The recent Free Trade Agreements (‘FTAs’) negotiated between the European Union (EU) with Korea, Canada and the United States of America illustrate a major evolution in the role that these FTAs could play in a globalised economy. Countries want to abolish tariff barriers, but at the same time protect their economy. Non-tariff barriers (NTB) and the Investor-State Dispute Settlement Tribunal are key legal elements included in those FTAs
The FTA between EU and Korea
At the fifth year since its entry into force, the EU-Korea FTA appears to be a fine success for both sides. Even before its entry into force, the FTA has allowed to increase trade between Korea and the EU. One of the main advantages that the EU has FTA with Korea is definitely the rebalancing of trade flows between the two partners, previously negative for the European partner. For Korea, it seems that the negative impact of the crisis on the Korean exports to Europe could have been more substantial without this agreement.
FTA became a model for the EU’s following FTA negotiations with other partners all over the world. Nevertheless, there is still more to be done, especially in the matter of deleting NTB, which consists mainly in harmonising the technical standards whose differences constitutes a serious barrier to trade.
The Comprehensive Economic Trade Agreement (CETA) between EU and Canada
The main target of the CETA was to enable European companies to enter the first market within the world, that is, the North American market. The majority of tariffs will be eliminated upon the entry into force of the Agreement. Most industrial products will be duty-free immediately which enable EU exporters to save on average 470 million euros per year and Canadian exporters about 158 million euros.
Thus, thanks to the recognition of conformity assessment between Canada and the EU, both parties will be allowed to certify their own exports according to the other’s technical regulations, which undoubtedly would encourage exports by preventing double testing and the extra costs which are constitutive of considerable obstacles to trade for small and medium-sized companies. Although being an efficient way of optimisation, negotiators reassure public opinion affirming the convergence of standards from both sides.
To find a balance between protecting foreign investors’ rights and the State’s sovereignty in regulating general welfare, the EU created an institutional structure for the tribunal in charge of ISDS.
Starting with Canada, on the basis of the successful EU-Korea FTA, this was the first necessary step for the EU before negotiating and finalising the Transatlantic Trade and Investment Partnership (TTIP) with the USA.