Press Releases

Europe needs coherent strategy for negotiating bilateral free trade agreements

Berlin, 01 August 2014

Failure to reach global WTO agreement

“Free access to the world’s markets and reduction of trade barriers are essential to safeguarding our competitiveness and with it growth and employment,” said Matthias Wissmann, President of the German Association of the Automotive Industry (VDA). He added, “For this reason we regret the fact that the opportunity of a global agreement to remove trade barriers has now been lost.”

Now, after the failure of the World Trade Organization’s efforts to eliminate import duties and non-tariff trade barriers, the important thing is to drive forward bilateral agreements more vigorously. “What we need is a coherent strategy for negotiating bilateral free trade agreements. Germany and Europe should aim above all to negotiate with the countries that represent economic growth and large future markets. Import duties and non-tariff trade barriers must be eliminated,” according to the VDA president. “This is the only way to halt the wave of international protectionism.”

Wissmann explained that the agreement currently being negotiated between the EU and the USA was of special strategic importance, because these two economic areas accounted for nearly one third of world trade. He said, “A transatlantic free trade zone will provide a considerable economic boost to both sides. Removing import duties, facilitating the exchange of goods, and mutual recognition of technical regulations – all of this saves time and money. The many regulatory differences in the two economic areas make products more expensive and burden both industry and consumers.” German automotive firms alone pay over one billion euro every year in duties on imports between the USA and Europe. And the costs of non-tariff trade barriers are far higher. “The aim is not to relax social, product or environmental standards, but the elimination of red tape through mutual recognition of equivalent regulations.

The agreement with Canada was also of key importance, Wissmann stated, and he continued, “Here we rapidly need to bring about a successful conclusion. Furthermore, the EU should conclude agreements with important growth regions, such as the ASEAN states, India and MERCOSUR.” The negotiations with MERCOSUR have not generated any measurable progress for years, and the only ASEAN country with which an agreement has so far been negotiated is Singapore.

The European Union is the world’s largest trading block – even larger than the USA and Japan. No continent in the world exports more goods and services. “In fact the EU is in a comfortable position for entering into international negotiations. Yet up to now, Europe has not been very successful in applying its whole weight and improving access to markets in important countries for its key industries,” Wissmann said.

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