My Department commissioned Copenhagen Economics to undertake a report on the impacts of EU Free Trade Agreements (FTAs) on Ireland. The aim of the report is to identify the opportunities and challenges for Ireland from Free Trade Agreements and to develop recommendations to maximise gains and mitigate the challenges that can arise.
The analysis was to take a portfolio approach and covers a total of seven recently agreed or prospective EU FTAs
- two of which are already implemented - South Korea and, provisionally, CETA with Canada
- two are more recently concluded - Japan and Mexico, and
- three prospective - Mercosur, Australia and New Zealand, albeit political agreement has just been reached on Mercosur.
In order to fully assess the combined impact of the seven FTAs on the Irish economy, the study utilizes an internationally recognised Computable General Equilibrium (CGE) model of global trade, one which has been employed in several impact assessments of prospective FTAs by the European Commission. It was also employed in the assessment of the impact of Brexit on the Irish economy undertaken by Copenhagen Economics for my Department in 2017.
The CGE model quantifies the expected macroeconomic and sectoral impacts of the FTAs on the Irish economy in 2030. This is done by comparing two future states of the Irish economy: one without the FTAs in 2030 and an ambitious scenario, where all seven FTAs in place and fully implemented in 2030. A key input to the model is the expected reduction in trade costs between the EU and each partner country. This includes both tariffs and non-tariff barriers or NTBs (regulatory barriers to trade and services barriers). The study models for the impacts of FTAs and different Brexit scenarios. For sensitivity analysis, the study also models for a more modest scenario where the FTAs are not all fully implemented by 2030.
In addition to the model simulations, interviews were conducted with a broad range of stakeholders and a survey was conducted on the actual impacts of the EU-South Korea FTA experienced by Irish firms. Insights from all sources are combined to qualify conclusions and to formulate policy recommendations.
The primary research for the report has been completed, however, preliminary findings and results cannot be released as they remain draft and are still subject to further review by the authors.
In relation to Mercosur, as the deputy will be aware, the Government has committed to a full economic and environmental sustainability assessment on the EU-Mercosur deal on the basis of the more detailed information which was announced as part of the political agreement reached and announced by the Commission on 28th June last. This element will be commissioned shortly by my Department in conjunction with the Department of Agriculture, Food and the Marine.
In light of the Mercosur developments, it is too early to provide an estimate of the timeframe, at this stage, as the resource requirements and definitive terms of reference require detailed assessment.