Sweden’s starting point for negotiations between the EU and the US is clear: we want to see a resolution to the trade war. The US is Sweden’s largest export market for goods and services combined, and many Swedish companies are dependent on trade with the US. At the same time, an agreement must be beneficial for both sides. We want the EU and the US to present an agreement with mutual tariff cuts well before 9 July.
But the EU cannot afford to sit back until then. To strengthen our economic position and make us less dependent on individual markets, we need to open up new trade routes. Sweden is therefore pushing for the EU to sign five new free trade agreements as early as this year:
- Australia. Negotiations between the EU and Australia were in their final stages when they were abruptly put on hold in 2023. There is thus a negotiated agreement that just lacks signatures. This agreement could have increased the EU’s GDP by up to SEK 40 billion and helped the 150 Swedish companies already operating in Australia. Following the general election in Australia, there are now signals that interest in the deal is mutual.
- India. The combination of a fast-growing population and strong economic growth makes India an exciting economy. Furthermore, Swedish exports to India increased by 17 per cent last year and now total SEK 22 billion. It is clear that the EU and Sweden have a lot to win from a free trade agreement with India. Because India currently has high tariffs and a large number of trade barriers in place, the benefits of a free trade agreement would be considerable. During the European Commission’s visit to New Delhi earlier this year, Commission President Ursula von der Leyen expressed the hope that a free trade agreement would be signed with India. She noted that it would create the world’s largest free trade zone and that it could be in place this year.
- Mexico. The existing free trade agreement with Mexico is currently being modernised. It is estimated that the new deal could create up to 30 000 jobs in the EU.
- Indonesia. Negotiations with Indonesia will soon reach the 10-year mark. Negotiations should not be allowed to drag on that long.
With an agreement in place, EU exports to Indonesia could increase by around 40 per cent by 2032, and imports by 17 per cent. What is really striking is an expected increase in exports of motor vehicles of more than 160 per cent, which is particularly important following drastic increases on car tariffs imposed by the US. - MERCOSUR. No free trade agreement is a higher priority than that with Brazil, Argentina, Paraguay and Uruguay. It would result in tariff reductions of 90 per cent in mutual reductions. Goods exports would have increased more than 70 per cent by 2032 and the EU’s GDP would have jumped by as much as SEK 150 billion in the same period. There would also be clear upsides for Swedish consumers because products such as orange juice, wine and fresh fruit would be cheaper. After the culmination of 25 years of negotiations last year, all that remains is the approval of the EU Member States. Sweden is doing everything it can to convince the doubters. Things are looking positive at the moment because opponents such as France and Poland alone cannot stop it.
But the Swedish Government is doing more than pushing for individual free trade agreements. We are striving for fundamental changes that could accelerate the pace of all negotiations. For example, it is unreasonable that an agreement is delayed by one to two years for it to be translated into all EU languages An agreement could be valid in English first and be translated later.
We are also calling for the European Commission to establish a fast track through which to obtain greater flexibility for signing new free trade agreements. This would make it possible to enter into simple agreements that focus more specifically on trade. A basic deal is better than no deal at all.
When the proposals were approved by the Riksdag’s Committee on EU Affairs, the Social Democrats opposed them, as did the Green Party and the Left Party. However, several EU countries have recently backed Sweden’s position. It is clear to them that a new trade policy is needed to quickly secure new free trade agreements.
This is especially the case if we are to get five new free trade agreements over the line this year, which would be more than the EU has ever signed in a year. But that is precisely what is needed now. This would not only result in major economic gains and more secure value chains for European companies; it would also send a clear signal that the EU is serious about its support for free trade. As the US turns in on itself, the EU should be a bastion of trade and cooperation.
Benjamin Dousa, Swedish Minister for International Development Cooperation and Foreign Trade
