Trend The EU uses free trade agreements to diversify markets and suppliers

Summary

In external trade policy the EU is expanding free trade agreements to secure alternative markets and sources of supply and to make its economic relations more predictable. Progress in negotiations with Mercosur, Indonesia, India and Australia and a dialogue with CPTPP members show a strategy that combines market access with economic security, digital trade, sustainability standards and a rules-based trading order. The report presents these agreements as tools for widening options rather than for cutting ties with China. Signing an agreement does not by itself reroute supply chains, however. The actual diversification effect depends on entry into force and implementation, local production and processing capacity, and European firms' investment and financial and technological cooperation.