Despite the EU-US planning a free trade agreement, the two sides havent yet formally launched negotiations

Despite the EU-US planning a free trade agreement, the two sides haven't yet formally launched negotiations

The latest monthly round-up of updates to key free trade agreements and trade preference programmes involving the EU, US and Japan covers developments in June and July 2019. Trade agreements, rules of origin, tariffs and schedules are all covered in depth in the re:source by just-style strategic planning tool.

EUROPEAN UNION

EU-Australia Free Trade Agreement

The fourth round of talks on the EU-Australia Free Trade Agreement took place from 1-5 July 2019 in Brussels, covering almost all thematic groups. Negotiators have started putting together parts of the text agreeable to both sides. Regarding rules of origin, the two parties discussed three parts of the chapter: general provisions, origin procedures and product-specific rules. On product-specific rules, both sides compared their respective approaches for agricultural products. The fifth negotiation round is scheduled for October 2019.

EU-Chile Association Agreement

The fifth round of negotiations to modernise the EU-Chile Association Agreement took place in Brussels from 15-19 July 2019. The EU Trade Commission says very good progress was achieved in a significant number of chapters, including technical barriers to trade, goods, customs and trade facilitation, services, competition and trade, and sustainable development. Regarding rules of origin, the two parties identified differences in cumulation rules and reached agreements on some product-specific rules. The trade talks may resume this autumn.

EU-Indonesia Free Trade Agreement

The eighth round of discussions on the proposed EU-Indonesia Free Trade Agreement took place in Jakarta from 17-21 June 2019. This round showed continued progress, with further text consolidation in most chapters under negotiation. Notable progress was made on government procurement and also saw good engagement on the chapter on state-owned enterprises. Regarding the tariff elimination schedule, the two sides exchanged offers in respect of the 5% of lines and trade value that may not be fully liberalised within seven years after the entry into force of the agreement. Indonesia also shared its first reactions on the EU proposal for product-specific rules, although the details have not been released. Both sides agreed to hold the next round in early December in Brussels.

EU-New Zealand Free Trade Agreement

The EU and New Zealand finished their fifth round of negotiations on the proposed free trade agreement from 8-12 July 2019 in Brussels. This round covered practically all areas of the future pact and moved some of them close to reaching a provisional conclusion. Regarding rules of origin, both sides agreed on several elements, such as the use of all EU official languages for the statement of origin. Both sides also started the detailed technical discussions on the product-specific rules of origin. The two parties may resume the trade talks this autumn.

EU-US Free Trade Agreement

In an update on progress of the US-EU trade talks since July 2018, the EU Trade Commission confirmed that the two sides haven't formally launched negotiations on the proposed EU-US Free Trade Agreement. Although the EU Council has authorised the EU Trade Commission to open talks with the US on eliminating tariffs on industrial goods, it has not yet been possible to begin negotiations in this area due to the diverging objectives of the two sides. The EU and US are also divided on whether to include agriculture in the negotiations. The prospect of reaching the deal in the near future looks slim.

EU-Mercosur Free Trade Agreement

On 28 June 2019, the European Union and South American bloc Mercosur (including Argentina, Brazil, Paraguay and Uruguay) reached a political agreement for a comprehensive free trade agreement between the two regions. The trade agreement removes the majority of tariffs on merchandise and services traded between the two, including textiles and apparel. The EU says the agreement also upholds the highest standards of food safety and consumer protection, and contains specific commitments on labour rights and environmental protection, including the implementation of the Paris climate agreement and related enforcement rules.

According to the draft text released in July 2019, this agreement has "fabric-forward" rules of origin for apparel items, which means that fibres and yarns may be produced anywhere, but each component starting with the fabric used to make the garments must be formed within the free trade area.

The EU and Mercosur began negotiating the free trade agreement back in 2000. As of 2018, the EU is one of the largest trade partners of Mercosur countries. Likewise, with 260 million consumers, Mercosur is also the fifth largest external market for EU members.

JAPAN

Regional Comprehensive and Economic Partnership (RCEP)

The 27th round of the RCEP negotiations took place in China from 22-31 July 2019, focusing on trade in goods, trade in services, rules of origin, intellectual property and e-commerce. While the 16 RCEP members aim to reach a broad agreement as soon as possible, whether it will happen in 2019 remains unclear.