Shcherbata N. Z.

Volyn Lesya Ukrainka National University, Lutsk, Ukraine

The Spread of EU Trade Agreements

The European Union has recently shifted to a trade policy that envisages a greater use of Free Trade Agreements (FTAs). The EU has, since 1995, been central to the proliferation of trade agreements in the world economy. In particular the EU is working on a number of new FTA initiatives.

The EU’s agreements fall into three general categories: those with the EU’s immediate European neighbors; those with Middle Eastern countries; and others elsewhere in the world [4].

The EU has been a significant user of FTAs and region-to-region negotiations. These fall into a number of categories.The EU is also negotiating with Mercosur (Brazil, Argentina, Uruguay and Paraguay), the Golf Co-operation Council (GCC) (Bahrain, Oman, Saudi Arabia, Qatar, Kuwait and the United Arab Emirates) as well as states in the western Balkans and some Euro-Med Agreements with partners in North Africa and the Middle East. In addition to these full-fledged FTAs there are a range of other co-operation agreements, including efforts to promote regulatory co-operation with the United States.

In the case of EU FTAs, as with all FTAs, there have been a number of factors motivating each EU initiative. But some FTAs have been shaped more by foreign/security policy and others more by commercial considerations, рromoting the European model of integration [5].

A common feature of the agreements is the replacement of unilateral preferences with reciprocal preferences. The reasons for this change of trade policy towards the developing countries have derived from political, economic and legal considerations; the precise mix of these three components varying according to the primary objectives of the agreement.

Political considerations have been particularly important in the free trade agreements with the MED countries, where the EU's Barcelona Declaration in 1995, which launched the Euro-Mediterranean Partnership Agreements, explicitly referred to the need to create greater social and economic stability and economic convergence with the EU in a region of vital interest to the security of the EU.

Economic considerations have primarily motivated the agreements with Mexico, Chile and MERCOSUR. First, to meet the competitive challenge posed by the US under NAFTA and the possible establishment of the FTA, and to provide a platform for EU exports to North and South America. Second, particularly in the case of MERCOSUR, to preserve EU market shares and expand into new areas of exports, including services.

More generally, the fact that all of the EU's agreements cover a wide range of trade related issues, such as customs cooperation and rules of origin, competition law, standards, government procurement, and investment codes; may assist the EU in establishing EU rules and procedures in multilateral agreements and so provide a competitive advantage to EU corporations in international trade and investment.

Whether the preferential trade agreements negotiated by the EU are able to perform any of these roles depends critically on the importance of trade with the EU to the economy of the developing country and the precise details of the scope and content of the agreements and their enforcement mechanisms [2].

Trade facilitation, in the broad sense as defined above, is not given detailed attention in a number of the FTAs recently concluded by the European Union. In most of these agreements, trade facilitation provisions are only in the framework of customs cooperation, with a view to ensuring ‘fair trade and compliance with trade rules’. Thus, in terms of depth and specific provisions, the trade facilitation sections of some of the FTAs may be described as shallow, although they are often accompanied by detailed Protocols dealing with the provision of mutual assistance by the administrative authorities of the Contracting Parties. However, there are one or two exceptions, namely the FTAs with Chile and Mexico, which include a considerable amount of detail as to the trade facilitation measures that the Contracting Parties are required to implement. The trade facilitation demands made by the EU would appear to depend on the extent of trade liberalisation already in place in the partner country concerned. For instance, the detailed provisions in the EU FTA with Chile can be attributed to the liberal economic culture in Chile, which means that Chile is more willing and able to accept and implement more comprehensive measures than, for example, the Mediterranean (MED) countries with their less liberal (if not illiberal) economic policies [1].

The Partnership and Cooperation Agreement between Ukraine and the EU envisages the possibility of a free trade agreement between the two parties if suitable conditions exist, in particular, regarding further progress in transition to a market economy in Ukraine. A free trade agreement could bring significant economic benefits to both parties if introduced in a suitable climate whereby individual economic actors are free and able to exploit the opportunities that are created [3].

The EU FTAs with countries reviewed above are of various degrees of depth and scope. One discernible trend is that, generally, the countries with less elaborate trade-related institutions and/or a less liberal trade and economic policy framework have accepted fewer detailed commitments on trade facilitation, while those whose trade-related institutions are relatively more developed and/or who are already engaged in substantial trade and economic reforms at home have accepted far deeper commitments.

Literature:

1. Fasan O. Comparing EU free trade agreements: Trade facilitation // http://www.ecdpm.org/Web_ECDPM/Web/Content/Navigation.nsf/index2?readform.

2. Francois J., McQueen M., Wignaraja G. EU-Developing Country FTA’s: Overview and Analysis. – Rotterdam: Erasmus University,2005. – 30 p.

3. Merza N. Z. Free trade zone as the best kind of countries participation in world trade // Соціально-економічний розвиток України в умовах глобалізації світової економіки: Збірник доповідей IV науково-практичної конференції / За заг. наук. ред. к. філос. н. А. А. Журавльова.– Луцьк: ПВД «Твердиня», 2007.– С. 93-95.

4. Sundström E. Trade Agreements in the European Union. A Relevant Driving Force for U.S. Trade Policy? // Policy Report. – 2002. – October. - 2002. – P. 13-25.

5. Woolcock S. European Union policy towards Free Trade Agreements // EСIPE Working Paper. – 2007. – № 3. – Р. 1-15.