Free trade agreement

EcIPE WorkIng PAPEr • no. 03/2007

European Union policy towards Free Trade Agreements
Stephen Woolcock StephenWoolcock (s.b.woolcock@lse.ac.uk) is a Lecturer in International Political Economy in the Department of International Relations at the London School of Economics. Dr.Woolcock also heads the LSE International Trade Policy Unit (ITPU) and is a Member of ECIPE’s Advisory Board.AbstrAct

The European Union has recently shifted to a trade policy that envisages a greater use of Free Trade Agreements (FTAs). In particular the EU is working on a number of new FTA initiatives. Policy statements also reiterate the EU’s commitment to multilateralism in trade and to the completion of the stalled Doha Development Agenda. This paper considers the background to the shift towards a moreactive use of FTAs, the motivations and forces that have brought about the shift in policy, and the likely EU objectives with regard to the content of the FTAs. Unlike the US the EU has no ‘model FTA’ to form the basis of negotiations with all partners. In assessing the outlines of the EU negotiating mandates for these new FTAs it is, however, possible to also draw on recent policy statements andthe studies and reports produced on each possible new FTA. Finally, the paper discusses whether the EU can reconcile this greater emphasis on bilateral FTAs with its commitment to multilateralism in trade.

Keywords:

Trade Policy, Free Trade Agreements, International Political Economy F02, F13, F53, P59

JEL Code:

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IntroDuctIon *

The European Union has recently shifted to a trade policy that envisages a greater use of FTAs.1 In particular the EU is working on a number of new FTA initiatives. At the Vienna EU-Latin America summit in May 2006 a decision was reached to negotiate an EU – Central American FTA, something that hasbeen under consideration for some time.The EU has also agreed to negotiate an FTA with ASEAN and with India and is exploring an FTA with South Korea.2 The EU has, of course, made considerable use of FTAs and RTAs for some time. Policy statements also reiterate the EU’s commitment to multilateralism in trade and to the completion of the stalled Doha Development Agenda.3 This paper considers thebackground to the shift towards a more active use of FTAs, the motivations and forces that have brought about the shift in policy, and the likely EU objectives with regard to the content of the FTAs. Unlike the US the EU has no ‘model FTA’ to form the basis of negotiations with all partners. In assessing the outlines of the EU negotiating mandates for these new FTAs it is, however, possible to also drawon recent policy statements and the studies and reports produced on each possible new FTA.4 Finally, the paper discusses whether the EU can reconcile this greater emphasis on bilateral FTAs with its commitment to multilateralism in trade.
bAckgrounD

The EU has been a significant user of FTAs and region-to-region negotiations. These fall into a number of categories. There are the AssociationAgreements with the states in south eastern Europe/western Balkans and the Euro-Med partners that have been largely motivated by a desire to promote economic development and political stability in EU’s near neighbourhood.There are the Economic Partnership Agreements (EPAs) with the Africa Caribbean and Pacific (ACP) states that are largely motivated by development policy objectives. Finally, therehave been the bilateral FTAs concluded with South Africa, Mexico, and Chile and the region-to-region negotiation underway with MERCOSUR that have been more commercially motivated. In addition to these full-fledged FTAs there are a range of other co-operation agreements, including efforts to promote regulatory co-operation with the United States. See table I for a list of existing agreements and...