EU looks to SE Asia, South America for new free-trade areas

European trade chief Peter Mandelson on Wednesday unveiled a new trade strategy for the bloc which set out plans to seek free trade agreements (FTA) with trading partners in key areas including South East Asia and South America.

While stressing that multilateral negotiations under the World Trade Organisation umbrella remained the top priority, Mandelson said he had decided to put his focus on concrete results for European exporters.

The core message was clear, said Mandelson, "rejection of protectionism at home, activism in opening markets abroad".

He added: "Alongside our commitment to the WTO we have, through bilateral negotiations, sought to remove trade barriers behind borders, barriers beyond the reach of WTO rules for example in Latin America and the Gulf."

Mandelson's predecessor as European trade commissioner, Pascal Lamy, now WTO director general, said last month that the frozen WTO multilateral trade talks could be revived and brought to a successful conclusion by the end of 2007.

"We need to focus on competitiveness," said Mandelson outlining the new trade policy which has been approved by the European Commission, the EU's executive arm.

"ASEAN, (South) Korea and Mercosur emerge as priorities," says Mandelson's report entitled "Global Europe: Competing in the World".

ASEAN is the Association of South East Asian Nations, while Mercosur is South America's biggest trade grouping with which the EU is already negotiating.

The assessment was based on key criteria of market potential, including economic size and growth, and the level of protection against EU export interests from tariffs and non-tariff barriers.

"India, Russia and the Gulf Co-operation Council also have combinations of market potential and levels of protection which make them of direct interest to the EU," said the report.

China also meets "many of these criteria, but requires special attention because of the opportunities and risks it represents".

The statement added: "Europe is the world's biggest exporter - but it needs a tighter focus on target markets, and a long-term commitment to competitiveness."

The policy is presented as a strand of the 2000 Lisbon Strategy for growth and employment, which is the credo of the current executive.

Such bilateral negotiations would allow the European Union to deal more effectively in areas insufficiently covered by the WTO, such as the service sector, competition, investment, the opening up of public procurement markets and the protection of intellectual property rights.

This especially applies to the service sector, which accounts for 77 percent of gross domestic product (GDP) and employment, "an area of European comparative advantage with the greatest potential for growth in EU exports," according to the report.

Aid agency Oxfam called the new EU trade policy "development blind".

"The European Union's new external trade plans presented by Peter Mandelson today in Brussels will pose a serious threat to poor countries' development if implemented," Oxfam said in a statement.

"The EU is pushing an aggressive liberalisation agenda in developing countries and trying to impose rules on competition, investment and government procurement that won't help development.

"The new emphasis on regional and bilateral free trade deals will undermine multilateralism and calls into question the EU's stated commitment to the World Trade Organisation negotiations."

The document, adopted by the European Commission on Wednesday, stresses that the EU's priority should be to guarantee that all new FTAs, including those involving the EU, "serve as a stepping stone, not a stumbling block for multilateral liberalisation."

However the report criticises the traditional European approach to free trade agreements as serving the objectives of development or good neighbourliness more than the EU's own trade interests.