Russian War Leads EU Bloc to Push for Faster Trade Deals

(Bloomberg) -- A group of European Union countries are pushing to kick start negotiations on stalled free-trade agreements as Russia's war with Ukraine threatens the bloc's economic and security interests.

At least nine nations -- including Germany and Spain -- are planning to send a letter to the EU seeking to speed the delayed talks, according to a draft obtained by Bloomberg. France effectively blocked work on pending deals ahead of its presidential election in April.

The letter warns that the EU risks falling behind other countries, such as Japan, which has 80% of its trade covered by free trade accords. Other nations taking advantage of these types of trade pacts “should be a wake-up call for Europe,” according to the letter, which says these deals are necessary to make the EU less dependent and vulnerable.

“Russia's war on Ukraine shows that the EU's strategic choices do not take place in a vacuum, but in a global context where different powers and economic blocks are vying for leadership,” according to the draft letter, which is still subject to change.

French Opposition

France has held the six-month presidency for the EU since January, which means it has control of setting the policy agenda and can speed up, or stall, certain issues. Trade talks can be controversial in France and in the past have been weaponized during election campaigns.

France's opposition irritated some member states, particularly with regard to discussions with Chile, which is an important partner in strategic areas for the green and digital transitions and has access to lithium, a key material to build batteries and other high-tech components.

After a November meeting when member states discussed the Chile deal, Slovenia's chief trade minister, Zdravko Pocivalsek, told reporters, “most ministers were in favor of achieving progress in bilateral agreements and we have to avoid the influence of elections on either side, because if we take elections into account we will never achieve progress.”

The signatories to the letter are calling for faster negotiations with New Zealand, Australia, India and Indonesia, while speeding the implementation of accords agreed with Chile, Mexico and the Mercosur bloc of countries, which include Argentina, Brazil, Uruguay and Paraguay.

Trade ‘Credibility'

The letter also says that the process to negotiate, sign and implement trade deals is “too long,” and points out that the massive Regional Comprehensive Economic Partnership was signed in late 2020 and will enter into force this year for most members. The EU, however, is still struggling to ratify its agreement with Mercosur concluded in 2019 after almost two decades of negotiations.

“If we could accelerate our work to conclude and implement negotiated trade agreements, we would bolster our economic and trade interests and increase the EU's overall credibility as a serious trade partner,” according to the letter.

The countries that appear on the draft are the Czech Republic, Denmark, Estonia, Finland, Germany, Latvia, Portugal, Spain and Sweden. Ireland was also named but has not agreed to sign the letter, a spokesperson for the country's enterprise ministry said by email. Any drafts were for discussion, they added.