting this information sheet, no information was available regarding trade in 
service and foreign direct investment between the EU and Kosovo.  

5. 

CONCLUSIONS  

Kosovo and the EU are becoming ever closer trade partners, seeing an increase of 25% in 
bilateral trade during 2019. Over the last 10 years total trade has risen by 111% and the EU 
is Kosovo’s main trading partner, accounting for almost half of Kosovo’s total trade in goods.  

However,  Kosovo  has  still  to  reap  the  full  benefits  of  the  3  year  old  trade  agreement.  Its 
introduction of 100% import tariffs against Serbia and Bosnia and Herzegovina in late 2018 
was  a  major  blow  against  regional  economic  integration.  With  such  actions,  Kosovo  has 
hampered the development of a Regional Economic Area.  

192 

 
 
 
 
 
 
 
 
 
Kosovo has a large informal economy combined with high youth unemployment and a poorly 
performing  education,  which  constitute  serious  barriers  to  the  development  of  its  private 
sector and increased competitiveness. As in other parts of the region, therefore, the business 
and investment climate in Kosovo is extremely challenging.  

More constructive engagement with regional partners in CEFTA and cooperative participation 
in the development of the Regional Economic Area, on the basis of EU rules and standards, 
would assist Kosovo in moving forward. 

193 

 
 
 
 
 6. 

Statistics 

KOSOVO 

ANNUAL  INFORMATION  SHEET  ON  IMPLEMENTATION  OF  THE  TRADE 
PILLAR  OF  THE  EU-MONTENEGRO  STABILISATION  AND  ASSOCIATION 
AGREEMENT 

194 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Kosovo (mio €)Imports103718897129Exports7598499001 0371 285Balance6567778129401 155Share Kosovo in EU27 trade with Extra-EU27Imports0.0%0.0%0.0%0.0%0.0%Exports0.0%0.0%0.0%0.1%0.1%Total (I+E)0.0%0.0%0.0%0.0%0.0%Share EU27 in trade Kosovo with worldImports42.6%42.4%42.3%42.6%49.1%Exports23.7%22.4%22.0%27.5%33.3%Total (I+E)40.4%40.4%40.0%41.1%47.5%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Kosovo: IMF DotsTotal merchandise trade EU27 with Kosovo (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports971293333.8%Imports1 907 5651 934 94427 3791.4%Exports1 0371 28524823.9%Exports2 059 8822 132 01572 1333.5%Balance9401 155215Balance152 317197 07144 754Total trade1 1331 41428124.8%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Kosovo (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports242400.0%Imports118 891121 6442 7532.3%Exports25038113052.1%Exports169 000181 82512 8257.6%Balance226356130Balance50 10960 18110 072Total trade27540513047.5%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Kosovo (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports721053345.2%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports78690411714.9%EU27 exports1 890 8821 950 19059 3093.1%Balance71479985Balance102 208136 89034 682Total trade8591 00915017.5%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Kosovo (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %ImportsImports824 543824 015-528-0.1%ExportsExports928 420968 64840 2284.3%BalanceBalance103 877144 63340 756Total tradeTotal trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Kosovo (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018ImportsImports642 682776 924784 743824 543824 015ExportsExports750 713849 023855 477928 420968 648BalanceBalance108 03172 09970 734103 877144 633Total tradeTotal trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Kosovo (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInwardInward5 402 5316 647 4477 199 7797 275 8937 196 848OutwardOutward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInwardInward143 012803 285328 703209 462-67 421OutwardOutward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsKosovoKosovo20182019Extra-EU27Kosovo2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Kosovo02004006008001 0001 2001 40020152016201720182019Merchandise trade EU27 with Kosovo (mio €)ImportsExportsBalance 
 
 
1. 

INTRODUCTION 

On  15  October  2007,  the  EU  and  Montenegro  signed  a  Stabilisation  and  Association 
Agreement (SAA). The SAA is the prime instrument of the EU’s overall policy towards the 
Western  Balkan  countries’  Stabilisation  and  Association  process.  Under  this  process,  all 
Western Balkans countries, including Montenegro, are granted a clear perspective to become 
EU Member States.   

The  SAA  entered  into  force  on  1  May  2010,  although  the  trade-related  part  of  the  SAA 
already entered into force through an Interim Agreement on 1 January 2008. This Agreement 
established  a  free-trade  area  over  a  transitional  period  of  five  years.  From  the  date  of  the 
Interim  Agreement,  the  EU  granted  permanent  liberalisation  of  97.3%  of  tariff  lines, 
representing  almost  duty  free  treatment  to  all  imports  from  Montenegro.  By  2013, 
Montenegro had liberalised 95% of its tariff lines, representing 99% of EU imports during the 
three years preceding the entry into force of the agreement. The Agreement covers products in 
all Chapters of the Harmonised System. Only a few agricultural and fishery products  are not 
fully liberalised and subject to preferential quantitative concessions (TRQs).   

The  Agreement  also  includes  provisions  concerning  competition  matters,  investment  and 
related  payments,  a  high  level  of  protection  of  intellectual  property  rights  and  strengthened 
co-operation in customs matters. Since the entry into force of the full SAA on 1 May 2010, a 
number  of  additional  disciplines  are  being  implemented  concerning,  notably,  government 
procurement,  legislative  approximation  in  many  areas  including  standardisation,  as  well  as 
provisions regarding services and establishment.  

2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGRESS AND FOLLOW-UP ACTIONS  

Montenegro has  made good progress in  implementing the interim  agreement and the SAA 
provisions  since  their  entry  into  force,  but  some  non-compliance  issues  remain.  The  most 
significant  are related to non-tariff barriers, including technical standards and administrative 
obstacles.  

In  terms  of  improving  the  business  environment,  it  is  key  to  tackle  in  particular  unfair 
competition  from  the  informal  economy  and  deficiencies  in  the  regulatory  environment. 
Businesses are negatively affected by inconsistent and arbitrary law enforcement as well as by 
inefficiencies and weak capacity in the public administration.  

In line with SAA obligations, enforcement of competition rules needs to be enhanced, and 
significant efforts are needed with  regards to adoption of legislation and enforcement in the 
field of state aid control, including transparency of aid granted. Public procurement is another 
area  of  concern.  Under  the  SAA  the  respective  public  procurement  markets  are  in  principle 
opened  on  the  basis  of  non-discrimination  and  reciprocity  (no  less  favourable  treatment). 
Despite  a  broad  level  of  alignment  with  the  EU  acquis  in  the  area  of  classical  and  utilities 
procurement, Montenegro still needs to improve implementation and enforcement capacities 
at all levels.   

195 

 
 
 
 
 
 
 
3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The latest meeting of the SAA Sub-committee on Trade, Industry, Customs and Taxation 
took  place  in  Brussels  on  8  November  2019.  In  addition  to  discussing  trade  trends,  the 
Commission welcomed the fact that there were no bilateral trade irritants, and commended 
Montenegro for its high-level of integration with the Centra European Free Trade Agreement 
(CEFTA) and its active participation in the WTO.  

The  Commission  noted  the  ongoing  implementation  of  Montenegro’s  sectoral  strategies  on 
standardization,  metrology,  accreditation,  and  market  surveillance;  and  the  recent  activities 
carried out by Montenegro in the areas of SMEs development, women’s entrepreneurship and 
improved  financial  support  to  start-ups.  It  invited  Montenegro  to  strengthen  administrative 
capacity in these fields.  

In  the  field  of  customs  and  taxation,  the  Commission  commented  that  Montenegro’s 
legislation on VAT and its Excise Law need to be brought in line with the EU acquis as part 
of  the  accession  process.  The  success  of  the  planned  introduction  of  e-fiscalisation  will 
depend upon the administrative and technical capacity put in place to manage the system. The 
two parties also discussed cooperation in th the fight against smuggling of tobacco products. 

The  Commission  also  took  note  of  Montenegro’s  adoption  of  a  new  Industrial  Policy 
Strategy and Action Plan, which includes an objective of enhancing export diversification, 
and  noted  the  continuous  growth  trend  for  tourism  in  Montenegro  which  is  positive  for  the 
national economy and employment. 

4. 

EVOLUTION OF BILATERAL TRADE 

4.1 

Economic environment 

The Montenegran economy recorded a robust growth in 2017 and 2018 (4.7% and 4.9% GDP 
growth  respectively),  driven  by  a  strong  investment  cycle;  but  following  the  completion  of 
some  large  infrastructure  projects,  the  rate  of  economic  expansion  decelerated  to  3.0%  in 
2019.    Private  consumption  is  now  the  main  driver  of  growth,  boosted  by  a  strong  tourism 
performance,  growing  employment  and  increasing  household  loans.  Inflationary  pressures 
have been low in the last five years, with the exception of some moderate price increases in 
2017 and 2018.  

Montenegro is a relatively small and open economy. It has chosen unilaterally to use the euro 
as  legal  tender,  thereby  importing  the  euro-zone  monetary  stance.  As  a  result,  there  is  an 
absence  of  monetary  policy  tools,  leaving  fiscal  and  structural  policies  as  the  major 
macroeconomic policy instrument.  

Average annual inflation was 0.5% in 2019.  The inflation was driven by food prices, but their 
impact  has  been  largely  offset  by  the  decline  in  prices  for  oil  derivatives,  garments, 
communication, and tobacco.  

196 

 
 
 
 
 
 
 
 
 
The economy is service-oriented, with services accounting for 72% of total gross value added 
(GVA), followed by construction activity with 7% of GVA, while the manufacturing base is 
small,  accounting  for  only  5%  of  GVA.  The  manufacturing  base  is  concentrated  on 
commodities  with  low  value-added  and  with  a  high  dependence  on  imported  intermediate 
goods. Besides hard commodities (basic metals, rolling bearings and bauxite ores), economic 
output  is  concentrated  on  tourism  and  energy  which  exposes  the  country  to  fluctuations  in 
external markets and terms of trade.  

As  a  candidate  country  for  EU  accession  since  2012,  trade  integration  with  the  EU  is 
strengthening. In 2019 trade with the EU reached 50.1% of total trade exchanges, while with 
the regional CEFTA partners it accounted for 25.5%. Montenegro participates in the Regional 
Economic  Area  framework,  designed  to  increase  trade  exchanges.  However,  regional  non-
tariff  barriers,  in  particular  the  time  taken  and  procedures  needed  for  border  crossing,  still 
appear  to  hamper  stronger  intra-regional  trade.  Montenegro  signed  amendments  to  the  free 
trade  agreement  with  Turkey  in  July  2019  ensuring  additional  liberalisation  of  trade  in 
agricultural products and access to the services market.  

4.2 

Trade in goods 

Total bilateral trade between the EU and Montenegro grew only marginally (+0.7%) between 
2018 and 2019 to a total of €1.38 billion. Imports from the EU grew at a slightly better rate 
(2.5%) but exports to the EU fell by 11%. However, over the last 10 years bilateral trade has 
grown by 61% and the EU remains Montenegro’s first trading partner accounting for 46% of 
total  trade  (37%  of  total  exports  and  47%  of  total  imports  of  goods).  After  the  EU, 
Montenegro’s main trade partners are Serbia (20% of total trade), China (8%) and Bosnia and 
Herzegovina (6%). The main traded products were in the following sectors: mineral products; 
transport  equipment;  and  machinery  and  appliances.  The  overall  trade  balance  is  heavily  in 
favour of the EU, and increased slightly in 2019 to €1.06 billion. This is somewhat offset by 
Montenegro’s significant trade surplus in services of €375 million. 

4.3 

Trade in agricultural products 

In 2019, trade in agricultural products grew by almost 5%, reaching a total of €211 million, 
which  represents  15%  of  the  total  bilateral  trade.  The  trade  balance  is  heavily  in  the  EU’s 
favour: exports of agricultural products from the EU to Montenegro represent 94% of bilateral 
trade  in  agricultural  products.  The  EU  exported  mainly  pork  meat  (24%),  chocolate, 
confectionery  and  ice  cream  (8%)  and  pasta,  pastry,  biscuits  and  bread  (7%).  The  EU 
imported  mainly  vegetables  (33%),  wine,  vermouth,  cider  and  vinegar  (17%),  essential  oils 
(17%) and vegetables (17%).  

Tariff rates quotas granted by the EU to Montenegro 

197 

 
 
 
 
 
 
 
 
 
 
 
Utilisation rate of TRQs opened by the EU to Montenegro 

Sector 

TRQ 
description 

TRQ 
Quantity 

Beef 

Wine 

Baby beef 
Wine, ≤ 2L 
(bottled) 

Unit 
t (carcass 
weight eq.) 

800 

16.000  Hl 

Utilisation in TRQ period ending in: 
2018 

2019 

2017 

0% 

14% 

0% 

19% 

0% 

20% 

Regarding  geographical  indications,  Montenegro  is  making  progress  in  aligning  its  quality 
policy with that of the EU and there is a strong interest in capturing and promoting the local 
traditions and know-how of its food and drinks sector.   

Information regarding the use of tariff rate quotas granted by Montenegro to the EU was not 
readily available at time of drafting of this staff working document. 

4.4 

Trade in services and Foreign Direct Investments 

In 2018,  total  bilateral  trade in services increased by a massive 35% to  just under €884 
million. This was mainly due to an increase in Montenegro’s exports of services to the EU by 
55%,  compared  to  only  a  2%  increase  in  the  import  of  services  from  the  EU.  As  a  result, 
Montenegro  has  a  very  healthy  trade  surplus  in  services  of  €375  million.  This  is  almost 
entirely due to tourism.  

The EU remains the main source of Foreign Direct Investment into Montenegro, holding 
€1.46 billion at  the end of 2018. However, this represents  a decrease of  €70 million (4.6%) 
since 2017. In contrast, total FDI stock from Montenegro in the EU was only €18 million. 

5. 

CONCLUSIONS  

Montenegro  and  the  EU  remain  close  trade  partners,  despite  the  very  small  increase  in 
bilateral trade during 2019. This can be partially attributed to rather sluggish GDP growth in 
2019.  However,  over  the  last  10  years  total  trade  has  grown  by  61%  and  the  EU  is 
Montenegro’s main trading partner, accounting for almost half of Montenegro’s total trade in 
goods.  In  addition  Montenegro  has  a  significant  surplus  in  trade  in  services  with  the  EU, 
thanks to growing tourism, and the EU remains the main source of FDI.  

The trade agreement is generally well implemented by Montenegro, although there remain 
a few non-tariff barriers to be dealt with. Montenegro is a positive participant in CEFTA and 
contributes to the development of a Regional Economic Area.  

As  in  other  parts  of  the  region,  tackling  the  large  informal  economy  remains  an  important 
structural challenge. Low labour market outcomes in Montenegro encompass several aspects 
that undermine potential growth and improving living standards. Low labour market activity 
and a high unemployment rate also reflect structural issues. Strengthening 
regulatory 
environment  requires  a  long-term,  continuous  commitment  from  the  state  and  local 
authorities. Discretion and inconsistencies in interpretation and implementation of laws need 
to be addressed more forcefully.  

the 

198 

 
 
 
 
 
 
 
However,  it  is  expected  that  in  the  near  future  Montenegro  will  benefit  greatly  from  the 
renewed  EU  accession  perspective  and  that  closer  economic,  structural  and  legislative 
integration with the EU will have positive outcomes on trade relations and the business and 
investment climate in Montenegro. 

199 

 
 
 
 
6. 

STATISTICS 

MONTENEGRO

200 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Montenegro (mio €)Imports139146152180159Exports8639741 0521 1891 219Balance7248289001 0091 059Share Montenegro in EU27 trade with Extra-EU27Imports0.0%0.0%0.0%0.0%0.0%Exports0.0%0.1%0.1%0.1%0.1%Total (I+E)0.0%0.0%0.0%0.0%0.0%Share EU27 in trade Montenegro with worldImports40.6%47.4%46.5%47.1%47.0%Exports34.0%36.7%33.0%42.8%37.2%Total (I+E)39.6%45.9%44.6%46.5%45.7%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Montenegro: IMF DotsTotal merchandise trade EU27 with Montenegro (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports180159-20-11.3%Imports1 907 5651 934 94427 3791.4%Exports1 1891 219302.5%Exports2 059 8822 132 01572 1333.5%Balance1 0091 05950Balance152 317197 07144 754Total trade1 3681 378100.7%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Montenegro (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports77-1-7.0%Imports118 891121 6442 7532.3%Exports194205105.3%Exports169 000181 82512 8257.6%Balance18719811Balance50 10960 18110 072Total trade202211104.8%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Montenegro (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports172153-20-11.5%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports9941 014202.0%EU27 exports1 890 8821 950 19059 3093.1%Balance82286240Balance102 208136 89034 682Total trade1 1671 16700.0%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Montenegro (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports40663022455.2%Imports824 543824 015-528-0.1%Exports24925562.3%Exports928 420968 64840 2284.3%Balance-157-375-218Balance103 877144 63340 756Total trade65588423035.1%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Montenegro (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports206223285406630Imports642 682776 924784 743824 543824 015Exports252186202249255Exports750 713849 023855 477928 420968 648Balance47-37-83-157-375Balance108 03172 09970 734103 877144 633Total trade458408488655884Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Montenegro (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward9818Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward2 9271 5161 5161 446Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward-2982-738Inward143 012803 285328 703209 462-67 421Outward202-131Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsMontenegroMontenegro20182019Extra-EU27Montenegro2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Montenegro02004006008001 0001 2001 40020152016201720182019Merchandise trade EU27 with Montenegro (mio €)ImportsExportsBalance 
 
 
ANNUAL  INFORMATION  SHEET  ON  IMPLEMENTATION  OF  the  TRADE 
PILLAR  OF  THE  EU-SERBIA  STABILISATION  AND  ASSOCIATION 
AGREEMENT 

1. 

INTRODUCTION 

On  29  April  2008,  the  EU  and  Serbia  signed  a  Stabilisation  and  Association  Agreement 
(SAA).  The  SAA  is  the  prime  instrument  of  the  EU’s  overall  policy  towards  the  Western 
Balkan  countries’  Stabilisation  and  Association  process.  Under  this  process,  all  Western 
Balkans  countries,  including  Serbia,  are  granted  a  clear  perspective  to  become  EU  Member 
States.   

The SAA entered into force on 1 September 2013, although the trade-related part of the SAA 
already applied, through an Interim Agreement, as of 1 February 2009 for Serbia, and as of 8 
December  2009  for  the  EU  side.  This  Agreement  established  a  free-trade  area  over  a 
transitional period of six years.  

The  Agreement  covers  products  in  all  Chapters  of  the  Harmonised  System.  Only  a  few 
exceptions,  concerning  a  limited  number  of  agricultural  and  fishery  products  were  not  fully 
liberalised and are still subject to preferential quantitative concessions (Tariff Rate Quotas).   

The Agreement also includes provisions concerning competition and state aid, investment and 
related  payments,  a  high  level  of  protection  of  intellectual  property  rights  and  strengthened 
co-operation in customs matters. Since the entry into force of the full SAA in 2013, a number 
of  other  legislation  approximations  with  impact  on  trade  were  put  in  place  in  the  fields  of 
public procurement, standardisation and the right of establishment. 

2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGRESS AND FOLLOW-UP ACTIONS  

Although Serbia has made progress in implementing the interim agreement and then the SAA 
provisions  since  their  entry  into  force,  some  non-compliance  issues  remain  unresolved.  The 
most  significant  are:  discriminatory  excise  duties  on  certain  alcoholic  beverages  (grain-
based  spirits);  systematic  inspections  of  EU  products  at  import  and  non-recognition  of  EU 
certificates  of  conformity  at  the  Serbian  border;  restrictions  on  the  free  movement  of 
capital - in particular restrictions on the acquisition by foreigners, including EU citizens, of 
agricultural  land;  and  the  lack  of  respect  for  the  transparency  and  non-discrimination 
principles in public procurement procedures.  

In  line  with  Serbia’s  SAA  obligations,  enforcement  of  competition  rules  needs  to  be 
enhanced,  and  significant  efforts  are  needed  with  regards  to  adoption  of  legislation  and 
enforcement  in  the  field  of  state  aid  control,  including  transparency  of  aid  granted.  In 
particular,  Serbia  should  ensure  that  intergovernmental  agreements  concluded  with  third 
countries and their implementation do not unduly restrict competition, comply with the basic 
principles  of  public  procurement,  such  as  transparency,  equal  treatment  and  non-
discrimination, and are in line with the EU acquis. 

Regarding  legislative  alignment,  Serbia  has  made  good  progress  in  adjusting  its  legislation 
on  dual-use  goods.  And  as  part  of  the  accession  process,  Serbia  has  begun  work  to 
implement  the  REACH  directive  (chemical  products)  and  is  making  progress  towards 
alignment of legislation on explosives for civil use, pyrotechnic articles, construction products 

201 

 
 
 
and  toy  safety.  However,  Serbia  still  needs  to  remove  legislative  provisions  related  to  the 
Serbian mark of conformity for products marketed in Serbia after accession to the EU. 

Regarding  SMEs  and  the  business  climate,  despite  improved  performance  in  various 
international  rankings,  the  regulatory  environment  remains  weak  and  further  efforts  are 
needed to improve the predictability and quality of legislation. The existence of a large grey 
economy  negatively  affects  competition.  Serbia’s  new  SME  strategy  is  welcome,  but  its 
objectives need to be concretised. Alignment with EU legislation on combating late payment 
in commercial transactions needs to be completed. 

In November 2018, Kosovo imposed a 100% import tariff for goods originating from Serbia 
(and  Bosnia  and  Herzegovina),  indirectly  affecting  EU  businesses  operating  in  Serbia  and 
trading  in  the  region.  These  measures  are  politically  motivated  and  the  EU  has  repeatedly 
called for their termination. 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The SAA Sub-committee on Trade, Industry, Customs and Taxation last met in Belgrade 
on 16 October 2019. Both sides noted the positive trade trends, and in particular that exports 
to the EU grew at a higher rate compared to imports, which is not the case with other major 
trading partners in the region.  

All the pending issues raised in section 2 were discussed. 

Regarding investment, the Commission commended the work undertaken by the World Bank 
to  analyse  all  the  investment  treaties  existing  in  the  region,  and  recommended  that  Serbia 
should update its investment treaties or sign a new model Bilateral Investment Treaty, aligned 
with  EU  standards  and  including  a  ‘sunset’  clause  in  relation  to  Serbia’s  expected  EU 
accession. 

The  Commission  emphasized  that  regional  cooperation  is  of  great  importance  for  the 
integration  of  the  Western  Balkans  and  that  all  initiatives  aimed  at  furthering  regional 
cooperation  are  welcome,  provided  that  they  are  all  inclusive.  Serbia  noted  that  the  Joint 
Economic  Development  Declaration  with  Albania  and  North  Macedonia,  which  aims  to 
further  the  free  movement  of  persons,  goods,  services  and  capital  in  the  Region,  will 
encourage better integration of economies in the Western Balkans, and that other parties are 
invited to join. Both parties regretted the introduction of 100% tariffs by Kosovo, and noted 
that these hinder economic integration in the region.  

The Commission urged Serbia to make more efforts to progress the WTO accession process 
and recalled that this is a condition for EU accession under chapter 30. 

The Commission noted that Serbia has signed an FTA with the Eurasian Economic Union and 
took  note  of  the  provision  that  Serbia  will  be  able  to  terminate  the  Agreement  before  its 
accession to the EU. 

4. 

SPECIFIC AREAS OF IMPORTANCE 

Serbia  has  repeatedly  raised  its  strong  concerns  regarding  the  impact  of  the  EU’s  steel 
safeguards at the highest political levels. In line with the provisions of the SAA, the EU has 
organised  bilateral  consultations  with  Serbia  on  this  issue,  and  will  continue  to  ensure  the 

202 

 
 
safeguard  measures  are  applied  fairly,  that  traditional  trade  flows  are  maintained  and  the 
measures  will  not  have  detrimental  effects  on  Serbia’s  stabilisation  and  economic 
development. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

After strong economic growth in 2018 (+4.4% GDP), economic expansion slowed somewhat 
in  2019  to  4.2%.  Robust  domestic  demand  has  been  the  main  growth  driver  (private 
consumption, sustained by rising employment and real incomes). Rising domestic demand has 
led to a strong growth in imports, resulting in a negative trade balance for a third consecutive 
year. Price pressures remain subdued and inflation has been contained at around 1.3%. Price 
stability was supported by a continuously strong dinar exchange rate. Both the dinar nominal 
and the real effective exchange rates remained stable in 2019. 

Electrical machines top the list of Serbia’s exports (11.7% of total exports), followed by road 
vehicles,  power  engines  and  motors,  rubber  products,  and  iron  and  steel.  Imports  are 
dominated  by  oil  and  oil  derivatives  (6.6%  of  total  imports),  electrical  machines,  road 
vehicles, and iron and steel.  

The introduction of a 100% tariff by Kosovo in late 2018 on imports from Serbia and Bosnia 
and  Herzegovina  adversely  affected  Serbia’s  trade  relations  with  Kosovo  causing  a  drop  in 
exports of goods of 79.4 % compared to 2018.  

In contrast, the EU’s safeguard measures on steel, introduced in June 2018, do not appear to 
have had a significant impact on Serbia’s ability to export affected steel products to the EU.  

Significant  bottlenecks  at  borders  with  neighbouring  EU  countries  (lengthy  inspection 
procedures, non-recognition of EU certificates) still remain in place, hampering further trade 
facilitation with the EU 

. 

5.2 

Trade in goods 

Total bilateral trade between the EU and Serbia grew by 4.8% between 2018 and 2019 to a 
total of €26.5 billion. Over the last 10 years bilateral trade has grown by an impressive 156% 
and the EU remains Serbia’s first trading partner accounting for 63% of total trade (68% of 
total exports and 59% of total imports of goods). After the EU, Serbia’s main trade partners 
are  Russia  (7%  of  total  trade),  China  (6%)  and  Bosnia  and  Herzegovina  (5%).  The  main 
traded  products  were  in  the  following  sectors:  machinery  and  appliances;  base  metals  and 
articles;  plastics,  rubber  and  articles  thereof;  and  transport  equipment.  Thanks  to  a  greater 
increase in Serbia’s exports to the EU than imports from the EU in 2019, trade is almost in 
balance, with the EU showing only a slight surplus of €116 million. 

203 

 
 
 
 
 
5.3 

Trade in agricultural products 

In 2019, overall trade in agricultural  products  grew by 16% to  reach a total of  €2.6 billion, 
which  represents  9.9%  of  the  total  bilateral  trade,  and  more  than  double  the  value  of 
agricultural  trade  in  2009  (€1.2  billion).  Serbia’s  exports  of  agricultural  products  to  the  EU 
grew by an impressive 25% in 2019 (compared to an increase of 8% for imports from the EU) 
resulting in an agricultural trade surplus for Serbia of €108 million. The EU imported mainly 
fruit – excluding citrus and tropical fruit – (21%), cereals – other than wheat and rice – (16%) 
and vegetable oils – other than palm and olive oils  – (8%); while its main exports to Serbia 
included mainly chocolate, confectionery and ice cream (9%) and food preparations (9%).  

Tariff rates quotas granted by the EU to Serbia 

Utilisation rate of TRQs opened by the EU to Serbia 

Sector  TRQ description 

TRQ 
Quantity 

Beef 
Sugar  Sugar 

Baby beef 

Wine, ≤ 2L 
Wine 
(bottled) 
Wine  Wine, > 2L (bulk) 

8.700 
181.000  T 

55.000  Hl 
12.300  Hl 

Unit 
t (carcass weight 
eq.) 

Utilisation in TRQ period ending in: 

2017 

6% 
93% 

7% 
0% 

2018 

4% 
18% 

6% 
2% 

2019 

7% 
53% 

9% 
0% 

With financial and technical support under the EU Instrument for Pre-Accession Assistance, 
Serbia is making firm progress in aligning its quality policy with that of the EU. Serbia has a 
rich tradition in food and culture, which sees many of its local products now being registered 
as geographical indications.   

Information regarding the use of tariff rate quotas granted by Serbia to the EU was not readily 
available at time of drafting of this staff working document. 

5.4 

Trade in services and Foreign Direct Investments 

In 2018, total bilateral trade in services increased by 4% to just under €4.5 billion. Trade in 
services is well balanced, with the EU having a small surplus of €467 million. The EU’s trade 
in services with Serbia is well spread across several Member States both in terms of imports 
and exports, including Austria, Hungary, Greece, Italy, Croatia and Slovenia.  

At  the  time  of  drafting  this  report  there  no  information  was  available  on  foreign  direct 
investement between the EU and Serbia.  

6. 

CONCLUSIONS  

Serbia and the EU  remain  close trade partners, seeing an increase of almost  5% in  bilateral 
trade  during  2019.  Over  the  last  10  years  total  trade  has  grown  by  156%  and  the  EU  is 
Serbia’s  main  trading  partner,  accounting  for  almost  two  thirds  of  Serbia’s  total  trade  in 
goods.  

204 

 
 
 
 
 
 
 
 
 
 
 
In general, Serbia implements the trade agreement fairly well, and is making decent progress 
in its EU accession. Serbia also participates constructively in CEFTA and contributes to the 
development of a Regional Economic Area. On the other hand, Serbia’s WTO accession has 
been stalled for some time without progress.  

Serbia’s  business  environment  has  improved,  but  remains  hampered  by  red  tape,  political 
interference  and  a  lack  of  predictability  in  the  implementation  of  legislation.  The  outsized 
state-owned  enterprises  crowd  out  private  sector  development.  Foreign  direct  investments 
(FDIs) often receive generous public support, leaving other companies, in particular domestic 
small  and  medium  sized  enterprises  (SMEs),  in  a  less  favourable  position.  The  informal 
economy  is  still  sizeable  and  poses  a  challenge  in  terms  of  unfair  competition  from 
unregistered companies. In addition, Serbia’s competitiveness continues to be hampered by a 
polluting,  inefficient  and  not  properly  regulated  energy  sector  and  weak  labour  market 
integration  of  young  people.  The  emigration  of  workers  across  the  occupational  spectrum 
hampers the growth potential.  

However, Serbia would  benefit  greatly from progress  in  its EU  accession process, as  closer 
economic, structural and legislative integration with the EU would have positive outcomes on 
trade  relations  and  the  business  and  investment  climate  in  Serbia.  Furthermore,  the 
development  of  a  Regional  Economic  Area  in  the  Western  Balkans  based  on  the  CEFTA 
agreement and on the EU rules and standards could also generate untapped growth. 

205 

 
 
 
 
7. 

STATISTICS 

SERBIA 

206 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Serbia (mio €)Imports7 6968 4879 73110 73611 278Exports10 97311 51513 22514 53115 189Balance3 2773 0283 4953 7953 911Share Serbia in EU27 trade with Extra-EU27Imports0.5%0.5%0.5%0.6%0.6%Exports0.6%0.6%0.7%0.7%0.7%Total (I+E)0.5%0.6%0.6%0.6%0.7%Share EU27 in trade Serbia with worldImports61.2%60.0%61.1%59.4%58.6%Exports64.3%64.5%65.7%68.6%68.2%Total (I+E)62.5%62.0%63.0%63.2%62.6%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Serbia: IMF DotsTotal merchandise trade EU27 with Serbia (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports10 73611 2785425.0%Imports1 907 5651 934 94427 3791.4%Exports14 53115 1896584.5%Exports2 059 8822 132 01572 1333.5%Balance3 7953 911116Balance152 317197 07144 754Total trade25 26726 4681 2014.8%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Serbia (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports1 0901 36027024.8%Imports118 891121 6442 7532.3%Exports1 1571 252958.2%Exports169 000181 82512 8257.6%Balance68-108-175Balance50 10960 18110 072Total trade2 2472 61236416.2%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Serbia (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports9 6469 9192722.8%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports13 37413 9375644.2%EU27 exports1 890 8821 950 19059 3093.1%Balance3 7274 018291Balance102 208136 89034 682Total trade23 02023 8568363.6%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Serbia (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports1 9382 033954.9%Imports824 543824 015-528-0.1%Exports2 4202 500813.3%Exports928 420968 64840 2284.3%Balance481467-14Balance103 877144 63340 756Total trade4 3584 5341764.0%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Serbia (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports1 7441 9171 7811 9382 033Imports642 682776 924784 743824 543824 015Exports2 4342 2462 2182 4202 500Exports750 713849 023855 477928 420968 648Balance690330437481467Balance108 03172 09970 734103 877144 633Total trade4 1774 1633 9994 3584 534Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Serbia (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward139399Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward12 29112 866Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward716516Inward143 012803 285328 703209 462-67 421Outward16155274311Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsSerbiaSerbia20182019Extra-EU27Serbia2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Serbia02 0004 0006 0008 00010 00012 00014 00016 00020152016201720182019Merchandise trade EU27 with Serbia (mio €)ImportsExportsBalance 
 
 
 
 
PART III.3 

DEEP AND COMPREHENSIVE FREE TRADE AREAS WITH  

GEORGIA, MOLDOVA AND UKRAINE  

207 

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

1. 

INTRODUCTION 

The  Deep  and  Comprehensive  Free  Trade  Area  (DCFTA)  of  the  EU-Georgia  Association 
Agreement (AA)105 entered into force on 1 July 2016 after being applied on a provisional basis 
since  1  September  2014.106  This  information  sheet  constitutes  the  fourth  report  on  the 
implementation  of  the  EU-Georgia  DCFTA,  in  line  with  the  reporting  requirements  of  the 
Regulation implementing the anti-circumvention mechanism provided for in the EU-Georgia 
Association Agreement.107  

The  Government  of  Georgia  adopted  in  November  2017  an  Action  Plan  for  the 
implementation  of  the  DCFTA  2018-2020108.  It  is  a  continuation  of  the  Action  Plan  for 
2014-2017, outlining the priorities of the Association Agenda in different sectors (including 
for  example  Technical  Barriers  to  Trade,  SPS  measures,  customs  or  IPR)  and  the  planned 
activities  related  to  each  priority  with  indicators,  responsible  implementing  institutions  and 
timeframe for implementation.  

2. 

MAIN IMPLEMENTATION ISSUES  

2.1   Main open issues, progress and follow-up  

The  approximation  commitments  for  2015-2019  are  mostly  on  track,  but  have  not  been 
entirely  implemented  to  date.  This  concerns  in  particular  the  submission  of  draft  laws 
approximating  to  EU  telecommunication  directives.  It  should  be  noted  that  the  timeline  for 
approximation  of  Georgian  legislation  was  back-loaded  in  the  negotiation  process  to  the 
extent  that  approximation  intensified  in  2018,  but  will  continue,  in  line  with  the  DCFTA, 
until,  e.g.,  2022  in  the  TBT  area  or  even  2027  with  regard  to  certain  veterinary  measures, 
plant protection and food safety.  

105  The  EU-Georgia  Association  Agreement  was  published 

in  OJ  L 261,  30.08.2014.  http://eur-

lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2014:261:FULL&from=EN  

106  When it comes to DCFTA application to breakaway regions Abkhazia and South-Ossetia, the EU gives its 
full  support  to  Georgia's  territorial  integrity.  However,  in  accordance  with  Article  429  (Territorial 
application) of the Association Agreement, conditions enabling effective implementation of the DCFTA, and 
notably de facto government  control over those territories,  would need to be created in  either  Abkhazia or 
South Ossetia for the DCFTA to apply to those regions, which is not the case at present. 

107  Regulation (EU) 2016/401 of the European Parliament and of the Council of 9 March 2016 implementing the 
anti-circumvention mechanism provided for in the Association Agreement between the European Union and 
the European Atomic Energy Community and their Member States, of the one part, and Georgia, of the other 
part  (OJ  L 77/2016).  According  to  its  Article  4,  the  Commission  shall  submit  an  annual  report  on 
implementation  of  this  Regulation  and  Title  IV  (DCFTA)  of  the  Association  Agreement.  The  report  shall, 
inter  alia,  include  information  about  the  application  of  the  anti-circumvention  mechanism  and  set  out  a 
summary of the statistics and the evolution of trade with Georgia. 

108  See http://www.dcfta.gov.ge/en/implementation.  

208 

 
 
 
 
 
 
 
                                                 
Sanitary and Phytosantinary (SPS) aspects 

The  list  of  the  EU  SPS  acquis  that  Georgia  will  approximate  was  submitted  to  the  EU  in 
December  2015  and  formally  adopted  by  the  EU-Georgia  SPS  Sub-Committee  on  7  March 
2017. Deadlines  committed by Georgia to  achieve compliance  with  the  EU SPS system  are 
rather  long,  to  the  extent  that  about  45%  of  the  legal  acts  will  be  subject  to  approximation 
only  after 2020 (in concrete terms,  35 legal  acts  in  case of veterinary measures,  41 on food 
safety  and  46  in  case  of  plant  protection).  Georgia  has  approximated  101  acts  so  far.  The 
institutional capacity in terms of food safety control still needs to be enhanced. A number of 
Georgian  establishments  are  authorised  to  export  fruit,  vegetables,  honey  and  fishery 
products (from the Black Sea) to the EU. Georgia has submitted a residue monitoring plan 
for aquaculture, and an audit on a Georgian pet food company was carried out in 2019. 

In 2019, the Commission launched a process to verify Georgia’s efforts on approximating to 
the  EU  legislation  regarding  sanitary  and  phytosanitary  measures.  This  review  resulted  in 
minor recommendations to the Georgian National Food Agency. 

Technical Barriers to Trade  

Georgia  is  on  schedule  with  the  approximation  of  legislation  on  market  surveillance  of 
industrial and consumer products. Annex III-A of the DCFTA setting out the list of acquis to 
be  approximated  was  amended  in  2019  to  reflect  the  latest  EU  acquis.  This  meant  that 
Georgia had to approximate to twelve EU acts in 2019, amongst which some, which Georgia 
already  had  approximated  to  in  a  former  version.  The  twinning  project  launched  in  the 
beginning  of  2018  helps  the  Technical  and  Construction  Supervision  Agency  (TCSA)  to 
contribute to the approximation of legislation, apply relevant institutional changes and build 
capacity of the staff, especially in  order to  effectively implement  the adopted legislation.  In 
2019,  the  TCSA  made  progress  in  capacity  building  and  training  on  surveillance  and 
contributed  to  drafting  regulations  on  risk  assessment  methodology  for  market  surveillance 
activities  and  cooperation  between  market  surveillance  authorities.  In  2019  the  Market 
Surveillance Agency became a separate agency from the TCSA. 

Public Procurement  

The institutional part in public procurement approximation has been delayed, but should now 
be  completed109.  A  recently  adopted  law  sets  up  the  impartial  and  independent  review  body 
ensuring that its members will be independent, selected on a competitive basis and appointed 
by the Prime Minister for five years. The secretariat of the review body will be affiliated with 

109  In  accordance  with  the  Association  Agreement  the  first  approximation  stage  relates  to  setting  up  the 
institutional framework: an executive body at central government level responsible for coherent policy in all 
areas  related  to  public  procurement  and  an  impartial  and  independent  body  tasked  with  the  review  of 
decisions taken by the contracting authorities and entities as well as with the introduction of basic standards 
regulating the award of contracts. 

209 

 
 
 
 
 
 
                                                 
the  Georgian  Competition  Agency.  The  Public  Procurement  Roadmap  was  finalised  taking 
correctly  into  account  reference  to  the  alignment  with  the  EU  Concessions  Directive,  as 
foreseen in the Association Agreement. This roadmap will be a point of reference to facilitate 
the implementation of the Public Procurement Chapter of the DCFTA, including on the step 
by step alignment of the Georgian legislation to the EU acquis in this area. On 2 July 2020, 
the  Parliament  of  Georgia  approved  the  Law  of  Georgia  on  Amendments  to  the  Law  of 
Georgia on Public Procurement with the three readings. Once the Association Committee in 
Trade  Configuration  (ACTC)  will  have  approved  it,  major  parts  of  the  Law  will  enter  into 
force and will be enacted from 01 January 2021. As a result of aforementioned amendments, 
the  current  administrative  review  body  –  so  called  “Dispute  Resolution  Council”  (the 
“Council”) will be completely reformed and a new independent and impartial public body will 
be established within that Council. 

Institutional  capacity  needs  to  be  further  built  both  within  the  Georgian  State  Procurement 
Agency  and  within  the  contracting  authorities.  In  this  regard,  further  Concrete  steps  were 
being  taken  following  a  joint  Commission  visit  by  DG  NEAR  and  GROW  to  Georgia  in 
November  and  the  Trade  Committee  in  Tbilisi  in  December  2019.  Georgia  is  expected  to 
conclude phase 1 and endorse the Roadmap in 2020.  

Intellectual Property  

The implementation of the IPR Chapter of the DCFTA has started and Georgia has brought 
the majority of its laws in compliance with the DCFTA. However, the exhaustion regime of 
Georgia  is  still  not  line  with  its  DCFTA  commitments,  as  it  provides  for  a  regime  of 
international exhaustion as opposed to domestic exhaustion as foreseen in the agreement.  

As  one  of  the  deliverables  of  the  meeting  between  the  Government  of  Georgia  and  the 
Commission  on  21  November  2018,  the  Commission  decided  to  allocate  resources  to  a 
cooperation  programme  between  the  Georgian  Intellectual  Property  Centre  (Sakpatenti)  and 
the  European  Intellectual  Property  Office  (EUIPO),  aiming  at  among  others  aligning  the 
Georgian  laws  and  standards  concerning  registration  and  management  of  IP  rights  with  EU 
norms and standards. Georgia is planning to work on further amendments to IPR laws and in 
particular on the trademark law. This is being done in cooperation with the EUIPO under the 
cooperation programme, one overarching project between EUIPO and Sakpatenti.  

Rules of Origin 

On 1 July 2017 Georgia joined the  Convention  on pan-Euro-Mediterranean preferential 
rules of origin (“PEM Convention”)110. The joint Decision of the Customs sub committee on 
the  linkage  of  the  rules  of  origin  in  bilateral  trade  to  the  Protocol  of  PEM  Convention111 

110  The  Decision  of  the  Joint  Committee  of  the  PEM  Convention  on  Georgia  accession  was  published  in  OJ 

L 329, 3.12.2016 http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:22016D2126 

111  Council  Decision  (EU)  2017/2433  of  18  December  2017  on  the  position  to  be  adopted  on  behalf  of  the 

European Union within the Customs Sub-Committee; OJ L 344, 23.12.2017, p. 21. 

210 

 
 
 
 
 
                                                 
entered into force on 1 June 2018. This allows Georgia to benefit from diagonal cumulation of 
origin with the EU and Turkey as of 1 June 2018, and to be better integrated in regional trade 
flows.  In  2019  Georgia  and  Ukraine  also  signed  an  amendment  their  bilateral  tradea 
agreement to allow for diagonal cumulation between them. 

Energy 

Georgia officially became a Contracting Party to the  Energy Community Treaty on 1 July 
2017.  The  Protocol  of  Accession  to  the  Energy  Community  Treaty  commits  Georgia  to 
approximate  its  legislation  to  key  energy  and  energy-related  EU  acquis  between  2017  and 
2020.  The  law  relating  to  the  electricity  and  natural  gas  market  directives  and  the  law  on 
renewables entered into force in 2019, whereas the law on energy efficiency was adopted in 
Parliament in May 2020. 

Customs and Trade Facilitation 

On 4 January 2016,  Georgia ratified the WTO Trade Facilitation Agreement which has 
been  in  force  since  February  2017,  and  contains  commitments  on  simplifying  border 
procedures  and  modernisation  of  customs  techniques  and  instruments  and  customs  control. 
The  Georgian  National  Committee  on  Trade  Facilitation  was  established  in  2019.  A  new 
customs code entered into force in September 2019, approximating to the Union customs code 
(which  remains  to  be  reflected  in  Annex  XIII  of  the  DCFTA).  The  customs  code  is 
accompanied by 51 secondary normative acts.  

2.2 

Progress in the implementation of trade and sustainable development provisions 

The Parties continued to make progress on the implementation of the Trade and Sustainable 
Development  (TSD)  Chapter  in  2019.  The  identification  by  the  EU  of  TSD  priorities  per 
partner, in line with the European Commission’s 15-point action plan, allowed a more focused 
approach  to  implementation.  For  Georgia,  these  priorities  are  outlined  in  the  Workplan112 
agreed in 2018.  

The 4th TSD Subcommittee meeting took place on 26 March 2019. During the meeting, the 
EU and Georgia reaffirmed their commitment to implement the TSD Work Plan 2018-2020113 
agreed  in  June  2018,  and  reviewed  the  state  of  play  of  the  areas  covered.  Accordingly,  the 
Sub-Committee  reviewed  the  implementation  of  the  labour  provisions  of  the  TSD  Chapter, 
including  the  ratification  and  effective  implementation  of  the  ILO  conventions  and  of  the 
Decent Work Agenda.  

The EU welcomed the adoption of the revised Georgian Occupational Safety and Health 
(OSH) law, which entered into force on 1 September 2019, and on-going strengthening of the 

112 https://trade.ec.europa.eu/doclib/docs/2019/april/tradoc_157858.pdf  
113  The workplan can be consulted at http://trade.ec.europa.eu/doclib/docs/2019/april/tradoc_157858.pdf  

211 

 
 
 
 
 
 
 
 
                                                 
Labour  Inspection  Department’s  capacity  as  further  steps  towards  aligning  supervision  and 
control in this area with international and EU standards. The new law allows labour inspectors 
to  conduct  unannounced  inspections  across  all  economic  sectors  (the  first  OSH  law  from 
March 2018 limited this to workplaces defined as involving “Hard, Harmful and Hazardous” 
conditions). The EU also took note of Georgia’s plans to further develop the Department to 
ensure supervision and control of labour legislation. 

The  EU  and  Georgia  discussed  the  state  of  play  of  Georgia’s  implementation  of  the 
environmental  provisions  of  the  TSD  Chapter,  including  of  multilateral  environmental 
agreements  (MEAs)  and  their  joint  efforts  and  cooperation  to  support  multilateral 
environmental governance.  

Regarding  climate  change,  the  EU  and  Georgia  recalled  that,  collectively,  Nationally 
Determined  Contributions  (NDC)  submitted  by  the  Parties  under  the  Paris  Agreement  and 
current emission trajectories fall far short of what is required to achieve the long-term goals of 
the  Paris  Agreement  and  they  discussed  their  respective  strategies  on  greenhouse  gas 
emission. In addition, the EU emphasised the need for close cooperation with civil society and 
highlighted  the  project  it  has  put  in  place  to  support  the  functioning  of  civil  society 
consultation  mechanisms  established  under  TSD  chapters  of  its  trade  agreements.  A  first 
workshop to  build the capacity of the Domestic Advisory Groups was also organised in  the 
margins of the TSD subcommittee. Further, an open Civil Society Forum was organised on 27 
September. During this forum, the EU and Georgia presented the TSD Sub-Committee’s Joint 
Statement114 and replied to the questions posed by the EU and Georgian Domestic Advisory 
Groups.  

On  a  national  level,  Georgia  adopted  a  new  Forest  Code  in  October  2019.  The  code  was 
prepared with the technical assistance of the EU, the World Bank and GIZ.  

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

3.1 Joint decisions of the Association Bodies 

In 2019 amendments/updates were made to the following parts of the DCFTA:  

  Standardisation: Annex III (rules applicable to standardisation, accreditation, conformity 

assessment, technical regulation and metrology)115; 

  Public Procurement: Annex XVI (public procurement)116; 

114  Available at http://trade.ec.europa.eu/doclib/docs/2019/april/tradoc_157854.pdf  
115  OJ L 296, 15.11.2019, p. 30-32 
116  OJ L 296, 15.11.2019, p. 33-62 

212 

 
 
 
 
 
 
 
 
                                                 
  Agriculture: List of EU agricultural products and foodstuffs other than wine and spirits to 
be  protected  in  Georgia  (Annex  XVII-C)  and  the  List  of  spirit  drinks  of  the  EU  to  be 
protected in Georgia (part B of Annex XVII-D).117  

3.2 Meetings of the Association Bodies 

The  6th  meeting  of  the  EU-Georgia  Association  Committee  in  Trade  configuration  was 
held on 5-6 December 2019 in Tbilisi. It provided an opportunity to review all issues relating 
to the comprehensive and timely implementation of the EU-Georgia DCFTA and allowed to 
take note of the fact that approximation takes place in generally good conditions. The EU and 
Georgia  reviewed  progress  made  in  all  DCFTA  Chapters,  including  trade  in  goods,  SPS 
measures,  intellectual  property  rights,  customs  and  trade  facilitation,  technical  barriers  to 
trade,  public  procurement,  establishment,  trade  in  services  and  electronic  commerce,  trade-
related energy, competition, and trade and sustainable development. The Committee assessed 
the development of bilateral trade after five years of implementation of the DCFTA, which is 
not increasing  at a similar level (in terms of magnitude or diversification) as with Ukraine or 
Moldova.  

Both  partners  raised  their  respective  concerns  relating  to  the  implementation  of  the 
commitments  on  approximation  with  EU  law  in  particular  in  the  area  of  SPS  measures, 
technical  barriers  to  trade,  public  procurement,  customs,  competition,  intellectual  property 
rights,  and  trade  and  sustainable  development.  They  instructed  the  specialised  Sub-
Committees  to  continue  to  seek  solutions.  Both  sides  underlined  the  importance  of  EU 
financial  and  technical  assistance  in  the  implementation  of  the  DCFTA,  notably  projects 
aimed at supporting both Georgia’s administration and its small and medium-sized enterprises 
(SMEs) to align with the acquis and to reap the benefits from the Agreement. 

The 5th Customs Sub-Committee met in Tbilisi on 12 June 2019. The discussion focused on 
the  following  matters:  developments  in  customs  legislation  and  procedures,  including  the 
approximation  process  (Annex  XIII  of  the  Agreement),  customs  enforcement  of  intellectual 
property  rights,  Georgia's  accession  to  the  Convention  on  a  Common  Transit  Procedure  – 
progress of the Twinning Project, Mutual Administrative Assistance in Customs Matters and 
World Customs Organisation matters, rules of origin, revision of the pan-Euro-Mediterranean 
Convention  (PEM)  on  rules  of  origin  as  well  as  harmonisation  of  legisation  on  dual  use 
goods.  Following  the  adoption  of  an  admendment  to  the  DCFTA,  adding  a  rules  of  origin 
protocol in 2018, diagonal cumulation is now possible between the EU, Georgia, the Republic 
of Turkey and Ukraine. The parties also confirmed the harmonisation of Georgian legislation 
with the EU Regulation 953/2013, as amended. 

117  OJ L 66, 4.3.2020, p. 1–156 

213 

 
 
 
 
 
 
 
                                                 
The  5th  Sub-Committee  on  SPS  measures  (SPS  Sub-Committee),  met  on  19  November 
2019  in  Brussels.  During  this  meeting,  the  Georgian  authorities  presented  progress  in  the 
implementation  of  the  operational  conclusions  of  the  previous  Sub-Committee  meeting  (of 
October  2018)  as  well  as  of  the  DCFTA  SPS  Chapter,  and  institutional  reforms.  The  EU 
underlined the importance for Georgian authorities to  meet  the deadlines foreseen in  Annex 
XI-B  of  the  Association  Agreement  and  to  allocate  human  resources  in  order  to  meet  this 
priority. The parties also discussed the need to make some slight changes to Annex XI-B in 
light of amendments to the legal acts on the EU side.  

Georgia  indicated  that  it  is  looking  forward  to  the  implementation  of  ENPARD  IV118,  and 
called for funding to enhance the country’s laboratory capacity. Further, the parties discussed 
the  progress  on  exports  of  animal  origin  products.  In  this  context,  Georgia  had  submitted  a 
residue  monitoring  plan  for  aquaculture  in  2019,  which,  once  agreed  by  the  EU  and 
authorisations are given to export related products, could lead to new export opportunities to 
the EU.  In accordance  with  Georgia’s list  of products  with  export potential, an audit by the 
Commission  on  a  Georgian  pet  food  company  was  accelerated  and  carried  out  in  2019  in 
order  to  include  it  on  the  third  country  authorisations  list.  The  audit  resulted  in  a  few 
recommendations  to  the  National  Food  Agency  to  adapt  further  their  structures  before  pet 
food  can  be  exported  to  the  EU.  Georgia  presented  information  about  SPS  Border  Control 
Infrastructure and pointed out that there are five upgraded fully functional Border Inspection 
Posts. It also underlined the need for funding of four additional Border Inspection Posts. 

The 4th meeting of the Geographical Indications Sub-Committee took place in Brussels on 
23  January  2020.  The  Sub-Committee  discussed  updates  of  the  EU  GI  lists  for  agricultural 
products  and  foodstuffs,  wines,  spirit  drinks  and  aromatized  wines.  During  the  meeting  the 
parties  adopted  a  Decision  amending  Annex  XVII-C  (list  of  EU  agricultural  products  and 
foodstuffs other than wine and spirits to be protected in Georgia) and part B of Annex XVII-D 
(list of spirit drinks of the EU to be protected in Georgia) of the DCFTA119. The provisions on 
exchange  of  information  on  all  the  updates  on  EU  as  well  as  Georgian  Geographical 
Indications (new ones, removals from the list, modifications) were also discussed in order to 
allow  each  party  to  run  objection  procedures  for  the  new  names  and  to  follow  other 
procedures  necessary  for  the  next  update  of  the  Geographical  Indications  Annexes  to  the 
DCFTA. 

The  4th  TSD  Sub-committee  took  place  on  26  March  2019.  The  meeting  was  the  main 
occasion for the Parties to take stock on progress and engage in substantial discussions in line 
with  the  TSD  Work  Plan  2018-20.  The  EU  welcomed  Georgia’s  amendments  to  the 
Occupational Safety and Health (OSH) law, as well as the ongoing work to amend the Labour 
Code  in  order  to  strengthen  the  mandate  of  the  Labour  Inspectorate.  On  this  point,  the 
Commission  noted  the  current  capacity  challenge  for  the  Labour  inspection  department, 
notably  in  terms  of  staff.   On  climate  change,  Georgia  informed  the  EU  on  their  ongoing 

118  European Neighbourhood Programme for Agriculture and Rural Development. 
119  Decision 1/2020, OJ L 66, 4.3.2020. 

214 

 
 
 
 
 
                                                 
update of Nationally Determined Contributions (NDCs) and their intention to develop a long-
term  2050  Low  Emission  Development  Strategy  within  the  framework  of  the  EU4Climate 
initiative.  These exchanges were followed by a Civil Society Forum on 27 September, after 
which the Domestic Advisory Groups (DAGs) on both sides issued a joint statement120.  

4. 

SPECIFIC AREAS OF IMPORTANCE   

An  anti-circumvention  mechanism  applies  to  several  agricultural  goods  i.e.  beef,  pork, 
sheep  and  poultry  meat,  dairy  products,  eggs  and  albumins,  mushrooms,  cereals,  malt, 
starches  and  sugars  as  well  as  to  processed  agricultural  products  such  as:  sweetcorn, 
processed  sugars  and  cereals  and  cigarettes.  For  none  of  the  products  under  the  anti-
circumvention mechanism the respective trigger levels were exceeded in 2019, due to the low 
trade levels for those products in the analysed period. 

The Parties agreed on a review clause, i.e. that after five years from the entry into force of the 
DCFTA, they would consult to consider broadening the scope of the liberalisation of customs 
duties in bilateral trade. The parties agreed at the 6th ACTC, in December 2019, that there was 
a need to review the mechanisms. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

The economic growth  rate  for Georgia  was 5.1% in  2019 while the  annual  inflation rate 
amounted to 7.0%. The main driving forces were price changes for 1) food and non-alcoholic 
beverages  (+12.3%),  2)  alcoholic  beverages  and  tobacco  (+15.6  %),  particularly  tobacco 
(especially for tobacco (30.8%)), 3) recreation and culture (+6.9%), 4) transport +2.9 %) and 
5) restaurants and hotels (+7.9%). 

With  regard  to  the  Georgian  Lari’s  (GEL)  exchange  rate  with  the  euro,  the  percentage 
change in January 2019 compared to the corresponding month in 2018 was 2.9%, whereas in 
December  2019  compared  to  corresponding  month  of  previous  year  it  had  decreased  by  -
0.6%. The monthly exchange rate of the GEL with the euro in January 2019 was 3.0 and in 
December  2019  3.2.  Domestic  demand  was  supported  by  higher  consumption,  investment 
contracted due to the completion of several infrastructure projects and declining foreign direct 
investment (FDI)”.  

In  2019,  total  foreign  trade  of  Georgia  with  the  rest  of  the  world  amounted  to 
EUR 10.8 billion (+2.7%). Exports increased by 12.4% and reached EUR 3,2 billion. Imports 
decreased  by  0.8  %  and  amounted  to  USD 9.1 billion.  The  trade  deficit  equalled 
EUR 4.5 billion and its share in trade turnover constituted 41.2%. Comparing the 2019 figures 
with trade turnover in 2014 (EUR 9.8 billion), an increase of 12% is observed. In 2019, 21.9% 

120 

https://www.eesc.europa.eu/en/agenda/our-events/events/4th-joint-meeting-eu-georgia-domestic-advisory-

groups  

215 

 
 
 
 
 
 
 
                                                 
of Georgian exports went to EU member states, 53.1% to the Commonwealth of Independent 
States (CIS) and 25.0% to other countries. During the same period, Georgia imported 25.6% 
from  EU  member  states,  26.9%  from  CIS  countries,  and  47.5%  from  other  countries.  The 
number  of  exporting  companies  (11,376)  from  Georgia  during  2019  has  increased 
significantly by 41% compared to  2018.  In terms of exporter companies  to  EU specifically, 
there is also a positive trend, namely 4% growth with a total of 915 exporter companies.  

In 2019 the top five exported goods from Georgia were 1) motor cars (18.2% share in total 
exports). Commodity price y-o-y increased by 68%; 2) copper ores and concentrates (17.3%). 
Commodity  price  y-o-y  increased  by  29%;  3)  ferro-alloys  (8.0%).  Commodity  price  y-o-y 
decreased by 14%; 4) wine of fresh grapes (5.9%). Commodity price y-o-y increased by 13%; 
5) medicaments put up in measured doses (4.6%). Commodity price y-o-y increased by 17%.  

In  2019  top  five  imported  goods  to  Georgia  were  1)  petroleum  and  petroleum  oils  (8.4% 
share  in  total  import).  Commodity  price  y-o-y  decreased  by  12%;  2)  motor  cars  (7.2%). 
Commodity price y-o-y increased by 6%; 3) copper ores and concentrates (6.7%). Commodity 
price y-o-y increased by 52%; 4) medicaments put up in measured doses (3.9%). Commodity 
price y-o-y increased by 5%; 5) petroleum gases and other gaseous (3.6%). Commodity price 
y-o-y increased by 13%.  

On  21  June  2019  Russia's  President  signed  a  decree  that  banned  Russian  airlines  to  fly 
Russian citizens from Russia to Georgia from 8 July and advised tour operators/travel agents 
to  “refrain  from  selling  tourist  products  to  citizens,  which  provide  for  transportation 
(including commercial) of citizens from Russia to Georgia” for the duration of the ban. This 
ban remains active up to now.  

The  Free  Trade  Agreement  between  Georgia  and  Hong  Kong  entered  into  force  from  13 
February  2019,  and  on  21  October  2019  an  agreement  on  strategic  partnership  and 
cooperation between Georgia and the United Kingdom of Great Britain and Northern Ireland 
was signed. The agreement includes an FTA part. 

5.2 

Trade in goods 

The scope of trade liberalisation 

At  the  start  of  provisional  application  of  the  DCFTA  on  1  September  2014  both  partners 
eliminated import duties for all goods with a few exceptions on the European Union side, 
related  to  sensitive  agriculture  products,  for  which  market  access  has  in  the  meantime  also 
improved.  For  example,  in  2019  the  EU  granted  duty-free  Tariff  Rate  Quotas  for  garlic 
originating  from  Georgia  and,  for  28  agricultural  products  (including  fruits  and  vegetables) 
that are subject to entry prices, the EU eliminated the ad valorem component of the import 
duty.  

Overall evolution of EU–Georgia trade in goods 

In  accordance  with  2019  Eurostat  data,  the  EU  is  the  most  important  trading  partner  of 
Georgia  with  a  23%  share  in  its  overall  trade  (21.9%  in  total  export  and  25.6%  in  total 

216 

 
 
 
 
 
 
 
imports),  followed  by  Turkey  (14%),  Russia  (11%),  China  (9%)  and  Azerbaijan  (8%) 
Georgia is the EU’s 78th trade partner and accounts for only 0.1% of its total trade. 

In  2019  the  overall  trade  between  the  EU  and  Georgia  decreased  on  year-on-year-basis 
by  3% and amounted to €2.6 billion. EU exports to Georgia decreased by 1.8%, while EU 
imports  from  Georgia  noted  a  decrease  of  5%  compared  to  2018.  The  top  5  products 
(mineral  products,  foodstuffs,  beverages,  tobacco,  products  of  chemical  or  allied  industries, 
and textiles and textile articles) accounted for 87 % of total Georgian exports to the EU. 

In  the  analysed  period  the  surplus  in  EU  trade  with  Georgia  has  slightly  decreased  from 
€1.42  billion to €1.40billion. 

Sectoral structure of EU-Georgia trade in goods 

As  concerns  the  structure  of  EU  exports  to  Georgia  in  2019,  the  most  important  product 
categories (by Sections of the Harmonized System Nomenclature – HS) were: products of the 
chemical or allied industries and machinery and appliances. 

The observed shares and dynamics in 2019 in comparison to 2018 were as follows: products 
of the chemical or allied industries amounted to 19 % of overall EU exports to Georgia and 
increased  by  7%;  machinery  and  appliances  amounted  to  18%  of  EU  overall  exports  to 
Georgia (a decrease by 14%); mineral products amounted to 16% (a decrease by 15%); and 
transport  equipment  to  9%  (increase  by  42%).  Other  products  categories  that  showed  an 
increase in EU exports are live animals; animal products, vegetable products and textiles. 

In terms of the structure of EU imports from Georgia in 2019, the most important product 
categories were: mineral products, foodstuffs, beverages and tobacco, chemicals, vegetables, 
textiles and base metals. 

The  following  shares  and  dynamics  in  2019  comparing  to  2018  were  observed:  Mineral 
products  accounted  for  54  %  of  total  EU  imports  from  Georgia  and  decreased  by  1%; 
foodstuffs, beverages, tobacco accounted to 10% of total EU imports from (decrease by 25%); 
chemicals accounted for 10% (increase by 8%); vegetables made up 8% of the imports (32% 
increase); whereas textiles remained stable at 7% of total EU imports. Finally base metals and 
articles thereof accounted for 5% of EU total imports (a 48% decrease).  

5.3 

Trade in agricultural products 

Total trade in agricultural goods with Georgia counted for €358 million in 2019. EU exports 
of agricultural  goods  to  Georgia  (€251 million  in  2019) have been steadily increasing since 
2009. In 2019 EU exported to Georgia mainly spirits and liqueurs (13%), beet and cane sugar 
(8%) and food preparations (7%).  EU imports from Georgia (€107 million in 2019) consisted 
mainly  of  beverages,  spirits  and  vinegar  (44%)  followed  by  tropical  fruits,  nuts  and  spices 
(36%). Compared to  2018, the imports of tropical  fruits, nuts  and spices increased by 30%, 
whereas  the  import  of  spirits  and  liqueurs  decreased  by  58%  in  the  same  period  (from  €31 
million to €13 million). 

217 

 
 
 
 
 
 
 
 
 
 
 
 
As  regards  the  anti-circumvention  mechanism  for  agricultural  products  and  processed 
agricultural  products  set  out  in  Article  27  of  the  DCFTA,  none  of  the  trigger  levels  were 
overshot in 2019. There were no imports of garlic within the TRQ.  

TRQs opened by the EU to Georgia  

Utilisation rate of TRQs opened by the EU to Georgia 

Utilisation in TRQ period ending 
in: 
2018 
1% 

2019 
0% 

2017 
0% 

Sector 

TRQ description 

F&V 

Garlic 

TRQ 
Quantity 

Unit 

220  T 

There are no TRQs opened by Georgia to the EU. 

5.4 

Trade in services and Foreign Direct Investments 

Market access related to establishment and trade in services 

In the DCFTA the EU and Georgia laid down the necessary arrangements for the progressive 
reciprocal  liberalisation  of  establishment  and  trade  in  services  and  for  cooperation  on 
electronic commerce. Both Partners committed to freedom of establishment as from the start 
of the DCFTA’s provisional application, by granting each other national treatment and most 
favoured-nation treatment (subject to several reservations specified by EU Member States and 
a  few  reservations  by  Georgia).  The  Cross-border  supply  of  services  was  also  liberalised 
(the  EU  and  Georgia  granted  each  other  national  treatment  with  several  limitations  and 
reservations on both sides). 

In four services sectors (postal and courier services, telecommunication, financial services 
and  international  maritime  transport  services)  Georgia  recognised  the  importance  of 
gradual approximation (over a period of 4 to 8 years) of its existing and future legislation to 
the EU acquis (in case of financial services Georgia also committed to the international best 
practice and standards). Further market opening in those sectors is conditioned upon Georgia 
fulfilling its commitments of gradual approximation up to 2022. 

The EU and Georgia also agreed on a review clause with a view to liberalising establishment, 
cross-border  supply  of  services  and  capital  movement.  This  review,  if  and  when  triggered, 
shall  take  into  account,  inter  alia,  the  process  of  gradual  approximation  foreseen  in  the 
DCFTA  and  its  impact  on  the  elimination  of  remaining  obstacles  to  cross  border  supply  of 
services between the parties. 

Trade in services 

Trade  in  services  between  the  EU  and  Georgia  has  more  than  doubled  between  2006  and 
2018,  both  in  terms  of  imports  and  exports.  As  Georgian  exports  of  services  are  growing 
faster  than  EU  exports,  the  EU  positive  trade  balance  has  been  gradually  decreasing.  Total 

218 

 
 
 
 
 
 
 
 
 
 
 
 
trade in services between the Partners increased in 2018 by 15% from €846 to €978 million, 
while the EU’s trade balance with Georgia decreased from €89 million to €75 million. 

The  structure  of  exports  of  services  by  Georgia  to  the  world  is  dominated  by  travel  and 
transport  services.  In  terms  of  imports  the  most  important  sectors  are  transport,  travel, 
insurance and pension services as well other business services. 

Foreign Direct investment 

In 2018 Foreign Direct investment (FDIs) stocks in Georgia originating from the EU have 
remained roughly constant at €1.9 billion, decreasing from €2 billion in 2017). The top three 
EU  Member  States  investing  in  Georgia  include  Ireland,  the  Netherlands  and  Luxembourg. 
Inward FDI flows in that year amounted to €116 million, which is a slight decrease from the 
€147 million registered in 2017. 

According to the data provided both by the EU and Georgia, the main sectors chosen by EU 
investors are: telecommunications, transport, infrastructure and manufacturing. 

The above statistics show that positive impact of the DCFTA on attracting more investments 
from the EU is still ahead for Georgia. Georgia performs very well in international rankings in 
terms of business climate. According to the 2019 World Bank Doing Business Index Georgia 
is on 7th position amongst 190 countries. In the 2019 Transparency International – Corruption 
Perception Index Georgia appeared on 44th position among 180 countries. 

6. 

CONCLUSIONS  

After  five  years  of  DCFTA  implementation,  external  trade  and  FDIs  remain  key  for  the 
overall economic growth of a small open economy like Georgia. Economic uncertainty in 
some  key  trading  partners  in  the  region  (Russia,  Turkey  and  Azerbaijan)  and  the  recovery 
from the recession in the EU created a relatively fragile but positive external environment for 
Georgia’s trade in 2019.  

The  EU  is  constantly  encouraging  and  assisting  Georgia  to  accelerate  the  necessary 
reforms, notably in the SPS area, as these reforms would not only enhance food safety in the 
country but also allow further market access opportunities for Georgian agricultural products 
to  the  EU  market.  In  the  medium  term,  the  benefits  from  approximation  to  the  EU  acquis 
should translate into an increase of bilateral trade, and especially growth in Georgia’s exports 
to the EU. Georgia has an untapped trade potential not only in relation to trade in goods, but 
also  to  services  and  public  procurement.  The  DCFTA  will  help  Georgia  to  diversify  its 
economy and enhance regional trade with its neighbours and the broader paneuromed region. 

The continuation of the DCFTA implementation, notably through legal approximation (that 
has  a  dynamic  character  due  to  developments  in  the  EU  acquis)  and  institutional  capacity 
building will require continuous efforts by Georgian authorities as well as on the EU side in 

219 

 
 
 
 
 
 
 
 
 
terms  of  assisting  Georgia  in  this  process.  The  ACTC  as  well  as  the  specialised  Sub-
Committees  established  under  DCFTA  remain 
the  main  fora  for  discussions  and 
comprehensive  evaluation  of  that  progress.  Simultaneously,  in  order  to  effectively  enhance 
exports  from  Georgia,  the  EU  delivers  financial  and  technical  support  to  the  reforms  and 
administrative  capacity  building  in  trade-related  areas  like  TBT  (e.g.  standardisation  and 
metrology infrastructure; accreditation and surveillance system), SPS (notably in institutional 
capacity building in food safety control) as well as in promotion of producers organisations, 
value chain optimisation and SME development. Improving the enforcement and governance 
of labour standards and working conditions is an important factor for Georgia to fully reap the 
benefits of the DCFTA and of the Assocation Agreement. 

220 

 
 
 
 
7. 

STATISTICS 

GEORGIA 

221 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Georgia (mio €)Imports704491652634599Exports1 7631 8431 9062 0462 008Balance1 0591 3521 2541 4121 409Share Georgia in EU27 trade with Extra-EU27Imports0.0%0.0%0.0%0.0%0.0%Exports0.1%0.1%0.1%0.1%0.1%Total (I+E)0.1%0.1%0.1%0.1%0.1%Share EU27 in trade Georgia with worldImports27.3%28.4%26.5%26.3%24.4%Exports28.3%26.1%23.5%21.3%21.0%Total (I+E)27.5%27.9%25.7%25.0%23.4%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Georgia: IMF DotsTotal merchandise trade EU27 with Georgia (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports634599-34-5.4%Imports1 907 5651 934 94427 3791.4%Exports2 0462 008-37-1.8%Exports2 059 8822 132 01572 1333.5%Balance1 4121 409-3Balance152 317197 07144 754Total trade2 6792 608-72-2.7%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Georgia (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports116107-8-7.2%Imports118 891121 6442 7532.3%Exports240251114.5%Exports169 000181 82512 8257.6%Balance12414319Balance50 10960 18110 072Total trade35635820.7%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Georgia (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports518492-26-5.0%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports1 8061 758-48-2.7%EU27 exports1 890 8821 950 19059 3093.1%Balance1 2881 265-22Balance102 208136 89034 682Total trade2 3242 250-74-3.2%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Georgia (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports3794517319.2%Imports824 543824 015-528-0.1%Exports4675265912.6%Exports928 420968 64840 2284.3%Balance8975-14Balance103 877144 63340 756Total trade84697813215.6%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Georgia (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports256278245379451Imports642 682776 924784 743824 543824 015Exports520518378467526Exports750 713849 023855 477928 420968 648Balance2642401338975Balance108 03172 09970 734103 877144 633Total trade776795622846978Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Georgia (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward7111132147116Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward4 0601 6572 0471 902Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward4-25-611234Inward143 012803 285328 703209 462-67 421Outward200-1 63968-17Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsGeorgiaGeorgia20182019Extra-EU27Georgia2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Georgia05001 0001 5002 0002 50020152016201720182019Merchandise trade EU27 with Georgia (mio €)ImportsExportsBalance 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE  DEEP 
AND COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN THE EU AND 
ITS MEMBER STATES AND MOLDOVA  

1. 

INTRODUCTION 

The Deep and Comprehensive Free Trade Area (DCFTA) between the EU and Moldova is the 
main  economic  pillar  of  the  Association  Agreement  (AA)121  and  has  been  provisionally 
applied  since  1  September  2014  (it  fully  entered  into  force  on  1  July  2016).  The  DCFTA 
comprises two main components: trade liberalisation (in the form of a Free Trade Agreement) 
and regulatory approximation to the EU acquis. 

In  2019,  both  Parties  completed  the  third-year  review  of  tariff  concesions  for  agricultural 
products, which was foreseen in the DCFTA and had been initiated by Moldova in 2017. This 
process was finalised with the Decision of the Association Committee in Trade configuration 
(ACTC) amending Annex XV to the AA, which was adopted on 23 January 2020. Moldova is 
making progress  in  the adoption and implementation  of EU  acquis  in several  areas, such as 
sanitary  and  phytosanitary  matters,  technical  barriers  to  trade,  customs  and  intellectual 
property  rights.  Despite  this  progress,  there  are  still  concerns  about  corruption  and  the 
business climate in the country, and reforms are needed in the institutional landscape of the 
country in order to guarantee independent enforcement of the provisions in the newly adopted 
legislation.  The  country  had  three  successive  governments  in  2019,  as  a  result  of 
parliamentary elections in February 2019 and a motion of no-confidence in November 2019. 
Despite  this  changing  political  situation, trade  can  be  considered  an  anchor  in  EU-Moldova 
relations.  

The DCFTA applies to the entire territory of the Republic of Moldova including Transnistria 
since 1 January 2016, as per Decision No 1/2015 of the EU-Republic of Moldova Association 
Council. The EU is  monitoring the implementation  of these arrangements and its adherence 
by both Chisinau and Tiraspol on a yearly basis, and progress is assessed in the framework of 
the annual ACTC. 

2. 

MAIN IMPLEMENTATION ISSUES  

2.1   Main open issues, progress and follow-up 

Third-year review clause of the Association Agreement (review of the duty free tariff-rate 
quotas  or  “TRQs”):  In  October  2017,  Moldova  activated  the  review  clause  foreseen  in  the 
DCFTA (Article 147(5)). As a result of the negotiations, which were concluded in July 2019, 
the EU agreed to increase TRQs for two products (table grapes and plums), to introduce a new 

121  The  EU-Republic  Moldova  Association  Agreement  was  published  in  OJ  L 260,  30.08.2014.  http://eur-

lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2014:260:FULL&from=EN  

222 

 
 
 
 
 
 
 
                                                 
TRQ  for  cherries,  and  to  raise  the  levels  of  imports  triggering  the  anti-circumvention 
mechanism  for  wheat,  barley,  maize  and  processed  cereals,  taking  into  account  the  trade 
patterns  over  the  last  years.  Moldova  agreed  to  raise  the  TRQs  for  EU  exports  of  pork  and 
poultry  meat,  dairy  and  sugar.  The  results  of  the  negotiation  were  formalised  through  a 
Decision of the EU-Moldova ACTC, which applies since 23 January 2020 (see also  section 
5.2 below).  

In terms  of  regulatory  approximation, parliamentary activity slowed down in  2019 due to 
the  parliamentary  elections  in  February  2019  and  subsequent  long  negotiations  to  form  a 
government. The DCFTA was updated to reflect evolution in EU  acquis: two annexes were 
amended  in  2019  (Annex  XXVIII-B  -  Rules  applicable  to  telecommunication  services;  and 
Annex XXVIII-D - Rules applicable to international maritime transport). 

As  regards  technical  barriers  to  trade,  Moldova  is  advancing  in  the  implementation  and 
several  relevant  acts  have  been  adopted  (Law  on  accreditation  and  conformity  assessment; 
Law on national standardization; Law on metrology; Law on market surveillance for non-food 
products;  amended  Civil  Code  to  include  liability  for  defective  products;  Law  on  general 
product safety). Moldova has also adopted over 25,000 EU technical standards, half of which 
are  already  applied.  Moldova’s  National  Accreditation  Centre  (“Moldac”)  has  played  a 
meanigful  role  in  this  process.  However,  Moldova’s  Law  on  controls  and  inspections  (Law 
No. 131) runs contrary to the provisions of its Law on market surveillance, which was in line 
with EU acquis. As a result, the market surveillance area is currently not harmonised with the 
EU legislation. Moldova is also in the process of determining potential sectors for the possible 
negotiation  of  an  Agreement  on  Conformity  Assessment  and  Acceptance  of  Industrial 
Products  (ACAA),  and  early  2020  it  communicated  the  outcome  of  this  preliminary 
assessment. 

As  regards,  intellectual  property  rights,  the  DCFTA  provides  for  alignment  with 
international  conventions,  norms  and  standards.  In  2019,  the  EU  voiced  concerns  about  the 
draft  copyright  act,  which was not  fully in line  with  the EU Collective  Rights  Management 
Directive. According to the draft, only national authors and rights holders could benefit from 
private  copying  and  reprography  remuneration  schemes,  which  would  discriminate  foreign 
rights  holders  and  be  contrary  to  the  “national  treatment  principle”  under  the  Berne 
Convention. As of early 2020, the draft law was still under preparation.  

Moldova is moving forward with the legal and institutional alignment in the field of  public 
procurement.  Moldova  completed  phase  1  of  the  indicative  time  schedule  for  institutional 
reform,  approximation  and  market  access  (Annex  XXIX-B).  Phase  2  was  expected  to  be 
completed five years after the entry into force of the AA (i.e. by September 2019) and needs 
to be reviewed. The draft Law on procurement in the utilities sector (energy, water, transport 
and postal services), required for the completion of phase 2, was still being discussed in the 
Parliament as of early 2020.   

Moldova's energy reforms progress fairly well within the Energy Community but the market 
still  lacks  transparency,  with  repercussions  also  for  EU  investors.  There  have  been  some 
improvements in electricity procurement in terms of procedure and transparency. 

223 

 
 
 
2.2 

Progress in the implementation of trade and sustainable development provisions 

The  4th  Trade  and  Sustainable  Development  Sub-Committee  took  place  on  4  July  2019  in 
Chisinau.  Moldova  explained  the  ongoing  situation  as  regards  the  reform  of  the  labour 
inspectorate and agreed on the need to bring both the labour code and the labour inspectorate 
system  in  compliance  with  ILO  standards.  This  will  require  sufficient  administrative  and 
inspectors.  On  environment,  waste 
financial  resources 
management  is  a  significant  concern  raised  by  civil  society  and  business.  The  need  for  a 
strategic approach to waste management, waste sorting and recycling has been raised several 
times.  Moldova  has  plans  to  introduce  eco-labelling,  with  the  help  of  the  EU4environment 
project,  but  more  efforts  are  needed  to  increase  awareness  among  the  population  about 
sustainability schemes. 

to  adequately 

labour 

train 

The  parties  had  agreed  on  a  number  of  follow  up  actions  both  in  the  area  of  labour, 
environment and climate. However, it is hard to identify tangible progress made by Moldova 
in  any  of  the  fields  due  to  the  unstable  political  situation  in  the  country  (there  were  three 
consecutive governments in 2020). 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The  6th  meeting  of  the  EU-Moldova  Association  Committee  in  Trade  configuration 
(ACTC)  was  held  in  Chisinau  on  4  October  2019.  The  meeting  took  place  in  a  context  of 
political renewal in Chisinau, following the formation of a new coalition government in June 
2019, between the ACUM block and the Socialist Party (this coalition collapsed in November 
and be followed by a new government led by the Socialist Party). The meeting allowed for a 
useful  exchange  on  the  state  of  play  of  implementation  of  the  different  chapters  of  the 
DCFTA. Moldova reaffirmed its commitment to the full implementation of the DCFTA and 
showed openness to addressing certain outstanding issues of concern to EU business. The EU 
highlighted  the  renewed  engagement  between  the  EU  and  Moldova,  and  recalled  the  recent 
good  developments  in  Chisinau.  Trade-related  assistance  to  support  the  reform  process  in 
Moldova and the conditionality of the EU's assistance were also discussed. 

The  5th  Sub-Committee  on  SPS  measures  (SPS  Sub-Committee)  met  on  19  July  2019  in 
Chisinau. Moldova presented progress in the implementation of the operational conclusions of 
the previous Sub-Committee meeting of July 2018 and updated the EU on the implementation 
of  the  DCFTA  SPS  Chapter  and  on  the  institutional  capacity  of  the  Food  Safety  Agency 
(ANSA).  The  EU  underlined  the  importance  for  Moldova  to  meet  the  deadlines  foreseen  in 
Annex XXIV-B of the DCFTA due for the period 2014-2019, and to allocate human resources 
in  order  to  meet  this  priority.  Discussions  also  touched  upon  the  need  for  the  laboratory 
network  to  be  strengthened  and  extended,  the  negotiation  on  veterinary-sanitary  certificates 
for export from the EU to Moldova and Moldova’s application for export of poultry meat and 
eggs.  

224 

 
 
 
 
  
 
The 5th Sub-Committee on Customs and Trade Facilitation took place in Chisinau on 21 
November  2019.  Moldova  informed  that  the  national  legislation  on  Authorised  Economic 
Operators (AEO), which was adopted in approximation to EU provisions, applies since 2017, 
with  currently  135  authorisations  issued  for  EU  AEOs.  The  EU  showed  concerns  about  the 
high  thresholds  for  criminal  investigation  in  the  area  of  customs  (Law  179),  and  Moldova 
informed that an assessment was being carried out and results will be shared with the EU. As 
regards  the  new  Customs  Code,  Moldova  is  assessing  the  expert  report  from  the  TAIEX 
mission that took  place in  September 2019 and adoption is expected in  2020.  Moldova also 
informed about the closure of duty-free shops for fuel sales at Transnistria border points, and 
the  adoption  of  more  restrictive  criteria  for  issuance  of  licences  for  airport  shops  once  the 
current ones expire.  

The  5th  Geographical  Indications  (GI)  Sub-Committee  met  on  17  October  2019.  It  took 
stock of the latest developments in the area of GIs in the EU and Moldova and of the on-going 
work on two specifications submitted by the Republic of Moldova ("Brînză de Popeasca" and 
“Zăbriceni”), and it discussed the overall implementation of the GIs section of the Association 
Agreement. 

The 4th TSD Sub-Committee met in Chisinau on 4 July 2019 (see section 2.2 above). 

4. 

SPECIFIC AREAS OF IMPORTANCE  

On  3  May  2018,  the  Moldovan  Parliament  discussed  in  first  reading  amendments  to  the 
domestic trade law. The draft had been promoted by the Ministry of Economy and contains 
several problematic provisions incompatible with DCFTA and WTO rules. This includes, for 
example  the  obligation  for  at  least  50%  of  products  in  stores  to  be  of  Moldovan  origin. 
Furthermore, the proposed prohibition for producers to give retail chains and shops more than 
10%  of  the  discount  on invoices  might  limit  free  competition  on  the  market.  The  draft  also 
foresees  significant  penalties  for  business  operators  that  do  not  comply  with  the  new 
requirements. This draft was withdrawn by the government in 2019, but has been reintroduced 
early  2020  and  was  again  discussed  in  the  Parliament  in  February  2020.  The  EU  reiterated 
once again its concerns about the provisions included in the legal text. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

In 2019, GDP increased by 3,6% in real terms in spite of a significant slowdown in the fourth 
quarter. Growth in the first three quarters of 2019 was driven by a surge in investments and a 
rise in household consumption supported by growing real wages. The slowdown in the fourth 
quarter of 2019 was  caused by a  cut  in  public investments  and consumption due to  a set  of 
fiscal  measures  introduced  in  August  and  the  fact  that  the  effects  of  the  cut  in  tax  rates 

225 

 
 
 
 
 
 
 
introduced in October 2018 were fading.  On the supply side, the main contributors to growth 
in  2019  were  construction  (up  by  15.9%),  wholesale  and  retail  trade  (5.7%),  IT  (9.2%)  and 
industry  (2.4%),  together  adding  3.3  percentage  points  to  the  growth  figure.  Agriculture 
contracted by 0.2%. 

Inflation  accelerated  quickly  in  2019  to  7.5%  in  December  (year-on-year),  following  a 
depreciation  of  the  currency,  decreases  in  the  rates  of  personal  income  taxes  and  social 
contributions,  and  large  increases  in  public  sector  wages.  The  National  Bank  decreased  the 
base interest rate by two percentage points to 5.5% in December 2019. 

The  budget  deficit  for  2019  ended  at  of  1.5%  of  GDP.  The  budget  for  2020  includes  an 
ambitious  surge  in  infrastructure  investments,  especially  road  construction,  which  would 
increase the budget deficit to 3.3% of GDP. Financing of the deficit is not yet secured. Public 
debt  was  27.4%  of  GDP  at  the  end  of    2019.  About  80%  of  the  public  debt  is  long-term, 
mostly with IFIs and the rest with bilateral official creditors.  

The current account deficit has remained significantly high in 2019 at 9.8% of GDP (it was 
10.7% in 2018), in comparison to 6.1% of GDP in 2017 and 4.1% in 2016. The deterioration 
reflects strong growth in non-energy imports fuelled by increased consumption demand. The 
trade deficit is partly offset by remittances that stood at around 15% of GDP in 2019.  Foreign 
direct investment has been low at around 2% of GDP in recent  years, but increased in 2019 
due to  some one-off investments  in  the agricultural  sector. The reserves level  is  well above 
the  target  stipulated  in  the  IMF  programme  reaching  to  EUR  2.6  billion  by  end-December 
2019 (corresponding to five months of imports). 

5.2 

Trade in goods 

The scope of trade liberalisation 

At the start of the DCFTA provisional application on 1 September 2014, the EU eliminated all 
customs  duties  on  goods  imported  from  Moldova  except  for  six  agricultural  products 
(tomatoes,  garlic,  table  grapes,  apples,  plums  and  grape  juice),  which  are  subject  to  annual 
duty-free  Tariff  Rate  Quotas  (TRQs).  Further  to  that,  the  EU  eliminated  the  ad  valorem 
component of the import duty for twenty categories of fruits and vegetables (the entry prices 
for  these  remain).  Import  of  fourteen  groups  of  agricultural  and  processed  agricultural 
products (pig meat, poultry, dairy products and processed dairy products, eggs and albumins, 
cereals and processed cereals, sugar and sugar processed goods, cigarettes and sweet corn) is 
duty-free  but  monitored  under  anti-circumvention  mechanism  (if  the  imports  to  the  EU 
reaches  certain  agreed  levels  and  Moldova  fails  to  provide  a  proof  of  the  origin  of  these 
imports,  the  EU  may  temporarily  suspend  the  preferential  treatment  of  the  products 
concerned). 

The scope of elimination of customs duties has broadened as a result of the review of certain 
TRQs, following the agreement between the EU and Moldova in the framework of the review 
clause  included  in  the  Association  Agreement.  As  a  result,  both  Parties  have  obtained 
additional duty-free TRQs to access the other partner’s market: the EU for pork, poultry, dairy 
products and sugar, and Moldova for table grapes and plums, as well as a new TRQ for sweet 

226 

 
 
 
 
cherries. In addition, the trigger volumes of the anti-circumvention mechanism for Moldovan 
imports into the EU have been increased for wheat, barley, maize and processed cereals.  

Overall evolution of EU – Moldova trade in goods 

In 2019, the EU remained a key trade partner of Moldova, accounting for 54% of its total 
trade (approx. 64% of total exports and 49% of Moldova’s total imports), followed by Russia 
(10%) and China (7%). Moldova is EU’s 59th trade partner.  

In 2019, the total trade between the EU and Moldova grew by 3,9% compared to 2018, to 
slighlty over €4.7 billion. The EU maintained a trade surplus with Moldova which increased 
to €1.16 billion. Over the reporting period, EU exports increased by 8,5% from €2.71 billion 
to  €2.94  billion,  while  EU  imports  from  Moldova  decreased  by  2,7%  from  €1.83  billion  to 
€1.78  billion.  This  decrease  needs  to  be  seen  in  light  of  the  particular  strong  increase  of 
imports, by 17,6%, between 2017 and 2018. While the main export of Moldova into the EU 
(i.e. insulated wire and cables, which represents around a quarter of all exports into the EU) 
has kept its positive trend and increased by 11% in 2019, the biggest drops concerned cereals 
(decrease of 23%) and iron and steel (decrease of 36%). Again, these drops contrast with the 
increases noted in previous years, particularly for iron bars and rods.  

As  regards  EU  exports,  there  were  increases  in  all  top  categories.  The  main  exports  by 
Moldova  into  the  EU  in  2019  were,  by  order  of  importance,  electrical  machinery  and 
equipment,  apparel  and  clothing  and  oil  seeds  (especially  sunflower  seeds).  The  main  EU 
exports into Moldova were mineral fuels, electrical machinery and vehicles. 

The  number  of  companies  involved  in  trade  with  the  EU  has  continued  to  increase,  with 
approximately 1 837 Moldovan companies exporting to the EU in 2019 up from 1 734 firms 
engaged in exporting to the EU in 2018. 

5.3 

Trade in agricultural products 

Total trade in agricultural goods between the EU and Moldova reached a sum of €914 million 
in 2019, compared to €873 million in 2018 (i.e. an increase of 4,7%). In terms of EU imports 
from  Moldova  in  2019,  agricultural  goods  counted  for  33.1%  (€589  million)  and  consisted 
mainly of: oilseeds – other than soyabeans – (24%, €142 million), wheat (11%), vegetable oils 
– other than palm & olive oil – (11%) and cereals – other than wheat and rice – (11%).  

EU exports of agricultural goods to Moldova increased by 14.4% from 2018, to reach in 2019 
€325 million. EU’s exports of agricultural goods to Moldova  are quite diverse, and include 
oilseeds  –  other  than  soyabeans  (8%,  €25  million),  cigars  and  cigarettes  (6%),  pork  meat 
(5%), food preparations (4.6%) and cereals – other than wheat and rice – (4.6%). The export 
of cigars and cigarettes increased by 125% compared to 2018.   

As  regards  the  anti-circumvention  mechanism  for  agricultural  products  and  processed 
agricultural products set out in Article 148 of the FTA, the 2019 trigger levels were exceeded 
for wheat, maize and processed cereals. As regards TRQs, only two (table grapes and plums) 

227 

 
 
 
 
 
 
 
were fully utilised by Moldova, while there were only small imports of apples and grape juice 
and no imports of tomatoes and garlic. 

TRQs openend by the EU to Moldova  

Utilisation rate of TRQs opened by the EU to Moldova 

Sector 
F&V 
F&V 
F&V 
F&V 
F&V 
F&V 

TRQ description 

Tomatoes 
Garlic 
Table grapes 
Apples 
Plums 
Grape juice (incl. must) 

TRQ 
Quantity 

2.000 
220 
10.000 
40.000 
10.000 
500 

Unit 
t 
t 
t 
t 
t 
t 

Utilisation in TRQ period 
ending in: 
2018 
2% 
0% 
100% 
5% 
99% 
0% 

2017 
4% 
0% 
100% 
5% 
100% 
1% 

2019 
0% 
0% 
100% 
6% 
100% 
7% 

Information  on  the  utilisation  of  TRQs  openend  by  Moldova  to  the  EU  was  not  readily 
available at the time of drafting of this staff working document. 

5.4 

Trade in services and Foreign Direct Investments 

Market access related to establishment and trade in services 

Approximation  to  the  EU  acquis  is  foreseen  in  four  services  sectors  (postal  and  courier 
services,  telecommunication  services,  financial services and international  maritime transport 
services).  Moldova  recognised  the  importance  of  gradual  (lasting  between  3  and  8  years) 
approximation  of  its  existing  and  future  legislation  to  the  list  of  the  EU  acquis  (in  case  of 
financial services also to the international best practice and standards). 

Trade in Services 

In  2018,  total  trade  in  services  between  the  EU  and  Moldova  reached  €957  million,  which 
represents  an  increase  of  7,6%  when  compared  to  2017  (up  from  3.4%  in  the  previous 
reporting period). Over the same period of time, EU exports of services to Moldova increased 
by 2.5% (from €437 million to €448 million) while EU imports from Moldova increased by 
12.4% (rising from €452 million to €509 million). 

While import and export values had been evolving mostly in tandem with a slight surplus for 
the EU, this was reversed in 2017, when the value of imports from Moldova into the EU was 
higher  than  the  value  of  exports  from  the  EU  to  Moldova.  This  trade  deficit  in  services 
slightly widened in 2018. The main sub-sectors of services exported by Moldova to the world 
remain transport, travel, ICT and other business services as well as manufacturing services on 
physical inputs owned by others. In terms of imports, the most important sub-sectors belong 
to transport and travel-related services. 

Foreign Direct investment (FDIs) 

In 2018, EU FDI stocks in Moldova increased from €928 million to €1.1 billion, with the EU 
ranking  as  a  major  foreign  investor  representing  over  60%  of  overall  FDI  stocks.  EU 

228 

 
 
 
 
 
 
companies  are  present  in  many  sectors  (including  energy,  financial  sector,  industry,  retail 
trade, agriculture and services).  

As in 2016, direct investment flows from the EU also increased in 2018 (from €118 million to 
€127 million). 

6. 

CONCLUSIONS  

After five years of implementation of the DCFTA, the EU has consolidated its position as key 
trade  partner  of  Moldova.  While  there  has  been  progress  in  the  process  of  regulatory 
approximation,  there  remains  untapped  potential  from  the  DCFTA.  Trade  between  both 
Parties  should  continue  to  be  broadened  and  stimulated,  particularly  from  Moldovan 
companies  towards  the  EU.  In  this  regard,  there  are  two  key  elements  to  consider  in  the 
coming years: continued trade liberalisation and regulatory approximation.   

To  fully  reap  the  benefits  of  trade  liberalisation,  it  is  crucial  that  Moldova  continues  its 
process  of  approximation  to  the  EU  acquis  in  all  trade-related  areas  (e.g.  sanitary  and 
phytosanitary  matters  -SPS-,  technical  specifications  -TBT-,  public  procurement,  customs, 
etc.), as foreseen in the annexes to the AA/DCFTA. To achieve this, the authorities need to 
continue  introducing  the  legislative  changes  and,  more  importantly,  ensure  a  robust  and 
independent  institutional  framework  to  guarantee  proper  implementation  and  oversight  of 
these new provisions. This should have a positive knock-on effect on the business climate in 
the country and would stimulate investment and innovation.  

229 

 
 
 
 
 
7. 

STATISTICS 

MOLDOVA 

230 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Moldova (mio €)Imports1 1611 2651 5561 8291 780Exports2 0112 0012 3952 7122 940Balance8507368398831 159Share Moldova in EU27 trade with Extra-EU27Imports0.1%0.1%0.1%0.1%0.1%Exports0.1%0.1%0.1%0.1%0.1%Total (I+E)0.1%0.1%0.1%0.1%0.1%Share EU27 in trade Moldova with worldImports47.7%47.6%48.3%48.4%48.8%Exports54.5%59.2%60.1%65.8%63.6%Total (I+E)49.9%51.5%52.2%54.0%53.6%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Moldova: IMF DotsTotal merchandise trade EU27 with Moldova (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports1 8291 780-48-2.6%Imports1 907 5651 934 94427 3791.4%Exports2 7122 9402278.4%Exports2 059 8822 132 01572 1333.5%Balance8831 159276Balance152 317197 07144 754Total trade4 5414 7201793.9%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Moldova (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports58358950.9%Imports118 891121 6442 7532.3%Exports2843254114.4%Exports169 000181 82512 8257.6%Balance-299-26436Balance50 10960 18110 072Total trade868914465.3%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Moldova (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports1 2451 192-54-4.3%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports2 4282 6141867.7%EU27 exports1 890 8821 950 19059 3093.1%Balance1 1831 423240Balance102 208136 89034 682Total trade3 6733 8061333.6%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Moldova (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports4525095612.4%Imports824 543824 015-528-0.1%Exports437448112.5%Exports928 420968 64840 2284.3%Balance-15-60-45Balance103 877144 63340 756Total trade889957677.6%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Moldova (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports440369384452509Imports642 682776 924784 743824 543824 015Exports534499461437448Exports750 713849 023855 477928 420968 648Balance9513077-15-60Balance108 03172 09970 734103 877144 633Total trade974868844889957Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Moldova (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward5585839291Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward9281 100Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward711-6-144Inward143 012803 285328 703209 462-67 421Outward83118127Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsMoldovaMoldova20182019Extra-EU27Moldova2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Moldova05001 0001 5002 0002 5003 0003 50020152016201720182019Merchandise trade EU27 with Moldova (mio €)ImportsExportsBalance 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE  DEEP 
AND COMPREHENSIVE FREE TRADE AREA (DCFTA) BETWEEN THE EU AND 
ITS MEMBER STATES AND UKRAINE 

1. 

INTRODUCTION 

The  Deep  and  Comprehensive  Free  Trade  Area  (DCFTA),  the  trade  part  of  the 
Association  Agreement,  provisionally  entered  into  force  on  1  January  2016  while  the  full 
Association Agreement formally entered into force on 1 September 2017.  

Since 2016 bilateral trade has increased steadily in both directions and reached € 43.3 billion 
in 2019. Bilateral trade data also reveal that the variety of goods that Ukraine exports to the 
EU  is  broadening  and  includes  more  value  added  goods  while  ever  more  companies  are 
exporting  these  goods  to  the  EU.  The  number  of  Ukrainian  companies  exporting  to  the  EU 
increased from approximately 11,700 in 2015 to over 14,500 in 2019. 

Overall  the  implementation  of  Ukraine’s  considerable  commitments  under  the  DCFTA  is 
making  headway  with  progress  in  most  sectors.  However,  the  EU  has  in  the  past  expressed 
strong  concerns  about  legislation  and  enforcement  of  intellectual  property  rights  (IPR)  in 
Ukraine  while  the  rule  of  law,  the  business  and  investment  climate  and  corruption  remain 
issues  Ukraine  needs  to  tackle  more  vigorously  to  further  faciliate  trade  and  attract 
investment. 

2. 

MAIN IMPLEMENTATION ISSUES 

2.1   Main open issues, progress and follow-up 

A number of market access barriers could be solved in 2019: 

The value added tax refund law No 2440 that cancels the refund of the value added tax upon 
export  of  soybeans  and  rapeseed  has  been  in  force  since  2018.  It  was  introduced  to  restrict 
exports of these products  and encouarge domestic processing. This  measure has been under 
heavy  cristism  by  farmers  and  exporters  alike  and  by  the  EU  as  it  violates  Ukraine’s 
commitments  in  the  WTO  and  under  the  DCFTA.  Ukraine  announced  in  late  2019  its 
intention  to  amend  the  law  and  bring  it  in  compliance  with  the  DCFTA.  The  law  is  to  be 
signed by the President and will become effective in 2020. 

Further, in order to eliminate a risk of unlimited imports of a new cut of poultry meat  from 
Ukraine, which reached 55,000 tons in 2018, the Commission held negotiations with Ukraine 
to amend the trade preferences for poultry meat and poultry meat preparation. The outcome 
of these negotiations consists of 1) including two poultry tariff lines in the existing quota, 2)  
increasing the  existing poultry quota  for Ukraine by 50,000 tonnes  and 3)  reintroducing the 
most  favoured  nations  duty  of  €100.8/100kg  net  for  impots  exceeding  the  quota.  The 
agreement  in  the  form  of  an  exchange  of  letters  was  signed  in  Kyiv  on  30  July  2019  and 
ratified by both the EU and Ukraine in December 2019. The agreement entered into force on 1 
February 2020.  

231 

 
 
 
 
 
 
 
 
 
 
 
Moreover,  over  a  long  period  Ukraine  has  had  restrictive  measures  in  place  for  importing 
samples of unregistered  crop protection products (CPP) for the purpose of state trials and 
research, which hampered farmers’ access to new and different crop protection products. The 
EU raised concerns in particular on the legal provision according to which an importer must 
submit  a  confirmation  of  such  product’s  state  registration  in  the  country  of  manufacture. 
Ukraine  finally  confirmed  that  this  requirement  will  be  cancelled  and  requirements  will  be 
brought in line with EU provisions in the course of 2020. 

According to the Chapter on public procurement under the DCFTA Ukraine will, over several 
years,  adopt  most  of  the  current  and  future  EU  legislation  on  public  procurement.  The 
reciprocal  granting of market  access  in  the  area  of public procurement will  be linked to  the 
successful implementation of EU legislation in five different phases. Ukraine’s alignment to 
EU’s  public  procurement  legislation  continued  in  2019  and  the  completion  of  Phase  1  on 
public procurement, which entails implementation of articles 150(2) and 151 and adoption of 
the reform strategy in Article 152 of the DCFTA, should be finalised and formalised through 
a  decision  of  the  EU-Ukraine  Association  Committee  in  Trade  Configuration  (ACTC)  in 
2020. Legislative alignment is also moving forward in relation to the fulfilment of Phases 2 
and  3  while  the  law  on  concessions  adopted  in  October  2019  is  being  assessed  by  the 
Commission. 

The comprehensive SPS Strategy, which contains a list of around 240 EU legislative acts on 
SPS and animal welfare to which Ukraine has committed to approximate, was adopted by the 
SPS Management Sub-Committee on 18 November 2019122. This approximation process has 
been  underway  even  before  the  formal  adoption  of  the  SPS  Strategy  and  Ukraine  is 
undertaking it with  considerable technical  assistance from  the EU. Once  fully implemented, 
Ukraine will be the first third country exporting significant volumes of poultry meat to the EU 
that  applies  EU  welfare  standards  throughout  the  production  chain.  Ukraine  still  needs  to 
recognise the regionalisation measures in place in the EU for African Swine Fever (ASF). In 
this regard, Ukraine has carried out audits in some EU Member States and we expect formal 
recognition  in  2020.  The  new  harmonised  certificates  for  EU  exports  to  Ukraine  of  poultry 
meat  and  egg  products  entered  into  force  on  15  October  2019  and  previous  bilateral 
certificates for these products were phased out until 15 January 2020. As regards EU exports 
to Ukraine of mechanically separated poultry meat (MSM), Ukraine agreed to extend the use 
of  bilateral  certificates  until  mid-January  2021,  by  when  we  expect  to  find  mutually 
satisfactory  long  term  solution.  The  recognition  of  equivalence  of  Ukrainian  provisions  on 
certification of cereal seed with those of the EU, which was requested by Ukraine, is expected 
to be finalised in 2020. 

In  the  area  of  technical  barriers  to  trade  Ukraine’s  efforts  in  aligning  legislation  and 
standards gained momentum in 2019 with the adoption of the market surveillance law, which 
is the remaining horizontal law on technical barriers to trade referred to in the TBT Chapter. 
Examinatiuon of the law’s compliance with EU legislation will be finalised in 2020. Ukraine 
remains very keen to conclude an Agreement on Conformity Assessment and Acceptance of 
industrial products (ACAA) but there are several necessary steps required before negotiations 
can  eventually  begin.  A  pre-assessemnt  mission  is  foreseen  in  2020  that  will  examine 
progress in relation to the work done on technical barriers to trade and implementation of the 

122 OJ L 268 of 22.10.2019 

232 

 
 
 
 
 
                                                 
Ukrainian national quality infrastructures. Cooperation on technical barriers to trade and the 
pre-assessment mission continues to take place in 2020. 

There is also progress in the field of competition, but there are still improvements required in 
the  legal  framework.  Some  of  the  remaining  issues  relate  to  the  independence  of  the  anti-
monopoly  committee,  how  it  applies  competition  law  to  individual  cases  and  the  quality  of 
decisions  of  the  competition  authority.  The  EU  remains  actively  involved  in  the  ongoing 
discussion in Ukraine to revise and review the existing legislative framework on competition. 
This will continue in 2020. 

Geographical  Indications  under  the  DCFTA  cover  food  products,  wines  and  spirits  and 
ensure a high level of protection for the full list of EU GI's and two Ukrainian GIs. The level 
of  protection  reflects  the  level  of  GIs  protection  in  the  EU.  In  2019,  Ukraine  made 
considerable legislative progress by adopting the framework law laying the foundation of a GI 
system in Ukraine according to EU norms and standards. Work continues on several sectoral 
bylaws under this umbrella law. With the help of the EU GIs technical assistance programme, 
one new foodstuff GI was formally recognized by the Ukrainian authorities and several other 
applications are in the pipeline. The technical assistance programme also carried on work on 
the  rebranding  of  EU  GI  names  used  in  Ukraine  (champagne,  cognac,  feta)  and  on  the 
development of eno-gastro tourism projects. 

In  the  area  of  customs  and  trade  facilitation  Ukraine  has  adopted  important  pieces  of 
legislation, including on the Authorised Economic Operator (AEO) Programme; on integrated 
transit procedure and on IPR Customs enforcement. Discussions on the mutual recognition of 
the AEO programme could start late 2020 or early 2021 once Ukraine’s AEO programme has 
been tested and functioning for some time. Ukraine is also moving ahead with legislation that 
could possibly lead to its accession in 2020 to the EU conventions on a common transit and 
simplification of formalities. There is also work ongoing on a draft law on criminalisation of 
smuggling of goods, which are subject to excise duties. The Commission continues to closely 
cooperate  with  Ukraine  on  this.  Once  adopted  and  effectively  implemented,  this  should 
become  an effective tool in  the fight  against the  smuggling of  goods. Ukraine still needs to 
submit  a  proposal  to  amend  Annex  XV  of  the  DCFTA  on  aligning  its  customs  code  to  the 
Union  Customs  Code.  Efforts  to  increase  transparency  in  customs  valuation  procedures  is 
underway and will need further follow-up in 2020.123 

In relation to services, joint work continues on updating the appendices of Annex XVII on the 
list  of  EU  acquis  in  four  services  sectors:  financial  services;  postal  and  courier  services; 
telecommunication  services;  and  international  maritime  transport  services.  To  support 
Ukraine’s aspirations to further approximate its national legislation in the area of the digital 
economy,  the  EU  launched  in  2019  an  on-site  assessment  of  Ukraine’s  policy  framework, 
institutional capacity and the current state of play of implementation of its commitments listed 
in  the  telecommunications  Annex.  The  findings  of  this  assessment  are  expected  in  the  first 
quarter  of  2020  and  will  be  used  to  formulate  recommendations  for  adjusting  or  improving 
Ukraine’s  telecommunications  policy  framework.  A  project  of  €25  Million  to  support 
Ukraine’s digital transformation, will be signed in 2020. 

123 OJ L 206 of 6.8.2019 

233 

 
 
 
 
 
 
 
                                                 
2.2 

Progress in the implementation of trade and sustainable development provisions 

The  third  Trade  and  Sustainable  Development  (TSD)  Sub-Committee  between  the  EU  and 
Ukraine was held on 6 November 2019 in Brussels, followed by an open Civil Society Forum 
on 7 November 2019 during which members of the EU Advisory Group were able to meet the 
newly  established  Ukraine  Advisory  Group  for  the  second  time.  The  meeting  of  the  Sub-
Committee enabled a substantial exchange on TSD labour, forestry and energy provisions.  

With  respect  to  trade  and  labour,  at  the  Sub-Committee  meeting,  Ukraine  and  the  EU 
reviewed the priority issues and actions agreed at the 2018 meeting, including plans to ensure 
effective  implementation  of  labour  standards,  improve  the  functioning  and  capacity  of 
Ukraine’s State Labour Services, as well as to tackle undeclared work and to address the issue 
of wage arrears. Both parties also agreed on the need to modernise labour legislation. The EU 
welcomed  the  decision  by  Ukraine  to  adopt  a  new  Labour  Code  in  early  2020  that  would 
address  legal  gaps  related  to  several  ILO  fundamental  labour  standards  and  related  to  other 
Association  Agreement  obligations which require approximation to  relevant  EU labour law. 
Ukraine also informed the EU that its draft Law “On Collective Agreements and Contracts” 
has  passed  consultations  and  is  now  pending  review  and  approval  by  the  Government.  The 
EU  urged  swift  adoption  of  the  draft  Law  and  submission  to  the  Parliament.  The  EU  once 
again  stressed the need to ensure that the trade unions' rights  and activities are respected in 
line with international standards.  

The second priority discussed was sustainable and legal forest management. Both parties had 
agreed  in  2018  that  a  system  should  be  set  up  for  the  management  of  all  Ukrainian  state 
forests that  should be independent from a robust forest control body and from forest policy 
and  legislation  function;  Ukraine  noted  at  the  sub-committee  that  the  reform  process  is 
currently  underway.  Both  sides  agreed  to  deepen  and  intensify  discussions  on  forestry 
governance  and  to  discuss  outstanding  issues  in  depth  in  early  2020  so  that  the  identified 
issues can be addressed by the end of 2020.  

Finally, the subcommittee meeting saw renewable energy being discussed for the first  time.  
Progress  was  made with  regard to  the  adoption of eco-design/energy labelling legislation  in 
Ukraine. The EU and Ukraine also shared information on sustainable biomass legislation; this 
cooperation  will  be  stepped  up  over  the  coming  years.  Finally,  both  sides  confirmed  the 
importance  of  stable,  predictable,  transparent  and  market-based  regulatory  frameworks  for 
supporting renewable energy.  

2.3 

Legal enforcement – dispute settlement case 

The wood export ban is a long-standing trade irritant violating the commitments Ukraine has 
taken  under  the  Association  Agreement.  The  EU  strongly  supports  legitimate  measures  to 
preserve forests and to combat illegal logging but it has repeatedly stated that Ukraine's export 
ban  cannot  be  considered  an  appropriate  or  effective  measure  for  this  purpose.  Ukraine  did 
not  make  any  attempt  in  2019  to  repeal  the  wood  export  ban.  Therefore,  and  following 
bilateral  dispute  settlement  consultations  in  February  2019  that  failed  to  resolve  the  matter, 

234 

 
 
 
 
 
the EU has requested the formal establishment of a bilateral arbitrarion panel to adjucate on 
the matter. The request was launched in June 2019124 and the arbitration panel, the first one 
under any EU free trade agreement, was formallly established on 28 January 2020. A ruling 
by the panel is expected by mid-2020. 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The fourth meeting of the ACTC took place in Brussels on 18-19 November 2019. The ACTC 
adopted Decision n° 1/2019 concerning the list of arbitrators125.  

Also the Sanitary and Phytosanitary Management Sub-committee met for the fourth time on 
18  November  2019  in  Brussels  and  adopted  the  SPS Strategy.  The  SPS Strategy  contains  a 
comprehensive list of EU legislation on sanitary and phytosanitary and animal welfare, with 
deadlines for approximation by Ukraine.126  

The  other  three  Sub-Committees  on  Customs,  Geographical  Indications  (GI)  and  Trade  and 
Sustainable  Development  (TSD)  also  held  their  third  annual  meetings  throughout  2019  for 
details, see sections 2.1 and 2.2 above and the reports from those meeting published on DG 
TRADE  Web  site.  The  agenda  and  reports  of  the  Association  Committee  in  Trade 
configuration and sub-committees are available on DG TRADE’s website.127  

4. 

SPECIFIC AREAS OF IMPORTANCE   

law  on  collective  management  organisations  (CMOs)  related 

There are systemic problems with enforcement of IPR in Ukraine, as confirmed by the recent 
report  on  the  protection  and  enforcement  of  intellectual  property  rights  published  by  the 
Commisison in January 2020128.  In particular, there are concerns about the implementation of 
the 
tariff  setting, 
retransmission, accreditation of CMO’s  and non-payment of royalties. In addition, Ukraine’s 
efforts  against counterfeiting and piracy need to  be reinforced. The adoption of the customs 
IPR enforcement law is a step in the right direction but this would need to be effectively and 
efficiently implemented to improve the situation in relation to IPR protection in Ukraine.  

to 

In relation to patent legislation, the Commission, often with other third countries, has been 
actively  advising  the  Ukrainian  authorities  to  ensure  that  its  legislation  respects  Ukraine’s 
international and DCFTA commitments. The European Patent Office has also been involved 
in this process. For example, Ukraine’s intention to limit the patentability criteria and exclude 
certain  pharmaceuticals  from  patent  protection  has  been  discussed  on  several  occasions, 
inclduing with European Patent Office. Cooperation on the patent legislation will continue in 
2020. 

The  Commission  continues  to  be  actively  involved  in  the  discussions  in  Ukraine  on 
trademark and copyright laws. The large number of intellectual property related draft laws 

124 https://trade.ec.europa.eu/doclib/cfm/doclib_section.cfm?sec=144  
125 OJ L120 of 8.5.2019 
126 OJ L 268 of 22.10.2019 
127 https://trade.ec.europa.eu/doclib/cfm/doclib_section.cfm?sec=144  
128 https://trade.ec.europa.eu/doclib/docs/2020/january/tradoc_158561.pdf  

235 

 
 
 
 
 
 
 
 
                                                 
submitted to the Verkhovna Rada over 2019 (Ukrainian Parliament) complicates the process 
of    ensuring  that  the  legislation  respects  and  complies  with  Ukraine’s  DCFTA  and 
international  commitments.  A  monitoring  mechanism  will  be  established  that  will  aim  at 
ensuring  better  tracking  of  the  legislation  and  real-time  response  from  Ukraine  to  the  input 
from  the  Commission.  IPR  related  isues  are  discussed  both  in  the  ACTC  and  in  the  IPR 
dialogue, which takes place annually in Ukraine. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

Ukraine’s  economy  has  returned  to  growth  after  the  deep  recession  in  2014-15  and 
strengthended  in  2019  driven  by  investment  activity  and  private  consumption.  Economic 
growth in Ukraine was solid at  3.2% in 2019, led by  a  good  agricultural harvest  and sectors 
dependent  on  domestic 
to 
consumption.  The  COVID-19 
impact economic activity in the country. 

expected 

crisis 

is 

The  Ukrainian  government  has  made  significant  progress  in  the  consolidation  of  its  public 
finances  in  the  past  five  years  and  prudent  fiscal  policy  and  budget  execution  continued  in 
2019. Inflation slowed down to around 4.1% in 2019 from 9.8% at the end of 2018.  

The National Bank of Ukraine also lowered the key policy rate in light of falling inflation and 
lower inflation expectations, to 11% as of February 2020 from 18% per annum in September 
2018.  Official  foreign  exchange  reserves  increased  from  USD  17.8  billion  in  July  2018  to 
USD 25.3 billion by the end of 2019, equivalent to 4 months of goods and services imports.  

The  unemployment  rate  decreased  to  around  8.5%  in  2019  from  its  peak  at  10.1%  in  early 
2017. Ukraine remains a very open economy, even though the combined volume of imports 
and exports of goods and services decreased from 107.8% of GDP in 2015 to around 99% in 
2019.  The  negative  goods  and  services  balance  widened  from  2.6%  of  GDP  to  8.5%  in  the 
same period. The current account deficit has been much smaller (1.9% of GDP in 2017, 3.3% 
in  2018  and  an  estimated  0.7%  in  2019)  thanks  to  significant  and  growing  foreign  income 
flows, primarily driven by remittances from abroad.  

5.2 

Trade in goods 

Bilateral  trade  between  Ukraine  and  the  EU  has  been  growing  since  the  provisional 
application of the Agreement in 2016, reaching € 43.3 billion in 2019. EU exports to Ukraine 
increased by 12% to € 24.2 billion while Ukrainian exports increased by roughly 10% in 2019 
to  €  19.1  billion.  Although  most  of  the  increase  in  Ukrainian  exports  was  due  to  increased 
exports  of  agricultural  goods  (€  12,1  billion),  Ukrainian  exports  of  industrial  goods  also 
remain  high  (€  7  billion)  and  the  highest  since  2016.  EU  exports  to  Ukraine  are  split 
differently with a much higher proportion of industrial goods, € 21.8 billion Euros, and only € 
2.4 billion of agricultural goods. See statistical section for more detailed data. In 2019, the EU 
was  the  destination  of  41,5  %  of  Ukraine's  worldwide  exports  while  the  EU  trade  surplus 
increased  to  roughly  €5  billion,  up  from  around  €4  billion  in  2018.  The  main  product 
categories exported by the EU to Ukraine in 2019 were machinery and appliances, chemical 
products, transport equipment, mineral products, plastics, rubber and articles thereof, textiles 

236 

 
 
 
 
 
 
 
 
 
and  textile  articles.  In  2019,  Ukraine  mainly  exported  base  metals,  mineral  products, 
vegetable  products,  machinery  and  appliances  and  wood  and  charcoal.  As  mentioned  in  the 
introduction,  Ukraine’s  export  profile  is  becoming  more  diversified  with  a  higher  degree  of 
value added products such as electrical machinery and equipment, machinery and mechanical 
appliances, furniture and optical and medical products. 

5.3 

Trade in agricultural products 

In 2019, Ukraine continued to be the EU’s 4th biggest supplier of agricultural products, with 
imports of agricultural goods from Ukraine reaching €7.02 billion in 2019 (with an increase of 
29.7% compared to 2018). Imports of agricultural goods represents 36.7% of all imports from 
Ukraine. The EU imported from Ukraine mainly cereals (38%, €2.67 billion), vegetable oils – 
other than palm & olive oil – (19%) and oilseeds – other than soyabeans – (17%). These three 
main categories of imports increased by respectively 30%, 49% and 68.2% compared to 2018.  

EU  exports  of  agricultural  goods  to  Ukraine  increased  by  20,3%  since  2018  and  reached 
€2.45  billion.  In  agricultural  goods,  exports  to  Ukraine  were  diversified,  with  cigars  and 
cigarettes accounting for 6.7%, oilseeds – other than soyabeans – for 6.4%, pet food for 6%, 
and  chocolate,  confectionery  and  ice  cream  for  6.1%  of  exports  in  agricultural  goods.  In 
particular, the exports of cigars and cigarettes increased by 132% compared to 2018. 

Tariff rate quotas granted by the EU to Ukraine 

While most of agricultural exports from Ukraine were liberalised,  TRQs of limited volume 
were  granted  for  EU  sensitive  products.  Altogether,  the  EU  opened  40  TRQs  for 
agricultural  products,  out  of  which  27  are  managed  on  first-come-first-served  basis  and  13 
under import licences. Certain quotas are subject to 5-year phasing in periods (from 2016 to 
2021). 

Among  the  TRQs  granted  to  Ukraine  only  some  of  them  were  fully  utilised  in  2019,  e.g. 
poultry,  sugar  and  starches.  The  zero  utilisation  for  beef  and  pig  meat  is  related  to  non-
authorisation for Ukraine to export to the EU due to SPS reasons. The same reason is behind 
low utilisation of dairy TRQs.In the cereals sector Ukraine is making full use of the maize and 
what quotas whereas barley and oats quotas are used to a lesser extent. This can be explained 
by  very  competitive  maize  and  wheat  production  in  Ukraine,  whereas  oat  production  in 
Ukraine remains rather modest. As to barley, the EU is itself a major producer and exporter. 

237 

 
 
 
 
 
 
 
 
 
 
 
Tariff rates quotas opened by the EU to Ukraine 

Utilisation rate of TRQs opened by the EU to Ukraine 

Sector 

TRQ description 

Beef 
Pigmeat 

Pigmeat 
Sheep 

Poultry 
Poultry 

Dairy 
Dairy 

Dairy 

Dairy 

Dairy 

Eggs 
Eggs 
Honey 
F&V 
F&V 

Mushrooms 

Mushrooms 

Cereals 
Cereals 
Cereals 
Cereals 
Cereals 
Cereals 
Starches 
Sugar 
Sugar 

Sugar 
Sugar 
products 

Preparations 

F&V 

Beef 
Pigmeat 
Pigmeat, excluding 
hams, loins & 
boneless 
Sheep meat 
Poultrymeat & 
poultry preparations 
Chicken, frozen 
Milk & cream, 
condensed & yogurt 
Milk powder 
Fermented milk 
processed products 
Butter & dairy 
spreads 
Processed butter 
products 

Eggs & albumins 
Eggs 
Honey 
Garlic 
Sweetcorn 
Mushrooms 
(Agaricus), prepared 
or preserved 
Mushrooms 
(Agaricus), prepared 
or preserved 
Common wheat, 
flours & pellets 
Barley, flour & pellets 
Oats 
Maize, flour & pellets 
Barley groats & meal 
Malt & wheat gluten 
Starches 
Sugars 
Other Sugars 
Sugar processed 
products 
Milk-cream 
processed products 
Cereal processed 
products 
Tomatoes, 
processed 

TRQ 
Quantity 

Unit 

12.000 
20.000 

t (net weight) 
t (net weight) 

20.000 
1.950 

t (net weight) 
t (net weight) 

18.400 
20.000 

t (net weight) 
t (net weight) 

9.200 
3.600 

t (net weight) 
t (net weight) 

Utilisation in TRQ period 
ending in: 

2017 

0% 
0% 

0% 
0% 

100% 
26% 

4% 
35% 

2018 

2019 

0% 
0% 

0% 
0% 

0% 
0% 

0% 
0% 

100% 
59% 

100% 
46% 

15% 
24% 

15% 
29% 

2.000  T 

0% 

22% 

43% 

2.400 

t (net weight) 

100% 

100% 

84% 

250  T 

t (shell egg 
eq.) 
t (net weight) 
t (net weight) 
t (net weight) 

2.400 
3.000 
5.600 
500 
1.500  T 

0% 

0% 

0% 

37% 
20% 
100% 
33% 
1% 

75% 
53% 
100% 
98% 
1% 

84% 
63% 
100% 
79% 
2% 

500 

t (net weight) 

0% 

0% 

0% 

500 

t (net weight) 

0% 

0% 

0% 

980.000  T 
310.000  T 
4.000  T 
550.000  T 
7.200  T 
7.000  T 
10.000  T 
20.070  T 
16.000 

t (net weight) 

2.600  T 

420  T 

2.000  T 

10.000  T 

238 

100% 
100% 
46% 
100% 
100% 
98% 
99% 
100% 
76% 

100% 
17% 
36% 
100% 
100% 
100% 
100% 
85% 
16% 

100% 
80% 
31% 
100% 
100% 
90% 
100% 
100% 
6% 

14% 

14% 

16% 

3% 

4% 

2% 

27% 

40% 

99% 

100% 

100% 

100% 

 
 
 
 
Utilisation rate of TRQs opened by the EU to Ukraine 

Sector 

TRQ description 
Grape juice & Apple 
juice 

F&V 
Preparations  Sugar syrups 
Preparations  Food preparations 
Ethanol 

Ethanol 
Bran, shaps & 
residues 
Cigars & cigarettes 
Mannitol & sorbitol 
Modified starches; 
Glues 
Amylaceous finishing 
agents 

Animal feed 
Tobacco 
Alcohols 

Starches 

Starches 

TRQ 
Quantity 

Utilisation in TRQ period 
ending in: 

Unit 

2017 

2018 

2019 

16.000 

t (net weight) 

2.000  T 
2.000  T 
70.800  T 

20.000  T 
2.500  T 
100  T 

1.600  T 

2.000  T 

100% 
0% 
1% 
7% 

31% 
0% 
0% 

100% 
0% 
1% 
10% 

43% 
0% 
0% 

100% 
0% 
3% 
9% 

72% 
0% 
0% 

30% 

100% 

100% 

0% 

100% 

100% 

On 15 May  2019, the EU and  Ukraine also  held  the annual  agricultural dialogue meeting 
focussing this year on organic agricultural production. On 16 May 2019, the Cluster V Sub-
committee,  organised  under  the  cooperative  part  of  the  Association  Agreement,  took  place 
where, among others, the legislative developments and reforms relating to the agriculture and 
rural development sector were discussed.   

Tariff rate quotas granted by the Ukraine to the EU 

At the entry into force of the DCFTA, 87% of the Ukrainian agricultural tariff lines were fully 
liberalised and the average duty in the remaining tariff lines was 10%. Ukraine liberalised 
completely many products for which the EU had strong offensive interests, e.g. cheeses, olive 
oil, wine. In the sensitive tariff lines (e.g. meat products, fruits and vegetables, dairy) the EU  
benefits from duty reductions from 20% to 50%.  

239 

 
 
 
 
 
 
The table shows Ukraine’s TRQs for EU exports of pork, poultry meat and sugar. 

Product 

Quantity (tonnes) 

Utilisation rate (2019) 

Pork meat 
Pork meat (additional) 
Poultry meat 
Poultry meat (additional) 
Sugars 

Autonomous Trade Measures 

10 000 
10 000 
9 200 
10 000 
36 000 

99.5% 
56.5% 
99.8% 
0.4% 
2.5% 

In view of the difficult economic and political situation in Ukraine, the EU granted Ukraine 
temporary autonomous trade measures (ATMs) for certain agricultural and industrial products 
for a period of three years, starting on 1 October 2017129.These comprise: 

 

increased  TRQs  for  eight  groups  of  agricultural  products  (natural  honey,  barley,  barley 
groats, prepared or preserved tomatoes, grape juice, common wheat, maize and oats); 
  elimination  of  EU  import  duties  for  22  industrial  products,  including  pigments, 
ammonium  sulphate  and  nitrate,  fertilisers,  aluminium,  footwear  and  certain  electrical 
machinery.  Most  of  these  import  duties  would  otherwise  only  have  been  phased  out  by 
2021  and  mean  that  Ukraine  benefit  from  tariff  savings  of  duties  up  to  10%  for  some 
products. 

These zero-duties and some of the TRQs apply  from 1 October 2017 and will expire on 30 
September  2020  while  the  TRQs  for  certain  cereals  (e.g.  common  wheat,  common  wheat 
flour,  meslin  flour,  wheat  pallets,  maize  flour  and  pellets,  barley  flour  and  pellets)  are 
managed by import licenses, administered annually from 1 January until 31 December. They 
were applied from 1 January 2018 and will accordingly expire on 31 December 2020. Ukraine 
has used most of the agricultural quotas to the fullest and made tariff savings. The table shows 
the use of the agricultural quotas in 2018 and 2019 provided under the ATM. 

Utilisation rate of TRQs opened by the EU to Ukraine 

Sector 

TRQ description 

Honey 

Honey 

TRQ Quantity 

Unit 
2,500  t (net weight) 

Cereals 
Cereals 
Cereals 
Cereals 
Cereals 
F&V 
F&V 
(*) TRQs, which expire on 31.12.2020 

Common wheat, flours & pellets* 
Barley, flour & pellets* 
Oats 
Maize, flour & pellets* 
Barley groats & meal 
Tomatoes, processed 
Grape juice 

65,000  T 
325,000  T 
4,000  T 
625,000  T 
7,800  T 
3,000  T 

500  t (net weight) 

TRQ utilisation 
2019 
2018 
100% 
100% 

100% 
23% 
9% 
100% 
100% 
100% 
0% 

100% 
67% 
23% 
100% 
100% 
100% 
0% 

129 Regulation (EU) 2017/1566 of the European Parliament and of the Council of 13 September 2017. 

240 

 
 
 
 
                                                 
The low quota fill rates can be explained in case of sugar by the non-competitiveness of EU 
produce in Ukrainian market in comparison to Ukrainian domestic production. The additional 
poultry meat quota covers poultry carcasses, a product for which there is very low demand on 
the Ukrainian market.  

5.4 

Trade in services and Foreign Direct Investments 

Total trade in services reached € 10 billion in 2018, an increase of 10% compared to 2017. EU 
exports  of  services  reached  €  7  billion  in  2018  while  imports  from  Ukraine  amounted  to 
around € 3 billion. Hence the EU maintains a trade surplus in services. 

According to the Ukrainian National Bank, total FDI incoming to Ukraine (from all countries) 
amounted to € 2.1 billion (1.9% of Ukraine’s GDP) in 2018 and to € 2.7 billion (2% of GDP) 
in  2019,  while  the  outgoing  FDI  was  much  lower:  €0.1  billion  in  2018  and  €0.6  billion  in 
2019. According to estimates published by the National Bank of Ukraine, more than one third 
of the incoming FDI represents round-tripping of capital of domestic origin. Round-tripping, 
which is often motivated by tax optimisation, implies that domestic investments are registered 
as  undertakings  by  foreign  legal  entities.  Thus,  the  actual  non-resident  FDI  having  entered 
Ukraine  in  2019  is  estimated  at  around  1.3%  of  GDP,  which  is  low  in  comparison  to  other 
emerging and developing economies. 

6. 

CONCLUSIONS  

Bilateral trade continues to increase and the trend towards more diversified Ukrainian exports 
to the EU, combined with an increasing number of Ukrainian companies exporting to the EU, 
are  positive  developments  resulting  from  the  DCFTA,  boding  well  for  the  future.  Proper 
enforcement  and  implememention  of  the  law  on  customs  IPR  enforcement,  combined  with 
correct and efficient measures in the customs area will help faciliate trade further. Ukraine in 
particular  needs  to  step  up  efforts  against  counterfeiting  and  piracy  and  to  align  its 
enforcement laws on intellectual property rights. The removal of trade barriers related to VAT 
refunds and crop protection will be confirmed in 2020. Also the adoption of the SPS Strategy 
is a welcome and significant commitment and should, like Ukraine’s efforts in aligning to EU 
legislation in the area of public procurement, be valued. As regards technical barriers to trade, 
the pre-assessment mission should give an overview of the state of play of  Ukraine’s efforts 
in aligning legislation and standards.  Implementation of DCFTA commitments, reforms  and 
approximation with EU rules are advancing steadily and are closely monitored and supported 
by  the  Commission.  Ukraine  should  continue  its  reform  process  so  that  it  can  fully  benefit 
from the DCFTA and further develop its trade relations with the EU.  

241 

 
 
 
 
 
 
 
7. 

STATISTICS 

UKRAINE 

242 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Ukraine (mio €)Imports12 50412 86016 23917 42519 116Exports13 71916 17619 83821 55524 222Balance1 2153 3163 5994 1305 106Share Ukraine in EU27 trade with Extra-EU27Imports0.8%0.8%0.9%0.9%1.0%Exports0.7%0.9%1.0%1.0%1.1%Total (I+E)0.7%0.8%1.0%1.0%1.1%Share EU27 in trade Ukraine with worldImports39.4%41.9%40.3%39.1%39.9%Exports33.2%36.3%39.7%41.5%40.5%Total (I+E)36.3%39.2%40.0%40.2%40.2%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Ukraine: IMF DotsTotal merchandise trade EU27 with Ukraine (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports17 42519 1161 6929.7%Imports1 907 5651 934 94427 3791.4%Exports21 55524 2222 66712.4%Exports2 059 8822 132 01572 1333.5%Balance4 1305 106976Balance152 317197 07144 754Total trade38 98043 3394 35911.2%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Ukraine (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports5 4167 0241 60929.7%Imports118 891121 6442 7532.3%Exports2 0402 45541520.3%Exports169 000181 82512 8257.6%Balance-3 376-4 570-1 194Balance50 10960 18110 072Total trade7 4569 4792 02327.1%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Ukraine (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports12 00912 092830.7%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports19 51521 7682 25211.5%EU27 exports1 890 8821 950 19059 3093.1%Balance7 5069 6752 169Balance102 208136 89034 682Total trade31 52433 8602 3367.4%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Ukraine (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports2 7422 8681264.6%Imports824 543824 015-528-0.1%Exports6 5537 0695177.9%Exports928 420968 64840 2284.3%Balance3 8104 201391Balance103 877144 63340 756Total trade9 2959 9376426.9%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Ukraine (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports2 5342 5932 4872 7422 868Imports642 682776 924784 743824 543824 015Exports4 6184 9885 3606 5537 069Exports750 713849 023855 477928 420968 648Balance2 0842 3952 8743 8104 201Balance108 03172 09970 734103 877144 633Total trade7 1537 5817 8479 2959 937Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Ukraine (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward1 3911 1911 020663Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward19 05413 73016 88318 31019 354Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward1962-34Inward143 012803 285328 703209 462-67 421Outward1 8722 342102Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsUkraineUkraine20182019Extra-EU27Ukraine2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Ukraine05 00010 00015 00020 00025 00030 00020152016201720182019Merchandise trade EU27 with Ukraine (mio €)ImportsExportsBalance 
 
 
 
 
PART III.4 

ASSOCIATION AGREEMENTS WITH  

MEDITERRANEAN AND MIDDLE EAST PARTNERS   

243 

 
 
 
 
 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE  EU-
ALGERIA ASSOCIATION AGREEMENT 

1. 

INTRODUCTION 

The EU and Algeria established a Free Trade Area (FTA) under the EU-Algeria Association 
Agreement, signed in 2002, which entered into force on 1 September 2005 (hereinafter called 
‘the  Agreement’).  The  Agreement  provides  for  a  reciprocal  liberalisation  of  trade  in  goods, 
with  elements  of  asymmetry in favour of  Algeria,  such as  a 12  years transitional period for 
dismantling tariffs for industrial goods and a selective liberalisation on agriculture. In 2012, 
the  EU  and  Algeria  agreed  to  review  the  timetable  of  tariff  dismantling  set  forth  in  the 
Association  Agreement  for  certain  products  (steel,  textile,  electronics,  and  automobiles), 
extending the transitional period from 12 to 15 years. Complete dismantling of tariffs and thus 
completion  of  the  EU-Algeria  free  trade  area  is  now  scheduled  for  September  2020. 
Market opening for agricultural products so far only concerns a limited number of tariff lines 
subject  to  full  liberalisation,  Tariff  Rate  Quotas  (TRQ)  or  a  reduction  of  Most  Favoured 
Nation (MFN) rates respectively, for both Parties. The agreement contains general provisions 
on  dispute  settlement  but  so  far,  no  additional  negotiations  have  been  opened  on  a  specific 
Dispute Settlement Protocol.  

Algeria  is  a  member  of  the  Regional  Convention  on  pan-Euro-Mediterranean  preferential 
rules of origin, which it signed in 2012 and notified the EU of ratification in January 2017.  

Algeria started negotiating its accession to the WTO in 1987. The negotiation process with the 
Accession Working Party has, however, stalled since 2014.  

2. 

MAIN IMPLEMENTATION ISSUES 

2.1 

Main open issues, progress and follow-up  

Several  market  access  issues  remain  in  Algeria  and  new  ones  appeared  in  2019.  Although 
these  measures  are  not  specifically  targeted  at  the  EU,  they  affect  EU  companies 
disproportionally  as  the  EU  is  Algeria’s  most  important  trading  partner,  accounting  for  two 
thirds of the country’s total trade.  
2018 saw the introduction of the so called DAPS130, a tax having an effect equivalent to a 
custom duty, ranging from 30% to 200% of the value of the goods, which was levied on 
1,095 tariff lines, across all sectors of the economy. This measure broadly replaces an import 
ban  which,  in  2017,  had  affected  877  products.  A  custom  duty  hike  imposed  in  2017  on 
another goup of 129 products still applies. A ban on import on vehicles remains in place - 
which were, until  2017,  subject  to  an import licence scheme which effectively resulted in  a 
zero quota for three years. Effectively, EU car exports have been banned since 2015.  

In  September  2019,  the  Algerian  authorities  issued  a  circular  imposing  new  restrictive 
procedures on the imports of mobile phones and household appliance products based on 
three elements. First, payment for imports must be delayed by nine to twelve months. Second, 

130  Droit additionnel de prélevement spécial. 

244 

 
 
 
 
 
 
                                                 
operators are required to use national maritime transport capacities whenever such choice is 
possible. Third, letters of credit are to be issued only for contracts using FOB incoterms. Even 
if  the  implementation  of  these  measures  has  been  inconsistent  so  far,  they  are  expected  to 
have significant negative impact on EU exports to Algeria. The intention was to extend these 
requirements  to  the  import  of  all  products.  A  later  circular,  of  December  2019,  somehow 
relaxed  these  conditions,  with  FOB  no  longer  being  mandatory  but  to  be  used  as  preferred 
option whenever possible. 

Other long-standing trade-related issues include:  a  ban on imports of  medicines for  which 
there  exists  a  locally-produced  equivalent;  technical  standards;  particularly  stringent 
mandatory security devices for vehicles, coupled with obligatory inspections.  

2.2   

Legal enforcement – dispute settlement case 

Given the number and impact of these import-restrictive measures taken in violation of  the 
EU-Algeria  Association  Agreement,  the  EU  has  initiated  an  active  political  and  technical 
dialogue with Algerian authorities. A dedicated high-level working group was set up and met 
several  times  in  2017  and  2018.  At  the  latest  meeting  of  the  Association  Council  in  May 
2018,  the  Parties  agreed  to  resolve  these  matters  by  the  end  of  2018.  Unfortunately,  in  the 
absence  of  genuine  engagement  by  the  Algerian  side  this  objective  could  not  be  achieved 
during 2019. 

According  to  the  European  Commission,  the  Algerian  measures  are  inconsistent  with  the 
Association  Agreement  and  would  justifiy  a  recourse  to  the  dispute  settlement  mechanism 
under  this  Agreeement.  The  first  step  of  the  procedure  would  consist  of  a  referral  of  the 
dispute to  the Association  Council, which has the task of addressing  any dispute relating to 
the interpretation and application of the Agreement. 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

In  2019  Algeria  experienced  major  upheavals  in  the  political  system  with  massive  anti-
establishment demonstrations starting in February and leading to the resignation of President 
Bouteflika,  the  long-standing  leader  of  the  country.  Eventually,  after  two  failed  attempts, 
presidential  elections  were  held  in  mid-December  2019  and  a  new  President  was  elected  in 
the  person  of  Abdelmadjid  Tebboune.  In  light  of  this  political  context,  no  Sub-Committee 
meetings were held with Algeria in 2019. 

The outcome of the last Sub-Committee on Trade, Industry, and Services held in October 
2018,  the  Sub-Committee  on  Agricultural  and  Fisheries  Products  in  October  2018  and 
Sub-Committee  on  Customs  Cooperation  in  November  2018  were  reported  in  the  third 
Staff Working Document published in October 2019131.  

131  The  third  edition  of  the  staff  working  document  published  on  14  October  2019  can  be  consulted  here : 

https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:52019SC0370 

245 

 
 
 
 
 
                                                 
4. 

SPECIFIC AREAS OF IMPORTANCE 

The Partnership Priorities adopted by the EU and Algeria at the Association Council of 13 
March  2017132  mention  cooperation  for  the  socio-economic  development  of  Algeria, 
including trade and access to the European single market. The EU and Algeria also conducted 
a joint evaluation of the Association Agreement in 2016-17. The evaluation concluded that, 
as regards cooperation in the trade, economic and investment areas, Algerian efforts and EU 
assistance  should  focus  on  the  following  areas:  diversification  and  competitiveness  of  the 
Algerian economy, improvement of the business climate and facilitation of investments.  

The  EU  is  providing  support  to  Algeria  through  various  trade-related  assistance 
programmes such as DIVECO I, II (Programme d’appui à la diversification de l’économie), 
P3A  I  and  II  (Programme  d’appui  à  la  mise  en  oeuvre  de  l’Accord  d’Association),  or 
PADICA (Programme d’appui à la diversification industrielle et à l’amélioration du climat 
des  affaires),  implemented  in  partnership  with  the  Algerian  authority  for  trade  promotion 
(ALGEX)133.  Such  programmes  aim  to  strengthen  export  competitiveness,  to  modernise  the 
legal  framework,  to  diversify  the  economy,  and  to  improve  the  business climate  in  Algeria. 
This  support  will  continue  under  the  2018-20  programming  period.  The  EU  also  supports 
Algeria  in  preparation  of  negotiations  on  an  Agreement  on  Conformity  Assessment  and 
Acceptance of industrial products (ACAA), in sectors identified as key priorities by Algerian 
authorities such as construction materials, domestic appliances and low voltage electric goods. 
This work has been conducted since 2013 through TAIEX missions, resulting for instance in 
twinning  programmes  involving  the  Algerian  authority  for  certification  and  accreditation 
(ALGERAC). Additional programmes, such as PASSEM (Programme d’appui spécifique à la 
surveillance  et  à  l’encadrement  du  marché),  focus  on  specific  areas,  such  as  market 
surveillance and consumer protection.  

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

With  oil  accounting  for  90%  of  exports  and  60%  of  total  income,  Algeria’s  economy  is 
highly  dependent  on  hydrocarbons,  and  on  global  oil  and  gas  prices.  The  economic  growth 
continued  to  be  affected by the  global fall in  oil prices as well  as by the uncertain  political 
situation in the country.  This  led to  a growth  rate of only 0.9% in  2019, when compared to 
1.5%  in  2018  and  well  below  both  the  forecast  of  the  Algerian  Government  and  the  IMF’s 
initial target of 4%.  

The  inflation  rate  rose  by  2.4%  in  2019  down  from  2.7%  the  year  before.  Overall,  the 
currency depreciation helped to adjust the economy to inflationary pressures. Since 2014, the 
dinar has lost 48% of its value against the dollar. Algeria continued to tap into its foreign 
currency reserves in 2019 to counterbalance global hydrocarbon price fluctuations, to  which 
the country is exposed due to the lack of economic diversification.  Foreign reserves of the 

132  They  can  be  downloaded  here:  https://eeas.europa.eu/delegations/algeria/31985/les-nouvelles-priorites-du-

partenariat-ue-algerie_en  

133  See DG DEVCO for more information https://ec.europa.eu/europeaid/home_en 

246 

 
 
 
 
 
 
                                                 
country have thus been declining continuously and dropped to USD 76 billion at the end of 
2019, which covers around 18 months of imports.  

The  budget  deficit  remained  under  pressure  in  2019.  Preliminary  government  data  shows  a 
7% fiscal  deficit  at  the  end  of  the  year  (around  USD  11.5  billion,  which  could  be  finally 
higher given weak growth) due to the increase in operating expenditures and the reduction in 
petroleum  taxes,  despite  a  significant  reduction  in  capital  expenditure  (which  could  lead  to 
further reduction in production). Public debt rose markedly to 45.8 percent of GDP, from 37 
percent in 2018. Algeria is now considering using foreign funding for economic projects.   
In general the business climate has not improved in the country, given the long list of trade 
restrictive measures in place and new ones introduced. Often, these measures were introduced 
in an arbitrary way, without a clear legal basis, as was the case of the package of measures of 
September 2019 (new requirements of deferred payments for imports, preferential recourse to 
national  maritime  carriers  and  the  mandatory  use  of  FOB  incoterm  for  import)  by  a  simple 
circular issued by the Association of Algerian Banks under the instruction of the Cabinet of 
the Minister of Finance. 

5.2 

Trade in goods 

The  EU-27  was  Algeria’s  first  partner  for  merchandise  trade  in  2019,  accounting  for 
46.7%  of  Algeria’s  total  trade,  before  the  United  States  and  Turkey  (4.9%  and  4.5% 
respectively) and the United Kingdom (3.5%). The EU is Algeria’s first export market with 
a share of 56.3%. The EU is also Algeria’s first source of imports, accounting for 33.9% of 
total Algerian imports.  

Algeria  is  the  EU’s  first  trading  partner  amongst  all  Euromed  countries,  ahead  of 
Morocco and Israel: in 2019, taking into account the eight Euromed countries with which the 
EU has trade agreements, 30% of EU imports originated from Algeria and 18% of EU exports 
went  to  Algeria.  This  privileged  position  is  mainly  due  to  the  important  share  of 
hydrocarbons in EU-Algeria trade flows. 

Trade in goods between the EU and Algeria has intensified under free-trade area established 
by  the  Association  Agreement: 
in  2019,  the  total  two-way  trade  amounted  to 
€33.24 billion,  an  increase  of  about  40%  from  its  2004  value  of  €24.04 billion,  the  year 
preceding  the  entry  into  force  of  the  Association  Agreement.  But  the  volume  of  bilateral 
trade peaked in 2012 at €50.9 billion. 

EU exports to Algeria grew by about 70% between 2004 and 2018, from €9.27 billion to 
€18.5 billion.  However  the  2019  data  (€16.9  billion)  shows  a  significant  drop  of  about 
20% over 2018 and are a far from the peak of 2012 (€50.9 billion). In 2019, EU exports to 
Algeria were mainly by the machinery and transport equipment (37%), agricultural and food 
products (14%) and chemicals (12%) sectors. The four biggest EU exporters to Algeria were 
France, Spain, Italy and Germany. 

247 

 
 
 
 
 
EU imports from Algeria are dominated by trade in oil and gas (mineral fuels amount to 96% 
of  the  total  exports134  to  the  EU)  which  has  a  significant  impact  on  overall  volumes  with 
possible  important  fluctuations  from  from  one  year  to  the  other  in  function  of  price 
develop^ments on the international energy markets. EU imports from Algeria rose by about 
7% between 2004 and 2019 from €14.77 billion to €16.3 billion (with a remarkable peak of 
€30.2 billion in 2012). Between 2018 and 2019 the EU imports decreased (by about 20%) 
from €18.4 billion in 2018 to €16.3 billion in 2019. The three biggest EU importers in 2019 
were Italy, Spain, and France.   

Because of the absolute dominance of oil and gas in Algeria’s exports,  international energy 
prices have a direct impact on the value of Algerian exports and on the trade balance with the 
EU. Historically, Algeria has mostly recorded a trade suplus with the EU, but the decline 
in oil and gas prices led first to the shrinking of that surplus from 2012 to 2014 and later, in 
2015 and 2016, to  an EU's surplus for the first time. In 2017, with oil and gas prices rising 
again, Algeria’s trade balance with the EU reached an equilibrium but became negative again 
in 2018 although with a small margin (minus €76 million). A further small deterioration was 
recorded again in 2019, with a relatively small negative trade balance for Algeria of € 0.62 
billion. 

5.3 

Trade in agricultural products 

Total  trade in  agricultural  products  between the  EU and  Algeria increased by  92% between 
2002  (€1.311  billion)  and  2019  (€2.524  billion).  Between  2018  and  2019,  EU  agricultural 
exports  decreased  by  5%,  going  from  €2.645  billion  to  €2.524  billion.  EU  imports,  on  the 
other hand, increased by 23%, from €74 million to €91 million. In 2019, among our Euromed 
partners,  Algeria  was  the  EU's  most  important  destination  for  exports  of  agri-food  products 
(23% of total agri-food exports in the region). The main product categories the EU exported 
to Algeria were cereals (37%), dairy produce (13%), live animals (9%), other cereals, flour, 
starch (6%) and animal and vegetable fats & oils (5%). EU agricultural imports from Algeria 
were  dominated  by  tropical  fruit,  fresh  or  dried,  and  nuts  (46%)  and    beet  and  cane  sugar 
(14%).  

TRQs granted by the EU to Algeria  

Regarding agricultural tariff rate quotas (TRQ), Algeria’s 2019 fill rate was low for a limited 
number of products such as olive oil (7%). It remained nil or close to zero for the majority of 
products, such as tomato juice, wine or dairy.  

134  Despite what the above graph suggests, mineral fuels continuously accounted for more than 90% of Algerian 
exports since the entry into force of the Agreement. The discrepancy between the lines ‘EU imports’ and ‘EU 
imports of mineral fuels’ prior to 2009 is presumably due to a change in the reporting methods. 

248 

 
 
 
 
 
                                                 
Information on the utilisation of TRQs granted by Algeria to the EU was not readily available 
at the time of drafting of this staff working document. 

5.4 

Trade in services and Foreign Direct Investments  

Foreign  investment  in  Algeria  suffers  from  a  persistent  reluctance  to  relax  long-standing 
restrictions.  Numerous  obstacles  to  foreign  investment  thus  remain,  most  notably  the 
horizontal ‘49/51’ foreign equity cap that applies across the board, to all sectors. Although 
the  2016  Investment  Code  no  longer  features  the  foreign  equity  cap,  the  rule  remains 
applicable by virtue of the Budget  Laws 2009 (as amended in 2012), which is still in force. 
Such  a  blanket  foreign  equity  cap  discourages  potential  investors  and  hampers  Algeria’s 
prospects  of  accession  to  the  WTO.  The  EU  has  routinely  raised  the  issue  with  Algerian 
authorities, suggesting a more limited scope of application of the rule.  

The  total  trade  in  services  between  the  EU  and  Algeria  remained  relatively  stable  in  past 
years with a persistent negative balance on the Algerian side. In 2017 the volume of bilateral 
tade in services amounted to €4.4 billion with an EU exporting €3 billion and importing €1.4 
billion  worth  of  services.  In  2018  the  volume  nof  bilateral  trade  in  services  declined  to  €  4 
billion with EU exporting €2.7 billion while importing €1.3 billion.  

According to Eurostat data FDI flows between the EU and Algeria remained volatile between 
2013  and  2018  with  the  vast  majority  of  investments  coming  from  the  EU  to  Algeria 
(€1.6 billion in 2018 increasing the total stock of EU FDI in the country to €14.4 billion). It is 
estimated  that  EU  companies  based  in  Algeria  employ  approximately  60.000  employees. 
Algerian investments in the EU are relatively low, its stock levelling at €1.3 billion and with a 
mere 0.1 billion FDI flow in 2018. As to other partner countries in 2018 the stock of FDI by 
US amounted to almost USD7 billion, by China USD 850 million, by UEA USD 617 million 
and  by  Turkey  USD  322  million.  The  main  reason  of  these  low  FDI  flows  is  mainly  the 
legitimate concerns by investors regarding the business climate in the Algeria. According to 
the Wold Bank's Doing Business Index 2020,  Algeria's performance remains poor and is 

249 

201720182019DairyYogurt, flavoured1.500t0%0%0%HoneyHoney100t0%0%0%FlowersCut flowers100t0%0%0%FlowersFoliage, branches & other parts of plants100t0%0%0%F&VNew potatoes5.000t5%5%11%F&VApricots1.000t0%0%0%F&VStrawberries500t0%0%0%OilsOlive oil1.000t4%7%6%OilsRefined sunflower-seed oil25.000t0%0%0%PreparationsPasta, other2.000t0%3%9%PreparationsCouscous2.000t26%33%26%F&VTomatoes, prepared or preserved, peeled300t0%0%0%F&VTomatoes, prepared or preserved, min. dry matter 12%300t0%0%12%F&VTomato juice200t0%0%0%F&VApricot juice200t0%0%0%WineWine224.000hl1%1%0%WineWine, local PDO, ≤ 15% vol, ≤ 2L224.000hl0%0%0%Utilisation rate of TRQs opened by the EU to AlgeriaSectorTRQ descriptionTRQ QuantityUnitUtilisation in TRQ period ending in: 
 
 
 
 
 
 
below even regional best practices. As a matter of fact, according to 2019 data, the country 
kept the same rank as in 2018, reaching 157th out of 190 (it was 166th in 2017), with a distance 
to frontier (DTF)135 score of 48.6 out of 100 (down from 49.6 in 2018).  

6. 

CONCLUSIONS   

There has been a positive overall trend in EU-Algeria trade since the entry into force of the 
Association Agreement, although Algeria’s heavy dependency on hydro-carbons and lack 
of  structural  reforms  have  held  back  any  significant  diversification  of  its  exports.  The 
country registered a small negative trade balance with the EU in 2019 due to low energy 
prices and despite the Algerian policy of restricting trade through erecting barriers. The EU 
remains committed to its support of the Algerian government's effort to diversify its economy. 
However,  in  the  light  of  the  numerous  and  significant  trade  barriers  introduced  since 
2015, the EU expects that pragmatic solutions will be shortly found to ensure full compliance 
with the EU-Algeria Association Agreement.  For the EU side this is of paramount economic 
and systemic interest. 

135  The DTF score is a measurement used by the World Bank to assess the absolute level of regulatory 

performance in economies over time. The higher the score, the better. 

250 

 
 
 
 
                                                 
7. 

STATISTICS 

ALGERIA 

251 

 
 
 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE  EU-
EGYPT ASSOCIATION AGREEMENT 

1. 

INTRODUCTION 

The EU and Egypt established a free trade area (FTA) as part of the EU-Egypt Association 
Agreement, signed in 2001 (hereinafter referred to as ‘the Agreement’). The Agreement was 
provisionally  applied  from  21  December  2003  and  officially  entered  into  force  on  1  June 
2004. It provides for reciprocal liberalisation of trade in goods, with elements of asymmetry 
in favour of Egypt: Egypt was able to export to the EU all industrial products covered by the 
Agreement  tariff-free  from  the  day  of  entry  into  force  of  the  Agreement,  while  it  benefited 
from a transitional period of 3 to 15 years, depending on the product, to dismantle tariffs on 
EU imports. Egypt finalized the process of fully dismantling tariffs applied to industrial 
goods on 1 January 2019.  

In  October  2008,  the  EU  and  Egypt  signed  an  Agreement  providing  for  liberalisation  in 
agricultural, processed agricultural and fisheries goods; the latter entered into force on 1 
June 2010 and extended the list of agricultural products covered by the original Agreement. 
Today, 80% of trade in agricultural goods is covered by duty-free treatment.  

In November 2010, the EU and Egypt signed a Protocol establishing a Dispute Settlement 
Mechanism (DSM), for which the ratification process is still pending.  

In November 2011, the Commission received a Council mandate authorising it to negotiate 
a Deep and Comprehensive Free Trade Area (DCFTA) with Egypt.Egypt while intersted 
to explore the possibilities modernise the Free Trade Agreement, it has shown limited interest 
in a full-fledged DCFTA so far 

Egypt  also  signed  the  Regional  Convention  on  pan-Euro-Mediterranean  preferential 
rules of origin on 9 October 2013 and notified it on 1 June 2014. The main objective of the 
Convention is to provide a more unified framework for origin protocols.  

2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGRESS AND FOLLOW-UP ACTIONS  

The EU-Egypt  Association Agreement provides a framework for a close bilateral EU-Egypt 
cooperation. Dialogue on the implementation of the trade related provisions of the Agreement 
is pursued within the Association Council, the Association Committee, and the various sub-
committees,  including  the  Sub-Committee  on  Industry,  Trade,  Services,  and  Investment 
(hereinafter referred to as ‘the Trade Sub-Committee’). The last meeting of the  Trade Sub-
Committee was held in June 2019.  

In 2019, the  government of  Egypt expressed  interest in enhancing trade and investment 
relations with the EU, mainly focused on the attraction of EU investment. Egypt informed 
the EU that it had been undertaking economic reforms and improving industrial infrastructure 
as  well  as  business  legislation.  In  January  2019,  Egypt  fully  liberalised  its  tariffs  on 
imports  of  EU  passenger  vehicles,  in  line  with  the  commitments  of  the  Association 
Agreement.  

252 

 
 
 
 
 
 
 
 
 
 
In  this  context,  both  partners  engaged  in  an  active  dialogue,  at  the  political  and  technical 
level,  to  further  remove  barriers  to  trade  affecting  businesses  and  investors,  with  some 
progress  in  2019.  Thanks  to  coordinated  efforts  of  the  EU,  EU  Member  States,  and  like- 
minded  countries  as  well  as  the  cooperation  of  the  Egyptian  authorities,  some  further  trade 
facilitation was achieved for the main trade irritants, especially as regards Egypt's procedure 
for the compulsory registration of exporters, where a number of EU export applications was 
advanced.  Following  a  visit  of  EU  Commissioner  for  Agriculture  to  Cairo  in  January  2019 
and a series of technical meetings between EU agricultural experts and Egyptian authorities in 
June  2019,  veterinary  checks  of  animals  destined  for  exportation  to  Egypt,  performed  by 
Egyptian  veterinarians  in  the  EU  territory,  were  abolished.  Moreover,  Egypt  partially 
facilitated  the  procedure  of  importing  infant  formula  from  EU  Member  States  classified  as 
"non-reference” countries.  

Nevertheless, major Egyptian market access barriers persist (in particular the registration 
scheme and pre-shipment inspections imposed on entities exporting certain goods to Egypt), 
constituting a substantial hindrance for EU investors and businesses. These measures apply to 
25 categories of manufactured goods since the beginning of 2016 and have been extended to 4 
further product categories in January 2019. The measures have been raised in the WTO and 
bilaterally at political and technical level repetadely including in 2019 insisting on removing 
these  barriers  but  also  more  transparency,  rapidity,  and  streamlining  of  the  administrative 
processes, in order to facilitate the registration from a practical point of view. 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;  however,  it  did  not  resolve  all  pending  application  requests  nor  the  structural 
problems  related  to  the  scheme.  The  EU  and  Egypt  will  continue  an  enhanced  dialogue  in 
order  to  establish  long-term  structural  solutions  addressing  the  lack  of  transparency  of  the 
registration process,  the  absence of a clear  appeal  procedure, and the non-existence of clear 
deadlines for processing the requests.  

The EU and Egypt  are engaged in  an active dialogue to  address  also  other trade irritants: 
arbitrary  customs  valuations  methods,  problems  with  acceptance  of  origin  declarations, 
restrictive  labelling  requirements,  and  sanitary  and  phtosanitary  issues  mainly  affecting 
cereals, cheese, infant milk, and importers of beef/live cattle and ducklings. Compliance with 
obligations in the field of competition and public aid, including transparency on the latter, has 
to be further enhanced. The EU is also closely following the drafting of  Egypt’s future tax 
incentives  scheme targeting  the automobile sector. Egypt  still has to ratify the protocol 
establishing a Dispute Settlement Mechanism signed in November 2010.  

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The  Sub-Committee  on  Industry,  Trade,  Services,  and  Investment  met  in  June  2019  in 
Cairo  (no  meeting  had  take  place  in  2018).  Bilateral  issues  discussed  included  Egypt’s 
technical  barriers  to  trade  and  the  draft  tax  incentive  scheme  targeting  the  automotive 
industry,  which  in  2019  is  still  under  review  by  Egypt.  Egypt  was  invited  to  ratify  the 
Protocol on the Dispute Settlement Mechanism. The EU recognized the active participation of 
Egypt  in  the  European  Enterprise  Network,  highlighting  the  role  played  by  Egypt  in 
organizing multiple business events. Other issues discussed included progress on a potential 
Agreement  on  Conformity  Assessment  and  Acceptance  of  industrial  products  (ACAA),  the 
need for time to adapt Egyptian SPS legislation to EU requirements, as well as the continued 
possibility of enhancing the current trade partnership.  

253 

 
 
 
 
Additionally,  a  technical  meeting  on  SPS  took  place  in  Cairo  in  June  2019  to  address  the 
outstanding SPS issues. The meeting allowed for detailed discussions and progress on several 
points of interest from both sides, including from the EU side on conditions for export of meat 
and  live  animals  to  Egypt  (pre-shipment  monitoring  of  cattle  by  Egyptian  officials  will  no 
longer  be  required  and  BSE-related  conditions  for  meat  will  be  aligned  with  OIE 
recommendations),  seed  potatoes  (EU  standards  will  be  accepted  for  most  of  the 
requirements),  and  standards  for  cheese  (in  February  2020,  Egypt  issued  new  standards  for 
cheese that should remove irritants  related  to  imports  of Feta cheese).  These developments 
are  likely  to  facilitate  the  existing  significant  exports  from  the  EU  to  Egypt  in  the  above 
sectors. 

During  the  2019  Sub-Committee  on  Agricultural  and  Fisheries  products,  the  following 
issues were discussed, among others: agri-food trade developments with the recent increase of 
Egyptian  agri-food  exports  to  the  EU  market,  the  latest  developments  in  the  agricultural 
policies of both EU and Egypt, possible future cooperation on organic farming and GIs, and a 
review  of  the  impact  of  the  EU  technical  assistance  provided  to  Egypt  in  the  sector  of 
agriculture and rural development.  

The last Sub-Committee on Customs Cooperation was held in Cairo in June 2019. The EU 
and Egypt agreed to reinforce their cooperation through organisation of a TAIEX workshop 
on  rules  of  origin  and  a  workshop  dedicated  to  tackle  fraud  (value,  customs,  forged 
documents).  

4. 

SPECIFIC AREAS OF IMPORTANCE 

The  EU-Egypt  Association  Council  of  25  June  2017  endorsed  the  EU-Egypt  Partnership 
Priorities to guide the bilateral relations for the period 2017-2020. The Partnership Priorities 
reflect  shared  interests  and  focus  on  three  interlinked  areas  where  co-operation  between  the 
EU and Egypt is of mutual benefit. In particular:  

  Priorities related to "Egypt's sustainable modern economy and social  development" 
focus  on  advancing  socio-economic  goals  set  out  in  Egypt's  "Sustainable  Development 
Strategy – Vision 2030" with a view to building a stable and prosperous Egypt through 
economic modernisation and entrepreneurship; trade and investment; social development 
and  justice;  energy  security,  environment  and  climate  action.  In  the  area  of  trade  and 
investment,  the  EU  and  Egypt  committed  themselves  to  strengthening  the  existing 
relations  and  to  ensuring  that  the  provisions  of  the  bilateral  FTA  are  implemented  in  a 
manner that enables the agreement to reach its full potential. While the EU has previously 
put  forward  the  idea  of  a  comprehensive  Deep  and  Comprehensive  Free  Trade 
Agreement  (DCFTA),  the  EU  and  Egypt  will  also  jointly  identify  other  suitable 
approaches to enhanced trade relations. 

  Priorities  related  to  "partners  in  foreign  policy"  focus  on  stabilising  the  common 
neighbourhood  and  beyond,  and  cooperating  in  crisis  management  and  humanitarian 
assistance; 

  The third priority area focuses on enhancing stability. Therein focus is on: establishing a 
modern,  democratic  state  that  delivers  benefits  equitably  to  all  people;  promotion  of 

254 

 
 
 
 
 
 
 
 
 
human  rights,  security  and  combating  terrorism;  and  managing  migratory  flows  for 
mutual benefit. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

To  lift  the  economy  after  internal  political  crisis  and  revolutionary  uprising  in  2011,  Egypt 
began  a  USD  12  billion  IMF-supported  reform  programme.  The  programme  was 
completed  in  November  2019  and  is  widely  seen  as  having  successfully  contributed  to  the 
economy’s  recovery,  as  growth  has  strengthened,  inflation  and  unemployment  have  fallen, 
and fiscal and current account deficits have narrowed. 

Growth reached 5.6% in 2019 (with an increase from 5.3% a year earlier) which is one of 
the highest rates in the region. The strong and stable growth was mainly driven by public 
consumption, investment, and net exports. Growth also continued to rely on the extraction and 
gas  sectors,  expanding  by  9.8%  and  20.2%  respectively,  as  well  as  tourism  that  enjoyed  a 
32.7%  increase  in  arrivals  during  the  first  nine  months  of  2019,  as  compared  to  the  same 
period in 2018. In spite of economic diversification efforts, the country continues to depend 
on the oil sector for a large part of its foreign income. Egypt aims to become an energy-
hub for the European continent, which is why in 2019 it launched EGYPS 2021 (the largest 
oil  &  gas  conference  and  exhibition  across  Egypt,  North  Africa  and  the  Mediterranean)  to 
expand its energy industry by attracting investments from international oil companies.  

Inflation, which had risen to near record highs against a backdrop of a political turmoil and 
loss in  the value of the  Egyptian pound,  averaged 8.9% in 2019, from  13.8% the previous 
year. The unemployment rate fell to around 8.0% at the end of 2019, down from 8.9% a 
year  earlier  and  13.5%  in  2013.  Nevertheless,  it  is  estimated  that  three-quarters  of  all 
employees are paid as unofficial workers and 32.5% of the population lives below the poverty 
line.  Moreover,  as  the  population  continues  to  grow  at  a  fast  pace  (+2%  in  2019,  with 
population reaching 100 million in early 2020), the participation rate has also seen a decline.  

Fiscal consolidation measures, a VAT increase, and a hike in custom duties led to a gradual 
reduction  in  the  government  deficit  (8.2%  of  GDP  in  FY136  18/19,  down  from  9.7%  the 
previous  year),  which  resulted  in  a  primary  balance  surplus  of  1.9%  of  GDP,  close  to  the 
government’s 2% medium-term target. The current account deficit deteriorated from 2.4% to 
3.6%  of  GDP  between  FY17/18  and  FY18/19  (the  FY  covering  period  from  1  June  till  31 
May  of  the  respective  year)  due  to  foreign  petroleum  companies  repatriating  large  profits. 
However,  during  the  first  half  of  FY19/20,  Egypt’s  current  account  deficit  narrowed 
slightly compared to previous year thanks to improved non-oil trade balance and a rebound in 
remittances.   

Foreign  reserves  have  continued  to  rise.  Standing  at  USD  45.5  billion  in  February  2020, 
official gross reserves had grown by 3.3% year on year and are sufficient to cover around 7 

136 Fiscal years in Egypt cover the period from 1 June till 31 May of the following year 

255 

 
 
 
 
  
 
 
 
                                                 
months  of projected imports of goods  and services. Prior to  the  IMF-supported programme, 
reserves were below USD 20 billion.  

5.2 

Trade in goods 

In  2019,  the  EU27  remained  Egypt’s  main  trading  partner,  accounting  for  25.3%  of  the 
total Egyptian trade, before China (6.6%), the United Arab Emirates (6.5%), and the United 
States  (6.2%).  Egypt  is  the  fourth  most  important  trading  partner  of  the  EU  in  the 
Euromed  region.  Total  trade  in  goods  between  the  EU  and  Egypt  has  tripled  over  the 
period since the FTA entered into force growing by +214% in 17 years, from €8.7 billion 
in 2002 (the year preceding the provisional entry into force of the Agreement) to €27.4 billion 
in  2019.  The  level  of  total  EU-Egypt  trade  in  2019,  compared  to  2018,  increased  by 
6.6%,  from 25.7€ billion to 27.4€ billion. The increase of trade in the last four years (from 
2015 to 2019) was 7.3%. 

EU  exports  to  Egypt  tripled  since  the  FTA:  increased  by  216%  between  2002  and  2019, 
from €6.0 billion to €19.0 billion. Between 2018 and 2019, they rose by 5.8%, from €18.0 
billion  to  €19.0  billion.  In  2019,  the  EU  mainly  exported  to  Egypt  goods  in  the  sectors  of: 
machinery  and  transport  equipment  (35%),  chemicals  (16%),  manufactured  goods  (12%), 
mineral  fuels  and  agricultural  products  (each  representing  9%).  The  three  biggest  EU 
exporters to Egypt were Germany (19%), France (15%) and Italy (13%).  

EU imports also  tripled  in the same period:  increased by 211% between 2002  and 2019, 
from €2.7 billion to €8.3 billion. Between 2018 and 2019, they augmented by 8.7%, from 
€7.6  billion to  €8.3  billion.  In  2018,  EU  imports  were  principally  in  the  sectors  of:  mineral 
fuels  (41%), chemicals  (15%), manufactured products  (14%), and agricultural  goods (11%). 
The  three  biggest  importers  of  Egyptian  products  in  the  EU  were:  Italy  (23%),  Germany 
(16%) and Spain (10%).  

An  upward  trend  in  Egyptian  exports  between  2015  and  2019  (increase  by  29.3%), 
coupled  with  stable  imports  from  the  EU  (only  decreased  by  0.1%),  has  resulted  in  a 
decreasing trade imbalance between the EU and Egypt.  

5.3 

Trade in agricultural products  

Total  trade in  agri-food  products  between the EU27 and Egypt  increased by  238% between 
2002 and 2019, from €0.9 billion in 2002 to €2.9 billion in 2019. Year-on-year, EU agri-food 
exports  considerably  increased  (+30%),  going  from  €1.4  billion  in  2018  to  €1.9  billion  in 
2019. EU imports  also  rose significantly  (+22%), from  €0.8 billion in  2018 to  €1 billion in 
2019.  

An  upward  trend  in  Egyptian  exports  of  agricultural  products  between  2015  and  2019 
(increase by 45%), coupled with  a decrease of imports from  the EU (-12%), has resulted in 
the reduction of Egypt's deficit in the agricultural trade with the EU.  

In  2019,  Egypt  was  the  EU’s  second  biggest  supplier  of  agri-food  products  among 
Euromed  countries.  The  EU  imported  from  Egypt  mainly  fruit  (€426  million,  41%), 
including  citrus  fruit,  and  vegetables  (€291  million,  28%).  EU  agri-food  exports  to  Egypt 

256 

 
 
 
 
 
 
 
 
 
 
 
were  dominated  by  wheat  (€224  million,  15%),  vegetables  (€176  million,  12%)  and  sugar 
(€153 million, 10%).  

TRQs openend by the EU to Egypt 

Regarding agri-food tariff rate quotas (TRQs), Egypt’s 2019 fill  rate was high for  a limited 
number  of  products,  such  as  garlic  (99%)  or  strawberries  (110%)  or  oranges  (69%),  but 
remained nil or close to zero for the majority of products, such as cereal preparations or sugar 
products. 

Information on the utilisation of TRQs granted by Egypt to the EU was not readily available 
at the time of drafting of this staff working document. 

5.4 

Trade in services and Foreign Direct Investments 

Total  trade  in  services  between  the  EU27  and  Egypt  increased  by  44%  between  2014  and 
2018,  from  €  6.7  billion  to  €  9.7  billion,  mainly  thanks  to  the  strong  performance  of  the 
tourism  and  transport  sectors.  EU  exports  of  services  to  Egypt  increased  by  29%  over  the 
same time period, while Egypt’s exports of services to the EU augmented by 52%. In 2018, 
the EU exported € 6.2 billion in services to Egypt, compared to € 5.2 billion in 2017 (increase 
of 19%), and Egypt exported € 3.6 billion in services to the EU in 2018, compared to € 3.4 
billion in 2017 (increase of 6%). 

257 

201720182019F&VGarlic5.219t89%87%99%F&VCucumbers3.914t4%3%3%F&VOranges36.300t14%93%69%F&VStrawberries11.687t82%89%100%CerealsRice, husked23.185t0%0%0%CerealsRice, semi/wholly milled81.149t0%0%0%CerealsRice, broken92.742t0%0%0%SugarChemically pure fructose1.000t0%0%0%Sugar productsOther sugar confectionery, not containing cocoa, >70% of sucrose1.611t1%2%4%Sugar productsSweetened cacao powder, 70% to 80% of sucrose638t0%0%0%Sugar productsSweetened cacao powder, >80% of sucrose638t0%0%0%Sugar productsChocolate & other preparations containing cocoa638t0%0%0%PreparationsOther food preparations of flour, groats, meal, starch or malt extract1.611t0%0%0%PreparationsPreparations with a basis of coffee, >70% of sucrose/isoglucose1.611t0%0%0%PreparationsPreparations with a basis of tea or mate, > 70% of sucrose/isoglucose638t0%0%0%PreparationsSugar syrups, >70% of sucrose/isoglucose638t0%0%0%PreparationsPreparations used in drink industries, >70% of sucrose/isoglucose1.611t0%0%1%Sugar productsOdoriferous substancies for bevarages, >70% of sucrose/isoglucose1.611t0%0%0%Utilisation rate of TRQs opened by the EU to EgyptSectorTRQ descriptionTRQ QuantityUnitUtilisation in TRQ period ending in: 
 
 
 
 
 
 
 
 
As  regards  Foreign  Direct  Investment  (FDI),  EU27  is  the  second  foreign  investor  in 
Egypt accounting for ca. 21% of FDI inflows (data for FY18/19), after UK with ca. 39%, 
and with the total EU investment stock amounting to €38.2 billion in 2018. EU FDI inflows 
remained relatively volatile between 2014 and 2018. 

In 2019, the country saw a 6 position improvement in the World Bank’s  Ease of Doing 
Business Index 2020 ranking, reaching 114th out of 190, with a distance to frontier (DTF)137 
score  of  60.1  out  of  100  -  an  increase  of  1.6  in  DTF  score  compared  to  2018.  This 
improvement  is  due  to  the  simplification  and  reinforcement  of  some  business  regulations, 
such  as  making  starting  a  business  easier,  providing  an  online  tax  payment  platform  to 
businesses,  increasing  the  reliability  of  electrcitiy  supply,  strenghtening  the  protection  of 
minority investors, etc.       

6. 

CONCLUSIONS  

Bilateral trade has grown significantly since the entry into force of the FTA, although a mix of 
political and economic factors have impeded Egyptian exporters from fully benefitting from 
the opportunities the agreement created. The EU is therefore engaged in several trade-related 
assistance projects in Egypt in order to create conditions under which the FTA could deliver 
more  significant  results.  In  effect,  in  2018  and  2019  Egypt’s  exports  to  the  EU  increased, 
resulting in a decrease of Egypt’s trade deficit in trade with the EU.  

Upgrading  bilateral  trade  and  investment  relations  remains  a  medium-term  objective  to  be 
followed  once  Egypt  is  ready  for  it.  Meanwhile,  discussions  on  the  implementation  of  the 
current FTA focus on trade irritants. 

137  The  DTF  score  is  a  measurement  used  by  the  World  Bank  to  assess  the  absolute  level  of  regulatory 

performance in economies over time.  

258 

 
 
 
 
 
 
 
                                                 
7. 

STATISTICS 

EGYPT 

259 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Egypt (mio €)Imports6 4265 9417 3987 6478 304Exports19 07519 14218 41818 02019 060Balance12 64913 20111 02010 37310 756Share Egypt in EU27 trade with Extra-EU27Imports0.4%0.4%0.4%0.4%0.4%Exports1.0%1.0%0.9%0.9%0.9%Total (I+E)0.7%0.7%0.7%0.6%0.7%Share EU27 in trade Egypt with worldImports30.7%26.1%23.5%22.9%22.9%Exports23.3%24.0%28.1%29.0%30.7%Total (I+E)29.0%25.6%24.8%24.7%25.3%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Egypt: IMF DotsTotal merchandise trade EU27 with Egypt (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports7 6478 3046578.6%Imports1 907 5651 934 94427 3791.4%Exports18 02019 0601 0405.8%Exports2 059 8822 132 01572 1333.5%Balance10 37310 756383Balance152 317197 07144 754Total trade25 66727 3631 6976.6%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Egypt (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports8611 05519322.4%Imports118 891121 6442 7532.3%Exports1 4421 87943630.2%Exports169 000181 82512 8257.6%Balance581824243Balance50 10960 18110 072Total trade2 3042 93362927.3%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Egypt (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports6 7867 2494646.8%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports16 57717 1816043.6%EU27 exports1 890 8821 950 19059 3093.1%Balance9 7929 932140Balance102 208136 89034 682Total trade23 36324 4301 0674.6%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Egypt (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports5 1686 15298319.0%Imports824 543824 015-528-0.1%Exports3 4133 5721594.7%Exports928 420968 64840 2284.3%Balance-1 755-2 579-824Balance103 877144 63340 756Total trade8 5819 7241 14213.3%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Egypt (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports4 0544 5104 1705 1686 152Imports642 682776 924784 743824 543824 015Exports2 7264 2383 5193 4133 572Exports750 713849 023855 477928 420968 648Balance-1 328-272-651-1 755-2 579Balance108 03172 09970 734103 877144 633Total trade6 7808 7487 6888 5819 724Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Egypt (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward2198559241 116Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward41 93338 171Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward45151263Inward143 012803 285328 703209 462-67 421Outward867-1 7243 3342 508-477Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsEgyptEgypt20182019Extra-EU27Egypt2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Egypt05 00010 00015 00020 00025 00020152016201720182019Merchandise trade EU27 with Egypt (mio €)ImportsExportsBalance 
 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE  EU-
ISRAEL ASSOCIATION AGREEMENT 

1. 

INTRODUCTION 

The  EU  and  Israel  relations  are  governed  by  an  Association  Agreement  (hereafter  named 
“Agreement” or "AA") that has been provisionally applied since 1996 and fully entered into 
force  in  2000.  The  terms  of  the  Agreement  provided  for  full  elimination  of  customs  duties  
applicable  to  industrial  products  and  partial  one  for  agricultural  products  creating  a  Free 
Trade  Area  (FTA).  The  EU  and  Israel  had  already  signed  an  FTA  in  1970,  subsequently 
extended in 1975, eliminating duties on industrial products and over 80% of agricultural tariff 
lines.138  The AA improved the provisions on rules of origin and included a series of further 
reciprocal  agricultural  concessions  (selected  arrangements  on  agri-food  trade).  However  the 
FTA is still “old generation” as it does not include commitments on services and investments, 
regulatory convergence or modern trade rules. 

The EU and Israel subsequently upgraded the free trade area by signing an agreement in 
2008, which amended the AA and thus further liberalised trade in agricultural products, 
notably in processed   agricultural products  and fish and fishery products, in force since 
2010.  This  amendment  further  increased  reciprocal  market  access  on  agro-food  products 
and   is  based  on  the  “negative  list  approach”  (i.e.  all  agro-food  trade  is  liberalised  on  both 
sides  apart  from  a  limited  number  of  sensitive  lines  on  either  side).  For  the  sensitive 
agricultural products such as fruit and vegetables, sugar, etc., market access on both sides is 
provided in the form of duty free quotas. Moreover, the EU maintains its entry price system, 
but with ad valorem duty component set at 0%.  

Discussions for a Dispute settlement protocol under the FTA took place in December 2016 
on the occasion of the EU-Israel trade-subcommittee, but have not been finalised. 

Israel is a member of the Regional Convention on Pan-Euro-Mediterranean preferential 
rules of origin (PEM Convention) which it signed in 2013 and notified the EU its ratification 
and entry into force in 2014.  

The  EU  and  Israel  signed  in  1999  a  "Good  Laboratory  Practice"  (GLP)  agreement, 
ensuring the high quality, validity and reliability of health and environmental data generated 
during the testing of cosmetics, industrial chemicals, pharmaceuticals, food additives, animal 
feed  additives,  pesticides  by  means  of  mutual  recognition  of  OECD  principles  of  good 
laboratory  practice  (GLP)  and  compliance  monitoring  programmes.  The  EU  and  Israel  also 
have  an  Agreement  on  Conformity  Assessment  and  Acceptance  of  industrial  products 
(ACAA)  on  pharmaceuticals,  in  force  since  January  2013,  which  facilitates  trade  on  both 
sides,  as  it  recognises  each  partner’s  certification  of  conformity  of  pharmaceutical  products 
without the need for re-testing at import.  

In June 2013, the EU and Israel signed an EU-Israeli Aviation Agreement (called Open Sky 
Agreement),  opened  up  the  air  transport  market  ,  after  a  five-year  implementation  period 
which ended in  March 2018. The Agreement, which has entered into force in  August  2020, 
allows all EU airlines to operate direct flights to Israel from anywhere in the EU and Israeli 

138 https://ec.europa.eu/commission/presscorner/detail/en/MEMO_93_38  

260 

 
 
 
  
 
 
 
 
 
                                                 
carriers  to  operate  flights  to  all  airports  throughout  the  EU.  The  EU-Israeli  air  transport 
market has been opened gradually and, as of spring 2018, the market is now fully open with 
no  restrictions  on  the  number  of  flights.  On  26  June  2020,  the  Council  adopted  a  decision 
authorising the conclusion of the Agreement.  

2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGRESS AND FOLLOW-UP ACTIONS  

No significant roll back of commitments in the Agreement has been recorded; however there 
are a number of persistent trade irritants. These include the discriminatory treatment of EU 
Member States, who have joined since 2004 and of Luxembourg, with particular reference to 
restrictions  on  import  authorization  of  medical  devices,  the  lack  of  data  protection  on 
biological  medicines  and  the  rigid  regime  of  kosher  certification  of  meat  as  well  as 
restrictions  to  the  import  of  live  animals  from  certain  Member  States.  Israel  continues 
imposing local content requirements in government procurement contracts, in particular in the 
transport sector. In line with its commitments under the Government Procurement Agreement 
in  the  WTO,  as  of  2020  Israel  will  need  to  start  phasing  out  from  the  exceptions  regarding 
local content. A number of official and technical meetings have taken place to look into these 
issues.  

On  trade  defence  policy,  an  anti-dumping  (AD)  investigation  on  imports  of  cement  from 
Greece took longer than the WTO ceiling of 18 months. The EU has drawn Israel's attention 
to  this  issue  and  asked  that  no  duty  would  be  imposed,  however  Israel  imposed  a  minimal 
0.25%  duty.  The  investigation  has  nevertheless  been  reopened,  and  in  April  2020  a 
recommendation  to  impose  an  almost  30%  AD  duty  on  imports  from  Greece  has  been 
submitted  by  the  investigating  authorities.  The  EU  submitted  written  comments  on  the  
proceedings, as well as participated in an official hearing held on 12 May.  

In the context  of the  Conformity Assessment  and Agreement (ACAA),  Israel  has expressed 
interest  in  expanding  the  Good  Manufacturing  Practice  annex  by  adding  medicinal 
products  derived  from  human  blood  and  plasma.  The  EU  indicated  in  the  Trade  Sub-
committee  of  May  2018  that  a  full  assessment  of  Israel's  legislation  (currently  in  process) 
could take place only when the legislative process has been finalized.   

Israel  has  also  raised  the  possibility  of  an  ACAA  on  cosmetics,  but  the  EU  position  is  that 
such an agreement is not  the appropriate tool with  regard to  the cosmetic sector.  Indeed, in 
this  sector  there  is  no  third  party  conformity  assessment  procedure  that  would  justify  an 
ACAA  or  a  Mutual  Recognition  Agreement,  thus  in  the  cosmetics  sector  the  EU  has  not 
signed any similar agreement with any trade partner. However, Israel's recent efforts to amend 
its regulations on imports of cosmetics could in principle help aligning its legislation with EU 
regulations in this sector. This  could also facilitate bilateral trade and the EU is fully engaged 
to support such regulatory approximation.   

  3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The  EU-Israeli  Sub-committees  on  Industry,  Trade  and  Services  met  on  10  September 
2019 in Brussels. A range of bilateral issues were discussed, including the state of EU-Israeli 
trade under the Association Agreement. Regarding trade barriers, the EU stressed the need to 
resolve  the  distinction  between  ‘new’  and  ‘old’  Member  States  (pre  and  post-2004)  for 
imports  of  medical  devices,  as  well  as  the  situation  of  the  EU's  request  for  granting  IPR 
protection to biological pharmaceuticals and the EU's comments regarding the legislation on 

261 

 
 
 
 
 
cosmetics  in  Israel.  Furthermore,  the  EU  addressed  a  long-standing  issue  of  local  content 
requirements  in  government  contracts,  in  particular  Israel’s  schedule  for  phasing  out  these 
provisions,  in  line  with  the  country’s  commitment  undertaken  during  accession  to  GPA. 
Parties also exchanged information regarding the implementation of the so-called “Technical 
Arrangement"  on  zip  codes.  Both  parties  provided  an  update  on  their  ongoing  bilateral  and 
multilateral trade negotiations. Israel expressed interest in closer cooperation with the EU on a 
range of issues, including on cosmetics. 

A  meeting  of  the  EU-Israel  sub-committee  on  Agriculture  and  Fisheries  took  place  in 
Brussels on 9 September 2019. The main SPS-related market access issues discussed in that 
meeting  were  the  growing  opposition  in  Israel  to  imports  of  live  animals  due  to  animal 
welfare  concerns,  and  also  the  increasing  problems  of  certain  Member  States  to  have  fresh 
meat and its products certified for exports to Israel due to certain regulatory differences e.g. 
on  ingredients  in  animal  feed  and  the  frequency  of  official  inspections.  The  EU  reminded 
Israel about its international trade commitments and about its position on the animal welfare 
issue.  Both  sides  also  agreed  to  work  toward  harmonised  conditions  for  the  export  of  meat 
and  live  animals  from  the  EU  to  Israel.  Finally,  discussions  included  flexibility  on  kosher 
certification in the EU and the possibility to agree on a single EU certificate for exports of live 
animals, meat, table eggs and products of animal origin (flour, pet feed, fertilizers, etc.) from 
EU  Member  States  to  Israel.  The  Israeli  delegation  also  confirmed  the  interest  of  Israel  to 
initiate negotiations on a bilateral agreement on organics. 

The  EU-Israel  Customs  Cooperation  and  Taxation  Sub-committee  took  place  on  19  June 
2019  in  Jerusalem.  Both  Parties  discussed  methods  for  enhancing  bilateral  customs 
cooperation  in  the  framework  of  the  Association  Agreement.  The  need  to  maintaining 
contacts for promoting items of mutual interest and to strengthening cooperation in customs 
and  taxation  matters  was  stressed  such  as  the  IPR  border  enforcement,  the  Authorized 
Economic  Operators,  the  mutual  administrative  assistance.  The  review  of  the  regional 
Convention  on  pan  euro-Mediterranean  rules  of  origin  and  the  possible  early  application  of 
the revised rules on a bilateral basis were also discussed. 

4. 

SPECIFIC AREAS OF IMPORTANCE  

Regulatory  cooperation  -  In  the  context  of  the  Israeli  government’s  intention  to  fight  the 
high cost of living and enhance competitiveness on the market, the EU is supporting Israel’s 
ongoing market reforms by sharing its best practices on issues such as food safety, standards, 
import  procedures,  conformity  assessments,  agricultural  support  policy,  competition,  etc. 
normally  through  TAIEX  workshops,  Twinning  projects  and  study  visits  (among  others,  on 
Individual  Vehicle  Approval,  Hollistic  Approach  for  Offshore  Pipeline  Planning,  Market 
Surveillance  in  Energy  Products  and  Assessment  of  Advanced  Therapies  in  Medicinal 
Products Aplications). In November 2019 the EU organised a study visit for Israeli officials 
from the food health and security authority to the Italian food safety agency (Rome) the EU 
food safety agency (Parma) and the European Commission  (DG SANTE and DG TRADE). 
The purpose of the visit was to share the EU framework and exchange best practices, with a 
view to also facilitate trade. 

Government  procurement  –  as  mentioned  above  (see  point  3),  there  is  an  ongoing 
discussion  between  the  EU,  the  European  Investment  Bank  and  the  Israeli  government  
regarding local content requirements in government contracts. In line with the EIB Guide to 
Procurement, projects with local content requirements are not eligible for funding. In order to 

262 

 
 
 
 
avoid allegations of breach of the EIB Guide to Procurement, Israeli authorities often rebrand 
local  content  requirements  as  “industrial  cooperation”.  The  position  of  both  the  EU  and  the 
EIB on this matter is clear and well known to Israel.  

Settlement products – in its judgment of 12 November 2019 the European Court of Justice139 
ruled that as said in the Commission's interpretative notice of 2015, foodstuffs originating in 
territories occupied by the State of Israel must bear the indication of their territory of origin, 
accompanied, where those foodstuffs come from a locality or a group of localities constituting 
an  Israeli  settlement  within  that  territory,  by  the  indication  of  that  provenance.  The  control 
and enforcement of the correct implementation of EU rules regarding indication of origin is 
the task of the Member States. 

Investment -  In 2019 the Commission started preparations on launching a project under the 
Partnership Instrument aimed at strengthening EU investment in Israel in three sectors: start-
ups, clean tech and agri food.  

Dispute  settlement  -  Discussions  between  the  EU  and  Israel  on  a  Dispute  Settlement 
Agreement under the Association Agreement are still to be resumed.  

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

The Israeli economy has recorded one of the best performances of OECD countries in the last 
15 years, with is GDP growth averaging 3.7% mainly due to the increase in the working age 
population and the participation rate. After achieving 3.4% of GDP in 2018, growth increased 
slightly  to  3.5%  of  GDP  in  2019,  despite  the  global  slowdown  dampening  exports  and 
political  instability  eroding  consumer  and  business  confidence.  Private  consumption 
continued  to  support  growth  by  means  of  a  low  inflation  rate,  a  favourable  employment 
conditions, an accommodative monetary policy, and an expansionary fiscal policy. 

Inflation  increased  by  0.6%  in  2019,  compared  to  0.8%  in  the  year  before,  and  remained 
below the lower bound of the central bank’s target range (1 to 3%) for the sixth consecutive 
year.  Yet,  the  price  level  in  Israel  remains  much  higher  than  in  other  developed 
economies. In 2019, the price level was roughly 19% above the OECD average in 2019, with 
imported products being particularly costly.  Israel has one of the highest  living standards in 
the  region,  with  average  salaries  similar  to  EU  countries.    The  shekel  continued  its  long-
term  strengthening  in  2019,  appreciating  by  6.3%  against  the  EUR  and  0.9%  against  the 
USD. This trend is generally explained by several factors, such as the strong high-tech exports 
and sound fiscal situation and economic fundamentals.  

The  unemployment  rate  decreased  further  to  an  average  of  3.8%  in 2019,  compared  to 
4%  in  2018.  However,  important  challenges  remain  with  respect  to  the  labour  market 
participation of some parts of the society, especially ultra-orthodox men and Arab women. 
For  men,  average  labour  market  participation  was  68%  in  2019,  but  only  50%  of  ultra- 
orthodox men participate in the labour force. The low participation rate is typically related to 

139  Judgment in Case C-363/18 of 12 Nov. 2019. 

263 

 
 
 
 
 
 
 
 
                                                 
comparatively poor education levels and generous state pay-outs. For women, average labour 
market participation was 60% in 2019, but only 38% for Arab women.  

Israel  has  a  diversified  and  technologically  advanced  economy.  In  2019,  Israel  started 
exporting  gas  to  neighbouring  countries,  Jordan  and  Egypt.  Furthermore,  it  signed  a  deal 
with  Greece  and  Cyprus  to  build  an  undersea  pipeline  EastMed  to  carry  gas  from  new 
offshore deposits to Europe. The energy deals are considered milestones for Israel, not only 
for economic reasons, but also for political considerations. The exploitation of these gas fields 
has  wide  political  implications  for  Israel  and  its  relations  with  its  neighbours,  as  now  it  is 
exporting gas to Jordan and Egypt.  

5.2 

Trade in goods 

In  2019  the  EU  was  Israel’s  first  trading  partner,  representing  27.5%  of  Israeli  trade, 
followed by the US (21%) and China (8.4%). Israel is the EU’s 27th largest trading partner 
(representing  0.8%  of  the  EU's  total  trade)  and  the  3rd  largest  in  the  Euro-Mediterranean 
region, behind Algeria and Morocco. The EU was the largest exporter to Israel, holding a 
42%  market  share,  ahead  of  the  US  (16%)  and  Switzerland  (10.6%).  The  EU  was  Israel’s 
second export market in 2019, receiving 21% of Israeli exports, preceded by the USA with 
28%.  

Since  the  Association  Agreement  came  into  force,  the  value  of  imports  and  exports 
between the EU and Israel has been increasing in both directions. In 2002, the first year in 
which data is available, the value of trade in goods was €19.5 billion and in 2019 it was €33.1 
billion, thus representing an increase by 70%. In the same period, the EU’s trade surplus has 
almost doubled from €3.8 billion in 2002 to €7.1 billion in 2019.  

The value of EU exports to Israel  has risen  by  over 70% from €11.7 billion in 2002 to 
€20.1 billion in 2019. Though, EU exports between 2018 and 2019 contracted going from 
€20.7  billion  in  2018  to  €20.1  billion  in  2019.  Nevertheless,  with  the  exception  of  2009 
(financial  crash),  EU  exports  to  Israel  have  shown  a  fairly  consistent  growth.  In  2019,  the 
most  important  export  items  by  value  were  machinery  and  appliances  (25%),  transport 
equipment (16%), and chemical products (15.6%).  

The value of EU imports from Israel has risen from €7.8 billion in 2002 to €13 billion in 
2019,  representing  almost  70%  rise.  Nevertheless,  EU  imports  between  2018  and  2019 
decreased from €13.6 billion to €13 billion. In 2019 the most important groups for import by 
value were chemicals (40%), machinery and appliances (17.5%) and plastics (7%).   

5.3 

Trade in agricultural products  

Total trade in agri-food products between the EU and Israel has almost doubled between 2002 
and 2018, from €1.3 billion in 2002 to €2.8 billion in 2019. EU agri-food exports increased 
by  9.2%  from  €0  billion  in  2018  to  €2  billion  in  2019.  Over  the  same  time  period,  EU 
imports increased by 9.7% from  €0.75 billion to €0.83 billion. In 2019,  Israel  was the EU's 
second most important destination for exports of agri-food products in the region and the EU's 
third largest supplier of agri-food products in the region. Among the EU's agricultural imports 
from  Israel  53%  were  fruit,  vegetables  and  nuts,  including  citrus  fruit  while  the  EU  mainly 

264 

 
 
 
 
 
 
 
 
 
 
exported beverages, spirits and vinegar (11%), preparations of cereals, flour and starch (11%), 
followed by live animals (9%).   

TRQs openend by the EU to Israel  

Regarding agricultural Tariff Rate Quotas (TRQ), Israel’s 2019 fill rate was 100% for some 
products (new potatoes or wine). Other products with a relatively higher share of used quota 
were sweet peppers (83%), and starches (63%). Fill rates were below 5% for other products, 
including fresh oranges, tomatoes or chewing gum (sugar products).  

265 

 
 
 
 
 
 
266 

201720182019PoultryTurkeys (< 185 g, live)129.920Number of items5%0%0%PoultryTurkey cuts, frozen4.000t0%0%13%PoultryDucks560t0%0%0%DairyWhey1.300t2%18%6%FlowersCut flowers22.196t23%20%15%FlowersCut flowers (Lilies & Other)7.840t32%34%47%F&VNew potatoes33.936t100%100%100%F&VCherry tomatoes28.000t0%0%0%F&VTomatoes, other than cherry5.000t20%11%2%F&VCucumbers1.000t18%19%8%F&VSweet peppers17.248t100%100%83%F&VSweetcorn, frozen10.600t0%0%0%F&VSweetcorn, provisionally preserved5.400t0%0%0%F&VDried tomatoes1.200t20%24%22%F&VOranges224.000t1%1%1%F&VClementines, mandarins & wilkings40.000t100%100%100%F&VClementines, mandarins & wilkings15.680t100%35%100%F&VMelons30.000t2%1%0%F&VStrawberries5.000t0%0%0%PoultryTurkey, prepared /preserved, offal or blood5.000t18%17%17%PoultryChicken, prepared2.000t30%25%26%Sugar productsChewing gum, >60 % of sucrose100t2%4%3%Sugar productsCocoa powder; Other preparations containing cocoa2.500t0%0%0%PreparationsGingerbread & the like, >30 %of sucrose3.200t0%0%0%F&VTomatoes, prepared or preserved, min. dry matter 30%784t2%6%15%F&VSlices of peaches, fried in oil112t0%0%0%F&VOrange juice, ≤2L21.280t1%0%0%F&VOrange juice, >2L35.000t17%21%16%F&VMixtures of citrus juices19.656t1%0%0%WineWine & grape must6.212hl100%100%100%StarchesGlues250t100%48%63%Utilisation rate of TRQs opened by the EU to IsraelSectorTRQ descriptionTRQ QuantityUnitUtilisation in TRQ period ending in: 
 
 
 
TRQs opened by Israel to the EU  

EU quotas were fully used in 2019 for a number of products including pears ad honey 
and  next  to  fully  used  for  apples,  garlic  and  onions.  Lower  use  could  be  observed  for 
mushrooms (21%) and prunes (18%). More than 140 million eggs were imported from the EU 
to Israel within non-mandatory WTO TRQs. 

267 

Import)Tones(Garlic230F.C.F.S 230100%220,596%Apples3.280Initial Allocation3.280100%3.25999%Pears2.140Initial Allocation2140100%2139100%Quinces380F.C.F.S 380100%34390%Onion2.300Initial Allocation2300100%224598% Honey (Under)Kg 1.5180F.C.F.S180100%17899% Honey (Over)Kg 50300 According to marketshare300100%300100%Raisins120F.C.F.S120100%8067%Eggs8.000.000 According to marketshare8000000100%690000086%Potatoes6.380 To industry accordingto production volume6.380100%5.81091%Prune730F.C.F.S20027%13218%Pet food1.610F.C.F.S1.610100%1.13971% 'Dogs and catsfood1.150F.C.F.S1150100%113298%Mushrooms200F.C.F.S200100%4121%Hatching eggs50.000F.C.F.S50000100%00%DescriptionTonesAllocation Method Allocation of Quata)Tones(of Quota %of Quota % 
 
 
 
 
 
5.4 

Trade in services and Foreign Direct Investments 

In  2018  trade  in  services  between  the  EU  and  Israel  was  worth  €12.2  billion.  Between 
2010  and  2018,  there  has  been  an  overall  increase  in  the  value  of  services  imported  from 
Israel from €3.2 billion to €5.2 billion. Over the same period there has been an increase in EU 
exports of services to Israel from €3.8 billion to €7 billion.  

On  FDI  flows  there  is  no  consistent  image  on  volume  or  partner  country.  Figures  show 
fluctuations  every  year  and  no  trend  can  be  identified.  EU  FDI  in  both  stocks  and  flows 
both  in  and  out  of  Israel  have  grown  continuously  since  2001.  Between  2017  and  2018 
inward stocks increased from €49 bilion to €69 billion while outward stocks remained at the 
stable level and noted only a small increase from €27 billion in 2017 to €28 billion in 2018.  

According to data from the Israeli Central Bureau of Statistics in 2018, FDI in Israel were led, 
the  U.S.  (31.5%)  and  the  Europe  (not  just  EU  but  also  including  Switzerland  etc)  (22.8%). 
The biggest EU investor in Israel is the Netherlands.  

Although  both  outward  and  inward  FDI  stocks  have  been  growing  relative  to  GDP  since 
2008, inward FDI stocks have been growing faster so that FDI is inward orientated. In 2015, 
Israel’s  share  of  the  OECD  total  inward  FDI  stock  (0.64%)  was  slightly  higher  its  share  of 
GDP  (0.57%),  but  its  share  in  outward  stock  was  0.46%  of  the  OECD  total,  lower  than  its 
share of GDP.140 

According  to  The  World  Bank  Doing  Business  Index  2020  which  ranks  190  countries, 
Israel, an OECD member, was ranked 35th in the world (up from the 49th position of 2018) 
with  a distance to  frontrier (DTF)141  score of 76.7  out  of 100  –  an improvement from the 
value of 2018 (73.23). 

6. 

CONCLUSIONS  

Overall  the  value  of  trade  between  the  EU  and  Israel  has  increased  during  the  period  of 
implementation  of  the  Agreement  and  this  is  true  in  both  directions.  Goods  continue  to 
account for the majority of trade, although the relevance of exchanges in services is growing. 
The stock of foreign investments is noteworthy and increasing.  

Both  sides  are  trying  to  deepen  bilateral  relations  through  a  continuous  dialogue  in  many 
areas,  such  as  in  the  regulatory  field,  where  Israel  considers  the  EU  as  an  international 
reference. Israel has expressed some limited interest in using the Agreement’s review clause 
on services. The EU and Israel also continue cooperating in plurilateral and multilateral trade 
talks.  

The EU will continue supporting Israel’s ongoing market reforms and will continue in 2020 
working with Israel on cosmetics, medical devices, food and other areas, advocating for rules 
that are aligned with international and, where possible, EU standards.  

140 http://www.oecd.org/investment/ISRAEL-trade-investment-statistical-country-note.pdf  
141  The DTF score is a measurement used by the World Bank to assess the absolute level of regulatory 

performance in economies over time. The higher the score, the better. 

268 

 
 
 
 
 
 
 
 
                                                 
 
7 

STATISTICS 

ISRAEL 

269 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Israel (mio €)Imports12 10011 98613 57112 40412 992Exports17 62119 79720 05519 42420 101Balance5 5217 8116 4847 0207 109Share Israel in EU27 trade with Extra-EU27Imports0.7%0.7%0.8%0.7%0.7%Exports0.9%1.1%1.0%0.9%0.9%Total (I+E)0.8%0.9%0.9%0.8%0.8%Share EU27 in trade Israel with worldImports32.7%35.6%35.0%33.2%32.2%Exports18.3%19.6%21.5%21.2%21.1%Total (I+E)25.3%28.0%28.7%27.9%27.5%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Israel: IMF DotsTotal merchandise trade EU27 with Israel (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports12 40412 9925874.7%Imports1 907 5651 934 94427 3791.4%Exports19 42420 1016773.5%Exports2 059 8822 132 01572 1333.5%Balance7 0207 10989Balance152 317197 07144 754Total trade31 82933 0921 2644.0%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Israel (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports756830749.7%Imports118 891121 6442 7532.3%Exports1 8442 0141709.2%Exports169 000181 82512 8257.6%Balance1 0881 18496Balance50 10960 18110 072Total trade2 6002 8442439.4%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Israel (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports11 64812 1615144.4%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports17 58018 0875072.9%EU27 exports1 890 8821 950 19059 3093.1%Balance5 9325 926-7Balance102 208136 89034 682Total trade29 22830 2491 0203.5%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Israel (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports4 8785 2443677.5%Imports824 543824 015-528-0.1%Exports6 1426 95080813.1%Exports928 420968 64840 2284.3%Balance1 2641 705441Balance103 877144 63340 756Total trade11 02012 1941 17410.7%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Israel (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports3 4423 9024 4444 8785 244Imports642 682776 924784 743824 543824 015Exports4 0505 7995 6516 1426 950Exports750 713849 023855 477928 420968 648Balance6071 8971 2071 2641 705Balance108 03172 09970 734103 877144 633Total trade7 4929 70110 09511 02012 194Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Israel (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward40 29444 86349 18969 086Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward15 40716 77627 12528 028Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward2 36113 890597-609Inward143 012803 285328 703209 462-67 421Outward1 7241 1819201 9642 141Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsIsraelIsrael20182019Extra-EU27Israel2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Israel05 00010 00015 00020 00025 00020152016201720182019Merchandise trade EU27 with Israel (mio €)ImportsExportsBalance 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE  EU-
JORDAN ASSOCIATION AGREEMENT 

1. 

INTRODUCTION 

The  Association  Agreement  (AA)  creating  a  free  trade  area  (FTA)  between  the  EU  and 
Jordan  (hereinafter  referred  to  as  ‘the  Agreement’)  was  signed  on  24  November  1997  and 
entered into force on 1 May 2002. It liberalised two-way trade in goods, with asymmetrical 
transition periods in favour of Jordan. This allowed Jordan to phase in tariff reductions over a 
12 year period. Tariff dismantling has now been completed.  

The EU and Jordan upgraded the Agreement in  2006 concluding  an  additional  Agreement 
on  trade  in  agricultural  and  processed  agricultural  products.  Today  all  Jordanian 
agricultural products can enter the EU duty free with the exception of virgin olive oil and cut 
flowers,  which  are  under  tariff  rate  quotas  (TRQs),  while  agricultural  liberalisation  on  the 
Jordanian side is substantial, but not complete.  

A  Protocol  establishing  a  bilateral  Dispute  Settlement  Mechanism  was  added  to  the 
Agreement in 2011.  

Jordan is a member of the Regional Convention on pan-Euro-Mediterranean preferential rules 
of origin (PEM Convention), which it signed in 2011 and notified the EU of its ratification in 
2013.  The  EU  and  Jordan  also  agreed  to  a  specific  iniative  in  July  2016,  later  modifie  din 
December  2018,    granting  Jordanian  further  rules  of  origin  flexibiltities  linked  to 
employent of syrian refugees.  

In 2011 the Council of the European Union adopted negotiating directives to further enhance 
the trade relationship through a Deep and Comprehensive Free Trade Area (DCFTA) with 
Jordan, but Jordan has shown limited interest so far.    

2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGRESS AND FOLLOW-UP ACTIONS  

In  general  there  are  relatively  a  low  number  of  trade  barriers  by  Jordan  vis-à-vis  the  EU, 
however in 2019 the country has enacted some new trade restrictive measures. The latter 
translates  into  ad-hoc,  unpredictable  and  unjustified  quantitative  and  time  restrictions  for 
imports  of  some  agro-food  products  (oils,  fruits and  vegetables,  dairy).  The  barriers  are  not 
technical  regulations  or  sanitary  and  phytosanitary  requirements  but  punctual  administrative 
decisions without consumer safetry or legal foundation. Discussions on these between the EU 
side and the relevant authorities are ongoing.  

In  2019,  Jordan  informed  the  WTO  of  the  launch  of  an  investigation  and  possible  import 
restrictions  on  potato  chips.  The  investigation  is  based  on  a  petition  filed  by  the  domestic 
industry,  in  which  it  alleged  that  the  increase  of  imports  had  caused  serious  injury  to  the 
domestic  industry  producing  like  and  directly  competitive  products.  The  outcome  of  the 
investigation is still outsnading.  

Furthermore, there are a number of structural issues on the side of Jordan, which prevent 
the country from taking full advantage of the Agreement, such as a lack of clear trade and 

270 

 
 
 
 
 
 
 
development  policies  and  administrative  weaknesses.  There  is  a  lack  of  interest  from  the 
Jordanian  private  sector,  which  still  prefers  to  focus  on  neighbouring  markets  as  the  EU  is 
seen  as  a  highly  competitive  and  demanding  market  with  high  regulatory  requirements.  In 
addition,  production  costs  in  Jordan  are  high  due  to  water  shortages,  high  electricity  prices, 
certification and transportation costs, which tend to reduce the international competitiveness 
of goods made in Jordan.  

Most  significantly,  the  protracted  Syrian  crisis  has  had  serious  consequences  for  the 
Jordanian economy and its trade. The closure of traditional trade routes resulted in significant 
losses and downscaling of production for the export market, which in turn has made it more 
difficult  for  the  country  to  take  full  advantage  of  the  FTA.  The  presence  of  over  650,000 
Syrian refugees in Jordan has compounded existing economic grievances. In order to address 
the problems caused by the Syrian crisis, the EU provided Jordan with a package of support, 
including the simplification of the Rules of Origin applicable to Jordanian exports to the EU 
and trade related assistace programs (See section 4).  

Trade policy featured prominently in both the government's Renaissance ("Nahda" in 
Arabic)  Plan  (which  translates  the  government's  priorities  for  2019-2020  about  enhancing 
productivity,  the  state  of  law  and  solidarity)    and  in  the  five-year  growth  plan  presented 
during  the  London  Conference  of  February  2019  (a  major  international  donor  conference 
organised  by  the  governments  of  Jordan  and  the  United  Kingdom  to  support  investment, 
growth  and  jobs  for  Jordan).  The  government  identified  trade  as  one  of  the  engines  for 
growth, with the aim to grow exports by 5% annually and reduce imports by 15% by the end 
of  2020.  In  the  coming  3  years  the  government  plans  to  work  towards  the  following 
objectives: i) providing technical assistance and financial incentives for companies that export 
utilising  Jordanian  workers;  ii)  establishing  a  company  that  is  concerned  with  export 
promotion; iii) rehabilitating border crossings with Syria, Iraq and Palestine142; establishing a 
Jordanian–Iraqi  joint  free  zone  close  to  both  borders;  and  iv)  expanding  the  scope  of 
insurance  coverage  for  Jordanian  exporters  within  the  export  credit  guarantee  program  to 
reach  100  million  Dinars  annually  by  the  end  of  2020.  The  government  is  also  requesting 
support in its efforts to reform the national quality infrastructure and attract FDI.  

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES   

There were no sub-committee meetings in 2019. The latest committee meeting took place in 
2017  and  were  reported  in  the  2018  Staff  Working  Document  (SWD  (2018)454  Final) 
attached to the 2018 Report on the implementation of Free Trade Agreements. 

4. 

SPECIFIC AREAS OF IMPORTANCE  

In order to address the problems caused by the Syrian crisis, the EU provided Jordan with a 
package  of  support,  including  the  simplification  of  the  Rules  of  Origin  (RoO)  applicable  to 
Jordanian exports to the EU and trade support programs.  The initiative to simplify Rules of 
Origin  was  agreed  in  July  2016  and,  based  on  Jordan’s  request  for  additional  flexibility, 

142 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. 

271 

 
 
 
 
 
 
 
                                                 
further reviewed in December 2018. Under the initiative, Jordanian  exporters to the EU can 
now benefit from the same rules of origin for manufactured products as those applied by the 
EU for the Least Developed Countries, provided that certain conditions are met. These rules 
are  simpler  than  those  that  would  otherwise  apply  under  the  Agreement.  The  simplification 
applies to 52 product groups. To qualify to use the simpler rules, production must take place 
in  the  territory  of  Jordan  and  Syrian  refugees  must  also  account  for  no  less  than  15%  of  a 
manufacturer’s workforce. The parties have also foreseen a possibility to extend the scheme 
to  all  companies  operating  in  Jordan  (without  the  15%  requirement  as  above)  once  Jordan 
reaches  a target  of 60,000 legal  and active jobs  for Syrian  refugees. The  scheme  will apply 
until  2030.  The  government  of  Jordan  has  also  agreed  to  put  in  place  specific  monitoring 
procedures to ensure companies who benefit comply with all the requirements of the scheme. 
Monitoring  and  capacity  building  for  the  Ministry  of  Labour  is  being  carried  out  by  the 
International Labour Organisation (ILO) through a specific EU funded programme. There is 
interest  on  both  sides  to  further  incentivise  economic  operators  to  use  the  simplified  RoO 
scheme. It has been expanded in scope and duration during 2019 and has seen increases in the 
number of firms and volume of exports, though these remain small in the context of overall 
trade. Employment overall in factories eligible for the scheme rose by 13% in 2019 over 2018 
to 1,150, and employment of Syrians rose 26% to 355. One major challenge is the difficulty in 
advocating  for  employers  to  hire  more  Syrian  workers  on  their  production  lines,  when  the 
benefits of the scheme are not fully visible. Exports under the scheme increased threefold in 
2019 to €56.4 million (more than double of the trade figures of 2018), which is a significant 
achievement,  and  reflects  the  extended  time  periods  required  for  initiatives  such  as  this  to 
have an impact.  

However,  the  simplified  Rules  of  Origin  scheme  has  not  yet  translated  into  further 
investments in the sectors benefiting from the new scheme except for the textile and garment 
industry  that  benefits  from  an  estalished  infrastructure  and  networks  under  the  US-Jordan 
FTA.  

On  trade-related  assistance,  the  EU  continued  to  provide  direct  and  indirect  assistance.  The 
EU is also providing one million euros to the Jordan Standards and Metrology Organisation 
for  capacity-building  for  accreditation  and  market  surveillance.  Progress  is  being  made  in 
2019 on regulatory approximation in preparation of the possible launch of an Agreement on 
Conformity  Assessment  and  Acceptance  (ACAA).  In  this  sense,  the  Jordan  Standard  and 
Metrology  Organisation  (JSMO)  has  received  support  for  further  alignment  of  the  Jordan 
legislation on product safety and market surveillance to the legislative framework of the EU, 
enhancement of the testing capacities of the JSMO laboratories (in concrete for banned and 
restricted chemical substances, the testing of gas appliances and electrical appliances), and the 
extension  of  the  accreditation  scope  in  new  defined  areas.  The  market  surveillance 
competencies  have  been  strengthened  by  training  of  the  market  surveillance  inspectors  in 
rules  and  procedures  of  the  European  market  surveillance  system  (same  product  groups  as 
mentioned above).   

In addition, to support the government's objectives, the EU has signed a programme with the 
International Finance Cooperation/World Bank Group for technical assistance which is aimed 
at  contributing  to  the  overall  improvement  of  the  National  Quality  Infrastructure  in  Jordan, 
including  the  development  of  the  National  Quality  Policy  (NQP)  and  related  regulations, 
especifically for agrofood and pharmaceuticals products.   

272 

 
 
 
 
 
  
Trade-related assistance  projects  to  improve the trade and investment  climate also  include a 
€65 million Private Sector Development programme comprising a budget support component, 
technical  assistance  to  the  Government  and  company-level  assistance  for  the  private  sector. 
There is a further project to support entrepreneurship in the north of Jordan, the region most 
strongly  affected  by  the  influx  of  refugees.  It  aims  at  stimulating  innovation,  increasing  the 
competitiveness of Jordanian exports and supporting the Rules of Origin initiative. 

In  addition,  2016,  Jordan  agreed  with  the  International  Monetary  Fund  on  a  three-year 
programme  foreseeing  long-delayed  structural  reforms.  The  latter  was  reviewed  and 
renogiated at the end of 2019. Additionally, Jordan continued to benefit from Macro-Financial 
Assistance  (MFA  II)  operation  from  the  EU  aimed  at  strengthening  its  foreign  exchange 
reserve  position  and  meeting  its  balance  of  payments  and  budgetary  financing  needs.  The 
country  requested  additional  MFA  which  was  adopted  by  the  European  Commission  in 
September  2019  and  endorsed  by  the  Council  in  December  to  provide  up  to  €500 
million.  

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

Jordan’s  GDP  grew  by  2%  in  2019,  the  economy  remaining  stable  and  inflation  low. 
Macroeconomic  and  financial  stability  has  been  maintained  and  headline  inflation  has 
remained broadly contained, decreasing to 0.6% in 2019 from 3.5% in 2018.  

Low  private  and  public  investment,  high  unemployment,  and  high  public  debt  remain 
critical  challenges.  While  buoyant  tourism  and  exports  gave  some  impetus  to  economic 
activity  in  2019,  the  improvement  in  the  business  climate  has  not  yet  translated  into 
higher  domestic  or  foreign  investment.  In  fact,  gross  capital  formation  has  declined 
considerably  in  the  last  10  years.  Per  capita  income  has  continued  to  decline  due  to  rapid 
population growth and was in 2019 about 10 percent below its 2010 level. Economic growth 
labor  market.  As  a 
was 
result, unemployment continued 
to 
2019 compared 
18.6% in 2018.  Weak fiscal performance, together with lackluster economic growth, resulted 
in elevated public debt-to-GDP levels, with central government debt reaching 99.1% of GDP 
in 2019. 

to  alleviate  pressures  on 

the  domestic 

insufficient 

19.1% in 

reaching 

rise, 

to 

External imbalances have improved significantly. The current account deficit has narrowed 
markedly since 2017, due to a strong recovery in exports and tourism and to lower imports. 
Exports have been supported by favourable trends in world prices of potash and phosphates 
and preferential access to the U.S. and EU markets.  Data from the Ministry of Finance shows 
that  in  the  first  three  quarters  of  2019,  the  current  account  deficit  narrowed  to  3.4%  of 
GDP  from  9.3%  of  GDP  in  the  same  period  in  2018,  driven  largely  by  the  favourable 
development of the goods trade balance thus, achieving a comfortable international reserves. 

The financial sector is sound, due to the banking system remaining well capitalized, liquid, 
and  profitable.  Private  sector  credit  grew  by  about  5%  in  2019,  compared  with  around  10 
percent during 2016–17, but SME access to credit continues increasing. The non-performing 
loan ratio is also relatively low, around 5.2% (although up from 4.2% in 2018).  

273 

 
 
 
 
 
 
In  2019,  even  with  fiscal  consolidation  policies,  the  government  general  budget  deficit 
(including grants) widened to 3.4% of GDP in 2019 from 2.4% of GDP in 2018 due to a 
1.1%  decrease  in  total  revenues  (including  grants)  together  with  a  2.9%  increase  in  total 
expenditure. Although, tax revenues outweighed the decline in non-tax revenues and in taxes 
on  financial  transaction,  the  marginal  increase  in  domestic  revenues  was  offset  by  a  11.9% 
fall in foreign grants in 2019, compared to 2018. External debt remains vulnerable to current 
account and real exchange rate shocks. Despite efforts, fiscal consolidation proved difficult 
to  maintain.  Yields  from  efforts  to  broaden the tax base and mobilize revenues,  particularly 
from  the  removal  of  sales  tax  exemptions,  fell  short  of  expectations,  reflecting  marked 
weaknesses  in  tax  administration,  tax  arbitrage  opportunities  from  special  economic  zones, 
and  delays  in  implementation.  Significant  wage  and  pension  increase  for  public  sector 
workers, agreed in 2019 and reflected in the 2020 budget, will add to expenditure pressures.  

5.2 

Trade in goods 

In  2019,  the  EU  remains  Jordan’s  fourth  main  trading  partner,  accounting  for  14.2%  of 
the total trade in goods, after Saudi Arabia (14.3%) and before the United States (13.4%) and 
China (12.2%). In 2002, the year the Association Agreement entered into force, the value of 
trade  in  goods  was  €2.3  billion  and  by  2019  it  reached  €  3,7  billion,  hence  an  increase  by 
almost 65% over this period. Total trade in goods between the EU and Jordan increased 
by 5% from € 3.5 billion in 2018 to € 3,7 billion in 2019. 

The  value  of EU  exports  to  Jordan  almost  doubled  between  2002  and  2019,  from  €  1,7 
billion in 2002 to € 3.4 billion in 2019. After contracting in 2018 (-11.2%), EU exports have 
picked up again in 2019 by 4,4% compared to previous year. EU exported mainly machinery 
and  appliances  (20%),  products  of  the  chemical  or  allied  industries  (16%),  transport 
equipment  (14.3%)  and  foodstuffs,  beverages,  tobacco  (8.5%)  without  major  changes 
compared to 2018. Three main EU MS exporters to Jordan are Germany (22%), Italy (15%) 
and The Netherlands (11%), representing all together 48% of EU exports. The EU is the first 
source of Jordanian imports (18%), followed by China and Saudi Arabia (15.6% each) and the 
USA (8.5%).  

Overall, since 2002, the value of EU imports from Jordan has risen by 76%. Over the last 
five  years,  imports  from  Jordan  have  experienced  ups  &  downs  with  an  average  value  of  € 
272  million.  Year-to-year,  imports  have  increased  by  17%  from  2018  reaching  a  total 
amount  of  €  287  million  in  2019.  The  three  main  importing  EU  Member  States  are  the 
Netherlands  (15.5%),  Spain  (15%)  and  Italy  (13.8%).  The  main  categories  of  imported 
products  are  products  of  the  chemical  or  allied  industries  (41%),  textiles  and  textile  articles 
(16%)  and  base  metals  and  articles  thereof  (9.6%).  The  EU  is  the  seventh  destination  for 
Jordanian  exports  (3%),  significantly    after  the  USA  (27%),  Saudi  Arabia  (11%)  and  India 
(10.4%).  

There is a substantial trade deficit between Jordan and the EU with an average of €3.2 billion 
over  the  last  five  years.  Jordan’s  trade  balance  with  all  its  partners  was  negative  in  2019, 
except with the USA. Its global trade deficit amounted to €10,7 billion. The EU’ share of the 
trade  deficit  was  28%,  while  China  and  Saudi  Arabia  followed  with  24%  and  19% 
respectively.  

274 

 
 
 
 
 
 
 
 
5.3 

Trade in agricultural products  

Total  trade in agri-food products between the EU and Jordan continued its downward 
trend  to  reach  €  722  million  in  2019  which  represents  a  decrease  by  11.7%  from  2016. 
Between 2018 and 2019, EU agri-food exports decreased by 4%. Over the same period, EU 
agri-food  imports  increased  by  16%.  In  2019,  the  EU  mainly  exported  wheat,  live  animals, 
preparations of vegetables, fruit or nuts and infant food and other cereals, flour, starch or milk 
preparations. The EU's main agri-food imports included vegetables, fresh, chilled and dried, 
tobacco & tobacco products.  

5.4 

Trade in services and Foreign Direct Investments 

Total trade in services between the EU27 and Jordan stagnated between 2014 and 2018, from 
€ 1.34 billion to  € 1.35  billion. EU exports of services to  Jordan decreased by 7% over the 
same time period, while Jordan’s exports of services to the EU augmented by 12%. In 2018, 
the  EU  exported  €  753  million  in  services  to  Jordan,  compared  to  €  769  million  in  2017 
(decrease by 2%), and Jordan exported € 600 million in services to the EU in 2018, compared 
to € 507 million in 2017 (increase of 18%). 

The  total  EU  direct  investment  stock  amounting  to  €  2.9  billion  in  2018  with  France  and 
Spain  as  major  EU  investors  in  terms  of  number  of  projects.  EU  direct  investment  inflows 
remained  relatively  volatile  between  2014  and  2018.  Overall,  Foreign  Direct  Investments 
(FDI)  have  declined  since  the  2008  global  economic  crisis,  followed  by  geopolitical 
instability,  and have since remained stable. According to  data from UNCTAD, FDI inflows 
totalled to USD 950 million in 2018, showing a decrease compared to the previous year (US$ 
2.0  billion).  Estimated  at  US$  35  billion,  the  total  stock  of  FDI  represents  82.9%  of  the 
country's GDP (UNCTAD's 2019 World Investment Report).  

Jordan authorities continue focusing on attracting investments to boost the economy and 
stimulate  job  creation.  Investments  so  far  are  mainly  concentrated  in  the  field  of  real  estate 
(residential and commercial), financial services and large tourism projects.  In order to boost 
FDI  flows,  the  Government  has  planned  large-scale  infrastructure  projects  (water, 
transportation, nuclear energy) for which it needs foreign and private funds. A project linking 
the Dead Sea to the Red Sea was expected to start in 2018, but was postponed as Jordan could 
not  reach an  agreement  with  Israel  on how to  construct  the canal.  The project  faced  further 
delays  in  2019  as  Israel-Jordan  relations  soured  over  Palestine.  Jordan  is  also  seeking  to 
become a regional logistics hub, notably for electric and transport networks.  

The  authorities  have  also  taken  some  important  steps  to  improve  Jordan’s  business 
climate.  Key  measures  include:  passing  amendments  to  the  insolvency,  inspections,  and 
secured  lending  laws;  revamping  the  PIM/PPP143  framework;  launching  a  private  credit 
bureau;  opening  previously-restricted  economic  activities  to  FDI;  eliminating  and  merging 
multiple  licenses;  implementing  electronic  filing  and  payment  for  labour  taxes  and  other 
mandatory  contributions;  and  automating  business  registration.  In  2019,  the  Government 
proposed  amendments  to  the  investment  legislative  framework,  which  included  an  investor 

143 Public Investment Management/Public Private Partnership 

275 

 
 
 
 
 
 
 
 
                                                 
 
grievances by law No.163 to implement a mechanism to solving disputes at an early stage and 
creating  an  institutional  mechanism  for  dispute  management  and  maintaining  incentives 
granted  to  investments  for  a  period  of  no  less  than  10  years  following  the  date  of  its 
establishment.  These  improvements  have  been  reflected  in  recent  business  environment 
assessments, including Jordan’s ranking among the top improvers in the World Bank’s 2020 
Doing Business Report.  

According  to  the  World  Bank  2020  "Ease  of  Doing  Business"  index  which  ranks  190 
countries,  Jordan  ranked  75th  in  the  world  for  overall  ease  of  doing  business,  a  big 
improvement compared to the 2018 where it ranked 104th. Jordan scored a distance to frontier 
(DTF)144  of  69.0  out  of  100  –  an  increase  of  8.02  in  DTF  score  compared  to  2018.  The 
country was among the top 10 improvers in 2019. This significant jump, marking a contrast 
with  years  of  decline,  was  mainly  a  result  of  considerable  improvement  with  regards  to  the 
access  of  private  firms  to  credit.  At  the  same  time,  Jordan  continues  to  lag  behind  top-
performing  regional  peers  in  a  number  of  areas,  including  resolving  insolvency,  enforcing 
contracts, and protecting minority investors. 

6. 

CONCLUSIONS  

Overall the value of trade between the EU and Jordan has increased since the Association 
Agreement has come into force. Goods continue to account for the majority of trade, although 
services  and  foreign  investment  are  also  present.  In  2019,  EU  exports  have  experienced  an 
increased  by  5%  compared  to  previous  year  while  EU  imports  from  Jordan  have  also 
increased  by  17%  in  comparison  to  2018.  The  EU  maintains  a  trade  surplus  of  EUR  3.4 
billion with Jordan.  

The  Syria  crisis  has  closed  many  traditional  trade  routes  used  by  Jordan.  The  Decision  on 
relaxation  of  Rules  of  Origin,  adopted  in  July  2016  and  revised  in  2018,  was  designed  to 
boost Jordanian exports to  the EU and to  support  formal integration of Syrian  refugees into 
the Jordanian economy though the results can only be evaluated in the medium term. Further 
actions  are  planned  to  raise  awareness  of  this  initiative  and  to  promote  the  business 
opportunities it provides.  

DCFTA  negotiations  have  not  yet  started,  however,  the  importance  of  the  DCFTA  to 
improve the resilience of the Jordanian economy was formally recognised in the Partnership 
Priorities145. On the other hand, both Jordanian public and private sector have expressed their 
reservations on a future DCFTA claiming that trade figures between the EU and Jordan do not 
support  a  further  extension  of  the  ongoing  FTA.  Jordan’s  Government  and  private  sector 
community have shared their aspiration to see further access of Jordanian produce into the EU 
market before enaging in new negotiations. At the ame time, Jordan’s significant progress in 
inproving its business climate should further EU investments and provides an opporunity to 
modernis ethe FTA to also include services and investments. 

144  The  DTF  score  is  a  measurement  used  by  the  World  Bank  to  assess  the  absolute  level  of  regulatory 

performance in economies over time. The higher score the better. 

145  See http://data.consilium.europa.eu/doc/document/ST-12384-2016-ADD-1/en/pdf 

276 

 
 
 
 
 
 
 
 
 
                                                 
7 

STATISTICS 

JORDAN 

277 

Merchandise trade EU27 2014-2018 20152016201720182019Merchandise trade EU27 with Jordan (mio €)Imports319277324273321Exports3.6303.7403.7113.2943.436Balance3.3113.4643.3883.0213.115Share Jordan in EU27 trade with Extra-EU27Imports0,0%0,0%0,0%0,0%0,0%Exports0,2%0,2%0,2%0,2%0,2%Total (I+E)0,1%0,1%0,1%0,1%0,1%Share EU27 in trade Jordan with worldImports20,3%23,0%20,2%20,4%18,2%Exports2,2%2,4%2,4%2,7%3,0%Total (I+E)15,8%17,9%16,0%16,1%14,2%Source Trade G2 Statistics/ISDB 18-mars-20Trade EU27: Eurostat COMEXT;  Trade Jordan: IMF DotsTotal merchandise trade EU27 with Jordan (mio €)Total merchandise trade EU27 with Extra-EU28 (mio €)Growth Growthmio €annual %mio €annual %Imports2733214717,2%Imports1.907.5651.934.94427.3791,4%Exports3.2943.4361424,3%Exports2.059.8822.132.01572.1333,5%Balance3.0213.11595Balance152.317197.07144.754Total trade3.5673.7571895,3%Total trade3.967.4474.066.95999.5122,5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Jordan (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports2934516,5%Imports118.891121.6442.7532,3%Exports720691-29-4,1%Exports169.000181.82512.8257,6%Balance691657-34Balance50.10960.18110.072Total trade749725-25-3,3%Total trade287.891303.46915.5785,4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Jordan (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports2442874217,3%EU27 imports1.788.6741.813.30024.6261,4%EU27 exports2.5742.7451716,7%EU27 exports1.890.8821.950.19059.3093,1%Balance2.3292.459129Balance102.208136.89034.682Total trade2.8183.0322147,6%Total trade3.679.5563.763.49183.9352,3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Jordan (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports5076009418,5%Imports824.543824.015-528-0,1%Exports769753-16-2,1%Exports928.420968.64840.2284,3%Balance262153-109Balance103.877144.63340.756Total trade1.2751.353786,1%Total trade1.752.9631.792.66239.7002,3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Jordan (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports535472486507600Imports642.682776.924784.743824.543824.015Exports809737709769753Exports750.713849.023855.477928.420968.648Balance274265223262153Balance108.03172.09970.734103.877144.633Total trade1.3441.2091.1951.2751.353Total trade1.393.3951.625.9481.640.2201.752.9631.792.662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Jordan (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward814Inward5.402.5316.647.4477.199.7797.275.8937.196.848Outward2.0352.942Outward7.050.0968.511.8379.145.3538.833.6068.750.004FDI FlowsFDI FlowsInward-387134Inward143.012803.285328.703209.462-67.421Outward130156Outward203.7111.016.490449.657180.796-103.421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsJordanJordan20182019Extra-EU28Jordan2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Jordan01.0002.0003.0004.00020152016201720182019Merchandise trade EU27 with Jordan (mio €)ImportsExportsBalance 
 
 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE  EU-
LEBANON ASSOCIATION AGREEMENT 

1. 

INTRODUCTION 

The EU and Lebanon signed on 17 June 2002 an Association Agreement146 creating a Free 
Trade  Area  (FTA).  Its  economic  and  trade  provisions  were  provisionally  applied  as  from 
2003,  based  on  an  Interim  Agreement  which  entered  into  force  on  1  March  2003.  The 
Association Agreement (hereinafter referred to as ‘the Agreement’) fully entered into force on 
1  April  2006.  The  Agreement  liberalised  two-way  trade  in  industrial  goods  with  an 
asymmetrical transition period of 12 years in favour of Lebanon. The phased-in liberalisation 
of industrial products by Lebanon started in 2008 and was completed in 2015.  

In regard to agri-food trade, the Agreement as of its provisional application,  granted tariff-
free access of most Lebanese agricultural and processed agricultural products to the EU 
market (i.e. 89% of products  enter tariff  and quota free) with  only 27 agricultural  products 
facing  a  specific  tariff  treatment,  mostly  Tariff  Rate  Quotas  (TRQs).  On  the  other  hand, 
agricultural liberalisation by Lebanon has been more limited.  

In  2010,  the  EU  and  Lebanon  signed  an  additional  protocol  on  a  Dispute  Settlement 
Mechanism which entered into force on 1 September 2018.  

In  2014,  Lebanon  signed  the  Regional  Convention  on  Pan-Euro-Mediterranean  preferential 
rules of origin  (PEM  Convention). The country notified its ratification in October 2017 and 
formally joined on 1 December 2017147.  

2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGRESS AND FOLLOW-UP ACTIONS  

In  2019,  an  intense  dialogue  took  place  on  rules  of  origin:  EU  and  Lebanon  agreed  to 
bilaterally modernise the applicable rules of origins between EU and Lebanon in the context 
of the Pan-Euromed-Convention on rules of origin. 

New  trade  barriers  were  raised  in  2019,  notably  the  temporary  additional  duty  of  3%  on 
most  imports  and  the  additional  duties  on  imports  of  some  selected  products.  These  issues 
were discussed in the Joint Working Group and raised several times at the highets level vis-à-
vis  the  Lebanese  authorities.  Some  trade  barriers  introduced  in  2019  were  discussed  and 
subsequently  solved:  the  mandatory  requirement  of  registration  of  factories  for  certain 
products,  which  is  not  being  implemented  by  Lebanon,  and  the  double  certification 
requirement for imports, which was removed. 

Lebanon is still in the process of applying to join the WTO, wich the EU continue to support, 
including by technical assistance if requested by the Goverment.  

146  https://ec.europa.eu/world/agreements/downloadFile.do?fullText=yes&treatyTransId=3121 
147  For  more  information  see  https://ec.europa.eu/taxation_customs/business/calculation-customs-duties/rules-

origin/general-aspects-preferential-origin/arrangements-list/paneuromediterranean-cumulation-pem-
convention_en  

278 

 
 
 
 
 
 
 
 
 
                                                 
3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The  EU-Lebanon  Sub-Committee  on  “Industry,  Trade  and  Services,  Customs”  last  met 
on 7 March 2018 and was already reported on in the 2019 FTA Implementation Report. 

The EU-Lebanon Joint Working Group on Trade and Investment is a informal forum set 
up in 2017 for frequent technical level discussions, with a focus to help Lebanon take more 
advantage  from  their  free  access  to  the  EU  market,  while  also  addressing  barriers  EU 
operators  face  when  exportng  to  Lebanon.  It  aims  at  improving  economic  cooperation  and 
trade dialogue and at informing the Sub-Committees. In 2019, the Joint Working Group was 
convened  three  times.  The  main  topics  addressed  were  the  EU  support  to  Lebanese  export 
capacity  in  particular  in  the  the  agri-food  or  pharmaceutical  sectors,  support  to  joining  the 
Entreprise Europe Network, modernising the existing Rules of Origins to benefit both sides as 
well  as  the  trade  restrictive  measures  taken  by  Lebanon  in  form  of  import  duties  and    new 
customs procedures. 

4. 

SPECIFIC AREAS OF IMPORTANCE  

Lebanon is suffering from what most experts describe as the worse economic and financial 
crisis in decades, with a public debt estimated at more than 150% of GDP, a negative balance 
of  payment  of  -7,4%,  and  growing  unemployment  (around  20%  in  2019),  compounded  by 
very weak growth since 2011, with the country entering into recession in 2019 (according 
to recent figures by Central Administration of Statistics). The lack of liquidity has provoked a 
hard currency crisis and severe restrictions being imposed by the banks on access to private 
bank  deposits  as  well  as  credit  for  SMEs.  The  impact  of  the  crisis,  together  with  systemic 
governance issues, prompted massive demonstrations in October 2019, which brought the 
country  to  a  halt  and  provoked  the  government  to  stand  down.  Currently,  all  imports  are 
severily  restricted  due  to  the  unavailability  of  credit  facilities  in  hard  currency  for  most 
companies,  while  some  measures  are  being  put  in  place  to  facilitate  the  importation  of 
essential items.  The situation hits particularly SMEs, and according to  several  studies  more 
than 100,000 jobs have been lost since the beginning of the demonstrations in October 2019. 
148 
A new government was appointed in February 2020 which has the major task of redressing 
the  dire  socio-economic  and  financial  crisis  and  is  under  pressure,  domestic  and 
internationally, to deliver on a set of urgent reforms in order to regain the trust of the domestic 
and international community. It is in this tense social, political and economic context that the 
EU and Lebanon will have to ensure that trade dialogue remains open and bilateral trade 
dynamic. It is to be noted that they are some critical voices against the free trade agreement 
with the EU and in particular the trade deficit of Lebanon towards the EU, held accountable of 
the balance of payments crisis.  

The EU and Lebanon adopted Partnership Priorities in November 2016 for the period 2016-
2020 as well as an annexed EU-Lebanon Compact identifying the most important reforms and 
development priorities and outlining mutual commitments and actions to address the impact 
of  Syria  crisis.  For  the  period  2017-2020,  the  EU's  bilateral  assistance  to  Lebanon  under 
the  European  Neighbourhood  Instrument  has  an  indicative  allocation  of  €186.5  million-

148  See  notably  http://www.businessnews.com.lb/cms/Story/StoryDetails/7358/160,000-jobs-lost-Businesses:-

10-percent-closed 

279 

 
 
 
 
 
                                                 
€227.9 million. Lebanon is eligible under the EU External Investment Plan and, through the 
EU  blending  mechanism  “Neighbourhood  Investment  Platform”,  has  benefitted  from  EU 
grants (€50 million) that have leveraged total investments of €530 million, mainly via loans 
from  the  European  Investment  Bank  and  the  Agence  Francaise  de  Développement,  in  the 
sectors  of  water,  roads  and  local  urban  development.  Under  the  EU  twinning  tool,  the 
Lebanese  public  administration  is  partnering  with  European  administrations  for  mutual 
learning  and  capacity  building  through  sharing  of  EU  best  practices.  On-going  twinning 
projects  take  place  and  Lebanese  public  administrations  also  benefits  from  the  Technical 
Assistance and Information Exchange (TAIEX) tool149. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1  

Economic environment 

Since 2011, following the Arab springs, the Syrian conflict and internal political tensions, the 
Lebanese  economic  growth  had  slowed  down.  In  2019,  it  suffered  a  sharp  decline  amid 
economic  difficulties,  political  turmoil  and  pressing  social  demands.  Estimated  at  -1.9%  in 
2018, GDP contracted by -6.9% in 2019, driven by downturns in private consumption and 
investment.  

The  Lebanese  state  has  become  over-indebted  and  lacks  liquidity.  Lebanon  is  the  third 
most  indebted  country  in  the  world  after  Japan  and  Greece.  Public  debt  increased  to 
178%  of  GDP  in  2019  compared  to  155%  of  GDP  in  2018,  with    37%  of  public  debt 
denominated in foreign currency. The current account deficit represented -20.6% of GDP 
in 2019 compared to 24.3% of GDP in 2018.  

The traditional engines of growth in Lebanon (real estate, construction and tourism) are 
at  a  standstill.  As  for  the  resilient  banking  sector,  it  has  shown  to  bevulnerable,  revealing 
worrying  prospects  for  growth.  The  seasonally-adjusted  Purchasing  Managers’  Index  (PMI) 
plummeted as low as 37 points in November 2019, which indicates the country is still deep in 
contractionary  territory  (below  50  points).  To  respond  to  the  liquidity  squeeze,  banks  have 
imposed informal capital controls, limiting withdrawals and transfers abroad.  

Inflation  fell  from  4.0%  in  2018  to  2.9%  in  2019.  However,  as  consumption  goods  are 
largely  imported,  the  Lebanese  currency  LBP  depreciation  in  parallel  markets  will  fuel 
consumer  prices  in  the  country.  Unemployment  increased  to  11.4%  in  2019  compared  to 
6.1% in 2018.  

5.2 

Trade in goods 

In 2019, the EU remains Lebanon’s main trading partner, accounting for 32% of the total 
trade in goods, before the United States and China (7%), Switzerland, Russia, the United Arab 
Emirates  and  Turkey  (around  5%  each).  However,  the  relative  share  of  Switzerland  and 
Russia doubled from 2018 to 2019. In 2002, the year before the Agreement was provisionally 
applied,  the  value  of  trade  in  goods  was  €3.4  billion  and  by  2019  it  reached  €  6,2  billion, 

149  https://ec.europa.eu/neighbourhood-enlargement/neighbourhood/countries/lebanon_en 

280 

 
 
 
 
 
 
 
 
 
                                                 
hence almost doubling over this period. Lebanon is the 5th most important trading partner of 
the EU in the Euromed region. Total trade in goods between the EU and Lebanon decreased 
by 15 % from € 7,3 billion in 2018 to € 6,2 billion in 2019. 
The value of EU exports to Lebanon doubled between 2002 and 2019, from €2,9 billion in 
2002 to €5,8 billion in 2019. In 2019 the EU exports shrank by 15,6% compared to 2018. 
EU  exported  mainly  mineral  products  (34%),  products  of  the  chemical  or  allied  industries 
(14%), machinery and appliances (9%), foodstuffs, beverages, tobacco (7%) and live animals; 
animal  products  (6%)  -  without  major  changes  compared  to  2018.  The  biggest  decreases 
between 2018 and 2019 can be observed in exports of transport equipment (- 41%) and animal 
or vegetable fats and oils (-38%). The only significant increase concerns vegetable products 
(+ 27%) and pearls, precious metals and art (+17%). The EU is the first source of Lebanese 
imports  (37%),  followed  by  the  United  States  (9%),  China  (8%)  and  Russia  (7%).  The 
relative  share  of  the  EU  decreased  compared  to  2018,  where  it  represented  41%,  while 
Russia’s  share  increased  significantly,  where  it  accounted  for  less  than  3%.  The  three  main 
EU  MS  exporters  to  Lebanon  are  Italy,  Greece  followed  by  Germany,  representing  all 
together 50% of EU exports. 

The value of EU imports from Lebanon have also doubled from less than €0.2 billion in 
2002 to more than €0.4 billion in 2019. In 2019, EU imports shrank by 9% year-on-year. 
The EU is the third destination for Lebanon exports (9%), after Switzerland (22%) and the 
United  Arab  Emirates  (14%).  This  is  an  important  change  to  2018,  where  the  United  Arab 
Emirates ranked first (14%) , followed closely by the EU (13%), then Syria (6%). The main 
categories  of  imported  products  are  base  metals  and  articles  thereof  (32%),  foodstuffs, 
beverages,  tobacco  (15%),  plastics,  rubber  and  articles  thereof  (12%).  The  three  main 
importing EU Member States are the Netherlands (16%), France (14%) and Greece (12%). 

There is a trade deficit between Lebanon and the EU over the last 5 years, with, however, a 
noteworthy diminution of the deficit in 2019 (€ 5,3 billion) compared to the previous year (€ 
6,3 billion), where EU exports (- 16%) shrank more than EU imports (- 9%). Lebanon’s trade 
balance with all its partners is negative since 2015. In 2019, it amounted to € 13,2 billion. The 
EU’ share is 40%, while the United States and China account each for approximately 10%.  

5.3 

Trade in agricultural products  

Total  trade  in  agri-food  products  between  the  EU  and  Lebanon  remained  stable  around  €  1 
billion between 2015 and 2019.  Between 2018 and 2019, EU agri-food exports decreased 
by  almost  7%  from  €  979  million  to  914  million.  Over  the  same  period,  EU  agri-food 
imports increased by 8%, from €90 to €98 million. In 2019, the EU mainly exported dairy 
produce,  live  animals  and  cereals.  The  EU's  main  agri-food  imports  were  preparations  of 
vegetables, fruits and nuts and tobacco and tobacco products. 

281 

 
 
 
 
 
 
 
 
TRQs granted by the EU to Lebanon 

Regarding  agricultural  tariff  rate  quotas  (TRQs),  the  fill  rate  by  Lebanon  was  very  low  in 
2019. The country only  used 6% of its olive oil quota, 5% of its quota for table grapes and 
only 2% of its quota for preserved and prepared tomatoes. All other quotas remained unused. 

Information on the utilisation of the TRQ granted by Lebanon to the EU was not available at 
the time of drafting of this staff working document. 

5.4 

Trade in services and Foreign Direct Investments 

Total  trade  in  services  between  the  EU  and  Lebanon  is  relatively  stable  around  €2  billion 
since 2014. There has, however, been a decrease of 13% in the value of services exchanged 
between 2017 and 2018. Lebanon’s provision of services to the EU increased between 2014  
and 2019, from € 0,7 billion to € 1 billion. EU exports of service to Lebanon fluctuated in the 
same period around € 1,2 billion. The EU has a small surplus when it comes to services.  

In 2018, EU FDI stocks in Lebanon amounted to €2,2 billion, while inward FDI stocks from 
Lebanon to the EU accounting for €4,8 billion. In 2018, EU FDI flows accounted for € 106 
million, while flow of Lebanese FDI reached € 363 million.  

According  to  The  World  Bank  Doing  Business  Index  2020  ranking  190  countries,  in  2019 
Lebanon ranked 143rd in the world  on the  ease of doing business  (it ranked 142nd  in  2018), 
with  a  distance  to  frontier  (DTF)150  score  of  54.3  out  of  100  –  stable  if  compared  to  2018, 
when the value was 54.4.  

150  The  DTF  score  is  a  measurement  used  by  the  World  Bank  to  assess  the  absolute  level  of  regulatory 

performance in economies over time. The higher the score, the better. 

282 

201720182019F&VNew potatoes26.000t0%0%0%F&VNew potatoes & so-called 'new potatoes'52.000t0%0%0%F&VSo-called 'new potatoes'52.000t0%0%0%F&VTomatoes21.000t0%0%0%F&VGarlic3.000t0%0%0%F&VGarlic5.000t0%0%0%F&VOlives1.000t0%0%0%F&VOlives, provisionally preserved1.000t0%0%0%F&VTable grapes (tariff 0%)6.000t11%8%5%F&VTable grapes (tariff 4.6%)4.000t1%0%0%F&VApples10.000t0%0%0%F&VApricots5.000t0%0%0%F&VCherries5.000t0%0%0%F&VPeaches, including nectarines10.000t0%0%0%F&VPlums & sloes5.000t0%0%0%OilsOlive oil1.000t4%8%6%F&VTomatoes, prepared or preserved1.000t1%1%2%Utilisation rate of TRQs opened by the EU to LebanonSectorTRQ descriptionTRQ QuantityUnitUtilisation in TRQ period ending in: 
 
 
 
 
 
 
 
 
 
                                                 
6. 

CONCLUSIONS  

Overall the value of trade between the EU and Lebanon has increased in both directions 
since the Agreement entered into force. EU exports have grown more strongly than Lebanese 
exports  and  consequently  the  EU  trade  surplus  has  widened.  Goods  continue  to  account  for 
the majority of trade.  

The private sector, in particular SMEs, forms the cornerstone of the Lebanese economy and 
remains the main source of job creation in Lebanon. It continues to suffer from an inadequate 
business  environment,  weak infrastructure  and a  lack of structural  reforms. This  situation is 
aggravated by the severe liquidity crisis  and  consequent  unavailability of  credits for private 
companies,  particularly  SMEs,  which  is  already  provoking  a  substantial  reduction  of  trade 
volumes,  particularly  imports,  likely  to  aggravate  during  2020.  Urgent  trade  financing 
measures would be essential to reverse this negative trend. There is also untapped potential in 
the services sector. Enhancing the competitiveness of the Lebanese service sector could lead 
to economic growth in selected sectors of strategic importance for the country.  

The main challenges for 2020 will be to re-establish a good strategic partnership around the 
Association  Agreement  with  the  newly  appointed  Lebanese  Government,  strengthening 
Lebanon’s confidence in the potential benefits of the Agreement and addressing satisfactorily 
the ongoing issues restricting trade and investment in Lebanon. The EU as a major partner of 
Lebanon stands ready to assist.  

283 

 
 
 
 
 
 
 
7. 

STATISTICS 

LEBANON 

284 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Lebanon (mio €)Imports370371411477433Exports6 1766 2616 8426 8445 776Balance5 8075 8906 4316 3675 344Share Lebanon in EU27 trade with Extra-EU27Imports0.0%0.0%0.0%0.0%0.0%Exports0.3%0.3%0.3%0.3%0.3%Total (I+E)0.2%0.2%0.2%0.2%0.2%Share EU27 in trade Lebanon with worldImports39.3%37.8%40.0%39.1%37.4%Exports10.8%9.7%7.9%12.1%8.8%Total (I+E)34.3%33.1%34.6%34.8%31.8%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Lebanon: IMF DotsTotal merchandise trade EU27 with Lebanon (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports477433-44-9.3%Imports1 907 5651 934 94427 3791.4%Exports6 8445 776-1 068-15.6%Exports2 059 8822 132 01572 1333.5%Balance6 3675 344-1 023Balance152 317197 07144 754Total trade7 3216 209-1 112-15.2%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Lebanon (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports909878.0%Imports118 891121 6442 7532.3%Exports979914-65-6.6%Exports169 000181 82512 8257.6%Balance889817-72Balance50 10960 18110 072Total trade1 0691 012-57-5.4%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Lebanon (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports387335-52-13.4%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports5 8654 862-1 003-17.1%EU27 exports1 890 8821 950 19059 3093.1%Balance5 4784 527-951Balance102 208136 89034 682Total trade6 2525 197-1 055-16.9%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Lebanon (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports1 091968-123-11.3%Imports824 543824 015-528-0.1%Exports1 3361 148-188-14.1%Exports928 420968 64840 2284.3%Balance245180-65Balance103 877144 63340 756Total trade2 4282 117-311-12.8%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Lebanon (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports7558137351 091968Imports642 682776 924784 743824 543824 015Exports1 1861 3571 2351 3361 148Exports750 713849 023855 477928 420968 648Balance431544500245180Balance108 03172 09970 734103 877144 633Total trade1 9402 1701 9692 4282 117Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Lebanon (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward3 6462 5584 2134 7394 846Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward1 7782 3742 1942 264Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward1 234151 052363Inward143 012803 285328 703209 462-67 421Outward22106Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsLebanonLebanon20182019Extra-EU27Lebanon2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Lebanon01 0002 0003 0004 0005 0006 0007 0008 00020152016201720182019Merchandise trade EU27 with Lebanon (mio €)ImportsExportsBalance 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE  EU-
MOROCCO ASSOCIATION AGREEMENT 

1. 

INTRODUCTION 

The  EU  and  Morocco  established  a  Free  Trade  Area  (FTA)  as  part  of  the  EU-Morocco 
Association  Agreement  (the  “Agreement”),  signed  in  1996,  which  entered  into  force  on  1 
March 2000. Trade for industrial  products  is  now entirely liberalised, while market  opening 
for  agricultural  products  is  also  substantial.  The  Agreement  provides  for  a  reciprocal 
liberalisation of trade in goods, with elements of asymmetry in favour of Morocco: since the 
day of entry into force of the Agreement, all industrial products covered could be exported by 
Morocco to the EU tariff-free, while Morocco benefited from a transitional period of 12 years. 
The transitional period for Morocco to reduce its tariffs on industrial products to zero ended in 
March 2012.  

The  EU  and  Morocco  also  signed  an  agreement  on  additional  liberalisation  of  trade  in 
agricultural  products,  processed  agricultural  products,  fish  and  fisheries  products,  which 
entered  into  force  in  October  2012.  While  the  dismantling  of  remaining  tariffs  on  the  EU 
exports  to  Morocco  covered  by  eventual  liberalisation  is  due to  be  completed  by  1  October 
2020,  a  number  of  products  will  remain  subject  to  tariff  rate  quotas  when  exported  to 
Morocco. Only a few Moroccan products remain subject to tariff rate quotas when imported 
into the EU. 

A protocol establishing  a  Dispute Settlement  Mechanism was agreed  upon by the EU and 
Morocco  and  entered  into  force  in  2012.  Morocco  also  signed  the  Regional  Convention  on 
pan-Euro-Mediterranean preferential rules of origin (PEM Convention) on 18 April 2012 and 
ratified  it  in  May  2019.  Negotiations  in  view  of  an  Agreement  for  the  Protection  of 
Geographical Indications (GIs) were concluded in 2015, and ratification is pending on both 
the EU and Morocco's sides. 

Negotiations for a Deep and Comprehensive Free Trade Agreement started in 2013. The 
last  round  took  place  in  April  2014  and  negotiations  were  put  on  hold  at  the  request  of 
Morocco. The Joint Statement 151of the EU –Morocco Association Council that took place in 
June 2019, after several years, refers to the aim of creating an area of economic convergence 
and social cohesion. It specifically points to the need of “making better use of the possibilities 
offered  by  the  bilateral  trade  relationship,  the  relaunching  of  negotiations  for  a  Deep  and 
Comprehensive Free Trade Agreement (DCFTA) on the basis of the expected benefits for both 
parties,  the  gradual  move  towards  regulatory  convergence,  close  bilateral  cooperation 
regarding  customs,  good  fiscal  governance,  the  protection  of  personal  data  and  a 
strengthening of the connectivity of physical and digital infrastructures”. Negotiations for a 
Deep and Comprehensive Free Trade Agreement are hence expected to resume. 

151 

https://www.consilium.europa.eu/en/press/press-releases/2019/06/27/joint-declaration-by-the-european-

union-and-the-kingdom-of-morocco-for-the-fourteenth-meeting-of-the-association-council/ 

285 

 
 
 
 
 
                                                 
2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGRESS AND FOLLOW-UP ACTIONS  

The reinvigorating of the EU-Morocco trade relation overall and the perspective of relauching 
sub-committee  meetings  and  Deep  and  Comprehensive  Free  Trade  Agreement  negotiations 
led to increased technical exchanges on trade policy issues in 2019, which have to be taken 
forward  in  2020.  A  technical  seminar  was  organised  in  Rabat  in  October  2019  to  review 
trade policy developments that took place in the EU and in Morocco since the suspension of 
contacts in 2015. 

In  terms  of  market  access,  two  new  barriers  appeared.  One  case  concerns  the  Cmim 
marking,  which  since  February  2019  needs  to  be  affixed  on  products  subject  to  specific 
technical regulation (currently electrical products and toys, but the system will be extended to 
further  families  of  products).  Although  the  Cmim  marking  is  largely  equivalent  to  the 
European CE marking, the latter does no longer suffice on products imported into Morocco. 
Constructive dialogue took place between the EU and Moroccan authorities who clarified the 
application of the Cmim requirements for EU operators. The other case concerns exports of 
pharmaceutical products to Morocco, notably the requirement to localise the production of 
drugs  in  order  to  obtain  marketing  authorisations.  One  older  barrier  linked  to  the 
implementation of the 2016 Foreign Trade Law was removed after initial concerns about 
the possible impact of the Law did not materialise. Other long-standing market access issues 
await the organisation of trade subcommittees to provide a forum for raising them.  

Morocco is a user of trade defence measures, some of which affect imports from the EU. In 
2019,  Morocco  imposed  safeguard  measures  on  the  imports  of  hot  rolled  steel  plates  as 
well  as  steel  and  iron  tubes  and  pipes  via  additional  ad  valorem  duties  of  25%.  The  EU 
participated  actively  in  the  public  hearing  and  submitted  written  observations.  These  new 
measures  come  on  top  of  the  already  existing  safeguard  measures  targeting  imports  of  wire 
rods  and  reinforcing  bars,  as  well  as  cold-rolled  steel  sheets,  neither  plated  nor  coated,  and 
plated  or  coated  sheets.  Beyond  the  steel  sector,  Morocco  also  imposed  in  2019  safeguard 
measures  on  imported  coated  wood  boards.  Following  intensive  contacts  with  the  local 
authorities,  the  EU  obtained  80%  of  the  tariff  quota  of  26,460  tonnes  exempted  from  the 
additional duties. In 2019, following a mid-term review investigation on the implementation 
of the safeguard measure on imports of paper reels and reams, the tariff rate quota for duty 
free imports was increased to 23,500 tonnes in 2019 and 25,500 tonnes in 2020. Still in 2019, 
Morocco  launched  an  antidumping  investigation  on  imports  of  insuline  from  a  Danish 
company.  

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The last Sub-Committees on “Industry, Trade, and Services” and “Internal Market” were held 
in  December  2013  and  both  the  last  Sub-Committee  on  Agricultural  and  Fisheries  Products 
and the last Sub-Committee on Customs Cooperation took place in 2015. Committees did not 
meet in 2019 the Trade committee met in June 2020 and the AGRI committee met on 1st July 
2020. 

286 

 
 
 
 
4. 

SPECIFIC AREAS OF IMPORTANCE  

On 16 January 2019 the European Parliament approved the amendment of the protocols of the 
EU-Morocco  Association  Agreement,  extending  the  tariff  preferences  laid  down  in  the 
Association  Agreement  to  products  originating  in  Western  Sahara.  Following  the 
ratification by the Moroccan Parliament, the amendment entered in force on 19 July 2019152. 
Products from Western Sahara – in areas as diverse as fishery and agricultural products and 
phosphates  and  its  derivate  products  –  are  thus  imported  into  the  EU  under  trade 
preference.The European Parliament on 12 February 2019 also approved the new Sustainable 
Fisheries  Partnership Agreement with  Morocco, which also  covers the waters of Western 
Sahara. The EU ratified it in early 2019 and Morocco did so on 18 July 2019 allowing for the 
entry into force153.The entry into force of these agreements paved the way for the relaunch of 
political dialogue in 2019 and was followed by technical cooperation between the two parties 
to ensure the implementation of these agreements. It is to be noted that there are some Court 
cases pending in the EU on these agreements.  

5. 

EVOLUTION OF BILATERAL TRADE 

5.1  

Economic environment 

Still  highly  reliant  on  a  volatile  agricultural  sector,  Morocco's  economic  growth 
decelerated to 2.3% in 2019 (compared to 3% in 2018), marking one of the weakest growth 
rates  since  2007,  after  that  of  2016.  Inflation  remained  low  in  2019,  averaging  1.2%,  as  a 
result of a slowdown in domestic demand and a fall in international commodity prices. 

Morocco's foreign trade accounts for 88% of GDP (World Bank, 2018). Propped up by the 
signature of over fifty FTAs, Morocco’s trade in goods quadrupled in the past two decades, to 
reach € 72 bn in 2019 (of which € 26bn worth of exports and € 46bn of imports) (Morocco's 
Exchange Office). 

Morocco’s industrial development strategy, based on the emergence of ecosystems revolving 
around large foreign investors, notably from the EU, has supported the diversification of 
Moroccan  exports  and  the  increase  in  value  added  as  a  result  of  a  more  active  insertion  in 
global value chains. Notably, the establishment of leading European car manufacturers in 
Morocco led to the emergence of the automotive sector as the leading export sector since 
2014.  In  2019,  according  to  the  Moroccan  Exchange  Office,  automotive  sector  sales 
represented  27%  of  Moroccan  total  exports,  followed  by  agriculture  and  agrifood  (22%), 
phosphates  and  derivatives  (17%),  textile  and  leather  (13%)  and  aeronautics  (6%).  On  the 
import  side,  capital  goods  accounted  for  the  largest  share  of  imports  (26%),  followed  by 

152   https://www.consilium.europa.eu/en/documents-publications/treaties-

agreements/agreement/?id=2018036&DocLanguage=en 

153  https://www.consilium.europa.eu/en/documents-publications/treaties-

agreements/agreement/?id=2018051&DocLanguage=en 

287 

 
 
 
 
 
                                                 
finished  consumer  goods  (23%),  semi-finished  products  (21%),  energy  products  (15%)  and 
food products (10%). 

Morocco’s  external  position,  while  sustainable,  has  some  vulnerabilities  deriving  from  a 
structurally  negative  trade  balance  driven  by  the  still  relatively  limited  export  base  and 
dependence on energy imports. After narrowing until 2015, the trade in goods deficit widened 
again to reach around €20bn in 2019, representing 18.5% of GDP. The FTA signed between 
Morocco and Turkey in 2004 came under increased criticism in 2019 owing to the large  and 
increasing deficit faced by Morocco, and is currently under review as both countries agreed to 
discuss new measures to ensure more balanced bilateral trade relations. The inverse trend is 
reported  for  trade  in  services.  Morocco  has  tripled  its  balance  of  services  surplus  since 
2004 (earliest data available) to € 8bn in 2019. Morocco’s trade in services, which totalled € 
26bn in 2019, consist mainly of travels and transports (61%). 

5.2 

Trade in goods 

Total trade in goods between the EU and Morocco more than tripled since 2002 (earliest 
data available) to reach € 39.6bn in 2019. EU-Morocco trade increased by 5% year - on -year 
and by 42% in the past 5 years. In 2019, the EU is Morocco's main partner, accounting for 
56%  of  Morocco's  total  trade,  before  China  (7%),  the  USA  (6%),  Turkey  (4%)  and  India 
(3%). With a share of 24% in  total  trade in  the  Euromed region,  Morocco is  the  main EU 
trade partner in the region, before Algeria and Israel (20% each). 

With a market share of 63% of total Moroccan imports, the EU is Morocco's main supplier. 
EU exports to Morocco more than tripled (3.2x) between 2002 and 2019, up to €23.4 bn 
(+33% between 2014 and 2019, and +4% between 2018 and 2019). In 2019, the EU mainly 
exported  automobile  products  (12%),  chemicals  (10%),  petroleum  and  petroleum  products, 
non electrical  machinery, electrical  machinery  (9% each), textile and food (7%  each). Main 
EU exports to Morocco came from Spain (36%), France (21%), Germany and Italy (9% each). 

The EU is also Morocco's main client : 51% of Morocco's total exports are destined to the 
EU. EU imports from Morocco almost tripled (2.8x) since 2002, totaling €16.3bn in 2019 
(+58% since 2014 and +6% compared to a year earlier). In 2019, the EU mainly imported 
electrical machinery (22%), food (21%), automobile products (17%) and clothing (16%) from 
Morocco. Spain (42%), France (31%) and Germany (5%) are the three main EU importers. 

The EU's trade surplus with Morocco is on an increasing trend. In 2019, the trade surplus 
reached € 7billion (4.6x compared to 2002 and up by 1.2x in the past 5 years). Nevertheless, 
Morocco's  trade  with  the  EU  is  more  balanced  than  that  with  other  trading  partners. 
Morocco's trade deficit with the EU represents 34% of Morocco's overall trade deficit, while 
bilateral trade accounts for 56% of the country's total trade. The coverage rate of imports by 
exports  is  of  72%  with  the  EU  (vs.  only  31%  for  the  USA,  24%  for  Turkey  and  5%  for 
China). 

288 

 
 
 
 
 
5.3 

Trade in agricultural products  

Total  trade  in  agricultural  products  between  the  EU  and  Morocco  more  than  tripled 
(3.3x) between 2002 to 2019 to € 4bn, including an increase of 35% over the past 5 years and 
of 10% year-on-year (2019/18). 
In 2019,  Morocco was  the 15th  EU agrifood trade partner worldwide (21st client  for EU 
exports  and  12th  supplier  for  EU  imports).  In  details,  Morocco  was  the  EU’s  2nd  client  in 
vegetable  oils  other  than  palm  and  olive  oils,  4th  in  wheat,  9th  in  live  animals  and  10th  in 
cereals  other  than  wheat  and  rice.  Morocco  was  the  EU  1st  supplier  in  vegetables,  2nd  in 
fruits  and  olive  oil,  4th  in  citrus  fruit  and  8th  in  preparation  of  vegetables,  fruit  or  nuts. 
Morocco has a trade surplus on agricultural products with the EU, while the EU has a 
surplus on processed agricultural products.  

EU  agrifood  exports  to  Morocco  rose  by  10%  over  the  past  5  years  to  €  1.75bn  in  2019, 
particularly  as  a  result  of  an  improvement  in  exports  of  food  preparations  (€  +110m)  and 
vegetable  oils  other  than  palm  &  olive  oils  (€  +61m),  which  account  for  18%  and  12% 
respectively of total agrifood exports from Morocco. The exports to Morocco increased by 
20.4% since 2018, but the EU still has a trade deficit of € 543 mn. In 2019 the EU exports 
to Morocco were dominated by wheat (21%, €361 million value) and vegetable oils other than 
palm & olive oil (12%, €214 million value).  

Among the EU’s Euromed partners, Morocco is the largest supplier of agricultural products. 
Year-on-year, in 2019 EU agrifood imports from Morocco grew by 65% to €2.3bn, owing 
mainly  to  a  rise  in  imports  of  fruits  (€  +358m)  and  vegetables  (€  +257m),  which  represent 
26% and 42% respectively of total agrifood imports from Morocco. Utilisation rates for Tariff 
Rate  Quotas  opened  by  the  EU  to  Morocco  are  high  for  tomatoes  (100%)  and  courgettes 
(70%).  

TRQs granted by the EU to Morocco 

Only  the  quotas  for  tomatoes  were  fully  used  by  Morocco  in  2019,  the  utilisation  rate  also 
remained relatively high for courgettes (70%) and increased for clementines (56%). Fill rates 
went up for garlic (9% as compared to 0% in 2018, but decreased for strawberries.   

Utilisation rate of Tariff Rate Quotas opened by the EU to Morocco 

Sector  TRQ description 
Tomatoes 
F&V 
Tomatoes 
F&V 
Garlic 
F&V 
Cucumbers 
F&V 
Courgettes 
F&V 
Clementines 
F&V 
Strawberries 
F&V 
F&V 
Strawberries 
Sugar  Chemically pure fructose 

TRQ 
Quantity  Unit 
257.000 
28.000 
1.500 
16.800 
56.000 
175.000 
3.600 
1.000 
600 

t 
t 
t 
t 
t 
t 
t 
t 
t 

289 

Utilisation in TRQ period 
ending in: 
2017 
100% 
100% 
1% 
49% 
63% 
54% 
23% 
25% 
0% 

2019 
100% 
100% 
9% 
38% 
70% 
56% 
30% 
8% 
0% 

2018 
100% 
100% 
0% 
40% 
72% 
52% 
40% 
17% 
0% 

 
 
 
 
 
 
 
Information on the utilisation of the TRQs granted by Morocco to the EU were not readiliy 
available at the time of drafting of this staff working document.  

5.4 

Trade in services and Foreign Direct Investments 

Total  trade  in  services  between  the  EU  and  Morocco  increased  by  24%  between  2014  and 
2018 to € 9.6bn, including a growth of 40% in exports and of 15% in imports. In 2018, the 
EU exported € 4 billion in services to Morocco (same level as in 2017) and imported € 5.6 bn 
from  Morocco,  slightly  down  (-1%)  compared  to  a  year  earlier.  More  than  40%  of  EU-
Morocco  trade  in  services  is  with  France,  particularly  in  the  sectors  of  travel  and 
telecommunications, computer and information services. 

Foreign Direct Investment flows exceptionally declined in 2017 before regaining momentum 
in  2018.  With  a  stock  of  Foreign  Direct  Investment  €  17.9bn  at  the  end  of  2018,  the  EU 
remains the first foreign investor in Morocco, accounting for more than half of Foreign 
Direct  Investments  entering  the  country,  according  to  Morocco's  Exchange  Office, 
followed by the United Arab Emirates (21%), the USA (5%) and the United Kingdom (4%). 
More  than  85.000  direct  jobs  were  generated  by  the  automotive  sector  between  2014  and 
2018,  associated  with  exports  to  the  EU  market  (more  than  80%  of  automotive  exports), 
bringing  total  employment  in  the  sector  to  163.000  in  2018,  according  to  the  Moroccan 
Ministry of Economy and Finance. 
Morocco ranked 53rd out of 190 in the World Bank ‘Doing Business 2020’, with a distance to 
frontier  (DTF)154  score  of  73.4  out  of  100  –  this  means  an  increase  of  5.5  in  DTF  score 
compared  to  2018.  This  improvement  is  mainly  due  to  easier  trading  across  borders, 
access to construction permits and electricity. Morocco has an ambition to join to the top 
50 in the coming years.  

6. 

CONCLUSIONS  

EU-Morocco trade and investment relations are intense and should be further strengthened in 
view of the willingness on both sides to relaunch and reinvigorate all the dimensions of the 
EU-Morocco  partnership  -  in  line  with  the  conclusions  of  the  EU-Morocco  Association 
Council of 27 June 2019. 

The overall impact of the Free Trade Area on EU-Morocco trade has been positive, bringing 
both economies closer together and rapidly intensifying exchanges in goods. As a result, the 
EU  is  the  leading  trade  partner  of  Morocco  today,  accounting  for  about  56%  of  total 
Moroccan  trade.  Morocco  is  number  one  exporter  of  vegetables  to  the  EU  and  has  a  trade 
surplus  with  the  EU  in  agri-food  products,  while  at  the  same  time  the  EU  has  a  surplus  in 
processed agricultural products. The EU is the first foreign investor in Morocco, accounting 
for more than half of the FDI stock in the country and generating a significant number of jobs. 

154  The  DTF  score  is  a  measurement  used  by  the  World  Bank  to  assess  the  absolute  score  of  regulatory 

performance in economies over time.  

290 

 
 
 
 
 
                                                 
It  will  be  important  to  capitalise  on  the  technical  work  under  the  EU-Morocco  trade  sub-
committees, which should be restarted in 2020, and ensure that Deep and Comprehensive Free 
Trade Agreement negotiations, expected to be resumed in 2020, bring benefits. Negotiations 
are  meant  to  cover  areas  such  as  access  to  public  procurement,  disciplines  on  non-tariff 
measures,  but  also  standards  and  regulatory  issues,  sanitary  and  phytosanitary  measures, 
intellectual  property  rights,  consumer  protection,  competition,  investment,  services  and 
sustainable development.  

291 

 
 
 
 
7. 

STATISTICS 

MOROCCO 

292 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Morocco (mio €)Imports11 67312 62414 35415 36216 293Exports17 49319 92621 48522 48123 359Balance5 8207 3027 1307 1187 066Share Morocco in EU27 trade with Extra-EU27Imports0.7%0.8%0.8%0.8%0.8%Exports0.9%1.1%1.1%1.1%1.1%Total (I+E)0.8%0.9%1.0%1.0%1.0%Share EU27 in trade Morocco with worldImports50.3%53.7%54.2%51.8%50.8%Exports58.6%61.9%62.5%61.3%62.7%Total (I+E)53.3%56.6%57.2%55.2%54.9%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Morocco: IMF DotsTotal merchandise trade EU27 with Morocco (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports15 36216 2939306.1%Imports1 907 5651 934 94427 3791.4%Exports22 48123 3598783.9%Exports2 059 8822 132 01572 1333.5%Balance7 1187 066-52Balance152 317197 07144 754Total trade37 84339 6511 8084.8%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Morocco (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports2 2172 299823.7%Imports118 891121 6442 7532.3%Exports1 4591 75629820.4%Exports169 000181 82512 8257.6%Balance-758-543215Balance50 10960 18110 072Total trade3 6764 05638010.3%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Morocco (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports13 14513 9938486.5%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports21 02221 6025802.8%EU27 exports1 890 8821 950 19059 3093.1%Balance7 8777 609-268Balance102 208136 89034 682Total trade34 16835 5961 4284.2%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Morocco (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports5 6585 591-67-1.2%Imports824 543824 015-528-0.1%Exports3 9903 979-11-0.3%Exports928 420968 64840 2284.3%Balance-1 668-1 61256Balance103 877144 63340 756Total trade9 6479 570-78-0.8%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Morocco (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports4 8754 6325 1405 6585 591Imports642 682776 924784 743824 543824 015Exports2 8413 5233 6843 9903 979Exports750 713849 023855 477928 420968 648Balance-2 034-1 110-1 456-1 668-1 612Balance108 03172 09970 734103 877144 633Total trade7 7178 1558 8249 6479 570Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Morocco (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward7041 5661 8992 056Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward14 01314 75315 00615 96717 868Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward-17-336-75279Inward143 012803 285328 703209 462-67 421Outward662-1 983731Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsMoroccoMorocco20182019Extra-EU27Morocco2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Morocco05 00010 00015 00020 00025 00020152016201720182019Merchandise trade EU27 with Morocco (mio €)ImportsExportsBalance 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE  EU-
PALESTINE INTERIM ASSOCIATION AGREEMENT 

1. 

INTRODUCTION 

The Interim Association Agreement creating a Free Trade Area (FTA) between the EU and 
Palestine155 (hereinafter called ‘the Interim Agreement’) was signed in 1997 and entered into 
force on 1 July 1997. The Interim Agreement liberalised two-way trade in industrial goods 
by  providing  duty-free  and  quota-free  access  for  industrial  goods  traded  in  both  directions, 
with  some  limited  liberalisation  of  agricultural  products  by  both  parties.  This  was  an 
asymmetrical liberalisation to the extent that the EU dismantled its tariffs on the first day of 
the agreement while Palestine had a phased reduction of tariffs.  

The  Agreement  was  first  updated  in  2005  before  a  more  significant  update  was  signed  in 
2011 to further liberalise trade in agricultural, processed agricultural products (PAPs), fish 
and fishery products. The EU removed all tariffs and quotas on agricultural products and 
PAPs  imported  into  the  EU  for  a  period  of  ten  years,  which  is  renewable.  Palestine 
continues to maintain a number of tariffs and quotas on selected agricultural and PAP imports 
from the EU.  

Products  from  Israeli  settlements  in  occupied  Palestinian  territory  do  not  benefit  from  the 
preferential  tariff  preferences  under  the  EU-Palestine  Interim  Agreement  or  the  EU-Israel 
Association Agreement or any other trade agreement.  

Palestine  is  a  member  of  the  Regional  Convention  on  pan-Euro-Mediterranean 
preferential rules of origin (PEM Convention), which it signed in 2013 and notified the EU 
of its ratification in 2014.  

2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGRESS AND FOLLOW-UP ACTIONS  

The ongoing situation with Israel remains a key factor in EU-Palestinian trade. The Union for 
Mediterranean Trade Ministerial in 2010 adopted a package of measures to facilitate trade 
in  Palestinian  products  with  other  Euro-Mediterranean  partners  on  a  bilateral  and  regional 
basis and to be followed by an informal Trade Trilateral Working Group (EU, Israel and 
Palestine). The EU continues its efforts to help remove the obstacles to Palestinian trade and 
to  promote  the  implementation  of  the  Package  of  measures  to  facilitate  trade  of  Palestinian 
products  with  the Euro-Mediterranean partners.  In the follow up meeting of the UfM  Trade 
Ministers  in  2018  the  European  Commission  presented  a  Technical  Progress  Report  on  the 
implementation  of  the  Package156  of  which  the  Ministers  took  note  in  their  Ministerial 
Declaration.  Towards  the  end  of  2019  trade  relations  with  Israel  deteriorated  turning  into  a 
mutual escalation of restrictive measures, which has notably led to an imposition by Israel of 
a  ban  on  export  of  agricultural  products  from  Palestine  to  foreign  markets,  including  to  the 
EU. In February 2020, both sides reached an agreement and lifted their respective bans. 

155 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. 

156 https://trade.ec.europa.eu/doclib/docs/2018/june/tradoc_156946.pdf  

293 

 
 
 
 
 
 
 
 
  
                                                 
3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The  most  recent  meeting  of  the  EU-Palestinian  Sub-committee  on  Trade  and  Internal 
Market,  Industry,  Agriculture  and  Fisheries,  and  Customs  took  place  in  October  2019. 
Discussions included the following issues: increase in trade in dates from Palestine to the EU 
and the prospects for increasing and diversification of Palestinian agri-food exports to the EU; 
the  time  that  it  is  taking  to  finalise  the  process  of  Palestine’s  accession  to  the  Agadir 
Agreement (an FTA between Egypt, Jordan, Morocco and Tunisia); Palestine's pending status 
as  an  observer  to  the  WTO;  the  EU  reiterated  that  it  supports  Palestine's  role  in  both 
organisations,  aiming  to  enhance  regional/international  cooperation;  matters  related  to  the 
Agreement on Conformity Assessment and Acceptance of industrial products, priority sectors 
for  Palestine  include  construction,  wood-working  and  furniture  as  well  as  pharmaceuticals  
sector;  the  possibility  was  discussed  of  organizing  a  TAIEX  workshop  regarding  the 
construction sector and ways to strengthen the Palestinian laboratory capacity; agriculture and 
Sanitary  and  Phytosanitary  measures,  including  the  so  called  cluster  concept  to  focus  on 
agricultural areas where water is available and the EU funded PEGASE progamme to support 
agricultural  activities  in  the  West  Bank  and  the  Gaza  Strip;  customs  matters  covering  the 
establishment  of  so  called  dry  ports  (bonded  warehouses  and  clearance  centers)  and  the 
transfer of customs procedures for imported goods to the Palestinian Authorities.  

The  Joint  Economy  Committee  in  charge  of  follow-up  of  the  Paris  Protocol  (agreement 
dealing  with  trade  related  issues  under  the  Oslo  Accord)  has  not  met  since  2009.  The 
Palestinian  Authority  undertook  efforts  with  limited  results  to  re-activate  the  committee, 
pending positive response from the Israeli side.  

4. 

SPECIFIC AREAS OF IMPORTANCE  

The  expansion  of  Palestinian  trade  is  largely  influenced  by  its  relationship  with  Israel. 
Several reports have identified a number of key trade barriers, including Israeli control over 
Palestinian  trade  routes,  internal  restrictions  on  the  movement  of  people  and  goods  by 
physical  barriers,  such  as  checkpoints,  and  the  cost  of  bureaucratic  process  –  including 
transaction  costs  imposed  at  Israeli  checkpoints,  fiscal  leakages  due  to  customs  evasion, 
indirect  imports  that  enter  Palestine  designated  as  Israeli  but  orginiate  from  elswhere  or 
transaction fees charged by Israeli customs that lie at 3% and are decucted from the clearance 
revenues for purposes of handling costs. 

With the aim to facilitate trade and support an increase in bilateral trade volumes, the EU has 
completed  two  studies  in  2019  dedicated  to  bilateral  trade,  notably  the  penetration  of 
Palestinian  products  on  the  EU  market.  The  studies  concluded  that  in  exporting  Palestinian 
products  traders  face  challenges  ranging  from  unfavourable  business  environment  in 
Palestine,  trade  barriers  and  restrictions  imposed  by  Israel  as  well  as  weak  supply-side 
capacities.  At  the  same  time,  Palestinian  companies  continue  to  make  an  effort  to  better 
penetrate  the  EU  and  international  markets  and  statistical  data  shows  that  exports  of  some 
Palestinian products increased to the EU. Based on the studies the EU plans to take further 
targeted  support  facilitating  EU-Palestine  trade  in  the  coming  period,  addressing  key 
challenges faced by Palestinian exporters to EU markets such as strengthening standardisation 
and regulations related to quality control.  

294 

 
 
 
 
 
The  EU  has  rolled  out  the  first  Twinning  programme  in  Palestine  in  2019  in  the  field  of 
customs. The project focuses on strengthening the capacity of the Palestinian Authorities to 
improve customs revenue collection and border crossings control. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

Despite  solid  growth  in  the  West  Bank,  the  sharp  drop  in  activity  in  Gaza  weighed  on 
Palestine’s    economy.  Economic  growth  contracted  throughout  2019  due  to  the  fiscal 
crisis.  GDP  growth  was  0.9%  compared  to  1.2%  in  2018.  On  the  demand  side,  household 
consumption was the main driver of economic growth (+4.1% year on year). 

The fiscal crisis started in February 2019 when Israeli Defence Cabinet announced that it 
would  withhold  USD  138  million  monthly  from  Palestine’s  tax  revenues  to  enforce  a  Law 
aimed  at  preventing  transfer  of  salaries  by  the  PA  to  the  families  of  Palestinians  in  Israeli 
prisons).  Palestine  reacted  by  refusing  to  accept  the  remaining  clearance  revenue,  which 
amounted to 65% of its total budget revenues. With fiscal distress rising, Palestine decided to 
accept the funds again in August, which were then transferred retroactively in two lump sums 
in  August  and  October.  Clearance  revenue  transfers  normalised  by  the  end  of  the  year  to  a 
level  comparable  with  2018.  Government  consumption  (-6.1%  yoy)  and  gross  capital 
formation (-1.9% yoy) were both hit by the fiscal crisis in 2019.  

Inflation rate increased to 1.3% in 2019 compared to 0.3% In 2018 and was higher in the 
West Bank (+1.8%) than in Gaza (+0.4%).  

The  current  account  deficit  improved  to  10.8%  of  GDP  at  the  end  of  2019  compared  to 
13.2%,  mainly  due  to  the  deficit  in  trade  in  goods  (-32%)  and  in  services  (-6%).  The 
compensation of Palestinians employed in Israel (15% of GDP) mitigated the current account 
deficit.  The  financing  of  the  current  account  deficit  will  continue  to  depend  on  informal 
private capital transfers and possibly further drawdowns of foreign exchange.  

The  humanitarian  crisis  has  worsened,  particularly  in  Gaza  where  the  majority  of 
residents depend on financial support. The latest report by World Bank of 2019 estimates that 
24% of Palestinians live below the poverty line,  46% in  Gaza compared  to  9% in  the West 
Bank.  In  the  West  Bank,  poverty  status  is  sensitive  to  even  small  shocks  in  household 
expenditures, while in Gaza any change in social assistance flows can considerably impact the 
population’s  wellbeing.  The  unemployment  rate  continues  to  be  very  high  at  25.4%, 
slightly  down  from  26.2%  in  2018.  Unemployment  disproportionately  affects  residents  of 
Gaza,  which  struggle  with  a  rate  of  45.2%  against  the  West  Bank’s  more  subdued 
predicament of 14.6%.  

The  decline  in  international  donor  aid  continued  in  2019.  International  budget  support 
decreased from $516 million to $498 million. After the Arab Donors ($245 million), the EU 
was the second-largest donor via the PEGASE programme with $180 million. Roughly two 
thirds of this amount was used to pay the salary of civil servants, pensioners, civil police and 
civil  defence.  The  rest  of  the  amount  was  in  support  of  vulnerable  Palestinian  families  and 
hospitals in East Jerusalem.  

295 

 
 
 
 
 
 
 
 
 
5.2 

Trade in goods 

In 2019, the EU was Palestine’s second largest trading partner behind Israel, representing 
11% of its total trade. With a 12.2% share, the EU was the second largest exporter to Palestine 
behind  Israel  (55.6%). The EU was Palestine’s  ninth largest  export destination (0.6%), with 
the first export destinations being Israel (84.3%), Jordan (5.9%) and the UAE (2.2%). 

The  value  of  trade  between  the  EU  and  Palestine  has  increased  sevenfolds  since  the 
Association  Agreement  came  into  force,  in  both  directions.  In  2002  the  value  of  trade  in 
goods was €40 million and in 2019 it was €284 million. It should be noted that the value of 
EU exports to Palestine has increased more than in the other direction. This has deepened 
Palestine’s  trade  deficit  with  the  EU  over  the  same  period.  Palestinian  exports  remained 
largely at that same level despite full preferential market access to the EU market. This 
is largely due to obstacles facing Palestinian trade, as well as competitiveness issues and the 
difficulties  on  the  Palestinian  side  to  meet  EU  standards,  in  particular  SPS  and  technical 
standards.  

The value of EU exports to Palestine has risen from €33 million in 2002 to €263 million in 
2019  (an  increase  of  nearly  700%).  After  an  rare  decline  in  2018,  EU  exports  increased 
(12%)  again  between  2018  and  2019,  rising  from  €235  million  to  €263  million.  The  main 
export sectors in 2019 were machinery and transport equipment (46%), food and live animals 
(26%) and chemicals (13%).  

The  value  of  EU  imports  from  Palestine  has  risen  from  less  than  €7 million  in  2002  to 
more than €21 million in 2019, which represents an increase of 200% but the volume is 
still far below potential. Within the lifespan of the agreement, however, the value of imports 
has  been  fluctuating:  Between  2018  and  2019,  EU  imports  increased  by  50%  from  €14 
million  to  €21  million.  In  2019  the  most  important  import  sectors  were  agri-food  products 
(90% out of which 61% are fruits and nuts) and industrial products (10%). 

5.3 

Trade in agricultural products  

Total trade in agri-food products between the EU and Palestine increased by 950% between 
2003 and 2019, from €8 million to €84 million in 2019. EU exports increased by 20%, from 
€54  million  2018  to  €65  million  in  2019,  while  EU  imports  increased  by  46%  between 
2018 and 2019, from €13 million to €19 million. 

In  2019,  agri-food  products  represented  the  majority  of  EU  imports  from  Palestine, 
accounting  for  €19  million  (90%)  of  the  EU's  total  imports.  Palestine  exports  a  limited 
number  of  agri-food  products  including:  fruit,  nuts  and  spices,  olive  oil,  bulbs,  roots,  live 
plants, and vegetables. Overall the level of Palestinian agri-food exports has grown since the 
Agricultural  Agreement  of  2012,  rising  from  €9  million  in  2011  to  its  current  value.  The 
biggest increase has been in olive oil, which has risen from €1 million to €5 million in the 
same period, with  year-on-year variations.  Export levels  of vegetables,  bulbs,  roots and live 
plants  have remained relatively static over the same period and  even fell slightly in  the last 
couple  of  years;  the  “star  export  item”  more  recently  has  been  dates.  Due  to  the  Israeli 

296 

 
 
 
 
 
 
 
 
 
 
blockade exports from Gaza are restricted to Israel and selected sectors. Agricultural products 
make up some 80% of all Gazan exports and are thus under particular disstress. In December 
2019 Israel allowed export of a limited number of strawberry shipments from Gaza to the EU 
market. 

5.4 

Trade in services and Foreign Direct Investments 

In  2018  trade  in  services  between  the  EU  and  Palestine  was  worth  €163  million,  which 
represents a 83% increase as compared to €89 million in 2014. There have been year-on-year 
fluctuations  in  the  value  of  services  imported  from  Palestine,  which  has  declined  slightly 
overall between 2011 and 2015.  In 2016, EU imports from  Palestine reached  a high of €91 
million, but declined to €34 million in 2017, to then increase to € 42 million in 2018. As for 
EU exports of services, they have been growing since 2014, with a slight fluctuation in 2016, 
to reach an all-time high of €121 million in 2018, an increase of 16% compared to 2017 (€104 
million).  

In 2018, EU FDI stocks in Palestine amounted to €28 million, an increase from €15 million 
in 2014. In 2016, EU FDI flows accounted for €20 million. Palestinian FDI stocks to the EU 
amounted  to  €25  million  in  2018  compaed  to  €21  million  in  2017.  EU  FDI  flows  totalled 
€242 million in 2018, compared to only €5 million 2016. Palestinian FDI flows increased by 
100% in 2018, from €2 million in 2017 to €4 million.157  

According to the World Bank Ease of Doing Business 2020 index which ranks 190 countries, 
in 2019 Palestine ranked 117th in the World for overall ease of doing business, slightly down 
from the 116th position held in 2018. The distance to frontier (DTF)158 score is 60.0 out of 100 
– a slight improvement from the value achieved in 2018 (59.1). 

6. 

CONCLUSIONS  

Overall the value of trade between the EU and Palestine has increased with  the Agreement. 
The EU trade surplus  continues to  increase since the value of Palestinian exports to the EU 
remains negligible. The continuation of the trade restrictions applied by Israel remains a key 
issue in EU-Palestinian trade relations and continues to be addressed in the trade discussions 
with both parties. The absence of an effective mechanism to address issues of market access 
and  distortion  has  manifested  itself  in  an  escalating  trade  confrontation.  The  EU  thus 
promotes trilateral discussions on trade to facilitate progress and will continue to engage with 
both sides to remove the obstacles to Palestinian trade.  

157 While these data suggest a noteworthy increase in EU investments in Palestine, statistics on FDIs often are 
not as precise as for trade in goods. 

158  The  DTF  score  is  a  measurement  used  by  the  World  Bank  to  assess  the  absolute  score  of  regulatory 

performance in economies over time. The higher the score, the better. 

297 

 
 
 
 
 
 
 
                                                 
 
7. 

STATISTICS 

OCCUPIED PALESTINIAN TERRITORY 

298 

 
 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE  EU-
TUNISIA ASSOCIATION AGREEMENT 

1. 

INTRODUCTION 

A Free Trade Area (FTA), as part of the EU-Tunisia Association Agreement, was signed 
on  17  July  1995  and  entered  into  force  on  1  March  1998.  This  provided  for  reciprocal 
liberalisation of trade in  goods.  Since the day of entry into force of the Agreement, Tunisia 
can  export  to  the  EU  all  industrial  products  covered  by  the  Agreement  tariff-free,  while  it 
benefited from a transitional period of 12 years, which ended in 2010. This Free Trade Area 
establishes the principle of two-way trade free of any trade tariffs for industrial goods.  

As regards agricultural, agri-food and fisheries products, the FTA foresees liberalisation 
for  selected  products,  with  the  EU  granting  tariff-free  quotas  for  a  number  of  products. 
Contrary to other countries in the region (e.g. Morocco or Egypt), the EU and Tunisia have 
not  yet  negotiated  an  agricultural  top-up  and  hence  market  access  on  both  sides  is  more 
limited that what is the case with most other Southern Mediterranean partners.  

The  EU  and  Tunisia  signed  a  Bilateral  Protocol  in  2009  on  the  establishment  of  a  Dispute 
Settlement Mechanism (which entered into force in September 2011), however it is not yet 
operational. 

Tunisia  also  signed  the  Regional  Convention  on  pan-Euro-Mediterranean  preferential 
rules  of  origin  on  16  January  2013.  The  main  objective  of  the  Convention  is  to  provide  a 
more unified framework for origin protocols.  
Negotiations on a modernised trade agreement159 started in 2015. The objective is to extend 
agricultural  liberalisation,  include  services  and  investments,  as  well  as  a  number  of  modern 
trade rules and regulatory convergence commitments, with a view to better integrate Tunisia 
into  the  EU  market.  Four  rounds  have  taken  place  thus  far,  the  most  recent  one  in  May 
2019. Since then negotiations are effectively on hold. The standstill was initially due to the 
Tunisian legislative and Presidential elections held in autumn 2019 and the need to await the 
formation of a new government. The new government took office in late February 2020, just 
days before the Covid-19 crisis touched Tunisia.  

2. 

MAIN OPEN IMPLEMENTATION ISSUES, PROGRESS AND FOLLOW-UP ACTIONS  

There are several  long-standing market access issues.  Tunisia relies heavily on technical 
controls on imports (systematic and void of risk analysis) and on technical specifications that 
can  impose  restrictive  conditions  on  the  product  and/or  the  importer.  Other  NTBs  include 
customs  measures  such  as  the  request  for  an  export  declaration  by  EU  operators.  There  are 
also sectorial market access limitations on pharmaceuticals, cars, tyres and ceramic tiles.  

On the other hand, a major market access barrier in the form of de facto non-automatic 
licenses on products covering a wide range of sectors (agricultural and agri-food products, 
textiles  &  clothing,  cosmetics,  leather  products,  shoes,  toys,  electrical  goods)  and  affecting 

159 Deep and Comprehensive Free Trade Agreement  

299 

 
 
 
 
 
 
 
 
                                                 
EU exports of €35 million (2017)  was successfully removed in  July 2019.  Although import 
authorisations  were  in  theory  guided  by  objective  technical  specifications  ("cahier  des 
charges"), in reality these specifications were not defined and the Ministry of Trade decided 
on  each  importation  request  in  an  arbitraty  manner.  Quantitative  restrictions  were  also 
applied.  The  measure  appeared  to  be  a  clear  violation  of  the  FTA  and  of  Tunisia’s  WTO 
obligations, which prohibit quantitative restrictions or measures of equivalent effect. The EU 
raised  the  issue  repeatedly  in  bilateral  meetings  at  both  technical  and  political  level  (EU-
Tunisia  Trade  Sub-Committee  meeting  in  February,  to  the  Association  Committee  in  April 
and  the  Association  Council  meeting  in  May  2019).  The  EU  also  raised  the  matter  in  the 
WTO,  especially  as  Tunisia    never  formally  notified  the  measure.  Following  the  extensive 
calls  for  the  withdrawal  of  these  measures,  the  Tunisian  government  cancelled  the  import 
restrictive authorisation measures as of 26 July 2019.  

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The  Sub-Committee  on  Trade,  Industries  and  Services  and  the  Sub-Committee  on 
Internal Market met on 28 February 2019 in Tunis. These meetings allowed for an indepth 
discussion on the evolution of both parties’ trade policy, as well as a discussion on regional 
trade initiatives aiming at promoting further trade integration, such as the implementation of 
the Agadir Agreement, the Union for Mediterranean and the revision of the PEM Convention 
on  Rules  of  Origin.  Both  sides  also  discussed  their  respective  position  on  multilateral  and 
continental  issues,  such  as  various  WTO  iniatives  and  the  African  Continental  Free  Trade 
Area. On  market access barriers, non-automatic import licences imposed by Tunisia in 2018 
were  successfully  removed.  The  EU  also  expressed  concern  about  persisting  and  new 
technical import controls, export declaration requests and concerns in specific sectors, such as 
pharmaceuticals,  cars,  tyres  and  ceramics  and  sanitary  and  phytho-sanitary  (SPS)  question. 
Other  issues  discussed  were  the  evolution  of  recent  trade  flows  during  which  Tunisia 
expressed  the  wish  to  further  diversify  its  trade  with  EU  Member  States.  Both  sides  also 
discussed  the  implementation  of  the  provisions  included  in  the  Association  Agreement, 
including  the  operationalisation  of  the  Dispute  Settlement  Protocol.  During  the  part  of  the 
meeting related to internal market, the parties discussed the recent company laws adopted in 
Tunisia as well as the EU regulation on government procurement. 

The latest Sub-Committee on Agricultural and Fisheries Products met in December 2017 
and  the  Sub-Committee  on  Customs  Cooperation  and  Taxation  in  February  2017.  For 
logistical  and  organisational  reasons,  no  further  meeting  of  these  sub-committees  has  taken 
place  since.  The  content  of  the  two  meetings  held  in  2017  was  detailed  in  previous  FTA 
implementation reports.    

4. 

SPECIFIC AREAS OF IMPORTANCE 

The 2011 revolution marked a turning point in EU-Tunisia relations, with the EU being a key 
partner  in  Tunisia’s  democratic  and  economic  transition.  Since  2012  the  ‘special 
relationship’  between  Tunisia  and  the  EU  takes  the  shape  of  a  ‘Privileged  Partnership’ 
detailed in an ambitious European Neighbourhood Policy Action Plan.  

300 

 
 
 
 
 
 
 
 
In 2016, a Joint Communication from the European Commission and the High Representative 
of  the  Union  for  Foreign  Affairs  and  Security  policy  to  the  European  Parliament  and  the 
Council, entitled ‘Strengthening  EU support for  Tunisia’160, outlined the areas in  which EU 
support is to be provided, including a number of trade-related measures as well as the launch 
of a ‘Partnership for growth’ initiative.  

The Joint Communication foresees a possible early entry into force of EU trade concessions 
on  agricultural  market  access  under  a  future  modernised  trade  agreement,  the  possible 
advanced implementation of the modern Rules of Origin rules under the PEM Convention as 
well as temporary flexibilities for certain products, or the setting-up of a structured regulatory 
dialogue  to  facilitate  and  speed  up  the  negotiation  of  an  Agreement  on  Conformity 
Assessment and Acceptance of industrial products (ACAA), which still needs key legislation 
to be adopted. These offers remain on the table and  consultations are still ongoing.  

Between 2011 and 2018, EU assistance to Tunisia amounted to over €2.5 billion (over €1.7 
billion in grants and €800 million in macro-financial assistance). Over the period 2017-2020, 
EU bilateral assistance has provided Tunisia €300 million per year in grants on average.  This 
support has focused on three priority sectors: (1) promoting good governance and the rule of 
law,  (2)  investing  in  the  future:  stimulating  a  sustainable  economic  growth  generating 
employment, and (3) reinforcing social cohesion between generations and regions. 

In addition, Tunisia has benefitted from two Macro-Financial Assistance (MFA) operation, a 
first  one  between  2014  and  2017  (€300  million)  and  a  second  one  in  2018-2019  (€500 
million), both linked to a series of policy measures intended to support the country's economic 
transition. 

The EU provides substantial trade-related assistance to help Tunisia take better advantage 
of the existing FTA and to prepare and adapt to the possible impact of the DCFTA. Several 
EU  projects  provide  assistance  to  a  wide  range  of  Tunisian  companies  in  order  to  increase 
their competitiveness on the local and international markets, but also to favour reforms and to 
help upgrading the quality infrastructure, to the benefit of Tunisian consumers.  

Overall, since the launch of negotiations for a modernised trade agreement in 2015 the EU has 
provided €250 million in grants to support the upgrading of the Tunisian economy and export 
promotion  (€  154  million  on  agriculture,  €74  million  on  industry  and  €22  million  on  the 
services). An important pillar of the support to the industrial and agriculture sectors is the 90 
million EUR “Programme d’appui à la compétitivité et aux exportations (PACE)” signed in 
November  2018,  which  complements  the  “Programme  d’Appui  à  la  Compétitivité  des 
Services  (PACS)"  launched  in  2016,  which  focused  mainly  on  the  services  sector.  Upon 
request by the Tunisian authorities, the EU also funds independent studies for Tunisian trade 
negotiators  on  specific  subjects.  These  include    legal  monitoring  of  EU  regulatory 
developments,  public  procurement,  competition  and  state  aid,  postal  services  as  well  as 
sanitary and phytosanitary requirements. 

160  https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:52016JC0047  

301 

 
 
 
 
 
 
 
                                                 
5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

Since the political, economic and geopolitical upheaval, which has affected the country since 
2011, Tunisia’s economy has continued experiencing subdued growth. The  GDP grew only 
1%  in  2019  at  a  slower  pace  than  2018  with  2.7%,  falling  short  of  the  government’s  3.1% 
growth target. This slow growth is mainly due to a downcast demand and drop in investment. 
Activity also suffered from the slowdown in agriculture and contraction in industry (sharp 
fall  in  oil  and  gas  output).  However,  growth  in  the  service  sector,  particularly  tourism 
amounting  to  USD  2  billion,  partially  compensated  the  subdued  growth.  The  number  of 
tourists  increased  by  13.6%  in  2019  to  9.5  million,  a  record  level,  underlining  the 
vulnerability of growth to any potential crisis that could hit the industry. 

After a peak in  inflation between 2017 (6.2%) and 2018 (7.5%), the Tunisian Central  Bank 
raised its key rate to 7.75% from 6.75% to combat high inflation, which dropped to 6.7% in 
2019. Real interest rates are now positive.  

Fiscal consolidation to offset the impact of the oil price shock continued in 2019 and the 
fiscal deficit eased to 3.5% against a 4.9% deficit in 2018. The Tunisian government aimed at 
strengthening  collection  efforts  by merging  all tax functions, including administrative, audit 
and recovery under the same umbrella structure. Moreover, the 2019 Budget Law harmonised 
the tax regime for all companies, eliminating the preferential treatment of offshore ones, 
albeit  offshore  companies  already  established  benefit  from  a  moratorium  until  2021. 
Combined with a flexible exchange rate, this helped  reduce the current account deficit to 
8.7% percent of GDP against 11.1% of GDP in 2018, as well as help stabilize public debt, 
which stood at 71.9% of GDP in 2019 compared to 77.9% in 2018. 

Unemployment remains high, even if it came down slightly to 15.2% at the end of 2019 
compared to 15.4% in 2018. Unemployment continues to disproportionally affect  the youth 
(about 25%) and women (21.7%) at the end of 2019 because the skill mismatching and the 
difficulty to start a business.  

5.2 

Trade in goods 

The EU is Tunisia’s largest trading partner, followed by China and the USA, accounting for 
64% of its trade. Tunisia is the fifth most important trading partner of the EU in the Euromed 
region.  

Total trade in goods between the UE and Tunisia has increased since the entry into force 
of the FTA. It rose by 55.7% between 2002 and 2019 from € 13.4 billion to €20.9. After a 
slight decline in 2009, the level of total UE-Tunisia trade resumed its uptrend and accelerated 
by 26.8% between 2009 and 2019.  However, it decreased again  between 2018 and 2019 by 
2.1% from 21,4 € billion to 20,9 € billion because of the drop in exports owing to restrictive 
measures taken by Tunisia that has not been offset by an increase of imports from Tunisia.  

EU exports to Tunisia increased by 46.8% between 2002 and 2019, from €7,4 billion to 
€10,9 billion. The EU remains by  far Tunisia’s  main source of imports,  even if EU exports 

302 

 
 
 
 
 
 
 
 
 
 
 
decreased by 4.4% in 2019 compared to 2018 from 11,4 € billion to 10,9 € billion, owing, as 
indicated above, to some import restrictive measures taken by Tunisia in late 2018 until mid-
2019.  EU  exports  to  Tunisia  are  dominated  by  machinery  and  transport  equipment  (€3,9 
billion,  35,1%),  followed  by  textiles  and  clothing  (€1,3  billion,  12,3%),  chemicals  (€1,2 
billion,  11,0%),  and  fuels  and  mining  products  (€1,2  billion,  11,6%).  The  three  main  EU 
exporters to Tunisia are France (14.2%), Germany (6.8%) and Italy (5.2%). 

EU imports from Tunisia rose by 66,6% in the same period from €6 billion to €10 billion 
and  the  EU  continue  to  be  the  main  destination  for  Tunisian  products  .  Between  2018 
and 2019, they increased slightly by 0.6% from € 9.9 billion to €10 billion. EU imports from 
Tunisia  are  mostly  made  up  of  machinery  and  transport  equipment  (€3,8  billion,  41,3%), 
textiles and clothing (€2,2 billion, 23,7%) and agricultural products (€0,5 billion, 6,1%).  

Overall, the agreement has proven mutually beneficial, with both imports and exports 
growing. Tunisia’s trade deficit with the EU is relatively small when compared to the one 
Tunisia has with China, Russia or Turkey – three countries, which make up for a far smaller 
share of Tunisia’s total trade. In 2019, Tunisia’s trade deficit with the EU was as low as 1.4% 
of the country’s total deficit while it reached 30.6% with China, 12,9% with Turkey and 7.3% 
with Russia. 

5.3 

Trade in agricultural products  

In  2019,  total  trade  in  agricultural  goods  between  the  EU  and  Tunisia  decreased  by  almost 
€0.2 billion compared to 2018, with a decrease of 9.7% of exports and of 18.7% of imports. 
The EU has a trade deficit in its agricultural trade with Tunisia (exports in 2019 totalled €494 
million whereas imports totalled €534 million).  

The decrease in imports from Tunisia is mainly due to a decrease of 32.4% in imports of olive 
oil (essentially due to a bad harvest and market developments), that represents more than 52% 
(and a value of €277 million) of total imports of agricultural goods from Tunisia. The import 
of tropical fruit is also quite relevant, representing with 20% of imports of agricultural goods 
from Tunisia with a value of €105 million.  

EU exported to Tunisia mainly wheat (24.5% for a value of €121 million) and other cereals 
(11%, and a value of 53%). The export of cereals other than wheat and rice saw a decrease of 
43.6% compared to 2018. 

303 

 
 
  
 
 
 
 
 
TRQs granted by the EU to Tunisia 

The  56 700 tonne  tariff  rate  quota  (TRQ)  for  olive  oil  imports  from  Tunisia  set  out  in  the 
bilateral agreement was completely filled in 2019 (fill rate of 100%). Fill rates were extremely 
low  for  cut  flowers    and  new  potatoes  (1%  each)  as  well  as    wine  (2%);  the  fill  rate  for 
oranges  slightly  increased  (from  31%  to  33%).  The  remaining  quotas  for  Tunisian  products 
were not utilised at all in 2019. 

Utilisation rate of TRQs opened by the EU to Tunisia 

TRQ description 

Sector 
Honey  Honey 
Flowers  Cut flowers 
F&V 
F&V 
F&V 
Oils 

New potatoes 
Olives, provisionally preserved 
Oranges 
Olive oil, virgin 
Tomatoes, prepared or preserved, 
min. dry matter 12% 
Truffles, prepared or preserved 
Apricot pulp 
Mixtures of fruits 
Wine 
Wine, local PDO, ≤ 15% vol, ≤ 
2L 

F&V 
F&V 
F&V 
F&V 
Wine 

Wine 

TRQ 

Quantity  Unit 
50 
1.120 
18.816 
10 
39.338 
56.700 

t 
t 
t 
t 
t 
t 

Utilisation in TRQ period 
ending in: 
2018 
0% 
4% 
0% 
0% 
31% 
100% 

2019 
0% 
1% 
1% 
0% 
33% 
100% 

2017 
0% 
0% 
2% 
0% 
41% 
99% 

t 
4.000 
t 
5 
t 
5.160 
1.000 
t 
179.200  hl 

56.000  hl 

6% 
0% 
0% 
0% 
6% 

0% 

12% 
0% 
0% 
0% 
4% 

18% 
0% 
0% 
0% 
2% 

0% 

0% 

Information on the utilisation of TRQs granted by Tunisia to the EU was not readily available 
at the time of drafting of this staff working document. 

5.4 

Trade in services and Foreign Direct Investments 

Two-way  trade  in  services  amounted  to  €3.6  billion  in  2018  with  EU  imports  of  services 
representing €2.5 billion and exports €1.1 billion.  

Total trade in services  between the EU and Tunisia decreased between 2015 and 2018, 
from €4.2 billion to €3.6 billion, mainly owing to the weak performance of the tourism sector 
(accounting  for  13.8%  of  Tunisian  GDP)  mostly  due  to  security  issues  during  a  number  of 
years. Both Tunisia and the EU suffered from this decrease, with Tunisian exports of services 
to  the  EU  falling  by  13.8%  between  2015  and  2018  and  EU  exports  of  services  to  Tunisia 
falling by 15.4 % over the same period. In 2018, the EU exported €1.1 billion in services to 
Tunisia, compared to € 1.2 billion in 2017 but Tunisia increased slightly its exports in services 
to  the  EU  from  €2.4  billion  to  in  2017  to  €2.5  billion  in  2018  following  the  tourism  sector 
recovery during this year. Thus, the service trade balance remains in deficit with Tunisia.   

FDI flows remained relatively steady between 2013 and 2018, despite a slowdown of EU FDI 
in Tunisia, resulting in the total EU FDI stock of €4.0 billion in Tunisia at the end of 2018. 
Flows  of  foreign  direct  investment  to  Tunisia  are  concentrated  on  the  development  of  the 
infrastructure  network  as  well  as  of  the  textiles  and  clothing  sectors.  The  EU  remained  the 

304 

 
 
 
 
 
 
 
 
 
first foreign investor in Tunisia, accounting for over 85% of FDI entering the country as well 
as the first employer with 81% of the total employment generated by FDI. France continues to 
be  the  main  foreign  investor  with  34.2%  of  FDI  in  2018,  followed  by  Italy  (8.4%)  and 
Germany (7.4%).  

According to the World Bank Ease of Doing Business 2020 ranking, in 2019 Tunisia ranked 
78th out of 190, up from the 80th place in 2018, with a distance to frontier (DTF)161 score of 
68.7 out of 100 – an improvement from the score of 2018 (66.1). 

6. 

CONCLUSIONS  

Overall,  the  FTA  has  had  a  positive  impact  on  EU-Tunisia  trade,  especially  for  Tunisia, 
which  has  seen  a  gradual  expansion  and  diversification  of  its  trade  to  the  EU.  Despite 
persistent non-tariff barriers on the part of Tunisia, both Tunisia and the EU benefited from 
the  phase-out  of  bilateral  tariffs.   In  addition,  2019  saw  some  major  trade  barriers  removed 
after active EU engagement. Nonetheless, the existing FTA between the EU and Tunisia has 
reached  its  limits  and  would  need  to  be  modernised  to  further  boost  and  facilitate  trade, 
allowing  the  Tunisian  economy  to  further  diversify  and  adapt  to  evolving  regional  value 
chains. This shows the importance of pursuing negotiations of a modernised trade agreement. 

One of the main objectives of the latter is to support economic reforms in Tunisia and faciliate 
their ability to export by regulatory convergence towards international and EU standrads. The 
principles of asymmetry and progressiveness  in  favour of Tunisia  guide  both  market  access 
(especially in agriculture) and regulatory approximation. The negotiations have been carried 
out  in  a  transparent  manner  with  all  EU  initial  proposals  published  and  civil  society 
consultations held in the margins of negotiating rounds, including jointly. Joint reports were 
also published after each round, including in Tunisia162.  

161  The  DTF  score  is  a  measurement  used  by  the  World  Bank  to  assess  the  absolute  level  of  regulatory 

performance in economies over time.  

162 https://ec.europa.eu/trade/policy/countries-and-regions/countries/tunisia/  

305 

 
 
 
 
 
 
                                                 
7. 

STATISTICS 

TUNISIA 

306 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Tunisia (mio €)Imports9 3079 1419 2589 96310 026Exports10 56810 32810 99011 44910 944Balance1 2611 1861 7321 486918Share Tunisia in EU27 trade with Extra-EU27Imports0.6%0.6%0.5%0.5%0.5%Exports0.6%0.6%0.6%0.6%0.5%Total (I+E)0.6%0.6%0.5%0.5%0.5%Share EU27 in trade Tunisia with worldImports53.8%52.8%52.7%52.3%52.1%Exports74.8%75.7%72.0%71.6%69.7%Total (I+E)62.2%62.0%60.6%60.1%59.5%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Tunisia: IMF DotsTotal merchandise trade EU27 with Tunisia (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports9 96310 026630.6%Imports1 907 5651 934 94427 3791.4%Exports11 44910 944-505-4.4%Exports2 059 8822 132 01572 1333.5%Balance1 486918-568Balance152 317197 07144 754Total trade21 41220 971-442-2.1%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Tunisia (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports657534-123-18.7%Imports118 891121 6442 7532.3%Exports547494-53-9.7%Exports169 000181 82512 8257.6%Balance-110-4070Balance50 10960 18110 072Total trade1 2041 028-176-14.6%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Tunisia (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports9 3069 4931862.0%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports10 90210 450-452-4.1%EU27 exports1 890 8821 950 19059 3093.1%Balance1 596957-638Balance102 208136 89034 682Total trade20 20819 943-266-1.3%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Tunisia (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports2 4152 5171024.2%Imports824 543824 015-528-0.1%Exports1 1991 138-60-5.0%Exports928 420968 64840 2284.3%Balance-1 216-1 378-162Balance103 877144 63340 756Total trade3 6143 655411.1%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Tunisia (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports3 2292 9121 8412 4152 517Imports642 682776 924784 743824 543824 015Exports1 0091 2521 2051 1991 138Exports750 713849 023855 477928 420968 648Balance-2 220-1 660-636-1 216-1 378Balance108 03172 09970 734103 877144 633Total trade4 2384 1643 0463 6143 655Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Tunisia (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward222636799Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward2 9634 1454 1834 044Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward-4033-2Inward143 012803 285328 703209 462-67 421Outward368742462-127Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsTunisiaTunisia20182019Extra-EU27Tunisia2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Tunisia02 0004 0006 0008 00010 00012 00014 00020152016201720182019Merchandise trade EU27 with Tunisia (mio €)ImportsExportsBalance 
 
 
 
 
PART IV: AFRICAN, CARRIBEAN AND PACIFIC COUNTRIES 

307 

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

1. 

INTRODUCTION 

The EU-SADC European Partnership Agreement (EPA) is an agreement between the EU and 
six  countries  from  the  Southern  African  Development  Community  (SADC):  Eswatini, 
Botswana, Lesotho, Mozambique, Namibia and South Africa . It was signed on 10 June 2016 
and entered into provisional application on 10 October 2016 for all Parties to the Agreement 
except  for  Mozambique.  It  entered  into  provisional  application  for  Mozambique  on  4 
February  2018.  Hence  2019  was  the  second  year  in  which  all  SADC  EPA  states  fully 
implement the EU-SADC EPA ("the Agreement").  

All SADC EPA States except South Africa receive duty free and quota free treatment for all 
their goods (except arms and ammunition) imported into the EU. South Africa receives such 
treatment  for  96%  of  its  exports  to  the  EU  and  an  additional  2.7%  of  exports  from  South 
Africa  benefits  from  reduced  tariffs  or  from  preferential  tariff  rate  quotas.  The  Southern 
African  Customs  Union  (SACU),  comprising  Eswatini,  Botswana,  Lesotho,  Namibia  and 
South Africa, grants duty free and quota free treatment to 84.9% of products exported by the 
EU  to  the  region.  An  additional  12.9%  of  EU  exports  benefits  from  partial  liberalisation 
(reduced tariffs or tariff rate quotas). As a least developed country, Mozambique liberalises a 
smaller percentage of exports from the EU. 

The EU-SADC EPA is the first and only regional EPA in Africa to be fully operational (all 
partners  are  implementing  the  tariff  cuts  foreseen  by  the  EPA).  The  Agreement  replaces  all 
the trade provisions  of the former bilateral  Trade and Development  Cooperation Agreement 
(TDCA) between the EU and South Africa . 

2. 

MAIN IMPLEMENTATION ISSUES  

2.1   Main open issues, progress and follow-up  

Mozambique has started to apply the reduction in EPA customs duties for goods coming from 
the  EU  since  the  1st  of  January  2019,  as  the  last  SADC  EPA  State  to  do  so.  Several  EU 
Member States and EU companies confirmed that it is working in practice and that they are 
benefiting  from  preferential  (reduced)  EPA  tariff  for  imports  from  the  EU  to  Mozambique. 
Mozambique  has  also  updated  its  tariff  book  (pauta  aduaneira)  to  the  Harmonized  System 
nomenclature of 2017.163  
In  February  2019,  the  first  meeting  of  the  EU-SADC  EPA  Joint  Council  took  place.  At  its 
first  meeting, the Joint Council adopted the institutional  framework of the EPA,for instance 
rules  of  procedures  of  the  main  bodies  under  the  EPA  and  procedural  rules  on  dispute 

163 The Harmonized System (HS/SH) is an international nomenclature for the classification of products. It allows 
participating  countries  to  classify  traded  goods  on  a  common  basis  for  customs  purposes.  Mozambique´s 
updated tariff book is published on Mcnet site.   

308 

 
 
 
 
 
 
 
 
                                                 
settlement and avoidance. This allowed all the bodies set up under the EPA to become fully 
operational.  

In 2019, the EU and the SADC EPA States had regular contact on trade irritants concerning in 
particular poultry (see section 2.3) and textile exports of the EU to SACU. In both cases the 
EU believes that the SACU States are not respecting the obligations under the EPA.   

An  outstanding  implementation  issue  is  the  fact  that  the  EPA  foresees  the  possibility  to 
‘cumulate origin’: for instance, a SADC EPA State could import products from other SADC 
EPA States or another  ACP country,  carry out  some processing, and export under the same 
preferential regime that applies to fully originating products (i.e. zero duties and zero quota). 
This provision could be key for integration within the SADC region but has not entered into 
force yet, in the absence of a confirmation by the SADC EPA States of the intention to start 
applying  it.  It  has  nevertheless  be  discussed  between  the  EU  and  the  SADC  EPA  States  at 
several occasions. 

2.2 

Progress in the implementation of trade and sustainable development provisions 

The  EU-SADC  EPA  includes  a  chapter  on  Trade  and  Sustainable  Development  and  parties 
have used it, for example, to engage in a debate on trade and climate change during the latest 
Trade and Development Committee meeting, in February 2020. 

At the Joint Council meeting of 19 February 2019, EPA Parties committed to co-facilitate at 
least once per year the organisation of a meeting of non-state actors from both the EU and the 
SADC EPA States to discuss EPA-related issues and EPA implementation. 

During  the  meeting,  the  SADC  EPA  States  have  committeed,  by  the  next  Trade  and 
Development Committee, to send a proposal rerding non-state actors and how they should be 
engaged in the implementation of the EPA. To this date, this however remains substaintially 
outstanding (see section 3 below). 

On  the  same  date,  the  EU  and  African  Farmers  Association  of  South  Africa  hosted  the 
Organic, Fair & Ethical Trade Event in Cape Town. The event was attended by more than 140 
participants  from  industry,  emerging  farmers,  academics  and  government.  The  event 
addressed  market  opportunities  ino  the  European  sustainable,  fair  and  ethical  market  for 
farmers in South Africa, provided technical input and information on organic, fair and ethical 
trade and showcased successful case studies. Participants used the opportunity to deliberate on 
these matters with policy makers – high-level input was provided by the Deputy Minister of 
Agriculture  Forestry  and  Fisheries  in  the  Government  of  South  Africa  and  the  EU  Trade 
Commissioner. 

2.3 

Legal enforcement – dispute settlement case 

On 14 June 2019, the EU requested  formal  consultations with  SACU regarding a safeguard 
measure imposed on 28 September 2018 on imports of frozen poultry from the EU, thereby 
triggering  the  dispute  avoidance  and  settlement  procedures  foreseen  under  the  EU-SADC 
agreement. Consultations, which are the first step in the dispute settlement process, took place 
in Gaborone (Botswana) on 13 September 2019. During the consultations, the EU focussed on 

309 

 
 
 
 
 
 
 
 
 
 
 
three main aspects of the safeguard measure at stake, namely the legal basis used by SACU, 
the procedural aspects of the investigation, and the data and calculations used to determine the 
level of the safeguard.  

By way of background, on 15 December 2016 a provisional safeguard measure of 13.9% was 
imposed on imports from  the whole EU based  on Article  34 of the EU-SADC EPA. On 28 
September  2018,  SACU  adopted  a  final  safeguard  measure  against  imports  of  poultry  from 
the EU. The safeguard measure takes the form of increased tariff duties, subject to progressive 
reduction over a period of four years. The safeguard was set at 35.3% for the first six months, 
which were reduced to 30% in March 2019. Yearly reductions will follow in March 2020 to 
25% and in March 2021 to 15%. The safeguard will expire on 11 March 2022. However, it 
could be extended for a further 4 years thereafter. 

The  adoption  of  the  safeguard  in  September  2018,  should  be  seen  in  the  context  of  South 
Africa’s concerted effort to curb imports of poultry from the EU. 

In  2015,  South  Africa  imposed  anti-dumping  duties  of  22%,  30%  and  73%  on  imports 
respectively  from  Germany,  the  Netherlands  and  the  UK,  based  on  the  South  Africa's  anti-
dumping regulatory  framework. These measures would normally expire after 5  years unless 
an interim investigation is opened based on new elements, or a sun-set investigation is granted 
at the end of the 5 years to renew the measures. The Southern African Poultry Association has 
made  a  submission  to  renew  the  measures  for  another  five  years  and  the  administrative 
process to this effect has just started.  

In  addition,  in  October  2016,  South  Africa  imposed  SPS  bans,  due  to  avian  influenza 
outbreaks,  on  poultry  from  eight  EU  Member.  These  bans  are  still  in  force  for  four  EU 
Member  States  (Belgium  France,  Germany,  and  Hungary)  despite  the  fact  that  the  avian 
influenza  outbreak  was  already  contained  back  in  2017  and  the  World  Organisation  for 
Animal Health (OIE) declared them Avian Influenza free. Bans on imports from Poland and 
Spain  were  only  lifted  in  2019  (following  field  visits)  and  the  Netherlands  was  readmitted 
only in February 2020.  

As a consequence of the above measures, EU exports of frozen bone-in chicken cuts affected 
by the SACU safeguard measure dropped in 2017 to less than one third of the 2016 levels and 
have  since  stayed  low.  Because  of  the  inability  of  the  South  African  producers  to  meet 
demand,  imports  from  EU  were  substituted  by  imports  from  US  and  Brazil.  On  13  March 
2020 SACU’s  MFN rate was increased from 37.5% to 62%  impacting on imports from non-
EU countries. 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The  6th  meeting  of  the  Trade  and  Development  Committee  (TDC),  the  main 
implementing body under the Agreement, took place in February 2020, alongside a meeting 
on Trade in services, and technical committee meetings.  

During the TDC, the committee agreed on a system for monitoring and evaluating the EPA. 
The Parties in particular agreed to a set of monitoring indicators and agreed to work towards 
adopting  annual  joint  monitoring  reports.  Moreover,  the  Parties  discussed  a  request  from 
Angola to start negotiations on its accession to the EPA.  

310 

 
 
 
 
 
 
 
 
 
Parties  endorsed  a  number  of  draft  decisions  for  adoption  by  the  Joint  Council  on  the 
following  matters:  (i)  updating  the  reference  quantities  for  the  application  by  the  Southern 
African Customs Union (SACU) of the Agricultural safeguard under Article 35 of the EPA, 
(ii) allocation and reallocation of the tariff rate quotas (TRQs (pending the SACU-wide TRQ 
management  system)  for  imports  from  the  EU  and  on  (iii)  corrigendum  to  the  SADC-EU 
EPA.  

Following the formal consultations within the  trade dispute on safeguard tariff imposed by 
the  SACU  on  imports  of  frozen  poultry  from  the  EU  (see  section  2  above),  the  Parties 
exchanged views on the next steps of the dispute settlement procedure.  

As the SADC-EU EPA approaches 4 years of its implementation, the Parties exchanged views 
on its review which should start in 2021 in accordance with the Agreement’s provision.  

The co-facilitation of engagement of non-state-actors representatives from both sides in the 
monitoring of EPA implementation was also discussed with a view of reaching agreement on 
key  principles  allowing  organisation  of  a  first  joint  meeting  of  non-state  actors  from  both 
sides in October 2020. 

In the context of implementation of the Trade and Sustainable Development Chapter, the 
SADC-EPA  Party  made  presentation  on  climate  change  policies  and  the  EU  Party  on  the 
European Green Deal, the new EU’s climate friendly growth strategy. 

The  SADC  EPA  States  provided  updates  on  their  National  EPA  Implementation  Plans, 
aiming  at  identifying  the  necessary  steps  and  measures  to  fully  implement  the  EPA  and 
maximize the contribution of the Agreement to sustainable development. 

In  the  margins,  a  meeting  on  Trade  in  Services  took  place  between  the  EU  and  the 
‘participating SADC EPA States’ (Eswatini, Botswana, Lesotho and Mozambique). It was a 
fruitful  first  discussion  between  the  parties  on  trade  in  services  since  the  last  discussion  in 
2014. 

During the same week, a 3rd meeting of the Special Committee on Trade Facilitation and 
Customs  Cooperation  and  a  4th  meeting  of  the  Special  Committee  on  Geographical 
Indications  and  Trade  in  Wines  and  Spirits  and  a  second  meeting  of  the  Agricultural 
Partnership  took  place.  SACU  expressed  its  willingness  to  finally  start  applying  diagonal 
cumulation164 although some small administrative formalities still need to be met.  

Previously, on 19 February 2019 the first meeting of the EU-SADC EPA Joint Council (at 
ministerial level) took place. This first meeting of the Joint Council allowed for the adoption 
of  the  ‘institutional  set-up’  of  the  Agreement,  notably  the  rules  of  procedure  for  the  bodies 
under  the  agreement  and  the  procedural  rules  for  dispute  settlement.  Moreover,  the  Joint 
Council endorsed an update of the  annex to  the  EPA on the  agricultural  safeguard that  will 
render  this  provision  operational.  This  update  allows  the  Southern  African  Customs  Union 

164 SADC EPA States have the possibility to use non-originating materials through the rules on cumulation of origin. This 
means  that  in  certain  circumstances,  a  factory  in  for  example  Botswana  can  use  materials  from  another  country  and 
further  process  them.  In  calculating  whether  the  final  product  can  be  considered  to  originate  in  Botswana  within  the 
meaning of the EPA, the materials from the other country are considered to be Botswana inputs and count towards the 
originating status of the final product. The SADC EPA allows SADC EPA States to cumulate with originating materials 
products from other countries party to the EPA, as well as many other countries (ACP and others). 

311 

 
 
 
 
 
 
 
 
 
 
                                                 
(SACU) to impose a safeguard on imports of certain products from the EU, should these  go 
beyond  a  pre-defined  threshold  level.  Finally,  at  a    meeting  which  took  place  on  the  day 
before, the Trade and Development Committee also adopted the list of arbitrators for dispute 
settlement. 

4. 

TRADE AND DEVELOPMENT COOPERATION AND SPECIFIC AREAS OF IMPORTANCE  

1.  Regional programmes 

Regional  economic integration was  a focal  sector for the SADC region,  both  under the 10th  
and 11th European Development Fund (EDF). The following programmes are directly relevant 
to EPA implementation.  

a)  Under 10th EDF 

EU-SADC  Trade  Related  Facility  (TRF)  (€32  million)  continued  in  2019,  supporting 
national  administrations  to  better  implement  regional  integration  policies  at  national  level, 
such as the SADC Trade Protocol. The Programme was granted an extension up to September 
2021. All SADC EPA States have in the past benefitted from support under this Facility, for 
example:  

-  Botswana:  Strengthening  capacity  of  trade  development  institutions,  SPS  and  TBT 
(€1.2 million) and development of a national e-commerce strategy for Botswana (€1.2 
million); 

-  Eswatini:  €2.6  million  for  trade  facilitation,  tourism  policy,  customs  administration, 

with a focus on the Agriculture sector; 

-  Mozambique:  €2.6m  was  approved  in  2017  (until  2019)  to  support  complementary 
aspects  of  the  SADC  Trade  Protocol  and  EPA  in  Mozambique,  managed  by  the 
Ministry of Industry and Trade. 

The  Tripartite  Transport  and  Transit  Facilitation  Programme  (TTTFP)  (€18m)  is 
assisting COMESA, EAC and SADC (Tripartite) member states to harmonize road transport 
laws, policies, regulations, standards and systems with the aim to facilitate increased trade. A 
Project Management Unit is hosted by SADC Secretariat on behalf of the Tripartite. 

The Regional Integration Support Programme (€20 million) was completed in December 
2018 and aimed at supporting the implementation of the regional trade agenda, the negotiation 
of the EU-SADC EPA and the SADC Finance and Investment Protocol.  

b)  Under 11th EDF:  

The EU-SADC Support to Improving the Investment and the Business Environment in 
the  SADC  region  (SIBE)  programme  (€14  million)  will  support  the  implementation  of  the 
SADC  protocol  on  investment  and  finance  by  improving  and  harmonising  the  investment 
policy framework in the region to facilitate and enhanced integration of financial markets.  

EU- SADC Support to Industrialisation and Productive Sectors in SADC Region (SIPS) 
(€18  million)  will  support  the  development  of  two  regional  value  chains  (leather  and  anti-
retroviral) through the enhancement of the policy and regulatory environment along these two 
value chains and the improvement of the private sector participation.  

312 

 
 
 
 
 
 
 
 
 
 
 
 
EU-SADC Trade Facilitation Programme (TFP) (€15 million): aims at reducing the cost of 
intraregional  trade  by  enhancing  the  efficiency  of  border  posts.  It  will  harness  the  benefits 
from  the  EU-SADC  EPA  and  support  implementation  of  trade  facilitation  measures  at 
corridor level.  

2.  National programmes 

In addition, each SADC EPA State has drawn up or is in the process of drawing up, jointly 
with  the  EU,  National  EPA  Implementation  Plans  (NEIPs)  The  purpose  is  to  identify 
necessary steps and measures to fully implement the EPA and maximize the contribution of 
the EPA to long-term sustainable development. Under the 11th EDF, the EU will support the 
operationalization  of  the  NEIPs  with  €30  million  in  Botswana,  Eswatini,  Lesotho, 
Mozambique  and  Namibia.  Under  the  Development  Cooperation  Instrument  (DCI), 
€10 million have been allocated to South Africa for the same purpose.  

A)  BOTSWANA 

The  Government  officially  submitted  the  Botswana  EPA  Implementation  Plan  in  October 
2017. Key national stakeholders and the EU Delegation developed the Plan.  

Current and future support programmes: 

EU-Botswana  Policy  Dialogue  Facility  -  €1.5  million.  This  programme  will  facilitate  and 
strengthen  the  dialogue  between  Botswana  counterparts  and  the  EU  in  issues  of  common 
concern, such as the implementation of EU-SADC EPA and the strengthening of the private 
sector and the development of value chains in Botswana.  

The EU–SADC Economic  Partnership Agreement Support programme €6 million. The 
programme's  main  objective  will  be  to  support  Botswana  to  effectively  implement  the  EPA 
and reap the full benefits offered by the agreement. The programme was approved by the EDF 
Committee on 15 October 2019. Preparatory work is ongoing for the inception phase of the 
programme.

Trade and private sector development (TPSD) Facility. The objective of the two missions 
is  to  develop  an  Action  Plan  to  address  the  capacity  needs  of  the  relevant  stakeholders  to 
implement  the  EPA  National  Implementation  Plan  and  to  assist  in  the  preparation  of  the 
Terms of reference for the technical assistance programme.  

Support to Job Creation and Investment Climate – Botswana Window (€5 million). The 
programme aims at supporting the implementation of the Doing Business reforms Roadmap 
and  Action  Plan,  in  particular  through  simplification  of  the  regulatory  framework  and 
development  of  e-government  services.  It  will  also  support  ecotourism  development,  with  a 
focus  on  community-based,  economically-viable  and  effectively  managed  ecotourism 
enterprises,  conservation  and  heritage  areas.  The  programme  was  approved  by  the  EDF 
Committee in September 2019. Work is  ongoing to  prepare the necessary documents for its 
implementation.  

Short-term support was also provided by experts of the EU-funded TradeCom Facility: (1) 
Support to Botswana National Beef Producers' Union :  In the context of the privatisation of 

313 

 
 
 
 
 
 
 
 
 
 
 
 
the  Botswana  Meat  Commission,  the  support  aims  at  boosting  the  beef  value  chain  in 
Botswana  and  the  profitable  participation  of  farmers  to  the  new  company.  (2)  Botswana 
Investment and Trade Centre: support market intelligence for organic fertilizer exports to the 
EU,  guidelines  and  recommendations  for  active  businesses  in  keeping  with  the  EU  import 
requirements.  

B)  ESWATINI 

The Government completed the drafting of the National EPA implementation plan early 2019, 
which was approved by Cabinet in April 2019.  

Current and future support programmes: 

Under the COMESA Regional Integration Support Mechanism (RISM), €1.1 million have 
been granted to Eswatini for private sector support: construction of trade hub and investment 
promotion. 
Support  to  EPA 
implementation  (€6  million).  This  programme  (currently  under 
formulation) will aim to: 1.Strengthen public-private dialogue on ease of doing business and 
Increase  value  addition,  productivity  and  competitiveness 
MSME competitiveness.2. 
through  environmentally  and  socially  responsible  producer-buyer  alliances.  3.Enhance 
capacity of trade and investment promotion bodies and/or private sector associations so as to 
take advantage of EPA opportunities.  

Support to Job Creation and Investment Climate – Eswatini Window (€5 million).  The 
specific objectives of this programme are:  

o  The establishment and support to public-private partnerships in selected value chains 

(horticulture/livestock); 

o  Support  to  the  participation  of  local  micro,  small  and  medium  enterprises  in  export-

oriented Special Economic Zones; 

o  Increasing  the  data  and  knowledge  available  on  upgrading  the  targeted  value  chains 

and on designing bankable investment projects. 

Livestock  Value  Chain  Development  Programme  (€9.15  million).  Its  specific  objectives 
are  to  improve  smallholder  livestock  productivity  through  a  more  inclusive  management  of 
assets  at  community/household  level,  promoting  inclusive,  efficient  and  transparent  markets 
for livestock products and the establishment of new SMEs along the value chain.  

C)  LESOTHO 

The National EPA  Implementation Plan was finalised and  adopted in  the first  half of 2018. 
Lesotho confirmed the Coordinating Committee on Trade (LCCT) as an existing platform to 
monitor EPA implementation (the Committee is hosted by the Ministry of Trade and Industry 
and involves all relevant stakeholders).  

Current and future support programmes: 

A  programme  is  under  formulation  to  assist  the  government  in  NEIP  implementation  and 
trade facilitation (RIP, €6 million) that should be adopted mid-2020.  The main objective of 
the programme is to contribute to Lesotho’s inclusive economic development and sustainable 
regional and international trade. With a focus on selected value chains to be identified as part 

314 

 
 
 
 
 
 
 
 
 
 
 
 
of the action, the specific objectives are to enhance the capacity of the Government to manage 
and  implement  trade  agreements,  supporting  the  upgrading  of  value  chains  and  investment 
promotion. 

D)  MOZAMBIQUE 

A  National  EPA  Implementation  Plan  was  formally  adopted  by  the  Government  of 
Mozambique in April 2018. The EPA Implementation Plan addresses the priorities relating to 
EPA Compliance Measures, EPA related business environment actions and trade facilitation 
reforms in order to improve business environment and facilitate trade. Mozambique officially 
launched its National Trade Facilitation Committee (NTFC) in July 2018 

Current and future support programmes: 

The Support Programme to Trade and Development (€6m NIP + €6m RIP) will address 
trade facilitation issues (customs, trade safeguards, quality infrastructure)  and aspects  of the 
business environment agenda, with  a focus on supporting the smooth implementation of the 
SADC EU EPA and of the WTO´s Trade Facilitation Agreement. The Financing Agreement 
was  signed  in  December  2018  and  implementation  started  on  4th  November  2019  with  the 
arrival  of  the  Technical  Assistance.  In  addition,  the  quality  infrastructure  component  to  be 
implemented by UNIDO will be contracted before the end of the year.  

E)  NAMIBIA  

The EPA Implementation Plan was formulated with EU support. A validation workshop was 
organised  on  21  August  2018.  The  plan  remains  quite  large,  although  a  few  activities  have 
been  prioritized.  The  Ministry  of  Trade,  Industrialisation  and  SMEs  Development  has 
officially adopted the Plan as National  Working  Document  and will be shortly organising a 
launching event.  

One  of  the  Plan's  priority  actions  is  to  strengthen  the  role  and  performance  of  the  National 
Competent  Authorities,  with  focus  on  SPS  issues.  To  this  end,  the  technical  assistance  was 
extended to provide the Namibian Standards Institute, who is the competent authority for fish 
and  fishery  products,  with  training  and  capacity  building  in  the  areas  of  a)  delegation  of 
authority  and  rules  of  origin,  b)  food  safety  and  animal  health  and  the  importance  of  SPS 
agreements and c) access to the EU market and overview of the applicable EU legislation.  

Current and future support programmes: 

Namibia  benefits  from  the  10  EDF  RIP,  Trade  related  facility,  €2.6m:  Optimisation  of  the 
Industrial Upgrading and Modernisation Programme (IUMP); trade facilitation and EPA 
implementation 

11 EDF National Indicative Plan, – Technical Cooperation Facility, Technical Assistance to 
support  the  formulation  of  the  EPA  implementation  Plan.  The  last  phase  of  the  project  is 
envisaged  to  deliver  some  specific  training  and  capacity  building  to  the  Namibia  Standard 
Institute in the area of food safety and SPS requirements for Namibia exports to the EU of fish 
and fishery products.  

315 

 
 
 
 
 
 
 
 
 
 
 
 
 
11  EDF  Livestock  Support  Programme  in  the  Northern  Communal  Areas  of  Namibia: 
boosting  the  entire  beef  value  chain,  from  production  to  processing  and  trade  (investment 
climate driver: business environment reforms). 

11  EDF  RIP  Cross-regional  -  Support  to  EPA  implementation  in  Namibia,  €6m  was 
endorsed  by  the  EDF  Committee  in  October  2019.  The  programme  has  an  innovative 
approach  to  EPA  implementation  including:  i)  supporting  the  EPA  more  private  sector 
in  value  chain  support,  notably  around 
involvement 
SPS/TBT/quality); ii)  peer to peer exchange .   

(e.g.  by  associating 

them 

F)  SOUTH AFRICA 

The  South  African  Government  has  preprared  an  EPA  implementationplan  which  aligned 
EPA implementation and support along the priorites of the National Development Plan.  

The  EU-funded  €10  million  ‘Support  Programme  to  the  implementation  of  the  EU–SADC 
Economic  Partnership  Agreement  (EPA)  in  South  Africa  (SA)’  seeks  to  unlock  challenges 
related  to  quality  infrastructure  and  technical  capacity  in  agricultural  value  chains  that  are 
throttling exports to the EU and to support increased responsiveness to opportunities under the 
EU-SADC EPA,  particularly  for emerging exporters of agricultural  products  and those with 
recognised  geographical  indications.  €8.5  million  will  be  provided  through  budget  support 
and €1.5 million in technical assistance.Implementation will start in April 2021.  

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

Over  the  last  few  years,  a  number  of  factors  (from  drought  and  cyclones,  to  energy 
infrastructure failures, as well as unfavourable commodities cycles) have held back economic 
growth  and  jobs  creation  in  the  region.  South  Africa,  the  regional  economic  powerhouse, 
remains in a state of economic stagnation, with growth rates well below 1%. The economies 
Namibia  has even contracted. 

Besides  persistent  structural  problems  in  South  Africa,  events  such  as  cyclones  Idai  and 
Kenneth in Mozambique in 2019 have further weighed heavily on the whole region.  

In 2019, South Africa only grew by 0.2%165, formally entering technical recession by the end 
of the  year. According to available sources,  Lesotho  grew by 2.6%166, Eswatini  by 1.4%167, 
Mozambique  by  1.9%  168,  Namibia  contracted  by  1%.  Only  Botswana  maintained  a  higher 
growth  rate  of  3.5%169.  In  such  a  difficult  environment170,  the  continued  growth  of  South 

165 http://www.statssa.gov.za/?p=13049  
166 https://www.afdb.org/en/countries/southern-africa/lesotho  
167 https://www.afdb.org/en/countries/southern-africa/eswatini  
168 https://www.afdb.org/en/countries/southern-africa/mozambique/mozambique-economic-outlook  
169 https://www.afdb.org/en/countries/southern-africa/botswana  
170  See  also  IMF  data  at  https://www.imf.org/en/Publications/REO/SSA/Issues/2019/04/01/sreo0419  page  58 

onwards 

316 

 
 
 
 
 
 
 
 
 
 
                                                 
African exports to the EU thanks to the EPA are important to note, providing much needed 
support to the economic locomotive of the region. 

South Africa recorded a good performance in the WEF Competitiveness Global ranking 2019, 
gaining 7 positions, up to number 60 thereby narrowing the gap with Muritius, Africa’s top 
performer at 52171. That was mainly thanks to improvements in public sector governance and 
re-inforcement  in  the  judiciary  system.  Namibia  at  94  improved  its  ranking  by  6  positions. 
Botswana (at 91), Eswatini (at 121) and Lesotho (at 131) dropped by one notch compared the 
previous  year,  while  Mozambique,  (the  lowest  ranking  in  the  region  at  136)  lost  four 
positions. 

The COVID pandemic in 2020 is expected to lead the region into a state of quasi economic 
paralysis  as  most  manufacturing  (automotive  and  textile  in  particular)  and  mining  activities 
have been brought to a halt. The agricultural sector may prove more resilient but will still be 
hit  by  a  large  number  of  constraints  (from  collapse  of  demand  for  some  producs  to  trade 
restrictions and logistics deterioration). 

5.2 

Trade in goods 

The  EU,  even  at  27,  remains  the  main  trading  partner  for  the  six  SADC  EPA  States, 
accounting for 23.4% of their exports (ahead of China with 11.75%, the US with 7.6% and the 
UK with 7.5%) and 26.1% of their imports (ahead of China with 18% and USA with 6.57%). 

Main destination for SADC EPA States’ exports within the EU are Germany (37%), Belgium 
(20.5%) and the Netherlands (14.1%), followed by Italy (8.8%) and Spain (6.6%). EU exports 
to SADC EPA States come from Germany (39%), the Netherlands (9.9%), Italy (8.1%) and 
France (7.7%).  

Total  trade  between  the  EU27  and  SADC  EPA  States  has  been  increasing  since 
implementation of the EPA in 2016. In particular, EU imports from SADC EPA states have 
increased continuously over the past five years, while EU exports have evolved irregularly to 
bounce  to  a  new  peak  in  2019.  While  the  overall  balance  of  trade  is  positive  for  the  EU, 
SADC EPA States record a surplus in agricultural trade with the EU. South Africa accounts 
for 82% of EU imports from and 93% of EU exports to SADC EPA States. The trade balance 
with  South  Africa  is  positive  for  the  EU  but  the  surplus  has  been  shrinking  (down  to  €4 
billion in 2019).   

In 2019 (and in line with previous growth), EU imports from SADC EPA States increased by 
€1.1  billion  or  5.4%  to  €23  billion,  while  EU  exports  to  SADC  EPA  increased  by  €1.45 
billion  or 6.2% to €24.5 billion.  

The  increase  in  EU27  imports  was  driven  exclusively  by  South  Africa,  and  mostly  by 
increases  of  imports  of  motor  vehicles  and  ores,  slag  and  ash  (predominantely  iron  ore). 
Overall EU imports from South Africa increased by €1.5 billion or 9% to a new record total 
of  €19  billion.  Main  imports  in  2019  were  motor  vehicles  (€5.9  billion,  +26.4%),  precious 
stones and metals (€3.4 billion, +5.8%), ores, slag and ash (€2.1 billion, +63.4%), edible fruits 

171 http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf  

317 

 
 
 
 
 
 
  
 
 
 
                                                 
and nuts (€1.2 billion, -3.2%), machinery and mechanical appliances (€1.2 billion, +11%) and 
iron and steel (€0.8 billion, 15.6%). 

Imports from Botswana decreased by €136 million (-10.8%) to €912 million billion due to a 
decrease in raw diamond exports (-€354 million or -31.7%), offset only slightly by increases 
in  exports  of  the  only  other  significant  export  to  EU,  namely  fresh  or  frozen  beef,  which 
leaped from €9.6  million to €17 million.  

EU imports from Mozambique decreased by €83 million (-4.7%) to €1.66 billion, mostly due 
to  slowing  raw  material  exports,  such  as  aluminium  (-3.7%)  and  coal  (-32%),  having  both 
registered record highs last  year. This  was partially compensated by significant  increases in 
exports  of  tobacco  (+12%)  and  cane  sugar  (+562.4%).  Other  agri-food  exports  in  2019 
included  frozen shrimps (€27 million, -10%),  and cashew nuts (€11.9 million, +24%).  

EU  imports  from  Namibia  decreased,  halting  the  positive  trend  of  the  last  few  years  (from 
€987 million in  2014 to €1.26 billion in 2018), levelling at  €1.1 bn in  2019. This  is  mainly 
due  to  a  drop  in  export  of  unrefined  and  refined  copper  (-€137  million,  or  -26%).  Other 
important  exports  in  2019  included  hake  fillets  (€228.7  million,  -  1.6%),    diamonds  (€117 
million, +12%), zinc (€55 million, -42%) and grapes (€53 million, +10.7%%). 

Both  Lesotho  and  Eswatini  trade  mostly  with  South  Africa.  EU  imports  of  diamonds  from 
Lesotho  fell  by  €54  million  (or  -16%)  to  €  292  million  in  2019  –  accounting  for  98%  of 
Lesotho's  total  exports  to  the  EU.  The  portion  of  processed  diamonds,  however,  increases 
(from  less  than  2%  to  nearly  10%).The  remaining  exports  are  mostly  apparel  and  clothing, 
and some tropical fruits.  

EU  imports  of  sugar  from  Eswatini  (accounting  for  some  80%  of  total  imports)  rebounced 
dramatically  to  €85  million  in  2019  (+  269%)  after  a  string  of  negative  years,  boosting 
Eswatini  trade  surplus  to  €72  million.  Exports  of  alcoholic  beverages  and  derivatives  kept 
increasing  (by  32%,  from  €5.3  to  €7  million).  However,  exports  of  prepared  or  preserved 
fruits and nuts, including fruit juices went down by 25% (from €4 to €3 million). 

Exports  of  SADC  EPA  States  to  the  EU  are  still  little  diversified.  The  share  of    mining 
products  and  precious  stones  and  metals  in  total  SADC  exports  to  the  EU  has  slightly 
decreased  since  implementation  of  the  EPA  but  nevertheless  remains  dominant  for  most 
countries.  Exports  are  largely  concentrated  in  few  products:  the  share  of  the  top  10  export 
products  in  their  total  exports  to  the  EU  is  extremely  high  for  Eswatini  (96.6%),  Botswana 
(99.9%), Lesotho (99.9%) and Mozambique (94.4%). Namibia (83.3%) may be showing some 
early  signs  of  diversification.  South  Africa  (46.9%)  is  the  exception,  as  the  country  has  a 
diversified  export  base  including  manufactured  goods  (cars  in  particular)  and  agricultural 
products.  

Preference  utilization  rates  (PUR)  for  exports  to  the  EU  for  the  region  is  88.8%,  averaging 
around  98-99%  range  for  Botswana,  Mozambique  and  Namibia.  They  were  a  bit  lower  for 
Eswatini, Lesotho and South Africa in 2019 where they stood at about 87.5%. 

In 2019, total EU exports to SADC EPA States were €24.5 billion. EU exports to Botswana, 
Eswatini,  Lesotho,  Mozambique  and  Namibia  increased  by  €144  million  (10.3%)  to  €1.53 
billion,  while  EU  exports  to  South  Africa  rebounced  by  €1.3  billion  to  €23  billion.  Main 
exports  to  SADC  EPA  States  were  machinery  and  mechanical  appliances  (€7.5  billion, 

318 

 
 
 
 
 
 
 
 
 
 
+7.3%),  motor  vehicles  (€4.7  billion,  +15.9%)  and  pharmaceutical  products  (€1.1  billion, 
+7.73%).  

Main increases in exports to SADC EPA States in absolute terms:  machinery and mechanical 
appliances  (+€400  million,  +9.5%),  motor  vehicles  (+368  million,  +9.4%),  electrical 
machinery  and  equipment  (+110  million,  +4.9%),  medical  instruments.  Main  increases  in 
relative  terms:  zinc  and  articles  thereof  (+279.2%);  aircraft,  spacecraft  and  parts  thereof 
(+267.7%), cereals (+67%) and products of animal origin (+26%).  

Exports of mineral fuels and oils (-€359 million, -35.7%), allumium (-€46 million, -25.8%), 
plastics  (-€21  million,  -2.2%)  and  sugar  (-€13  million,  -38.2%)    have  shown  the  largest 
absolute losses in 2019. In relative terms, exports of sugar (-38.2%), mineral fuels (-35.7%), 
live trees (-34.9%) and alluminium (-25.8%) decreased the most.  

According  to  South  African  statistics,  preference  utilization  rates  (PUR)  for  EU  exports  to 
South Africa (hence to SACU overall) stood at around 64.5% in 2018 (latest year for which 
data is available). For Mozambique, no data is available. 

5.3 

Trade in agricultural products 

Agricultural imports from the SADC EPA region to the EU have kept increasing since the 
entry into force of the EU-SADC EPA, moving from €2,1 billion in 2016 to €2,4 million in 
2019.  In  2019,  edible  of  fruits  and  nuts  accounted  56%  of  total  agri-food  imports,  despite 
decreasing slightly by 2.4% to €1,342 million. Sugar imports bounced back to €175 million 
(+€105  million,  +152%),  imports  raw  tobacco  increased  to  €132  million  (+€14  million, 
+12%), while wine imports decreased to €244 million (-€28.5 million, -10%) and imports of 
fruit and vegetable prepatations decreased to €109 million (-€2 million, -2%). 

Main  agri-food  imports  from  South  Africa  in  2019  were  citrus  (€ 536  million,  -1%)  and 
other fruits, excluding tropical (€575 million, -7%), wine (€244 million, - 10%) and tropical 
fruits  (€168  million,  +3%).  Wool  and  silk    (+€10  million),  fatty  acids  and  waxes  (+€5 
million), vegetables (+€5 million) and   tropical fruit (+€5 million) saw the strongest increases 
in absolute values. 

Tariff rate quotas opened by the EU to South Africa 

The  usage  of  the  TRQs  granted  by  the  EU  to  imports  from  South  Africa  has  decreased  for 
apple  juice,  sugar  and  tropical  canned  fruit  and  increased  slightly  for  canned  fruit.  Global 
weighted average of EU TRQ usage went down from 74% in 2018 to 69% in 2019. 

319 

 
 
 
 
 
 
 
 
 
 
 
 
Utilisation rate of TRQs opened by the EU to South Africa 

Sector 
Dairy 
Dairy 
F&V 
Sugar 
Sugar 
Sugar 
F&V 

TRQ description 
SMP 
Butter 
Strawberries, frozen 
Sugar 
Sugar, for refining 
White crystalline powder  500 
100 
Citrus fruit jams 
Canned 
fruit, 
tropical 
Mixtures of tropical fruit 
Orange juice, frozen 
Apple juice 

non-

TRQ 
Quantity  Unit 
500 
500 
400 
50,000 
100,000 

t 
t 
t 
t 
t 
t 
t 

Utilisation  in  TRQ  period 
ending in: 
2017 
0% 
0% 
0% 
84% 
100% 
0% 
0% 

2018 
0% 
0% 
0% 
99% 
100% 
0% 
0% 

2019 
0% 
0% 
0% 
91% 
99% 
0% 
0% 

57,156 
3,140 
1,099 
3,829 
350 
792,239 
339,531 
80,000 

t 
t 
t 
t 
t 
hl 
hl 
t 

55% 
0% 
100% 
25% 
24% 
77% 
100% 
14% 

44% 
8% 
100% 
86% 
21% 
98% 
100% 
17% 

47% 
0% 
100% 
4% 
18% 
84% 
100% 
15% 

F&V 
F&V 
F&V 
F&V 
Preparations  Yeast, active 
Wine 
Wine 
Ethanol 

Wine 
Wine 
Ethanol 

EU agri-food exports to SADC EPA states increased by €280 million  or 18% in  2019 and 
accounted for 7.6% of total exports to SADC EPA states  in  2019.  

Main  agri-food  exports  to  South  Africa  in  2019  were  wheat  (€261  million,  +63%), 
vegetables oils excluding olive oil (€172 million, +8%),  poultry meat ((€125 million, +42%) 
and spirits (€99 million, +0.5%). Export increases in absolute values were highest for wheat 
(+€101 million), poultry (+€37 million172), beer (+€28 million) and milk  powders and whey 
(+€26 million). Export decreases in absolute terms were highest for cane sugar (-€15 million, 
-86%), pork meat (-€6 million, -12%),  olive oil (-€3 million, -15%), and cheese (-€3 million, 
-10%).  

Tariff rate quotas opened by the SACU to the EU  

In 2019, SACU TRQs for cereals-based food preparations and Mortadella Bologna were used 
for  the  first  time.  Except  for  the  TRQ  on  barley  (which  was  not  used  because  out-of-quota 
tariff rate is 0%), all other SACU TRQs were used in 2019. Average weighted TRQ usage in 
2019 was 83%, almost unchanged from the 2018 level of 84%.  

172  Mainly thanks to record low figures in previous two years and  the provisional readmission of  imports from 

Poland, subsequently foreclosed in 2020 due to a new outbreak of avian influenza. 

320 

 
 
 
 
 
 
                                                 
Utilisation of SACU TRQs opened for imports from the EU (t) 
TRQ 

Quota 
2017 

Balance 
1.9.2017 

Quota 
2018 

Balance 
1.9.2018 

Pork 
Pig fat 
Butter 
Cheese 
Wheat 
Barley 
Cereal  Based Food 
Preparations 

1,500 
260 
200 
77 
500 
479 
1,783 
7,550 
300,000  10,936 
10,000 
10,000 
2,300 
2,300 

1,500 
225 
200 
60 
500 
150 
5,323 
7,700 
300,000  35,505 
10,000 
10,000 
2,300 
2,300 

Quota 
2019 

Balance 
1.9.2019 

1,500 
807 
200 
150 
500 
181 
4,060 
7,850 
300,000  33,073 
10,000 
10,000 
2,138 
2,300 

Ice Cream 
Mortadella 
Bologna 

150 
100 

150 
100 

150 
100 

70 
100 

150 
100 

49 
96 

5.4 

Trade in services and Foreign Direct Investments 

Trade  in  services  in  2018  (the  most  recent  year  for  which  data  ia  available)  show  that 
important gains for both sides made in 2017 could be broadly sustained. EU exports increased 
to  €7.6  billion  from  €6.9  billion  in  2017  (+10%),  with  gains  in  respect  of  all  SADC  EPA 
countries.  SADC  exports  grew  from  most  countries,  to  the  exception  of  Mozambique  and 
Botswana. SADC services exports totalled €5.1 billion, up from €4.7 billion in 2017 (+8%). 
While  South  Africa  exports  still  dominate  the  export  and  the  import  market  (to  the  tune  of 
90%) across a wide range of services to the EU, exports from other countries in the region are 
particularly significant in the tourism sector.  

FDI flows from the EU to the SADC EPA region contracted in 2018. EU FDI flows amounted 
to    a  negative  €-840  million  (mostly  driven  by  negative  flows  with  South  Africa).  EU  FDI 
stocks  were  at  €50  billion,  further  to  a  contraction  of  nearly  €6  billion  in  South  Africa. 
Mozambique and Botwana recorded positive increases. 

According to UNCTAD, South Africa received inflows of USD 5 billion in 2018. In addition 
to  intra-company  transfers  by  investors,  investment  into  SA  was  led  by  mergers  and 
acquisitions in business services and petroleum refining.  

Ramaphosa announced in  2018 that South  Africa was aiming to  attract  direct  investment  of 
USD  100bn  over  the  5  year  period  to  2023  (aprox  R1.2  trillion).  In  2019  investment 
commitments worth R363 billion were made by domestic and foreign firms at the second SA 
Investment Conference, 17% more than commitments made in 2018. 

Nevertheless, the slow pace of reform in the energy, water, transport and telecommunications 
sectors, together with  uncertainty in  the tourism  and mining sectors  and  serious  governance 
and  financial  problems  across  most  of  the  country's  SOE  is  undermining  higher  levels  of 
investment. 

321 

 
 
 
 
Foreign Direct Investment in Namibia decreased in the second quarter of 2019, confirming an 
overall stagnant trend. 

According  to  UNCTAD,  FDI  inflows  in  Botswana  rose  from  USD  177  million  in  2017  to 
USD 229 million in  2018. The total  stock of FDI in  Botswana reached  USD 4.82 billion  in 
2018, estimated at 25.4% of the country's GDP (World Investment Report 2019, UNCTAD). 
In general terms, inflows of FDI have declined to less than 1% of GDP in 2016-18, compared 
to inflows of consistently over 4% of GDP during the 2000s. The mining sector (diamonds) 
attracts  most  of  the  FDI;  however,  investments  in  the  services  industry  (banking  and 
insurance)  have  been  growing  in  recent  years.  FDI  primarily  comes  from  the  EU,  SACU, 
Canada and Zimbabwe. 

Mozambique is an important destination country for FDI in South-East Africa. The country 
recorded historically high FDI inflows levels in 2013, reaching more than USD 6 billion, and 
over USD 4.9 billion in 2014. After a decrease of FDI  in 2017 (USD 2.2 billion) due to the 
difficulties faced by the major investor countries and global oil price fall, FDI influx in 2018 
increased  to  USD  2.7  billion.  The  stock  of  FDI  was  about  USD  40  billion  in  2018, 
representing  281%  of  the  GDP  (2019  World  Investment  Report,  UNCTAD).  While  the  oil 
sector  captured  more  than  half  of  the  influx  (USD  1.33  billion),  other  industries  failed  to 
capture foreign investors' interest. The evolution of influx will depend on liquefied natural gas 
potential.  Foreign  investors  are  primarily  interested  in  the  country's  mining,  hydrocarbon, 
energy, logistics, retail and real estate sectors. There is a growing interest on the coal industry. 
In  2017,  Mozambique's  leading  foreign  investors  were,  in  order,  the  United  Arab  Emirates, 
Mauritius, China, Italy, the United States, South Africa, Portugal and Turkey. 

6. 

CONCLUSIONS  

The  succesful  holding  of  the  first  Joint  Council  in  February  2019,  allowed  for  sustained 
implementation throughout the year up to the the 6th meeting of the Trade and Development 
Committee in February 2021.  

Most of the main trends in bilateral trade were confirmed in 2019 with imporant gains from 
both sides showing that the SADC EU EPA operates as an important buffer against a negative 
economic environment. While trade in 2020 is being seriously disrupted by the pandemic, it 
appears that fully exploiting opportunities offered by the SADC EU EPA can provide a solid 
reference for the recovery process. While the pandemic impact in certain sectors (such as the 
automotive)  will  impact  signifcantly  on  trade  flows,  efforts  will  be  required  to  ensure  that 
trade is increasingly aligned with broader sustainability objectives, whether in agriculture or 
non  agriculture  trade.  From  this  perspewctive,  strenghtening  regional  linkages  and  value 
chains should be seen as part of a strategy to increase sustainability, through optimasiation of 
production,  innovation  and  wider  inclusion.  In  this  context,  the  co-operation  activties 
supported through EU funding may prove particularly important, as illustated by the example 
below.       

322 

 
 
 
 
 
Example 1: White asparagus from Namibia thanks to Spanish investment 

In September 2019, thanks to a twining agreement between the Omusati Regional Council in 
northern  Namibia  and  the  Spanish  Industrias  Alimentarias  de  Navara,  SAU,  the  Spanish 
Asparagus  Agro-Processing  Factory  –  the  first  of  its  kind  in  Namibia  –  was  officially 
inaugurated.   

Located  in  Ruacana,  in  the  region  of  Omusati,  the  factory  is  part  of  an  agro-industrial 
complex  for  the  production,  processing  and  export  of  white  asparagus  to  local  and 
international markets, particularly Spain and other European countries.  In the EU, imports of 
white asparagus  face  a standard tariff of 10.2% (or 6.7%  for  countries benefitting  from  the 
Generalised Scheme of Preferences) but, thanks to the EPA, asparagus from Namibia enters 
duty-free.  

The  asparagus  for  processing  is  supplied  by  the  Otjimbele  Agricultural  PTY,  a  60-hectare, 
drip-irrigated farming scheme in Etunda, near Ruacana.  White asparagus farming started in 
2017,  after  two  years  of  trials  carried  out  in  collaboration  with  Namibia’s  Ministry  of 
Agriculture.  The current plot is expected to produce 460 tons of asparagus a year.  Plans are 
underway to expand and increase the production area to 300 hectares. 

400  people  work  in  the  factory  and  200  on  the  farm,  mainly  women  from  the  local 
communities.  When in full production, the project will create up to 800 jobs in the factory 
and 1,000 jobs during harvesting. 

Namibia’s Government sees the project as a great contribution for developing the agricultural 
sector and adding more value locally.  The project could serve as a catalyst for commodity-
based  industrialisation,  which  is  one  of  the  key  elements  for  economic  transformation  and 
growth. 

“Namibian asparagus is of excellent quality. The impact of this project on the community is 
very significant. Sustainability is being ensured through a cutting-edge technology that 
minimises water consumption.  Thanks to the SADC EPA, we could import all the capital 
goods and inputs duty-free and secure long-term, unfettered access to the EU market.”  

Carlos  Lertxundi  Aretxaga,  General  Manager, 
representing Otjimbele Agriculture PTY 

  Asparagus  Agro-Processing  Project 

323 

 
 
 
 
 
 
 
 
 
 
 
7. 

STATISTICS 

EPA SADC 

324 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with EPA SADC (mio €)Imports18 40618 87220 38421 88923 080Exports24 03521 92823 26623 11124 561Balance5 6293 0562 8811 2221 481Share EPA SADC in EU27 trade with Extra-EU27Imports1.1%1.2%1.2%1.1%1.2%Exports1.3%1.2%1.2%1.1%1.2%Total (I+E)1.2%1.2%1.2%1.1%1.2%Share EU27 in trade EPA SADC with worldImportsExportsTotal (I+E)Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade EPA SADC: IMF DotsTotal merchandise trade EU27 with EPA SADC (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports21 88923 0801 1915.4%Imports1 907 5651 934 94427 3791.4%Exports23 11124 5611 4506.3%Exports2 059 8822 132 01572 1333.5%Balance1 2221 481259Balance152 317197 07144 754Total trade45 00047 6412 6415.9%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with EPA SADC (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports2 3452 417713.0%Imports118 891121 6442 7532.3%Exports1 5831 86328017.7%Exports169 000181 82512 8257.6%Balance-762-554208Balance50 10960 18110 072Total trade3 9284 2793518.9%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with EPA SADC (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports19 54420 6631 1205.7%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports21 52822 6981 1705.4%EU27 exports1 890 8821 950 19059 3093.1%Balance1 9842 03551Balance102 208136 89034 682Total trade41 07143 3612 2905.6%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with EPA SADC (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports4 7685 1613928.2%Imports824 543824 015-528-0.1%Exports6 9057 64974410.8%Exports928 420968 64840 2284.3%Balance2 1362 488352Balance103 877144 63340 756Total trade11 67312 8091 1369.7%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with EPA SADC (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports3 9944 1004 0734 7685 161Imports642 682776 924784 743824 543824 015Exports5 3337 0216 5096 9057 649Exports750 713849 023855 477928 420968 648Balance1 3382 9202 4362 1362 488Balance108 03172 09970 734103 877144 633Total trade9 32711 12110 58211 67312 809Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with EPA SADC (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward9 6349 70310 3489 8126 457Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward47 19886 40350 03856 08050 497Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInwardInward143 012803 285328 703209 462-67 421OutwardOutward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsEPA SADCEPA SADC20182019Extra-EU27EPA SADC2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018EPA SADC05 00010 00015 00020 00025 00030 00020152016201720182019Merchandise trade EU27 with EPA SADC (mio €)ImportsExportsBalance 
 
 
1. 

INTRODUCTION 

Pending a comprehensive Economic Partnership Agreement (EPA) with the full Eastern and 
Southern  African  region,  an  interim  EPA  was  signed  in  2009  by  four  ESA  countries 
(Madagascar, Mauritius, Seychelles and Zimbabwe). This ESA-EU interim EPA (iEPA) has 
been  provisionally  applied  since  14  May  2012  for  the  four  countries.  Comoros  signed  the 
EPA in 2017, ratified the EPA in December 2018 and implements the EPA since 7 February 
2019. Zambia took part in the negotiations of the interim EPA and it may decide to sign the 
agreement in the near future.  

In  2017,  the  then-four  ESA  partners  requested  to  deepen  this  Agreement  beyond  trade  in 
goods. In May 2019, the parties agreed to on a joint scoping paper at technical level, paving 
the  way  for  the  official  launch  of  the  negotiations  in  October  2019  (see  section  4  for  more 
details).  A  Sustainability  Impact  Assessment  (including  a  limited  ex-post  evaluation  of  the 
existing interim EPA) will be conducted in parallel to the negotiations.  

2. 

MAIN IMPLEMENTATION ISSUES  

2.1   Main open issues, progress and follow-up  

The interim EPA offers duty free quota free access in the EU for all imports from ESA as of 
1st January 2008. ESA States are in the process of liberalising their market to EU imports in 
line with the individual schedules of each ESA State, annexed to the interim EPA.173 By 2022, 
Comoros,  Madagascar  and  Zimbabwe  will  liberalise  around  80%  of  their  trade,  while 
Mauritius  and  Seychelles  will  liberalise  96  and  98%,  respectively.  Goods  excluded  from 
liberalisation  vary  according  to  the  individual  offer  but  include  predominantly  agricultural 
products and some industrial goods such as plastics, paper, or textiles.174  

Mauritius and Seychelles are implementing according to the respective schedule. Zimbabwe 
has now fully met its tariff liberalisation commitments following the gazette of the EU EPA 
market Access Offer covering the period 2017-2022 through Statutory Instrument (S.I. 2017 
of  2019)  in  October  2019.  Madagascar  needs  to  complete,  as  agreed  among  the  parties,  the 
transposition of the tariff lines into HS2017 to ensure a smooth implementation of the tariff 
reduction phases. Comoros started implementing the agreement on 7 February 2019. 

The  EU  Delegations  in  the  region  maintain  a  close  dialogue  with  government  and  private 
sector  on  economic  matters,  including  trade  policy.  For  example,  in  Madagascar,  the  EU 
participates  in  the  Economic  Round  Tables  (which  are  annually  organised  for  last  5  years) 
which  the  government  uses  to  consult  and  obtain  recommendations  how  to  improve  doing 
business climate and increase EU investments. EPA matters are also discussed. In Mauritius, 
regular  business  consolations  are  organised  before  each  political  dialogue.  Also  before  the 
official launch of the negotiations to deepen the current agreement in October 2019, Mauritius 
private  sector,  which  is  very  active,  met  with  the  EU  to  discuss  their  expectations  and  the 

173 The ESA countries were not in a position to table a common regional market access offer and each country 

presented an individual offer based on its specificities. 

174 More details can be found here: http://trade.ec.europa.eu/doclib/docs/2012/march/tradoc_149213.pdf  

325 

 
 
 
 
 
 
 
 
                                                 
evaluation  of  the  existing  EPA.  EU  funded  the  e-licencing  platform  project  of  the  private 
sector  allowing  businesses  to  obtain  licenses  and  permits  on  line.  In  Seychelles,  likewise, 
project  launches  and  political  dialogues  are  used  as  an  opportunity  to  consult  and  engage 
private sector. In Madagascar,  Economic Round Tables, which are annually organised for last 
5  years,  consult  with  private  sector  and  obtain  recommendations  how  to  improve  doing 
business  climate,  to  facilitate  exports  and  increase  EU  investments.  In  Zimbabwe,  the  EU 
participated  at  events  organised  by  private  business,  which  the  public  sector  such  as  the 
Zimtrade  Exporter’s  Conference  (November  2019)  and  the  Zimbabwe  International  Trade 
Fair (April 2019) also attended, with the aim to discuss barriers to their operations.  

This year, the parties agreed to adopt the technical amendments on the Protocol on Rules of 
Origin aimed at:  

(1)  allowing ‘accounting segregation’ for materials;  
(2)  replacement  of  the  provision  on  ‘direct  transport’  by  a  rule  on  ‘non-alteration’  and 

possibility to use REX for EU exports to the ESA countries; and  

(3)  transposing  to  HS2017  the  codes  in  Annex  II  relating  to  the  product  specific  rules. 

The amendments entered into force on 31 March 2020175. 

Most importantly, the Parties agreed to undertake further steps towards the development of a 
common  methodology  aimed  at  finalizing  a  monitoring  and  evaluation  framework  for  the 
interim  EPA.  This  is  an  important  step  to  define  a  joint  understanding  of  the  progress  and 
remaining challenges as to be able to address those adequately. 

2.2  

Trade and sustainable development goals  

The  interim  ESA-EU  EPA  does  not  include  a  dedicated  chapter  on  Trade  and  Sustainable 
Development. Parties are committed to negotiate such a chapter in the course of the ongoing 
negotiations to deepen the Agreement. Under the umbrella of the Cotonou Agreement, and in 
the framework of development cooperation, the EU and the five ESA EPA States cooperate 
closely  on  achieving  the  sustainable  development  goals,  including  ensuring  the  contribution 
of trade policy towards that objective.  

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

An  established,  functioning  EPA  Committee  serves  as  a  platform  for  dialogue  in  a  spirit  of 
partnership  to  oversee  and  monitor  the  agreement's  implementation  and  to  take  appropriate 
decisions. 

The  main  issues  addressed  by  the  7th  Meeting  of  the  EPA  Committee  in  January  2019  (in 
Brussels) were: 

  Agreement on modernisation of rules of origin  and adoption by the EPA Committee 

by mid-2019; 

  Agreement  to  put  in  place  a  monitoring  and  evaluation  Mechanism  to  ensure  an 

effective implementation of the interim EPA;  

175175 OJ L93,  Decision No 1/2020 of the EPA Committee of 14.1.2020, p.1 

326 

 
 
 
 
 
 
                                                 
 

Initiated  discussions  on  the  scope  and  objectives  of  the  envisioned  deepening  of  the 
agreement (covering additional topics) which the ESA4 have asked for. The deepening 
will  evolve  around  the  issues  mentioned  in  the  rendez-vous  clause  of  the  interim 
agreement; 

  Progress  on  the  support  to  EPA  implementation  under  both  the  10th  and  the  11th 

European Development Fund (EDF); 

  Agreement to setup a coordination mechanism financed by the EU to assist ESA side 

in the negotiations for the deepening; 

  Discussion  on  the  ESA  commitments  to  the  development  of  internationally  agreed 

standards for cooperation between tax jurisdictions. 

4. 

TRADE AND DEVELOPMENT COOPERATION AND SPECIFIC AREAS OF IMPORTANCE  

Deepening of the current agreement 

In 2017, the four ESA States (Madagascar, Mauritius, Seychelles and Zimbabwe) expressed 
their interest to deepen the agreement beyond trade in goods towards a more comprehensive 
agreement.  The  EU  welcomed  this  initiative,  especially  in  the  context  of  the  Africa-Europe 
Alliance for Sustainable Investment and Jobs, and engaged in this process. In the meantime, 
Comoros  joined  the  EU-ESA  EPA  on  7  February  2019.  In  October  2019,  both  parties 
officially launched the negotiations for the deepening of the agreement after having agreed on 
the scope and objectives of this deepening. The new agreement should cover other important 
trade related areas  and trade related rules, such as services, investment, technical barriers to 
trade, intellectual property rights as well as trade and sustainable development. A first round 
of  negotiations  based  on  text  proposals  from  both  sides  took  place  in  January  2020  and 
covered  the  five  following  areas:  rules  of  origin,  sanitary  and  phytosanitary  measures, 
customs and trade facilitation, technical barriers to trade and agriculture.  

Support and technical assistance for the negotiations 

At the request of the five ESA countries, the European Union has agreed to provide financial 
assistance  for  the  setting  up  of  an  EPA  coordination  mechanism.  Its  aim  is  to  ensure 
appropriate coordination and technical support to the five ESA countries so they can engage 
effectively  in  the  negotiation  process.  The  ESA  EPA  Hub  received  initially  €1  million  to 
support the ESA side to the preparation of the scoping phase and the launch of negotiations 
and an additional €1 million to continue with the needs of negotiations. Further, the process is 
assisted  by  EU  Member  States,  as  exemplified  by  the  German  development  agency  GIZ 
support for capacity building, whereas complementarity is assured.  

Technical assistance towards the implementation of the current agreement 

Development cooperation is essential for EPA implementation and for ensuring the long-term 
sustainable  development  impact  of  the  agreement.  Each  of  the  four  ESA  EPA  countries 
benefits from an envelope of €10 million and Comoros an envelope of €6 million under the 
SADC regional programme to support EPA implementation and export competitiveness. The 
respective technical assistance programmes are currently in different states of preparation or 
implementation.   

327 

 
 
 
 
1.  COMOROS  

In 2019, Comoros benefitted from support through the EU-funded TradeCom  II programme 
for Comoros’ accession to the WTO and EPA implementation. Following ratification of the 
ESA-EPA  in  January  2019,  the  country  is  currently  in  the  process  of  drafting  its  EPA 
National  Implementation  Plan.  A  €6  million  programme  (RIP  EDF)  to  support  the 
implementation of the EPA is being formulated and will be adopted during 2020. It will assist 
private  sector  to  become  more  competitive,  will  foster  private-public  dialogue  and  promote 
the “Made in Comoros” brand. 

2.  MADAGASCAR  

The EPA National  implementation  plan was elaborated in  2016, however little progress  has 
been  made  on  reforms.  The  Programme  d'Appui  au  Développement  des  Exportations  et  à 
l'Intégration  Régionale  (PADEIR,  €10  million)  is  designed  to  support  EPA  implementation 
through capacity building for key public and private sector stakeholders and addressing non-
tariff barriers. Certain number of actions have been initiated:  

  Cooperation  with  the  APEX  export  promotion  agency  which  directly  supports 

exporters to respond to international market expectations;  

  Support for a One-Stop Shop for customs clearance certificates and authorisations in 

line with the objectives of the Trade Facilitation Agreement; 

  Support  to  quality  infrastructure  development,  in  particular  accreditation  and 

upgrading of laboratories, to counteract border rejection of exports;  

  Support for ICT, tourism and textile sectors;  

  Support for Public-Private dialogue.  

Other EPA-relevant projects include:  

  Support  for  Business  Climate  Programme  (€7  million):  aims  at  improving  doing 
business  conditions  and  improve  investment  attractiveness  of,  started  in  September 
2019.  

  Support  for  Ecosystem  Incubation  (€5  million)  is  dedicated  to  young  entrepreneurs' 
support but will be reported on in 2020. EDB will be involved as a one-stop shop for 
opening  and  developing  a  business  as  well  as  a  support  institution  for  young 
enterprises.  

3.  MAURITIUS 

Under the EPA support project (€10 million under the 11th EDF), the EU supported various 
reforms of the business and investment climate. Given that Mauritius business licensing was 
viewed as a major obstacle to business activity due to its overtly bureaucratic nature, lack of 
transparency  and  highly  prescriptive  licenses,  €5.5  million  have  been  dedicated  to  the 
development of an e-licencing platform. The portal is now operational for the main permits. 
The  reform  contributed  to  improving  Mauritius’  rank  (now  13th  worldwide)  in  the  World 
Bank Doing Business Report (more information in the case study at the end of this chapter).  

Furthermore,  the  EU  supports  the  implementation  of  the  Intellectual  Property  Development 
Plan to unlock the potential for innovation.  The IP Law was adopted in Mauritius in 2019 and 

328 

 
 
 
 
work on the reform of the IPR office will continue in 2020. Moreover, thanks to EU support, 
the OECD conducted the first Regulatory Impact Assessment (RIA) in Mauritius to improve 
cost benefit analysis of business-related legislation, strengthen regulatory oversight and ability 
to monitor compliance. Finally, the Mauritian Chamber of Commerce and Industry received 
the  EU  support  to  implement  technology  transfer  activities  between  the  EU  and  Mauritian 
SMEs.  

4.  SEYCHELLES 

Seychelles’ EPA Implementation Strategy 2017-2020 aims amongst other at strengthening the 
role of high value manufacturing niche sectors, including in the blue economy.     
Under  the  10th  EDF,  Seychelles  benefited  from  €1  million  actions  focusing  on  capacity 
building  of  trade  related  institutions  such  as  the  Seychelles  Standards  of  Bureau.  Dialogue 
between  the  EU  and  the  Seychelles  in  the  context  of  this  project  has  also  promoted  the 
Seychelles  government  into  transferring  EPA  responsibilities  from  Foreign  Affairs  to  the 
Ministry of Trade for more consistency. Under the 11th EDF, a new €10m project has recently 
been  signed  and  will  start  implementation  in  2020.  The  project  will  strengthen  capacity, 
ownership and efficiency of key actors that manage and implement the EPA, as well as other 
trade and regional integration agreements; and support the upgrading of specific value chains 
to expand trade with the EU.   

Thanks  to  a  €5.4  million  garantee,  the  EIB  financed  a  large  rehabilitation  and  extension 
project  of  Port  Victoria  in  Seychelles.  Further,  under  the  sectoral  support  of  the  EU-
Seychelles  Sustainable  Fisheries  Partnership  Agreement  (SFPA),  three  medium-sized  local 
fish processing companies exporting to the EU market have benefited from the construction of 
adequate  warehouses  designed  for  fulfilling  the  EU  standards  on  quality  assurance,  food 
safety and good manufacturing practices. In addition, smaller units have been leased to local 
fish  food  processors  to  ensure  similar  food  and  hygiene  standards  in  the  local  market.  The 
above actions ensure local value addition, decent job conditions, circular economy principles 
for high quality fresh fish processing facilities targeting the EU market and the local market. 

5.  ZIMBABWE 

The  Zimbabwe  EPA  Support  Project  (€10  million)  seeks  to  improve  the  legislative  and 
regulatory  framework  in  the  area  of  trade  and  private  sector  development.  This  will  be 
accomplished  through  support  to  the  custom’s  “single  window”  initiative  and  the 
establishment  of  a  coordinated  border  management  platform.  Furthermore,  the  project  will 
seek  to  improve  competitiveness  and  export  capacity  of  SMEs  and  boost  agricultural  value 
chains. The project will provide technical assistance and capacity development to the Ministry 
of Foreign Affairs and International Trade, the national EPA Committee and to the National 
Economic  Consultative  Forum  to  strengthen  EPA  implementation  and  private-public 
dialogue.Also  relevant,  technical  assistance  is  being  provided  to  review  and  strengthen  the 
organisational capacity of the Zimbabwe Revenue Authority.  

329 

 
 
 
 
5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

COMOROS: Cyclone Kenneth (April 2019) heavily affected economic activity in the Union 
of Comoros in 2019. According to the IMF, growth for the year as a whole fell to about 1.9 
%, while inflation remains contained at 3.3%. Fiscal revenue as a share of GDP fell as well, 
driven  by  the  impact  of  the  cyclone  on  the  economy  and  difficulties  of  several  state-owned 
enterprises.  Growth  of  credit  to  the  private  sector  remained  weak  as  the  operating 
environment for banks remains challenging. 

The structural trade deficit results from a limited export base (cloves, ylang-ylang and vanilla 
represent 90% of exports), subject to the large variation in the prices of agricultural products, 
and  dependency  on  imports  of  hydrocarbons,  rice  and  other  agricultural  products, 
manufactured  products,  etc..  The  deficit  is  partially  compensated  by  private  and  official 
transfers:  external  subsidies,  in  particular  from  the  Middle  East,  and  diaspora  remittances 
reach even 18.6% of GDP.  

MADAGASCAR:  Growth  had  reached  a  decade-high  of  5.1%  in  2018,  driven  by  robust 
activity in export-oriented sectors, but slowed in the first half of 2019 due to a combination of 
weakening  external  demand  from  key  trading  partners  and  the  slow  execution  of  public 
spending. In particular, as the new government took office following the presidential election 
end-2018,  the  establishment  of  the  new  administration  and  the  revision  of  the  2019  budget 
were associated with slower budget execution, particularly for public investments.   

Export  revenues  and  industrial  activity  were  also  adversely  affected  by  a  significant 
deceleration  in  major  export  markets,  which  coincided  with  the  flare-up  of  trade  tensions 
between the United States and China. These two countries absorb 25% of Malagasy exports. 
This  has put  downward pressure on both  the demand and price of Madagascar’s key export 
goods and was associated with a dip in industrial sales and order books at the start of the year. 
Weakening  export  revenues,  including  from  cash  crops  and  nickel,  and  sustained  imports 
were reflected in a deteriorating current account balance. 

MAURITIUS: Mauritius continues to preserve macroeconomic stability and steady growth, as 
confirmed by the IMF Article IV report released in April 2019.  The country's gross domestic 
product (GDP) in 2019 grew 3.6%, driven by construction and services sectors (banking, ICT) 
as well as a rebound in  agriculture. Manufacturing growth remained on a sluggish trend and 
was negatively impacted by decelerating global demand during 2019.The high level of debt, 
however,  makes  Mauritius  vulnerable  to  macro-fiscal  shocks  in  the  medium-term.  In  this 
sense, the Central  Bank has surprisingly donated 18 billion Rs (close to 4% of GDP) to the 
government  to  repay  parts  of  its  debt  obligations.  On  the  fiscal  policy,  the  Government  is 
adopting  an  expansionary  policy  with  increased  government  expenditure,  especially  on  the 
welfare state. After the reform of its global business sector, triggered inter alia by the request 
of the European Commission under exercise to list non-cooperative tax jurisdictions, the IMF 
recommends  that  Mauritius  adopt  further  revenue  mobilization  efforts  to  build  fiscal  space 
and  preserve  debt  sustainability.  Tax  efficiency  should  be  improved  to  yield  additional 
revenues,  although  the  Mauritius  Revenue  Authority  remains  the  best  performing  African 
revenue authority and among the best in the world.  

330 

 
 
 
 
SEYCHELLES:  Macroeconomic  perspectives  for  Seychelles,  which  evolved  into  a  high-
income status in 2015, remain positive. Real GDP growth is estimated at 3.5% in 2019, down 
slightly from 4.1% in 2018 (AfDB data), driven by tourism, fisheries, and financial services. 
The  service  sector  (mainly  tourism)  contributes  more  than  80%  of  GDP  and  employment, 
while industry contributes a meagre 16% (5% from manufacturing). GDP per capita growth, 
3.4% in 2018, declined to an estimated 2.8% in 2019, due to lower GDP growth. Inequality is 
high.  Although  the  unemployment  rate  was  low  in  2018  (3.5%),  youth  unemployment  was 
four times as high (14.5%).  

The  exchange  rate  remained  stable  over  the  past  three  years,  mainly  due  to  a  robust  tourist 
presence and prudent macroeconomic management. Inflation remained low at 2.6% in 2019, 
with  lower  import  prices  than  anticipated  and  a  tight  monetary  policy.  The  fiscal  balance 
declined  to  a  slight  deficit  in  2019  (0.1%)  due  to  increased  capital  outlays.  The  current 
account remained in deficit, hovering around 17% of GDP, substantially financed by foreign 
direct  investment  (FDI).  Current  debt  is  58%  of  GDP,  down  from  130%  during  the  2008 
financial crisis. 

ZIMBABWE:  According  to  the  World  Bank  real  GDP  is  expected  to  contract  by  7.5%  in 
2019. Shortages of foreign currency, fuel  and electricity  contributed to  dampened economic 
activity.  Production  of  agriculture  and  mining  products  is  on  the  decline.  Inflation  reached 
230% in July 2019, driven by rising prices of both  food and non-food items  on the back of 
local  currency  depreciation.  The  food  security  situation  is  dire  following  the  destruction 
caused  by  cyclone  Idai  2019  and  exacerbated  by  the  current  El  Nino  induced  drought 
conditions prevailing in the country. 

5.2 

Trade in goods 

While the EU27’s share as a destination for ESA4 exports has been shrinking over the past 
decade, the bloc remains the second largest trade partner for ESA5 after South Africa. In 
2019,  the  main  export  destination  of  ESA5  was  South  Africa  (31%),  followed  by  the  EU 
(22% - down from 51% in 2008)), the United Arab Emirates (10%) and the US (8%). ESA5 
imports in 2019 mainly came from South Africa (19%), the EU (15%), China (14%), United 
Emirates  and  India  (both  8%).  In  2019,  total  trade  between  the  EU  and  ESA5  is  highest 
with  Mauritius  (€1.8  billion)  and  Madagascar  (€1.7  billion),  followed  by  Zimbabwe  (€514 
million), Seychelles (€445 million) and Comoros (€82 million).   

331 

 
 
 
 
Although  total  trade  with  ESA5  increased  slightly  by  €43  million  (1%)  in  2019,  the  EU 
imports from ESA5 decreased by €234 million (-10%) while EU exports to ESA5 increased 
by €277 million  (14%)  absorbing the long  standing positive  for ESA5 trade balance, which 
became  positive  for  the  EU  (€165  million).  This  reverse  of  trade  balance  is  mostly  due  to 
Mauritius and Madagascar.  

The overall decrease in EU imports from ESA5 in 2019 is mainly caused by a sharp fall in 
vanilla  and  cobalt  imports  from  Madagascar,  prepared  and  preserved  fish  from  Seychelles, 
iron and steel products from Zimbabwe and preserved fish and textiles from Mauritius.  EU 
imports have risen for cane sugar from Mauritius, tobacco, as well as earth and stones from 
Zimbabwe, nickel from Madagascar and light oils from Seychelles. 

Mauritius has long had a trade deficit with the EU  due to strong imports of machinery and 
transport  equipment  and  from  the  EU.  As  a  positive  development,  in  2019,  EU  imports  of 
cane  sugar  from  Mauritius  bounced  back  strongly  (+€35  million,  +  55%),  reversing  the 
negative trend caused by the end of the sugar quota in the EU. Imports of optical, medical and 
surgical instruments also continued to grow, albeit still accounting only for around 3.5% (€21 
million)  of  total  exports.  On  the  other  hand,  EU  imports  of  prepared  or  preserved  fish 
decreased  (-€17  million  or  9%).  The  continuous  decrease  in  textile  exports  (in  2019,  -€19 
million or -12.7%) can be attributed to growing competition in the world and specifically, as 
the  Mauritian  sector  stresses,  the  introduction  of  the  minimal  wage  in  Mauritius  in  2018. 
Moreover, Mauritius experiences shortages of manpower. The textile factories rely on foreign 
(Bangladeshi  and  Malagasy)  labour  and  many  producers  delocalised  to  Madagascar. 
Slowdown in Mauritian textile industry’s exports may also be attributed to the non-response 
to current consumer needs, i.e. bio products from natural fibres and use of sustainable and fair 
production practices.     

EU  imports  from  Madagascar  decreased  by  €207  million  (or  -17%)  due  to  a  substantial 
decrease  of  imports  of  raw  vanilla  (-€115  million  or  -32%)  and  vanilla  extracts  /  oils  (-€32 
million or almost 100%), as well as cobalt (-€63 million or -72%) and fisheries (-€17 million 
or -17%). The decrease in vanilla exports is mainly due to a combined result of problems in 
the  management  of  the  production,  the  limited  by  the  government  time  for  the  Malagasy 
campaigns compared to other countries and the crop robberies (green vanilla collected in the 

332 

 
 
 
 
 
 
 
 
fields).  The  decrease  in  cobalt  exports  is  due  to  a  decrease  in  total  quantities  (-57%),  as  a 
Madagascar-based  major  nickel  and  cobalt  producer,  Ambatovy,  shut  down  for  planned 
maintenance in the end of the  year, and a fall in global prices (-33%). On the positive side, 
exports of apparel and clothing remained stable (accounting for €328 million or 33% of total 
EU imports from Madagascar). Imports of nickel increased (+€12 million, +27%). 

EU imports from Zimbabwe grew marginally (+€4 million or 1.2%), due to growing imports 
of tobacco (+€23 million or 26%), granite and other earths and stones (+€9 million or 45%) 
and edible fruits and nuts (+€5 million or 14%). On the other hand, imports of iron and steel 
decreased significantly (-€42 million, -30%). 

EU  imports  from  Seychelles  decreased  due  to  a  drop  in  imports  both  of  fresh  fish  (-€14 
million, -28%) and prepared and preserved fish products (-€35 million, -21%).  

EU imports from Comoros are concentrated in vanilla, cloves, and ylang-ylang essential oil. 
Imports of the latter decreased by €4 million or 25% in 2019.  

Exports  are  becoming  increasingly  diversified  for  Madagascar  and  Mauritius,  but 
diversification  is  still  sought-after  for  Seychelles  and  Zimbabwe,  as  well  as  Comoros. 
Mauritius  has  launched  exports  of  assembled  medical  appliances  and  instruments,  of  which 
around 60% are destined for the EU market. Madagascar has a textile heavy export base, but 
is  also  adding  continuously  new  products.  In  2019,  the  top  10  export  products  (HS  6-digit) 
accounted for 60% of Madagascar’s total exports to the EU and 62% for Mauritius, but 83% 
for Zimbabwe, 98% for Seychelles and 99% for Comoros. Looking at the number of different 
products  (at  6  digits  level  of  HS  codes)  exported  to  the  EU  with  a  minimum  value  of  €1 
million:  in  2019,  the  EU  imported  100  different  products  from  Madagascar  (up  from  69  in 
2008; mostly different textile products, however), 63 from Mauritius, 27 from Zimbabwe, 9 
from Seychelles and 3 from Comoros.  

Preference utilisation rates for ESA5 exports to the EU are high, ranging from 92-98% for the 
five countries.  

A number of structural problems impact the (diminishing) competitiveness of the economy of 
Mauritius. Traditional export sectors are breaking away. For example, the Mauritian textile 
industry is endangered by increasing labour costs and strong competitors such as Bangladesh, 
Vietnam and even Madagascar now. Recently, Mauritius has taken important steps towards an 
economy based on more sophisticated and high-tech manufacturing and services as mentioned 
above.  

For Madagascar, the outlook does not look very good this year mainly because the shrinking 
exports  of  vanilla  and  cobalt.  This  trend  could  be  reversed  with  changes  in  the  overall 
business  environment  and  investment  climate.  Similarly,  Zimbabwe  has  enormous  export 
potential  but  as  long  as  the  economic  situation  remains  uncertain,  with  no  serious  business 
climate reforms and no foreign capital inflows, necessary investments will not take place. For 
Seychelles,  the  lack  of  diversification  is  serious;  the  country  is  aiming  at  exporting  more 
fisheries  by-products  and  processed  fish  products  but  is  hindered  by  human  resource 
limitations.  

333 

 
 
 
 
 
 
 
 
 
 
 
Top 10 EU imports from ESA5 in 2019 
Madagascar 
Vanilla 

Comoros 
Essential oils 

1 

2 

Vanilla 

Frozen shrimps 
and prawns  

Mauritius 
Prepared or 
preserved tunas, 
skipjack etc. 
Cane sugar 
(170199) 

Seychelles 
Prepared or 
preserved tunas, 
skipjack etc. 
Frozen yellowfin 
tunas  

Zimbabwe 
Tobacco 

Iron and steel 
products of 
chapter 72 

3 

Cloves 

4 

5 

6 

Vessels for the 
transport of goods 
and/or persons 
Cruise ships 

Light-vessels, fire-
floats, floating 
cranes and other 
vessels 

7  Machines for the 
reception, 
conversion and 
transmission or 
regeneration of 
voice, images or 
other data 
Personal property 
belonging 

8 

9 

 Parts suitable for 
use solely or 
principally with 
electric motors and 
generators, electric 
generating sets and 
rotary converters 

Raw cane sugar 
not containing 
flavouring or 
colouring 
(170114) 
T-shirts, singlets 
and other vests of 
cotton 
Men’s or boys’ 
trousers, bib and 
brace overalls 
(etc.) of cotton 

Light oils and 
preparations  

Fresh or dried 
oranges  

Frozen skipjack 
or stripe-bellied 
bonito 
Prepared or 
preserved fish  

Raw hides and 
skins of reptiles 

Arsenic sulfides, 
alunite, 
pozzuolana, 
earth colours and 
other mineral 
substances, n.e.s. 
Granite, crude or 
roughly trimmed  

Men's or boys' 
shirts of cotton 

Frozen bigeye 
tunas 

Articles of 
jewellery 

Fresh or chilled 
yellowfin tunas  

Ferro-silico-
chromium  

Jerseys, pullovers, 
cardigans, 
waistcoats and 
similar articles of 
Kashmir 
Nickel  

shawls, scarves, 
mufflers, 
mantillas, veils 
and similar articles 
of silk or silk 
waste  
Fresh tamarinds, 
cashew apples, 
jackfruit, lychees, 
passion fruit, other   
shawls, scarves, 
mufflers, 
mantillas, veils 
and similar articles 
of textile materials 

Prepared or 
preserved tunas, 
skipjack, etc  
Unshelled beans  

Frozen yellowfin 
tunas  

Diamonds  

Fresh or chilled 
peas  

Fresh or dried 
avocados 

Fresh or chilled 
fillets of fish, 
n.e.s. 
Instruments and 
appliances used in 
medical, surgical 
or veterinary 
sciences, n.e.s. 

10  Coffee 

cobalt  

medical 
instruments 

motor boats and 
motor yachts 

Ferro-chromium, 
containing by 
weight > 4% of 
carbon 

Source: Eurostat, product names partly simplified 

Increasing EU exports to ESA5 (+€288 million  or 13.9%) can be explained by the unusual 
spike  of  machinery  and  equipment  mainly  due  to  transport  equipment  (aircraft)  exports 
(+€307  million  in  2019).  Disregarding  this  sector,  EU  exports  to  ESA5  actually  decreased 
slightly (-0,9%) in 2019.  

Main  export  increases  in  2019  are  machinery  and  transport  equipment  (+€276  million  or 
41%),  chemicals  (+€13  million  or  5%),  medical  instruments  (+€11  million  or  15.4%), 
plastics, rubber and products thereof (+€8 million or 12%), vegetables (+€8 million or 12%), 

334 

 
 
 
 
 
 
 
 
 
 
 
textiles (+€7 million or 4.2%) and pulp of wood and products thereof (+€6 million or 15%). 
Main export decreases  concern machinery  and  appliances (-€31 million  or 6%), live animal 
and animal products (-€24 million or 14%) and base metals (-€11 million or 11%). 

5.3 

Trade in agricultural products 

In  2019,  the  agri-food  trade  balance  was  still  positive  for  ESA5  (€404  million)  but  lower 
than in 2018 (+€486 million). Increased imports of sugar (from €64 million in 2018 to €105 
million in 2019) and tobacco (from €87 million in 2018 to €109 million in 2019) were offset 
by decreased imports of tropical fruits (from €386 million in 2018 to €274 million in 2019).  
EU  exported  mainly  wheat  (€40  million),  followed  by  pet  food,  food  preparation  not 
specified, pasta and pastry, and infant food and other cereals, starch or milk preparations.  

5.4 

Trade in services and Foreign Direct Investments 

The current EPA does not include provisions on services. In 2018 (latest year for which data 
is available), total EU services imports from ESA5 increased by €318 million to €2.2 billion, 
The change was driven by a substantial increase of Services imports from Mauritius (the most 
important  services  trade  partner  among  ESA5)  by  €171  million  or  15%,  to  €1.3  billion  and 
Seychelles by € 67 million or 17%.  

Services imports from Zimbabwe and Madagascar are also growing, albeit from lower levels, 
by 39% to  €74 million and 16% to  €319 million  respectively. As for services imports from 
Comoros,  they  doubled  to  €84  million  discounting  probably  the  positive  climate  from  the 
implementation of the agreement.  

On  the  other  hand,  EU  services  exports  to  ESA5  in  total  shrunk  to  €1.4  billion  in  2018,  a 
decrease of 32% over 2017, which is entirely due to Mauritius. The EU runs a deficit with all 
ESA5 but with Zimbabwe.  

The five ESA countries are currently negotiating provisions on trade in services, which would 
allow them to find a new growth engine in services exports. In particular, Mauritius took part 
in  the  WTO’s  negotiations  for  a  Trade  in  Services  Agreement  (TISA)  and  now  would  be 
interested to use the ESA EPA opportunities, as TISA is not going forward. Financial services 
and tourism are main sectors of interest. 

Current  EU  FDI  stocks  in  ESA5  stand  at  €17.1  billion,  out  of  which  €15.7  billion  for 
Mauritius,  €778  million  for  Seychelles,  €366  million  for  Zimbabwe  and  €268  million  for 
Madagascar. 

FDI  flows  in  2018  remained  positive  for  Madagascar  and  Zimbabwe  albeit  at  low  levels 
(+€14.3 million and +€33 million respectively) proportionally to the overall level of stocks in 
these two countries reflecting their need for improving the overall business climate to attract 
investors. On the other hand, for Mauritius, the flows became substantially negative in 2018 (-

335 

 
 
 
 
 
 
€1.2 billion from +€2.3 billion in 2017) reflecting a massive disinvestment from EU investors 
which may be attributed to the effect of the issues raised relating to illicit financial flows176.  

According to Mauritian national statistics, gross FDI from the EU for the first three quarters 
of  2018  amounted  to  MUR  7.4  billion  (approx.  €170  million)  accounting  for  two-thirds  of 
world  total.  In  2019,  national  statistics  from  the  Bank  of  Mauritius  show  that  FDI  inflows 
from the EU increased significantly, driven by real estate investment.  

Mauritius stands out as the single most important jurisdiction in Africa offering a stable legal 
environment. In particular, Mauritius has gathered a reliable reputation regarding its banking 
structures and increasingly expanded its financial sector. As such, Mauritius is the largest EU 
FDI recipient among the ESA5 partners. However, this positive context may be compromised 
by  the  listing  of  Mauritius  by  the  Financial  Action  Task  Force  as  one  of  the  countries 
presenting  strategic  deficiencies    in  their  legal  framework  onanti-money  laundering  and 
countering  the  financing  of  terrorism.  Mauritius  is  currently  reforming  its  anti-money 
laundering legal framework, including with EU support.  

FDI in Mauritius is mostly in financial sector and real estate. The same is true for Seychelles 
where the financial/offshore sector is growing rapidly; the government considers the financial 
sector  as  the  third  pillar  of  economic  development  after  tourism  and  fisheries.  Productive 
investment in both countries can be found in tourism, but also in manufacturing for Mauritius. 
For Seychelles, an example for productive investment is a German-Seychelles joint venture, 
Sun Tech Seychelles177, which provides solar photovoltaic technology and after sales services 
in the Seychelles.   

6. 

CONCLUSIONS  

In  2019,  the  most  important  element  was  the  official  launch  of  the  negotiations  for  the 
deepening of the current agreement on 2 October in Mauritius. The future comprehensive free 
trade  agreement  will  improve  the  business  and  investment  environment  and  stimulate  the 
economies of the five ESA countries, for instance by diversifying their exports to the EU. The 
process  will  thereby  contribute  to  the  objectives  formulated  in  the  Commission’s 
“Comprehensive  Strategy  with  Africa”  and  the  “Africa-EU  Alliance  for  Sustainable 
Investment and Jobs” launched in September 2018. Moreover, it will  promote both regional 
economic  integration,  for  instance  by  developing  regional  value  chains,  and  continental 
integration by furthering the ESA five countries' preparedness for implementing the African 
Continental Free Trade Area (AfCFTA) under the African Union. 

Another  important  element  in  2019  was  the  agreement  on  the  setting  up  a  mechanism  for 
monitoring  and  evaluating  the  implementation  of  the  agreement.  It  will  consist  of  regular 
monitoring  reports  and  period  ex-post  evaluations  undertaken  in  close  cooperation  by  the 
parties. Both parties agreed to undertake further steps towards the development of a common 

176 Mauritius has been identified by the Financial Action Task Force (FATF) as a country potentially presenting 
deficiencies relating to Mauritius framework to combat money laundering and the financing of terrorism and 
proliferation. In  February 2020, such strategic deficiencies  led FATF to list Mauritius  in its  so-called  grey 
list.  

177 https://sts.sc/index.html  

336 

 
 
 
 
                                                 
methodology aimed at finalizing a monitoring and evaluation framework for the interim EPA. 
This  is  an  important  step  to  define  a  joint  understanding  of  the  progress  and  remaining 
challenges as to be able to address those adequately. 

and 

negotiation 

challenging.  Nevertheless, 

Overall,  the  very  different  economic  profiles  and  levels  of  development  of  ESA5  render 
implementation 
natural 
complementarities  and  the  countries  see  the  potential  for  cooperation  among  themselves, 
both in the context of the EPA and beyond. Labour shortages in Mauritius can be addressed 
by  employing  Malagasy  and  by  delocalising  e.g.  textile  production  to  Madagascar. 
Madagascar can supply Mauritius and Seychelles with needed fruits and vegetable exports, if 
SPS issues are resolved. Mauritius experience in reforming the business  environment is key 
for  Madagascar,  Seychelles  and  Zimbabwe  in  unblocking  their  development  prospects. 
Zimbabwe, finally, features high in Mauritius’ Africa Strategy, as a close partner to invest in.  

there 

are 

MAURITUS  –  ranking  13th  in  World  Bank  Doing  Business  thanks  to  reforms 
undertaken with assistance of the EPA support project  

Applying for business permits and licenses was considered as a daunting task for business 
operators  and  investors.  Inefficient  government  bureaucracy  was  identified  as  the  most 
problematic  factor  for  doing  business  in  Mauritius  by  CEOs,  according  to  the  World 
Economic  Forum’s  Global  Competitiveness  Report  2017.  Applicants  needed  to  deal  with 
multiple  agencies  that  all  weighted  in  on  the  final  decision.  Applications  were  processed 
manually, creating bottlenecks and a source of red tape. The opaque procedures, ambiguous 
rules and unpredictable results created a lot of uncertainties which added to business costs 
for potential investors. 

The Government acknowledged that an overhaul of the current business licencing system 
was  required  to  avoid  unnecessary  restrictions  on  competition.  The  Government  of 
Mauritius  sought  the  support  of  the  European  Union  under  the  Economic  Partnership 
Agreement  (EPA)  support  programme  to  address  the  efficiency  and  effectiveness  of 
Government licencing departments and institutions. 

The  EU  support  was  multi-dimensional  as  it  targeted  the  simplification  of  the  regulatory 
framework,  streamlining  the  licensing  process,  improving  the  interaction  among  public 
sector  agencies  and  setting  up  an  electronic  application  system  for  business  permits  and 
licences. A business process reengineering exercise was undertaken with 14 Ministries and 
27  public  agencies  dealing  directly  with  business  permits  and  licences  in  order  to 
streamline  the  administrative  processes  to  reduce  inefficiencies  and  red  tape.   The 
recommendations  of  this  exercise  was  submitted  to  the  Government  of  Mauritius  and 
subsequently  eight  primary  legal  provisions  and  nine  business  regulations  under  the 
Mauritius  Business  Facilitation  Act  was  amended.  In  parallel,  the  National  Electronic 
Licencing  System  (NELS)  (https://www.edbmauritius.org/e-licensing/)  was  put  in  place 
which became a game changer by creating a major structural change in the administration 
and  processing  of  business  permits  and  licences. The  platform  acts  as  the  single  point  of 
entry for application of business permits and licences, occupation and working permits.  

The  World  Bank  2020  Ease  of  Doing  Business  report   acknowledged  the  reforms  of 
business  licensing  system  undertaken  by  Mauritius.  Thanks  to  the  NELS,  and  the  EU 
support,  the  country  is  now  ranked  13th  compared  to  49th  in  2017  and  is one  of  the  most 
business friendly country in Africa  

337 

 
 
 
Energy-efficient production of ylang-ylang essential oil in COMOROS  

Under  the  EU-funded  regional  programme  on  renewable  energy,  the  EU  provided 
€365,000  for  the  project  Filière  ylang-ylang  et  distillation  à  foyer  économe  in  Comoros 
and  Madagascar.  The  project  helped  to  build  36  energy-efficient  destillation  units  of 
ylang-ylang  essential  oil  on  the  islands  of  Anjouan  and  Mohéli.  Reduced-energy 
destillaries help allow to save precious wood resournces and contribute to maintaining the 
ecological balance of these islands. The project has also trained 53 young technicians on 
Ylang-Ylang  distillation  and  planted  more  than  25,000  trees  as  accompanying  measure. 
Ylang-ylang essential oil is primarily exported to France and used in high-value parfumes.  

Competitive agricultural production in Madagascar thanks to EU imports  

Tozzi Green is specialised in the production of renewable energy as biggest hydroelectric 
independent power producer in the country. The enterprise, however, is also involved very 
actively in agribusiness. It has rehabilitated 7,000 ha of which was believed to be arid land 
in  the  South  of  the  country  (Ihrombe  region),  now  devoted  to  the  production  on  corn, 
soybeans and geranium essential oils.  

Production  is  continously  evolving  through  experimentation,  and  currently  covers  the 
following crops:  

  Primary  foodstuffs, such as plantations  of maize (first  ranking internal  producer 

of the island), soy, black beans, voanjobory, sunflowers and fruit trees. 

  Bourbon  geraniums,  from  which  essences  and  distillates  are  obtained  for 
perfume which are standard supplies for perfumery and cosmetics companies. The 
essential oils are marketed under the Tozzi Green Aromatics brand name.  

  Quality spices, grown in cooperation with small local producers that guarantee the 
artisan  execution  of  all  the  processes.  The  spices  are  marketed  under  Sambava 
Epices brand.  

  Research and development on the Jatropha Curcas, a plant that produces oily 
seeds  for  the  production  of  biodiesel.  On  this  front  Tozzi  Green  has  a  long-
standing cooperation with the University of Florence. The purpose of the research 
is to obtain a selection of seeds which will optimize the harvest and yield of the oil 
extracted for energy production. 

Tozzi  Green  is  a  clear  example  of  the  EPA  benefit  for  Madagascar:  besides  catering  to 
local food needs, the firm produces essential oils for export to the EU, thereby providing 
jobs  to  158  permanent  employees  (37%  female)  and  518  temporary  workers  (30% 
women).  Tozzi  Green  also  stresses  the  importance  of  competitively  priced  inputs  for 
production,  illustrating  thereby  that  tariff  reduction  in  essential  intermediate  products 
serves local development.  

“We  import  fertilizers  and  other  agricultural  inputs  with  different  origins  as  well  as 
agricultural  equipment  mainly  from  the  EU.  As  we  produce  for  the  local  market  it  is 
essential that we can keep our production cost low in order to be able to sell our products 
at a reasonable price in the context of Madagascar. We also need to be competitive with 

338 

 
 
 
 
 
 
 
 
 
 
food  importations  which  are  a  problem  for  the  economy  given  that  imports  are  paid  in 
euro or dollars bringing monetary unbalances for the state finance”  

Alessandro Berti, Tozzi Green, CEO Madagascar 

Corporate Social Responsibility is high on the agenda for Tozzi Green, and the company 
has  build  child  care  facilities,  wells,  and  medical  offices.  The  agribusiness  project  in 
Madagascar has been recently financed by two European development finance institutions, 
namely BIO Invest and Finnfund.  

339 

 
 
 
 
 
 
 
7. 

STATISTICS 

EPA ESA 

340 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with EPA (interim) Eastern and Southern Africa (ESA) (mio €)Imports2 0232 1092 4552 3752 141Exports1 8131 7982 1462 0302 306Balance-210-311-308-346165Share EPA (interim) Eastern and Southern Africa (ESA) in EU27 trade with Extra-EU27Imports0.1%0.1%0.1%0.1%0.1%Exports0.1%0.1%0.1%0.1%0.1%Total (I+E)0.1%0.1%0.1%0.1%0.1%Share EU27 in trade EPA (interim) Eastern and Southern Africa (ESA) with worldImportsExportsTotal (I+E)Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade EPA (interim) Eastern and Southern Africa (ESA): IMF DotsTotal merchandise trade EU27 with EPA (interim) Eastern and Southern Africa (ESA) (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports2 3752 141-234-9.9%Imports1 907 5651 934 94427 3791.4%Exports2 0302 30627713.6%Exports2 059 8822 132 01572 1333.5%Balance-346165511Balance152 317197 07144 754Total trade4 4054 448431.0%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with EPA (interim) Eastern and Southern Africa (ESA) (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports795718-77-9.6%Imports118 891121 6442 7532.3%Exports31731700.1%Exports169 000181 82512 8257.6%Balance-478-40177Balance50 10960 18110 072Total trade1 1111 035-76-6.9%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with EPA (interim) Eastern and Southern Africa (ESA) (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports1 5811 423-158-10.0%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports1 7131 99027716.2%EU27 exports1 890 8821 950 19059 3093.1%Balance132566434Balance102 208136 89034 682Total trade3 2943 4131193.6%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with EPA (interim) Eastern and Southern Africa (ESA) (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports1 9082 22631916.7%Imports824 543824 015-528-0.1%Exports2 0441 385-659-32.2%Exports928 420968 64840 2284.3%Balance136-841-978Balance103 877144 63340 756Total trade3 9513 611-340-8.6%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with EPA (interim) Eastern and Southern Africa (ESA) (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports1 8192 0982 1561 9082 226Imports642 682776 924784 743824 543824 015Exports1 1551 2891 6082 0441 385Exports750 713849 023855 477928 420968 648Balance-664-809-548136-841Balance108 03172 09970 734103 877144 633Total trade2 9733 3863 7643 9513 611Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with EPA (interim) Eastern and Southern Africa (ESA) (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward6 3475 12810 1438 07810 310Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward13 13714 3641 44817 78517 119Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInwardInward143 012803 285328 703209 462-67 421OutwardOutward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsEPA (interim) Eastern and EPA (interim) Eastern and 20182019Extra-EU27EPA (interim) Eastern and Southern Africa 2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018EPA (interim) Eastern and -50005001 0001 5002 0002 5003 00020152016201720182019Merchandise trade EU27 with EPA (interim) Eastern and Southern Africa (ESA) (mio €)ImportsExportsBalance 
 
 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE 
ECONOMIC PARTNERSHIP AGREEMENT (EPA) BETWEEN THE EU AND COTE 
D’IVOIRE 

1. 

INTRODUCTION 

Pending  an  Economic  Partnership  Agreement  (EPA)  with  the  West  African  region,  Côte 
d’Ivoire concluded a stepping stone or interim Economic Partnership Agreement with the 
EU in November 2008.178 The interim EPA with Côte d’Ivoire was signed on 26 November 
2008,  approved  by  the  European  Parliament  on  25  March  2009  and  ratified  by  the  Ivorian 
Parliament on 12 August 2016. It entered into provisional application on 3 September 2016. 
The  interim  EPA  (iEPA)  will  be  substituted  by  the  regional  EU-West  Africa  EPA  once  the 
latter  enters  into  force.179  By  the  end  of  2019,  14  out  of  15  members  of  the  Economic 
Community of Western African States (ECOWAS), and Mauritania, have signed the regional 
EPA, which now misses only Nigeria’s signature.  

Côte  d'Ivoire  is  the  first  country  in  West  Africa  that  started  liberalizing  its  market  for 
trade  with  the  EU  and  apply  reciprocity  to  the  market  access  enjoyed  in  the  EU.  In  2019, 
Côte d’Ivoire translated this political commitment into the first round of tariff reduction. The 
process was completed in December 2019 and the liberalization of the first 1115 products will 
be  applied  retroactively  as  of  1st  January  2019.  Agricultural  products,  including  fruit  and 
vegetables, are mostly excluded from liberalisation.  

178 The official name of the agreement ("stepping-stone agreement") reflects the fact that the initial and ultimate 
objective for economic partnership in West Africa is a comprehensive, regional agreement. It is also called 
"interim EPA".  

179 The  Economic  Partnership  Agreement  was  signed  in  December  2014  by  the  European  Union  and  13  West 
African  Countries.  In  2018,  the  Gambia  and  Mauretania  signed  the  agreement,  making  Nigeria  the  only 
remaining country opposed to the EPA. The agreement will enter into provisional application if the 16 West 
African Countries sign the agreement and 2/3 of these countries ratify it.  

341 

 
 
 
 
                                                 
2. 

Main implementation issues   

2.1 

Main steps in implementation  

2.1.1 Implementation activities in 2019  

In  2019,  Côte  d'Ivoire  took  the  first  step  towards  implementing  its  market  access  offer,  by 
liberalizing its market for 1155 EU products. The liberalization became fully effective on 6th 
December 2019 with the publication of the Customs notices180. The benefit of liberalization 
will be applied retroactively as of 1st January 2019 for the 1155 European products liberalised.  
The  first  round  of  tariff  liberalization  (2019)  concerns  few  products  with  significant  EU 
exports  (9  tariff  lines  with  exports  above  €1,000,000),  e.g.  vaccines  (human  and  veterinary 
medicine),  printed  books,  laboratory  reagents,  some  chemicals  (diammonium  phosphate, 
contraceptive  preparations),  newspaper,  electrical  equipment  (e.g.  motors).  Agricultural 
goods,  including  fruits  and  vegetables,  are  altogether  mostly  excluded  for  liberalization,  as 
well  as  inputs  in  specific  value  chains  such  as  cotton,  cement,  cosmetic  goods,  plastics  and 
cardboards.  The  liberalization  process  will  be  completed  by  1/1/2029.  The  revised  Market 
Access Offer and schedule have been published.181 

In  2019,  the  parties  furthermore  adopted  of  the  reciprocal  rules  of  origin,  enabling  the 
implementation  of  preferential  market  access  for  EU  products  in  Côte  d’Ivoire.  The  parties 
also agreed to  to create EPA sub-committee on customs.  

2.1.2 EU cooperation with the private sector on trade and investment barriers  

Within  the  framework  of  a  contract  called  “S’investir  ensemble”  set  in  2019,  the  EU 
delegation is working together with the European private sector (Eurocham182), as well as the 
national private sector, represented by  Union Des Grandes Entreprises  Industrielles De Côte 
D'ivoire (UGECI) and Confédération Générale des Entreprises de Côte d'Ivoire (CGECI), to 

180 The customs notices on EPA liberalisation are the following: 

1.  Circulaire d'application de l'Ordonnance 2019-80 du 23/01/2019 identifiant les 1155 produits de la 

première phase du démantèlement tarifaire 
http://www.douanes.ci/sites/default/files/base_documentaire/c_2052.pdf   

2.  Circulaire d'application du Décret 2019-829 fixant les règles d'origine et méthodes de coopération 

administrative http://www.douanes.ci/sites/default/files/base_documentaire/c_2053_0.pdf 

3.  Circulaire sur les procédures douanières pour le bénéfice des préférences applicables aux produits 

originaires de l'UE importés dans le cadre de l'APE 

4.  http://www.douanes.ci/sites/default/files/base_documentaire/c_2054.pdf     

Circulaire sur le dédouanement des marchandises éligibles à l'APE et d'autres marchandises contenues 

5. 
dans un même envoi: http://www.douanes.ci/sites/default/files/base_documentaire/c_2067.pdf     
181 

schedule 

found 

Trade 

Offer 

and 

DG 

can 

the 

on 

be 

website: 

https://trade.ec.europa.eu/doclib/docs/2020/january/tradoc_158598.pdf 

182 The European private sector is supported by a European Chamber of Commerce and national chambers of 
Commerce to identify trade and investment barriers; Eurocham, the European Chamber of Commerce, was set 
up with the support of the EU delegation 10 years ago was the first European chamber in West Africa. This 
Chamber was also the first European chamber in West Africa to join the network of European chambers 
(EBOWNN) in 2017. In addition, national chambers of commerce from France, Belgium, UK and more recently 
Germany are present in Côte d’Ivoire.  

342 

 
 
 
 
 
 
 
 
                                                 
 
improve  the  business  climate.  Key  objective  is  to  establish  a  dialogue  between  the  private 
sector, the government of Côte d’Ivoire and the EU with Members States.  

The  cooperation  achieved  first  results  in  2019.  Eurocham  organised  strategic  monitoring 
sessions on key impediments to doing business in sectors such as energy, agriculture and new 
technologies.  These  sessions  aimed  at  better  understanding  the  evolution  and  identify  the 
challenges and problems concerning a specific sector and to issue recommendations. 

The first “Trilogue”183 meeting between the private sector (represented by Eurocham, CGECI 
and  UGECI),  the  EU  and  its  Member  States  and  the  Ivorian  authorities  at  ministerial  level 
took place on 12 November 2019 and the following themes were addressed: corporate social 
responsibility, the banking and financial sector and broadening the tax base. 

The  EU  has  suggested  continuing  these  dialogues  with  quarterly  meetings.  Côte  d’Ivoire  is 
fully supportive of this process and it has proven to be an effective way to tackle trade barriers 
and contribute to the EU market access strategy.  
The  EU  organised  also  the  EU-Côte  d’Ivoire  Business  Forum,  in  May  2019,  which 
highlighted  the  contribution  of  the  European  private  sector  to  the  Ivorian  economy,  and  the 
link  between  Ivorian  jobs  and  exports  to  the  EU,  being  Côte  d'Ivoire's  main  market.  The 
Forum improved the visibility of the EU as an essential partner of the private sector, with the 
participation  of  600  CEOs,  4  Ivorian  Ministers  (Trade,  Economics  and  Finance,  SME,  and 
Private Investment promotion), close to 30 newspaper articles and a digital footprint of over 
125,000 online views on the Facebook page of the Delegation.  

2.1.3 Study on the impact of the interim EPA on regional integration in West Africa184  

Côte d'Ivoire, with support from the EU, conducted in 2019 a study to determine the impact of 
tariff liberalisation under the EU-Côte d’Ivoire and EU-Ghana interim EPAs on regional trade 
in  West  Africa.  The  study  assessed  the  possible  consequences  of  EU  intermediate  products 
imported  under  EPA  preferences  (i.e.  at  zero  duties,  or  duties  significantly  lower  than  the 
ECOWAS  Common  External  Tariff)  being  used  for  manufacturing  final  goods,  which  are 
then exported to the region. The study takes into account the de facto applied rules for goods 
circulation  within  ECOWAS  (the  ECOWAS  Trade  Liberalisation  Scheme,  ETLS,  the 
corresponding rules of origin).   

The impact study showed the following results:  

1.  The volume of  Ivoirian  and Ghanaian transformed goods that contain liberalised EU 
inputs (=intermediate products imported from the EU under EPA preferences) and are 
exported to the rest of the region are very limited for Côte d’Ivoire (123 million USD) 
and  statistically  non-significant  for  Ghana  (26.4  million  USD).  The  volume 

183 The trilogue is prepared by the EU’s Market Access Team, including Eurocham and the national chambers. 
Agenda items that are not adequately addressed at the level of the trilogue, are put on the agenda of the Political 
Dialogue between the EU and Côte d’Ivoire (Political Dialogue under Article 8 of the Cotonou Agreement).  

184 The study is available in the website of DG TRADE: https://trade.ec.europa.eu/doclib/html/158337.htm) 

343 

 
 
 
 
 
 
 
 
 
                                                 
 
 
 
corresponds to 2% and 0.4%, respectively, of goods formally imported by ECOWAS 
Member States from both countries.  

2.  The study shows that the countries possibly affected by these imports of transformed 
products would be: a) Burkina Faso (31 million USD) and Mali (24 million USD) in 
the case of Côte d’Ivoire; and b) Burkina Faso (10 million USD) and Togo (2 million 
USD) in the case of Ghana.  

3.  Only  15  transformed  products  produced  and  exported  by  Ghana  and  Côte  d’Ivoire 
using  EU  liberalised  input  might  require  specific  trade  surveillance  measures.  These 
include  wheat  products,  soap  products,  carboys,  soups,  make-up,  hygiene  articles, 
tableware, clinker and preserved tomatoes. 

4.  Trade  diversion  effects  caused  by  those  products  against  regional  producers  are 
statistically insignificant (less than 1 million USD) and mostly compensated by trade 
creation effects going in favour of local consumers (i.e. more affordable prices).  
5.  In Côte d’Ivoire, the liberalisation of 26 EU inputs (accounting for 52 million USD of 
Ivorian  imports  from  the  EU)  used  in  the  manufacturing  of  8  transformed  products 
exported in  the region  does not  significantly distort  the demand of Côte  d’Ivoire  for 
equivalent  regionally  produced  inputs  except  for  salt  coming  from  Senegal  (0.16 
million  USD  of  Ivorian  imports  from  Senegal).  In  Ghana,  the  liberalisation  of  7  EU 
inputs  (accounting  for  12  million  USD  of  Ghanaian  imports  from  the  EU)  used  to 
produce  8  transformed  products  exported  in  the  region,  does  not  significantly  affect 
the  demand  of  Ghana  for  equivalent  regionally  produced  inputs  except  for  locally 
produced clinker. 

6.  The already limited impact of these EU input liberalisation will be further mitigated by 
their progressive liberalisation as agreed in their respective Market Access Offer. 66% 
of  the  volumes  will  be  liberalised  after  2026  in  the  case  of  Ghana  and  60%  of  the 
volumes  will  be  liberalised  after  2024  in  the  case  of  Côte  d’Ivoire.  This  gives 
sufficient time to the region to set up the recommendations proposed by this study.  

The Study proposes four main recommendations: 

1.  In  the  short  term,  i.e.  within  the  next  five  years,  maintain  the  free  circulation  of 
transformed products coming from Ghana and Côte d’Ivoire and using EU liberalised 
input goods. If needed, apply safeguards if unexpected rise in volume exports happen 
related to the transformed products occur.  

2.  A  trade  surveillance  system  should  be  set  up  for  the  identified  15  products  that  are 
manufactured  using  liberalised  EU  inputs  and  may  cause  distortions  on  the  regional 
market.  

3.  In the medium term, from 2024, the monitoring of the ETLS system by ECOWAS and 
the trade statistics in Ghana and Côte d’Ivoire could be improved for a better tracking 
of the transformed products using EU liberalised input.  

4.  Furthermore,  after  2024,  Ivoirian  and  Ghanaian  companies  exporting  to  other 
ECOWAS  countries  could  be  requested  to  pay  back  to  these  countries  the  customs 
duties related to the amount of liberalised EU input used in their transformed products. 

A  key  recommendation  of  the  study  was  to  initiate  discussions  on  building  a  regional 
safeguard mechanism between ECOWAS countries that currently does not exist in the legal 
framework.  A  safeguard  mechanism  could  help  facilitate  the  solution  of  other  cross-border 
issues currently dealt with at bilateral level. 

344 

 
 
 
 
 
 
2.2  Trade and sustainable development goals  

The  interim  EPA  with  Côte  d’Ivoire  does  not  include  a  dedicated  chapter  on  trade  and 
sustainable development. Nevertheless, the parties cooperate closely under the framework of 
the  Cotonou  Agreement  to  ensure  the  contribution  of  trade  to  the  achievement  of  the 
sustainable development goals. Furthermore, the parties have recently taken concrete steps – 
in line with the 15 point action plan of the EU  – to address sustainability matters under the 
EPA.  

For example, in  2019, the EU and Côte d’Ivoire  made good progress  on the setting up of a 
monitoring mechanism for the Agreement. The first joint monitoring report was endorsed in 
November 2019 during the 4th EPA Committee.185 Moreover, Côte d'Ivoire and the EU agreed 
to  establish  an  EPA  Civil  Society  platform  with  the  support  of  the  European  and  Ivorian 
Economic and Social Economic Committees to address all trade and sustainable development 
issues from a civil society perspective. It will bring together representatives from the EU and 
Côte d’Ivoire civil society and become a key instrument with which civil society can weigh in 
on the implementation of the agreement.  
Dialogue on sustainability matters has also intensified in the last EPA Committee. In the 4th 
EPA  committee  meeting  with  Côte  d’Ivoire  in  November  2019,  the  parties  discussed 
sustainability issues in the cocoa value chain. This happened against the backdrop of Ghana 
and  Cȏte  d’Ivoire  announcing  in  mid-2019  a  minimum  price  for  cocoa  sold  on  the  world 
market,  with  the  aim  to  ensure  a  decent  income  for  local  farmers.186  DG  TRADE,  in  close 
cooperation with DEVCO, took this opportunity to engage with both Ghana and Côte d’Ivoire 
on  complementary  issues,  namely  deforestation  and  child  labour,  which  are  affecting  the 
sustainability of the cocoa value chain.  

The EU is the first importer of cocoa of Côte d'Ivoire and Ghana amounting to 65% of their 
exports.  There  is  a  consensus  among  the  different  actors  (EU  Commission,  EU  Member 
States, MEPs, European and international companies, NGOs), that more work is required to 
make the cocoa value chain  sustainable. The European Parliament  and NGOs request  better 
traceability  of  cocoa  products  and  more  responsible  business  conduct  from  the  companies 
supplying  the  European  market  with  cocoa.  Several  large  international  food  companies  are 
pushing  for  EU  actions:  e.g.  setting  up  a  multi-stakeholder  platform,  establishing  a  due 
diligence  system,  based  on  legislation  adopted  at  EU  level,  introduction  of  a  voluntary 
partnership  agreement  or  the  setting  up  of  a  robust  traceability  system.  EU  Member  States 
involved  in  chocolate  production  and  distribution  (FR,  NL,  BE,  DE)  and  Switzerland  are 
promoting national  due diligence requirements or multi-stakeholder actions. They  are aware 
that  significant  results  cannot  be  achieved  in  isolation  and  without  structural  reforms  of  the 
cocoa sector in the two countries.  

185 Available here: https://trade.ec.europa.eu/doclib/html/158529.htm   
186 Ghana and Cȏte d’Ivoire jointly announced in June 2019 the suspension of their cocoa futures  sales for the 
cocoa  production  of  the  2020-2021  season  (which  will  begin  in  October  2020)  below  a  certain  price  (USD 
2600/tonne). This was accompanied by a joint public intervention, which led to an agreement with industry to 
offer a USD 400/tonne premium above the price of the world market. 

345 

 
 
 
 
 
                                                 
3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

Two  EPA  committees  meeting  took  place  in  2019:  one  in  April  and  an  extraordinary 
committee in November.  

In April, the focus was on the urgency of effectively implementing the first phase of tariff 
dismantling.  This  was  also  an  opportunity  to  hold  a  first  meeting  with  the  Ivoirian  civil 
society to discuss deforestation, child labour and cocoa production. A meeting took also place 
with the EU Member States agencies promoting trade and investment in Africa. 

During the 4th EPA Committee meeting between Côte d’Ivoire and the EU in November 
2019, the parties took stock of the liberalisation process in Côte d’Ivoire that was initiated in 
January.  Côte d'Ivoire formally announced the signature of the decree on the Rules of Origins 
paving  way  for  the  effective  liberalisation.  A  discussion  took  place  on  the  joint  monitoring 
report of 2018 and the implementation of the EU-Côte d’Ivoire civil society platform. The EU 
stressed the growing importance of sustainable development, coming both from civil society 
and  European  parliamentarians.  The  Committee  underlined  the  importance  of  sustainable 
development  with  regards  to  cocoa  (deforestation,  child  labour  and  living  income  for 
farmers).  Both  parties  recognized  the  importance  of  Sanitary  and  Phytosanitary  (SPS) 
measures  in  order  to  ensure  food  safety  and  agreed  to  work  together  to  deal  with  the  SPS 
problems  in  the  field  of  fishery  (tuna)  and  to  strengthen  the  quality  of  the  competent 
structures. The committee validated the texts of the rules of arbitration procedure and the rules 
of mediation as well as the methodology for drawing up the list of international arbitrators and 
established the list of the arbitrators. 
In  addition,  Côte  d’Ivoire  organized  a  regional  workshop  on  7th  and  8th  of  May  2019  to 
discuss the results and the recommendations of a study on the impact of the interim EPAs 
in Côte d'Ivoire and Ghana on regional integration in West Africa with the two regional 
organizations ECOWAS and WAEMU and neighboring countries. The workshop allowed for 
the formal endorsement of the recommendations by Côte d'Ivoire integrating concerns raised 
by the participants. This study commissioned by Côte d'Ivoire demonstrated that the impact of 
liberalisation  in  Côte  d’Ivoire  and  Ghana  was  limited  in  scope,  due  to  the  weak  economic 
integration of the ECOWAS region, the complex rules of circulation set in the ECOWAS and 
the  limited  numbers  of  industrial  products  exported  by  Côte  d’Ivoire  and  Ghana  into  the 
region.  The  study  made  recommendations  to  circumscribe  the  potential  risks.  It  played  an 
important  role  in  reassuring  Côte  d’Ivoire  and  Ghana  as  well  as  the  neighboring  countries, 
that the liberalization process could be managed in the short term.  

4. 

TRADE AND DEVELOPMENT COOPERATION AND SPECIFIC AREAS OF IMPORTANCE  

Fisheries  

In  2019  two  major  audit  undertaken  by  the  EU  in  Côte  d’Ivoire  fisheries’  sector  revealed 
serious deficiencies in the control systems put in place by the Ivoirian authorities. 

First,  an audit of DG Sante identified serious deficiencies with  regards to  respect  of SPS in 
tuna processing. The various weaknesses identified during an SPS audit can lead to restriction 
of  access  for  exports  of  Ivorian  tuna  products  to  the  EU  market.  Following  this  audit,  Côte 

346 

 
 
 
 
 
 
 
 
d’Ivoire agreed to strengthen monitoring and follow-up mechanisms to address and minimize 
the possible negative impacts for the tuna sector following the audit results. 

Secondly,  DG  Mare  performed  an  audit  with  regards  to  illegal,  unreported  and  unregulated 
(IUU) fishing in May 2019 which identified weaknesses in the Ivorian system to combat IUU 
fishing. The lack of initial response to repeated requests for information sent by MARE was 
of concern and the issue was raised during the Political Dialogue. DG MARE plans a mission 
in 2020 to assess the progress made.  

Banana sector  

Upon the initiative of Ivorian banana producers, banana producers from ACP countries came 
together  in  the  “Appel  d’Abidjan”  in  September  2019  to  voice  their  concerns  to  the  EU 
regarding  preference  erosion.  The  EU  reiterated  that  the  tariff  liberalization  negotiated  with 
Latin American countries on banana within their respective FTAs was now stabilized with a 
floor customs tariff of €75/ton.  

Development cooperation 

Development  cooperation, in  particular trade-related assistance, is  an important  pillar of the 
EPA, as it contributes to operationalizing the development dimension of the partnership.  
Côte  d’Ivoire  is  a  showcase  of  integrated  approach;  development  cooperation  and  trade  are 
aligned and mutually reinforcing common interests.  

The  EU  provides  budget  support  to  Côte  d’Ivoire  under  a  good  governance  contract  (€60 
million,  2016-2020)  with  the  aim  to  improve  economic  governance  and  the  investment 
climate overall, as well as increasing the collection of value-added taxes (VAT). 

Another  budget  support  operation  on-going  is  the  Programme  d'appui  au  foncier  rural 
(PAFR) (€41 million 2016-2022) which aims at investing in rural infrastructure, agricultural 
modernisation  and  security  in  rural  areas.  Communication  on  the  EPA  is  embedded  in  this 
programme. 

The  Côte  d’Ivoire  EPA  Implementation  Strategy  was  adopted  in  October  2017.  A 
dedicated EU-financed programme (€5 million in support of EPA implementation) and was 
adopted  in  November  2019.  It  will  promote  customs  cooperation  on  tariff  and  non-tariff 
issues and provide support to reduce barriers to trade. The programme will also assist relevant 
government  actors  with  other  reforms  related  to  the  implementation  of  the  EPA,  including 
transition in taxation (diversification of fiscal revenues away from  customs income) and the 
establishment  of  trade  defence  instruments.  An  specific  technical  assistance  is  foreseen  to 
support  the  fiscal  transition  to  the  Customs  Directorate-General  for  Customs  and  the 
Directorate  General  for  Taxation  as  well  as  the  strengthening  of  technical  and  operational 
capacities of the ministries impacted by the EPA in the areas such as regulatory harmonisation 
and  legislative  approximation  relating  to  technical  barriers  to  trade  and  sanitary  and 
phytosanitary measures . 

The  implementation  of  the  national  component  for  Côte  d'Ivoire  of  the  regional 
Competitiveness  support  programme  in  West  Africa  (PACIR  II)  (€9  million)  started  in 
2019.  The  project  aims  at:  (1)  Upgrading  and  supporting  consortia  of  companies  in  target 
sectors and value chains; (2) Strengthening the capacities of the Private Sector Intermediary 

347 

 
 
 
 
 
 
 
 
 
 
 
Organizations  that  will  serve  as  a  lever  for  modernization,  competitiveness  and  growth  for 
SMEs;  (3)  Improving  the  overall  business  regulatory  environment.  The  programme  will 
further  consolidate  results  achieved  under  the  previous  Trade  and  Regional  Integration 
support programme (PACIR I, €16 million, 2010-2015).  

Côte  d’Ivoire  will  also  benefit  from  the  regional  West  Africa  Trade  Facilitation 
Programme (€24.4 million) and the Regional Infrastructure Investment Programme. The 
latter foresees investment of €28.6 million on the Bamako-San Pedro corridor between Mali 
and Côte d’Ivoire, as well as €9.43 million for pre-studies on the construction of a motorway 
between Abidjan and Lagos.  

Funded from the EDF’s intra-ACP envelope, the Fit for Market programme, implemented 
by COLEACP since 2016 (35M€), undertook a number of interventions in Côte d’Ivoire187. 
The Fit for Market programme assists smallholders, farmer groups and MSMEs (Micro, Small 
and  Medium  Enterprises)  to  access  international  and  domestic  horticultural  markets  by 
complying with market and sanitary/phytosanitary (SPS) requirements. It provides training on 
building  up  producers’  business  skills,  strengthening  links  throughout  the  value  chain,  and 
improving  the  capacity  of  competent  authorities.  COLEACP  has  been  conducting  141 
interventions in Côte d’Ivoire from the start of the programme:   

  89 technical assistance activities (31 in 2019); 
  45  trainings  (18  in  2019,  which  focus  on  building  up  producers’  business  skills, 
strengthening  links  throughout  the  value  chains  and  improving  the  capacity  of 
competent authorities); 

  3 information and communication (1 in 2019); 
  3 administrative support interventions. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 Economic environment 

Côte d'Ivoire has experienced significant and steady economic growth since the political crisis 
of  2012,  with  an  average  GDP  growth  above  8%.  In  2019  the  economy  grew  by  7%.  Côte 
d'Ivoire is  the leading economy within the Western African Economic and Monetary Union 
(WAEMU). 

Côte d’Ivoire has adopted an open economy approach, with a focus on trade liberalisation, as 
well as an economic growth based on private investment from both domestic and international 
sources  (50%  of  total  investment  is  FDI).  Côte  d'Ivoire  has  adopted  generous  investment 
policies  to  promote  the  industrialisation  and  transformation  of  its  agro-industry,  mainly 
geared towards export markets (cocoa, cashew, banana, tuna, hévéa, coffee…).   

Côte  d'Ivoire  has  improved  its  Doing  Business  ranking  from  122nd  in  2019  place  to  110th 
place in 2020, but Côte d'Ivoire is not yet in the top 10 in Africa and is no longer one of the 

187 https://Côte-divoire.coleacp.org  

348 

 
 
 
 
 
 
 
 
                                                 
most reforming  countries.  Côte d'Ivoire's progress in  the ranking  was mainly made possible 
by  the  introduction  of  the  online  payment  and  tax  refund  system.  Investors  identify  fiscal 
harassment  and  the  lack  of  predictability  (of  fiscal  measures)  as  two  of  the  main  barriers, 
impacting investment and business climate.  

Key  challenges  remain  for  inclusive  economic  growth:  The  Ivorian  economy  remains 
dependent  on  exports  of  agricultural  raw  materials  and  very  vulnerable  to  climate  change. 
More private investment and especially FDI will be necessary to maintain the current growth 
rate. Côte d’Ivoire needs to increase its stagnating tax revenues (their share in GDP being one 
of the lowest in the region), reduce the informal employment rate (close to 94%) and the share 
of  population  living  in  poverty  (currently  at  46%).  The  2019  UNCTAD  investment  policy 
review of Côte d’Ivoire has more details.188 

5.2 Trade in goods  

The  EU27  continues  to  be  the  main  trade  partner  for  Côte  d’Ivoire:  in  2019,  35%  of 
Ivorian exports went to the EU, 19% to the West African region, 9% to the US and 6% to 
Vietnam.  With  19%  of  regional  exports  Côte  d’Ivoire  is  a  champion  of  regional  trade  (the 
average  in  ECOWAS  is  9%).  Almost  70%  of  Côte  d’Ivoire’s  regional  exports  go  Burkina 
Faso, Mali and Ghana. Regarding imports, the  EU accounted for 27% of Ivorian imports 
from  the  world,  followed  by  China  (15%)  and  Nigeria  (12%).  Around  16%  of  Ivoirian 
imports come from the West African region, almost 75% of it from Nigeria (mostly mineral 
fuels and other petrol-based products). 

Total trade with Côte d’Ivoire has increased by €36 million or 0.5% in 2019. EU imports 
from Côte d’Ivoire increased by €19 million (+0.4%), reaching €4.1 billion and EU exports to 
Côte d’Ivoire increased by €17 million (+0.6%), reaching €2.6 billion. The trade balance 
remains strongly in favour of Côte d’Ivoire (€1.5 billion), due to a large surplus in agri-food 
trade (€2.6 billion); however, Côte d’Ivoire runs a deficit for non-agricultural trade (-€1.1 
billion).   

The  slight  increase  in  EU  imports  from  Côte  d’Ivoire  in  2019  can  be  attributed  to  an 
increase  in  value  of  imports  of  raw  and  processed  cocoa  products  by  €99  million  or  3.5%, 
after a fall of €175 in 2018 (caused by a drop in global market prices). Imports of fruits and 
nuts  also  increased (+€33 million, 12.1%), driven mainly by bananas, but  also  cashew nuts, 
pineapples and mangos. Imports of mineral fuels (-€117 million, 25%) and canned tuna (-€29 
million, 23%) decreased.  

Cocoa  and  transformed  cocoa  products  remain  Côte  d’Ivoire’s  main  export  products, 
accounting for 69% of total EU imports from Côte d’Ivoire in 2019. Ivorian exports of cocoa 
paste,  butter  and  powder,  as  well  as  chocolate,  have  continuously  increased  in  recent  years 
and,  being  less  sensitive  to  price  fluctuations,  are  supporting  the  creation  of  a  local 
agroindustry. Chocolate exports to the EU significantly increased by 412% from €24 million 
in 2010 to €123 million in 2019.  

188 UNCTAD, 2019: https://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=2681  

349 

 
 
 
 
 
 
 
 
 
                                                 
Preference  utilisation  rates  for  Côte  d’Ivoire  are  continuously  in  the  98-99%  range. 
Preferences  are  used  in  particular  for  cocoa  and  cocoa  products,  vegetables,  prepared 
foodstuffs and wood products. 

EU imports from Côte d’Ivoire are still little diversified. The total number of products with 
export values above €1 million was 46 in 2019, basically the same as in 2014 (45 product 
lines). The share of the top 10 products in total EU imports from Côte d’Ivoire is 91% in 2019 
(see Table 1).  
However, over the past 10 years, Côte d’Ivoire was able to further diversify its economy by 
exporting a range of new products. For example, exports of fresh coconuts, articles of wood 
and fresh fish all went from zero to being worth several million euros. Of the more traditional 
export sectors, the most drastic increases over the past 10 years were recorded for guavas and 
mangos, bran, sharps and other residues of wheat, and waste and scrap of copper.  

Table 1. 2019 top 10 EU imports from Côte d’Ivoire  
Product  Description 

180100   Cocoa beans, whole or broken, raw or roasted 
180310   Cocoa paste (excl. defatted) 
270900   Petroleum oils and oils obtained from bituminous 

minerals, crude 

180400   Petroleum oils and oils obtained from bituminous 

minerals, crude 

400122   Technically specified natural rubber 'tsnr' 
080390   Fresh or dried bananas (excl. Plantains) 
180620   Chocolate and other food preparations containing 

cocoa, in blocks, slabs or bars weighing > 2 kg or in 
liquid, paste, powder, granular or other bulk form, in 
containers or immediate packings of a content > 2 kg 
(excl. Cocoa powder) 

160414   Prepared or preserved tunas, skipjack and atlantic 
bonito, whole or in pieces (excl. minced) 

180320   Cocoa paste, wholly or partly defatted 
400129   Natural rubber in primary forms or in plates, sheets or 

strip 
Total 

Source: Eurostat (Product descriptions are partly shortened)  

Imports in value in 
2019 (million €) 

Share (%) 

1713.0 
369.8 
343.5 

275.5 

266.4 
231.5 
122.9 

88.7 

81.9 
47.1 

44.1% 
9.5% 
8.8% 

7.1% 

6.9% 
6.0% 
3.2% 

2.3% 

2.1% 
1.2% 

 3,540.3 

91.2% 

EU  exports  that  increased  in  2019  are  wheat  and  meslin  (+€28  million,  +40%),  tobacco 
(+€24 million, 31%), pharmaceutical products (+€17 million, 12%) and food preparations of 
flour, groats, meal, starch or malt extract, or milk, cream, butter milk, sour milk, sour cream, 
whey, yogurt, kephir (+€18 million, 56%). Main export decreases concern motor vehicles (-
€47 million, 21%) and mineral fuels (-€14 million, 9%).  

350 

 
 
 
 
  
 
 
Table 2. 2019 top 10 EU exports to Côte d’Ivoire 
Product  Description 

300490   Medicaments consisting of mixed or unmixed 

products for therapeutic or prophylactic purposes 

870899   Parts and accessories, for tractors, motor vehicles for 

the transport of ten or more persons 

870120   Road tractors for semi-trailers 
284390  

Inorganic or organic compounds of precious metals, 
whether or not chemically defined (excl. Silver and 
gold) 

870840   Gear boxes and parts thereof, for tractors, motor 
vehicles for the transport of ten or more persons 

870829   Parts and accessories of bodies for tractors, motor 

vehicles for the transport of ten or more persons 
840820   Compression-ignition internal combustion piston 
engine "diesel or semi-diesel engine" 
880240   Aeroplanes and other powered aircraft of an of an 
unladen weight > 15.000 kg (excl. Helicopters and 
dirigibles) 

840734   Spark-ignition reciprocating piston engine 
847150   Processing units for automatic data processing 

machines, digital 
Total 

Source: Eurostat (Product descriptions are partly shortened)  

5.3 

Trade in agricultural products 

Exports in value in 
2019 (million €) 

Share (%) 

561.7 

552.7 

451.7 
379.8 

352.3 

328.0 

304.8 

300.0 

272.9 
247.4 

2.7% 

2.6% 

2.1% 
1.8% 

1.7% 

1.6% 

1.4% 

1.4% 

1.3% 
1.2% 

 3,751.3 

17.8% 

In  2019,  total  trade  in  agricultural  goods  was  €9.49  billion,  with  a  huge  surplus  of  €2.64 
billion  for  Côte  d’Ivoire.  EU  imports  of  agricultural  goods  from  Côte  d’Ivoire  to  the  EU 
represented  78%  of  the  total  exports  from  Côte  d’Ivoire  to  the  EU  and  amounted  to  €3.26 
billion. Imports were dominated by cocoa products – cocoa beans, paste and powder – (84%, 
for  a  value  of  €2.75  billion)  followed  by  tropical  fruits  (9%,  €304  million).  Imports  in 
agricultural goods have increased by almost 80% since 2009.  

EU agri-food exports to Côte d’Ivoire reached a value of €625 million in 2019 (increasing by 
11.2% since 2018 and reaching the highest value since 2009). EU exports consisted mainly of 
wheat  (17.6%),  raw  tobacco  (16.6%)  and  infant  food  and  other  cereals,  starch  or  milk 
preparation (11%). All of the three main categories of exports registered an increased by more 
than 30% compared to 2018. 

5.4 

Trade in services and Foreign Direct Investments 

The  interim  EPA  with  Côte  d’Ivoire  does  not  cover  services  nor  investment.  Trade  in 
services between the EU and Côte d’Ivoire increased by 15.5% in 2018, due to an increase of 
both EU exports by 16.3% or €120 million and EU imports by 14.3% or €76 million. Total 
trade in services has reached its highest since 2014, from €1.205 billion to €1.455 billion or 
+20% in 5 years. Total services trade balance is positive for the EU.  

351 

 
 
 
 
 
 
 
 
 
EU  foreign  direct  investment  stocks  in  Côte  d’Ivoire  stood  at  €2.5  billion  in  2018.  New 
outward investment in Côte d’Ivoire was €151 million in 2018.  The EU remains the largest 
foreign  investor,  accounting  for  over  58%  of  the  current  FDI  stock.  Over  500  European 
companies are currently active in Côte d’Ivoire, several of them as market leaders within their 
particular market.  

In the past 5 years, competition from emerging countries has been increasing. FDI flows from 
China have been steadily on the rise, combined with over €3.5 billion of concessional loans in 
key  infrastructure  sectors  (Abidjan  port  and  airport,  roads,  energy,  mining).  The  latter 
promoted  state-supported  Chinese  companies  to  enter  the  Ivorian  market  where  they  are 
increasingly  crowding  out  European  companies.  Moreover,  strong  communication  coming 
from the Ivorian government indicates an objective to double or even triple the share of these 
new investors (more specifically China, Morocco and Gulf States).   

6. 

CONCLUSIONS  

The  EU  continues  to  be  the  largest  and  most  stable  market  for  Ivorian  exports  but  Côte 
d'Ivoire is progressively sourcing imports including machinery from  Asia. Chinese presence 
in the economy is on the raise, while the EU continues to be the main trade and investment 
partner  for  the  country,  with  EU  investments  also  supporting  sustainability  goals  ad  can  be 
seen  from  the  example  in  the  box  below.  Implementation  of  the  interim  EPA  will  be  a  key 
instrument to ensure the continued prime position of the EU among Côte d’Ivoire’s partners, 
as well as the contribution of trade to sustainable development in the medium and long term. 
The EU will need to intensify its work with Côte d’Ivoire specically on sustainability matters, 
such as the cocoa sector.  

352 

 
 
 
 
 EU investment in biomass plant for renewable electricity production in Côte d'Ivoire 

In  2019,  Côte  d'Ivoire  and  the  project  company  Biovéa  Energie,  composed  of  the  French 
companies EDF and Meridiam and the Ivorian company Biokala (a subsidiary of the SIFCA 
group), signed a concession contract for a biomass power plan. 

The  contract  provides  for  the  design,  construction  and  operation  of  a  biomass  power  plant 
with a capacity of 46 MW over a period of 25 years.  Work will start in the second half of 
2020 and operations in mid-2023.   

The  biomass  plant  will  be  located  in  Aboisso,  100  km  from  Abidjan,  in  the  Sud-Comoé 
region.    It  will be the largest  energy infrastructure in  West Africa based on biomass  waste.  
Using  agricultural  waste,  it  will  provide  electricity  for  1.7  million  people.  The  total 
investment  represents  almost  €200  million,  financed  by  the  consortium  and  partners  like 
Proparco, a subsidiary of the French Agency for Development.  

Farmers supplying biomass for the plant will see their incomes rise by up to 20%.  Farmers 
will  be  able  to  use  the  ash  emitted  by  the  power  plant  as  fertilizer.    Building  the  plant  is 
expected to  create at  least  500 jobs  locally, while its  operation  will create more than 1,000 
full-time jobs. 

This project is part of the National Action Plan for Renewable Energies of Côte d'Ivoire, the 
aim  of  which  is  to  increase  the  share  of  renewable  energies  in  the  energy  mix  to  42%  by 
2030. 

353 

 
 
 
 
 
 
 
 
 
 
 
 
7.  STATISTICS 

IVORY COST 

354 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Ivory Coast (mio €)Imports3 9904 2314 3154 1514 169Exports2 5022 3332 7172 6262 643Balance-1 488-1 898-1 598-1 524-1 526Share Ivory Coast in EU27 trade with Extra-EU27Imports0.2%0.3%0.2%0.2%0.2%Exports0.1%0.1%0.1%0.1%0.1%Total (I+E)0.2%0.2%0.2%0.2%0.2%Share EU27 in trade Ivory Coast with worldImports30.6%29.1%35.6%27.6%27.3%Exports39.6%37.7%37.9%33.9%34.5%Total (I+E)35.6%33.9%36.9%30.9%30.9%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Ivory Coast: IMF DotsTotal merchandise trade EU27 with Ivory Coast (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports4 1514 169190.4%Imports1 907 5651 934 94427 3791.4%Exports2 6262 643170.6%Exports2 059 8822 132 01572 1333.5%Balance-1 524-1 526-2Balance152 317197 07144 754Total trade6 7776 813360.5%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Ivory Coast (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports3 1253 2651394.5%Imports118 891121 6442 7532.3%Exports5626256311.2%Exports169 000181 82512 8257.6%Balance-2 563-2 640-77Balance50 10960 18110 072Total trade3 6883 8902025.5%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Ivory Coast (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports1 026905-121-11.8%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports2 0642 018-46-2.2%EU27 exports1 890 8821 950 19059 3093.1%Balance1 0391 11375Balance102 208136 89034 682Total trade3 0902 923-167-5.4%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Ivory Coast (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports5296047614.3%Imports824 543824 015-528-0.1%Exports73185112016.3%Exports928 420968 64840 2284.3%Balance20324644Balance103 877144 63340 756Total trade1 2601 45519515.5%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Ivory Coast (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports473655582529604Imports642 682776 924784 743824 543824 015Exports732724695731851Exports750 713849 023855 477928 420968 648Balance25970113203246Balance108 03172 09970 734103 877144 633Total trade1 2051 3791 2771 2601 455Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Ivory Coast (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward-2-205152961978Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward3 6793 7903 7303 2172 584Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward36-235-6268874Inward143 012803 285328 703209 462-67 421Outward735-50193151Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsIvory CoastIvory Coast20182019Extra-EU27Ivory Coast2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Ivory Coast-3 000-2 000-1 00001 0002 0003 0004 0005 00020152016201720182019Merchandise trade EU27 with Ivory Coast (mio €)ImportsExportsBalance 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE 
ECONOMIC  PARTNERSHIP  AGREEMENT  (EPA)  BETWEEN  THE  EU  AND 
GHANA 

1. 

INTRODUCTION 

Pending  an  Economic  Partnership  Agreement  (EPA)  with  the  West  African  region,  Ghana 
concluded a stepping stone (or interim) Economic Partnership Agreement with the EU in 
December 2007.189  The stepping-stone EPA with Ghana was signed on 28 July 2016, ratified 
on 3 August 2016 by the Ghanaian Parliament and approved by the European Parliament on 1 
December 2016. It entered into provisional application on 15 December 2016. The EU-Ghana 
interim  EPA  agreement  will  be  substituted  by  the  regional  EU-West  Africa  EPA  once  the 
latter  enters  into  force.190  By  the  end  of  2019,  14  out  of  15  members  of  the  Economic 
Community of Western African States (ECOWAS), and Mauritania, have signed the regional 
EPA which now misses only Nigeria’s signature. 

During  the  2nd  EPA  Committee,  held  in  Brussels  in  November  2019,  Ghana  submitted  a 
revised  liberalisation  schedule  for  the  period  2020-2029.  Ghana  started  reciprocating  its 
preferential access to the EU at the beginning of 2020, while the EU continuously upheld 
duty  free  quota  free  access  to  its  market  for  Ghanaian  products  since  2008.  The  revised 
market access offer and full liberalisation schedule is available on DG Trade’s website.191  

2. 

MAIN IMPLEMENTATION ISSUES   

2.1   Main steps in implementation 

2.1.1  Main steps taken in the implementation of the Agreement in 2019 

In  2019,  the  parties  endorsed  Ghana’s  revised  market  access  schedule,  along  with  the 
revised market access offer – paving the way for liberalisation to commence in 2020. While 
the EU continuously upheld duty free quota free access to its market for Ghanaian products, 
Ghana  started  to  liberalise  its  market  for  EU  products  in  2020.  The  revised  market  access 
offer foresees that 78% of tariff lines will be progressively liberalised over the period 2020-
2029. Liberalisation has started formally in early 2020, however, only products where tariffs 
are already at 0% are included in this first round. “Actual” liberalisation will start in January 
2021  where  1056  lines  will  be  liberalised.  This  first  round  of  liberalisation  concerns  few 
products  with  significant  EU  exports  (8  tariff  lines  with  exports  above  €1,000,000,  mainly 

189  The official name of the agreement ("stepping-stone agreement") reflects the fact that the initial and ultimate 
objective for economic partnership in West Africa is a comprehensive, regional agreement. It is also called 
"interim EPA". 

190   The  Economic  Partnership  Agreement  was  signed  in  December  2014  by  the  European  Union  and  13  West  African 
Countries. The agreement will enter into provisional application if the 16 West African Countries sign the agreement and 
2/3 of these countries ratify it. In 2018, both the Gambia and Mauretania signed the agreement, which means that only 
Nigeria’s signature is still missing. 

191  Published on DG Trade’s website: https://trade.ec.europa.eu/doclib/docs/2020/january/tradoc_158599.pdf  

355 

 
 
 
 
 
 
                                                 
machinery and chemicals). Agricultural goods, including fruits and vegetables, are altogether 
mostly excluded for liberalization, as well as inputs in specific value chains such as poultry, 
sugar, edible offal, food preparations. The full offer and schedule is available online. 192    

The parties endorsed the changes stemming from legal scrubbing of the Protocol on Rules of 
Origin, and agreed to adopt the final version of the protocol in 2020. The parties also agreed 
on a draft text for the rules of procedures for the EPA Committee, to be adopted in the first 
half of 2020.  

2.1.2  Cooperation with the private sector in addressing trade barriers 

The  EU  Delegation  to  Ghana  has  systematically  worked  in  close  coordination  with  the  EU 
Member  States  and  the  local  authorities  to  address  trade  barriers.  In  May  2019,  a  joint 
meeting  between  the  EU  Delegation,  EU  Member  States,  the  European  Business 
Organisation and the Customs Division of the Ghana Revenue Authority, took  place in 
order for the EU and private sector representatives to address  challenges when dealing with 
Customs' authorities at Ghana's main port. 

The  EU  Delegation  also  ensures  that  the  voice  of  the  local  private  sector  is  heard  in  the 
process  of  addressing  trade  barriers  and  implementing  trade  agreements.  For  example,  in 
2019,  the  EU-funded  West  Africa  Competitiveness  Program  (€4.1  million,  2019-2021) 
supported small and medium local trade associations to become more present in forums and 
events  and  to  better  make  their  voice  heard  with  regard  to  value  chains  in  the  agriculture 
sector. Furthermore, through the Investment Promotion component (€2.8 milllion, 2018-2021) 
of the EU-funded Ghana Employment and Social Protection Programme, the EU campaigned 
for more Ghanaian SME's to be linked with larger companies in the ECOWAS region and the 
EU market for improved export promotion and Value-Chains' development in agriculture. 

In  June  2019,  an  EU-Ghana  Business  Forum  was  organised  with  hundreds  of  participants 
and  dozens  of  Ghanaian  media  present.  Jyrki  Katainen,  Vice  President  of  the  European 
Commission  opened  the  forum.  The  forum  focused  on  the  European  External  Investment 
Plan, its tools and the opportunities it provides for developing countries which want to involve 
more the private sector in their development efforts.  

2.1.3  Conclusion of  a study193  on the impact  of  the interim EPAs on regional trade in  West 

Africa 

Côte d'Ivoire, with support from the EU, conducted in 2019 a study to determine the impact of 
tariff liberalisation under the EU-Côte d’Ivoire and EU-Ghana interim EPAs on regional trade 
in  West  Africa.  The  study  assessed  the  possible  consequences  of  EU  intermediate  products 
imported  under  EPA  preferences  (i.e.  at  zero  duties,  or  duties  significantly  lower  than  the 
ECOWAS  Common  External  Tariff)  being  used  for  manufacturing  final  goods,  which  are 
then exported to the region. The study takes into account the de facto applied rules for goods 
circulation  within  ECOWAS  (the  ECOWAS  Trade  Liberalisation  Scheme,  ETLS,  the 
corresponding rules of origin).   

192  Full offer and schedule available here: 

https://trade.ec.europa.eu/doclib/docs/2020/january/tradoc_158599.pdf  

193 The study is available in the website of DG TRADE: https://trade.ec.europa.eu/doclib/html/158337.htm) 

356 

 
 
 
 
 
                                                 
 
The impact study showed the following results:  

1.  The volume of  Ivoirian  and Ghanaian transformed goods that contain liberalised EU 
inputs (=intermediate products imported from the EU under EPA preferences) and are 
exported to the rest of the region are very limited for Côte d’Ivoire (123 million USD) 
and  statistically  non-significant  for  Ghana  (26.4  million  USD).  The  volume 
corresponds to 2% and 0.4%, respectively, of goods formally imported by ECOWAS 
Member States from both countries.  

2.  The study shows that the countries possibly affected by these imports of transformed 
products would be: a) Burkina Faso (31 million USD) and Mali (24 million USD) in 
the case of Côte d’Ivoire; and b) Burkina Faso (10 million USD) and Togo (2 million 
USD) in the case of Ghana.  

3.  Only  15  transformed  products  produced  and  exported  by  Ghana  and  Côte  d’Ivoire 
using  EU  liberalised  input  might  require  specific  trade  surveillance  measures.  These 
include  wheat  products,  soap  products,  carboys,  soups,  make-up,  hygiene  articles, 
tableware, clinker and preserved tomatoes. 

4.  Trade  diversion  effects  caused  by  those  products  against  regional  producers  are 
statistically insignificant (less than 1 million USD) and mostly compensated by trade 
creation effects going in favour of local consumers (i.e. more affordable prices).  

5.  In Côte d’Ivoire, the liberalisation of 26 EU inputs (accounting for 52 million USD of 
Ivorian  imports  from  the  EU)  used  in  the  manufacturing  of  8  transformed  products 
exported in  the region  does not  significantly distort  the demand of Côte  d’Ivoire  for 
equivalent  regionally  produced  inputs  except  for  salt  coming  from  Senegal  (0.16 
million  USD  of  Ivorian  imports  from  Senegal).  In  Ghana,  the  liberalisation  of  7  EU 
inputs  (accounting  for  12  million  USD  of  Ghanaian  imports  from  the  EU)  used  to 
produce  8  transformed  products  exported  in  the  region,  does  not  significantly  affect 
the  demand  of  Ghana  for  equivalent  regionally  produced  inputs  except  for  locally 
produced clinker. 

6.  The already limited impact of these EU input liberalisation will be further mitigated by 
their progressive liberalisation as agreed in their respective Market Access Offer. 66% 
of  the  volumes  will  be  liberalised  after  2026  in  the  case  of  Ghana  and  60%  of  the 
volumes  will  be  liberalised  after  2024  in  the  case  of  Côte  d’Ivoire.  This  gives 
sufficient time to the region to set up the recommendations proposed by this study.  

The Study proposes four main recommendations: 

1.  In  the  short  term,  i.e.  within  the  next  five  years,  maintain  the  free  circulation  of 
transformed products coming from Ghana and Côte d’Ivoire and using EU liberalised 
input goods. If needed, apply safeguards if unexpected rise in volume exports happen 
related to the transformed products occur.  

2.  A  trade  surveillance  system  should  be  set  up  for  the  identified  15  products  that  are 
manufactured  using  liberalised  EU  inputs  and  may  cause  distortions  on  the  regional 
market.  

3.  In the medium term, from 2024, the monitoring of the ETLS system by ECOWAS and 
the trade statistics in Ghana and Côte d’Ivoire could be improved for a better tracking 
of the transformed products using EU liberalised input.  

4.  Furthermore,  after  2024,  Ivoirian  and  Ghanaian  companies  exporting  to  other 
ECOWAS  countries  could  be  requested  to  pay  back  to  these  countries  the  customs 
duties related to the amount of liberalised EU input used in their transformed products. 

357 

 
 
 
 
 
 
A  key  recommendation  of  the  study  was  to  initiate  discussions  on  building  a  regional 
safeguard mechanism between ECOWAS countries that currently does not exist in the legal 
framework.  A  safeguard  mechanism  could  help  facilitate  the  solution  of  other  cross-border 
issues currently dealt with at bilateral level. 

2.2 

Trade and sustainable development goals 

The interim EPA with Ghana does not include a TSD chapter, nevertheless, close cooperation 
is taking place, e.g. under the framework of the Cotonou Agreement.  

Under the EPA, parties started to engage in a dialogue on sustainability of the Cocoa value 
chain,  during  the  2nd  EPA  Committee  meeting  with  Ghana  on  29th  November  2019.  Both 
sides  agreed  to  continue  this  dialogue  in  future  meetings.  The  EU  imports  65%  of  Ghana’s 
and  Côte d'Ivoire’s cocoa exports, making it the first importer worldwide. While cocoa beans 
are duty free on a MFN basis, exports of processed cocoa (butter, paste and powder) benefit 
from EPA preferences – which allowed Ghana to multiply by a factor of 6 its processed cocoa 
exports since 2008.  

In mid-2019, the governments of Ghana and Cȏte d’Ivoire started engaging in a joint cocoa 
initiative through guaranteeing a minimum price for cocoa on the world market with the aim 
to ensure a living income for local farmers.194 The European Commission seeks to  engage 
with both Ghana and Côte d’Ivoire on complementary issues related to deforestation and child 
labour which are affecting the sustainability of the cocoa value chain. Addressing these issues 
will need structural reforms in both countries, as well as strong cooperation among the various 
European actors involved in the value chain, e.g. with regard to traceability.  

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

Technical meeting in Accra, 28 February-1 March 2019 

A technical meeting took place on 28 February – 1 March 2019, at the Ministry of Trade and 
Industry (MoTI) in Accra, Ghana. Parties jointly undertook simulations on the fiscal revenue 
losses  in  order  to  finalise  the  update  of  the  Ghanaian  Market  Access  Offer.  Parties  also 
discussed remaining questions related to the final text on the rules of origins submitted by the 
EU party.  

2nd EPA Committee in Brussels, 29 November 2019 

The  second  meeting  of  the  EPA  Committee  under  the  Interim  Economic  Partnership 
Agreement (EPA) between Ghana and the EU was held in Brussels on 29th November 2019, 
in the presence of Hon. Alan Kyerematen, Minister of Trade and Industry of Ghana.  

The Committee achieved a number of key results: the Parties endorsed the full market access 
offer  and  market  access  schedule  of  Ghana.  Ghana  will  start  to  liberalise  its  market  for  EU 

194 Ghana and Cȏte d’Ivoire jointly announced in June 2019 the suspension of their cocoa futures sales for the 
cocoa  production  of  the  2020-2021  season  (which  will  begin  in  October  2020)  below  a  certain  price  (USD 
2600/tonne). This was accompanied by a joint public intervention, which led to an agreement with industry to 
offer a USD 400/tonne premium above the price of the world market. 

358 

 
 
 
 
 
 
 
 
 
                                                 
products by the first quarter of 2020. The liberalisation schedule will be concluded by 2029. 
The Parties, secondly, agreed on the final version of the Protocol on Rules of Origin and will 
adopt  it  officially  in  the  first  half  of  2020.  Thirdly,  the  EPA  Committee  also  agreed  on  the 
rules of procedures for the EPA Committee.  

Furthermore, the parties exchanged views on sustainability in the cocoa value chain. The EU 
informed  the  Committee  that  there  are  currently  discussions  in  the  EU  on  how  to  further 
contribute  to  addressing  social  and  environmental  challenges  in  the  cocoa  supply  chain. 
Finally,  the  EU  updated  Ghana  on  the  implementation  of  other  Economic  Partnership 
Agreements  with  other  ACP  countries  and  debriefed  the  Ghanaian  side  on  Brexit.  Ghana 
highlighted recent progress on the implementation of the African Continental Free Trade Area 
(AfCFTA). 

4. 

TRADE AND DEVELOPMENT COOPERATION AND SPECIFIC AREAS OF IMPORTANCE 

Development cooperation 

Development  cooperation,  particularly  trade-related  assistance,  is  an  important  pillar  of  the 
EPA as it contributes to operationalizing the development dimension of the partnership.  

Ghana  adopted  an  EPA  Accompanying  Measures  Strategy  in  2015  to  facilitate  EPA 
implementation. The EU will support the implementation of the strategy with €12 million for 
2018-2023 through the following projects: i) support to  the Ministry of  Trade to  implement 
the  EPA  and  to  engage  on  EPA-related  issues;  ii)  support  to  the  Ghana  Export  Promotion 
Authority and the Ghana Investment Promotion Centre in promoting local SMEs to upgrade 
along  value  chains  and  improve  the  quality  of  their  products;  and  iii)  overall  support  to 
improving the business policy and regulatory environment. 

The  first  action,  Support  to  the  Ministry  of  Trade  (€4.1  million,  2019-2021)  aims  at 
information  dissemination, awareness  raising  and mainstreaming the EPA across public and 
private  sector,  as  well  as  capacity  building  for  EPA  implementation  and  monitoring. 
Implementation will start in the first trimester of 2020.    

In  addition,  in  2018,  the  EU  launched  the  Ghana  Employment  and  Social  Protection 
Programme  (GESP)  –  Investment  Promotion  Component  (€2.8  million,  2018-2021) 
which aims at fostering access to business development services (BDS), promoting structured 
business  advocacy initiatives and supporting investment  promotion  and business linkages in 
selected  value  chains.  The  project  will  undertake  a  structured  sequence  of  investment 
promotion  activities,  such  as  identifying  potential  investors,  lead  companies  and  local 
suppliers,  preparing  investment  briefs  to  key  target  investors,  supporting  promotion 
campaigns  and  providing  investor  management.  In  2019,  SMEs  and  authorities  benefitted 
from  workshops  on  “Investment  Appraisal  Skills”,  “Institutional  Strengthening,  Leadership 
and Change Management” and “ECOWAS market identification”. A total of 151 MSMEs and 
start-ups  benefitted  from  a  first  round  of  investment  promotion  activities.  The  ECOWAS 
export  generation  initiative  has  selected  9  SMEs  from  the  prepared  food,  cosmetic  and  oil 
sectors and identified potential countries for export. Market research is underway for exports 
to Burkina Faso, Cape Verde, Ivory Coast and Mali. The project also co-sponsored the Ghana 
Industrial Exhibition and Summit and the Ghana-EU Forum  

359 

 
 
 
 
Under  the  regional  West  Africa  Competitiveness  Program,  the  national  component  in 
Ghana  (€6.35  million,  2019-2022)  is  focusing  on  value  chain  development  in  the  fruits, 
cassava  and  cosmetics  sector.  Planned  activities 
include  value  chain  diagnostics, 
strengthening  of  intermediary  organizations,  and  specific  training  of  brokers,  cluster 
development  agents  and  micro, small and medium  sized enterprises (MSMEs).  In 2019, the 
project  helped  establish  three  Value  Chain  Strategic  Committees  (VCSC)  for  the  three 
selected  value  chains,  with  the  objective  of  facilitating  sectorial  dialogue  and  promoting 
synergies. In 2019, the project provided trainings to 95 producers in cassava and fruit value 
chains  to  strengthen  the  application  of  Good  Agricultural  Practices  (GAP)  and  agricultural 
certifications,  and  trained  30  cosmetic  producers  on  product  registration  and  certification 
procedures. 

Other relevant support:  

  The  EU  supports  Ghana's  agricultural  sector  through  the  Market  Oriented 
Agricultural programme (MOAP) (€35 million, 2017-2024) and the programme to 
promote  productive  investments  for  sustainable  agriculture  in  Northern  Ghana 
(2018-2025, 102M€).  

  The  EU  is  also  implementing  the  Budget  Support  Programme  to  Promote 
Investment  and  Job  Creation  (SDG-Contract,  45  M€,  2019-2021)  which  aims  at 
promoting  domestic  and  foreign  investment  and  strengthening  public  financial 
governance  and  fight  against  corruption,  as  well  as  boosting  domestic  revenue 
mobilisation.  

The Fit for Market programme, implemented by COLEACP, since 2016 (35M€), assists 
smallholders,  farmer  groups  and  MSMEs  (Micro,  Small  and  Medium  Enterprises)  in  ACP 
countries to access international and domestic horticultural markets by complying with market 
and sanitary/ phytosanitary (SPS) requirements. It focuses on the business case for adopting 
good  practice  that  not  only  facilitates  market  access  but  also  genuinely  helps  suppliers  run 
more  efficient,  profitable  and  resilient  businesses.  It  provides  training  with  the  objective  of 
building  up  producers’  business  skills,  strengthening  links  throughout  the  value  chain,  and 
improving  the  capacity  of  competent  authorities.  COLEACP  has  been  conducting  72 
interventions  in  Ghana  from  the  start  of  the  programme:  50  technical  assistance  activities 
(21  in  2019),  21  trainings  (15  in  2019),  and  one  advocacy  training  (which  aims  at 
strengthening  stakeholders’  capacity  to  lobby  and  advocate  with  regulators  and  standard-
setters). 

Fisheries 

Following  the  issuance  of  a  yellow  card  by  the  EU  on  illegal,  unreported  and  unregulated 
(IUU) fishing in 2013, Ghana prompted rapid efforts at reform, including the introduction of 
Ghana’s  2015-2019  Fisheries  Management  Plan.  Ghana  earned  good  reputation  during  its 
work in the context of the formal dialogue with the European Commission, which led to the 
lift  of  the  pre-identification/yellow  card  in  October  2015.  However,  the  situation  has 
significantly  worsen  and  the  legal  reforms  undertaken  during  the  “yellow  card”  period  in 
terms  of  fines  as  well  as  monitor,  control  and  surveillance  (MCS)  are  not  being  fully 
implemented. 

360 

 
 
The Commission is recently alerted Ghana of the increased risk of a new yellow card, and 
outlined  key  concerns:  high  level  of  illegal  transhipments;  lack  of  control  over  foreign 
interests  in  the  industrial  sector;  the  disappearance  of  an  observer  on  a  Chinese-owned 
trawler; the lack of enforcement of the law and lack of political will to allow technical teams 
to  deliver,  including  political  obstruction.  The  Commission  called  on  Ghana  to  take  strong 
actions rapidly to address all the weakness in the system. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

The  assessment  of  the  macroeconomic  performance  for  Ghana  for  2019  showed  sustained 
improvements of key macroeconomic fundamentals, but weak revenue mobilisation, coupled 
with a faster growth in expenditure remain the main challenges.  

Ghana is one of the fastest growing economies in Africa. GDP grew by 6.7% in 2019, below 
the 7.1% target of the 2019 Mid-year Review. The downward trend of inflation is confirmed 
in  2019  with  end-period  inflation  of  7.6%  in  September  2019,  down  from  9.8%  in  October 
2018 and 11.8% in December 2017. The decline in inflation was mainly driven by non-food 
inflation and the monetary stance taken by Bank of Ghana. The fiscal deficit was at 4.5% of 
GDP at the end of September 2019.  

Ghana's  external  position  in  2019  largely  continued  to  strengthen.  The  provisional  trade 
balance  recorded  a  surplus  of  USD 2.16 billion  (3%  of  GDP)  by  the  end  of  2019  from  a 
surplus  of  USD 1,8  billion  recorded  in  2018.  Gross  international  reserves  decreased  to  3.6 
months of import cover from 3.9 months at the end of 2017 largely due to 7.6% depreciation 
against the US Dollar at the end of September 2018.  

Ghana remains a favourite destination for investment in West Africa and the government is 
continuing  its  reforms  to  improve  the  overall  investment  climate.  Ghana  dropped  by  four 
places in  the Doing Business  report of 2020 (118th place from  114th in 2019) but  still ranks 
13th among 48 Sub-Saharan African states. Ghana is valued for its political stability, relatively 
open  democratic  institutions,  free  media  and  a  fairly  vibrant  civil  society.  The  2018  Mo 
Ibrahim Index on African Governance ranks Ghana 6 out of 54 African countries with recent 
improvement in indicators like 'Sustainable Economic Opportunities' and 'Safety and Rule of 
Law'. On the other hand, Ghana suffers from the common ailments found all over Africa: red 
tape,  corruption,  discriminatory  taxation,  slow  justice  system  and  local  content/  ownership 
requirements that sometimes discourage European companies from investing and bidding for 
government contracts.  

5.2 

Trade in goods 

In  2019,  EU27  was  Ghana’s  largest  source  of  imports,  accounting  for  17%  of  Ghana’s 
imports  (ahead  of  China  with  16.8%  and  the  USA  with  9.6%).  EU27  was  Ghana  fourth 
largest  export  destination,  accounting  for  10.6%  of  Ghana’s  exports  (behind  India  with 
26.8%, China with 14.6% and Switzerland with 14.6%). However, exports to India and China 

361 

 
 
 
 
 
 
 
 
 
are  almost  exclusively  gold,  oil  and  mineral  ores,  while  exports  to  the  EU  are  more 
diversified. Only 4.5% of Ghana’s exports go to  the West African region (mostly Togo and 
Burkina  Faso)  and  less  than  4%  of  Ghana’s  imports  come  from  the  region  (mostly  Côte 
d’Ivoire  and  Nigeria),  less  than  the  average  exports  and  imports  rates  within  the  ECOWAS 
region.  

In 2019, total trade between the EU27 and Ghana decreased by 10.8%, mostly due to a fall in 
EU  imports  from  Ghana  by  €390  million  or  14.6%  to  €2.3  billion.  However,  total  imports 
from  Ghana  are still above the level  of 2017, as  2018 saw an unusual  spike due to  high oil 
exports. EU exports to Ghana in 2019 decreased by €231 million or 9.5% to €2.2 billion. The 
overall  trade  balance  is  negative  for  the  EU  (-€92  million),  for  both  agricultural  and  non-
agricultural goods.  

The decrease in EU imports from Ghana is due to a decrease in mineral oil imports by €457 
million  (-43.1%),  after  an  increase  by  180%  in  2018.  Imports  of  raw  cocoa  beans  also 
decreased  by  €39  million  (-6%).  On  the  other  hand,  EU  imports  of  edible  fruits  and  nuts 
(mostly bananas) increased by €21 million (+25%), imports of cocoa paste, butter and powder 
increased  by  €60  million  (+12%)  and  imports  of  vegetable  fats  and  oils  increased  by  €14 
million (+29%). Processed cocoa products (paste, butter, powder and chocolate) have doubled 
since 2010 and multiplied by 6 since 2008. They now account for 47% of the overall value of 
Ghanaian cocoa exports to the EU.  

Main destination of Ghanaian exports in  the EU  are the  Netherlands (€803 million), France 
(€396 million), Italy (€304 million) and Germany (€256 million). Ghanaian exports to the UK 
were €324 million in 2019, down 30% from the previous year. Preference utilisation rates for 
EU imports from Ghana are continuously around 98 or 99%.  

EU  imports  from  Ghana  are  diversifying  only  slowly.  The  top  10  products  imported  by  the 
EU (at HS 6-digit level) accounted for 87.4% of total imports in 2019 (89.8% in 2018), see 
Table 1. In 2019, the EU imported 47 different products (at HS 6-digit level) with a value of 
above €1million from Ghana (compared to 53 products in 2014 and 43 in 2009). A few new 
products were added to the export basket over the past 10 years, such as yams, frozen cuttle 
fish  and  squid,  frozen  octopus  and  frozen  tuna.  Of  the  more  traditional  export,  the  most 
dramatic  increases  over  the  past  10  years  were  recorded  for  mangos,  other  exotic  fruits, 
vegetable fats and oils, and, of course, cocoa butter, fat and oil and cocoa powder. 

362 

 
 
Table 1. 2019 top 10 EU imports to Ghana  

Product  Description 

180100  cocoa beans, whole or broken, raw or roasted  
270900  petroleum oils and oils obtained from bituminous minerals, 

crude  

180400  cocoa butter, fat and oil  
180310  cocoa paste (excl. defatted)  
160414  prepared or preserved tunas, skipjack and atlantic bonito, 

whole or in pieces (excl. minced)  

760110  aluminium, not alloyed, unwrought  
fixed vegetable fats and oils and their fractions  
151590 
080390 
fresh or dried bananas (excl. plantains)  
180500  cocoa powder, not containing added sugar or other 

sweetening matter  

180320  cocoa paste, wholly or partly defatted  

Total 

Source: Eurostat (product names partly shortened)  

Volume 
(million €) 
611.7 
560.7 

295.6 
175.7 
76.7 

76.6 
576.7 
53.4 
46.3 

27.5 
2,500.9 

Share 

26.98% 

24.73% 
13.04% 
7.75% 

3.38% 
3.38% 
2.54% 
2.35% 

2.04% 
1.21% 
87.41% 

Table 2. 2019 top 10 EU exports to Ghana  

Product  Description 

20714 

300490 

271012 

light oils and preparations, of petroleum or bituminous 
minerals  
frozen cuts and edible offal of fowls of the species gallus 
domesticus  
medicaments consisting of mixed or unmixed products for 
therapeutic or prophylactic purposes  
medium oils and preparations, of petroleum or bituminous 
minerals, not containing biodiesel, n.e.s.  
unused postage, revenue or similar stamps of current or new 
issue in the country  
300220  vaccines for human medicine  

271019 

490700 

843143 

630900 

190190 

870120 

parts for boring or sinking machinery of subheading 
8430.41 or 8430.49, n.e.s.  
worn clothing and clothing accessories, blankets and 
travelling rugs, household linen and articles for interior 
furnishing 
malt extract; food preparations of flour, groats, meal, starch 
or malt extract, not containing cocoa  
road tractors for semi-trailers  
Total 

Source: Eurostat (product names partly shortened)  

363 

Volume 
(million €) 

Share (%) 

184.3 

123.1 

696.7 

57.2 

40.1 

36.7 

34.3 

8.43 

5.63 

3.19 

2.62 

1.83 

1.68 

1.57 

32.7 

1.50 

32.2 

1.47 

25.9 
1,263.2 

1.18 
29.11% 

 
 
 
 
 
 
 
The decrease in EU exports to Ghana was mostly driven by a decrease in exports of mineral 
fuels and mineral oils (-€240 million, -49%), as well as machinery and mechanical appliances 
(-€49 million, -11%), cement (-€28million, -78%) and miscellaneous articles of base metal (-
€27 million, -58%).  

On the other hand, EU exports increased for stamps, banknotes, cheque forms, stock, share or 
bond certificates (+€40 million, +1005%), meat and edible meat offal (+€32 million, +21%), 
pharmaceutical products (+€21 million or 20%) and wheat and meslin (+€18 million from 0).  

5.3 

Trade in agricultural products 

Total trade in agricultural goods between the EU and Ghana counted for €1.83 billion in 2019, 
with Ghana having a surplus of €860 million.  

EU  imports  of  agri-food  products  from  Ghana  have  increased  by  €55  million  or  4.2%  in 
2019 to a total of €1.3 billion. Imports of agricultural goods from Ghana count for 59% of the 
total  EU  total  trade  with  Ghana.  Cocoa  products  (cocoa  beans,  paste,  butter  and  powder) 
counted for 86% (€1.16 billion) of EU imports of agricultural goods from Ghana. Imports of 
tropical fruits counted for a value of €82 million in 2019.   

The  EU  exports  of  agri-food  products  to  Ghana  in  2019  consist  mainly  of  poultry  meat 
(29%,  €143  million),  infant  food,  and  other  cereals,  flour,  starch  or  milk  preparations  (7%, 
€34  million  and  having  increased  by  54.5%  compared  to  2018),  milk  powders  and  whey 
(6.8%) and vegetables oils – other than palm & olive oil – (6.4%). In 2019, exports of sugar 
decreased by 36.7% and counted for 3.9% of exports of agricultural products to Ghana.  

The EU does not open any TRQs to Ghana. In 2019, Ghana was not yet liberalizing its market 
for  EU  imports  under  the  EPA,  and  most  agricultural  products  will  remain  excluded  from 
liberalization. 

5.4 

Trade in services and Foreign Direct Investments 

The interim EPA with Ghana does not cover trade in services nor investment.  

After a major fall in 2017 (from €2.493 billion in 2016 to €1.062 billion or  -50%), trade in 
services is picking up. Total EU services trade with Ghana slightly increased in 2018 reaching 
€1.098 billion (+3.3%). EU imports of services from Ghana decreased slightly by €7 million 
or 1.8% to €388 million. EU exports of services to Ghana increased by €44 million or 6.6% to 
€722 million. Overall balance is positive for the EU.  

In  2018,  EU27  foreign  direct  investment  stocks  in  Ghana  stood  €1.967  billion  (+€464 
million  or  +30.9%).  EU27  FDI  flows  reached  €149  million  (+€105  million  or  +238%). 
Several large EU companies, such as Volkswagen, have finalised plans to invest in assembly 
lines in the country.  

364 

 
 
 
 
 
 
 
 
6. 

CONCLUSIONS  

With the endorsement of the revised market access offer and schedule, the implementation of 
the EU-Ghana interim EPA took a major step forward in 2019. Exports of Ghana to the EU 
remain  dominated  by  cocoa  and  mineral  oils,  nevertheless,  exports  to  the  EU  are  far  more 
diversified than to any other trade partner. The EU remains a key trade and investment partner 
even its reduced EU27 configuration. Close cooperation will be needed in the coming years to 
reap full benefits from the implementation of the EU-Ghana interim EPA.  

Europeans enjoys fresh fruit from Ghana  

The Ghanaian company Blue Skies has been producing fresh-cut fruit in Ghana since 1998 
and has now diversified into freshly squeezed juice and dairy-free ice cream. The business 
employs around 3,500 people in its three factories in Ghana and sources fruit from over 120 
farms across the country.  

The business predominantly supplies ‘own label’ products to a number of retailers including 
Albert  Heijn  in  the  Netherlands,  Delhaize  in  Belgium  and  Carrefour  and  Monoprix  in 
France. Products sent to Europe include freshly cut mango, coconut, pineapple and papaya. 
In 2018/2019, Blue Skies exported over 7,000 tonnes of fresh fruit into the EU.  

Exporting  to  Europe,  thanks  to  duty-free  market  access  under  the  EPA,  has  been  a  key 
growth factor for the company. Blue Skies has recently launched dairy-free ice cream, which 
is made using fresh coconut milk and has won numerous awards.  

In response to growing demand, Blue Skies is investing in a new state-of-the-art factory in 
Benin,  which  is  expected  to  be  completed  by  the  end  of  2019  and  will  take  advantage  of 
direct flights from Cotonou to France. 

365 

 
 
 
 
 
 
 
 
 
 
7. 

STATISTICS 

GHANA 

366 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Ghana (mio €)Imports2 3682 0631 8972 6682 278Exports2 6352 2152 6072 4172 186Balance267152710-251-92Share Ghana in EU27 trade with Extra-EU27Imports0.1%0.1%0.1%0.1%0.1%Exports0.1%0.1%0.1%0.1%0.1%Total (I+E)0.1%0.1%0.1%0.1%0.1%Share EU27 in trade Ghana with worldImports19.6%21.6%23.4%21.5%17.0%Exports16.6%12.5%15.2%18.7%10.6%Total (I+E)18.3%17.2%19.0%19.8%13.1%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Ghana: IMF DotsTotal merchandise trade EU27 with Ghana (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports2 6682 278-390-14.6%Imports1 907 5651 934 94427 3791.4%Exports2 4172 186-231-9.5%Exports2 059 8822 132 01572 1333.5%Balance-251-92159Balance152 317197 07144 754Total trade5 0854 464-621-12.2%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Ghana (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports1 2931 348554.2%Imports118 891121 6442 7532.3%Exports4274886114.4%Exports169 000181 82512 8257.6%Balance-867-8606Balance50 10960 18110 072Total trade1 7201 8361166.7%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Ghana (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports1 374930-445-32.4%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports1 9901 698-292-14.7%EU27 exports1 890 8821 950 19059 3093.1%Balance616769153Balance102 208136 89034 682Total trade3 3652 628-737-21.9%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Ghana (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports395388-7-1.8%Imports824 543824 015-528-0.1%Exports666710436.5%Exports928 420968 64840 2284.3%Balance27132250Balance103 877144 63340 756Total trade1 0621 098363.4%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Ghana (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports9121 1831 153395388Imports642 682776 924784 743824 543824 015Exports1 0421 3981 340666710Exports750 713849 023855 477928 420968 648Balance130215186271322Balance108 03172 09970 734103 877144 633Total trade1 9542 5802 4931 0621 098Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Ghana (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward-671-1 511Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward2 3793 4362 2441 5031 967Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward-357-671Inward143 012803 285328 703209 462-67 421Outward153296944149Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsGhanaGhana20182019Extra-EU27Ghana2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Ghana-50005001 0001 5002 0002 5003 00020152016201720182019Merchandise trade EU27 with Ghana (mio €)ImportsExportsBalance 
 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE 
ECONOMIC  PARTNERSHIP  AGREEMENT  (EPA)  BETWEEN  THE  EU  AND 
CAMEROON 

1. 

INTRODUCTION 

On 17 December 2007, Cameroon and the EU initialled a stepping-stone EPA. They signed it 
on 15 January 2009. The European Parliament approved this agreement on 13 June 2013 and 
the Parliament of Cameroon proceeded to its ratification on 22 July 2014. On 4 August 2014, 
the agreement entered into provisional application. This EPA is a regional agreement and is 
open to the accession of other Central African countries. 

In  August  2016,  Cameroon  started  reciprocating  its  preferential  access  to  the  EU.  After  4 
years, the liberalisation process has now reached cruising speed. 

Cameroon  will  liberalize  80%  of  imports  from  the  EU  over  15  years.  Products  under 
liberalization  are  mainly  industrial  machines  (pumps,  generators,  turbines,  etc.),  electrical 
equipment  (transformers,  capacitors,  resistors,  etc.)  and  certain  chemicals.  These  are  mostly 
inputs  used  by  Cameroon's  industries  not  produced  locally.  Eliminating  import  duties  will 
reduce the costs of inputs for local businesses and will also benefit consumers.  

Cameroon has excluded a number of agricultural and non-agricultural processed goods from 
liberalisation of EU imports, mainly to ensure the protection of certain sensitive agricultural 
markets  and  industries  but  also  to  maintain  fiscal  revenues.  The  excluded  products  include 
most types of meat, wines and spirits, malt, milk products, flour, certain vegetables, wood and 
wood products, used clothes and textiles, paintings, and used tyres. 

2. 

MAIN IMPLEMENTATION ISSUES   

2.1   Main steps in implementation 

The  EPA  foresees  that  Cameroon  successively  liberalizes  80%  of  imports  from  the  EU. 
Effective liberalization started on 4 August 2016 for 1st category products (1727 tariff lines) 
and  on  4  August  2017  for  2nd  category  products  (985  tariff  lines).  The  two  first  categories 
consist mainly of necessities, industrial and agricultural inputs, machines, chemicals, vehicles 
and spare parts, computers, papers, consumer products for households. 

In 2019, during the 4th EPA Committee meeting, parties signed the Decision concerning the 
accession  of  Croatia  and  concluded  the  negotiation  on  dispute  settlement  procedures.  
Negotiation on a joint protocol on rules of origin are still ongoing and is expected to conclude 
in 2020. 

The EU Delegation throughout the year participated in local meetings in the field of trade and 
private sector development, including meetings linked to the preparations of a framework law 
for  the  implementation  of  measures  on  social  corporate  responsibility.  A  Committee 
composed of representatives from the Cameroonian government, the private sector and civil 
society  meets  at  least  twice  a  year  in  Yaoundé  to  assess  the  implementation  of  the  EPA.In 
addition,  the  Cameroonian  government  and  the  EU  Delegation  to  Cameroon  continued  to 

367 

 
 
 
 
 
organize  outreach  and  awareness  raising  events  on  the  EPA  with  civil  society,  media, 
academia and private sector representatives. 

2.2 

Trade and sustainable development goals 

The EPA with Central Africa / Cameroon does not include a dedicated chapter on Trade and 
Sustainable  Development.  However,  under  the  framework  of  the  Cotonou  Agreement,  and 
funded  by  the  European  Development  Fund  (EDF),  parties  are  cooperating  intensively  on 
matters related to environmental sustainability of trade.   

The  Forest  Governance  Improvement  Programme  (PAMFOR,  €10  million),  aims  to 
improve the traceability of wood for all the marketing and export of Cameroonian wood while 
respecting  the  balance  of  biodiversity.  The  private  sector  of  the  wood  sector  actively 
participates in the implementation process of the Voluntary Partnership Agreement relating to 
the application of Forest Law and Governance for Trade (VPA FLEGT). The restructuring of 
the wood industry is expected to have a positive impact not only on employment but also on 
the migration from the informal to the formal. 

The  Programme  to  support  the  preservation  of  biodiversity  and  fragile  ecosystems  in 
Central  Africa  (ECOFAC  6)  provides  direct  support  for  the  sustainable  management  of 
protected  areas  and  support  for  regional  and  national  environmental.  In  Cameroon  (€15.5 
million), ECOFAC 6 supports directly two national parks, the Faro national park and the Dja 
Faunal Reserve with activities to improve sustainable management of the protected areas and 
anti-poaching activities.  

The  Central  Africa  World  Heritage  Forest  Initiative  (€5  million)  is  deployed  also  in 
Cameroon,  in  the  Dja  Faunal  Reserve  and  the  Sangha  Tri-national.  The  project  aims  to 
reinforce, through the implementation of the World Heritage Convention, the management of 
forest sites. 

In the North Cameroon, the EU supports a landscape approach  to maintain wildlife corridors 
between  the  3  national  parks  (Faro,  Benoué  and  Bouba  N'Djida)  and  promote  socially 
equitable and ecologically sustainable economic development (€7.5 million). 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The fourth EPA Committee meeting between Cameroon and the EU took place on 18th to 
19th  February  2019  in  Yaoundé.  During  this  meeting,  the  parties  signed  a  decision  on  the 
accession  of  Croatia  to  the  EPA  and  reviewed  two  draft  decisions  on  dispute  settlement 
(procedures and list of arbitrators) to be signed during the fifth EPA Committee in 2020. The 
parties also  reached an agreement on the implementation  of the liberalisation schedule until 
2029, taking into account current Cameroon security and economic constraints. Cameroon’s 
official  commitment  to  the  schedule  provides  predictability  for  parties  and  particularly  for 
economic operators. 

The parties also exchanged views on the impact of tariff dismantling on the basis of the report 
this 
produced  by  Cameroonian  customs  highlighting  custom 

revenue 

losses 

for 

368 

 
 
 
 
 
administration. However, we are still at the beginning of the process and the real impact of the 
liberalisation, the final beneficiaries and the effects on the economy remain to be identified. 

A  common  protocol  on  rules  of  origin  was  not  included  in  the  EPA  at  the  time  the  parties 
concluded its  negotiations in  2007. Negotiations of a protocol started end 2016 and are still 
ongoing.  After  conclusion  of  the  negotiations,  the  parties  will  annex  the  protocol  to  the 
agreement.  In  the  meantime,  Cameroon  benefits  from  the  general  EPA  rules  of  origin 
included  in  EU  Market  Access  Regulation  2016/1076.  The  rules  of  origin  applicable  to 
products imported from the EU are laid down in Cameroon's Presidential Decree 2016/367 of 
3 August 2016. 

During the last EPA committee meeting, the parties took stock of the current negotiations on 
the protocol on Rules of Origin. The negotiations between experts should resume soon and a 
conclusion is expected before the fifth EPA Committee.  

The  parties  agreed  to  develop  a  monitoring  system  for  the  agreement.  This  monitoring  will 
make  it  possible  to  monitor  the  implementation  of  the  agreement,  identify  its  impacts  on 
Cameroon  value  chains  and  consumers,  and  will  contribute  to  the  identification  of  political 
correction  or  incentive  measures.  Parties  will  prepare  a  first  common  monitoring  report  for 
the next EPA Committee meeting in 2020.  

The parties also discussed trade barriers, Cameroonian export taxes and internal taxes/levies. 

4. 

TRADE AND DEVELOPMENT COOPERATION  

In addition to the technical assistance provided to Cameroon in pursuit of fostering trade and 
sustainable development goals, the EU continued to provide support to Cameroon helping the 
country  to  benefit  from  the  EPA,  improve  its  economic  performance,  competitiveness  and 
become more open for trade and investment.  

In  2019, the EU continued to  support Cameroun in  elaborating  a study  on a  National  EPA 
Implementation Strategy and a study on the net fiscal impact of the EPA and the reforms 
necessary to absorb and compensate such impact. Both studies will be  completed in the first 
half  of  2020.  Another  study  seeking  to  map  impediments  of  SME  competitiveness 
("cartographie des PME") started in 2019 and is  currently ongoing. Three additional studies 
funded  with  the  support  of  the  EU  were  finalised  in  2019:  (i)  a  strategy  for  cluster 
development ("Stratégie nationale de développement des clusters"), (ii) the implementation of 
the  National  Export  Strategy  ,  including  for  exports  to  the  EU,  Nigeria  and  Central  Africa, 
and (iii) the impact of the reforms adopted upon recommendation of the Cameroon Business 
Forum. 

The  implementation  of  the  programme  Dispositif  d'appui  à  la  compétitivité  du  Cameroun 
(DACC), (€10 million) started in January 2020. The programme will last until 2023 and aims 
at improving: (i) competitiveness, through direct support to SMEs, start-ups and intermediary 
organizations;  (ii)  business  climate  and  (iii)  standards  and  energy  efficiency.  Under  the 
DACC,  a  contract  has  been  signed  with  UNCTAD  to  extend  the  online  registration  of  new 
companies ("mybusiness.cm") to four regions of the country after a pilot phase established the 
online  registration  in  three  regions.  This  online  registration  is  one  of  the  most  appreciated 
reforms in the country in recent years.  

369 

 
 
 
 
In the agricultural sector, the EU provides  budget support  (€35 million in  2019, out  of a 
total €100 million for the period 2017-2019) to improve the distribution and access to seeds 
and  fertilizers,  to  foster  agricultural  productivity  and  competitiveness.  An  increase  of  €50 
million  to  the  budget  support  program  has  been  adopted  to  cover  the  period  2020-21.  The 
sectoral approach targeting the rural sector will be maintained, but with an increased emphasis 
on  supporting  the  development  of  value  chains  (cotton,  wood,  etc.),  including  improving 
governance  and  accountability  in  these  sectors.  Support  measures  for  the  banana  sector  are 
also still ongoing (€48 million, 2015-2020). Some EU Member States also provide support to 
certain value chains and to SMEs in the agri-food sector.  

Via  the  Fit  for  Market  programme,  implemented  by  ColeACP,  and  the  Strengthening 
sanitary  and  phytosanitary  systems  of  the  ACP  horticultural  sector  (FFM-SPS)  project,  the 
EU also supports SPS capacity-building activities related to fruit and vegetable value chains 
and the development and promotion of Geographic Indications in Cameroon.  

The  formulation  of  a  support  programme  for  regional  integration  and  investments  in 
Central  Africa  has  been  finalised  in  2019  (PAIRIAC).  Contracting  will  take  place  during 
2020  and  implementation  will  start  in  2021.  The  programme  will  include  support  to  EPA 
implementation  and  outreach;  assistance  in  the  rationalization  of  the  Regional  Economic 
Communities (CEMAC and CEEAC); capacity building for operators in the implementation 
and  monitoring  of  SPS  standards  and  private  standards;  improvement  of  the  region's 
attractiveness for investments and financing.  

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

Cameroon  is  a  Lower  Middle-Income  Country  and  classified  in  the  medium  human 
development  category  (rank  150/189)  in  the  2019  UN  Human  Development  Report.  While 
lagging behind  neighbouring  Gabon, Congo and  even Equatorial  Guinea  in  terms  of human 
development, it is the most diversified and dynamic economy in Central Africa. The business 
climate  remains  challenging.  Cameroon  consistently  fares  poorly  in  most  assessments  of  it 
business  climate  (167  out  of  190  economies  in  the  2020  World  Bank's  Doing  business 
ranking;  123  out  of  141  in  the  World  Economic  Forum's  2019  Global  Competitiveness 
ranking and 153 out of 180 in the corruption perceptions index 2019). 

Cameroon’s  economy  grew  by  4%  in  2018  and  2019  (3.5%  in  2017).  This  recovery  was 
characterized primarily by a less pronounced contraction of the oil and gas sector, but growth 
in the non-oil sector was also strong, driven by the implementation of projects for the Africa 
Cup  of  Nations,  the  production  of  timber  and  processed  wood  products,  and  the  services 
sector, particularly banks and financial institutions (source IMF). A serious impact on growth 
from the fall in oil and gas prices and social and economic restrictions due to Covid-19 can be 
expected for 2020. 

Inflation rose to 2.5 percent from 1.1 per- cent last year, mostly due to continued disruptions 
in  food  production  in  the  an-  glophone  regions.  The  Government  main-  tained  its  efforts 
towards  fiscal  consolidation  in  2019,  despite  security  spending  pressures.  While  the 

370 

 
 
 
 
unemployment  rate  according  to  ILO  remains  low  (3.8%),  the  main  challenge  relates  to 
underemployment which is estimated at over 70% of all those occupied.  

Cameroon's global trade balance is structurally negative: its trade deficit was of € 0.69 billion 
in 2019 (€4.7 billion of imports, against €4 billion of exports) with a positive trend to narrow 
the gap (€1.6 billion in 2018, from €2.5 billion in 2016). With the EU, however, its trade 
balance has been positive for several consecutive years.  

The  crisis  and  ongoing  security  concerns  in  the  two  anglophone  regions,  which  contribute 
significantly  to  the  country's  GDP,  will  continue  to  have  a  negative  impact  on  the 
government's  finances,  on  the  production  and  export  of  coffee,  bananas  and  cocoa,  and  on 
private investment. 

5.2 

Trade in goods 

Total EU27 trade with Cameroon has been relatively stable over the last decade. In 2019, EU 
imports from Cameroon increased by €381 million (+22%) to €2.1 billion, back to the level of 
the 2010-2014 period. Exports from the EU to Cameroon decreased by €124 million (-8%) to 
€1.4  billion.  The  balance  of  trade  has  been  negative  for  the  EU  for  a  long  period  and 
continues to slowly increase while EU exports are relatively constant. 

The EU is by far the most important trade partner of Cameroon: 47% of Cameroon's exports 
go  to  the  EU  (followed  by  China  with  14%,  India  11%,  USA  4%.  Furthermore,  28%  of 
Cameroon's  imports  come  from  the  EU  (followed  by  China  with  20%,  Thailand  5%  and 
Nigeria 5%).  

Main  products  exported  in  2019  from  Cameroon  to  the  EU  are  oil  and  gas  (48%  of  total 
exports in value), cocoa bean (19%), wood (12%), banana (7%). Top 10 products accounted 
for 93.4% of the total imports. Imports from Cameroon remain little diversified. 

Considering  the  high  share  of  raw  materials  in  Cameroon’s  exports,  most  of  Cameroon’s 
exports  to  the  EU  are  free  of  duty  on  an  MFN  basis.  The  remainder,  mainly  bananas, 
aluminum, processed cocoa and some wood are exported under EPA preferences. Preference 
utilisation rates are high for these products, at 98% in 2019. 

371 

 
 
 
 
 
 
 
Table 1: Top ten products imported by the EU27 from Cameroon in 2019 (in million of Euros) 

HS 
Code 

270900 

180100 

080390 

440729 

Product (shortend) 
petroleum oils and oils obtained from 
bituminous minerals, crude   
cocoa beans, whole or broken, raw or 
roasted   

fresh or dried bananas (excl. plantains)   
tropical wood specifie, sawn or chipped 
lengthwise, (…) 

180400  cocoa butter, fat and oil   

760110  aluminium, not alloyed, unwrought   
sapelli, sawn or chipped lengthwise, 
sliced or peeled (…) 
iroko, sawn or chipped lengthwise, sliced 
or peeled (…) 

440727 

440728 

090111  coffee (excl. roasted and decaffeinated)   
sheets for veneering, incl. those obtained 
by slicing laminated wood (…) 

440839 

 TOTAL 

Source: Eurostat  

2010 

2015 

2018 

2019  % 

822.45 

479.71 

717.05  1009.74 

48% 

417.96 

383.61 

264.09 

396.57 

0.00 

193.13 

152.07 

144.72 

99.03 

105.79 

119.75 

132.30 

29.70 

30.41 

71.69 

73.03 

102.01 

119.80 

79.85 

74.28 

27.06 

45.85 

43.54 

48.73 

26.12 

42.49 

21.87 

40.94 

32.95 

25.01 

29.79 

26.58 

30.46 

20.05 

24.59 

25.69 

19% 

7% 

6% 

4% 

4% 

2% 

1% 

1% 

1% 

1568.29  1423.37  1570.52  1968.24 

93% 

The  increase  in  EU  imports  from  Cameroon  in  2019  can  be  attributed  to  an  increase  in  the 
imports  of  mineral  fuels  (+€293  million  or  +41%),  cocoa  beans  (+€132  million  or  +50%) 
wood sawn or chipped (+€13 million  or  +10.5%), and cocoa butter (+€8 million  or +11%). 
On  the  other  hand,  EU  import  of  aluminium  from  Cameroon  decreased  in  2019  by  €46 
million or -38%. Similarly, imports of banana decreased by €7 million or -5%.  

Main destination for Cameroonian exports in the EU are the Netherlands (33%), Italy (22%), 
Belgium (12%), Spain (11%), France and Portugal. 

372 

 
 
  
 
 
Table 2: Top ten products exported by the EU27 to Cameroon in 2019 and evolution of share (in 
million of Euros) 

HS 
Code 

Product 
worn clothing and clothing accessories 
(…) 

630900 
300490  medicaments (…) 
100199  wheat and meslin 
271019  medium oils and preparations 
252310  cement clinkers   
870323  motor cars and other motor vehicles (…) 
light oils and preparations (…) 
271012 
mixtures of odoriferous substances and 
mixtures (…) 

330210 
110710  malt (excl. roasted)   
210690 

food preparations, n.e.s.   
TOTAL 

2010 

2015 

2018 

2019  % 

50.51 
72.24 
78.96  101.60 
80.79 
29.29 
32.15 
28.32 
0.93 

0.00 
13.45 
8.66 
15.38 
0.00 

69.08 
65.34 
23.18 
17.95 
33.46 
29.84 
61.98 

67.11 
62.37 
51.24 
47.27 
31.81 
29.55 
26.44 

4.86% 
4.52% 
3.71% 
3.43% 
2.31% 
2.14% 
1.92% 

1.77% 
27.25 
17.87 
1.59% 
24.30 
17.87 
10.57 
1.34% 
12.69 
213.26  413.13  365.07  380.48  27.58% 

26.22 
27.74 
13.85 

24.35 
21.91 
18.43 

Source: Eurostat  

The decrease in  EU exports to  Cameroon in  2019 affects  most products.  However, note the 
sharp  increase  in  imports  of  wheat  and  meslin  (€28  million  or  +121%),  medium  oils  (€29 
million  or +163%) and sharp decrease of light  oils (-€36 million,  -57%) among the top  ten. 
The  relatively  small  quantities  imported  of  each  product  also  explain  the  inter-annual 
variations. 

Main  origins  of  Cameroonian  imports  from  the  EU  are  France  (36%),  Belgium  (21%),  The 
Netherlands (8.7%), Italy (8.2%), Spain and Germany. 

Cameroon Customs tracks carefully the use of EPA preferences for the products liberalized as 
of  now.  The  total  value  of  goods  imported  into  Cameroon  under  EPA  preferences  from 
August  2016  to  December  2019  is  estimated  at  €530  million  (Source:  Cameroon  customs). 
Main products imported under EPA preferences according to Cameroon customs were clinker 
(27% of total value of imports under EPA preferences), chemical industries (24%), electrical 
machinery  and  equipment  (18%),  vehicles  and  transport  equipment  (6.5%),  paper  and 
cardboard (7.3%),  fertilizers (5.1%).  Over the period from  August  2016 to December 2019, 
the total value of forgone customs revenue due to liberalization of tariff rates under the EPA 
was  €21.53  million.  Ten  companies  account  for  56%  of  imports  under  EPA  preferences. 
These  companies  operate  in  the  following  fields:  cement,  brewing,  energy,  rail  transport, 
chemicals (Source: Cameroon Customs). 

5.3 

Trade in agricultural products 

In  2019,  the  trade  surplus  of  Cameroon  in  agricultural  goods  increased  compared  to  2018 
(€431  million  from  €316  million  of  2018).  Total  trade  in  agricultural  goods  increase 
compared  to  2018  up  to  €969  million  (+18%).  In  particular,  imports  from  Cameroon  (that 
count  for  33%  of  the  total  trade  from  Cameroon  to  the  EU,  for  a  value  of  €700  million) 
increased  by  23.2%  in  2019,  and  where  dominated  by  cocoa  products  (73%,  for  a  value  of 

373 

 
 
  
 
 
€507  million),  followed by  tropical  fruits,  nuts  and  spices  (21%,  €149  million).  EU  exports 
(€269  million)  were  more  diversified,  and  consisted  mainly  of  wheat  (€52  million,  19.3%), 
malt (€22 million, 8%) and food preparations (€22 million, 8%). 

5.4 

Trade in services and Foreign Direct Investments 

The  EPA  with  Cameroon  does  yet  not  include  provisions  on  trade  in  services  that  will  be 
negotiated  at  a  later  stage.  Trade  in  services  between  the  EU  and  Cameroon  shows  little 
variation over the last years. After a fall in 2017 (from €981 million in 2016 to €854 million 
or  -13%),  trade  in  services  is  picking  up.  Total  EU  services  trade  with  Cameroon  slightly 
increased  in  2018  reaching  €948  million  (+11%).  EU  imports  of  services  from  Cameroon 
increased  slightly  by  €14  million  or  4.7%  to  €314  million.  EU  exports  of  services  to 
Cameroon increased by €80 million or 14.4% to €634 million. Overall balance is positive for 
the EU. 

The  EU  investment  stock  in  Cameroon  remains  largely  tied  up  in  extractive  industries. 
However,  EU  is  currently  diversifying  its  investments  in  Cameroon  across  various  sectors 
such  as  infrastructure  (transport,  energy),  agriculture  (bananas,  sugar),  communication  and 
distribution.  

6. 

CONCLUSIONS  

In  2019,  Cameroon  continued  to  take  important  steps  in  implementing  its  commitments, 
culminating  in  significant  tariff  cuts.  The  implementation  of  the  agreement  is  now  in  its 
cruising  phase.  Several  steps  have  been  completed  in  2019  (liberalisation  schedule,  dispute 
settlement)  and  others  are  expected  to  be  launched  soon  (accompanying  measures, 
monitoring). Negotiations on rules of origin are still ongoing. 

Uncertainty remains as to the effective resumption of negotiations at the regional level and the 
possibility of extending the agreement to other Central Africa countries. 

The EPA is expected to gradually facilitate the internationalisation of small local businesses 
as illustrated by the example in the bow below.   

374 

 
 
 
 
 
 
 
Home décor from Cameroon 

Creativity, tradition and proudly African. These are the values that define Frida-54, a 
Cameroon-based brand of home decorations and textiles. When founder Edith Tialeu 
created Frida-54 in 2016, she wanted products to be designed by African artists, using 
African materials and inspired by African stories, cultures and traditions.  

To sell her products she looks beyond Africa: 3 years since being established, Frida 
has sales points in Cameroon, France, Ghana, Rwanda, the United Kingdom and the 
United States, and exports to other EU Member States via its web shop. 

Edith Tialeu sees tremendous opportunities in e-commerce and aims to become one of 
the top interior design e-shops within the next years; an e-shop where people around 
the world can buy homeware produced in Africa. She also plans to reach 15 new 
wholesalers around the world.  

The EPA between the EU and Cameroon is helping her global expansion. Not only 
does it allow Frida-54 to ship products to the EU duty free and quota free, but it also 
provides a platform to discuss with Cameroon authorities how to overcome obstacles 
related to cross-border payments and logistics — some of the key challenges that 
Edith Tialeu has identified for her business. 

375 

 
 
 
 
  
 
 
 
 
 
7. 

STATISTICS 

CAMEROON

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

376 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with Cameroon (mio €)Imports1 6561 6941 8691 7372 108Exports1 5271 5131 4181 5191 387Balance-129-182-451-218-721Share Cameroon in EU27 trade with Extra-EU27Imports0.1%0.1%0.1%0.1%0.1%Exports0.1%0.1%0.1%0.1%0.1%Total (I+E)0.1%0.1%0.1%0.1%0.1%Share EU27 in trade Cameroon with worldImports26.4%30.7%30.7%30.1%28.3%Exports45.2%52.5%54.1%47.3%47.4%Total (I+E)34.0%37.4%39.7%37.0%37.2%Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade Cameroon: IMF DotsTotal merchandise trade EU27 with Cameroon (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports1 7372 10837121.3%Imports1 907 5651 934 94427 3791.4%Exports1 5191 387-132-8.7%Exports2 059 8822 132 01572 1333.5%Balance-218-721-503Balance152 317197 07144 754Total trade3 2573 4952387.3%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with Cameroon (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports56870013323.3%Imports118 891121 6442 7532.3%Exports252269176.8%Exports169 000181 82512 8257.6%Balance-316-431-115Balance50 10960 18110 072Total trade82096915018.3%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with Cameroon (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports1 1701 40823820.4%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports1 2671 118-149-11.8%EU27 exports1 890 8821 950 19059 3093.1%Balance98-290-387Balance102 208136 89034 682Total trade2 4372 526893.6%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with Cameroon (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports300314144.7%Imports824 543824 015-528-0.1%Exports5546348014.4%Exports928 420968 64840 2284.3%Balance25432066Balance103 877144 63340 756Total trade8549489411.0%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with Cameroon (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports376373332300314Imports642 682776 924784 743824 543824 015Exports819547649554634Exports750 713849 023855 477928 420968 648Balance443174317254320Balance108 03172 09970 734103 877144 633Total trade1 195920981854948Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with Cameroon (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward38-23195217185Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward1 2921 1471 2311 737Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInward-0-501611-45Inward143 012803 285328 703209 462-67 421Outward5348128Outward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsCameroonCameroon20182019Extra-EU27Cameroon2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018Cameroon-1 000-50005001 0001 5002 0002 50020152016201720182019Merchandise trade EU27 with Cameroon (mio €)ImportsExportsBalance 
 
 
1. 

INTRODUCTION 

The EU- CARIFORUM EPA is a regional agreement between the EU and its Member States 
and  15  Caribbean  countries.  The  negotiations  were  concluded  in  December  2007.  The 
agreement  was  signed  in  October  2008  and  it  entered  into  provisional  application  on  29 
December 2008. In 2019, this agreement was provisionally applied by the EU and its Member 
States  and  by  14  Caribbean  States.195  Haiti  still  needs  to  ratify  the  agreement  in  parliament 
before applying it, due to domestic legal requirements. By the end of 2019, 25 EU Member 
States and 10 Caribbean States had ratified the EPA.196  

The  EU-CARIFORUM  EPA  is  ‘comprehensive’  both  in  the  geographic  and  thematic 
sense, covering the whole region and including not only provisions on trade in goods, but also 
trade in services and provisions on trade-related issues (including competition, innovation and 
intellectual  property,  transparency  in  public  procurement  and  trade  and  sustainable 
development).  Furthermore,  like  all  EPAs,  the  EU-CARIFORUM  EPA  is  a  development-
oriented trade agreement, geared towards fostering long-term sustainable economic growth in 
the Caribbean.197 

In  February  2019,  the  European  Commission  launched  a  10  year  ex-post  evaluation  to 
evaluate the level of implementation and the impact on sustainable development 10 years after 
entering  into  force  of  the  agreement.  Intensive  consultations  and  data  gathering  have  been 
carried  out  in  the  CARIFORUM  region  in  2019  via  consultants.  Results  of  this 
comprehensive 10 years evaluation study are expected in the first Q of 2020 and will feed into 
the 2020 Joint Review, as well as the next EU-CARIFORUM Joint Council, both foreseen 
for 2020. 

2. 

MAIN IMPLEMENTATION ISSUES  

2.1   Main open issues, progress and follow-up  

The  EU-CARIFORUM  EPA  has  been  implemented  for  10  years  now.  Implementation  of 
goods market access schedules is well advanced in most Caribbean states. Caribbean states 
have  up  to  25  years  (until  2033)  to  cut  import  tariffs.  They  have  excluded  from  these  cuts 
around  17%  of  goods  and  services  which  they  consider  sensitive.198  The  exclusion  list 
includes  fresh  fruits and vegetables, most alcoholic beverages, some  garments, a number of 
processed  agricultural  products,  fish,  chemicals  and  furniture.  In  general,  25%  of 
CARIFORUM's agricultural and fisheries products have been covered by liberalization under 
EPA and the EU is becoming increasingly important exporter of processed agriculture goods 
to CARIFORUM on the market that is strongly dominated by the US. 

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

196 On the Cariforum side, the agreement is not yet ratified by the Bahamas, Jamaica, Suriname and Trinidad and 

Tobago; on the EU side, the agreement is not yet ratified by Hungary, Poland and Slovenia. 

197 A factsheet on the EU-CARIFORUM EPA can be found here: 

http://trade.ec.europa.eu/doclib/docs/2012/april/tradoc_149286.pdf 

198 Note that the Cariforum states submitted individual market access schedules and not one single regional offer. 

Hence figures and information provided here are an average over all 14 market access schedules.  

377 

 
 
 
 
 
                                                 
In 2019, the parties made progress regarding the following matters: 

DG  TRADE  has  engaged  in  the  technical  assistance  to  CARIFORUM  Countries  to  assist 
them  in  the  transposition  of  tariff  commitments  from  HS  2002  to  HS  2017  to  enhance 
transparent application of the EPA rates.  

Services  commitments  are  an  important  part  of  the  agreement  and  in  2019  the  Parties 
intensified  the  discussions  on  the  establishing  a  Special  Committee  on  Services  that  is 
expected to become operational in 2020.  

Progress  has  been  made  in  2019  at  technical  level  in the  negotiation  of  Geographical 
Indications (GIs) with a view to establishing a list of potential GIs to be protected under the 
EPA. 

Multiple meeting of the task force on monitoring brought the parties close to an Agreement on 
a monitoring mechanism, which should become operational in 2020.  

Awareness  raising is  a  key  priority under this EPA to  make use of the  full comprehensive 
scope  of  this  agreement  by  EU  and  CARIFORUM  business.  In  2019  DG  TRADE  has 
engaged in EPA awareness and business outreach activities by active participation in the 4th 
CARIFORUM-EU  Business  Forum  in  Frankfurt199  in  September  2019    and    the  Trade 
and Investment Convention (TIC) in Trinidad and Tobago200.  

Cooperation with the private sector: 

Supporting B2B remains a very important objective, especially for the smaller scale markets 
like  CARIFORUM.  The  Regional  Private  Sector  Development  Programme  (RSDP) 
remains  the  flagship  regional  programme  in  support  to  the  Caribbean  private  sector, 
implemented  by  the  Caribbean  Export  Development  Agency  (CEDA)  focusing  on  SMEs 
support, development and B2B activities201.  

The EU Delegations in the region maintain a close dialogue with public and private sector in 
CARIFORUM States  on trade matters  and economic integration. The EU-funded Caribbean 
Export Agency and the EU Delegations in the region have consistently supported trade fairs 
such  as  the  Trade  and  Investment  Convention  (TIC)  in  Trinidad  and  Tobago;  The 
Jamaica Investment Exhibition (JIE) in Jamaica; and Agroaliementaria, Hub-Camara, 
and  Dominicana  Moda  in  the  Dominican  Republic,  as  well  as  the  regional  CARIFESTA. 
These  events  present  also  business  opportunities  for  EU  SMEs  and  general  awareness  and 
participation by EU SMEs will be further supported and promoted. 

For the future, key priorities for implementation are:  

  Enhancing  transparency  with  regard  to  progressive  implementation  of  the  market 

access offers and applicable EPA rates;  

199 https://www.carib-export.com/businessforum/  
200 https://ttma.com/tic/  
201 https://www.carib-export.com/  

378 

 
 
                                                 
  Promoting  implementation of the full scope of the agreement, including outstanding 
matters  of  importance  to  the  region  such  as  services,  cultural  cooperation  and 
sustainable tourism.  

  Raising EPA awareness with both CARIFORUM and EU Business 

  Full implementation of the regional preference clause to support regional integration 

of CARIFORUM countries in the region202 to building regional value-chains;  

  Establish  a  functioning  monitoring  mechanism  to  take  stocks  and  monitor  the 

agreements on annual basis. 

  Continued  support  to  technical  capacity  to  set  up  an  enabling  regulatory 
environment is generally perceived as a key challenge for trade and investment in the 
CARIFORUM region. 

2.2 

Progress in the implementation of trade and sustainable development provisions 

The  EU-CARIFORUM  EPA  includes  the  Chapter  4  –  Environment,    and  the  Chapter  5  – 
Social Aspects. These provisions recognise the right of all parties to regulate their markets to 
pursue  these  objectives  while  requesting  them  to  keep  each  other  informed,  be  transparent, 
avoid  unnecessary  obstacles  to  trade  and  work  towards  regional  harmonisation  of  these 
policies in the CARIFORUM States.  

Regarding sustainable development, the Agreement aims to ensure that any trade activity does 
not cause environmental degradation. It reaffirms the Parties’ commitment to conserve, 
protect and improve their natural environment and to prioritise sustainable development. 

Both chapters are part of the implementation efforts under the agreement at the regional level 
by  the  join  institutions  and  at  national  level  by  the  national  development  cooperation 
programmes and authorities and in particular supported by the EDF Programmes. 

With regard to the TSD Action Plan it is worth to flag that: 

  Working  Together:  during  the  meetings  of  the  Trade  and  Development  Committee 
(TDC) the parties take stock and advance with the implementation of these chapters. 
At the last TDC 2019 the Parties agreed to hold a number of sustainable development 
workshops  sharing  the  EU  experience  with  the  region  with  a  particular  focus  on 
sustainable tourism;  

  Enabling and civil society including the Social Partners to play a greater role in 
implementation: the EU-CARIFORUM Consultative Committee is composed of the 
civil  society  representatives  from  the  EU  and  the  Caribbean  and  meets  regularly,  as 
foreseen  under  the  Agreement.  The  5th  Meeting  took  place  in  Brussels  in  November 
2019, issuing the recommendations to the TDC and subsequent discussion and follow 
up; 

202 Many of these countries are small island developing states (SIDS). 

379 

 
 
 
                                                 
  With  regard  to  the  implementation  of  the  ILOs  conventions,  all  CARIFORUM 
countries have ratified the core ILO conventions and benefitted in the past from (EU-
funded) support on implementation; 

  Transparency, communication and awareness raising is a continuous objective for 

the Parties.  

Ensuring sustainability of our trade relations is a key objective in cooperation projects, both 
at regional and national level:  

In Dominican Republic, one of the actions directly relevant to achieve the objectives of TSD 
chapters  is  the  project  focused  on  Cocoa  production  and  fair  trade  in  Dominican  Republic 
(EUR  938,591  until  June  2020)  and  implemented  by  NGO  Save  the  Children.  It  aims  to 
improve  the  respect,  protection  and  enforcement  of  the  human  rights  of  vulnerable  groups, 
with  emphasis  on  children,  adolescents  and  women,  in  the  cocoa  value  chain  in  the 
Dominican Republic by  promoting and monitoring the incorporation and implementation  of 
the United Nations Business  and Human Rights  Guiding Principles, as well as the Children 
Rights  Business  Principles  (CRBP).  The  project  also  contributes  to  disseminate  information 
and awareness on the need to comply with the relevant standards of Fair Trade as regards to 
children labour, discrimination and forced labour.  

There  are  numerous  other  projects  under  the  11th  EDF  that  contribute  to  directly  or 
indirectly to the EPA social and human development objectives which, among others, aim 
at:  (a)  improving  education  and  training  and  building  technical  capacity  and  skills;  (b) 
improving health systems and nutrition, adequate food safety and security; (c) promoting fight 
against diseases; or (d) promoting social dialogue: 

  The Programme of Support for Health System Strengthening for Prevention and 
Control  of  Outbreaks  of  Zika  and  other  Mosquito-borne  Diseases  in  the 
Caribbean – Implemented by the Caribbean Public Health Agency (CARPHA) with a 
total budget: EUR 4, 120,000 

  Support  to  the  Health  Sector  in  Grenada-  Sector  Budget  Support  for  the  Health 
Sector with a total budget: EUR 3, 800,000 and the overall objective  to improve the 
quality, efficiency and effectiveness of health services delivery for all Grenadians. 

  Civil  Society  Social  Enterprise  Project  –  implemented  by  TEN  HABITAT  with  a 
the  EU  contribution  of  EUR  400,000  and  the  objective  is  to  boost  the  capacity  of 
CSOs  in  Barbados  and  two  other  Eastern  Caribbean  countries  to  deliver  on  their 
mandate,  i.e.  promote  social  development  and  inclusive,  equitable  and  sustainable 
growth. 

  Building Sustainable Youth Business through Social Entreprise – Implemented by 
Barbados  Youth  Business  Trust    with  a  total  budget:  EUR  690,779    (the  EU 
contribution: EUR 400,000) 

However, with regard to training, technical capacity building and skills, the key programme 
of  relevance  is  the  11th  EDF  Regional  Private  Sector  Development  Programme  – 
Implemented  by  Caribbean  Export  Development  Agency  (CEDA)  with  a  total  budget:  27.4 
Mio  EUR    (EU  contribution:  24  Mio  EUR).  It  has  as  the  main  objective  to  increase 

380 

 
 
employment  creation,  inclusiveness,  particularly  for  youth,  women  and  indigenous  groups, 
and to contribute to overall poverty reduction in CARIFORUM countries. 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The 9th meeting of the Trade and Development Committee (TDC) took place in Brussels 
on 28th and 29th November 2019. The parties discussed, among other, the implementation of 
the CARIFORUM's tariff liberalisation schedule, transposition of the harmonised Commodity 
Coding  Systems  (HS)  by  CARIFORUM  States,  establishment  of  the  Special  Committee  on 
Trade in Services and the establishment of the joint monitoring system under EPA. 

Parties also discussed EU framework programmes, activation of the provisions of the Protocol 
on the cultural cooperation, tourism, issues of trade and sustainable development, technology 
transfer  and  the  way  forward  for  development  cooperation.  The  Trade  Committee  has 
reflected on the work of the Joint EU-CARIFORUM Task Force for the next 5 years review 
of  EPA  due  in  2020  and  the  preparation  of  the  next  5th Joint  EU-CARIFORUM  Council  in 
2020.  

The  Committee  received  reports  by  a  number  of  functioning  Joint  CARIFORUM-EU  EPA 
Institutions:  

  The CARIFORUM-EU Consultative Committee, held on 26 November 2019 

  The  CARIFORUM-EU  Special  Committee  on  Customs  Cooperation  and  Trade 

Facilitation, held in April 2019  

  The CARIFORUM-EU Special Committee on Agriculture and Fisheries,  held in 

January 2019.  

  The Committee also received the report on the establishment of a joint working group 
on  the  modernization  of  the  Rules  of  Origin  of  the  EPA  as  agreed  by  the  Special 
Committee on Customs Cooperation and Trade Facilitation.  

Specific areas of importance in 2019: 

Services:  The  Parties  concluded  the  discussions  on  a  draft  decisions  to  establish  a  Special 
Committee  on  Services  and  initiated  the  necessary  legal  procedures.  The  committee  is 
expected to become operational in 2020.  

Agriculture and GIs: The Agriculture and Fisheries partnership is implemented through the 
Special  Committee  on  Agriculture  and  Fisheries  (SCAF).  The  SCAF  meetings  cover  a 
substantive  agenda:  from  agricultural  research,  the  use  of  new  technologies  in  agriculture, 
value  addition  in  agri-food  and  rural  employment  and  fisheries.  The  discussions  allowed  to 
identify concrete ways to move the partnership on agriculture and fisheries forward through 
the use of EU programmes and initiatives such as Erasmus+, Taiex, Twinnings, Interreg and 
Horizon 2020/Horizon Europe to enhance training and capacity building, to improve the value 
chain and to strengthen the collaboration and cooperation to successfully implement the EPA. 
The positive results are reflected in a more diversified and increased agri-food trade exchange 
in 2019.  

381 

 
 
 
A significant progress has been made in 2019 in the negotiation of Geographical Indications 
(GIs).  The  technical  worked  has  progressed  on  establishing  a  list  of  potential  GIs  to  be 
protected under the EPA. Currently the parties are exchanging information at technical level 
to clarify a few outstanding issues. In parallel, the EU Delegations in the region are actively 
promoting  awareness  on  GIs  through  tailor-made  events  and  workshops  with  business 
community, producer groups and other farmers' organizations. EUIPO is also assisting within 
the CarIPI project to install a robust GI legislation in the region. 

Monitoring:  The  Task  Force  on  Monitoring  has  made  significant  progress  towards 
establishing  a  monitoring  mechanism.  The  parties  agreed  on  the  priority  outcome  and 
compliance indicators and the operational basis for the mechanism.  As a result of this work, a 
joint  monitoring  mechanism  should  be  agreed  and  operational  in  2020.  It  is  expected  to 
improve  EPA’s  transparency,  accountability  and  to  increase  the  awareness  of  its  benefits  to 
business  stakeholders  and  economic  operators  on  both  sides.  The  monitoring  system  would 
also constitute an early warning mechanism allowing to address bottlenecks and inefficiencies 
in a swift and continuous manner.  

4. 

TRADE AND DEVELOPMENT COOPERATION  

The  EPA  is  a  genuinely  pro-development  agreement  and  the  EU  provides  considerable 
support  to  CARIFORUM  and  Caribbean  governments  for  EPA  implementation  and  export 
development.  Under  the  11th  European  Development  Fund  (EDF)  (2014-2020),  the  total 
allocation  for  the  Caribbean  region  is  approximately  €1  billion,  of  which  €326  million  is 
allocated to the Regional Programme (CRIP). Under this envelope, the EU supports Regional 
including  EPA 
Economic  Cooperation  and 
implementation,  trade-related  capacity  building  and  private  sector  development,  with 
€102 million.  

the  Caribbean, 

Integration 

in 

The main objectives under the focal sector 1 of CRIP - Regional Integration and Trade are: 
i)  to  strengthen  the  integration  processes  of  the  OECS  and  CARICOM;  ii)  improve 
intra-CARIFORUM cooperation, and: iii) increase cooperation between CARIFORUM 
and  neighbouring  regions,  including  OCTs  and  the  French  Overseas  Regions. 
Interventions under this focal sector are linked to the objectives of the European Partnership 
Agreement.  

This  includes,  for  example  directly  supporting  the  CARIFORUM  Directorate  (€6.2 
million)  to  fulfill  its  role  in  coordinating  and  facilitating  EPA  implementation  in 
CARIFORUM Member States.  

Overall,  2019  was  a  year  of  significant  progress  in  the  implementation  of  the  CRIP 
programmes  in  support  of  regional  integration  and  trade  with  some  key  projects  contracted 
under "Support to CARIFORUM member states in furthering the implementation of their 
Economic Partnership  Agreement  commitments and in meaningfully reaping the benefits 
of the Agreement" (decision 2018/040-087):  

  A grant agreement with the German Metrology Institute (PTB) for the "Technical 

Barriers to Trade Project", 

382 

 
 
 
  A  Contribution  Agreement  with  the  Inter-American  Institute  for  Cooperation  on 

Agriculture (IICA) for the "Sanitary and Phytosanitary Measures"  

  A  Contribution  Agreement  with  the  Caribbean  Development  Bank  for  the  EPA 

and CSME Stand-by Facilities.  

  A  Contribution  Agreement  with the  European  Union  Intellectual  Property  Office 
(EUIPO) for the "Innovation and Intellectual Property Rights" project Car-IPI. 
The  final  components  of  the  programme  "Capacity  building  in  the  areas  of 
competition,  public  procurement,  customs  and  trade  facilitation"  is  expected 
to be signed in Q3 of 2020 through a Contribution Agreement with CARICOM.  

Other ongoing projects are: 

  "Support  to  CARICOM  Single  Market  and  Economy  -  CSME"  being 

implemented by CARICOM. 

  "Support  to  the  Coconut  Industry"  (EUR  6.000.000  under  decision  2018/040-

856).  

  "Support  to  the  Organization  of  Eastern  Caribbean  States  –  OECS 
Cooperation  and  Integration  Process"  (EUR  10.125.000  under  decision 
2018/040-089).  

  "Support  for  CARIFORUM  role 

in  Regional  Cooperation  and  EPA 
Implementation"  for  additional  activities  under 
the  Legal  and  Enabling 
Framework  include  Legislative  and  Treaty  Drafting  to  strengthen  the  regulatory 
environment,  and  the  determination  of  EPA  compliant  legislative  &  regulatory 
Framework (a top-up of EUR 1.240.000 was proposed to decision 2016/038-925).  

  "Support to CARTAC – Caribbean Technical Assistance Center" (a top-up of 

EUR 1.000.000 under decision 2016/039-649). 

In the Dominican Republic, the EU currently supports a project on Quality Strengthening 
for  MSMEs  Development  (€11  million,  2014-2019).  The  project  seeks  to  strengthen  the 
national quality system and improve quality orientation of MSMEs in order to access national, 
regional  and  international  markets  by  e.g.  creating  institutional  networks  or  help  to 
implementing standards  and quality systems  (such as  ISO/9001,  ISO/27001,  ISO/22000),  as 
well  as  good  practices  and  food  safety  measures.  In  2019,  the  national  body  in  charge  of 
metrology  and  standards  was  accredited  by  ISO/IEC  17065  and  ISO/IEC  17021  which  will 
allow it to certify products and management systems, respectively. Accreditation by ISO/IEC 
17020 is expected in 2020 to carry out customs inspections, facilitating exports activity. 

Private Sector Development Programme: 

Out of the €102 million, the Caribbean Export Development Agency (CEDA) 203 currently 
implements a Regional Private Sector Development Programme (RPSDP) (€27.2 million, 
2017-2022).  This  remains  the  flagship  regional  programme  in  support  to  the  Caribbean 

203 https://www.carib-export.com/  

383 

 
 
                                                 
private sector, focusing on successful SMEs support, development and B2B activities. CEDA 
is instrumental in the implementation of the programme, but faces administrative challenges 
such as ongoing vacant position of executive director pending nomination by CARIFORUM 
States,  significant  staff  turn-over,  problems  with  correspondent  banking  relations  and  the 
possibility  to  process  funds  through  US  intermediary  banks,  as  well  as  the  delay  in  the 
financial contributions from CARIFORUM Member States.  

Thorough  its  branch  in  Dominican  Republic,  CEDA  conducted  a  Competitive  Intelligence 
Workshop  Series  in  2019,  reaching  around  40  firms  in  Dominican  Republic,  which  were 
trained on conducting market research and how to use market intelligence tools for export and 
business decision making.  

The  4th  CARIFORUM-EU  Business  Forum  in  Frankfurt  in  September  2019,  was 
organised by CEDA in partnership with GIZ. The conference welcomed over 200 participants 
under the theme ‘Building Strategic Partnerships in a Dynamic Global Economy’. The Forum 
was  followed  by  an  exposition,  which  showcased  more  than  60  of  the  region’s  leading 
producers  in  rum  and  natural  products  including  natural  cosmetics,  sauces  and  condiments 
and  the  creative  industries  (music,  film  and  animation  sectors).  Up  to  138  serious  business 
leads were secured at the Business Forum. Most of the leads made were by Caribbean creative 
industry  exhibitors  (44%),  followed  by  that  of  food  products  (20%),  then  rum  (19%). 
According to participating Caribbean exhibitors, expected long-term impacts of the Business 
Forum ranged from that of increased exports and profits, to that of new joint ventures with EU 
and other international firms. The general perception is that it was a successful event.204  

In  December  2019,  Caribbean  Export  took  the  opportunity  of  the  9th  ACP  Group  of  States 
(ACP) Summit of Heads of State and Government in Kenya, to stage a fashion showcase in 
collaboration  with  the  ACP  Secretariat  where  80  designers  from  20  countries  of  the 
Caribbean,  the  Pacific  and  Africa  presented  themselves  under  the  patronage  of  the  Prime 
Minister of Barbados.205 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

The  14  CARIFORUM  currently  implementing  the  EPA  include  some  bigger  and  more 
developed  partners  like  Dominican  Republic,  Trinidad  and  Tobago,  Bahamas  and  Jamaica 
and  smaller  islands  of  the  Eastern  Caribbean.  The  region  is  dependent  on  tourism  demand, 
commodity  prices  and  financial  services.  Despite  improvements  of  public  finances  and 
economic prospects in 2019, high fiscal deficits and public debt remain major vulnerabilities 
for the region.  In some tourism-dependent economies,  debt  ratios have been declining  from 
high  levels,  while  territories,  including  Grenada,  Jamaica  and  St.  Kitts  and  Nevis  have 
engaged in multiyear fiscal consolidation efforts. In addition, numerous banks operate under 
constrained  credit  availability  and 
increases  banks’ 
susceptibility to shocks.  

limited  economic  activity 

that 

204 See here for impressions of the business forum: https://youtu.be/JvAwfUkz3yw  
205 https://www.carib-export.com/news/caribbean-export-promotes-the-caribbeans-orange-economy-in-kenya/ 
https://youtu.be/F3pLXAotEGY 
https://www.carib-export.com/news/caribbean-export-promotes-the-caribbeans-orange-economy-in-kenya/ 

384 

 
 
 
 
                                                 
For the member states of the Easter Caribbean Currency Union (ECCU)206, GDP growth 
stood  at  3.8%  in  2018  and  the  conditions  remained  favourable  to  growth  in  2019  due  to 
buoyant  tourism.  However,  the  fiscal  balance  for  the  region  as  a  whole  remained  at  risk. 
While  much  progress  has  been  made  in  financial  sector  reforms,  long-standing  weaknesses 
such  as  limited  natural  resources,  dependence  on  imports,  and  vulnerability  to  natural 
disasters  and  global  and  regional  economic  crises  and  disturbances  will  likely  weigh  on 
growth prospects. External deficits remain high, amplified by low competitiveness and more 
frequent and intense natural disasters. 

The current COVID-19 crisis is expected to have a significant impact on the ECCU states due 
to high tourism dependence and little diversification in most of these economies.  

The  Dominican  Republic  is a  middle-income  country  and the biggest  country  in  the 
Caribbean  with  10  million  inhabitants.  The  economy  grew  by  5.1%  in  2019,  after 
averaging 6.3% per year between 2014 and 2018 and 7% in 2018, making it a champion in the 
LAC region.   The Dominican Republic aspires to be the regional transport and logistics hub, 
and has  a  keen  interest  in  regional  economic  integration.  It aims  to  become  a  high-income 
country by 2030. 

The sustained  economic  growth  is  due to increases  in  tourism  revenues,  strong  foreign 
investment  inflows,  and  continuously  increasing exports  and  remittances. Despite  strong 
growth, public debt continued to grow as a share of GDP (53.1% in 2018) due to persistent 
structural deficits, averaging around 4.5 % of GDP over the last five years. The debt to GDP 
ratio  reached  an  all  time  high  of  50.53%  in  2019.  The  Dominican  Republic’s  score  on  the 
World  Bank  "Ease  of  doing  business"  ranking  for  2019 was  61,  ranking  it  102  out  of  190 
countries. There is still much to be done to improve the business climate. 

The Dominican economy is sensitive to external demand conditions, as it depends on tourism, 
exports and remittances, predominantly  from the United States.  Tourism is  the backbone of 
economy, providing around 350,000 jobs and is a source of 30% of foreign exchange inflows. 
Tourism sector brought in USD 7.7 billion in 2019 and a total of 6.6 million tourists visited 
the country.   

The Dominican Republic has a comfortable level of foreign reserves and will be able to partly 
offset the effects of the current Covid-19 crisis, thanks to lower petrol prices and rising prices 
of  gold,  a  main  export  product. The  economy  is  expected  to  contract  between  1.5%  to  3% 
depending on the duration and depth of the Covid-19 crisis. However, it is expected to pick up 
again in 2021. 

206 Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines 
– as well as UK territory Montserrat. The six countries are also part of the Organisation of Eastern Caribbean 
States (OECS), together with other EU/UK territories and overseas regions.  

385 

 
 
 
 
 
                                                 
5.2 

Trade in goods 

Without the UK, EU27 remains the second largest importer of Caribbean goods, accounting 
for 13.4% of total Caribbean exports (after the US with 40.5% and before China with 12.2%) 
and  the  second  largest  exporter  to  the  region  with  15.2%  (after  the  US  with  40.5%  and 
before  Canada  with  5.7%).  The  UK  represents  only  1.5%  of  CARIFORUM  imports  and 
exports. Among EU27, the Netherlands, Spain, Germany, Italy, France and Belgium are 
CARIFORUM  main  trade  partners  in  2019  in  that  order.  Intra-regional  trade  between  the 
Caribbean  states  is  low:  only  7%  of  the  region’s  imports  originate  from  another  Caribbean 
state. Similarly, only 5.5% of Caribbean exports go to the region.  

Total trade between the EU27 and the CARIFORUM increased by €990 million or 12.4% in 
2019,  reaching  nearly  €9  billion.  EU  imports  from  CARIFORUM  states  increased  by  €802 
million (or 23.5%) to €4.2 billion while EU exports increased by €187 million (or 4.1%) to 
€4.7  billion.  The  trade  balance  remains  positive  for  the  EU,  but  is  now  close  to  being 
balanced.  

Increases in CARIFORUM exports to the EU were driven by mineral fuels (+€560 million 
or  80%)  and  aluminium  oxide  (+€58  million  or  20%),  but  also  increasing  exports  of  fruit 
(especially  bananas,  but  also  avocados  and  mangos  –  overall  +€49  million  or  25.6%), 
pharmaceutical products (+€38 million or 76%), medical instruments (+€27 million or 21%) 
and rice (+€19 million or 34%),  

Main  EU  imports  from  CARIFORUM  States  in  2019  were  natural  liquefied  gas  (€882 
million), methanol (€338 million), aluminium (€236 million), fresh or dried bananas (€191), 
gold  (€161), pesticides  (€117), rum (€114) and  cocoa beans (€94), instruments and medical 
appliances (€86). 

The largest EU trade partner in the Caribbean is the Dominican Republic (total trade of €2.9 
billion),  followed  by  Trinidad  and  Tobago  (€2.4  billion),  Bahamas  (€1.3  billion),  Jamaica 
(€600 million) and Suriname (€540 million) in 2019. 

386 

 
 
 
 
Bilateral  trade  between  the  EU  and  the  Dominican  Republic  reached  a  record  level  of  €3 
billion in 2019, with EU exports standing at €2 billion (highest ever recorded level) and EU 
imports from the Dominican Republic at nearly €1 billion 

Main EU exports to CARIFORUM in 2019 petroleum oil and preparations (€523  million),  
transport vessels (€335  million), jewellery (€131  million), cruise ships and excursion boats 
(€91  million), motor cars and transport vehicles (€87  million), motor boats and yachts (€74  
million),  solids  milk  and  cream  (€51    million),  potato  preparations  (€49    million),  food 
preparations  (€45    million),  compression  engine  parts  (€44    million)  and  medicaments  (€36  
million). 

In 2019 CARIFORUM States exports to the EU still show little diversification. The share of 
top ten products in total exports is above 90% for most States, with exports concentrated in 
very few commodities. Trinidad and Tobago exports mostly natural gas, rum,, ammonia and 
petroleum oils. For Jamaica, it is largely aluminium oxide (90.3% of its exports), followed by 
rum.  For  the  Bahamas  and  Barbados,  the  dominant  export  are  boats  and  ships  (re-
exports/sales,  not  local  production)  and  a  bit  of  seafood  (Bahamas)  and  rum  (  Barbados). 
Guyana and Suriname export predominantly gold (accounting for 26.9% and 53.7% of their 
exports  in  2019,  respectively);  Guyana  also  exports  aluminium  ores,  brown  rice  and  rum 
while Suriname exports mainly bananas, oil and frozen shrimps and prawns.  

The Dominican Republic represents an exception, where the share of top 10 products in total 
exports  is  68.8%  and  manufacturing  goods  represent  35%  of  all  exports.  Top  10  products 
exported  by  the  Dominican  Republic  to  the  EU  are  bananas,  medical  instruments,  cocoa 
beans,  rum  and  other  spirits  based  on  sugar  cane,  ferro-nickel,  tobacco  products  (cigars),  
pharmaceutical products, footwear, electrical equipment and fresh or dried guavas, mangoes 
and mangosteens. The total number of products imported from Dominican Republic (at HS 6-
digit level) with a value of more than €1 million grew from 53 in 2008 to 60 in 2019 (i.e. a 
13% increase).  

5.3 

Trade in agricultural products 

There are positive developments in the agriculture sector with increased cooperation and that 
is reflected in a more diversified and increased agri-food trade. Total  agri-food imports into 
the EU increased in  2019 by  15.6% to  €658 million, due to  increasing imports of bananas, 
rice,  beer,  cigars,  other  tropical  fruits and  rum.  EU  agri-food  exports  into  CARIFORUM 
states  increased  by  7.8%  to  €742  million,  with  increasing  exports  of  fruit  juices,  vegetable 
food preparations, beer and cheese.  

Key  EU  imports  from  CARIFORUM  States  in  2019  were  tropical  fruits,  mostly  bananas, 
avocados  and  mangos  (€240  million,  +25%),  spirits  and  liqueurs  (€122  million,  +8.5%), 
cocoa  and  cocoa  preparations  (€99  million,  -0.4%),  rice  (€74  million,  +34%)  and  tobacco 
(€62 million, +13%).  

Key  EU  exports  to  CARIFORUM  EPA  states  in  2019  were  dairy  products,  mostly  milk 
powder,  cheese  (€174  million,  +6.1%),  followed  by  beverages,  wines  and  spirits  (€138 
million, +7.2%) and food preparations (€78 million, +23%).   

387 

 
 
 
The Dominican Republic is an important supplier of organic agri-food products to the EU. In 
2018,  the  Dominican  Republic  was  the  third  largest  supplier  (after  China  and  Ecuador), 
accounging  for  8.4%  of  EU  imports  of  organic  agri-food  products  in  terms  of  volumes207 
(mainly bananas and cocoa beans).  

5.4 

Trade in services and Foreign Direct Investments 

The CARIFORUM EPA  provides for important services liberalisation.  In 2018, total  trade 
in  services  decreased  by  22%  to  €15  billion.  EU  services  exports  to  the  CARIFORUM 
states climbed by €1 billion (+31%), whereas imports of services from the Caribbean region 
dropped by  €5.8 billion (-33%). Main services trade partners being Bahamas, Barbados and 
Dominican Republic. The decrease can mainly be attributed to the financial services sector in 
Bahamas and Barbados where stricter EU rules on financial services transparency might have 
affected business.  

The CARIFORUM EPA contains provisions on investment liberalisation. EU FDI stocks in 
the Caribbean region were stable at €101 billion in 2018. The lion’s share of these stocks 
are  held  in  Bahamas  (€45  billion)  and  Barbados  (€45  billion),  which  have  large  financial 
sectors,  followed  by  Trinidad  and  Tobago  (€7.2  billion)  and  Dominican  Republic  (€6.5 
billion) where investment is more in extractives and manufacturing. The CARIFORUM FDI 
stocks in the EU were €110 billion in 2018, a slight decrease from 2017 with €114 billion. 
Due to large financial sectors in Bahamas and Barbados in particular, it can be assumed that 
little inflows and outflows in these two economies is actually productive investment.  

Outside  the  financial  sector,  EU  investment  in  the  region  is  found  in  fuel  import  and 
distribution  (e.g.  French  company  RUBIS),  and  in  the  rum  industry,  e.g.  with  Gruppo 
Campari  (Italian)  recently  acquiring  the  Jamaican  rum  maker  Lascelles  de  Mercado,  whose 
brands include Appleton Estate and Wray and Nephew. Rum production of Appleton Estate 
has increased to over 2 million bottles a year and 500 new jobs have been added.   

In the Dominican Republic, according to  data presented by the Central  Bank, the EU is  the 
third largest investor for the period 2010-2019, after the US and Canada, accounting for about 
10%  of  FDI  or  USD2.5  billion.  Largest  EU  investor  is  Spain,  accounting  for  around  6%  of 
total FDI in the Dominican Republic between 2010 and 2019.208  

There  are  many  EU  companies  present  in  Dominican  Republic,  including  from  Spain  (97 
companies), Germany (60), France (30), Italy (13), and the Netherlands (10). EU investment 
in  the  Dominican  Republic  is  mostly  in  tourism  and  manufacturing  for  exports  (the  latter 
taking  place  in  called  free  zones,  zonas  francas).  Zonas  francas  are  offering  numerous 
incentives  for  the  established  with  attractive  conditions  for  investors  and  producers.  The 

207 

See 

EC 

policy 

brief: 

https://ec.europa.eu/info/sites/info/files/food-farming-

fisheries/farming/documents/market-brief-organic-imports-mar2019_en.pdf 

208 According to the Central Bank of the Dominican Republic, total investment from Spain has been USD 292.4 

million; however, the Spanish Embassy recorded only €50.6 million due to different accounting 
methodologies e.g. the embassy only takes into account direct flows from companies in Spain and excludes 
investment in real estate.  

388 

 
 
 
                                                 
 
Dominican Republic is also connected by other free trade agreements with Central America 
and US (under DR-CAFTA) which presents important opportunities for potential investors. 

Recent  EU  investments  have  been  seen  in  renewable  energy  sector  (French  Akuo  Energy 
started  in  2019,  Spanish  investment  in  a  wind  park  by  INVERAVANTE  company  and  a 
photovoltaic park operational from  2019), infrastructure  (French  company  Vinci  Airports in 
2019)  as  well  as  manufacture  of  medical  disposables  (German  company  Fresenius  Kabi  in 
2019). 

6. 

CONCLUSIONS  

In  2019,  parties  took  significant  steps  in  the  further  implementation  of  this  comprehensive 
trade  and  development  agreement,  taking  into  account  the  complexity  of  the  region  and  its 
socio-economic structure. Progress has been achieved with regard to the institutional structure 
of the Agreement (e.g. setting up a special committee on services, establishing a monitoring 
mechanism), as well as negotiations on geographical indications. New working groups were 
established  or  re-vived,  for  example  on  the  modernization  of  the  rules  of  origin,  and  on 
conducting the next 5-year review of the Agreement.  

Strong  successes  in  2019  were  achieved  with  regard  to  awareness  raising  and  business-to-
business networking, e.g. through the EU-Cariforum Business Forum in 2020. Numerous new 
technical assistance projects, to be funded under the 11th EDF, were signed in 2019.  

Outstanding  challenges  include  the  implementation  of  all  regulatory  provisions,  e.g.  on 
services  and  investment,  for  which  dedicated  technical  assistance  is  needed,  and  making 
better use of the services chapter under the Agreement. Continuous effort of all partners will 
be needed to ensure that benefits of the agreement fully materialize and in particular to raise 
awareness  among EU business  and SMEs to make a full use of the agreement and business 
opportunities with this region.   

In 2019, the Parties started work under the Joint Task Force on the 2020 Review of the EPA 
(as prescribed by the agreement) with  the view to elaborate the  Joint Recommendations for 
the next EU-CARIFORUM Joint Council foreseen in 2020. 

In  2019,  research  work  for  the  ex  post  evaluation  of  the  Cariforum  EPA  started.  The  draft 
interim  report209  of  the  ongoing  evaluation  regarding  the  Cariforum  Economic 
Partnership Agreement (EPA) of Februry 2020 pointed out that the agreement contributed 
to improvements in the business environment in Caribbean countries, for example in the field 
of  competition,  increased  transparency,  lower  market  access  barriers,  etc.;  and  that  the 
development co-operation related to this EPA has helped to improve the quality infrastructure 
and supported the creation of a regional export development agency (CEDA) – both of which 
can  benefit  SMEs  in  particular.  The  draft  report  also  notes  that  a  Memorandum  of 
Understanding was recently signed between CEDA and the German SME Association at the 
occasion  of  an  EPA  related  event,  probably  increasing  the  interest  of  German  SMEs  in  the 

209  The 

revised 

interim 

report 

is 

available 

at 

https://trade.ec.europa.eu/doclib/docs/2020/february/tradoc_158657.pdf  

389 

 
 
 
 
                                                 
Caribbean region in the future (and thereby providing opportunities for both sides, as can also 
be seen from the example below). 

German  investment  in  medical  equipment  manufacturing  in  the  Dominican  Republic 
helps in the fight against Covid-19 

The Dominican Republic is currently the third largest global producer of medical equipment, 
with 32 companies operating in the sector, located mostly in free trade zones.  During 2019 
the  Dominican  Republic  exported  medical  equipment  to  a  total  value  of  USD  1.66  billion.  
The  sector  generates  24,000  jobs.    Investors  are  attracted  by  generous  fiscal  incentives,  a 
cheap  labour  force  and  privileged  geographical  position,  as  well  as  by  the  Dominican 
Republic’s free trade agreements with the US (DR-CAFTA) and the EU (EPA). 

In  2019,  German  company  Fresenius Kabi  expanded  its  plant  in  the  Haina  free  trade  zone 
with  an  investment  of  €30  million,  doubling  the  size  of  the  site’s  second  plant  to  around 
15,000 square meters.  The new building houses production equipment, plasma kit assembly 
lines  and  sterilisation  units.    Medical  disposables  manufactured  in  Haina  are  exported  to 
global markets, such as the US, China and the EU. 

The expansion will increase production capacity of the existing product range.  The number 
of employees has grown from 3,000 to 3,500, including production workers, technical staff, 
engineers  and  managers.  Within  the  next  years,  up  to  2,000  new  jobs  might  be  created, 
depending on the development of the Covid-19 related economic crisis.   

Importantly,  Fresenius  Kabi  is  making  equipment  for  an  innovative  treatment  of  Covid-19.  
The  equipment  can  extract  plasma  from  a  previously  infected  and  cured  donor  to  treat 
patients with Covid-19.  The US Food and Drug Administration has approved the process. 

390 

 
 
 
 
 
 
 
 
 
 
 
7. 

STATISTICS 

 EPA CARIFORUM 

391 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with EPA Cariforum (mio €)Imports3 3712 7073 0163 4174 219Exports4 4034 1724 3414 5604 747Balance1 0321 4651 3251 143528Share EPA Cariforum in EU27 trade with Extra-EU27Imports0.2%0.2%0.2%0.2%0.2%Exports0.2%0.2%0.2%0.2%0.2%Total (I+E)0.2%0.2%0.2%0.2%0.2%Share EU27 in trade EPA Cariforum with worldImportsExportsTotal (I+E)Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade EPA Cariforum: IMF DotsTotal merchandise trade EU27 with EPA Cariforum (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports3 4174 21980223.5%Imports1 907 5651 934 94427 3791.4%Exports4 5604 7471874.1%Exports2 059 8822 132 01572 1333.5%Balance1 143528-615Balance152 317197 07144 754Total trade7 9778 96699012.4%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with EPA Cariforum (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports5696588915.6%Imports118 891121 6442 7532.3%Exports688742547.8%Exports169 000181 82512 8257.6%Balance11984-35Balance50 10960 18110 072Total trade1 2581 40014211.3%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with EPA Cariforum (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports2 8483 56171425.1%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports3 8724 0051333.4%EU27 exports1 890 8821 950 19059 3093.1%Balance1 024444-580Balance102 208136 89034 682Total trade6 7197 56684712.6%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with EPA Cariforum (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports17 25611 439-5 817-33.7%Imports824 543824 015-528-0.1%Exports3 4644 5411 07731.1%Exports928 420968 64840 2284.3%Balance-13 792-6 8986 894Balance103 877144 63340 756Total trade20 72015 980-4 740-22.9%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with EPA Cariforum (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports12 38520 35718 27517 25611 439Imports642 682776 924784 743824 543824 015Exports2 2202 5232 9693 4644 541Exports750 713849 023855 477928 420968 648Balance-10 165-17 834-15 306-13 792-6 898Balance108 03172 09970 734103 877144 633Total trade14 60422 88021 24420 72015 980Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with EPA Cariforum (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward75 00368 45066 640114 605110 015Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward5 7358 60077 692101 442101 822Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInwardInward143 012803 285328 703209 462-67 421OutwardOutward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsEPA CariforumEPA Cariforum20182019Extra-EU27EPA Cariforum2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018EPA Cariforum01 0002 0003 0004 0005 00020152016201720182019Merchandise trade EU27 with EPA Cariforum (mio €)ImportsExportsBalance 
 
 
 
 
 
ANNUAL  INFORMATION  SHEET  ON  THE  IMPLEMENTATION  OF  THE 
ECONOMIC  PARTNERSHIP  AGREEMENT  (EPA)  BETWEEN  THE  EU  AND 
PACIFIC STATES 

1. 

INTRODUCTION 

The EU is  implementing an  "interim" EPA (covering only trade in  goods) with  Papua New 
Guinea (PNG) since 2009, Fiji since 2014 and Samoa since 2019. PNG and Fiji account for 
the vast  majority of trade between the 15 Pacific States and the EU210. The EPA is  open to 
accession  of  other  ACP  Pacific  States.  Samoa  acceded  and  is  applying  the  EPA  since  31 
December  2018.  The  EU  completed  its  inter-institutional  procedures  for  Solomon  Islands’ 
accession in December 2019 and Solomon Islands is applying the EPA since 17 May 2020. 
The  Commission  and  Tonga  continued  preliminary  accession  talks.  Kiribati,  Tuvalu  and 
Vanuatu have informally expressed their interest to join the EPA. While the original plan was 
to replace the interim EPA by a regional one with all the Pacific States, the negotiations were 
paused in 2016 due to lack of progress and the withdrawal of the regional powerhouse PNG 
from  the  negotiations.  The  interim  EPA  is  gradually  becoming  a  definitive  regional 
agreement,  with  the  possibility  of  extending  it  to  other  countries  and  areas  beyond  trade  in 
goods. 

In 2019, the Pacific region’s share in EU27 trade in goods was 0.1% (€2620 million in value). 
EU27  was  the  region’s  fifth  trading  partner  (7.6%)  after  Australia  (22.4%),  China  (16.8%), 
Singapore  (12%)  and  Japan  (7.6%).  In  value,  EU  imports  represented  €1267  million  and 
exports  €1353  million, with  a  positive  balance  of  €85M  on  EU  side.  Pacific  EPA  countries 
(Fiji,  PNG  and  Samoa)  together  accounted  for  46%  (26%  in  2018)  of  EU  trade  with  the 
region, with PNG alone accounting for 34% (24% in 2018). 

Owing  to  the  success  of  the  tuna  canning  industry  in  PNG,  which  has  attracted  big 
investments  and  created  tens  of  thousands  of  jobs,  the  Parties’  common  ambition  is  to 
replicate this success in other sectors/products and other countries in the region. 

The Parties are stepping up dialogues to mainstream trade aspects of sustainable development 
in  their  policies,  along  with  efforts  to  involve  non-state  actors  in  the  monitoring  and 
evaluation of EPA implementation. 

2. 

MAIN IMPLEMENTATION ISSUES 

2.1   Main steps in implementation  

All  exports  from  PNG,  Fiji  and  Samoa  enter  the  EU  market  duty-free  and  quota-free  on  a 
permanent  basis.  Taking  full  account  of  differences  in  development  levels  and  sensitive 

210  The 15 ACP Pacific States are Cook Islands, Fiji, Kiribati, Marshall Islands, Micronesia, Nauru, Niue, Palau, 

Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu and Timor-Leste. 

392 

 
 
 
 
 
                                                 
sectors,  PNG  has  liberalised  88%  of  imports  from  the  EU  since  2008,  Fiji  undertook  to 
liberalise 87% over 15 years and Samoa will liberalise 80% over 20 years. 

In  2019,  Samoa  started  applying  the  Agreement.  The  Parties  furthermore  made  progress 
towards the accession of Solomon Islands to the Agreement. Solomon Islands started applying 
the  Agreement  in  May  2020.  The  Parties  are  open  to  consider  the  requests  for  accession  of 
Vanuatu,  which  will  graduate  from  Least  Developed  Countries  (LDC)  status  in  December 
2020,  and  Kiribati  and  Tuvalu  whose  date  of  graduation  will  be  decided  in  2021.  Upon 
graduation from LDC status, these countries will lose the EU's Everything-But-Arms (EBA) 
preferences  three  years  thereafter.  They  will  fall  under  the  General  Scheme  of  Preferences 
(GSP), which is less generous, unless they decide to accede to the EPA. 

EU  development  support  is  essential  to  help  the  Pacific  States  to  prepare  national  plan  of 
actions for EPA implementation. In 2019, the Parties stepped up support to that end, as well 
as  capacity  building  on  customs  and  rules  of  origin,  made  progress  on  the  preparation  of 
decisions on rules of procedures, the amendments to the Agreement in order to take account 
of  the  accessions,  initiated  discussions  on  Trade  and  Sustainable  Development  (TSD)  and 
mechanisms for EPA monitoring and evaluation. 

2.2 

Trade and sustainable development goals 

The Pacific EPA does not currently include a chapter on Trade and Sustainable Development. 
Nevertheless, the EU and the Pacific States are cooperating on a number of relevant matters 
under  the  framework  of  the  Cotonou  Agreement  and  are  also  stepping  up  their  cooperation 
under  the  EPA.  For  example,  parties  have  advanced  their  discussions  on  setting  up  a 
monitoring mechanism for the agreement, with a strong role for civil society.  

With  support  of  the  EU  Delegation  for  the  Pacific,  the  EPA  Parties  held  a  civil  society 
workshop  at  the  University  of  South  Pacific  in  Suva  (Fiji)  on  2  October  2019,  bringing 
together  over  100  state  and  non-state  actors  in  order  to  promote  trade  and  sustainable 
development.  The  stakeholders  identified  the  main  sustainable  development  challenges  and 
ways  to  address  them  through  trade  and  the  EPA,  the  mechanisms  and  processes  used  to 
involve the private sector and civil society in designing appropriate solutions, and how gender 
(women)  representation  in  the  workforce  and  businesses  contribute  to  achieving  sustainable 
development objectives of the Agreement, etc. 

The  workshop’s  outcome  fed  into  the  seventh  meeting  of  the  EU-Pacific  Trade  Committee 
also  held  in  Suva  (3-4  October  2019).  The  Parties  agreed  to  draw  up  a  non-binding 
instrument  on  trade  and  sustainable  development,  setting  out  political  commitments  to 
promote bilateral cooperation and trade in a way that meets internationally recognised labour 
standards, safeguards the environment and the management of natural resources. 

3. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The Parties held their seventh statutory Trade Committee meeting in Suva (Fiji), 3-4 October 
2019, to which Solomon Islands and Tonga participated as observers.  

393 

 
 
 
 
 
During the Trade Committee, the Parties made progress on a number of draft decisions (rules 
of  procedure  for  the  Trade  Committee,  EPA  amendment  due  to  accessions,  updates  of  the 
Pacific countries’ market access commitments). They exchanged views on trade in services, 
development  cooperation  (preparations  of  the  Pacific  Regional  Integration  Programme,  and 
the  foreseen  support  for  EPA  implementation),  communication  (outreach  and  awareness 
raising), civil society involvement in the monitoring and evaluation of EPA implementation, 
etc.  They  were  also  briefed  on  the  Pacific  Kava  project,  the  evolution  of  trade  in  agri-food 
products  between  the  Parties,  value  chains  and  diversification,  with  the  view  to  exploring 
potentials of registration and protection of Geographical Indications for the Parties. 

Four complementary events were held on the margins the meeting, namely: 

  Bilateral discussions between the EU and each Pacific State (30 Sept. - 2 October); 
  Civil society and private sector workshop held at the University of the South Pacific to 

promote the trade aspects of sustainable development (2 October); 

  Capacity  building  workshop  on  customs  and  rules  of  origin  (30  Sept.  -  1  October), 
which  brought  together  35  customs  and  trade  officials  and  15  representatives  of 
private sector (fisheries, coconut and coconut oil, garment industry); 

  Special Committee on Customs Cooperation and Rules of Origin (2 October), which 
exchanged views on the recent developments in the customs legislations of the Parties, 
their  free  trade  agreement  negotiations,  and  the  necessary  technical  amendments  to 
bring Protocol II of the EPA up to date with current trade trends and realities. 

4. 

TRADE AND  DEVELOPMENT COOPERATION AND SPECIFIC AREAS OF IMPORTANCE  

Development  cooperation  is  essential  for  EPA  implementation.  In  December  2019,  the 
Commission  adopted  two  new  programmes  worth  €94  million  to  boost  climate-sensitive 
business,  trade  and  investment  in  the  Pacific.  The  Pacific  Regional  Integration  Support 
Programme  (€37  million)  will  strengthen  the  regional  trade  and  business  enabling 
environment. It will also assist Pacific businesses seize new opportunities under the EPA. The 
Investment Facility for the Pacific (€57 million top-up) will provide grant funding to leverage 
critical  investments  in  partnership  with  International  Financial  Institutions,  strengthening 
Pacific  productive  capacities  and  trade-related  infrastructure,  thus  facilitating  the  successful 
EPA implementation. 

Bilateral  programmes  are  ongoing  in  focal  areas  such  as  agriculture  (mainly  Melanesian 
countries), energy (Micronesian countries), fisheries and waste management. In Fiji, a budget 
support  is  contributing  to  agriculture/sugar  sector  reform  and  trade-related  adjustment.  In 
Samoa,  the  EU  supported  the  development  of  coconut  value  chains  including  an  innovative 
pilot project for a business exporting virgin coconut oil products to Germany. 

In  PNG,  the  Trade  Related  Assistance  (TRA2)  ended  in  November  2019  after  supplying 
laboratories equipment.  Future support areas may include technical assistance to review key 
customs  legislation,  training  on  the  use  of  and  purchase  of  complementary  laboratory 
equipment,  implementation  of  WTO  Trade  Facilitation  Agreement,  establishment  of  the 
National Trade Office, etc. The EU supports to rural entrepreneurship, investment and trade, 
enabling  ‘hard  components’  (transport  infrastructure,  energy  access)  to  be  connected  with 
‘soft  components’  (financing,  training,  market  access,  trade  and  other  value  chain  support 

394 

 
 
 
services for commodities). The EU and PNG held the first Business-to-Business Conference 
in Port Moresby (21 June 2019) involving Fiji, Samoa, Solomon Islands and Tonga. 

The  EU  provided  assistance  via  intra-ACP  programmes  (Hub  &  Spokes  II,  TradeCom  II, 
Technical  Barriers  to  Trade,  etc.),  helping  Pacific  countries  for  example  to  conduct  trade 
needs’  assessments  and  develop  customs  and  trade  policy  frameworks  and  related  national 
consultation mechanisms; with targeted support to help Samoa, Solomon Islands and Tonga in 
the  process  of  EPA  accession  and  implementation.  The  EU-ACP  Technical  Centre  for 
Agricultural and Rural Cooperation also provided support e.g. to optimise the performance of 
Pacific agricultural value chains, investment readiness, financial inclusion etc. 

5. 

EVOLUTION OF BILATERAL TRADE 

5.1 

Economic environment 

PNG  is  the  biggest  country  of  the  ACP  Pacific  grouping,  with  a  population  of  9  million. 
PNG’s GDP grew to €21 billion in 2019 (up from €20 billion in 2018), driven by a rebound in 
the resource (mainly extractive) sector. There was slowdown in the non-resource activity due 
to  sluggish  domestic  demand,  while  formal  employment  improved  during  the  first  nine 
months  of  2019.  The  exchange  rate  of  the  kina  (local  currency)  against  the  euro  remained 
stable, but inflation was 3.9% (down from 5.2% in 2018). The country is blessed with natural 
resources: rich in minerals (gold, copper), oil, gas, forests and fish stocks. PNG development 
objective  in  the  medium  to  long  run  is  to  move  from  an  economy  dominated  by  primary 
production to commercialisation through the promotion of downstream processing activities. 
The country’s long-term policies are centred on the renewable sector  and the transition  to  a 
green economy. 

A renegotiation of terms of the Papua Liquid Natural Gas (LNG) €13 billion project (the Elk-
Antelope gas fields in Gulf province) in August 2019, a delay in reaching agreement on the 
PNG LNG expansion (the P’nyang gas field) and prolonged legal proceedings over the Wafi-
Golpu  gold  project  have  led  to  downward  economic  growth  projections.  In  2019,  EU-PNG 
trade averaged €1 billion, a figure that has not been fluctuating much since 2011. 

The other thirteen ACP Pacific countries211, with a total population of around 2.5 million, are 
widely dispersed over a maritime region equivalent to 15% of the earth's surface. This makes 
transportation,  administration  and  the  efficient  provision  of  basic  services  extremely 
challenging. The countries' small size, limited natural  resources, narrowly-based economies, 
small  domestic  markets  and  large  distances  to  major  external  markets/trading  centres,  high 
costs  of  energy,  infrastructure  and  transportation  and  vulnerability  to  external  shocks 
considerably affect their economic growth and create a high degree of economic volatility. 

With a population of 1 million, Fiji's GDP of €5 billion in 2019 represented more than 50% of 
the countries' combined GDP of €9.5 billion. Samoa's GDP was around €0.83 billion. In 2019, 

211  Cook  Islands,  Fiji,  Kiribati,  Marshall  Islands,  Micronesia,  Nauru,  Niue,  Palau,  Samoa,  Solomon  Islands, 
Tonga, Tuvalu and Vanuatu – excluding Timor-Leste, which, albeit officially part of the Pacific grouping, is 
located in South East Asia and not covered here.  

395 

 
 
 
 
 
                                                 
Fiji's  GDP  grew  by  2.7%  (down  from  3.5%  in  2018)  and  Samoa's  GDG  grew  by  2.5%. 
Inflation rate was 3.5% (down from 4.1% in 2018) in Fiji and 2.2% in Samoa. 

Pacific Island States are characterised by narrow export sectors, dominated by processed and 
unprocessed  natural  resource-based  products.  The  majority  of  their  exports  are  agricultural 
products,  some  manufactured  goods,  services  (including  ICT)  and  mining/resources  (fuel  in 
the case of PNG, minerals, forestry products and pearls).  All Pacific States experience a high 
level  of  import  dependence.  Machinery  and  electrical  goods,  consumer  goods,  fuels,  raw 
materials, metals, chemicals, equipment, vehicles and some specific food products (e.g. rice), 
are the most prevalent type of imports. The level of import dependence is much higher for the 
very  small  island  countries,  which  lack  both  an  agricultural  and  industrial  base.  Like  other 
Pacific countries, Fiji and Samoa’s vulnerability to the effects of climate change and natural 
disasters affect significantly their economic and political environments. They are however at 
the forefront of the global fight against climate change (e.g. Fiji presidency of COP23). 

PNG and Fiji concluded negotiations of a bilateral trade deal with the UK, a replicate of the 
EPA, ahead of Brexit. 

5.2 

Trade in goods 

In 2019, the EU27 remained the fifth largest trading partner for PNG (representing 6.8% of its 
world’s  trade)  after  Australia  (29.5%),  China  (18.9%),  Singapore  (9.9%)  and  Japan  (9.9%). 
EU27 was PNG’s fourth exports destination and the sixth imports source. For the first time in 
last decade, the EU27 became Fiji’s second largest trading partner (representing 13.5% of its 
world’s trade) after Singapore (15.4%) and ahead of Australia (12.6%), New Zealand (11%) 
and  China  (8.6%).  For  Samoa,  the  EU27  is  only  the  thirteenth  largest  partner  for  Samoa 
(representing 0.7% of Samoa’s trade with the rest of the world). Samoa’s main trade partners 
are New Zealand, Singapore, the US, China, Australia and Fiji.   

In 2019, PNG accounted for 58% (66% in 2018) of the Pacific region’s exports to the EU27. 
Fiji alone accounted for 22% (2% in 2018) of the region’s imports from the EU27. Together, 
Fiji,  PNG and Samoa account  for 80% of the region’s exports to  the EU27 and  32% of the 
region’s  imports  from  the  EU27.  The  EU27’s  total  trade  with  Fiji,  PNG  and  Samoa 
increased  by  €221  million  (+18.2%)  in  2019.  EU  exports  to  these  States  increased  by  €257 
million  (+59%), mainly  driven by EU’s export of aeroplanes and other powered  aircrafts to 
Fiji. The overall trade balance was negative for the EU (-€296 million). 

396 

 
 
 
 
EU imports from PNG decreased slightly from €788 million (2018) to €741 million (2019), 
driven by a decline in exports of palm oil (-€45 million or 13%) and mining ores (-€25 million 
or 17%). EU imports of coffee (+€6 million, +12%) and preserved fish (+€12 million, +8%) 
grew. The EU27 exports to PNG grew from €118 million (2018) to €138 million (2019), with 
a negative trade balance of €603 on EU27’s side (2019). By AMA/NAMA Product Groups, 
EU27  imported  agricultural  products  (53.6%),  fishery  products  (22.4%)  and  industrial 
products  (20%);  and  exported  exclusively  industrial  products  (91.5%).  By  SITC  product 
Groups,  the  EU27  imported  mainly  primary  products  (92.6%)  and  exported  mainly 
manufactures  (89.9%).  Total  trade  in  value  decreased  from  €906  million  (2018)  to  €879 
million (2019). 

EU  imports  from  Fiji  increased  from  €19  million  (2018)  to  €31  million  (2019),  after  a 
significant  drop  in  2018.  The  recovery  was  driven  by  increases  in  EU  imports  of  fish  and 
sugar. The EU27 exports grew from €49 million (2018) to €291 million (504% growth rate, 
mostly due to export of aeroplanes and other powered aircrafts), with a trade balance of €260 
on  EU27’s  side  (2019).  By  AMA/NAMA  Product  Groups,  EU27  imported  agricultural 
products  (63%),  fishery  products  (22.6%)  and  industrial  products  (14.4%);  and  exported 
exclusively industrial products (96.6%). By SITC product Groups, the EU27 imported mainly 
primary products (85.6%) and exported exclusively manufactures (96%). Total trade in value 
grew from €67 million (2018) to €323 million (2019). 

EU27 imports from Samoa increased by more than 38% over the last decade mainly driven 
by an increase in fruit juices imports. 

Main  destinations  for  the  Pacific  EPA  States’  exports  are  the  Netherlands,  Germany  and 
Spain. Preference utilisation rates for EU imports from the Pacific states have risen from 85% 
in 2014 to 99.3% in 2019.  

Pacific  States’  exports  to  the  EU27  show  little  signs  of  diversification.  The  top  10  export 
products accounted for 96.6% of total exports from Fiji, 97.8% of total exports from PNG and 
95.5%  of  total  exports  from  Samoa  to  the  EU.  The  main  Fiji’s  exports  products  included 
sugar,  frozen  tuna  fillet,  fruit  and  vegetables,  mineral  water.  PNG’s  main  exports  included 
palm  oil,  prepared  or  preserved  tuna,  copper  ores,  coffee,  cocoa  and  vanilla.  Samoa’s  main 

397 

 
 
 
 
exports products  included juice, part or  accessories  of automatic data processing, dresses of 
synthetic fibres, crude coconut oil, etc. 

The  EU  mostly  exports  machinery  and  mechanical  appliances,  electrical  machinery  and 
equipment, optical, medical or surgical instruments, certain chemicals, as well as aircrafts and 
motor  vehicles  to  the  Pacific  States.  These  exports  are  crucial  for  the  local  industry,  which 
uses them as production inputs. Eliminating import duties on these items will reduce the costs 
of inputs for local businesses and will benefit consumers. 

5.3 

Trade in agricultural products 

Total  trade  in  agricultural  goods  with  Pacific  EPA  States  (Fiji,  PNG  and  Samoa)  reached  a 
value of €439 million in 2019, with a trade deficit for the EU of €395 million.  

EU agri-food exports to the EPA Pacific States are low (€22 million), and consisted mainly of 
preparations  of  vegetables,  fruits  or  nuts  (27%),  meat  preparations  (24.5%)  and  cigars  and 
cigarettes (17.5%). While meat preparations saw an increase of 28% in the exports compared 
to 2018, the export of cigars and cigarettes decreased by about 35% in the same period.  

EU imports of agricultural goods from EPA Pacific States (Fiji, PNG and Samoa) counted for 
€417 million in 2019. Imports of agricultural goods were dominated by palm & palm kernel 
oils (76%, about €360 million in value, representing a decrease of 12.5% compared to 2018) 
followed by unroasted coffee, tea in bulk & mate (12.5%, €59 million in value) and beet and 
cane sugar (6%, €28 million in value, an increase of 91% compared to 2018). 

5.4 

Trade in services and Foreign Direct Investments 

The EPA with the Pacific states does not include provisions on services or investment. Trade 
in  services  with  the  Pacific  EPA  states  has  been  fairly  stable  over  the  past  years,  at  a  low 
level.  EU  services  imports  from  PNG  were  €42  million  in  2019  and  exports  came  to  €86 
million. Services trade with Fiji in 2019 consisted of EU imports of €92 million, and exports 
of €43 million. EU FDI stocks are most significant in PNG, where they stood at €1.5 billion in 
2019, with new inflows of €52 million in 2019.  

6. 

CONCLUSIONS  

EPA implementation and accession remained top priorities in 2019. Fiji is still to ratify and 
effectively start implementing the Agreement. Having made all its tariff cuts, PNG continued 
to push to extend its export diversification beyond the fisheries sector. Samoa is preparing to 
start its tariff cuts in 2024. Following the conclusion of the accession, the EU and Solomon 
Islands  started  provisional  application  of  the  EPA  in  May  2020.  The  EU  looks  forward  to 
starting  negotiations  on  Tonga’s  accession  in  2020,  and  is  open  to  consider  any  accession 
requests  that  Kiribati,  Tuvalu  and  Vanuatu  may  make.  The  Parties  look  forward  to  making 
progress,  with  the  view  to  adopting  the  pending  procedural  and  implementation  decisions, 
including mainstreaming the trade aspects of sustainable development into respective policies, 

398 

 
 
 
 
 
 
 
involving  civil  society  in  implementation  and  carrying  out  a  study  on  the  strengths  and 
weaknesses of the services’ sector. 

Processed fish exports – a success story of the EPA 

A unique derogation (the so-called “Global sourcing”) allows Pacific States to source fish 
globally and process it further for exporting to the EU. It takes into account the Pacific states’ 
own limited fishing capacity and promotes the development of an onshore processing capacity 
to create local employment, skills transfer and income. At the same time, strong monitoring 
provisions ensure long-term sustainability of fish stocks. 

Since the conclusion of the EPA, five major onshore investment projects have been 
established in PNG, leading to an increase of direct and indirect employment, mainly for 
women. By 2014 PNG had reported 50 000 extra jobs in tuna canning, 90 % of them held by 
women. 

Exports of processed tuna to the EU have increased significantly. They reached EUR 164 
million in 2019, accounting for 20.7 % of PNG’s total exports to the EU that year.  

399 

 
 
 
 
Mineral water from Fiji 

Mineral and Natural Waters from Fiji (“FIJI Water”) is now available in leading hotels, fine 
restaurants and retail locations in EU27. Owing to harmonised import rules and the 
predictability in the EU market, guaranteed by the EPA framework, FIJI Water can be found 
in almost all the big distribution chains in four main EU27 countries: 

  France:  La  Grande  Epicerie  Paris,  Carrefour,  Casion  Supermarche,  E.  Leclerc, 

Franprix, Geant Casino, Intermarche, Monoprix 

  Germany:  Edeka,  Galeria  Kaufhof,  Getrarke  Hoffmann,  Globus,  Karstadt,  Kaufland, 

Rewe dein Markt, Legut 

  Spain: El Corte Ingles, Hipercor, Hudson 
  Belgium: Carrefour, etc. 

To note: currently almost all the imports (more than 90%) enter the Union via the United 
Kingdom and then redistributed in the rest of the above Member States. The main UK 
distribution chains are Booth, Harrods, Harvey Nichols, Recivital, Spar, Tesco, Waitrose and 
Whole Foods Market. 

400 

 
 
 
 
 
 
 
 
7. 

STATISTICS 

EPA PACIFIC COUNTRIES 

401 

Merchandise trade EU27 2015-2019 20152016201720182019Merchandise trade EU27 with EPA (interim) Pacific countries (mio €)Imports655599844809774Exports312211192180437Balance-343-389-652-630-337Share EPA (interim) Pacific countries in EU27 trade with Extra-EU27Imports0.0%0.0%0.0%0.0%0.0%Exports0.0%0.0%0.0%0.0%0.0%Total (I+E)0.0%0.0%0.0%0.0%0.0%Share EU27 in trade EPA (interim) Pacific countries with worldImportsExportsTotal (I+E)Source Trade G2 Statistics/ISDB 18-Mar-20Trade EU27: Eurostat COMEXT;  Trade EPA (interim) Pacific countries: IMF DotsTotal merchandise trade EU27 with EPA (interim) Pacific countries (mio €)Total merchandise trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports809774-36-4.4%Imports1 907 5651 934 94427 3791.4%Exports180437257142.7%Exports2 059 8822 132 01572 1333.5%Balance-630-337293Balance152 317197 07144 754Total trade9891 21022122.3%Total trade3 967 4474 066 95999 5122.5%Source Trade G2 Statistics/ISDB from Eurostat COMEXTAgrifood trade EU27 with EPA (interim) Pacific countries (mio €)Agrifood trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %Imports446417-29-6.5%Imports118 891121 6442 7532.3%Exports22220-0.7%Exports169 000181 82512 8257.6%Balance-424-39529Balance50 10960 18110 072Total trade469439-29-6.2%Total trade287 891303 46915 5785.4%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition AMA UR AoANAMA trade EU27 with EPA (interim) Pacific countries (mio €)NAMA trade EU27 with Extra-EU27 (mio €)Growth Growthmio €annual %mio €annual %EU27 imports363356-7-1.9%EU27 imports1 788 6741 813 30024 6261.4%EU27 exports158415257163.0%EU27 exports1 890 8821 950 19059 3093.1%Balance-20658264Balance102 208136 89034 682Total trade52177125048.0%Total trade3 679 5563 763 49183 9352.3%Source Trade G2 Statistics/ISDB from Eurostat COMEXTDefinition NAMA URServices trade EU27 with EPA (interim) Pacific countries (mio €)Services trade EU27 with Extra-EU27 (mio €)GrowthGrowthmio €annual %mio €annual %Imports175148-27-15.4%Imports824 543824 015-528-0.1%Exports185171-14-7.5%Exports928 420968 64840 2284.3%Balance92313Balance103 877144 63340 756Total trade360319-41-11.4%Total trade1 752 9631 792 66239 7002.3%Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsServices trade EU27 with EPA (interim) Pacific countries (mio €)Services trade EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018Imports13711794175148Imports642 682776 924784 743824 543824 015Exports137164172185171Exports750 713849 023855 477928 420968 648Balance04778923Balance108 03172 09970 734103 877144 633Total trade273280266360319Total trade1 393 3951 625 9481 640 2201 752 9631 792 662Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsFDI EU27 with EPA (interim) Pacific countries (mio €)FDI EU27 with Extra-EU27 (mio €)2014201520162017201820142015201620172018FDI StocksFDI StocksInward22193050169Inward5 402 5316 647 4477 199 7797 275 8937 196 848Outward4589211 6481 671Outward7 050 0968 511 8379 145 3538 833 6068 750 004FDI FlowsFDI FlowsInwardInward143 012803 285328 703209 462-67 421OutwardOutward203 7111 016 490449 657180 796-103 421Source Trade G2 Statistics/ISDB from Eurostat BOP statisticsEPA (interim) Pacific countriesEPA (interim) Pacific countries20182019Extra-EU27EPA (interim) Pacific countries2018201920172018Extra-EU27201720182019Extra-EU272018201920182019Extra-EU27201820192018EPA (interim) Pacific countries-1 000-50005001 00020152016201720182019Merchandise trade EU27 with EPA (interim) Pacific countries (mio €)ImportsExportsBalance