RELATIONS BETWEEN AUSTRALIA AND THE EUROPEAN UNION

Budapest Business School FACULTY OF INTERNATIONAL MANAGEMENT AND BUSINESS INTERNATIONAL BUSINESS ECONOMICS Regular student Economic diplomacy RELATIONS BETWEEN AUSTRALIA AND THE EUROPEAN UNION Written by: Kovács Gyöngyvér Budapest, 2004

Table of contents Introduction 4 1. Political relations between Australia and the European Union 5 1.1. History in brief: European roots of Australia 5 1.2. Political ties between Australia and the European Union 7 1.3. Agreements concerning political relations between Australia 12 and the European Union 1.3.1. Joint Declaration on Relations between Australia 12 and the European Union 1.3.2. An agenda for future cooperation 17 1.3.3. Cooperation in education 20 2. Economic relations between Australia and the European Union 22 2.1. Agreements concerning economic relations between 22 Australia and the European Union 2.1.1. Mutual Recognition Agreement between 23 Australia and the European Union on Conformity Assessment, Certification and Markings 2.1.2. Wine Agreement between Australia and 26 the European Union 2.1.3. Agreement between Australia and Euratom 26 2.1.4. Agreement on Coal between Australia and 27 the European Community 2.1.5. Arrangement for Information Sharing on Consumer 28 Policy and Protection between the Government of Australia and the European Commission 2.1.6. Agreement on Scientific and Technical Cooperation 29 between Australia and the European Community 2.2. Australia s trade policy 30 2.3. Australia s trade with neighbouring countries 36 2.4. Australia s trade with the European Union 38 2

2.4.1. Merchandise trade between Australia and the 40 European Union 2.4.2. Trade in services between Australia and the 46 European Union 2.4.3. Obstacles in trade relations between Australia 48 and the European Union 2.5. Investments 51 3. Relations between Australia and Hungary 55 3.1. Political relations between Australia and Hungary 56 3.2. Economic relations between Australia and Hungary 58 3.2.1. Trade relations between Australia and Hungary 59 3.2.2. Investments 62 Conclusion 63 Table of figures and tables 65 Bibliography 66 Annexes 71 Annex I 72 Annex II 84 Annex III 85 Annex IV 89 3

Introduction Trains which arrive on time do not make headlines. HE Piergiorgio Mazzocchi, the current EU Ambassador to Australia quoted that French saying when speaking about the relations between Australia and the European Union. I myself also believe that this is an exceptionally telling remark. Australia s close relations with Europe (especially with the United Kingdom) are almost taken for granted, even if the partnership with the European Union is not as unambiguous. The European Union is Australia s largest single economic partner. True. Nevertheless, thinking about Australia s geographical location one can not help but realizes the country s awkward and yet interesting situation: a country with European roots, culture, parliamentary system stuck in the Asia Pacific region. The question whether Australia should pursue closer partnership with the European Union or should abolish its European roots instead to fit in the Asia Pacific automatically arises. I am not doubting the current importance of the European Union for Australia, but can this relationship be maintained in its present form? If so, do the parties make every effort to forge closer links between themselves? Should Australia choose between Europe and the Asia Pacific at all? In my dissertation I attempt to outline the development of the relationship between Australia and the European Union. I examine this partnership mainly from an Australian point of view, because - coming about of an asymmetry nature of their relations - Australia is much more in need of the European Union than inversely. I closed data collection in December 2003. I would like to express my thanks to dr. Majoros Pál and dr. Gyürk István for assisting me with their advice. 4

1. Political relations between Australia and the European Union 1.1. History in brief: European roots of Australia In connection with the relations between Australia and the European Union the first question might enter one s mind is if there is any relation at all, with Australia being so far away and down under. The answer is yes. Australia has long had strong ties with Europe, since the origins of white Australia were solely European. After the Dutch and probably the Portuguese, William Dampier was the first Englishman to reach Australia s Western coast, and because he was not very fond of the view he had found, the British government had not shown interest in the island for a long time, at least not until the French began to quest out the Terra Australis. The rivalry was decided for the benefit of the British, when Captain James Cook set foot on Australia s shore in 1770, and after rounding Cape York, he claimed the land for the British Crown and named it New South Wales. To the proposal of Joseph Banks the transportation of convicts from Britain started in 1787 thus resolving the problem of overcrowded prisons in the mother-country. A colony was established on the 26 th of January in 1788 in Australia, after the First Fleet arrived in Sydney Cove with 750 convicts on board, under the command of Captain Arthur Philip who became the colony s first governor. In the early times it was a harsh place to live with permanent difficulties and the threat of starvation. It was Lachlan Macquarie (governor-general of New South Wales between 1809-1821) who lay the foundations of the development of Australia. He had roads and public buildings built, introduced merinos and continued the exploration of the land. Unlike in the case of European settlements of America, early exploration in Australia usually happened for the following reasons: to find suitable places for secondary punishment (for example the penal settlement on Norfolk Island), to occupy land before anyone else arrives or, in a better case to find adequate grazing grounds. Following the governance of Macquarie the face of the settlement slowly began to change, the former prison island became a colony: in 1823 New South Wales was declared a crown colony, then in 1825 Tasmania got a governor, in 1829 Western 5

Australia was formed with South Australia in 1836 and Queensland in 1859. The transportation of the convicts ended in 1853, with the last transport arriving in Tasmania. During the gold rush (which started in 1851) free settlers arrived in the hope of making their fortune. The huge influx of immigrants during that time and large finds boosted the economy and changed colonial social structures: the stock-breeder and the landowner became extremely rich while aborigines were deprived of their tribal lands as new settlers took up land for farming or mining. Ties with Britain grew even stronger as Australia s agricultural and mineral resources were suited to meet the demand of raw materials required by the Industrial Revolution in England. Australia became a nation on the 1 st of January in 1901, when the federation of the six states (New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia), 1 the Commonwealth of Australia came into existence, although it continued to accept (and still does) the Queen of Britain as the head of the state, and preserved many of the legal and cultural links with England. However, their relation slightly began to weaken during the Second World War, when Australia started to seek alliance with the United States of America, as a result of the threat of the Japanese in the Pacific region. Australia s ties with the mother-country loosened further in the following years, in terms of both political-cultural and trade relations. Great Britain s share in Australia s commerce showed a downward tendency: in 1949 Britain s share in Australian imports was 50,5% and took over 42,5% of Australian exports, these figures in 1960 were 37,5% and 25,7%. 2 A shift also followed in Australia s culture. Post World War II immigration brought a flood of European immigrants, but many of them were not British citizen. The Australian way of life originated no longer from the conventional British type but rather followed the lifestyle of the United States. Relations with the Asia Pacific region became lively, although Australia did not really support immigration from that region, not until the 1980s, when the decreasing number of Australian population became an issue. That was the time when the idea of multiculturalism was brought up and has been mostly supported ever since. Australia s recent efforts to fit in the Asia Pacific region has raised the question of the form of state and has brought about a heated debate. Finally Australian Prime 1 It was not until 1911 when the Northern Territory joined the Commonwealth of Australia. 2 Egedy Gergely: Ausztrália története (Aula Kiadó Kft, Budapest, 2000, page 311) 6

Minister John Howard called a referendum on the 6 th of November in 1999 to decide whether Australia should become a republic or should stay a constitutional monarchy with Elisabeth II as the head of the state. The national referendum resulted in a victory for the status quo, 55% of the citizens voted for the constitutional ties with Britain. It has to be mentioned though that a considerable suspicion against the political elite might have taken part in the result, since in the case of the republic the president would have been elected by Members of the Parliament. 3 By the way, the equal distribution of votes indicates that Australia has still a long way to go to find a collective identity of its own. 1.2. Political ties between Australia and the European Union The remarkable change in Australia s orientation (Australia s turn towards the Asia Pacific region and the United States of America) does not mean that it completely turned its back on Europe. Regarding Australia as an Asian country would be quite problematic. According to Samuel Huntington, a political scientist of the United States, any regional cooperation could only be successful as long as the participating countries are not only linked by geographical location. In Australia s case that means its economy should go beyond the bounds of culture and it should break with its European roots, which is pretty unimaginable. Even Asian leaders think that it is impossible to consider Australia as part of Asia. Mahathir Mohamad, Prime Minister of Malaysia, refused Australia s joining to the East Asian Economic Integration because of the following reason: From a cultural point of view Australia is still European at least we think it is. 4 So the ties between Australia and Europe remains, even if the relation between Australia and the United Kingdom is not as intense and strong as it used to be. Australia and the European Union are not only linked by their interwoven past and history 3 The question proposed in the referendum was the following: A proposed law: To alter the Constitution to establish the Commonwealth of Australia as a republic with the Queen and the Governor-General being replaced by a President appointed by a two-thirds majority of the members of the Commonwealth Parliament. Do you approve this proposed alteration? (see also Annex II) 4 Mahathir Mohamad, Prime Minister of Malaysia 7

(through the United Kingdom and the immigrants from the old continent), but also share many common views in the area of foreign and security policy. Their common goals include the support of democracy and the rule of law, the promotion of peace and security, a sound economy, a stable international financial system and a strong multilateral trading system. They have similar democratic parliamentary systems, both parties participate in international organizations such as the United Nations, the OECD and the WTO, with usually similar interests, they even have to face similar economic and social problems like growing income inequalities, educational directions, social cohesion or aging population. 5 Although economic relations have always been emphasised and have been the centre of the relationship, in the meantime political relations between the two sides have also grown stronger. The following chronology shows the development of political relations between Australia and the European Union: 6 1962 8 March: Sir Edwin McCarthy, CBE 7, the first Australian Ambassador to the European Communities, acceded to office in Brussels. 1974 September: Sir Christopher Soames 8 visited Canberra. An agreement came into existence to hold informal consultations at official level between the European Community and Australia. December-January: Gough Whitlam, Prime Minister of Australia, visited the European Commission. 5 The problem of aging population has become a real threat as it puts more and more pressure on existing pension systems. 6 Chronology adapted from: Australian Research Council Project Australia-European Union relations: Problems, Prospects and Options for future cooperation, Annmarie Elijah, Dr. Philomena Murray, Carolyn O Brien (Department of Political Science and Contemporary Europe Research Centre, University of Melbourne, 2003) 7 Commander of the Order of the British Empire a British honour 8 Vice-President of the Commission of the European Communities 8

1976 Consultations started between the European Commission and Australia covering a range of bilateral and multilateral issues. 1977 June: During his visit Malcolm Fraser, Prime Minister of Australia, recommended to Commission President Roy Jekins the transformation of the informal discussions into regular high-level consultations between the European Community and Australia. July: The Government of Australia created a Special Trade Representations portfolio, John Howard was appointed as Minister for Special Trade Negotiations with the European Community. Negotiations started in October the same year. 1978 The Committee on External Economic Relations provided a report on the state of the Australian-EC relationship. 1979 25 July: Malcolm Fraser announced that regular Ministerial Consultations were to be held between Australia and the EC. 1980 April: The preliminary round of Ministerial meetings between Australia and the EC was held in Canberra. 1981 April: The permanent Delegation of the Commission of the EC started operations in Canberra. 1 December: The first official round of Ministerial Consultations between Australia and the Commission of the European Communities took place in Brussels. W. Haferkamp, Vice-President of the EC, led the delegation of the Commission while Australian delegation was led by Tony Street, Minister for Foreign Affairs. 9

1990 17 May: Australia and the European Community agreed on new terms of their dialogue by proposing meetings at Ministerial level whenever it is considered necessary and with the EU Presidency Political Director every six month. 9 1991 April: A new forum was set up for discussing national energy policy and programs, bilateral energy relations with third countries and global energy issues. The socalled EC/Australia High Level Group met for the first time in 1992 in Brussels. May: The Agricultural Trade and Marketing Experts Group (ATMEG) was revived with the purpose to provide a regular forum for Australian and Commission officials to discuss developments in global and bilateral agricultural commodity trade. An Exchange of Letters established the Australia/EU Joint Group on Industrial Cooperation (JGIC) 10. 1994 A Framework Partnership Agreement between Care Australia 11 and the EC was concluded. 23 February: Australia and the European Community signed the Agreement on Scientific and Technical Cooperation. 1995 April: In exchange of letters Australia and the European Union discussed and suggested a Framework Agreement in order to expand the partnership to achieve common goals. 25-31 May: The European Parliamentary Delegation for relations with Australia and New Zealand paid official visit to Australia. 9 These terms were put down in a letter sent by the President of the EC Council of Ministers to Senator Evans. 10 JGIC s aim is to encourage greater industrial cooperation between Australia and the European Union. 11 CARE Australia is one of Australia s leading humanitarian aid agencies. 10

1996 Negotiations started on a Framework Trade and Cooperation Agreement and Joint Political Declaration between Australia and the EC. 1997 An Exchange of Letters was effected recording the common understanding on the principles of international cooperation on research and development activities in the domain of intelligent manufacturing systems between the European Community and the United States of America, Japan, Australia, Canada, Norway and Switzerland. 26 June: Commission Vice-President Leon Brittan, Dutch Foreign Minister and Council President Hans van Mierlo, and Australian Foreign Minister Alexander Downer signed the Joint Declaration on Relations Between the EU and Australia. 1998 6 May: First Australia-EU Troika Talks on Asia took place in Brussels. 12 2001 25 April: Bilateral consultations on development assistance were held. 29-31 May: A meeting took place on Joint Science and Technology Consultative Committee with the first Forum for European-Australian Science and Technology Cooperation (FEAST). 2002 21 March: The Australia-EU Consumer Protection Arrangement was signed in Brussels by the Australian Ambassador to the EU, Belgium and Luxemburg, Joanna Hewitt, and the Director-General of the EC Health and Consumer Protection Directorate, Ronald Coleman. 25 March: Security Dialogue between Australia and European Union senior officials was held in Brussels. 9-11 July: John Howard, Prime Minister of Australia paid visit to Brussels where he met with Commission President Romano Prodi and the full European Commission. 12 More followed on 14 April 1999, 14 Marc 2000, 15 June 2001 and 9 April 2003, each of them took place in Brussels. 11

As it appears from the chronology, political relations became intensified only from the mid 1990s. Before then political dialogues were rather occasional-like, regular official meetings did not exist. Even Britain s joining the European Community in 1973 did not help. Moreover, Australia was against the idea from the beginning, being very anxious about the possibility of loosing its important and traditional market. As a result of Britain s accession to the EC, ties with Australia loosened further, not only in terms of trade but politically as well. 13 In spite of all these circumstances, trade relations had slowly grown stronger between Australia and other European countries, mainly because of Australia s efforts to secure an optimum of overseas market access opportunities. As trade relations between the two sides had intensified, the need of a framework agreement arose to lay the contractual foundations of their broadening relationship. The result was the Joint Declaration on Relations between Australia and the European Union, which came into existence in 1997. 1.3. Agreements concerning political relations between Australia and the European Union 1.3.1. Joint Declaration on Relations between Australia and the European Union The main document governing the bilateral relationship is the Joint Declaration on Relations between Australia and the European Union (henceforth referred to as Joint Declaration). The idea of a closer cooperation was brought up in 1995 when exchange of letters between Australian Prime Minister Paul Keating and Commission President Santer suggested that the European Union and Australia develop a Framework Agreement reaffirming the parties commitment to expand the partnership in order to achieve common goals. On the 23 rd of April in 1996 Alexander Downer, Foreign 13 The appellation British subject disappeared from Australian passports and Advance Australia Fair became Australia s official national anthem instead of God Save the Queen. 12

Minister of Australia, announced that Australia and the European Union would negotiate a Framework Trade and Cooperation Agreement and Joint Political Declaration. First round of negotiations started on the proposed Framework Agreement on the 17 th of July in the same year. On the 29 th of January in 1997, discussions between Commission Vice-President Leon Brittan and Alexander Downer of Australia on the Framework Trade and Cooperation Agreement had commenced in Brussels which leaded to a decision not to establish a Framework Agreement but to negotiate a nontreaty status Political Agreement. As a result, the Joint Declaration was signed on the 26 th of June in 1997 in Luxemburg by Leon Brittan, Dutch Foreign Minister and Council President Hans van Mierlo, and Alexander Downer. The Joint Declaration reconfirms our mutual commitment to continue developing the new, more positive relationship Australia and the EU have been building over the last few years. It provides a strong basis for taking that relationship into the next century. It outlines our objectives for bilateral cooperation across a wide range of areas including environment, employment, education and training, refugee and asylum matters, agriculture, scientific and cultural cooperation and consumer and competition policies. It underlines our commitment to continue working together in international fora to support common goals such as further multilateral trade liberalisation and the international promotion and protection of human rights. 14 After the Preamble the parties take stock of their common goals they wish to achieve such as: - supporting democracy, the rule of law, the respect for human rights and fundamental freedoms; - supporting peace and promote international security in keeping with the principles of the Charter of the United Nations; - supporting non-proliferation of nuclear, chemical, biological weapons and missile technology, as well as the international transfer of conventional weapons; 14 Minister for Foreign Affairs Alexander Downer Media Release, 26 June 1997 - http://www.dfat.gov.au/media/releases/foreign/1997/fa62_97.html 13

- pursuing policies resulting in a sound world economy which reveals itself in sustained economic growth with low inflation, a high level of employment and stable international financial system; - promoting free market principles; - improving market access in conformity with the WTO rules; - advancing mutual understanding and knowledge between their cultures; - as well as supporting developing countries. To achieve their goals above, the parties wish to enhance dialogue with the aim of closer cooperation. Increased information exchange was considered necessary and desirable, particularly in the following areas: - protecting human rights and fundamental freedoms; - world peace and security issues; - strengthening the United Nations and other international organizations; - promoting peace, stability and prosperity in Europe and the Asia-Pacific region; - migration, asylum and refugee protection issues; - and information society issues including the protection of personal data, as well as preventing the use of the Internet in connection with child pornography or abuse. With regard to trade and economic cooperation, the parties aim at furthering trade liberalization, greater transparency and the implementation of the WTO and OECD principles. They wish to expand and diversify their bilateral trade by means of improving market access and the flow of goods and services. In the interest of those intentions, the two sides will: - examine opportunities in the telecommunications, financial, maritime and professional services sectors; - strengthen their dialogue on matters related to trade barriers, the protection of traditional expressions, customs cooperation, standards and certification, veterinary, sanitary and phytosanitary issues or public procurement access; - enhance cooperation on agriculture and fisheries; - encourage cooperation on industry, including information technology, mining, transport and energy; 14

- and exchange information (if appropriate) on certain aspects of their policies which is connected to competition and consumer protection. The parties emphasize the importance of creating employment opportunities and will strive for strengthening their cooperation in the relevant international fora like OECD or ILO. In the field of scientific and cultural cooperation, education and training, better understanding of each other s cultures and institutions, as well as knowing each other s languages are of particular importance. The parties will enhance dialogue to: - strengthen the cooperation on the areas of education and training, and science and technology; - develop tighter links in the field of communication, information, culture and education; - exchange expertise on the recognition of qualifications, new educational technologies, and partnerships between education and training institutions. Supporting developing countries is a high priority task. The two sides will coordinate their efforts and exchange information on that issue, with particular regard to the South Pacific region. The parties also decided about the framework for their dialogues, consultations between the two sides could take form of: ministerial consultations between the President of the Council, the European Commission and Australia they are held annually alternately in Brussels and Australia; consultations between officials of both sides to cover relevant aspects of the relationship, including briefings to Australian representatives on CFSP 15 meetings, and by Australia to the Presidency and the European Commission on Australia s foreign policy; 15 CFSP = Common Foreign and Security Policy of the European Union 15

summit meetings between the President of the European Council, the President of the European Commission and the Prime Minister of Australia (if necessary). There are also other forms of dialogue held on a high-level: ministerial consultations with the European Union Presidency; Australia-European Union Troika Talks on Asia; security dialogues; Australia-EU Senior Officials dialogue on migration and asylum issues. The signing of the Joint Declaration was an important step for the parties, although it still leaves much room for improvement. Australia is one of the few developed countries with which the European Union does not have a comprehensive agreement, partly because of Australia s reluctance to include a clause defining democratic principles and human rights as an essential element, which otherwise is included in all international agreements signed by the EU. For the Australian government refused to sign the draft framework agreement if it contained that clause, the result was a non-binding, non-treaty based political declaration, which does not have a financial protocol, therefore does not possess budgetary resources either. Although the relationship has not really deepened, the agenda for dialogue has widened since 1997. As a result of the Joint Declaration, there is a move away from the topic of agriculture, political dialogue has been intensified and high level political contacts increased significantly. Thanks to the intensified political dialogue a few practical results were born, such as some signed bilateral agreements (for example the Mutual Recognition Agreement on Conformity Assessment, Certification and Markings between Australia and the European Union), and some are under negotiations, like a possible Veterinary Agreement. The results and benefits of the Joint Declaration mentioned above were reviewed during the 19 th Ministerial Consultations 16 where officials of both parties met to discuss future cooperation and other political issues. 16 Annex III includes the chronology of Ministerial Consultations taking place between Australia and the European Union. 16

1.3.2. An agenda for future cooperation The 19 th Ministerial Consultations between Australia and the European Commission took place on the 16 th of April in 2003. Australian Foreign Minister Alexander Downer and Trade Minister Mark Vaile, as well as EU Commissioner for External Relations Chris Patten met in Melbourne in order to discuss future cooperation and other bilateral and international issues. Having agreed that under the Joint Declaration they achieved a dynamic work program and intensified exchanges between Australia and the European Union to make progress on a diverse range of common interests, 17 some high-priority areas were specified for the coming five years. Looking ahead, we reviewed our cooperation and identified priorities for our future work. These will involve intensified cooperation on: security and strategic issues including counter-terrorism; ambitious outcomes on trade including improving the international trading environment to benefit least-developed countries; strengthening our links on education and science and technology; pursuing common interests in major international developments in transport and the environment agenda; building our joint capacity to deliver development cooperation programs in the Asia-Pacific region and managing the challenges posed by global people flows. 18 As mentioned above, the following areas were identified as high-priorities: 1) Security and strategic issues With respect to the success of the first Australia-European Union strategic dialogue 19 in 2002 and a volatile global environment the parties decided to intensify cooperation on counter-terrorism and critical infrastructure protection through exchanging information on international 17 Australia and the European Union: an agenda for future cooperation - http://europa.eu.int/comm/external_relations/australia/intro/eucoop.htm 18 European Commission-Australia Ministerial Consultation Joint Media Release, 16 April 2003 - http://europa.eu.int/comm/external_relations/australia/intro/mc160403.htm 19 The first Security Dialogue between Australia and European Union senior officials was held in Brussels, the 25 th of March in 2002. 17

terrorist networks and protection of information infrastructure, as well as deepen the dialogue on non-proliferation and export control issues. The possibility of developing police cooperation was also raised. 2) Trade The parties are committed to arrange differences on issues of particular importance like market access and rule-making issues, and issues related to development. They emphasize the importance of the negotiations on agriculture and will make every effort to resolve differences and to reach an outcome consistent with the Doha declaration. In the interest of that, consultations will be held in the scope of the Agricultural Trade and Marketing Experts Group. 20 They will work together to support least-developed countries by implementing policies to allow them duty-and quota-free market access; to promote their access to affordable medicines; and to pass on technical assistance and capacity-building activities. With regard to the MRA, 21 the two sides will endeavour to simplify the operation of the Agreement and remove existing origin restrictions. 3) Education and Science and Technology In view of the success of the first Australia-European Union pilot project on higher education cooperation, a second pilot project is planned as soon as necessary funding procedures are clarified and finalised. Education would play a primary role in the partnership in the longer term, the parties expressed their desire to encourage participation in different student exchanges including Erasmus World when adopted. In the field of Science and Technology (S&T) the elaboration of an action plan is planned which would promote projects within the European Union s Sixth Framework Program for Research. A major 20 Agricultural Trade and Marketing Experts Group (ATMEG): its purpose is to provide a regular forum for Australian and Commission officials to discuss developments in global and bilateral agricultural commodity trade. ATMEG was revived in May 1991, following the 9 th Ministerial Consultations. 21 Mutual Recognition Agreement on Conformity Assessment, Certification and Markings between Australia and the European Union 18

S&T event would be organized every year with numerous other information sessions throughout Australia in order to further understanding of the Sixth Framework Program and how Australian researchers can become involved. Besides, joint thematic workshops are to be held in areas of mutual interest (some of them are: end-use energy efficiency programs, management systems and quarantine in connection with beef production, nano-materials for personal and resource security, sustainable land transport, and information society technologies). The parties intend to give a leading part to the Forum for European- Australian Science and Technology Cooperation (FEAST) 22 in the process outlined above. 4) Transport The two sides will make all necessary arrangements between the Australian Global Navigation System Coordination Committee and the European Commission to make cooperation possible with reference to the Galileo Satellite Navigation project. 23 That collaboration would include a framework for cooperation in process with the Galileo Joint Undertaking, on ground infrastructure in Australia, the potential for industrial cooperation, scientific and commercial Galileo applications, related industry research and development, cooperative research in the field of the radiofrequency spectrum, and standards. They are also to enhance cooperative activity in the field of Intelligent Transport Systems (ITS) and sustainable transport strategies. There is a possibility of further cooperation in the area of transportation, including the aviation liberalization agenda; and a bilateral agreement is planned on relaxing ownership and control rules, as well as inward investment opportunities. 22 The first Forum for European-Australian Science and Technology Cooperation (FEAST) was held between 29-31 May in 2001. 23 GALILEO European Satellite Navigation System: a worldwide system launched by the European Union and the European Space Agency. With the help of that technology one can determine his or her position or the location of any moving or stationary object to within one metre. It is based on the coordinated operation of 30 satellites and ground stations providing information on the positioning of users. This technology can be used in many sectors like transport, social services, justice system, customs services, search and rescue systems. 19

5) Environment Regarding environmental issues, attention will be drawn to technology development and deployment; climate science (including impacts and adaptation); harmonisation of emissions monitoring, reporting, verification, certification procedures; and evolution of mitigation commitments. 6) Development cooperation The parties agreed to take part in assisting the recovery and nationbuilding processes in East Timor and in the Solomon Islands. They are committed to assist nations in the Pacific region building good governance and economic growth and will also provide support and funding for the Asia Pacific Leadership Forum on HIV-AIDS and development. 7) Migration and asylum In connection with the issue of migration and asylum, the two sides will concentrate on the following areas: asylum seeker and refugee readmission to countries of first asylum; improving capacity-building in certain third countries which are of mutual interest; the integration of migrants; the relation between development and migration. Exchange of information will be enhanced on the development of new technologies and electronic support structures that could be of assistance to combat irregular migration as well as identity and document fraud. Fighting people-smuggling, human trafficking and related transnational crimes are also of particular importance. 1.3.3. Cooperation in education Both the 1997 Joint Declaration on Relations between Australia and the European Union and the Agenda for future cooperation completed during the 19 th 20

Ministerial Consultations emphasize the role of strengthened cooperation in the fields of education and training. Recognizing its importance, the parties are committed to expand their links and promote dialogue on those areas. In 2001 the Australian Government along with the European Commission established a fund for a Pilot Project framing a joint Post Graduate program including student exchange. It started as a three-year project, provided with a funding of 300000 euro on the EU s part, with matching funding on the Australian side. In the first pilot, the LEAFSE (Learning through Exchange Agriculture, Food Systems, and the Environment), the following universities were involved: - on the behalf of Australia: University of Western Sydney, University of New England, University of Queensland, University of Western Australia, - on the behalf of the European Union: Royal Veterinary and Agricultural University (Denmark), University of Wales (United Kingdom), University of Kassel (Germany), Wageningen University and Research Centre (the Netherlands). Australian and European university students were given the opportunity to study abroad through a joint Masters pilot program, which began in December 2002. In May 2003 a second Pilot Project was launched with a similar amount of funding. It will involve a consortium of Australian and European universities working together to establish a joint Masters program including student exchanges between Australia and the European Union member states. 24 These two pilot projects will create a basis for Australian Institutions to take part in the European Commission s latest education program in preparation, Erasmus World, which will grant scholarships for students, academics and administrators. 24 The selection of institutions is under way. 21

2. Economic relations between Australia and the European Union As ex-european Commission Vice-President Sir Leon Brittan once stated: The thumping heart of our relationship will remain economic. The European Union remains Australia s largest economic partner, with the focus being on trade in goods, services and investments. However, the importance of this partnership is often overlooked and is not generally recognized by certain Australian political spheres because the European Union is not always regarded as a single market since the emphasis is usually placed on individual nations. Despite close economic relations heated debates on trade policy became permanent between Australia and the European Union as Australia s balance of trade usually showed a deficit: there is a considerable asymmetry in the relationship with Australia being strongly dependent on the EU as its major trading partner. The European Union s Common Agricultural Policy (CAP) has been a constant subject to criticism since many Australians regard the EU as a market difficult to access, although the situation appears to ease with a promised CAP reform. On the other hand, the European Union criticizes Australia s strict quarantine regime which sometimes makes it impossible for certain European products to access the Australian market. Although these tensions concerning mainly agriculture remained, Australia and the European Union established several important bilateral agreements in economic, agriculture, energy and industrial policy. 2.1. Agreements concerning economic relations between Australia and the European Union As it has already been mentioned earlier, the European Union did not sign a comprehensive agreement with Australia. They conduct their relations within the multilateral framework of GATT and the OECD and other international bodies, their 22

trade relations are based on the GATT s Most-Favoured Nation clause. The following agreements are separate bilateral agreements between Australia and the European Union which provide a framework for the parties economic relationship. 2.1.1. Mutual Recognition Agreement between Australia and the European Union on Conformity Assessment, Certification and Markings Negotiations started in 1994 between Australia and the European Community in order to create the Mutual Recognition Agreement on Standards Certification. 25 The agreement was signed in 1998, going by the name of Mutual Recognition Agreement on Conformity Assessment, Certification and Markings between Australia and the European Union, and came into force on the 1 st of January in 1999, following the completion of the ratification processes. In March 1999 the first group of Conformity Assessment Bodies (CABs) was appointed (for the MRA with both Australia and New Zealand), the designation of the second group for the MRA with Australia took place in late May. Australia s Department of Industry, Science and Resources, along with the Delegation of the European Commission to Australia and New Zealand, held information seminars in Sydney (on the 8 th of June in 1999) and in Melbourne (two days later, on the 10 th of June in 1999) to help forward understanding of the agreement. The object of the MRA is to facilitate trade between Australia and Europe by allowing conformity assessment (testing, inspection and certification) of products to be undertaken in the exporting country 26 instead of accomplishing them at destination. That is, Australian exporters have to prove in Australia that the product complies with the requirements of the relevant EC regulations so that it can be placed on the EU market with the CE marking already imposed (prior to export). In this way no additional intervention is needed by EC authorities. The same rules apply to European Union exporters, with the exception they have to comply with the relevant Australian requirements. 25 Negotiations began with New Zealand at the same time. 26 MRA - http://ecdel.org.au/eu_and_australia/agreements_mra.htm 23

Conformity assessment procedures are carried out by Conformity Assessment Bodies in the other party, their results should be accepted by regulatory agencies in each party. 27 Sectoral Annexes contain the list of eligible CABs, while Annex I of the MRA deals with the principles of technical competence and systems under which CABs may be appointed. A given CAB may be suspended based on the results of a market surveillance program performed by regulatory authorities, and is able to continue its operation only after re-establishing its competence to the satisfaction of both parties. The MRA is a binding treaty between the Governments of Australia and the European Community which means it is a government to government agreement. Therefore its product coverage is limited to products which are subject to regulation by government authorities and which involve some form of mandatory third party intervention (conformity assessment) 28 even before the product is placed on the market. The Australia/EC MRA covers the following industry sectors: - medical devices - Good Manufacturing Practice (GMP) 29 for pharmaceuticals - telecommunications terminal equipment - electromagnetic compatibility (EMC) - low voltage electrical equipment - machinery - pressure equipment - automotive products 30 In time, new sectors (e.g. aircraft airworthiness) can be added to extend the coverage. The MRA is very beneficial in terms of cost saving. According to an OECD estimation the differing standards and technical regulations in different markets, 27 That does not mean harmonisation of regulations or standards of the parties, they still maintain their own internal standards. 28 MRA - http://ecdel.org.au/eu_and_australia/agreements_mra.htm 29 The acronym GMP is used internationally to describe a set of principles and procedures which, when followed by manufacturers of therapeutic goods, helps ensure that the products manufactured will have the required quality. A basic tenet of GMP is that quality cannot be tested into a batch of product but must be built into each batch of product during all stages of the manufacturing process. - http://www.health.gov.au/tga/docs/html/webgmp.htm 30 Automotive products are excluded from the EC/New Zealand MRA. 24

combined with the need for multiple testing and certification, may constitute between 2% and 10% of overall costs of production. 31 Because of differences in national standards and conformity assessment requirements, the cost of testing and certification raises with the growing number of transactions taking place across international borders. The MRA enables manufacturers to have their products tested in their own country (the importing country), therefore helps them to save time and money - time is extremely important in the case of high-technology products that age quickly -, so they can achieve a competitive edge in the importing market without quality or safety being compromised. 32 In accordance with some conservative estimates the MRA could generate cost savings for Australian exporters of approximately 10 million AUD every year. The MRA is also a provision of legal certainty, it makes sure that no further conformity assessment is needed to place the product on the importing country s market. In this case the importing country can no longer use its internal conformity assessment regime in a discriminatory or protectionist manner. Other benefits of the MRA are: - it helps consumers to lower prices and a potentially wider range of choice on domestic markets through cost saving; - it reduces the risk of using conformity assessments as means of (prohibited) technology transfer; - it can boost competition through the devolution of conformity assessment from centralised government agencies; - it can promote longer term objectives of harmonisation of standards and technical regulations through increased contact with regulatory agencies and CABs. 31 OECD estimation, 1996 - http://ecdel.org.au/eu_and_australia/agreements_mra.htm 32 http://ecdel.org.au/eu_and_australia/agreements_mra.htm 25

2.1.2. Wine Agreement between Australia and the European Union In February 1994 Australia and the European Union signed the European Community/Australia Wine Agreement. It aims to facilitate and promote bilateral trade in wine between the parties. Under the Agreement the European Community accepted Australian wine-making process as comparable to European practices and agreed to discuss the possible removal of technical barriers which had prevented the export of some Australian dessert wines. The Agreement defines those oenological practices and processes which have been approved by both parties in view of public health. It ensures protection of wine names and related provisions on description and presentation of wines, including the protection of geographical indications and traditional expressions. Thus intellectual properties concerning wine remains protected and fake presentation to consumers can be avoidable. Because trade in wine is such a vital issue for both Australia and the European Union, it has been accompanied by continuous debates. The European Commission would like to maintain the legal framework foreseen by the 1994 Agreement (because of the exclusive protection of traditional expressions and geographical indications stated in the Agreement) and is seeking assurance about oenological practices. In June 1999 the parties decided on further negotiations on those matters (this later became called Perth compromise ). One year later the European Council gave a favourable opinion, but Australia could not accept it. 2.1.3. Agreement between Australia and Euratom The initial round of negotiations on a framework for the supply of Australian uranium to the European Community started in October-November 1979, after the Council of Ministers had approved directives on an agreement on the transfer of nuclear materials between Australia and the Community on the 18 th of September. Following 26

two years of negotiations, the Australia/Euratom Agreement was signed in September 1981 and came into force in 1982. It sets out the framework for transfers of nuclear material from Australia to the Euratom, that is the European Atomic Energy Community. The Agreement refers to all forms of nuclear material transferred - directly or through a third country - from Australia for peaceful purposes alone, and continues to apply until the material is considered no longer useable for any nuclear activity. It also intends to further the objective of non-proliferation by prohibiting the development of nuclear weapons or other nuclear explosive devices, as well as the usage for any military purposes. 2.1.4. Agreement on Coal between Australia and the European Community On the 15 th of December in 1993, during the GATT Uruguay round, a bilateral agreement on coal between Australia and the European Community was signed. In the Agreement the European Community undertook an immediate standstill in its subsidised coal production and a gradual reduction in its subsidised production, and was committed to transform existing measures into more transparent forms of assistance. Australia on the other hand agreed not to challenge the European Community s coal subsidy scheme and not to use export measures in a manner which would disrupt normal commercial trade flows. Australia also promised not to prevent foreign participation in the Australian coal mining industry. The Agreement ended in December 2002, its continuation is under consideration. 27

2.1.5. Arrangement for Information Sharing on Consumer Policy and Protection between the Government of Australia and the European Commission On the 21 st of March in 2002 Joanna Hewitt, Australian Ambassador to the European Union, and Robert J. Coleman, Director General of the Health and Consumer Protection Directorate General of the European Commission, signed the Arrangement for Information Sharing on Consumer Policy and Protection between the Government of Australia and the European Commission. In the Arrangement the parties agreed to exchange information regularly on consumer policy objectives and implementation, as well as on consumer protection legislation, standards and guidelines in order to avoid inconsistencies or conflicts between laws and standards. Besides, they will share information on proposed new legislation and treat them with an appropriate level of confidentiality. The Arrangement excludes food but allow the parties to establish a separate arrangement for food safety issues. It also considers the parties existing commitments under such international agreements as: - the recommendation of the Council of the OECD, concerning Cooperation between Member Countries on Restrictive Business Practices affecting International Trade (1995); - the Agreement on Technical Barriers to Trade by the WTO; 33 - the objectives of the United Nations Guidelines for Consumer Protection. 34 The services for administrative purposes are: - in Australia the Consumer Affairs Division, Treasury; the Australian Competition and Consumer Commission; the Australian Securities and Investment Commission; - on the European Commission s part Health and Consumer Protection Directorate General. 33 The Agreement encourages international standardisation and conformity, supposing it does not build barriers to international trade. 34 UN Guidelines promote international cooperation through exchanges of information, education and joint training programs. 28