Trade Policy in the EU’s Neighbourhood. Ways forward for the Deep and Comprehensive Free Trade Agreements

This study by Iana Dreyer assesses the trade policy of the European Union (EU) in its neighbourhood and formulates proposals for the “Deep and Comprehensive Free Trade Agreements” (DCFTAs) that the EU is currently offering to Ukraine, Moldova, Georgia, Armenia, Jordan, Egypt, Tunisia and Morocco, as part of the European Neighbourhood Policy and in response to the democratisation processes in the region.

The study puts DCFTAs in context by taking stock of the trade policy arrangements currently in place with all its neighbours. It also benchmarks the DCFTA projects against the Free Trade Agreements (FTAs) the EU has signed in recent years with emerging markets outside its neighbourhood. The fundamental issue at stake is how far the EU should push the EU acquis communautaire in particular in the field of technical and sanitary standards. Another important issue is the need to foster investment in the partner economies. Also DCFTAs should be considered a means to foster industrial renewal on both sides.

The proposals revolve around an ambitious mutual trade and investment liberalisation agenda, an alternative solution to regulatory alignment in standards, and a customs union to both achieve the goals of regional economic integration and reduce the distortions coming from rules of origin in FTAs.