EU trade policy digest July–September 2024

European Commission: Negotiations and agreements

Update

Summary of progress in EU trade negotiations with low- and middle-income countries, and key developments in trade policy

What is changing?

EU trade negotiations with low- and middle-income countries

India

Progress is reported to have been difficult in the eighth round of negotiations on a Free Trade Agreement between EU and India held in June. While some progress was made on intellectual property rights, rules of origin and dispute settlement, “both sides’ respective positions still diverge on the vast majority of key outstanding issues” (European Commission 2024a).The ninth round of negotiations started in Delhi on September 23.

Indonesia

The 19th round of negotiations on an Indonesia–EU Comprehensive Economic Partnership Agreement (CEPA), held in July 2024, has yielded “fruitful discussions” according to the European Commission (2024b). In particular, advances have been made on market access for goods, rules of origin (with good progress reported on agriculture), and trade and sustainable development. However, certain issues such as export/import restrictions and investment conditions require further negotiations. Within the chapter on trade and sustainable development, discussions will continue regarding the right of each side to regulate climate change and sustainable management of marine resources.

Indonesian officials expressed optimism about finalising the Agreement, which they consider to be 90% complete. The government hopes to conclude key talks before the new government led by President-elect Prabowo Subianto comes into office in October (Antara 2024).

Kenya

The new EU-Kenya Economic Partnership Agreement (EPA) entered into force on 1 July 2024. Senior officials from the EU and the Kenyan government met in early September to discuss implementation of the EPA, in particular the commitments to trade and sustainable development (European Commission 2024c). Under this Agreement, Kenya can export all goods to the EU free of import tariffs. For most goods exported from the EU to Kenya (83% of current imports in value terms), import tariffs will be phased out gradually over the coming 15–25 years, except for a list of agricultural products including specific meat, fish, dairy products, fruit, vegetables, spices, rice, flours, and oils for which there will be no reduction in tariffs (Annex IId, Part 5).

The EPA supports Kenya’s diversification of agricultural exports and the development of value-added agricultural products. It foresees the establishment of a Kenya–EU Agriculture Dialogue aimed at raising farm incomes and improving food security, sustainable use of resources, and rural development/economic growth (Art. 60).

Thailand

The EU–Thailand negotiations on the establishment of a Free Trade Agreement (FTA) will continue in November. The European Commission (2024d) reported “constructive discussions” on a range of issues during the third round of negotiations in June. Discussions on market access are still at an early stage. Views are being exchanged on the tariff data that will underpin negotiations. It was agreed to include in the FTA a comprehensive sanitary and phytosanitary (SPS) chapter in relation to agri-food products, with discussions focusing on trade facilitation and approval procedures. Some progress was reported in relation to objectives, definitions, transparency, and institutional arrangements.

The FTA will include a chapter on trade and sustainable development. Work is progressing on articles related to labour, climate change, biological diversity, forestry, and marine biological resources. More difficult areas of negotiation are gender equality and the implementation of multilateral environmental conventions. Constructive discussions were reported on the overall objectives, scope, and general principles of a chapter on sustainable food systems, as well as cooperation on antimicrobial resistance.

The Thailand Department of Trade Negotiations echoed the Commission’s positive evaluation of the progress made at these talks (The Nation 2024).

Türkiye

The EU and Türkiye held their first High Level Dialogue on Trade in July 2024. The new initiative aims to discuss several areas of cooperation to support the EU’s Customs Union with Türkiye. Türkiye has already resolved a number of trade barriers identified by the EU; the meeting addressed outstanding barriers and other issues related to the Customs Union including the Carbon Border Adjustment Mechanism (CBAM), digital trade, and quotas relating to road transport (European Commission 2024e).

See the EU webpage Negotiations and agreements: scroll down to download Overviews and a Map summarising the state of play of EU trade agreements.

EU trade policy

Trade and the Strategic Dialogue on the Future of EU Agriculture

In the face of increasing farmer protests, in January 2024 the European Commission launched the Strategic Dialogue on the Future of EU Agriculture, bringing together major stakeholders in the agri-food sector. These experts were tasked with providing a set of recommendations which will help the European Commission set its new Vision for Agriculture and Food.

In spite of the divergent interests represented in the consultation, the experts reached a consensus set out in a final report (European Commission 2024f). Its key recommendations in relation to agri-food trade are as follows.

The EU should lead work towards a global trade policy framework for sustainable agri-food systems (common objectives, trade principles, standards, and metrics based on science).
The EU must strike a balance between the need for higher sustainability standards and their global recognition, and retaining Europe’s position as a competitive exporter and attractive destination for suppliers to export to. Impacts of trade on local small producers, the environment, and health must be part of the debate.
Stronger alignment of imports with EU food and farming standards, taking into account sociocultural, economic, geographic, climatic, and regulatory contexts of trading partners.
Greater coherence between trade and sustainability policies, ensuring a level playing field between the EU and non-EU producers. This should make use of scientific benchmarks for on-farm sustainability assessment evaluated according to harmonised methods that measure each sector/farm to compare sustainability objectives (e.g. biodiversity conservation, greenhouse gas emissions, animal welfare, water quality). This could be extended later to the whole agri-food system.
Import requirements that are consistent with World Trade Organization (WTO) rules, using existing concepts recognised by the WTO (equivalence of non-EU countries’ systems), or developing new approaches.
Assistance to non-EU operators through robust technical assistance and capacity building programmes to help adapt practices to meet EU standards.
Explore different types of trade agreements with non-EU countries that better reflect the strategic relevance of agricultural and food products.
Improve impact assessments made prior to trade negotiations to understand impacts on farmers and consumers in the EU and in non-EU countries.
More robust enforcement mechanisms in the sustainability chapters of trade negotiations to ensure trading partners are meeting requirements.
Reform of the WTO: a fairer dispute settlement system, “upgrading of production standards”, enforcement of intellectual property rights protection.

These ideas are recommendations for consideration by the Commission, which aims to deliver its new Vision within the first 100 days of its mandate.

Trade priorities of new European Commission

The European Commission’s current 5-year mandate ends in autumn 2024. Ursula von der Leyen, elected President of the Commission for a second mandate, has published political guidelines setting out a vision and priorities (von der Leyen 2024). On trade, these priorities are:

reform and strengthening of the WTO
more ambitious enforcement of trade agreements
use of all trade defence instruments where needed
deepening engagement with the Indo-Pacific region, including a new Strategic EU–India Agenda, and strengthening cooperation with the Association of Southeast Asian Nations (ASEAN)
new impetus in partnership with Africa, including working together on reform of international institutions and the impacts of climate change, demography, and migration
deepening cooperation between the EU and Latin America and the Caribbean.

EU reintroduces quotas for Ukrainian eggs, groats, oats, honey, and sugar

In 2022, the EU granted Ukraine full trade liberalisation – zero duties and zero quota limitations – on all goods for a temporary period in response to Russia’s aggression against Ukraine (Regulation 2022/870). These trade preferences were extended in 2023 (Regulation 2023/1077) and again until 5 June 2025 (Regulation 2024/1392).

The trade liberalisation measures include a safeguard mechanism for eggs, poultry, sugar, oats, maize, groats, and honey. Due to increases in imports, over the past quarter the EU has reintroduced tariff quotas for eggs, sugar, groats, oats, and honey. This means that full most favoured nation (MFN) tariffs (rather than preferential tariffs) now apply, and EU quotas have been set for the first 5 months of 2025 (see Ukrainian tariff rate quotas).

EU publishes evaluation of EU–CARIFORUM EPA

In 2008, the EU signed an Economic Partnership Agreement (EPA) with CARIFORUM (comprising Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Suriname, and Trinidad and Tobago).

A review of the EPA (European Commission 2024g) found that trade between EU and CARIFORUM States has more than doubled under the EPA, rising from €8.3 billion in 2008 to €17.7 billion in 2022. This is significantly higher than would have occurred without the EPA, which has established 100% trade liberalisation (zero duty and zero quotas on all products except arms). Exports of agricultural, fishery, and food products increased by 60% during that period, up to €990 million in 2022. Agricultural trade as a share of overall trade (4.3% in 2022) has dropped due to increases in exports of mineral fuels and oils.

The evaluation concludes that the EPA is a “comprehensive and relatively modern agreement, responding mostly to current economic challenges”. Nevertheless, implementation of the EPA has been challenging for certain CARIFORUM States. The region’s operators remain generally uncompetitive in global value chains. For smaller producers, the cost of complying with food and sanitary and phytosanitary (SPS) standards is an area where trade facilitation and technical support is particularly needed. Structural challenges such as transport infrastructure and slow progress in regional integration limit the attractiveness of the region for foreign investment. The report acknowledges that the EPA cannot address all these challenges, but can help in providing a stable framework for trade, improving the regulatory environment and supporting regional integration.

With certain States still struggling to implement the Agreement in its current form, there are not yet plans to extend the EPA.