With elections taking place in the EU, UK, India, and Indonesia in Q2, there was not much progress on the FTA front. The most notable event was the entry into force of the EU-New Zealand FTA, which will have a significant impact on EU traders. In this blog, we cover those implications along with updates on Q2 negotiation rounds in the Indo-Pacific region.

European Union 

EU-New Zealand Free Trade Agreement 

The trade agreement between the EU and New Zealand entered into force on May 1, 2024, and is expected to cut €140 million a year in duties for EU companies by removing tariffs on 91% of New Zealand’s goods exports to the EU, increasing to 97% in seven years. On the flip side, all tariffs on EU exports to NZ have been fully eliminated. The most prominent impact on EU traders will likely be seen in the key export markets of pork, wine, pet food, chocolate, and dairy products.

The agreement also protects over 2.000 geographical indications (GIs)—or geographical branding—for EU food, wines, and spirits, for example, Champagne, Asiago cheese, and Jabugo ham. Some GI producers will be grandfathered in, allowing them to continue to use terms like Parmesan but prohibiting its use for new producers. 23 GIs for New Zealand wine and spirits will be protected in the EU, including Marlborough wine.

The agreement, signed by both parties in July of 2023 and fully ratified in March of this year, has the potential to grow EU exports to New Zealand by up to €4.5 billion annually, with a dedicated chapter to help small business exports. In addition, the agreement stipulates standards for animal welfare, gender equality policies, and cooperation to reduce food waste.[1]

EU-India Free Trade Agreement 

Round eight of the EU-India FTA negotiations occurred June 24-28. While some progress was made in the areas of intellectual property rights, rules of origin, and dispute settlement, divergences remain substantial. A ninth round is scheduled for September.[2] It is expected that the EU may make several concessions in order to gain a competitive advantage over China.

From the side of India, they see the need to expand their trade with Europe, as evidenced in last quarter’s signing of the FTA with the European Free Trade Association (EFTA). India’s status as a Generalized System of Preferences (GSP) beneficiary country is under review, however, as they are now the fifth largest economy in the world, with a larger growth rate than Germany and Japan. Should their GSP status be revoked, this could further incent India to reach an agreement with the EU.

 EU-Indonesia Comprehensive Economic Partnership Agreement

The 18^th round of negotiations between the EU and Indonesia took place May 13-17. Provisions on electronic trust and authentication services in the area of digital trade were agreed upon, as well as provisions on trade and gender equality, sustainable development, and cooperation. Intellectual property rights sub-sections including trademarks, plant varieties, genetic resources, traditional knowledge, and traditional cultural expressions were closed and the geographical indications (GIs) were expanded.

From the EU side, a big stumbling block is related to unfair competition in the agricultural sector if the market is opened up, while blockers for Indonesia include the introduction of the European Union Deforestation Regulation (EUDR) and safe extraction of nickel.[3]

Indonesia is the largest country in the ASEAN area, representing on third of the region’s GDP. However, it is only the fifth largest country in the ASEAN when it comes to trade with the EU, mainly due to the absence of a Free Trade Agreement.[4] As is the case with India, Indonesia already has an agreement with EFTA and their GSP status is under review.

EU-Thailand Digital Trade Agreement

The third round of negotiations between the EU and Thailand took place June 17-21. Thailand is one of the bigger ASEAN economies and the fourth largest trading partner of the EU. Agreement was reached in the areas of rules of origin, customs and trade facilitation, trade remedies, technical barriers to trade, sanitary and phytosanitary (SPS) measures, intellectual property, and transparency and good regulatory practices (GRP).[5]

EU-Singapore Digital Trade Agreement

Round five of the EU-Singapore digital trade agreement negotiations took place May 6-8 in Singapore. Discussions were finalized on electronic authentication and electronic signatures, unsolicited electronic commercial messages, and institutional and final provisions.[6]

With the EU-Indo Pacific strategy, the EU is strongly looking to increase their influence in the Indo-Pacific region to ensure essential resources are not lost to other major states or regions on the globe. A way of achieving this is by committing to negotiations of FTAs with countries in this Asian region. The expectation is that these deals will be signed due to internal pressure within these countries, since they are also looking for a stronger sales market and some of them are on the verge of losing their GSP status due to no longer being seen as developing states. 

[1] https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/new-zealand/eu-new-zealand-agreement_en

[2] https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/india/eu-india-agreement_en

[3] https://www.dw.com/en/indonesia-complains-eu-trade-deal-taking-too-long/a-68920257

[4] https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/indonesia_en

[5] https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/thailand/eu-thailand-agreement_en

[6] https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/singapore/eu-singapore-agreements_en