EU Free Trade Agreements: Impact on Trade and Growth
In recent years, the EU has negotiated and is in the process of finaalising a number of new free trade agreements (FTAs) with important growth markets, including India, the Mercosur countries (Argentina, Brazil, Paraguay and Uruguay), several countries in Southeast Asia (the Philippines, Indonesia, Malaysia and Thailand), Australia and the United Arab Emirates. Together with already existing agreements, the EU soon has trade agreements with around 80 countries worldwide. This report analyses the trade and growth impacts of the new agreements for the EU, assuming full implementation by 2035.
All trade agreements included in the analysis increase trade between the parties. The agreement with India generates the largest growth gains, followed by the agreement with Mercosur. This is mainly due to the size of these markets and their high initial trade barriers. In total, the EU’s new trade agreements:
increase EU exports to these countries by approximately 26–33 per cent, or EUR 136–173 billion
increase EU imports from these countries by approximately 21–35 per cent, or EUR 108–130 billion
This increase in trade leads to a rise in EU GDP of up to EUR 108 billion per year.
The trade agreements also benefit the EU’s partner countries, often to a greater extent than the EU itself. The effects are particularly large in India and the Mercosur countries, where reductions in their domestic trade barriers have a substantial impact on trade and growth.
