Foreign relations of the European Union

The EU is Iran's largest trading partner, accounting for a third of all Iranian exports. 90% of these are energy related and Iran is the EU's sixth largest energy supplier. In 2008 Iranian exports to the EU amounted to €11.3 billion and imports from the EU amounted to €14.1 billion. EU exports to Iran are mainly machinery and transport (54.6%), manufactured goods (16.9%) and chemicals (12.1%).^[12] In 2011, Iran ranked 7th in exporting crude oil to Europe and a Eurostat report stated that 27 European states imported 11.4 billion Euros of goods from Iran in the first nine months of 2011.^[13] There is significant room for growth, though this is hampered by the nuclear dispute. A Trade and Cooperation Agreement was installed in 2002 but has been on hold since 2005 because of the dispute. There are no bilateral treaties as Iran is not a member of the WTO.^[12]

Trade between the EU and Israel is conducted on the basis of the Association Agreement. The European Union is Israel’s major trading partner.^[14] In 2004 the total volume of bilateral trade (excluding diamonds) came to over €15 billion. 33% of Israel’s exports went to the EU and almost 40% of its imports came from the EU.

Under the Euro-Mediterranean Agreement, the EU and Israel have free trade in industrial products. The two sides have granted each other significant trade concessions for certain agricultural products, in the form of tariff reduction or elimination, either within quotas or for unlimited quantities. However, goods from Israeli settlements in the Israeli-occupied territories are not subjected to the free trade agreement, as they are not considered Israeli. In 2009, a German court solicited the European Court of Justice for a binding ruling on whether goods manufactured in Israeli settlements in the Israeli-occupied territories should fall under duty exemptions in the Association Agreement. The German government stated as its position that there can be no exemption from customs duty for "goods from the occupied territories".^[15] The court, agreeing with the German government, ruled in February 2010 that settlement goods were not entitled to preferential treatment under the customs rules of the EU-Israel Association Agreement, and allowed the EU to impose import duties on settlement products.^[16]

In December, the Council of the European Union endorsed a set of conclusions on the Israeli–Palestinian conflict which forms the basis of present EU policy.^[17] It reasserted the objective of a two-state solution, and stressed that the union "will not recognise any changes to the pre-1967 borders including with regard to Jerusalem, other than those agreed by the parties." It recalled that the EU "has never recognised the annexation of East Jerusalem" and that the State of Palestine must have its capital in Jerusalem.^[18]

A year later, in December 2010, the Council reiterated these conclusions and announced its readiness, when appropriate, to recognise a Palestinian state, but encouraged a return to negotiations.^[19] Eight of its then 27 member states had recognised the State of Palestine

Relations between the European Union and the Palestine Liberation Organisation (PLO) were established in 1975 as part of the Euro-Arab Dialogue.^[22] The EU is a member of the Quartet and is the single largest donor of foreign aid to Palestinians.^[23][24]

The EU maintains a representative office in Ramallah, accredited to the PNA.^[25] The PLO's general delegation in Brussels, accredited to the EU,^[26] was first established as an information and liaison bureau in September 1976.^[27] Other representations are maintained in almost every European capital, many of which have been accorded full diplomatic status.^[22]

In western Europe, Spain was the first country granting diplomatic status to a PLO representative, followed later by Portugal, Austria, France, Italy and Greece.^[28]

The EU has insisted that it will not recognise any changes to the 1967 borders other than those agreed between the parties. Israel's settlement program has therefore led to some tensions, and EU states consider these settlements illegal under international law.^[29][30]

In July 2009, EU foreign policy chief Javier Solana called for the United Nations to recognise the Palestinian state by a set deadline even if a settlement had not been reached: "The mediator has to set the timetable. If the parties are not able to stick to it, then a solution backed by the international community should ... be put on the table. After a fixed deadline, a UN Security Council resolution ... would accept the Palestinian state as a full member of the UN, and set a calendar for implementation."^[31]

In 2011, the Palestinian government called on the EU to recognise the State of Palestine in a United Nations resolution scheduled for 20 September. EU member states grew divided over the issue. Some, including Spain, France and the United Kingdom, stating that they might recognise if talks did not progress, while others, including Germany and Italy, refused. Catherine Ashton said that the EU position would depend on the wording of the proposal.^[32] At the end of August, Israel's defence minister Ehud Barak told Ashton that Israel was seeking to influence the wording: "It is very important that all the players come up with a text that will emphasise the quick return to negotiations, without an effort to impose pre-conditions on the sides."^[33]

South Africa has strong cultural and historical links to the European Union (EU) (particularly through immigration from the Netherlands, the United Kingdom, Germany, France, and Greece) and the EU is South Africa's biggest investor.^[34]

Since the end of South Africa's apartheid, EU South African relations have flourished and they began a "Strategic Partnership" in 2007. In 1999 the two sides signed a Trade, Development and Cooperation Agreement (TDCA) which entered into force in 2004, with some provisions being applied from 2000. The TDCA covered a wide range of issues from political cooperation, development and the establishment of a free trade area (FTA).^[34]

South Africa is the EU's largest trading partner in Southern Africa and has a FTA with the EU. South Africa's main exports to the EU are fuels and mining products (27%), machinery and transport equipment (18%) and other semi-manufactured goods (16%). However they are growing and becoming more diverse. European exports to South Africa are primarily machinery & transport equipment (50%), chemicals (15%) and other semi-machinery (10%).^[35]

Canada's relationship with Europe is an outgrowth of the historic connections spawned by colonialism and mass European immigration to Canada. Canada was first settled by the French, and after 1763 was formally added to the British Empire after its capture in the Seven Years' War.

The United Kingdom has extremely close relations with Canada, due to its British colonial past and both being realms of the Commonwealth. The UK is a member of the EU.

Historically, Canada's relations with the UK and USA were usually given priority over relations with continental Europe. Nevertheless, Canada had existing ties with European countries through the Western alliance during the Second World War, the United Nations, and NATO before the creation of the European Economic Community.

The history of Canada's relations with the EU is best documented in a series of economic agreements:

In 1976 the European Economic Community (EEC) and Canada signed a Framework Agreement on Economic Co-operation, the first formal agreement of its kind between the EEC and an industrialized third country.

Also in 1976 the Delegation of the European Commission to Canada opened in Ottawa.

In 1990 European and Canadian leaders adopted a Declaration on Transatlantic Relations, extending the scope of their contacts and establishing regular meetings at Summit and Ministerial level.

In 1996, a new Political Declaration on EU-Canada Relations was made at the Ottawa Summit, adopting a joint Action Plan identifying additional specific areas for co-operation.

A 2.6-billion euro financial package for Latin America was also put forward^[37] with 840-million euro for Central America.^[39] A major forum for European relations with Latin America is the Latin America, the Caribbean and the European Union Summit, a biannual meeting of heads of state and government held since 1999.

The European Union and the United States have held diplomatic relations since 1953.^[40] The US and the EU are the largest economic and military powers in the world (even if EU Military integration is at an early stage). The two Unions dominate global trade, they play the leading roles in international political relations, and what one says matters a great deal not only to the other, but to much of the rest of the world.^[41] And yet they have regularly disagreed with each other on a wide range of specific issues, as well as having often quite different political, economic, and social agendas. Understanding the relationship today means reviewing developments that predate the creation of the European Economic Community (precursor to today's European Union)

Euro-American relations are primarily concerned with trade policy. The EU is a near-fully unified trade bloc and this, together with competition policy, are the primary matters of substance currently between the EU and the USA. The two together represent 60% of global GDP, 33% of world trade in goods and 42% of world trade in services. The growth of the EU's economic power has led to a number of trade conflicts between the two powers; although both are dependent upon the other's economic market and disputes affect only 2% of trade. See below for details of trade flows;[5]

Both the United States and the European Union as of 2005 have an arms embargo against China (PRC), put in place in 1989 after the events of Tiananmen Square. The U.S. and some EU members continue to support the ban but others, spearheaded by France, have been attempting to persuade the EU to lift the ban, arguing that more effective measures can be imposed, but also to improve trade relations between China and certain EU states. The U.S. strongly opposes this, and after the PRC passed an anti-secession law against Taiwan the likelihood of the ban being lifted diminished somewhat.

Australia and the European Union (EU) have strong historical and cultural ties. The two have solid relations and often see eye-to-eye on international issues. The EU-Australian relations are founded on a Partnership Framework, first agreed in 2008. It covers not just economic relations, but broader political issues and cooperation.^[34]

The EU is Australia's second largest trading partner, after China, and Australia is the EU's 17th. Australia's exports is dominated by mineral and agricultural goods. However 37% of trade is in commercial services, especially transportation and travel. EU corporations have a strong presence in Australia (approximately 2360) with an estimated turnover of €200 bn (just over 14% of total sales in Australia). These companies directly created 500,000 jobs in Australia. The EU is Australia's second largest destination of overseas investment and the EU is by far Australia's largest source of foreign investment €2.8 billion in 2009 (€11.6 billion in 2008). Trade was growing but ebbed in 2009 due to the global financial crisis.^[35]

There have been some disputes, such as the dispute over textile imports into the EU (see below). China and the EU are increasingly seeking cooperation, for example China joined the Galileo project investing €230 million and has been buying Airbus planes in return for a construction plant to be built in China; in 2006 China placed an order for 150 planes during a visit by the French President.^[45] Also, despite the arms embargo, a leaked US diplomatic cable suggested that in 2003 the EU sold China €400 million of "defence exports" and later, other military grade submarine and radar technology.

Interest in closer relations started to rise as economic contacts increased and interest in a multipolar system grew. Although initially imposing an arms embargo on China after Tiananmen (see arms embargo section below), European leaders eased off China's isolation. China's growing economy became the focus for many European visitors and in turn Chinese businessmen began to make frequent trips to Europe. Europe's interest in China led to the EU becoming unusually active with China during the 1990s with high-level exchanges. EU-Chinese trade increased faster than the Chinese economy itself, tripling in ten years from USD14.3 billion in 1985 to USD45.6 billion in 1994.^[46]

However political and security co-operation was hampered with China seeing little chance of headway there. Europe was leading the desire for NATO expansion and intervention in Kosovo, which China opposed as it saw them as extending US influence. However, by 2001 China moderated its anti-US stance in the hopes that Europe would cancel its arms embargo but pressure from the US led to the embargo remaining in place. Due to this, China saw the EU as being too weak, divided and dependent on the US to be a significant power. Furthermore, it shared too many of the US' concerns about China's authoritarian system and threats of force over Taiwan. Even in the economic sphere, China was angered at protectionist measures against its exports to Europe and the EU's opposition to giving China the status of market economy in order to join the WTO.^[46]

However, economic cooperation continued, with the EU's "New Asia Strategy", the first Asia–Europe Meeting in 1996, the 1998 EU-China summit and frequent policy documents desiring closer partnerships with China. Although the 1997 Asian Financial Crisis dampened investors enthusiasm, China weathered the crisis well and continued to be a major focus of EU trade. Trade in 1993 saw a 63% increase from the previous year. China became Europe's fourth largest trading partner at this time. Even following the financial crisis in 1997, EU-Chinese trade increased by 15% in 1998.^[46]

The EU and Japan share values of democracy, human rights and market economics. Both are global actors and cooperate in international fora. They also cooperate in each other's regions: Japan contributes to the reconstruction of the western Balkans and the EU supports international efforts to maintain peace in Korea and the rest of Asia.^[34]

The EU Japanese relationship is anchored on two documents: the Joint Declaration of 1991 and the Action Plan for EU-Japan Cooperation of 2001. There are also a range of fora between the two, including an annual summit of leaders and an inter-parliamentary body.^[34] Both sides have now agreed to work towards a deep and comprehensive free trade agreement. Four agreements thus far have been signed by the two sides;^[48]

• The EU-Japan Mutual Recognition Agreement (entered force on 1 January 2002)
• An Agreement on Co-operation on Anti-competitive Activities (adopted 16 June 2003)
• A Science and Technology Agreement between the EU and Japan (signed 30 November 2009)
• The Agreement on Co-operation and Mutual Administrative Assistance (entered force on 1 February 2008)

Japan is the EU's 6th largest export market (3.2% in 2010 with a value of €44 billion). EU exports are primarily in machinery and transport equipment (31.3%), chemical products (14.1%) and agricultural products (11.0%). Despite a global growth in EU exports, since 2006 EU exports to Japan have been declining slightly. In 2009, due to the global financial crisis, exports saw a 14.7% drop; however in 2010 they recovered again by 21.3%. Japan is also the 6th largest source of imports to the EU (4.3% in 2010 with a value of €65 billion). Japanese exports to Europe are primarily machinery and transport equipment (66.7%). The EU is Japan's 3rd largest trading partner (11.1% of imports, 13.3% exports). Trade in commercial services were €17.2 billion from the EU to Japan and €12.7 billion from Japan to the EU.^[48]

The trade relationship between the two has been characterised by strong trade surpluses for Japan, though that has moderated in the 2000s. Doing business and investing in Japan can be difficult for European countries and there have been some trade disputes between the two parties. However the slowdown in the Japanese economy encouraged it to open up more to EU business and investment.^[48] While working on reducing trade barriers, the main focus is on opening up investment flows.^[34]

The relations started with the 1980 European Commission–ASEAN Agreement and were developed since the formation of European Economic Community (EEC) in 1957.^[49][50]

In 2011, Malaysia is the European Union second largest trading partner in Southeast Asia after Singapore and the 23rd largest trading partner for the European Union in the world,^[50][51] while the European Union is Malaysia's 4th largest trading partner.^[52]

New Zealand and the European Union (EU) have strong historical and cultural ties. The two have solid relations and often see eye-to-eye on international issues. The EU-New Zealand relations are founded on a Joint Declaration on Relations and Cooperation, first agreed in 2007. It covers not just economic relations, but broader political issues and cooperation.^[34]

The EU is New Zealand's second largest trading partner, after Australia, and New Zealand is the EU's 49th. New Zealand's exports is dominated by agricultural goods. The stock of EU foreign direct investment in New Zealand is €9.8bn and the stock of New Zealand's investment in the EU is €4.5bn.^[35]

The Republic of Korea (South Korea) and the European Union (EU) are important trade partners: Korea is the EU's 9th largest trading partner and the EU is Korea's second largest export market. The two have signed a free trade agreement which will be provisionally applied by the end of 2011.^[34]

The first EU - South Korea agreement was Agreement on Co-operation and Mutual Administrative Assistance in Customs Matters (signed on 13 May 1997).^[35] This agreement allows the sharing of competition policy between the two parties.^[54] The second agreement, the Framework Agreement on Trade and Co-operation (enacted on 1 April 2001). The framework attempts to increase co-operation on several industries, including transport, energy, science and technology, industry, environment and culture.^[54][55]

In 2010, the EU and Korea signed a new framework agreement and a free trade agreement (FTA) which is the EU's first FTA with an Asian country and removes virtually all tariffs and many non-tariff barriers. On the basis of this, the EU and Korea decided in October 2010 to upgrade their relationship to a Strategic Partnership. These agreements will be provisionally in force by the end of 2011.^[34]

EU-Korea summits have taken place in 2002 (Copenhagen), 2004 (Hanoi) and 2006 (Helsinki) on the sidelines of ASEM meetings. In 2009, the first stand alone bilateral meeting was held in Seoul. The European Parliament delegation for relations with Korea visits the country twice a year for discussions with their Korean counterparts. Meetings at foreign minister level take place at least once a year on the sidelines of ASEAN regional form meetings, however meetings between the Korean foreign minister and the EU High Representative have occurred more frequently, for example at G20 meetings. At hoc meetings between officials occur nearly monthly.^[56]

Further Information: Foreign relations of South Korea#Europe.^[57]

The Partnership and Cooperation Agreement (PCA) (signed in 1996 and in force since 1999) serves as the legal framework for EU-Armenia bilateral relations. Since 2004, Armenia and the other South Caucasus states have been part of the European Neighbourhood Policy, encouraging closer ties between Armenia and the EU. An ENP Action Plan for Armenia was published on 2 March 2005, "highlighting areas in which bilateral cooperation could feasibly and valuably be strengthened." The plan sets "jointly defined priorities in selected areas for the next five years." In November 2005, formal consultations on the Action Plan were opened in Yerevan and as of 2008 are ongoing.^[58]