The EU accelerates the layout of the "free trade circle" and leverages the global trade pattern (global hotspots)

On January 17th, January 27th, and March 24th of this year, the European Union reached free trade agreements with the four founding members of the Southern Common Market (hereinafter referred to as "Mercosur"), India, and Australia. According to the website of Le Monde, the President of the European Commission, Ursula Vondrein, recently announced with pleasure that the EU has promoted a "trade trilogy" in just a few months, aiming to accelerate trade exchanges between the EU and other regions of the world. In a world where the United States is increasingly moving towards protectionism, the European Union is fully committed to a competition for a free trade agreement.

What are the core reasons why the EU has recently reached three major free trade agreements? What impact will the three major free trade agreements have on the EU's foreign policy and global economic and trade landscape? Our reporter interviewed Cui Hongjian, Director of the European Union and Regional Development Research Center at Beijing Foreign Studies University, and Chen Yang, Director of the European Studies Institute at the China Institute of Modern International Relations, to comment on this.

① Boosting confidence and highlighting its market attractiveness

The cooperation between the EU and the three parties can provide new markets, resources, and growth potential, which is conducive to the EU building a highly complementary economic and trade circle and a new economic closed loop, ultimately serving the core goal of enhancing European competitiveness

According to data released by the European Union:

The European Union Southern Common Market Partnership Agreement and the Interim Trade Agreement are expected to come into effect temporarily on May 1, 2026 (without the need for approval by the European Parliament), with zero tariffs on 91% of goods, saving EU companies about 4 billion euros annually, and focusing on opening up channels for South American agricultural products and key minerals.

The European Union India Free Trade Agreement will officially come into effect at the end of 2026-2027, covering a population of 1.9 billion and 1/4 of the global GDP. Industrial tariffs will be significantly reduced (such as from 110% to 10% for automobiles), and EU manufacturing and service industries will deeply enter the Indian market.

The European Union Australia Free Trade Agreement will be fully implemented in 2027-2028, with zero tariffs on 98% -99% of goods and targeting key Australian minerals such as lithium and aluminum. EU exports to Australia are expected to grow by 33% within 10 years.

Commentary: Cui Hongjian: The cooperation between the European Union and the Southern Common Market aims to build a small circle of key raw material supply chains to hedge against the United States' "Western Hemisphere Strategy"; Collaborate with India, recognizing its population size and market potential, and seek strategic balance in the Asia Pacific region through the Indo Pacific strategy; Cooperating with Australia values both its mineral resources and the value of its Indo Pacific strategic pivot.

For the EU, the benefits of the three major free trade agreements are self-evident. Firstly, the EU uses specific numbers to demonstrate the rationality and superiority of the free trade agreement, boost confidence, highlight its market attractiveness, and ensure that its strategic value outweighs its actual economic value; Secondly, against the backdrop of rising trade protectionism, the EU has demonstrated its defense of free trade by promoting free trade agreements and enhancing its international image.

Chen Yang: The selection of partners in the three major free trade agreements of the European Union has been carefully planned: the Southern Common Market is a typical representative of the global South and an important economic integration organization in South America; India is the most populous developing country with significant economic potential; Australia is a resource intensive country among developed nations. The cooperation between the EU and the three parties can provide new markets, resources, and growth potential, which is conducive to the EU building a highly complementary economic and trade circle and a new economic closed loop, ultimately serving the core goal of enhancing European competitiveness.

In the short term, the three major free trade agreements are buffer measures for the EU to cope with the impact of US tariffs, which can realize initial commercial benefits and provide stable industrial export markets and resource supply chain expectations for it. In the long run, the EU aims to leverage the "Brussels effect" by exporting high standard rules such as green transformation, digitalization, and labor through free trade agreements, binding the economic and trade systems of cooperative regions, creating an economic circle centered on EU rules, and achieving strategic autonomy goals.

② De risking and exacerbating the fragmentation of the multilateral trading system

Abandoning multilateralism and shifting towards bilateralism in the construction of the EU free trade zone will exacerbate the complexity of the international trade pattern, increase trade costs, drive other economies to follow suit, and further hinder the restart of the multilateral trading system. In the future, the EU's trade cooperation layout will focus on medium-sized powers and strategically valuable small and medium-sized countries, while deeply penetrating into the global South, taking into account the broad coverage of the "surface" and precise docking of the "points", and comprehensively considering core needs such as key raw materials, energy, and defense security

According to a report by the Financial Times, the three major free trade agreements of the European Union are a watershed in the global trading system: accelerating multipolarity, deepening blockchain, restructuring rules, and ensuring security. The three major free trade agreements open up domestically and build walls externally, strengthen multilateralism in the short term, and undermine the WTO in the long term. Global trade has shifted from "open globalization" to "selective camp based globalization".

The United Nations Conference on Trade and Development pointed out that 75% of global trade is covered by regional free trade agreements, and the European Union takes the lead in bypassing the WTO, accelerating the hollowing out of the multilateral system. The World News reported that the EU is pushing its own rules, further squeezing the voice of developing countries.

Cui Hongjian: Abandoning multilateralism and shifting towards bilateralism in the construction of the EU's free trade zone will exacerbate the complexity of the international trade pattern, drive up trade costs, drive other economies to follow suit, and further hinder the restart of the multilateral trading system. At the same time, if the EU's relevant free trade agreements are implemented according to its security strategy, they will exhibit exclusivity, undermine free market competition, and the agreed standards may also pose obstacles and constraints for other countries to sign free trade agreements.

In the short term, the EU is expected to continue promoting a country specific free trade zone strategy with deep strategic and security considerations, and integrating it with other strategies. If the adverse effects of international trade are not eliminated, the EU's foreign trade will form path dependence, and its coverage will expand and cooperation will be more targeted. The EU's trade cooperation layout will focus on medium-sized powers and strategically valuable small and medium-sized countries, while deeply penetrating into the global South, taking into account the broad coverage of the "surface" and precise docking of the "points", and comprehensively considering core needs such as key raw materials, energy, and defense security.

Chen Yang: The EU's creation of a so-called 'free trade zone without the United States' is essentially about creating exclusive small circles, building its own small cycle, challenging the global trade cycle, and promoting the trend of global trade polarization. As the main force of the traditional multilateral trading system, the EU has turned to small multilateralism, further exacerbating the fragmentation of the global multilateral trading system.

In the future, the EU's trade strategy will continue to advance along the track of "security and risk reduction", with a focus on expanding trade space to the global South, in order to create industrial and supply chains that are more in line with its own interests. This is also the mainstream consensus within the EU at present.

③ Adapting to pressure and promoting trade diversification

The three major free trade agreements of the European Union are not only tactical actions to respond to reality, but also significant shifts with strategic considerations. Their core is to instrumentalize trade and serve the overall foreign strategy and strategic autonomy goals

According to a German television station, the US trade policy is becoming increasingly unpredictable. Therefore, in recent months, the EU has accelerated the signing of multiple trade agreements aimed at expanding its position in global trade and stabilizing its supply chain. According to statistics from the European Parliament, as of March 2026, the EU has signed over 40 agreements involving investment and tariff concessions with more than 70 partner countries and organizations worldwide, with a particular emphasis on emerging economies.

The Financial Times reported that the European Union has built a de Americanized economic circle through a "trade trilogy": 83% of the EU's trade is outside the United States, and the three major free trade agreements are strategic milestones that directly weaken US trade hegemony.

Chen Yang: Weak global economic growth, anti globalization impacting trade, emerging industries reshaping growth patterns, and the economic logic of world trade gradually being replaced by security logic. In this context, the traditional economic model of the European Union, which is characterized by large inflows and outflows, with both ends being outward, is facing significant challenges. At the same time, the US tariff policy has brought enormous pressure, coupled with the risk of economic recession within the EU, making it urgent for the EU to find new ways out, which has become a direct driving force for the rapid implementation of the agreement.

The three major free trade agreements reflect the clear tendency of the European Union to reduce its dependence on the United States and promote strategic autonomy. With the increasing uncertainty of US policies and disregard for the interests of allies, the tight economic ties between Europe and the United States have become a new risk. Therefore, distancing itself from the United States and building an exclusive economic circle of friends has become an important choice for the EU to promote strategic autonomy, and economic autonomy is also one of its core considerations for strategic autonomy.

Cui Hongjian: The three major free trade agreements of the European Union are not only tactical actions to respond to reality, but also a major shift with strategic considerations. Their core is to instrumentalize trade and serve the overall foreign strategy and strategic autonomy goals.

From a strategic perspective, after the failure of multilateral negotiations at the World Trade Organization, the European Union has turned to bilateral economic and trade cooperation, no longer simply pursuing economic interests, but using free trade agreements as a means to expand markets and enhance competitiveness. It has also turned them into a "door opener" for foreign policy and strategy, with supporting diplomatic and security cooperation agreements aimed at building comprehensive strategic partnerships with partners, integrating systems such as markets, key raw materials, trade rules, and security policies.

From the perspective of practical reasons, firstly, the EU is responding to the impact of US tariffs and strategic pressure, getting rid of its dependence on the US economy, and promoting trade diversification; Secondly, in response to changes in the international trade landscape, the EU is promoting the clarification of the "Free Trade Zone" strategy, incorporating non economic factors such as energy, key raw materials, and security defense; The third is for the EU to proactively make concessions, lower the negotiation price for agricultural products, abandon the idea of reaching a traditional comprehensive economic agreement, and prioritize reaching a limited agreement with strategic significance.

The EU's strategic autonomy has never been limited to the fields of defense and security, but also includes the economic sector. In February 2021, the European Union released the "Open, Sustainable, and Confident Trade Policy", with the core of "open strategic autonomy". The EU deliberately added the word "open" before strategic autonomy in order to distinguish it from strategic autonomy in the field of defense and security, and is concerned that the international community may doubt the openness of its trade policy due to the EU's excessive emphasis on strategic autonomy. At present, the EU is attempting to instrumentalize trade and enhance its international discourse power by strengthening its trade relations with medium-sized powers and regional organizations. Its free trade circle construction uses the excuse of "horizontal cooperation among medium-sized powers" to promote defensive and non offensive measures.

④ Limited returns and uncertainty in execution

The three major free trade agreements of the European Union are a political project that prioritizes strategy over economy. They are easy to sign, difficult to approve, and even more difficult to implement. The core obstacles are the division of agriculture and values within the EU, sovereignty conflicts with partner countries, geopolitical hedging, and a gap in compliance capabilities. They are likely to fall into the dilemma of "long-term temporary effectiveness, partial implementation, and discounted strategic value"

According to Reuters, the European Union is pushing for high standards in areas such as human rights, climate, labor, intellectual property, and data; Mercosur, India, and Australia are sensitive to sovereignty, have weak compliance, and incur fatal compliance costs. According to a report by the Financial Times, the three major free trade agreements of the European Union are political projects that prioritize strategy over economy. They are easy to sign, difficult to approve, and even more difficult to implement. The core obstacles are the division of agriculture and values within the EU, conflicts with partner countries' rules and sovereignty, geopolitical hedging, and a gap in compliance capacity. They are likely to fall into the dilemma of "long-term temporary effectiveness, partial implementation, and discounted strategic value".

[Comment] Chen Yang: The implementation cycle of the three major free trade agreements of the European Union is long, and their effectiveness may be greatly reduced. Specifically, it is manifested as: firstly, unequal benefits among EU member states. Industrial countries such as Germany can expand exports, while agriculture in countries such as France, Italy, and Ireland is impacted by openness. Some countries may hinder the implementation of the agreement through "dragging" and "blocking" strategies; Secondly, the cooperating parties will take into account their own interests and will not fully open up the market. They will also use cooperation with the EU as a bargaining chip in negotiations with other economies and will not rely solely on the EU; Thirdly, the actual benefits of the agreement are limited, and the trade volume between the three major trading bodies and the European Union is far less than that of China and the United States. The billions of euros in tariff benefits also need to be verified in the long run, and the European Union has not found an effective way to offset the uncertainty of US policies and economy.

Cui Hongjian: Some free trade agreements need to be approved by the European Parliament in the future, and opposition from some countries may lead to compromised results, resulting in uncertainty in implementation. The EU's free trade arrangement will trigger strategic competition in the global free trade circle, and partners will not consider the EU as the only partner, which will lead to external competition for the EU. The EU's own strength is limited, making it difficult to extend trade cooperation to the diplomatic and security fields, and it is also difficult to have a comprehensive impact on distant partners.