The conclusion of ongoing EU free trade negotiations could stimulate the EU’s economy and offset the damaging effects of current US tariffs, according to a study released by Econpol Europe on Wednesday. Depending on the level of detail in the new trade agreements, the study estimates that industrial value creation could permanently increase by up to 1.1 percent, while overall European economic output could rise by 0.43 percent.
Lisandra Flach, a researcher at Ifo, noted that new trade agreements with Mercosur countries, India, Australia, the United Arab Emirates, and Southeast Asian nations could moderately boost the European economy in the medium term, even despite the detrimental impact of US tariffs on global trade.
The benefits from concluding new EU trade agreements would extend to all member states. Germany’s economy could see a medium-term increase of up to 0.47 percent, France up to 0.29 percent, and Italy up to 0.33 percent. Malta, Belgium, and Ireland would benefit the most, with estimated increases of 1.91 percent, 1.14 percent, and 1.13 percent, respectively. Flach warned that without these new trade agreements, the US sanctions tariffs would weigh down the European economy by 0.08 percent, with the industrial sector being particularly vulnerable and facing a value addition loss of 1.32 percent.
The study analyzes the economic impact of these potential EU trade agreements covering Mercosur countries (Brazil, Argentina, Uruguay, and Paraguay), India, Australia, Indonesia, Malaysia, Thailand, and the United Arab Emirates. Agreements with Mercosur, India, Australia, and Indonesia have already been negotiated and are awaiting finalization.