The EU and Australia share strong bonds in all domains and bilateral relations are deeply-rooted and expanding. The EU and Australia concluded the negotiations for a political Framework Agreement. This deal contains a number of economic and trade cooperation arrangements. The annual senior official-level Trade Policy Dialogue regularly meets to discuss bilateral trade relations.
There is a Mutual Recognition Agreement between the EU and Australia to facilitate trade in industrial products by reducing technical barriers. The agreement creates mutual recognition of conformity assessment procedures. This is done to reduce the cost of testing and certifying of exports and imports. Australia is part of the Asia-Pacific Economic Cooperation (APEC), the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). Australia is also a member of the World Trade Organisation.
EU – Australia relations
The European Union and Australia enjoy a strong, dynamic and continuously evolving partnership. This relationship has its foundations in the 1960s. Today the relationship is currently based on the 2008 European Union – Australia Partnership Framework. It is a comprehensive statement of shared values and close historical, political, economic and cultural ties. As our relationship evolved, the EU and Australia have moved to upgrade bilateral ties. To this end in 2017 the EU signed the EU Australia Framework Agreement.
EU-Australia leaders’ meeting via video conference
Building on the close relationship between the EU and Australia, which was formalised through a bilateral Framework Agreement in 2017, the leaders reconfirmed their determination to work together to tackle the coronavirus pandemic, including the development and provision of affordable vaccines and the support of the World Health Organisation.
They committed to step up cooperation on the post-pandemic socio-economic recovery, tackling the urgent challenge of climate change and accelerating the digital transformation. The leaders noted good progress in the ongoing negotiations for an EU-Australia Trade Agreement. They also discussed international developments including in Asia and the Pacific as well as cooperation in international organisations. The leaders also recognised the importance of further engaging with ASEAN.
Foreign & Security Policy
The EU and Australia are likeminded partners on the international stage. They work together to find solutions to global challenges, both bilaterally and multilaterally. Strategic cooperation is on-going in areas such as counter-terrorism, migration and asylum, non-proliferation of weapons of mass destruction, prevention and fight against organised crime, development and humanitarian aid, promotion and defence of human rights as well as supporting the rules-based international system.
Regular consultations underpin this cooperation, together with other forms of concrete collaboration. Australia contributed to EUCAP NESTOR, an EU-led maritime capacity building mission in the Horn of Africa and Western Indian Ocean, and the EU Advisory Mission in support of Security Sector Reform in Iraq (EUAM Iraq). A specific bilateral agreement on cooperation in crisis management enables Australian participation in EU-led crisis management missions around the world.
Despite having only 6% of the world’s population, the EU accounts for 15.4% of world GDP and its imports and exports with non-EU states accounts for 15.5% of global trade. This makes the EU the second-biggest trade player in the world (after China). It is simultaneously the world’s biggest investor; the source of 30% of the world’s foreign direct investment (FDI), as well as the top investment destination, receiving 34% of world FDI.
The EU’s trade policy safeguards growth and jobs in Europe. The European Commission ensures that negotiated trade deals result in market access for EU exporters. Globally, the EU has more than 200 Free Trade Agreements in place, covering a third of global trade.
The EU and Australia share a strong economic relationship. The EU (27) is Australia’s second-largest trading partner (after China and Japan), and its second-biggest trading partner in services. It is also the third-largest source of foreign investment in Australia, and the third-most popular destination for Australian FDI abroad.
The EU as a key trade partner for Australia
In 2019, the EU (27) was Australia’s third-biggest merchandise trading partner, accounting for AUD 60.9 billion (or 8.7%) of Australia’s total goods trade. 15.8% of Australian goods imports, worth AUD 48.7 billion, were from the EU (second after China), while 3.1% of Australia’s goods exports, worth AUD 12.2 billion, were destined for the EU; making it Australia’s eighth-biggest customer for goods.
The EU is Australia’s second-largest services trading partner (after the USA). EU has AUD 21.5 billion worth of two-way services traded in 2018 (11.3% of Australia’s total). It was the second-largest services supplier (after the USA), representing 14.7% of Australia’s services imports (worth AUD 14.4 billion). Also the EU is the third-biggest client of Australian services, purchasing 7.6% of Australian service exports (worth AUD 7.1 billion).
In 2019, the EU became the third-biggest investor, with total investment worth AUD 684 billion, or 18% of Australia’s total.
The EU-Australia Free Trade Agreement Negotiations
In November 2015, Australian Prime Minister Malcom Turnbull together with European Council President Donald Tusk and European Commission President Jean-Claude Juncker, agreed to initiate the process of launching of Free Trade Agreement (FTA) negotiations. Later in September 2017, President Juncker proposed starting trade negotiaions with Australia. In his State of the Union address to the European Parliament, and in May 2018, the Council of the EU granted the European Commission the negotiating directives to commence trade negotiations with Australia. The negotiations were formally launched by European Trade Commissioner Cecilia Malmström, Prime Minister Malcolm Turnbull and Trade Minister Steven Ciobo in June 2018 in Canberra.
EU-Australia trade agreement
On 22 May 2018, the Council of the European Union adopted the decision authorising the opening of negotiations for a Free Trade Agreement. So far the EU and Australia have been conducting their trade and economic relations under the 2008 EU-Australian Partnership Framework. This aims to facilitate trade in industrial products by reducing technical barriers and improve trade in services and investment.
EU has launched negotiations for a comprehensive and ambitious trade agreement between the EU and Australia. The negotiations aim at removing barriers to trade in goods and services. Also talks are developing trade rules to make trade easier and more sustainable.
Bilateral trade in goods and services
The EU is already Australia’s second biggest trade partner. Bilateral trade in goods has risen steadily in recent years, reaching almost €48 billion in 2017. The sectors which make up the bulk of EU exports to Australia are transport equipment, machinery and appliances, chemicals, food, and services. Bilateral trade in services is around €28 billion.
Australia ranked as the 19th-largest trade in goods partner of the EU. The EU represented Australia’s 3rd-largest trading partner in 2018, after China and Japan and before the US. Total trade in goods account for 47,6 billion € in 2018 (EU surplus of 24.4 bn €), and total trade in services add another 33 billion € in 2017 (EU surplus 14 bn €).
EU bilateral trade with Australia and New Zealand together is about roughly the same size as with Mexico or Canada. To be noted that the EU has a longstanding trade surplus with Australia also for agricultural and processed agricultural products when taken together (1,310m € in 2018) so is not in all areas defensive on agricultural products.
A balanced and progressive trade policy to harness globalisation
The EU and Australia share strong bonds in all domains of global challenges and bilateral relations are deeply-rooted and expanding. Global trade is a key contributor to a competitive and prosperous European Union, with more than 30 million jobs supported by European exports to the rest of the world.
A globally integrated economy continues to benefit both large and small or medium sized European companies, as well as European citizens, workers and consumers.