Analysis: The EU’s Free Trade Agreements – a tool to enhance crisis preparedness

Free trade agreements (FTAs) have untapped potential to strengthen the EU’s crisis preparedness. Recent global shocks – such as the COVID-19 pandemic and Russia’s full-scale invasion of Ukraine – have exposed vulnerabilities in the EU’s supply chains. This analysis explores how FTAs can help keep trade flowing during disruptions.

Kim Larsson, what do free trade agreements have to do with crises like pandemics, wars, or natural disasters?

Free trade agreements (FTAs) can help countries become more resilient during time of crisis. They support trade continuity, reduce barriers and provide a platform for cooperation. In other words, FTAs are a tool to strengthen crisis preparedness.

What tools does the EU already have in place in its FTAs to respond to crises?

Some of the EU’s FTAs include cooperation on contingency planning to ensure secure and resilient food supply chains during times of crisis. Other FTAs contain provisions requiring the parties to inform each other about disruptions or other crises affecting electricity supply chains.

Your analysis suggests we define “crisis” in trade agreements. Why is this such an important step?

Crises can take many forms. Before 2020, few could have predicted that the EU would face a pandemic, a war in its neighbourhood and an energy crisis – all within a few years. This highlights the importance of defining what we mean by “crisis”. A broad and flexible definition would make it easier to respond quickly and effectively when a crisis occurs.

How can FTAs actually prevent supply chain disruptions of essential goods like energy, medical equipment and critical raw materials?

FTAs reduce trade barriers and costs, foster trust between trading partners, and create a stable and predictable trade environment – all of which are important in times of supply chain disruption. Having more FTAs also helps diversify supply and suppliers, reducing the risk of overdependence on a single supplier.

Why might some countries prefer non-binding “trade-related agreements” (TRAs) over free trade agreements, and what is their advantage when it comes to crisis preparedness?

TRAs provide greater flexibility. If countries are not ready to enter into legally binding commitments, a TRA offers a way to begin cooperation on crisis preparedness without formal obligations. This can be a good first step and help build trust for deeper cooperation in the future. TRAs also allow the EU to work with countries with which it does not have FTAs.

Which of your recommendations to the European Commission is the easiest to implement?

One of the easiest recommendations to implement is to make better use of the FTA committees. These committees already exist and meet regularly. Some of them already discuss crisis preparedness and how to maintain preferential trade during crises.

We believe the European Commission could take the work within the FTA committees further – for example, by setting up early warning systems or by jointly monitoring the supply chains for essential goods and services with its FTA partners.

What is the National Board of Trade Sweden?

The National Board of Trade is the Swedish government agency for international trade, the EU internal market and trade policy. Our mission is to facilitate free and open trade with transparent rules as well as free movement in the EU internal market. We provide the Swedish Government with independent analyses, reports and policy recommendations and take into account the views of businesses of all sizes in international trade policy-related matters.