The free trade agreements of the European Union. Focus on CETA: risks and opportunities
- Friday 21 April 2023
- Accordi di associazione (AA), Accordi di libero scambio (ALS), Accordi di partenariato e cooperazione (APC), Accordi di partenariato economico (APE), Commercio, Comprehensive Economic and Trade Agreement (CETA), Diritto internazionale, Economia Internazionale, Globalizzazione, Made in Italy
- Canada, Unione Europea
In a complex international economic context increasingly characterized by an involutionary trend of globalization, to the advantage of a regionalized redefinition of trade exchanges, the indispensable tool for implementing an efficient and effective commercial strategy is represented by the so-called free trade agreements, i.e. agreements stipulated in accordance with the principles of international law which have the purpose of creating geographical areas of free trade between the contracting and cooperating states. The aforementioned trade agreements can be of three types, depending on the number and quality of the contracting parties: bilateral, plurilateral and multilateral; the international actors who adopt these reciprocal agreements therefore form an area of free trade, within which cross-border trade in goods and services can circulate free from tariff or non-tariff barriers, even if each country remains free to apply duties, tariffs and quotas on imports from countries outside the area. Furthermore, it is necessary to underline that the notion of free trade does not include the free cross-border movement of capital and workers (i.e. of the so-called factors of production), in which case there would instead be a single market.
Within the Union, the European Union manages trade relations with third countries by making use of the free trade agreements, designed to create better trade opportunities and overcome trade barriers. Furthermore, EU trade policy is used as a political tool for the promotion of European principles and values. The trade agreements envisaged at international level and adopted by the Community trade strategy vary according to their content and can be classified as follows:
- Economic Partnership Agreements (EPAs), support the development of African, Caribbean and Pacific trading partners;
- Free Trade Agreements (FTA), allow for the reciprocal opening of markets between developed countries and emerging economies, by granting preferential access to markets;
- Association Agreements (AA); they reinforce broader political agreements.
Furthermore, the European Union also concludes non-preferential trade agreements as part of broader agreements, such as the so-called Partnership and Cooperation Agreements (PCAs).
Negotiations relating to trade agreements are conducted in accordance with the rules set forth in art. 218 of the Treaty on the Functioning of the European Union (TFEU), which governs the procedure for negotiating agreements between the EU and third countries. In the procedural process of forming new commercial agreements and in defining the respective content, a fundamental role is played by the Council of the European Union. In the initial phase, the Council authorizes the European Commission to negotiate a new trade agreement on behalf of the European Union and this occurs through the attribution of a "negotiating mandate" to the Commission: with this authorization, the Council issues the directives negotiating framework, which include the objectives and scope of the negotiations, as well as any time limits. It is therefore the Commission that negotiates directly with the partner country, on behalf of the European Union and in close cooperation with the Council and the European Parliament. Once the text of the agreement has been agreed with the partners, the Commission sends the Council the formal proposals for adoption and, at the end of the discussions, the Council adopts a decision on the signing of the agreement on behalf of the European Union and sends the agreement signed in the European Parliament for approval. In the final phase, after having obtained the approval of the European Parliament, the Council adopts the decision relating to the conclusion of the agreement which, subsequently, although already adopted and in force within the Community, will have to be ratified by each Member State.
As far as the individual free trade agreements stipulated by the European Union are concerned, the one stipulated with Canada, i.e. the Comprehensive Economic and Trade Agreement (CETA), is of absolute importance. Provisionally entered into force on 21 September 2017, after a demanding negotiation process and, at times, hindered by several parties involved, CETA represents an extremely innovative free trade agreement, which provides not only for the elimination of almost all of the tariff barriers on goods (98% of trade between the two territories is not subject to duties of any type), but also preferential access to the services market and collaboration between the signatories for the recognition of protected origin’s indication, as well as measures aimed at facilitating investments, the reciprocal participation of companies in public tenders and the mobility of workers. Starting from 2017, also thanks to the positive impact of the aforementioned agreement on the regulation of commercial transactions, Italian exports of goods and, to a lesser extent, of services to Canada, above all thanks to the extensive use of the preferential customs regime, they recorded a sustained growth rate, hovering around +5.5%, more than one percentage point higher than the performance of the "Made in Italy" brand towards the rest of the world. In 2021, the value of Italian exports to Canada reached 4.8 billion euros and Canada became our tenth non-EU trading partner in terms of exports, climbing four positions. The Italian market share in the North American country rose, with reference to the previous year, from a percentage of 1.03 to a higher percentage of 1.16. Even the most recent data confirm that the results are in line with what has been seen previously: +28.8% for our exports in the first months of 2022 compared to the same period of 2021; it should be remembered that among the best-performing items of Italian exports, as underlined by Confagricoltura, there is the agri-food sector with increases of over 80% in five years in processed fruit and vegetables and 24% in the drinks, spirits and vinegar sector, and by 20% in that of cheeses, despite the criticisms raised against the agreement by a part of this economic sector. Lastly, it is necessary to highlight that CETA has benefited not only from exports of goods, but also from Italian FDI in Canada which, starting from 2018, the first year of full application of CETA, has recorded a significant growth dynamic (on average yearly, 500 million euros between 2018 and 2021 against 153 million in the period 2014-2017). Finally, the positive effect was also found with reference to the facilities granted to European companies to access tenders and invest in the Canadian market, which continue to offer important opportunities also in the light of the infrastructure plans promoted by the country, for example that of Québec 2022 /2032 from 142.5 billion dollars.
Despite the benefits obtained thanks to the provisional application of CETA, Italy is at the same time one of the few European countries that has not ratified the Comprehensive Economic and Trade Agreement in parliament, also due to the pressures suffered by the institutional decision-maker on the part of pressure groups (such as, for example, the one represented by trade associations in the agricultural sector) which pointed to the aforementioned agreement as a harbinger of potential risks related to the protection of "Made in Italy" such as, for example, the phenomenon of the so-called Italian sounding up to cases of real counterfeiting. This aversion towards CETA, however, has recently been the subject of an industrious repentance by our institutions, primarily by the executive, a repentance witnessed by the words of the current Minister of Agriculture, Food Sovereignty and Forests , Hon. Francesco Lollobrigida, who when asked on the point declared that "Italy is very pragmatic and there are some agreements, such as CETA, which have started and which are developing some elements to the advantage of our businesses and productions, putting us in a position to compete better with the productions of other continents. For this reason, I think that agreements like this can see a discussion in Parliament to put us in a position to arrive at the signing". Taking the Minister's words as sincere, one can only remain confident for a definitive and imminent ratification by the Italian legislator of the free trade agreement entered into between the European Union and Canada which, like other agreements of the same nature, has allowed our country and our products to establish themselves as a guarantee of excellence and quality on the international scene and which has led us to cover with stability the tenth position in the ranking of exporting countries of goods and services.