Trade policy for trading with the EU

Does your country want to increase trade with the EU? To increase your trade with the EU, it is important to have policies that help companies meet the requirements for selling goods and services on the EU’s single market – not least in terms of sustainability.

The EU single market is the largest trading area in the world. It consists of 27 different countries, which share a common trade policy. Every day, the EU imports hundreds of millions of Euros worth of goods. Together, EU countries account for 16 per cent of the world's imports and exports. The EU's strong position in world trade is largely due to the size of its single market, which serves almost 450 million consumers.

Trade with the EU under World Trade Organisation (WTO) rules

Under WTO rules, all countries must be treated equally in international trade. The only exceptions are developing countries and least developed countries, which may receive more favourable treatment than others. The EU's Generalised Scheme of Preference (GSP) provides duty-free or reduced tariffs for goods imported into the EU from low- and middle-income countries that meet specific rules of origin. If your country is a member of the WTO, these rules often serve as a base on which free trade agreements can then build by creating more favourable conditions for trade.

Understanding the WTO - principles of the trading system

Trade with the EU through a trade agreement

The EU has concluded a large number of trade agreements with non-EU countries. If your country wants to gain preferential access to the single market, one path is to negotiate a trade agreement or do more to utilise existing trade agreements. Trade agreements vary in nature, but all are designed to improve trade opportunities and reduce trade barriers. For example, Economic Partnership Agreements (EPAs) between the EU and certain African, Caribbean and Pacific developing countries provide, among other things, duty-free access for goods imported into the EU. The EU has also concluded bilateral free trade agreements with several countries, such as Vietnam and Morocco.

EU's trade relationships and negotiations with countries

EU requirements for products and services

In order to sell goods and services on the single market, a number of requirements must be met. These requirements are to ensure, for example, that products are safe for consumers to use and that they are sustainably produced. The EU’s product requirements apply both to imported goods and to goods produced in the EU. For trade in services, requirements often relate to ensuring that the people delivering the services have the right qualifications. It is therefore essential that exporters in your country are aware of and able to comply with EU requirements. Examples of requirements that are good to know are:

  • Sanitary and phytosanitary (SPS) agreements: For food products, the EU applies particularly strict requirements that production does not contain anything that can harm humans or animals. In some cases, special documentation accompanying the product is required to prove that it is safe.
  • CE-marking: A product that is CE marked is subject to EU harmonised legislation. This means it fulfils the essential health, environmental and safety requirements of EU common laws.
  • Registrating Chemicals, REACH: REACH requires companies that manufacture and export chemical products to the EU to comply with certain rules. These rules may include bans on certain substances, authorisation requirements for substances of very high concern, and requirements to inform customers about the content of a product.

Read more about product requirements on the EU Commission website: EU product requirements

The EU's sustainability ambitions

The EU works towards all three dimensions of sustainability – environmental, economic, and social as set out in the UN Sustainable Development Goals. The United Nations Agenda 2030 emphasises trade as an important instrument for achieving all three dimensions of sustainability. An example of EU sustainability ambition is the aim to reduce EU’s greenhouse gas emissions by 55 per cent by 2030 and to be carbon neutral by 2050.

Examples of trade related sustainability initiatives include:

Carbon Boarder Adjustment Mechanism

The Carbon Boarder Adjustment Mechanism (CBAM) will ensure that embedded emissions from certain carbon-intensive goods imported into the EU are priced in the same way as goods produced in the EU. The aim is to avoid “carbon leakage” – when companies in the EU move production to countries with less stringent climate policies, or when EU products are replaced by more carbon-intensive imports. The EU also wants to encourage countries to raise their climate ambitions. CBAM is being introduced gradually with the transitional phase beginning in 2023 and full implementation by 2026.

Regulation on deforestation-free products

The Regulation on deforestation-free products aims to prevent goods that have contributed to deforestation and forest degradation from being imported to and exported from the single market. Such products include cattle, cocoa, coffee, oil palm, wood, soya, and rubber. Under the new EU law, EU companies must be able to prove that the products they import are deforestation-free.

Corporate Sustainability Due Diligence Directive

The Corporate Sustainability Due Diligence Directive (CSDDD), is a proposed EU directive which was preliminary agreed upon at the end of 2023. Once adopted, it will require large EU companies to identify, mitigate, and prevent actual or potential negative impacts of their activities on the environment and human rights. Since the entire chain of operations is to be scrutinised, this means that exporters to the EU may need to disclose information to EU companies.

Prohibiting products made with forced labour

The EU has proposed a ban on goods made using forced labour. The proposal covers all products that are wholly or partly manufactured, produced, harvested, or extracted by forced labour, including child labour. It is proposed that these products should not be allowed to be placed on or exported from the single market.

To summarise, the EU has very high ambitions regarding sustainable development, safety for consumers and human rights. Supporting policies could be introduced to help producing companies meet the EU's requirements. There are many ways to achieve this, for example, assisting companies with meeting product requirements (e.g. technical regulations, standards and conformity assessment procedures) under European legislation.