1. EU-Indonesia Trade Cooperation Facility Module 2: EU as a negotiating partner Trends of EC trade negotiations 29 September 2015 1

2. Your trainer Lisa Mackie Civil servant in UK Government and European Commission for 18 years Former EU Deputy Chief Trade Negotiator, European Commission Now: Director of Seneca market intelligence 2

3. Structure of seminar: 1.Characteristics of EU trade policy 2.The EU’s trade negotiations – drivers, terminology, state of play 3.Who negotiates for the EU? 4.What’s it like to negotiate with the EU? 5.Future of EU trade policy 3

4. 1. EU in the world 4 EU single market Unique experience in building a single customs union with single trade policy and tariff across 28 countries: 500 million people. Transparent rules & regulations. Relatively open economy – trade flows to GDP 35%. World’s largest trading block with 16% of global imports and exports. Average import tariff low 5.5% (2013), 70% of imports at zero or reduced tariffs. Strengths in capital, technology & know-how. Dependent on imports of energy, food, animal feed and other commodities.

5. 1. EU trade policy trends Is trade policy only about import tariffs? 5 Standards & licensing Customs controls Public procurement Competition Services Investment Intellectual property Trade remediesDispute resolution

6. 1. EU trade policy trends In the EU, trade is not just about trade… 6 EU trade policy Labour rights Human rights Democracy Environment

7. 2. EU trade policy today - drivers Remember, it’s not only about negotiations: Deepen relations with strategic partners - China Enforce EU rights (trade defence, WTO litigation) Tackling trade barriers 7 What are the policy drivers for today’s EU trade policy?

8. 2 EU’s trade agreements - terminology 8 Free Trade Agreement Comprehensive Economic Partnership Agreement Deep and Comprehensive Trade Area Association Agreement Can include an FTA Many non-trade areas Political and Cooperation Agreement Unlikely to include FTA Can be linked to FTAs (prerequisite)

9. 2 EU’s trade agreements The EU has an active negotiating agenda Its approach to FTAs has evolved over time. Today, the EU trade agreements either applied or concluded cover 26.4% of EU imports. Multilateral Trade Agreements Bilateral Trade Agreements Depth & coverage Regional approach Quantity If EU concludes the agreements they are currently negotiating & planning, that figure would rise to 61.8%. 9

10. 2. The EU’s trade agreements - overview Trade agreements in force with 50 countries: Map: http://trade.ec.europa.eu/doclib/docs/2012/june/tradoc_149622.jpghttp://trade.ec.europa.eu/doclib/docs/2012/june/tradoc_149622.jpg Overview: http://ec.europa.eu/trade/policy/countries-and- regions/agreements/#_europehttp://ec.europa.eu/trade/policy/countries-and- regions/agreements/#_europe Agreements agreed but not yet in force with 10 countries: Canada – signed but not in force Vietnam – agreed, now preparing legal texts then send to Council & European Parliament Negotiations under way with 12 countries including: Transatlantic Trade and Investment Partnership (TTIP) Japan Investment negotiations with China 10

11. 2. Example of EU FTA in force EU-South Korea Free Trade Agreement The first in a new generation of trade deals focused on trade barriers. Negotiating mandate prepared simultaneously to that for EU negotiations with India & ASEAN. Negotiations were opened in May 2007 and the agreement entered into force on 1 July 2011, four years in total. Depth: The majority of import duties were removed when the FTA entered into force on 1 July 2011. On 1 July 2016, import duties will be eliminated on all products except for a limited number of agricultural products. Breadth: The FTA covers Trade in goods, access for service suppliers, Special focus on non-tariff barriers, Better access to government procurement, Protection of intellectual property, Strong competition rules, Commitment to sustainable development. 11

12. 2. Examples of EU FTA in Asia Check it out EU-South Korea FTA (in force): http://ec.europa.eu/trade/policy/countries-and-regions/countries/south- korea/ http://ec.europa.eu/trade/policy/countries-and-regions/countries/south- korea/ Text of the agreement: http://eur-lex.europa.eu/legal- content/EN/TXT/PDF/?uri=OJ:L:2011:127:FULL&from=ENhttp://eur-lex.europa.eu/legal- content/EN/TXT/PDF/?uri=OJ:L:2011:127:FULL&from=EN Guide to the agreement: http://trade.ec.europa.eu/doclib/docs/2009/october/tradoc_145203.pdf http://trade.ec.europa.eu/doclib/docs/2009/october/tradoc_145203.pdf EU-Vietnam FTA: http://trade.ec.europa.eu/doclib/docs/2006/december/tradoc_118238.pdf http://trade.ec.europa.eu/doclib/docs/2015/august/tradoc_153674.pdf EU-Singapore FTA: http://trade.ec.europa.eu/doclib/press/index.cfm?id=961 12

13. 3. Who negotiates for the EU? The EU negotiates trade agreements Not the 28 individual countries (‘member states’). 13 Who is the EU? What does that mean in practice?

14. 4. Who negotiates for the EU? 14 The European Parliament co-decides with the Council on trade legislation (except negotiating directives). It gives consent for trade agreements. The Council co-decides with the European Parliament on trade legislation. It sets the directives for negotiations and follows the negotiation process. Council approves the results of the negotiation (normally by qualified majority voting) The Commission negotiates on behalf of the EU. Regular reporting to the Council (28 countries) and the European Parliament Civil society & public consultation

15. 4. What’s it like to negotiate with the EU? Experienced negotiating system but complex. Experience of compromise within EU due to decision making mechanisms. The diversity of the EU means more opportunities for a deal. No flexibility to launch trade agreements that don’t meet EU breadth and depth. Slow to prepare and conclude formally but fast to negotiate. Inability to negotiate on issues beyond trade policy within a trade agreement. 15

16. 5. Future EU Trade strategy EU Commissioner for Trade Cecilia Malmström 2014-2019 http://ec.europa.eu/commission/2014- 2019/malmstrom_en 16

17. 5. Future EU Trade strategy New trade strategy communication likely in Autumn 2015. 17 How trade policy decisions are made Reflecting EU values Updated negotiating agenda

18. WWW.SENECAGROUP.EU Lisa.mackie@senecagroup.eu 18