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EU-Asia trade talks under sharp focus in Brussels

New Europe | 20 October 2008

EU-Asia trade talks under sharp focus in Brussels

Author: Tejinder Singh

There is a general rush to get a “bilateral deal” done at the international as well as regional level in Asia, but many of the free trade agreements that have been negotiated or are being negotiated by Asian countries and the EU are “trade light” deals because they reflect foreign policy and political imperatives rather than economic goals, economic analysts said in Brussels last week. Addressing a host of academics, diplomats and journalists at a dialogue titled Asian Regional Deals: Spur or Obstacle to Free Trade? organised by the Brussels-based think-tank the European Policy Centre (EPC) with the Sasakawa Peace Foundation (SPF,) Razeen Sally, Co- Director of the European Centre for International Political Economy (ECIPE,) said that while the EU has several trade agreements (FTAs) with Asia, most of these are “trade light” as they are goaded by foreign policy and political issues rather than by pure trade considerations.

Comparing the ongoing EU model, with its policy of exporting the tight regulation framework abroad with free market agenda sometimes being put on the back burner, vis-a-vis the US model of focusing on “trade deals,“ Sally lamented the EU method of linking nontrade issues with trade agenda and thus diluting the trade deals. On the other hand, Mauro Petriccione, Director, Services and Investment, Bilateral Trade Relations, Directorate-General for Trade of the European Commission asked, “What’s wrong with merging trade negotiations with other political objectives, provided it’s not hidden?”

Pointing out that the EU had been negotiating FTAs for 30 years, Petriccione added that these had never simply been about trade, as they touched on relations with neighbours or accession prospectives.
Petriccione described the three main strands of the EU’s Global Europe trade framework, launched last year. Global Europe: the EU is currently negotiating an FTA with South Korea and a deal is expected shortly. With ASEAN, the EU is looking for a region-to-region free trade agreement. In India, negotiations began “on the tail of reforms” being undertaken by the Indian government and conclusion of the agreement will be difficult unless the reform process regains momentum. Japan: the EU and Japan could in theory clinch a comprehensive FTA in a very short time, but trade relations are “out of step with what one would expect” given the two sides’ economic strength.

For example, FDI in Japan still stands at just three percent. However there is a resurgence of Japanese and European interest in closer economic relations. China: an FTA with China is “not politically feasible,“ said Petriccione. Foreign investors in China are mainly concerned about the rule of law and a good investment climate. The EU’s growing trade deficit with China is not so much an economic issue but more a political problem. The EU and China have a “dialogue-mechanism”, he said, which has to be at a sufficiently high level to make an impact in Beijing. In China, building personal relations is very important, he added. It may be pointed that the recent change of guard at the European Commission in the department of trade can have an effect on the dynamism of talks. Recently, Peter Mandelson, the EU Trade Commissioner was replaced by Baroness Cathy Ashton of the United Kingdom.

Replying to a question if the Doha Round is already dead thus leading to a flood of FTAs, the speakers noted that the Doha negotiations are not yet over but the present impasse in the Doha Round was encouraging many nations to clinch bilateral free trade agreements. Sally said that this was leading to a “noodle bowl” of nearly 40 FTAs in just 10 years, and a total 103 trade deals in East and South Asia altogether.

 source: New Europe