Free trade agreements: potential levers for growth and jobs

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Free trade agreements are potential levers for growth and jobs

In the current world context marked by the growing interconnection of economic and financial ties between players and the establishment of global supply chains, French and European businesses are de facto increasingly obliged to trade and/or invest on foreign markets. Guaranteeing effective access to partner country markets for our businesses is vital to ensure outlets for our production and to help our companies remain competitive. This is a major challenge to promote growth and jobs in Europe.

In order to guarantee access to the markets of our major trade partners and in the face of sluggish multilateral negotiations in the WTO framework, many countries and regional groupings negotiate and implement liberalized trade agreements on a bilateral basis. The number of these agreements, which are subject to notification to the WTO, has been growing constantly since the early 1990s.

These agreements waive the principle of non-discrimination but are nonetheless compatible with WTO law, which allows in Article XXIV of the GATT its members to conclude free trade and regional integration agreements so long as they respect certain conditions (reciprocity of commitments, substantial market coverage, not increasing trade restrictions vis-à-vis third parties). These agreements generally include provisions aimed at essentially eliminating customs barriers and, increasingly, non-tariff barriers for the free movement of goods and services.

France and the EU in free trade negotiations

Trade policy is historically an exclusive competency of the European Union and now covers foreign direct investment. Free trade negotiations are conducted by the European Commission on the basis of a negotiating mandate drawn up by the Council (Member States). Throughout negotiations, France strives to take the stakes for our businesses into consideration, seeking agreements based on mutual advantages and profit and ensuring that our offensive and defensive interests are raised across the board, while working to preserve our regulatory specificities (social, environmental and cultural diversity exceptions) and mobilizing a differentiated approach based on the level of economic development of the third partner concerned.

The EU has established the most extensive network of preferential regional agreements covering every continent, with a series of agreements concluded each decade with third countries. The EU’s trade policy was initially focused on its neighbourhood and the historical developing partners and came to a strategic turning point in 2006, when negotiations with emerging countries such as India, Russia, South Korea and the Andean States, as well as Mercosur, were launched. The EU’s trade policy has recently been diversified, with the negotiation of agreements with developed countries: Canada, soon Japan, and maybe the United States. Nonetheless, a series of negotiations with emerging countries remains current, including with the ASEAN (Association of SouthEast Asian Nations) countries (Malasia, Thailand, Vietnam; negotiations are concluded with Singapore) and with India and Mercosur (Southern Common Market). This policy has permitted the recent signing of several agreements: Colombia, Peru and South Korea; association agreement with Central American countries.

Moreover, following the events of the Arab Spring, France proposed to its European partners to open negotiations for Deep and Comprehensive Free Trade Agreements (DCFTAs) with Tunisia, Morocco, Jordan and Egypt, with the aim of gradually establishing a common economic space integrating these partners in the European internal market. These Agreements are tied in with the trade pillar of the Deauville Partnership and seek to explore new prospects for development and deepening of commercial relations with Southern countries.

The EU is also negotiating specific free trade agreements with African, Caribbean and Pacific (ACP) countries, aimed at promoting development and strengthening regional integrations. These are called Economic Partnership Agreements (EPAs).

Updated on: 24.05.13