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Russia’s invasion of Ukraine is pushing EU countries to strengthen trade links around the world.
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For the EU's free-trade fans, the time has come to fire up negotiations with potential partners around the world.
French President Emmanuel Macron had been vocal in his opposition to some trade programs ahead of last month's French presidential election, but that vote is out of the way. France is soon to give up its leadership of the Council of the EU, too.
The baton will pass to two of the bloc's biggest supporters of free trade — the Czech Republic and Sweden — when they take over the presidency of the Council of the EU in the year ahead.
For some in Brussels, Russia's invasion of Ukraine makes securing new trade partnerships an urgent mission once again. The supply chain disruption caused by the war fueled calls to open up more commerce with the rest of the world to diversify sources of everything from natural gas to sunflower oil.
The first step in reviving the EU's free-trade agenda will come on June 3, when ministers will meet to discuss their priorities over lunch. The Nordic countries, who led the free-trade push after Brexit, are trying to rally support for a letter to the European Commission, urging Brussels to hurry up and sign some deals.
"This is not a revolution," one EU trade diplomat said, stressing that Brussels will not engage in new negotiations with big partners like the U.S. anytime soon. But "the political momentum for free-trade deals is back," the diplomat added.
So where might the EU's attention focus first? POLITICO gets you up the speed.
Why does this one matter? The revamped EU-Chile association agreement is key to the EU’s goals of becoming a world leader in battery production, as it would help the EU get access to the massive lithium stocks of the Atacama salt flats. Germany in particular has been pushing to move the Chile deal forward given the importance of lithium for the transformation of its car industry to electric vehicles.
What is holding it back? Signing any kind of trade deal was sensitive for France before its presidential election. Chile also held two rounds of elections. Santiago’s new government, which came into power in December, now has asked for some time to go over the pact before signing it.
Chance of success anytime soon? 8/10. The Commission hopes to ink the deal by November.
Why does this one matter? The EU’s investment pact with China, officially known as the Comprehensive Agreement on Investment (CAI), was struck at the end of the German presidency in December 2020. The Commission hailed the deal as a success because it addressed the practice of requiring foreign businesses to share their technology in exchange for access to the Chinese market, along with assurances on forced labor.
What was holding it back? The deal is officially in the freezer until Beijing lifts sanctions against EU lawmakers. China had imposed those after EU countries approved sanctions on officials in charge of running internment camps for Uyghur Muslims in Xinjiang.
Chance of success anytime soon? 1/10. Relations with China have been deteriorating since the deal was struck, and Russia’s war in Ukraine has only made tensions worse. There is no sign of the sanctions being lifted and no one is seriously considering unfreezing the China deal anytime soon.
Why does this one matter? The EU-Mexico association agreement, reached in principle in 2018 and finalized in 2020, is an update of the previous EU-Mexico deal and would make almost all trade in goods duty-free.
What was holding it back? The Commission has been mulling whether to split up the agreement and complete the easier parts first to get some of it ratified faster, but that’s a no-go for Mexico. Splitting up the agreement would also potentially set a precedent for the more contentious deal the EU is working on with the Latin American Mercosur bloc. That makes a fast-track plan for the Mexico deal less likely.
Chance of success anytime soon? 7/10 The Mexican side is actively pushing the EU to proceed, and the deal as such isn’t particularly sensitive. But the chances of this deal moving forward depend on how much it can be politically separated from Mercosur, and how flexible Mexico is in the process.
Key number: 148 percent. Trade in goods between the EU and Mexico has risen by 148 percent by 2018 since the existing EU-Mexico trade agreement came into force in 2000.
Why does this one matter? The EU’s association agreement with Mercosur, a bloc comprising Argentina, Brazil, Paraguay and Uruguay, would cover a population of 780 million and would be a huge push for the EU’s relations with Latin America. It’s a major deal in terms of tariff reductions, as it would strip away some €4 billion of duties each year.
What was holding it back? Since it was concluded in 2020, several EU countries, MEPs and activists have over the years raised concerns about the Amazon rainforest shrinking. Macron in particular has opposed the deal to score points with both environmentalists and France’s influential farmers, who see a flood of cheap South American beef, wine and sugar as a threat.
Chance of success anytime soon? 4/10. Spain is leading the charge to get Mercosur going again, and the Commission wants to negotiate an extra protocol with the Mercosur countries about sustainability. But not only is the deal an intra-EU political minefield, but Brussels also has to take into account the Brazilian election in October.
Why does this one matter? India is one of the world’s fastest-growing economies, and the EU wants to give talks with New Delhi another shot, especially as India is out to bolster alliances against Beijing. Intensifying trade relations with India also fits in the EU’s bigger strategy for the Indo-Pacific region.
What was holding it back? Negotiations have not yet officially restarted. Trade talks between Brussels and New Delhi went into snooze mode back in 2013 after a disagreement over market access, with Europe frustratedly lambasting India for protectionism.
Chance of success anytime soon? 3/10. Both sides are facing increased strategic and commercial competition from China, which is bringing the two sides closer together. But while the EU might start thinking more geopolitically about its position in the Indo-Pacific, in the end it would rather break down India’s 125 percent car tariffs than play a bigger role in Himalayan security. Given India’s history, no one expects this one to be an easy ride.
Why does this one matter? Even though Australia is not one of the EU’s largest trading partners, sealing a trade agreement with Australia would be a geopolitical win, especially given Australia’s trade spat with China.
What was holding it back? The negotiations had been sucked into a political argument after France reacted with fury at losing a multibillion-dollar submarine deal with Australia. Paris had forced the EU to pause negotiations over the breach of trust.
Chance of success anytime soon? 6/10 While negotiations between Brussels and Canberra have resumed since the submarine dispute, talks still have to cover a lot of ground before coming to a deal, which is not expected before the end of the year. Negotiations on market access for agriculture will be a huge political discussion with the farming powerhouse, as will talks over intellectual property, raw materials and geographical indications.
Why does this one matter? New Zealand is only the EU's 50th-largest trading partner in goods, but as with Australia, sealing a deal with Wellington would be symbolic of the EU’s ability to conclude trade deals, especially with like-minded countries.
What was holding it back? Negotiations still need a political push, but the main obstacle for sealing the deal has been the French presidential election.
Chance of success anytime soon? 9/10. The Kiwi Prime Minister Jacinda Ardern is expected to come to Brussels to conclude the deal as soon as early summer.
Why does this one matter? The EU is Switzerland’s biggest trading partner, and Switzerland is the bloc’s fourth-biggest. The two partners' trading relations are governed by a patchwork of bilateral treaties — some of which will be running out.
What was holding it back? Switzerland and the EU had been negotiating for years on an overarching partnership agreement to replace the patchwork of deals, but pulled out in May last year. The two sides took up talks again in November, but made no significant progress. Brussels and Bern are at odds over how their trade relations should be governed.
Chances of success? 2/10. Revamping trade relations is in the interests of both sides, but each insists that their approach to the issue is a red line and hardly any progress has been made in recent years.
Leonie Kijewski and Sarah Anne Aarup contributed reporting.
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