A leading European retail trade association has set out what it sees as the "substantial" benefits of a free trade agreement with China, and is calling for a broader discussion about future trade relations between the European Union (EU) and China.

A study commissioned by the Foreign Trade Association (FTA) from the Centre for European Policy Studies (CEPS) suggests an EU-China trade deal would increase by US$200bn the combined GDP of the EU and China by 2030.  This is equivalent to the GDP of the Czech Republic.

According to the study, a potential EU-China trade deal would impact positively the economic growth of both partners: 1.87% for China and 0.76% for the EU.     

"The possible benefits in terms of growth and employment from a free trade agreement between Europe and China are substantial," says Christian Ewert, FTA's director general.

"The presented study will serve as an excellent tool to initiate a broader discussion about the future EU - China trade relations. A deep and comprehensive free trade agreement is good for the EU and good for China."

The report, 'Tomorrow's Silk Road: Assessing an EU-China Free Trade Agreement,' also calculates that EU exports to China, within the framework of a bilateral deal, would maintain more than 2.5m jobs in Europe, including 1.1m in Germany alone and another 1.1m in France, Italy, the Netherlands and the United Kingdom combined.

But it also notes that a free trade deal could only succeed when China implements reforms, including on state-owned enterprises (SOEs) and opening of public procurement.

China's closed public procurement market is a major frustration for EU business interested in the Chinese market. By contrast, Chinese companies routinely obtain public contracts in the EU.

A comprehensive and deep trade deal is a perfect 'fit' for today's China, combining reforms and 'openness', whilst the EU can finally pursue the 'logical sequel' in its trade policy vis-á-vis dynamic East Asia, the study says.    

China is the EU's second largest trading partner behind the United States and the EU is China's biggest trading partner. However, while the EU says it is committed to open trading relations with China, it wants to ensure that China trades fairly, respects intellectual property rights and meets its WTO obligations.

In November 2013 both sides announced the launch of negotiations of a comprehensive EU-China Investment Agreement, which provides for progressive liberalisation of investment and the elimination of restrictions for investors to each other's market.

It also provides a simpler and more secure legal framework to investors of both sides by securing predictable long-term access to EU and Chinese markets respectively, and providing for strong protection to investors and their investments.