The EU member states cooperate when it comes to trade with countries outside the EU. In such matters, the member states have transferred their decision-making powers to the EU. Individual EU countries cannot enter into their own free trade agreements with countries outside the EU.
Common rules and customs tariffs
The EU's common trade policy for countries outside the EU is, among other things, about creating uniform rules and customs levels for imports of goods from the rest of the world. The EU has, for example, common customs tariffs for non-EU countries. The same customs tariff should be paid on a product that is imported from a country outside the EU, regardless of which country imports the product. However, tariffs vary depending on the product.
The EU also draws up free trade agreements with individual or groups of countries outside the EU, and with trade organisations.
Trade policy on the EU website
The EU has exclusive competence
Trade with countries outside the EU is an area in which the EU has exclusive competence. This means that in trade issues, the EU member states have transferred their decision-making powers to the EU's two legislative institutions: the Council of the European Union and the European Parliament. Sweden and the other EU countries cannot, therefore, decide to enter into trade agreements with other countries or organisations themselves.
The EU’s powers depend on the issue at hand
Free trade agreements to facilitate trade
The EU enters into free trade agreements with countries outside the EU in order to facilitate trade. A free trade agreement means that customs tariffs on goods are abolished and that trade barriers, for example, to services, investments and public procurements, are reduced.
Several EU institutions are involved
The European Commission is the EU institution responsible for negotiating free trade agreements. The Commission is given the task of initiating negotiations by the Council of the European Union, which is the EU institution that consists of government ministers from the member states. When the negotiations are completed, the agreement must be approved by the Council of the European Union and the European Parliament, which comprises members elected by the member states’ citizens. Some free trade agreements also need to be approved by the member states’ national parliaments.
The EU institutions
Agreement with the UK the most comprehensive
The EU has free trade agreements with many countries, and is negotiating with many others. The most recent and most comprehensive of these is the free trade agreement with the UK, which was provisionally applied on 1 January 2021, and came into force on 1 May 2021. The agreement between the EU and the UK includes trade in products and services, digital trade, intellectual property rights, public procurement, air and road traffic, energy, fisheries, coordination of social security schemes, crime prevention and judicial cooperation, thematic cooperation and participation in EU programmes.
The Trade and Cooperation Agreement between the EU and the UK on the European Commission website
EEA and CETA other examples of free trade agreements
Another example of an existing free trade agreement is the European Economic Area (EEA) which applies to the EU member states as well as Iceland, Liechtenstein and Norway. The agreement gives companies in these countries access to the European single market and its free movement of goods, services, people and capital.
In 2017, the free trade agreement CETA (Comprehensive Economic Trade Agreement) was reached between the EU and Canada. CETA means that it will be easier for companies from Sweden and the other EU member states to sell products and services in Canada. The agreement also gives companies in Canada access to the European single market.
The list of countries with which the EU has free trade agreements is long. Information about all these agreements is available on the National Board of Trade website.
The EU's free trade agreements on the National Board of Trade website