UE Report outlines the rationale for trade policy in support of growth and jobs (20/07/2012)

The European Commission published a working document on external sources for growth. This progress report outlines the rationale for trade policy in support of growth and jobs, the economic framework of EU trade policy, the negotiating agenda, and the enforcement agenda. It reviews the deepening relationships between the EU and its key trading partners, including Mercosur.

The report notes that "ongoing FTA negotiations with large emerging economies such as the Mercosur countries, albeit very challenging, are important to prepare for the future".

FTA negotiations between the EU and Mercosur were re-launched in May 2010, following concrete indications of a shared willingness to negotiate an ambitious FTA. The stakes, economically and politically, are very high for both parties, as the aim is to create the biggest region-to-region free trade area in the world. Negotiations are of particular interest to the EU, considering the high tariffs applied in Mercosur and the high levels of EU investment in the region. Improved levels of protection and enforcement of intellectual property rights in Mercosur, including better protection of geographical indications, are of importance to the EU. For Mercosur, this agreement is a unique opportunity to improve market access to their biggest trade partner. However, protectionist tendencies in the region, and the latest internal developments in Mercosur, create significant challenges for negotiations.

Concluding all pending agreements could boost the EU’s total exports by 6%, worth close to an additional € 130 bn. Increases in exports to specific partners are obviously higher, ranging from 24% with Canada to more than 105% with Mercosur. EU imports would grow as well, albeit at a slightly lower rate.