The European Union aims to revive trade deals to secure allies

The European Union aims to secure at least three stalled trade accords this year as the bloc looks to reinforce strategic alliances amid the turmoil caused by Russia’s invasion of Ukraine.

The European Commission expects to conclude negotiations with Chile, New Zealand and Australia by the end of 2022 after progress had been stalled for months, according to an EU official familiar with the plans.

The commission, the EU’s executive arm, will also try to finalize legal texts to ratify agreements already struck with Mexico and the South American trade bloc Mercosur, according to the official, who asked not to be identified as the talks take place behind closed doors. Those discussions are expected to be concluded next year.

The trade offensive takes place amid the geopolitical fallout from Russia’s attack on its neighbor, prompting the 27-member EU to cement ties with allies including the U.S. and leveraging a market of 450 million people. Commission President Ursula von der Leyen visited India in April in a bid to deepen cooperation—and will meet with Japanese Prime Minister Fumio Kishida this week to discuss trade, security and defense.

Progress on trade negotiations have been stalled to some degree because of the election in France, where trade politics have not played well with voters. Brussels has also dedicated significant effort to address trade disputes with the U.S. that arose during former President Donald Trump’s administration.

Responding to a request for comment, a commission spokesperson said a rules-based, stable and reliable trade framework is now more relevant given the geopolitical context, based on partnerships with allies who share EU values.

During talks among EU member states on May 4, a group of ambassadors lamented the lack of progress on the bloc’s trade agenda, people familiar with the discussion said. Those included Cyprus, Portugal, Sweden, Spain, Denmark, Ireland, Malta and Finland. At least 10 member states are preparing a letter to the commission urging negotiators to speed up talks or push through agreements already finalized.

The conclusion of the trade talks between the European Union and Australia still could come in 2023, an EU official cautioned, given that the negotiations are less advanced than with Chile or New Zealand. Discussions were disrupted last year after the government in Canberra canceled a $37 billion deal with France to build conventional submarines.

In the case of Mexico, the commission and member states disagree over whether the agreement should be concluded as a “mixed” deal, which would imply the ratification in the 27 national parliaments, and some regional chambers, risking local pushback in some nations.

For Mercosur, whose main trading partners are Argentina, Brazil, Uruguay and Paraguay, the commission needs to agree with the bloc on an instrument to tackle deforestation after concerns raised by few member states including France.

Source: Bloomberg

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