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Australia refuses to sign trade agreement containing human rights clause, but considers trade with the European Union to be vitally important to Australia's economy

KERRY O'BRIEN: Now to Australia's latest trade problems, this time with Europe. It looks like a new trade and cooperation agreement could collapse because Australia refuses to sign a human rights clause in the deal. Right now, Foreign Minister, Alexander Downer, is in Brussels and he's told the Europeans, Australia won't sign any agreement that links trade to human rights even though that's standard practice for Europe, and they have made it clear there'll be no exception for Australia.

Barrie Cassidy reports on Alexander Downer's latest dilemma.

BARRIE CASSIDY: To Alexander Downer, human rights and trade are like sport and politics, they should never mix; but that's not the way the Europeans see it. They now insist on a human rights clause in all of their trade and cooperation agreements no matter who they are with because, as they discovered when they became the world's largest integrated market, everybody wants to do business with them, including countries with poor human rights records.

ANEURIN HUGHES: There was an electorate in Europe which said: 'Look, we don't want to be establishing formal agreements of giving aid et cetera, et cetera, when some of these countries are operating dictatorships and are seriously abusing elemental human rights.'

BARRIE CASSIDY: And the Tiananmen Square massacre in Beijing reinforced that attitude, that in extreme cases they should be free to break off agreements, and they have done that twice: to punish Nigeria and Somalia.

But Alexander Downer worries about the principle. And it's true there is a widespread view on the conservative side of politics that Australia is bound by too many international covenants.

STEPHEN HALL: It may well have something to do with Australia's reluctance to cede or to engage in activity which is perceived as ceding some of Australia's sovereignty over human rights questions in an international treaty. And the Australian Government had .. the Coalition has had some difficulty with these sorts of questions in the past.

BARRIE CASSIDY: And even some of those who do business with Europe share the same concerns about linking trade with human rights.

BRENDA DEGENHART: We can work out our trade on trade itself, on commercial interests, and not on this human rights issue. I think it's been taken completely out of context.

BARRIE CASSIDY: But the European Union's Ambassador says all that misses the point.

In your knowledge of the country, does Australia have anything to fear by signing a clause like this?

ANEURIN HUGHES: Well, in our view, absolutely none because there's no distinction in your respect for fundamental human rights and ours. And I've heard what people have said about fears that some pressure groups might use this agreement as a club to knock Australia on the head. But frankly, we feel that the possibility of that happening is so remote that it's a little unconscionable that this should stick out as a sore thumb because it doesn't do, I think, Australia any good at all because a lot of people are saying, 'Australia! Human rights! Got a problem!' and not understanding really that there is no problem about human rights between us.

BARRIE CASSIDY: And that being the case, the Government's attitude then raises suspicions, at least in the mind of one Aboriginal leader.

NOEL PEARSON: If there's nothing in our recent history about which we can feel ashamed, is there something in our prospective history about which we might feel that we are going to enter into a breach of human rights?

ALEXANDER DOWNER: Point to understand is we are about taking the relationship forward and this isn't a discussion about different ways of taking it backwards. And if it wasn't for the differences of view on the formulation that the European Commission has been putting forward, well there wouldn't be any disagreement. But there is a disagreement about that and we're exploring various options to see how we can take this forward.

NOEL PEARSON: Well, are we anticipating the day when, in order to conduct our international business, we're going to have to skulk around like some tinpot banana republic, ashamed of our human rights record, and needing not to be bound by human rights commitments, because we have something to be ashamed of? Clearly, we don't have anything to be ashamed of.

BARRIE CASSIDY: If the agreement collapses, Australia risks slipping down Europe's pecking order as new areas of cooperation are developed.

STEPHEN HALL: It covers, potentially, a very wide range of areas with an entity, the European Union, which is clearly of signal importance to Australia. For example, the European Union is Australia's largest economic partner, larger than Japan, when you take into account, not only merchandise trade but trade in services, our financial transfers and direct foreign investment. It's in fact .. the European Union is in fact vitally important to Australia.

BARRIE CASSIDY: And there would be important political consequences as well.

STEPHEN HALL: It could certainly set back relations between the European Union and Australia, at least at the political level if not at the legal level. If the treaty were to collapse over an issue such as a human rights clause, I think that would be tragic for the health of the European Union-Australian relationship. I don't want to overstate that, the relationship would remain friendly, would remain warm, it would remain constructive, but it would certainly be a setback.

BARRIE CASSIDY: To the point where important opportunities would be lost on both sides, according to Ambassador Hughes.

ANEURIN HUGHES: We won't have a budget plan. I think if we had a formal agreement, there would have to be an injection of funds from our side and from the Australian Government's side, to try and push the boat out further et cetera, and I would find that very, very regrettable being the head of delegation here in Australia, where the degree of ignorance about the European Union and its policies and the importance of the relationship between us is still pretty abject.

KERRY O'BRIEN: Political editor, Barrie Cassidy.