EU trade agreements

What trade agreements are

The EU manages trade relations with third countries through trade agreements. They are designed to create better trading opportunities and overcome related barriers.

The EU's trade policy is also used as a vehicle for the promotion of European principles and values, from democracy and human rights to the environment and social rights.

Classification of trade agreements

Trade agreements differ depending on their content: 

• Economic Partnership Agreements (EPAs) - support the development of trade partners from African, Caribbean and Pacific countries
• Free Trade Agreements (FTAs) - enable reciprocal market opening with developed countries and emerging economies by granting preferential access to markets
• Association Agreements (AAs) - bolster broader political agreements

The EU also enters into non-preferential trade agreements, as part of broader deals such as Partnership and Cooperation Agreements (PCAs).

Negotiations of trade agreements are conducted in accordance with the rules set out in Article 218 of the Treaty on the Functioning of the European Union.

• Treaty on the Functioning of the EU (EU legislation)
• The case for open trade (World Trade Organisation)

Negotiations and agreements

The EU has concluded over 40 agreements with around 80 partners. It is in the process of adopting or ratifying agreements with a further 27 partners.

• Trade negotiations and agreements (European Commission)
• EU trade relationships by country/region (European Commission)

How trade agreements are negotiated

On 22 May 2018, the Council adopted conclusions addressing the way in which trade agreements are negotiated and concluded.

These conclusions set out the key principles which will underpin the Council's approach towards trade negotiations from now on.

Specifically, the Council focused in particular on two issues:

• the European Commission's intention to recommend splitting agreements into two separate agreements, with one on investment protection and other for trade provisions
• the Council's role in trade negotiations

• New approach on negotiating and concluding trade agreements (press release, 22 May 2018)

The role of the Council

The Council plays a crucial role in shaping new trade agreements.

In the opening stages, the Council authorises the European Commission to negotiate a new trade agreement on behalf of the EU. This is done through a ‘negotiating mandate’. With this authorisation, the Council provides negotiating directives which include the objectives, scope and possible time limits of the negotiations.

The Commission then negotiates with the partner country on behalf of the EU, in close cooperation with the Council and the European Parliament.

After agreement on the text of the deal is reached with partners, the Commission submits a formal proposal for adoption to the Council. 

Following discussions, the Council adopts a decision on the signing of the agreement on behalf of the EU. It then sends the signed agreement to the European Parliament for consent. 
In the final stages, once the European Parliament has given its consent, the Council adopts the decision to conclude the agreement.

Trading principles

The EU abides by the principles of the World Trade Organisation (WTO).

Trade agreements are generally very complex because they are legal texts covering a wide range of activities, from agriculture to intellectual property. But they share a number of fundamental principles.

Anti-discrimination

This WTO trade principle looks at two aspects:

• most-favoured nation - countries cannot normally discriminate between their trading partners
• national treatment - imported and locally-produced goods should be treated equally

Predictability

According to WTO, promising not to raise a trade barrier can be as important as lowering one as it offers businesses predictability. In this way, investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition - choice and lower prices.

Fair competition

Although generally described as a ‘free trade’ institution, the WTO sometimes allow tariffs and, in limited circumstances, other forms of protection. More concretely, it promotes a system of rules dedicated to open and fair competition.

• Trade principles (World Trade Organisation)
• WTO in brief (website)