Overview and Prospect of the European Union’s Free Trade Agreements concluded with Korea, Canada and USA
The Free Trade Agreements (‘FTAs’) recently concluded between the European Union (EU) with Korea, Canada and the United States of America illustrate a major evolution in the role that these Agreements could play in a globalised economy. States want to abolish tariff barriers while protecting their economy. Non-tariff barriers (NTB) and the Investor-State Dispute Settlement Tribunal are key legal tools included in those Agreements.
The Agreement between EU and Korea
Since its entry into force five years ago, the EU-Korea FTA symbolizes a fine success for both parties. Even before its entry into force, the Agreement has enabled to expand trade between Korea and the European Union. One of the main advantages that the EU has FTA with Korea is definitely the rebalancing of trade flows between the two partners, previously negative for the European partner. Concerning Korea, it looks like the negative impact of the crisis on the Korean exports to Europe may have been more important without this agreement.
FTA constitutes a model for the EU’s following negotiations with other partners all over the world. However, there is still some effort to be done to eliminate NTB which consists mainly in harmonising the technical standards whose differences represents an important barrier to trade.
The Comprehensive Economic Trade Agreement (CETA) between EU and Canada
The main objective of the Agreement is to allow European companies to enter the North American Market which is the first market within the world. Upon the entry into force of the CETA, the majority of tariffs will be deleted. Most industrial products will be duty-free which allow EU exporters to save on average 470 million euros per year and Canadians about 158 million euros.
Thus, thanks to the recognition of conformity assessment between Canada and the EU, each party will be enabled to certify its own exports according to the other’s technical regulations, which undeniably would ramping up exports by preventing double testing and the extra costs which are constitutive of considerable obstacles to trade for small and medium-sized companies. Although being an efficient way of optimisation, negotiators ensure the convergence of standards from both sides.
To find a balance between protecting foreign investors’ rights and the State’s sovereignty in regulating general welfare, the EU created an institutional structure for the tribunal in charge of Investor-State Dispute Settlement (ISDS).
On the basis of the successful EU-Korea Agreement, the conclusion of the CETA with Canada was the first necessary step for the EU before negotiating and finalising the Transatlantic Trade and Investment Partnership (TTIP) with the USA.