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Putting the Australian-European Union bilateral relationship in perspective. Speaking notes for the introductory session of the CERC workshop on European Union-Australia relations, 9 July 2002
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CERC Workshop on
European Union - Australia Relations
Melbourne, 9 July 2002
Speaking notes for the introductory session
“Putting the Australian- European Union Bilateral Relationship in Perspective” Piergiorgio Mazzocchi
I believe this workshop is very timely for many reasons that I will attempt to
sketch during this presentation. In addition, for me personally, it represents
a good opportunity to share with you some perceptions and impressions,
after spending 4 months, almost day-by-day, since my arrival in Australia.
Let me start by saying that my perception is that our relations are
fundamentally sound and thriving, notably at the micro level, namely at the
level of individuals and firms, but I remain puzzled by the ambiguous
relations that exist between the two parties at the aggregate/official level.
There seems to be a somewhat pervasive divide made of mistrust and
abrasiveness on one side, and of irritation and dismissiveness on the other.
This divide finds its expression in rhetorical and often preconceived
formulas that seem to concentrate mainly around our agricultural relations,
even if these only represent a relatively modest part of the overall picture.
I was told recently that the reform of the CAP and the magnitude of the
new, good stories about the European Union should be better articulated and
explained in order to convince Australia that we are not the bad boys that
some in Australia still think we are. This is a task in which this workshop
can help us progress for the mutual benefit of the two parties. At the core of
the problem, there is, I believe, a problem of perceptions. The European
Union is still a puzzling entity that needs to be viewed through the new
prism of its emerging significance as a single actor, with its own institutions,
in a swiftly transforming world.
Let me now look at some recent developments that may be relevant for
Firstly, I am glad to note that there have been in recent months strong
expressions of interest and some significant events at the political level
aimed at stepping up the bilateral dialogue. These events include:
- the visit to the Commission by three senior Australian ministers -
Deputy Prime Minister Anderson, Foreign Minister Downer, and
Immigration Minister Ruddock - who went to Brussels on 18 April last
for the annual European Commission-Australia Ministerials.
- the visit of Trade Minister Mark Vaile to Commissioner Fischler, in
Brussels on 17 May.
- John Howard made his first visit to Brussels as Prime Minister to meet
with President Prodi on 10 July, the first such visit in eight years. The
last such visit was between Prime Minister Keating and president Delors
in June 1994. The meeting will be followed by a working lunch of the
PM with the whole Commission.
- Pascal Lamy, the European Commissioner for Trade, visited Australia
on 15-17 July, and met with senior Cabinet members.
- Commissioner Neilson, the Development Commissioner, will be visiting
Australia on 8 October.
- For 2003, we know already that Commissioner Patten will come to
Australia on 16-17 April.
- And a High Level Environment meeting is also being scheduled for 2003.
These events come in addition to the regular troika meetings held under
each new Presidency of the EU.
Secondly, there have been expressions of good intention on both sides to
further improve an already healthy bilateral relationship, which was
formalised by the 1997 Joint Declaration, and at the annual Ministerials on
last 18 April, it was agreed, and I quote from the Joint CommuniquÃ©:
“… it would be useful to review progress in cooperation in light of the
objectives of the 1997 Joint Declaration and we have instructed officials to
undertake such a review as well as to identify priorities for future
cooperation.” Thus both sides look forward to receiving at next year’s
Ministerial Consultations recommendations to advance the relationship
This underlines a clear need for a forward looking approach and I believe
that this workshop can provide a very relevant and timely input into the
review process and contribute towards the development of our thinking for
new areas for cooperation.
Similarly, Foreign Minister Downer supported the need for a new
perspective on Europe in his speech to the National Press Club on 7 May,
launching the new White Paper on Australia’s external relations, when he
said, “We need to work hard on building our links not only with the
individual member states of the European Union, but also with European
institutions. We need to see Europe through a new prism, not just through
the United Kingdom and traditional bilateral relationships.”
Thirdly, there is growing perception that the EU deserves a better
recognition in Australia’s external policies and that this can be achieved
without belittling relations with EU Member States. To this purpose, the
ambassadors of the EU submitted at the end of June a note to the Minister of
Foreign Affairs to contribute to the elaboration of the new White Paper on
Australia Foreign Policy to be published later this year.
As part of a separate process, Mark Vaile, Minister for Trade, appointed
John Azarias, to report to him on ways to improve business links between
Australia and Europe. I understand Mr Azarias has presented his draft report
Moving now to the substance, I want to briefly hint to some of the reasons
why the European Union-Australia relationship is important to the two
First, in a simple economic perspective, the European Union is an
important and growing player in the global economy:
- The European Union is a huge single market currently consisting of 381
million affluent consumers from 15 member states. With the
enlargement that is presently negotiated, the EU will expand eastwards
and to the south and is expected to incorporate up to 13 new member
states, bringing the total population to more than 500 million.
- At present, the EU is the world’s second largest single market (after the
US) and is more than 20 times the size of the Australian economy.
- The European Union is also a world-leading trader (second after the US),
accounting for $A2.9 trillion or 18% of the world total two-way trade in
2001. It is the world’s largest exporter and the second largest
importer. Its two-way trade is over double that of Japan and 14 times
that of Australia.
Our bilateral economic and trade relationship is vibrant and growing rapidly.
However, because the focus is usually on individual member states, the
importance of the EU to Australia is not generally recognised. This
point of view has been rightly echoed in recent media reports of comments
by Foreign Minister Downer. Let me give you some brief statistics:
- The EU has been Australia's largest economic partner for the past 11
years. By economic, I mean the total of all international transactions that
involve trade in goods, trade in services, investment income and transfer
payments measured on a two-way trade basis. By partner, I mean an
established single market like the EU or the ASEAN. APEC, for
example, is not yet - and probably will not be for some time - a single
- For 2000-2001 (latest available), the overall EU-Australia economic
relationship grew by 6.5%, to reach $A70.6bn and accounted for a
19.5% share of all Australian overseas transactions (the USA’s share was
17.4%, Japan 13.1% and ASEAN 12.7%);
- The EU is Australia’s largest merchandise trading partner (a status it
has held since 1995-96), with two-way trade amounting to $A39.5bn in
2000-01 or 16.6% of the total (Japan's share was 16.3%, the USA 14.3%
and ASEAN 14.0%);
- The EU remains Australia’s largest partner for trade in services, being
both the largest export market for Australia (growing by 12.8% in 2000-01 to an estimated $A6.5bn) and the largest supplier of services
(increasing by 6.9% to $A7.5bn);
- Total two-way trade in services between the EU and Australia was worth
an estimated $A13.9bn in 2000-01 or 21.5% of the total trade (the USA’s
share was 18%, ASEAN 15% and Japan 9%);
- The EU remains Australia’s leading investor, with an accumulated
investment of about $A270bn at the end of June 2001 or 33% total
foreign investment in Australia (the USA’s share was 29%, Japan 6%,
and ASEAN 4%);
- Importantly, investment by the EU has created many jobs in Australia,
estimated (in 1999) to total 350,000;
- The EU is the second major investment location for Australian funds
invested overseas reaching $A99.7bn or 24% of the total by June 2001
(the USA’s share was 43%, Japan 7% and ASEAN 5%).
Secondly, there is the political relationship. The EU, as an entity, in spite
of the fact that its construction has been underway for 50 years, is still in its
infancy. The areas of common foreign and security policy, as well as the
cooperation in the field of justice and home affairs, have been added only in
1992 by the Maastricht Treaty.
But the EU-Australia Political dialogue that takes place every six months,
under each new Presidency, is becoming an increasingly useful mechanism
to exchange views in these areas, with Europe particularly valuing
Australia’s security perceptions from its vantage point in the Asia-Pacific region.
Thirdly, our healthy bilateral relationship reflects strong similarities between
the EU and Australia. Our societies spring from similar roots and we share
common values, we both:
- support democracy, the rule of law, and respect for human rights and
- support peace and promote international security in accordance with the
purposes and principles of the Charter of the United Nations;
- support international efforts in the areas of non-proliferation of nuclear,
chemical and biological weapons, the non-proliferation of missile
technology and the international transfer of conventional weapons;
- pursue policies aimed at achieving a sound world economy marked by
sustained economic growth with low inflation, a high level of
employment, environmental protection, equitable social conditions and a
stable international financial system;
- promote free market principles, improve market access in conformity
with the WTO rules, and expand, promote and strengthen the multilateral
- help developing countries in their pursuit of sustainable development and
their efforts towards implementing political and economic reforms by
providing development assistance, broadening market access and
encouraging the efficient use of foreign assistance and national resources.
Fourthly, in addition to these shared values, the EU is well aware of the role
Australia takes as an independent medium size economy in both its
immediate region and in international fora.
Taking into account the many reasons just mentioned to underline the
importance of our relationship, we can ask whether the cooperation is
adequate and if it can be further enhanced?
In spite of this sound picture of convergence, we mainly hear about the areas
where we disagree because it makes good headlines in the press. The main
area has been for a long time agricultural support, and climate change has
been added recently. On climate change, incidentally our disagreement is
more about process than principle.
In fact, most often the positions of Australia and the EU are quite closely
aligned and we work closely together. Good examples include trade in
services, most environmental issues, governance, etc., and since we both
follow thorough, open and transparent decision-making processes, we have
much to learn from the experiences each other in developing new best
As already mentioned, we have the Joint Declaration on EU-Australia
relations signed 1997, which provides the overall framework for our formal
government-to-government relationship. (Asia Document)
I know that my predecessor has pressed hard for a fully-fledged Framework
Agreement, rather than a Joint Declaration. I now believe that while such
formal aspects were perhaps useful in the conditions prevailing in the 1990s,
we have now moved on.
And I am convinced that the Joint Declaration, as an overarching
framework, is already broad enough for us to use as a hook to hang
virtually any relevant initiative. The focus should therefore be on
making best use and improving specific existing provisions and possibly
devising new actions.
Let me now look at some of the specific areas:
Science & Technology cooperation will be an important focus of today’s
discussions. This is not surprising when one considers that collectively EU
countries constitute Australia’s premier international research partner, when
measured by joint citations in scientific papers published. An increasingly
important feature of the Australian-European research cooperation is the
EC-Australia Science & Technology Agreement, which was signed in
1994 and expanded in 1999. This facilitates mutually beneficial research
cooperation between Australia and the EU and since 1999 has involved over
$100m of joint research across a range of topics including health, global
environment issues, transport, manufacturing, agriculture and importantly
the new economy sectors of the information society and biotechnology.
As post-industrial economies, both Australia and the EU must take full
advantage of these new technologies if we are to maintain our place in the
world and the living standards of our citizens. While our traditional
industries will remain important, we must look to the new industries for our
More broadly European science & technology is becoming increasingly
integrated, driven by the increasing cost and complexity of research. This is
reflected in the European Research Area initiative and an increased
emphasis in Europe on international collaboration. In recognition of these
developments the European Union and Australia have established the Forum
for European-Australian Science and Technology cooperation
(affectionately known as FEAST) as an information and networking tool to
facilitate further collaboration between Australia and Europe, at both an EU
and member state level.
The need and benefits for research cooperation are clearly apparent. We
have some instruments in place and we have some successes. But are we
really making the best of the opportunities and if not what can we do to
improve the situation? I hope the answer to this question will be more
articulate than the inevitable request from researchers for more money, and
will also address other issues such as better models for cooperation.
Cooperation in Education is also of importance and perhaps as yet
underdeveloped. It is an area that is of specific interest to some here in
There have been discussions for some time on the scope for greater
cooperation in this field, with the first concrete outcome being the
announcement this year of a joint pilot exchange programme aimed at
encouraging cooperation in higher education.
This pilot project will enable postgraduate (Masters) students from the
Member States of the European Union to study in Australia, and Australian
postgraduate students to undertake study in a minimum of two EU Member
States. The pilot project will involve between 25 and 40 students from each
side, who will undertake the exchanges for a period ranging from one
semester to one year.
Last year we provided significant EU funding to establish the National
Europe Centre. Whilst this is located at the ANU in Canberra, I have been
emphasising, whenever I have had the opportunity, that this is a
NATIONAL Centre with a clear mandate, to operate across Australia, in full
cooperation with other centres. Accordingly, I see the NEC and institutions
such as yours working hand in hand.
The NEC has three main aims: to foster improved relations between
Australia and the EU and its constituent member states, candidate countries
to the EU, as well as other countries in Europe; to serve as a platform for a
better understanding of the EU, the constituent member states and their
institutions in Australia; and to develop as a centre of academic excellence.
I am looking forward to your input on what you would like to see from
this Centre and how you envisage your engagement with the NEC. Also
what further steps should be taken to develop further education
Looking more at the business relationship, we have the treaty covering
Mutual Recognition Agreement on Conformity Assessment, signed in
1999. This is somewhat of a clumsy title and so is normally referred to as
the MRA. In short, its purpose is to reduce technical barriers to trade and
to facilitate trade by allowing conformity assessment (testing, inspection and
certification) of products traded between Australia and the EU to be
undertaken in the exporting country rather than being carried out at
In the case of Australian exporters, this means that the compliance with the
requirements and technical norms contained in the relevant EC Directives
can be established in Australia, and the CE marking applied to the product
prior to export. In this way the product can be placed on the EU market with
no further intervention by EC authorities.
Again, I believe we should be asking ourselves whether this agreement is
working to its full potential, and if not, why not and what can be
improved. Perhaps we should also be asking ourselves the question whether
we should not be looking at more ambitious steps, such as moves to
harmonise the standards themselves, such as has largely happened in the
area of pharmaceuticals Good Manufacturing Practice?
on, which assists in the development of wine trade by addressing the
necessary regulatory issues required for this product.
The growth in exports in wine is an outstanding success story for
Australia. Australia has become the number one supplier to the EU of
wine, with over $A1 billion of wine exported to the EU last year.
Importantly for Australia, the expansion of the wine industry provides
opportunities for greater employment in rural areas. Addressing rural
development and rural employment is a common challenge faced by
Australia and the EU alike and one where I believe there should be greater
cooperation and sharing of experiences. Speaking of wine I should mention
that some forward looking attention should be given to olive oil, another
Mediterranean product for which I understand there have been huge
plantations in south Australia and Queensland that will come to the market
in two years time.
Finally, from the formal Treaty level agreements point of view, there is the
1982 Agreement between the Australia and the European Atomic Energy
Community (Euratom) concerning transfers of nuclear material from
Australia to Euratom. Essentially this is a safeguards agreement, ensuring
that Australian nuclear material can only be used for peaceful purposes.
There is also a range of lower level cooperative instruments (exchange of
letters, groups and arrangements) across a range of sectors, involving
various levels of intensity of commitments. These include: agriculture,
energy, environment, industry, development, information economy and
I would be interested to hear your views on where any of these
instruments of cooperation should be intensified and the other areas
where an improved bilateral dialogue would enhance our relationship.
I would now like to conclude these considerations by briefly highlighting
some of the major developments that will impact on our future
1. We had the successful launch of the euro in January this year. The euro
is extremely important in its own right, both as a symbol of integration and
for the tangible benefits it will bring such as reduced transaction costs and
increased transparency. Its introduction should also be viewed in the overall
context of an ongoing process of further deepening and integrating the single
2. Enlargement of the EU will bring many challenges for the European
Union and opportunities for its partners. I have already highlighted the
opportunity of a larger single market of some 500 million affluent
consumers - potentially all dealing with the same set of rules and all having
a single currency. Enlargement will also bring with it pressure for continued
reform and evolution of EU policies and programmes, notably the CAP, to
ensure their sustainability in budgetary terms.
3. In this respect, and particularly given the Agricultural focus on
agricultural matters, the Mid Term Review report of Agenda 2000 released
on 10 July in Brussels. This, in spite of not very favourable political
conditions, included ambitious proposals for further reorientation of support
away from market support to much less trade distorting support for rural
development, food safety, environment and other social values.
4. The Doha Declaration has opened new negotiations in WTO, during
which practically all trade issues will be on the table.
5. Still linked to enlargement, is the review of EU structures and
institutions. Currently we are at the stage where a Convention formed last
December is preparing for an Intergovernmental Conference in 2004. This
IGC is expected to introduce the changes to the existing Treaties that are
considered necessary to accommodate the enlarged Union. These may
include a reorganisation and simplification of the existing texts, a new basic
treaty which would in essence be a Constitution for the EU, and make other
institutional changes, including perhaps changing the present system of a
rotating Council presidency, the number of Commissioners, and member
state voting rights.
6. Over time we can expect further developments in the second and third
pillars of the EU, namely: common foreign and security policy and home
affairs and justice. This will mean that the European Union as an entity will
become an even more important player in addressing global strategic issues.
7. In addition to agricultural issues, let me mention another area of
potential friction that has so far been somewhat dormant. It is the
attitude towards multilateral solutions to international problems.
Australia has recently tended to side with the United States. In its position
of uncontested single major world power, the US tends to adopt a
philosophy of anti-multilateralism, objecting to international treaties,
perceived as attempts to curtail the US freedom of action. At the basis of
this approach, there is the American idea of “exceptionalism”, while Europe,
because of its very essence, places far more reliance on multilateral rules and
institutions than the US.
This is an area of possible turbulence in our relations on which some
forward-looking reflection would appear justified.
This has been a very brief review of some of the issues underpinning the
European-Australian relationship, hoping that in spite of its little analytical
content, will provide some perspective for today’s proceedings.
Let me stop here.
In conclusion, I would like to congratulate the organisers and, in particular,
Professor Philomena Murray, for picking such a relevant and timely topic
for discussion. I also wish each and every one of you that the debates during
this workshop will be very fruitful, assuring you that the points that will be
discussed today, and your conclusions, will be carefully taken into