Is #Australia getting closer to EU than ever before? EU-Australia Free Trade Agreement
There is one main reason why a key priority for the EU should be opening up market opportunities abroad. According to estimates by the European Commission, over the next ten to fifteen years, 90% of world demand will be generated outside Europe. Hence the importance of Free Trade Agreements (FTAs) designed to reduce the economic barriers which typically come in the form of tariffs and trade quotas. Formal negotiations on a FTA between Australia and the European Union will begin in early 2017. Now, it’s time to examine the potential effects of this deal.
What are opportunities that such an agreement could offer?
While Australia ranked as the twenty-first largest trade in goods partner of the EU (its key exports are gold, fuels, mining and agricultural products), the EU represents Australia’s third largest trading partner after China and Japan (its exports are predominantly manufactured goods). “The trade agreement with Australia will help us to ensure that shift to the Asia-Pacific region will mean that we can really keep our status as an important economic player in a region where we clearly see future growth,” said Christian Ewert, director general of the Foreign Trade Association. According to Steven Ciobo, Australian minister for trade, this deal will attract “vital new investment into the country, creating more local jobs, as European businesses look to Australia as a gateway to Asia”.
“The way that we see this free trade agreement, is an agreement between major developed economies which have shared values like commitment to democracy, commitment to the rule of law, human rights and sustainable development,” said First Assistant Secretary in the Australian Office of Trade Negotiation Alison Burrows. “The UE is now the only major trade partner that we do not have a free trade agreement with.”
Are there downsides to Australia-EU FTA?
Australia is a competitive agricultural exporter. Already in financial difficulty, European farmers fear increased imports of Australian agricultural products will drive them out of business. They are very likely to oppose any relaxation of protectionist measures.
However, according to Alison Burrows, there is no reason to consider EU-Australia relationships in terms of competition: “Don’t think of us as the agricultural exporter who is going to swamp the European market. We export €3 billion over Australian agricultural products but we import €4bn.”
Will Brexit harm EU-Australia FTA?
For services exports the UK is Australia’s crucial market within the European Union. The UE without the UK seems to be much less attractive to Australia.
Would Brexit bring Britain and Australia together? It is possible. British and Australian prime ministers have already declared they want a free trade agreement soon after Britain leaves the EU. “Our eyes are very much on doing a deal with the UE”, ensures at the same time Alison Burrows.
Time will tell whether Australia will make new friends in Europe or forge a stronger relationship with its old one.