EUROPEAN FOREIGN POLICY SCORECARD 2016

Trade and economic relations

63 - Trade and investment with the rest of the region

Grade: B
Unity 3/5
Resources 4/5
Strategy 3/5
Impact 3/5
Total 13/20

Trade talks with Vietnam and Japan moved ahead, while progress with India remained stalled

The EU pursued bilateral FTA talks with several Asian partners in 2015, specifically Vietnam, India, Japan, Thailand, and Malaysia. The European Council also agreed to start negotiations for an FTA with the Philippines.

Japan pressed for a conclusion to FTA talks by the end of the year, and six new rounds of negotiations took place. However, the reservations expressed by EU Trade Commissioner Cecilia Malmström about the deadline were borne out. With the signing of the Trans-Pacific Partnership (TPP) in October 2015, the window of opportunity has closed and Japanese negotiators will have to wait for the ratification debate in the US Congress before they make further progress. Of all FTAs currently under negotiation, the Japan–EU agreement gathered the most support from member states, and was considered the most promising. However, it is a tough undertaking, as Japan’s need for partnership is balanced by domestic sectoral and lobby interests.

While the EU may not have much leverage over Japan (or China), it has proved that it does with Vietnam. In December, the two reached an agreement on an FTA, including financial services and government procurement. Evidently, Vietnam’s strategic isolation, relative to China, leads it to seek greater interdependence with partners outside the region.

In comparison, negotiations between the EU and India, which have been ongoing since 2007, lacked substantial progress in 2015. Germany was the only member state to publicly support the FTA, while others saw India’s protectionist attitude as an obstacle, with little to be gained from the deal. However, India’s fast growth and population dynamics make it a key partner.

Support for FTAs with Asian countries was variable among member states. EU members support the Union’s trade initiatives overall, but ASEAN countries remain too limited as partners for member states to support EU negotiations with them as actively as those with Japan, for example. Nevertheless, the pro-trade attitudes of EU members mean that the EU has benefited from much leeway in its negotiations.