VLACHKOV_Chavdar

Comparative analysis of the EU’s geo-
economic Free Trade Agreements
Chavdar Nikolaev Vlachkov

Table of Contents
1 Introduction ..........................................................................................................................................1
2 Trade, Development and Co-operation Agreement with South Africa ................................................3
Trade of goods ..............................................................................................................................4
Trade in services ...........................................................................................................................7
Trade liberalization .......................................................................................................................7
Trade evolution.............................................................................................................................9
Non-tariff barriers to trade (NTB)...............................................................................................12
2.5.1 TBT and SPS provisions .......................................................................................................12
2.5.2 Rules of origin .....................................................................................................................12
2.5.3 Public procurement.............................................................................................................13
2.5.4 State Aid..............................................................................................................................13
Additional conditions and principles ..........................................................................................13
Conclusions .................................................................................................................................14
3 Free Trade Agreement with Mexico ...................................................................................................14
Trade of goods ............................................................................................................................16
Trade in services and FDI ............................................................................................................17
Trade liberalization .....................................................................................................................19
Trade evolution...........................................................................................................................21
Non-tariff barriers to trade.........................................................................................................22
3.5.2 Rules of Origin.....................................................................................................................22
3.5.4 State aid ..............................................................................................................................23
Conclusions .................................................................................................................................24
4 Free Trade Agreement with Chile.......................................................................................................25
Trade in goods.............................................................................................................................25
Trade in services .........................................................................................................................27

Trade evolution...........................................................................................................................30
4.5.2 Rules of origin .....................................................................................................................31
4.5.4 State aid ..............................................................................................................................32
Conclusions .................................................................................................................................33
5 Free Trade Agreement with South Korea ...........................................................................................34
Trade of goods ............................................................................................................................35
5.4.2 Rules of origin .....................................................................................................................40
5.4.4 State aid ..............................................................................................................................41
Conclusions .................................................................................................................................42
6 Association Agreement with Central America (Costa Rica, El Salvador, Guatemala, Honduras,
Nicaragua and Panama)..............................................................................................................................42
Trade of goods ............................................................................................................................44
6.4.2 Rules of origin .....................................................................................................................48
6.4.4 State aid ..............................................................................................................................49
Conclusions .................................................................................................................................50
7 Free Trade agreement with Columbia and Peru.................................................................................51

Trade in goods.............................................................................................................................52
7.4.2 Rules of Origin.....................................................................................................................57
7.4.4 State aid ..............................................................................................................................58
Conclusions .................................................................................................................................59
8 Comparative analysis ..........................................................................................................................60
EU’s trade policy .........................................................................................................................60
Motivation FTAs grouping...........................................................................................................61
Trade of goods ............................................................................................................................63
8.6.2 Rules of Origin.....................................................................................................................71
8.6.4 State Aid..............................................................................................................................74
Settlement dispute procedure....................................................................................................74
Intellectual property rights.........................................................................................................76
Capital movement and current payments..................................................................................78
Conclusions .................................................................................................................................78
9 Bibliography ........................................................................................................................................88

List of tables
Table 1 - South Africa's liberalization of trade per product group
Table 2 - EU’s liberalization of trade per product group
Table 3 - Negotiated tariff cuts, % of MFN tariffs
Table 4 - EU's liberalization of trade per product group
Table 5 -Mexico’s liberalization of trade per product group
Table 7 - Chile's liberalization of trade per product group
Table 8 - South Korea's liberalization of trade per product group
Table 9 - EU’s liberalization of trade per product group (without fishery products)
Table 11 - Peru's and Colombia's liberalization of trade per product group
Table 12 - Maximum non-originating material content permitted (as % of the ex-works price of the
product) – Chapter 87 (HS classification)
Table 13 - Dispute settlement time periods
Table 14 – Intellectual property provisions in EU’s FTAs
Table 15 - Comparative analysis of EU's FTAs
List of figures
Figure 1 – EU trade of goods with South Africa in 2000 (SITC)
Figure 2 –EU’s trade with South Africa, breakdown by product category 2000 (Mio EUR)
Figure 3 - EU's export and import of agricultural products to South Africa (in million EUR)
Figure 4 - EU's export and import to South Africa (in million EUR)
Figure 5 - EU trade of goods with South Africa in 2013 (SITC)
Figure 6 - EU 25 trade of goods with Mexico in 2000 (SITC)
Figure 7 – EU’s trade with Mexico, breakdown by product category 2000 (Mio EUR)
Figure 8 – EU (27) trade with Mexico (in million EUR)
Figure 9 - EU trade of goods with Chile in 2002 (SITC)
Figure 10 – EU’s trade with Chile, breakdown by product category 2000 (Mio EUR)
Figure 11 - EU (27) trade with Chile (in million EUR)
Figure 12 - EU trade of goods with South Korea in 2010 (SITC)
Figure 13 –EU’s trade with South Korea, breakdown by product category 2010 (Mio EUR)
Figure 14 - EU 27 trade of goods with Central America in 2012 (SITC)
Figure 15 - EU’s trade with Central America, breakdown by product category 2012 (Mio EUR)
Figure 16 - EU 28 trade of goods with Colombia and Peru in 2012 (SITC)
Figure 17 - EU’s trade with Peru and Colombia, breakdown by product category 2012 (Mio EUR)
Figure 18 – EU’s export per type of product as percentage of total export
Figure 19 - EU export of road vehicles as percentage of total export
Figure 20 - EU’s import per type of product as percentage of total export

List of abbreviations
BOT - Building, operation of public services and transfer
CAD - Countries of Andean Community
EC – European Commission
EU – European Union
FTA – Free Trade Agreement
FTAA - Free Trade Agreement of the Americas
GATS - General Agreement on Trade in Services
GATT - General Agreement on Tariffs and Trade
GI – Geographical indications
GPA - Agreement on Government Procurement
IP – Intellectual property
NAFTA - North American Free Trade Agreement
NTB – Non-tariff barriers to trade
PCDA - Political Cooperation and Dialogue Agreement
RoO – Rules of origin
SPS - Sanitary and phytosanitary measures
TBT - Technical barriers to trade
TRIPS - Agreement on Trade-Related Aspects of Intellectual Property Rights
VA - Value added method
WTO – World Trade Organization

Abstract
This paper explores the similarities and differences among the Free Trade Agreements negotiated by the
EU with some if it’s most economically significant trading partners and some developing economies. The
scope of the analysis is extended to six of the European trading partners with FTAs which came into force
in the last 15 years: South Africa, Mexico, Chile, South Korea, the countries of the Central American region,
Peru and Colombia. The findings and observations regarding the individual countries’ obligations enforced
with the trade agreements are reviewed through the lens of the bilateral trade composition of the
involved countries. Hypothesises are established based on the export portfolio structure and are tested
later on by verifying whether the trade liberalization of goods of particular value for the exporting
countries is addressed accordingly in all relevant provisions. The main FTA aspects examined within this
paper are: tariff elimination schedule for agricultural and industrial products, liberalization in the trade of
services, non-tariff barriers (including public procurement, TBT and SPS provisions, state aid, and Rules of
Origin), intellectual property protection, settlement dispute procedures and capital movement. The
comparative analysis of the above mentioned provisions is conducted with the intention of establishing a
benchmark and providing an explanation for possible deviations from it. The deviations are further
reviewed taking into consideration the economic and political context at the time of the conducting of
the trade negotiations. Many conclusions were deduced but among other the most important are: The
“Global Europe Initiatives of 2006” effect has contributed to a more comprehensive approach in the
presentation of provisions related to “Geographical Indications”, provisions for enforcement procedures
for intellectual property infringements, extended protection for certain copy rights and broader service
trade liberalization. Rules of Origin, settlement dispute procedures, the positive and negative list
approach for trade in services liberalization, conditions for capital movement and balance of the current
payments remain with minor discrepancy throughout the examined period. The “Singapore Issues” have
been addressed coherently in most FTAs and the failure at the WTO Cancun summit in 2003 caused only
minor deviations. The South African FTA is identified as the one which provisionally doesn’t address
comprehensively all issues of the trade liberalization, especially in comparison to the other five FTAs.
Research into the treatment of motor vehicles throughout all relevant chapters including NTB suggests
that the EU has a tailored approach for every FTA focusing on the products with the highest importance
in the bilateral trade relations.

1
1 Introduction
The focus of this paper is placed on providing a detailed analysis of the main provisions present in the
most significant European FTAs and use the findings of this research as an analytical foundation for a
follow up comprehensive comparative analysis. Due to the diverse economic and cultural characteristics
of the contracting parties a simple bench mark can’t be established easily. The treaties have to be analysed
through the lens of the economical context at the time when the trade negotiations took place, the social
and economic significance and the national industry characteristics of the trading partners. It’s important
to review the objectives of the agreements and classify them depending on the goals outlined in the legal
text of the individual FTAs. The elements used for comparison of the FTAs have to be deduced from the
legal text of the treaties and supported by the findings of various research papers which have analysed
the incentives and main drives for having those treaties signed. The analysis of factors such as
environmental protection, human and labour rights and intellectual property infringement has been
included in the scope of this paper as well. The importance of the individual elements has to be weighted
for every separate case.
A further factor to be taken into consideration and accordingly reviewed is the long term impact of the
FTA on both parties, where the effect on the foreign non-EU trading party is important for this analysis
only when the FTA goal was to support the economic development of the foreign country. As stated each
and every treaty is reviewed at the time when it was signed or came into force.
The main emphasis of the analysis will be placed on the FTA’s chapters with the most direct implications
of the EU economic development:
 Trade of goods – This section will be divided into two subsections:
o Trade of industrial goods
o Trade of agricultural goods
 Trade of services;
 Custom duties elimination;
 Non-tariff barriers to trade;
o Technical barriers to trade (TBT) and Sanitary & phyto-sanitary (SPS) measures
o Rules of Origin (RoO);
o State aid
o Public procurement
 Additional conditions and principles covered in the trade agreements FTA
o Dispute settlement procedure
o Intellectual property
o Capital movement and current payments
o Economic cooperation
Every chapter will start will a brief economic review of the most recent history of the contracting party, in
view of the trade relations between the EU and the country in question. Certain economic and political
events with possible impact on the content of the treaty will be mentioned as well. In the country

2
introduction chapter the objectives and goals of the FTA as stated in the FTA’s legal text will be briefly
analysed. Certain terms or principles mentioned and covered by the FTA will be explained with the first
occurrence e.g. Rules of origin, and will only be briefly mentioned with the follow up FTAs.
The trade structure and the export portfolios will be presented in greater detail. All of the data in the
Trade of goods and trade evolution chapter if not presented otherwise, has been gathered using the
Eurostat database. Such a review will assist in creating hypothesises and deriving conclusions regarding
the FTA goals. The follow up analysis will track how those goals were embodied in the commitments
originating from the FTA. The tariff reduction schedule is of particular interest, especially if the assumption
that import tariffs are the biggest contributors to increased trade costs is accurate. Every trade relation is
examined in a similar matter where the trade portfolio is divided in agricultural and manufacturing
products.
Non-tariff barriers to trade (NTB) can be extended to a wide variety of economic activities which have
direct or indirect impact on the positioning and competiveness of a foreign product on a local market.
TradeBarreirs.org1
distinguish between 8 individual categories:
1. Governmental involvement in the national trade extending certain benefits only to local
producers. An appropriate example for this category are the governmental and export subsidies,
favouritism toward local producers in the local public procurement system;
2. The second category involves import procedures that have to be executed so that a foreign
product can access the local market. Anti-dumping practices, import licenses and paper work. The
regulations regarding the origin of the material used for the production of the imported good
a.k.a. Rules of Origin are also researched within this category;
3. Technical barriers to trade (TBT) as defined by the WTO ;
4. Sanitary & phyto-sanitary (SPS) measures as defined by the WTO;
5. Specific restrictions e.g. Quotas or price control;
6. Charges on import different than import duties. E.g. Administration fees;
7. Transport related obstacles, for example restrictions for the means of transport used for the
import of the goods and transit costs and charges;
For the purpose of having a comprehensive comparative analysis several of the above mentioned
categories will be reviewed with every FTA analysis. The specific NTBs that are going to be presented are
selected based on their importance, impact and the possibility to make a qualitative comparison
afterwards.
Last this paper will research additional commitments for domains which are directly and/or in directly
related to the trade liberalization process. Analysis of the consistency in the EU’s approach in tackling
those issues is a further objective of this research.
1
More detailed information available at http://www.tradebarriers.org/ntb/categories

VLACHKOV_Chavdar

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