EU expands economic cooperation

The European Union (EU) has just signed a Free Trade Agreement (FTA) with New Zealand and restarted FTA negotiations with Australia and India following a long delay. In the context of facing a series of challenges, the promotion of FTAs is expected to create a strong impetus for the EU to ensure long-term economic growth and strengthen its position in the international arena.

 EC President, Ursula von der Leyen (right) and New Zealand Prime Minister, Jacinda Ardern (left), at a joint press conference after the signing ceremony in Brussels, Belgium on June 30, 2022. (Photo: AFP/VNA)
EC President, Ursula von der Leyen (right) and New Zealand Prime Minister, Jacinda Ardern (left), at a joint press conference after the signing ceremony in Brussels, Belgium on June 30, 2022. (Photo: AFP/VNA)

After four years of tough negotiations, the FTA between the EU and New Zealand has just reached the finish line, opening a new chapter in the cooperative relationship between the two sides. European Commission (EC) President Ursula von der Leyen said “this is a historic moment” while New Zealand Prime Minister Jacinda Arden affirmed that this FTA is a high-quality and inclusive agreement.

The agreement is expected to completely eliminate tariffs on EU goods exported to New Zealand and open the New Zealand service market in key sectors such as finance, telecommunications, shipping, and distribution. The EC President emphasised that the agreement promises to bring sweet fruits to both sides as it will increase bilateral trade turnover by 30% and help raise the EU’s annual exports to New Zealand to 4.5 billion EUR.

Besides the FTA negotiations with New Zealand, the EU is continuing to open new doors for cooperation with India and Australia. After nearly 10 years of hiatus due to disagreements over tax cuts and patent protection, the EU and India have just resumed negotiations and are aiming to reach a trade agreement by the end of 2023.

India is an important trading partner of the EU. According to the Government of India data, the two-way goods exchange reached a record of 116.36 billion USD in the 2021-2022 fiscal year (ending on March 31), with a growth rate of 43.5%. The Nikkei Asia website cited research by the European Parliamentary Research Service (EPRS) as saying that the FTA could help the EU’s exports to India increase by 52-56%. Meanwhile, Australian Prime Minister Anthony Albanese also announced that Australia and the EU are ready to resume FTA negotiations by October with the expectation of negotiation completion by the beginning of 2023.

Analysts have said that the EU’s active and proactive steps in promoting relations with partners are taking place in the context of the EU economy facing many challenges. A “price storm” has been coming for many months, causing the regional economy to wobble. According to new data released by the statistical office of the EU (Eurostat), inflation in the Eurozone rose to a new record in June. Specifically, consumer prices in 19 Eurozone member countries in June increased by 8.6% over the same period in 2021, surpassing the previous record of 8.1% reported in May. In addition to inflation, the EU also is facing a series of other difficulties such as interrupted supply chains, an ongoing energy and food crisis, and lower than expected economic growth rates.

In that context, FTAs ​​are important keys to help open up opportunities for EU businesses, farmers and consumers. EC Executive Vice President and European Commissioner for Trade Valdis Dombrovskis emphasised that new cooperation opportunities are very important for the EU in the context of the bloc’s efforts to recover its economy after the shock of the COVID-19 pandemic.

Tightening connections with partners is also a common desire of many EU member states. Ministers of economy, trade and foreign affairs of the 15 EU member countries recently wrote a letter calling on the bloc to strengthen the signing of FTAs ​​to ensure long-term economic growth. In a letter to EC Executive Vice President Valdis Dombrovskis, the ministers affirmed that the tensions in Ukraine and the COVID-19 pandemic have shown the need to build a sustainable and highly resilient supply chain with extensive strategic and commercial partnerships. Strengthening economic cooperation with partners is considered a necessary step to help promote sustainable growth and affirm the role and position of the EU.