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Trade agreements and new Challenges for the EU

Verantwortlicher Autor: Carlo Marino Rome, 27.08.2018, 10:16 Uhr
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Rome [ENA] There are new challenges the EU has to tackle, both globally and in its own neighbourhood. The growing contestation of the current global order, increasing inequalities related with globalisation, conflict beyond the EU borders, and continuing migration flows, all conspire to create an escalating perception of insecurity among EU citizens. The recent case concerning Italy's threat to pull its 20 billion euro

contribution to the European Union's budget unless it took in 150 migrants aboard the coast guard ship Diciotti didn't work, while on last Friday Italy's foreign ministry recognized the duty to pay and aid agencies called for the migrants to be let off the vessel in Catania harbour. A spokesman of the European Commission said "threats in Europe do not lead anywhere. The way in which Europe functions is cooperation and not threats". But despite latest news and headlines, the EU has always been about promoting trade: not only by eliminating barriers to trade between EU countries, but also by encouraging other countries to trade with the EU through its soft power.

In 2016, EU exports represented 15.6% of global exports and EU imports 14.8%, making it one of the world’s biggest trade players alongside the US and China. The EU currently has 116 trade agreements in place or in the process of being updated or negotiated. Trade agreements are not only an opportunity to reduce tariffs, but also to get partners to recognize EU quality and safety standards, and to respect products with a protected designation of origin. This is very important as European food products enjoy a worldwide reputation for distinction and tradition. The EU also uses trade agreements to set standards for environment and labour, for example to avoid the importation of products produced using child labour.

The latest EU trade agreement signed was with Japan, but many others are being negotiated. European firms not only benefit from economies of scale that being part of the world’s largest single market entail, but also from trade agreements that enable EU enterprises export many of their services and goods. At the same time foreign firms wanting to export to the EU have to meet the same high standards as local firms so there is no risk of unfair competition by non-EU companies cutting corners. In terms of exports of goods, the EU’s largest partners are the US (20%), China (10.5%) and Switzerland (8%). The EU imports most from China (20.2%) followed by the US (13.8%) and Russia (7.8%).

Trade with non-EU countries has led to the creation of millions of jobs in Europe. In 2015, the European Commission estimated that about 26 million jobs are linked to trade with non-EU countries. Being in the same single market has also led to more trade between EU countries.In addition the import of goods and services from outside the EU has forced European companies to be more competitive, while offering consumers more choice and lower prices.

The EU seeks to make the most out of globalisation and its economy thrives because of free trade.Nevertheless, sometimes it can be damaged by countries imposing unfair tariffs on its products or selling their goods at aberrantly low prices. There is also the risk of conflicts over trade escalating into a trade war, which is when both parties keep on increasing tariffs or create other barriers, which can make products more expensive and complicate things for companies. The EU can use a variety of trade defence instruments in these situations and respond by imposing anti-dumping duties as a trade defence instrument. The European Union's soft power in the world has been essentially an instrument for diplomacy and for peaceful innovation.

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