A world player - The European Union’s external relations

The European Union has a network of association, cooperation and trade agreements which criss-cross the globe, from its nearest neighbours in Europe to its most distant partners in Asia and the Pacific. To manage these relationships, the EU holds regular summit meetings or ministerial gatherings with its major partners.

The EU’s most intensive relations are with four western European neighbours: Switzerland, Norway, Iceland and Liechtenstein. They are all members of the European Free Trade Association (EFTA) who have aligned themselves with large parts of the EU’s internal market legislation and follow the EU in other policy areas. All except Switzerland participate, alongside the EU, in the European Economic Area (EEA).

Four countries in south-eastern Europe are candidates for European Union membership. Bulgaria and Romania are expected to join the Union in 2007. The timing of Turkey’s entry is less clear. Turkey is one of the EU’s oldest trading partners with an association agreement dating from 1963, which now includes a customs union. It applied to join the EU in 1987. The fourth country, Croatia, was accepted as a candidate by the EU in June 2004. Its entry date will depend on the speed of its membership negotiations.

Another western Balkan country, the Former Yugoslav Republic (FYR) of Macedonia submitted an application in March 2004. Applying is the first step towards being accepted as a candidate country.

The European Union and the Western Balkan countries have together created a ‘stabilisation and association process’ which – in addition to Croatia and the FYR of Macedonia – covers Albania, Bosnia and Herzegovina, plus Serbia and Montenegro. While the ultimate goal is future EU membership, these countries have been given free access to the EU market and receive EU support for domestic reform programmes. As the next step, they may negotiate ‘stabilisation and association agreements’ with the Union, just as Croatia and the FYR of Macedonia had done, before they eventually apply for EU membership.

The European Union is determined to ensure that the 2004 enlargement – and any subsequent enlargements – will not create new barriers between the expanded Union and its neighbours. This is why the EU is preparing to forge closer ties with its neighbours to the east (Russia, Ukraine, Moldova and eventually Belarus) – and to the south (the Mediterranean countries).

As part of its ‘European Neighbourhood Policy’ the EU plans to extend to these countries many of the benefits of its internal market, to offer them additional trade concessions and financial assistance. In exchange, the EU’s neighbours would make greater commitments to democratic reform and the market economy, and pay greater respect to human rights. As enlargement brings the EU into direct contact with neighbours marked by political and social instability, its response is to share with them its prosperity and stability, thus consolidating its own security.

Since the neighbours are transit points for illegal immigrants and traffickers in drugs and human beings, the EU is helping a number of them to strengthen their border management and immigration procedures.

Russia, Ukraine, Moldova and most countries in the south Caucasus and central Asia have agreements with the EU which cover trade, political cooperation, environmental protection and collaboration in scientific and cultural matters. With its biggest neighbour, Russia, the EU is developing a whole scheme for cooperation in a broad range of areas

These countries also benefit from the EU’s TACIS assistance programme which is worth €3.14 billion in the period 2000-2006. It funds projects on institutional reform, infrastructure networks, private sector development, environmental protection and the rural economy.

As part of the ‘Barcelona Process’, the EU is committed to setting up a free trade area with its Mediterranean neighbours by 2010. This would include the Arab countries around the southern and eastern Mediterranean plus Israel and the Palestinian Territories. Trade is being opened up between the Union and each of its partners, and the latter are taking steps to trade more amongst themselves. For example, in 2004, Egypt, Morocco, Jordan and Tunisia signed the ‘Agadir Agreement’ – a free trade agreement between them.

In the Middle East proper, the EU has been negotiating a free trade agreement with the six countries of the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates). The EU is also supporting reconstruction efforts in Iraq.

The transatlantic partnership with the United States is central to the EU’s external relations. Trade and investment flow across the Atlantic at a rate of nearly one billion euro a day. Washington has long supported European integration. The EU and US share many common values and common interests, even though there are sometimes differences of emphasis and approach between them.

Given the size of their bilateral trade (the US takes 25% of EU exports and supplies 20% of its imports), it is not surprising that disputes break out between the two from time to time. Although these disputes make the headlines, they represent less than 2% of total transatlantic trade. The way the EU and the US have handled joint issues involving competition law or the recognition of each other’s technical standards has served as a model for the Union’s relationships with others, including Japan and Canada.

With Canada, the EU launched two ground-breaking initiatives in 2004 to deepen relations. One is to create an EU-Canada partnership agenda for cooperation on global issues. The other is to negotiate a new agreement for enhancing trade and investment between them.

Although China and Japan are its biggest trading partners in Asia, the EU’s longest-standing relationship is with the seven-member Association of South-East Asian Nations (ASEAN). This relationship began in 1972 and was formalised in a cooperation agreement in 1980. ASEAN took the initiative to expand relations with the EU into the process known as ASEM (Asia-Europe Meeting) in which Japan, China and South Korea also participate. ASEM holds a summit meeting every two years.

In recent years the EU has intensified its relations with Japan. An EU–Japan action plan, adopted in 2001, expands the range of bilateral cooperation beyond trade and investment to include political and cultural affairs. Europe has become the major source of foreign direct investment to Japan and the largest recipient of Japanese foreign investment, surpassing the United States and China.

In line with the increasing importance of both the EU and China as global political actors, their relationship has grown dynamically in recent years, with greater emphasis on political dialogue, sectoral agreements and institutional exchanges. On the commercial front, China is now the EU’s second biggest trading partner outside Europe – after the United States and ahead of Japan. The EU is one of the principal sources of foreign investment in China.

The EU is India’s biggest trading partner and provider of foreign investment. Since they held their first summit meeting in June 2000, relations between them have blossomed and now embrace not only trade but also political dialogue, business summits, cultural cooperation and joint research projects.

China and India have decided to participate in Galileo, the EU’s satellite navigation system. This is a sign of Asian countries’ desire to move beyond mere trade relations with the European Union.

The Galileo system, to be operational in 2008, will provide a more accurate alternative to the US network of global positioning satellites (GPS). Galileo will primarily be used for the geographic positioning of vehicles and other transport modes, as well as for scientific research, land management and disaster monitoring. It will also have government applications accessible only to EU member states.

The European Union is Latin America’s second most important trading partner, its most important source of foreign direct investment and the leading donor of development aid for the region.

Every two years, the EU and all Latin American and Caribbean countries hold bi-regional summit meetings that cover a wide range of issues – political, economic, educational, scientific, technological, cultural and social. All Latin American countries, in groups or individually, are now linked to the Union by association, cooperation or trade agreements.

The EU has been negotiating an association agreement with Mercosur (Brazil, Argentina, Paraguay and Uruguay), including the creation of a free trade area between the two groups.

At the end of 2003, the EU concluded two separate political dialogue and cooperation agreements, one with the Andean Community and the other with Central America. The next step will be to negotiate association agreements with both regions. The European Union already has association agreements (including free trade arrangements) with Mexico and Chile, which were signed in 1997 and 2002 respectively.

In addition to its traditional links to African countries via the Mediterranean agreements or the ACP relationship, the EU has begun a new dialogue with the African Union (AU). This includes conflict prevention and resolution and EU support for AU and United Nations peace-keeping efforts on the continent.

The EU-Africa partnership also covers regional economic cooperation and integration and trade, the fight against drought and desertification, action against HIV/AIDS and communicable diseases, food security, human rights and democracy and the war on terror.