THE CASE FOR AN AUSTRALIA-EU FTA

There are several good reasons for considering the case for an Australia-EU FTA.

1. The substantial nature of the existing bilateral economic flows, particularly with regard to services trade and investment, are indicative of the scale of potential pay-off from a successful agreement. The EU is too big for Australia to ignore and there is a need to give more attention to maximising Australia’s trade and investment interests in the EU (see Australian Industry Alliance)
2. The fact that the EU currently stands out as the ‘biggest single missing jigsaw piece’ in Australia’s existing and prospective network of FTAs supports the logic of a push to negotiate a deal.
3. A Free Trade Agreement with Australia would enhance the ‘geopolitical footprint’ of the EU in Asia.
4. There are grounds for believing that agriculture may no longer be the deal-breaker that it has been in the past, and indeed there might now be scope to deliver improved access to the EU’s high-value internal market for Australian farmers. There may also be important opportunities for Australian businesses for cooperation with European Agri-supply chain operations to leverage Australia’s role as a ‘gateway-to-Asia’.
5. The limited opportunities currently on offer via the multilateral route, together with a sluggish global growth environment and some signs of increased protectionist pressures across the world economy, together argue for valuing the general growth and liberalisation benefits on offer from pursuing a bilateral agreement with the EU.
6. All of these arguments are given further force by the fact that the EU is already negotiating deals with many of Australia’s key regional trading partners, as well as a prospective ‘mega-regional’ deal with the United States in the form of T-TIP. Since the latter in particular has the potential to set the rules of the global game across a range of issues, it would be advantageous for Australia to maximise its input into the process and minimise the risks associated with trade diversion. The EU should be more interested in a Free Trade Agreement with Australia in order to protect its trade position in Australia as a likely result of the conclusion of the T-TIP negotiations.
7. Additionally, it seems probable that a Free Trade Agreement with the EU would also offer Australia additional payoffs. For example, there would be potentially important payoffs for Australia’s exports of elaborately-transformed manufactures through the reduced trade costs that could come from the mutual recognition of regulatory regimes. Similarly, there could be gains from improved deals on the movement of people, and from enhanced access to government procurement markets across the EU. There could also be significant payoffs for domestic policies within Australia.
8. Finally, work undertaken in recent years – including on Doha – has underlined that Australia and the EU do share interests in global economic governance and in encouraging transparency, openness and liberalisation.