We have now wrapped up Q1 2024 and, per our promise at the end of 2023, we will publish a quarterly review of negotiations and free trade agreement activity across the EU and UK.

European Union

EU-Philippines Free Trade Agreement

In March, the EU and the Philippines announced that they will resume free trade agreement negotiations now that the Philippines is under new administration. The negotiations started in 2015 but were put on hold in 2017 due to concerns about the human rights record of then-president Rodrigo Duterte. At its core, the focus of the EU-Philippines FTA is sustainability and a digital and green transition, but it will of course also remove barriers to trade.

Currently, the Philippines still benefits from GSP+, a unilateral scheme which rewards developing countries that demonstrate sustainability and good governance with duty-free access to the European market. Putting a free trade agreement in place between the EU and the Philippines is a logical next step towards collaboration.

Trade with the Philippines is worth around 18 billion euros for the EU, 8 billion in exports and 10 billion in imports, which, while not a lot, fits in the picture of the EU trade policy for the Indo-Pacific region. Major export products for the EU are machinery, transport equipment, chemicals, and food, whereas for the Philippines exports are telecommunications equipment, machinery, food products, and optical/photographic instruments. Having trade barriers removed could provide easier access to goods and services for the EU and ensure that we continue to have access to goods that are being imported into the EU at the same prices as right now.

For the Philippines, the stakes are higher. They are one of the fastest-growing countries in the ASEAN region and are projected to reach the status of upper-middle income countries by 2025 or 2026. This means that they would lose GSP+ status and would no longer be eligible for duty-free access to the EU. The EU countries are the 5^th largest recipients of Philippines exports. To be able to still enjoy duty-free access with the EU, a free trade agreement would be required.

The first round of new negotiations is expected to take place later this year.

EU-Canada Comprehensive Economic Trade Agreement (CETA)

Recently, a statement was published showing the effect of the EU-Canada CETA agreement after seven years of provisional application. The statement shows, among other things, that the two-way trade in goods has increased by more than 50% and continues to grow.

In value, the largest growth can be seen in machinery and pharmaceutical products, showing that the EU manufacturing industry is still relevant. The statement also includes an announcement of a report that is currently being drafted to provide an ex-post evaluation of the CETA agreement. We eagerly await the outcome of this report to fully see what benefits the CETA agreement has brought.

United Kingdom

Since the United Kingdom left the European Union, the UK government has been looking to tighten their trade relations with other third countries around the globe. Over the course of the last quarter, several negotiations were launched to establish new FTAs or update those that were copied from the EU. In the following paragraphs, we cover the most important developments in UK free trade negotiations.

Ratification of the CPTPP accession

Last year, the UK was allowed to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which grants lower duties on certain products exported to the signatory states of the CPTPP, and which established a first-time trade agreement between the UK, Malaysia, and Brunei. The agreement was approved by the UK Parliament in March, albeit with some parliamentary criticism. This paves the way for other signatory states to ratify the accession of the UK to the trade bloc. It is expected that the UK will fully join the CPTPP by the end of 2024.

UK – Canada free trade agreement

The United Kingdom and Canada currently have a free trade agreement that is based on the CETA agreement. Nevertheless, the UK commenced negotiations for a new agreement in 2022 based on the needs of the UK market. In January 2024, the negotiations were suspended due to disagreements over access to agricultural markets and tariff-free access to the Canadian market.

As of the first of April, the time-limit clauses for ‘EU cumulation’ and origin quotas applicable to goods in the UK that had EU origin, as agreed in the UK-Canada Trade Continuity Agreement, expired. Up until now, UK traders could rely on EU imports as if they were originating from the UK when exporting their goods to Canada. This is no longer the case. This means that goods that did not face tariffs could face tariffs now. For example, the duty rate on cars being imported to Canada from the UK could go up to 6,1% if they do not meet the new Rules of Origin requirements as set out in the TCA.

UK - Gulf Cooperation Council (GCC) free trade agreement

During the last quarter, the UK had their sixth round of negotiations with the GCC to establish a new free trade agreement. The technicalities of the negotiations are not public, but it is expected that, as with many free trade agreements, the discussed topics will be about accessible pricing, market integration, and welfare/safety, and that certain high trade tariffs will be lowered when the agreement is closed. It is clear from the pace of the negotiations (one approximately every quarter) that the GCC and the UK are keen on signing an agreement as quickly as possible. Follow us on LinkedIn for upcoming news.

UK – India free trade agreement

At the beginning of March 2024, the UK and India set out to negotiate a comprehensive free trade agreement. As one of the largest economies in the world, the Indian market is seen as lucrative for both imports and exports. Certain food products as well as (semi) finished industrial products and automotive products, which are now burdened with high tariffs, will likely be a part of the negotiations.

European Free Trade Association

European Free Trade Association (EFTA) – India

A major development that took place in Q1 of 2024 is the introduction of the EFTA – India free trade agreement. It is seen as one of the most important recent FTAs concluded and is expected to be worth around 100 billion euros in trade. The EFTA-India agreement will lift import tariffs on industrial goods currently being applied by India, creating easier access for products coming from the EFTA countries. This will result in a major boost in exports to India as well as a steady flow of exports from India to the EFTA countries. The ratification of the agreement is expected to happen in 2025.