1. EU BILATERAL AGENDA WITH STRATEGIC TRADE PARTNERS
Razeen Sally
European Centre for International Political Economy/
London School of Economics

2. EU BILATERALS Trade and FDI patterns
EU bilateral trade policy: Global Europe; Trade, Growth, World Affairs
FTAs in Asia
EU bilaterals: policy issues

3. EU BILATERALS EU and strategic trade partners
-- Bilateral trade and FDI
-- Comparative trade barriers

4. Leading EU27 Import & Export Countries Merchandise trade - Excluding intra-EU trade (2010)
Country
EU Imports + Exports
EU Imports from
EU Exports to
Rank
Mio euro
% world
World
100.0
100,0
USA 1
14.5 2
11.3
18.0
China
13.9
18.9
8.4
Russia 3
8.5
10.4 4
86 515
6.4
Switzerland
6.7 5
84 123
5.6
7.8
Japan 6
3.8
64 845
4.3
43 709
3.2
Brazil 10
63 566
2.2
32 290 9
31 277
2.3
India 8
67 784
2.4
32 991
34 793
South Korea
66 584
38 602
2.6
27 981
2.1
Canada 11
46 609
1.6 15
20 045
1.3 14
26 564
2.0
Singapore 12
42 638
1.5 17
18 658
23 981
1.8
Malaysia 23
31 926
1.1
20 684
1.4 28
11 241
0.8
Thailand 25
27 172
1.0 19
17 188
1.2 32
9 985
0.7
Indonesia 33
20 065
13 690
0.9 38
6 375
0.5
Vietnam
14 072
9 401
0.6 45
4 671
0.3
Philippines
9 113 43
5 373
0.4 49
3 739
ASEAN - 6
5.1
84 994
5.8
59 992
4.4
Source: Eurostat

5. Leading EU27 Import & Export Countries Services trade - excluding intra-EU trade (2009)
Country
EU Imports + Exports
EU Imports from
EU Exports to
Rank
Bln euro
% world
World
1194.6
100,0
542.9
651.7
USA 1
246.3
20.6
126.5
23.3
119.8
18.4
Canada - 19
1.6
8.2
1.5
10.8
1.7
China 2
32.4
2.7
13.6
2.5
18.8
2.9
Japan 3
29.9
13.3
2.4
16.6
Brazil
15.7
1.3
6.5
1.2
9.2
1.4
India
7.6 9
Korea*
12.2
1.0
4.4
0.8
7.8
ASEAN
38.7
3.2
18.3
3.4
20.4
3.1
Source: Eurostat and WTO International Trade Statistics 2010
* Services figures taken from and based on 2008 for % world figures.

6. EU 27 OFDI and IFDI Stocks with Main World Partners (2009) in billion of euros
Source: Eurostat

7. EU 27 OFDI and IFDI Flows with Main World Partners (2009) in billion of euros
Source: Eurostat

8. Average MFN Applied Tariffs and Bound Rates by Major Sector (2009)
Country/ economy
Binding Coverage
(All Goods)
Bound Tariff Rate (All Goods)
Applied Tariff
Rate
(Manufactures)
Applied Tariff Rate (Agriculture)
Overall Applied Tariff (All Goods) EU
100.0
5.2
4.0
13.5
5.3 US
3.5
3.3
4.1
Canada
99.7
6.7
10.7
4.5
Japan
5.1
2.5
21.0
4.9
Brazil
31.4
14.1
10.2
12.1
Korea
94.6
16.6
6.6
48.6
11.9
China
10.0
8.7
15.6
9.6
Hong Kong
45.6
0.0
Malaysia
84.3
24.0
7.6
8.4
Thailand
75.0
28.2
8.0
22.6
9.9
Indonesia
95.8
37.1
6.8
Philippines
67.0
25.7
5.8
9.8
6.3
Vietnam
11.4
9.7
18.9
10.9
Taiwan
6.4
6.1
Singapore
69.7
10.4
0.2
India
73.8
48.5
10.1
31.8
12.9
Pakistan
98.7
59.9
13.4
17.1
13.9
Bangladesh
15.5
169.2
14.3
17.6
14.7
Sri Lanka
38.1
30.2
9.2
24.8
11.2
Source: WTO World Tariff Profiles 2010

9. World Ranking Ease of Doing Business (2011)
Ease of
Doing
Business
Starting a
Dealing with
Constr.
Permits
Registe
ring
Property
Getting
Credit
Protec
ting
Investors
Paying
Taxes
Trading
Across
Borders
Enfor
cing
Contracts
Closing
Singapore 1 4 2 15 6 13
Hong Kong 56 3
United States 5 9 27 12 62 20 8 14
Denmark 10 30 28
Canada 7 29 37 32 41 58
Korea, Rep. 16 60 22 74 49
Japan 18 98 44 59
112 24 19
Thailand 95 72 91 25 46
Malaysia 21
113
108 23 55
Vietnam 78
100 43
173
124 63 31
China 79
151
181 38 65 93
114 50 68
Indonesia
121
155
116
130 47
154
142
Brazil
127
128
122 89
152
132
India
134
165
177 94
164
182
Philippines
148
156
102 61
118
153
Source: World Bank Ease of Doing Business 2011

10. Indicators for Trading Across Borders (2011)
Ease of
Trading
Across
Borders
(World
Ranking)
Documents
for
export
(number)
Time
(days)
Cost to
(US$ per
container)
Import
import
Cost to
Singapore 1 4 5
456
439
Hong Kong 2 6
625
600
Korea, Rep. 8 3
790 7
Thailand 12 14 13
795
United States 20
1,050
1,315
Japan 24 10
1,010 11
1,060
Malaysia 37 18
450
Canada 41
1,610
1,660
Indonesia 47
704 27
660
China 50 21
500
545
Philippines 61 15
675
730
Vietnam 63 22
555
645
India
100 17
1,055 9
1,025
Brazil
114
1,790
1,730
OECD -
4.4
10.9
1,058.70
4.9
11.4
1,106.30
Source: World Bank Ease of Doing Business 2011

11. The Enabling Trade Index (2008)
Country
Overall Rank
Market Access
Border
Administration
Transport and
Communications
Infrastructre
Business
Evironment
Rank
Score
Singapore 1
6.06
5.97
6.56 7
5.74 2
6.00
Hong-Kong
5.70 16
5.12 6
5.96 5
5.79
5.94
Denmark(EU) 3
5.41 95
3.76
6,22 8
5.71
Canada
5.29 25
4.85 17
5.61 20
5.24 18
5.45 US 19
5.03 62
4.17
5.60 11
5.49 37
4.86
Japan
4.80
121
3.20
5.65 14 34
4.91
Korea 27
4.72
111
3.63 24 15
5.37 44
4.65
Malaysia 30
4.71 31
4.57
4.95 51
4.59
China 48
4.32 79
3.87
4.53 43
4.13 41
4.74
Thailand 60
113
3.48
4.61 40
4.19 71
4.24
Indonesia 68
3.97
4.21 67
3.99 85
3.28
4.42
Vietnam
3.96 50
4.41 88 46
3.62 64
4.34
India 84
3.81
115
3.42
3.98 81
3.24 58
4.48
Brazil 87
104
3.72 80
3.70 66
3.64 83
4.00
Philippines 92 74
3.82
3.31
103
3.61
Source: The Global Enabling Trade Report 2010

12. EU BILATERALS EU bilateral trade policy
- Global Europe: economic/commercial rationale; WTO plus; but also non-trade motives; differences with EPAs/MENA
- Trade, Growth, World Affairs: Update and fleshing out; more emphasis on big trading partners, stronger provisions on regulatory market access in bilateral agreements and stronger trade enforcement
- Benchmarks for (relatively) strong, clean FTAs and non-FTA frameworks with other strategic trade partners
- How serious is the economic/commercial logic?
- Market access and non-trade motives (labour/environmental standards; “sustainable development”; climate change etc.)
- Comparisons with US FTAs on WTO plus issues; implications for EU trade policy after the Lisbon Treaty
- Overall context: no substitute for intra-EU reforms and multilateral progress; otherwise narrow mercantilism, trade diversion, spaghetti/ noodle bowls

13. Status of EU FTAs and their share of EU trade (%)
REGIONS AND FTA STATUS
Industrial products*
Agricultural products**
Imports (%)
Exports (%)
OPERATIONAL FTAS
22.3
27.7
24.3
29.1
Chile, Mexico, South Africa
Developing country FTAs
2.5
3.4
5.7
2.2
Andorra, San Marino, Turkey, Iceland, Liechtenstein, Norway, Switzerland
EFTA and customs Unions
14.6
15.9
11.6
Caribbean ACP
EPAs
0.3 1
0.6
Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Occupied Palestinian Territory, Tunisia
Mediterranean countries, FTAs 4
5.9
4.5
7.9
Albania, Bosnia and Herzegovina, Croatia, Former Yugoslav Republic of Macedonia, Montenegro, Serbia
Western Balkans, Stabilisation and Association Agreements
0.9
1.5
3.7
FTA NEGOTIATIONS CONCLUDED BUT NOT YET APPLIED, ONGOING AND PLANNED FTA NEGOTIATIONS
21.8
25.6
56.2
26.2
Bolivia, Ecuador, Peru, Colombia
Andean Community
0.4
5.3
Source: European Commission DG Trade (2010). Trade, Growth and World Affairs: Trade Policy as a Core Component of the EU’s 2020 Strategy, COM (2010) 612.

14. Cont. Status of EU FTAs and their share of EU trade (%)
REGIONS AND FTA STATUS
Industrial products*
Agricultural products**
Imports (%)
Exports (%)
Cont.
Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam
ASEAN
5.4
4.6
9.8
4.2
Costa Rica, El Salvador, Guatemala, Honduras Nicaragua, Panama
Central America
0.2
0.4
2.8
Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates
Gulf Cooperation Council (GCC) 2
5.3
0.3
5.1
Argentina, Brazil, Paraguay, Uruguay
MERCOSUR
1.5
2.5
20.9
Armenia, Azerbaijan, Canada, Georgia, India, Korea, Libya, Moldova, Syria, Ukraine
Other FTAs 10
9.1
7.2 8
ACPs less Caribbean
EPAs
2.3
3.2
10.5
6.6
NO FTAS
55.8
46.7
19.5
44.7
Australia, China, Japan, New Zealand, Russia, United States
Major trading partners
50.3
38.6
16.6
35.8
Rest of the World (~ 70 countries)
5.5
8.1
2.9
8.9
Source: European Commission DG Trade (2010). Trade, Growth and World Affairs: Trade Policy as a Core Component of the EU’s 2020 Strategy, COM (2010) 612.

15. FTAs IN ASIA
FTAs
- Context: stalled liberalisation; creeping regulatory protectionism (partly crisis-related); from non- discriminatory liberalisation to discriminatory FTAs
- Proliferation in Asia; catch up with other regions
- Motives: foreign policy; WTO stalled; building blocks to regional and global economic integration?
- Trade-lite FTAs (except with USA and EU?): focus on tariff liberalisation/elimination – but neglect of non-tariff and regulatory barriers; risks of trade distortions but limits to trade/investment creation and dynamic gains

16. FTAs IN ASIA Asian FTA players
-- China: trade-lite (eg., China-ASEAN to partial-scope agreements)
-- Japan: also trade lite; unambitious on market access and big carve outs
-- South Korea: more serious, e.g. US and EU FTAs
-- ASEAN: Singapore the exception, otherwise weak FTAs; bilaterals take priority over ASEAN+1 FTAs
-- India: v. weak FTAs; part of overall defensive trade policy

17. REGIONAL ECONOMIC INTEGRATION IN ASIA
- APEC: diverse, unwieldy, diffuse agenda; FTAAP unlikely
- ASEAN: Visions galore, but where’s the beef? CEPT progress; AFAS, AIA weak; little progress on regulatory barriers; AEC and ASEAN Charter: paper tigers?
- SAFTA: v. trade-light (excludes over half of trade); risks trade diversion; throttled Indo-Pak trade
- TPP: Building bloc to wider Asia-Pacific FTA?; odds against a deep-integration FTA; US demands on labour and environmental standards; excludes China – divisive economically and geopolitically?

18. REGIONAL ECONOMIC INTEGRATION IN ASIA
Regional economic integration (cont.)
- Wider regional integration initiatives: Northeast Asian FTA; ASEAN plus 3; ASEAN plus 6
- The case for a region-wide FTA: specialisation; economies of scale and dynamic gains; reduce trade diversion from noodle bowl; all depends on a comprehensive, WTO-plus FTA
- But it could compromise global integration, esp. processing trade and extension of global supply chains
- Huge economic and political differences in Asia make clean, strong FTAs very unlikely; rather trade-light FTAs adding to noodle bowl
- Conclusion: FTAs unlikely to contribute much to regional economic integration; reliance on bilateral FTAs; disintegration dangers

19. EU BILATERALS EU bilaterals: policy issues -- USA: tariffs and NTBs
-- Canada: FTA
-- Mercosur and other FTAs in Latin America
-- GCC
-- Russia and Ukraine
-- Low-income countries and LDCs (EPAs, GSP, GSP+, EBA)

20. EU-ASIA FTAs EU-Korea -- Estimated effects: tackling NTBs
-- Comprehensive tariff elimination; short transition periods
-- Ban on export restraints
-- Sector-specific agreements to tackle NTBs
-- FDI, GATS-plus, govt. procurement, IPR enforcement, competition (state aids), dispute settlement
-- Trade and Sustainable Development
-- Regulatory transparency

21. EU-ASIA FTAs
EU-ASEAN
- Estimated FTA effects: crucial to tackle NTBs and have major services liberalisation
- Existing bilateral cooperation framework: TREATI and PCAs
- From TREATI to FTA
- EU-ASEAN talks failed: v. low ASEAN common denominator and lack of common negotiating machinery
- EU-Singapore FTA: strong FTA likely
- EU-Malaysia/Vietnam/Indonesia/Philippines/Thailand: big challenge to negotiate strong FTAs
- Limited gains from such bilateral FTAs; risks of trade distortions

22. EU-ASIA FTAs EU-India - Estimated effects
- Extreme difficulty of negotiating strong FTA with India, esp. on NTBs and regulatory issues
- Issues: agriculture; NAMA; services; investment, other WTO plus issues, NTBs
- Indian concerns on labour and environmental standards

23. EU-ASIA FTAs EU-Japan -- Tariffs and NTBs: views from both sides
-- Lack of Japanese ambition
-- Moving towards an FTA negotiation?

24. EU BILATERALS - FTA not on the cards EU-China
- Existing bilateral cooperation framework (PCA, regulatory dialogues up to HLD): too soft; how to strengthen?
- Avoid non-trade linkages; don’t exaggerate
macroeconomic issues (bilateral deficit and exchange rate)
- Focus on market access, esp. regulatory issues
- Both EU and China have legitimate market-access issues

25. EU BILATERALS EU-China (cont.): issues
-- Raw materials and export restraints
-- Services
-- Investment (both ways)
-- IPR
-- Government Procurement
-- Norms and standards (both ways)
-- Subsidies
-- MES and trade remedies
-- Better prioritising and constructing quid pro quos

26. EU BILATERALS EU-China: Conclusion
-- Better prioritising and constructing quid pro quos
-- Constructive reciprocity vs. destructive reciprocity (threatening punitive measures)
-- Better bilateral relations if stalled domestic reforms are revived