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First Generation Free Trade Agreement

9 abril, 2021

In 2018, the volume of EU exports to all groups, with the exception of the CCFTA area, decreased (Figure 3). The decline in the first generation group accounts for most of the loss in export volume. In particular, the decline in EU exports to Turkey and Switzerland accounts for almost half of the total loss of the volume of EU exports to its preferred trading partners. The decline in EU exports to Turkey alone accounts for more than 66% of the overall decline in the value of ships and 39% in shipping volume. This is due to a significant drop in imports of mineral fuels and steel from the EU in 2018. Among the four groups, both in value and volume, trade with first-generation partners is the highest, with more than 70% of total trade between the EU and its preferential partners. Next came the second generation, the EPA and the DCFTA (Figure 2). The three main trading partners, Switzerland, Turkey and Norway, are all part of the first generation. Both the creation of trade and the diversion of trade have a decisive impact on the establishment of a free trade agreement. The creation of trade will result in a shift in consumption from a cost producer to a low-cost producer, which will lead to an expansion of trade.

On the other hand, trade diversion will mean that trade will move from a low-cost producer outside the zone to a more expensive producer in the free trade agreement. [16] Such offshoring will not benefit consumers under the free trade agreement, which will be deprived of the opportunity to purchase cheaper imported goods. However, economists note that trade diversion does not always harm the overall national well-being: it can even improve national well-being as a whole if the volume of misappropriated trade is low. [17] The food sector is certainly a sector that has generally benefited from free trade agreements. While EU cheeses and wines are facing difficult times in the US market due to recent US tariffs, free trade agreements have helped to expand the market to other countries and regions, such as Asia. Outside the Japanese market, the FREE trade agreement BETWEEN the EU and Singapore, which will come into force soon (on 21 November), will be the abolition of all tariffs on European food products on the Singapore market. In addition, the lack of modernisation of free trade agreements between the EU and some first-generation trading partners can also have a negative impact on the development of trade between the two sides. Some conditions may no longer be appropriate for current trade relations and some current issues are not addressed in the original agreements. The EU is negotiating with Mexico and Chile on the modernisation of free trade agreements. In 2016, the EU proposed to modernise its agreement with Turkey, but preparations are not yet complete.

For example, looking at one of the most recent trade agreements, the report shows that in the first full calendar year (2018) of the EU-Canada trade agreement, the first-generation free trade agreement between Colombia and Israel is finally in force. Although the negotiation process began in March 2012, the free trade agreement was signed in September 2014, after five rounds of negotiations that ended in June 2013. However, it took eight years for the agreement to enter into force on August 11, 2020 for both parties. Looking at the different sectors in all the agreements, the 2018 report shows that this free trade agreement is recognised as a first-generation agreement, as it contains various provisions that are not limited to international trade in goods. In particular, the Treaty aims to create better conditions for the exchange of goods, services and investment and covers, among other issues such as market access, rules of origin, customs procedures, technical barriers to trade, health and plant health measures, trade aid, services, investment, public procurement,