RELATIONS BETWEEN AUSTRALIA AND THE EUROPEAN UNION

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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 2.1. Agreements concerning economic relations between

22 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 3. Relations between Australia and Hungary

51 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 26th 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 1st 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 2

It was not until 1911 when the Northern Territory joined the Commonwealth of Australia. Egedy Gergely: Ausztrália története (Aula Kiadó Kft, Budapest, 2000, page 311)

6


Minister John Howard called a referendum on the 6th 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, CBE7, the first Australian Ambassador to the European Communities, acceded to office in Brussels. 1974 September: Sir Christopher Soames8 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 Australia11 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 23rd 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 17th of July in the same year. On the 29th 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 26th 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 CFSP15 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 19th Ministerial Consultations16 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 19th Ministerial Consultations between Australia and the European Commission took place on the 16th 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 dialogue19 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 25th 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 9th 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 EuropeanAustralian 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 19th 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 1st 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 8th of June in 1999) and in Melbourne (two days later, on the 10th 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 26

Negotiations began with New Zealand at the same time. 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 products30

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 32

OECD estimation, 1996 - http://ecdel.org.au/eu_and_australia/agreements_mra.htm 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 18th 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 15th 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 21st 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


2.1.6. Agreement on Scientific and Technical Cooperation between Australia and the European Community

The first step towards cooperation in Science and Technology was signing an Arrangement in 1986, which identified possible areas of cooperation between Australia and the European Community, in the field of research and technology. But it was not until 1994, when the actual Agreement on Scientific and Technical Cooperation between Australia and the European Community (S&T Agreement) was signed on the 23rd of February, during the eleventh Ministerial Consultations in Canberra. It was the first such cooperation agreement concluded by the European Community with an industrialized country outside Europe. The S&T Agreement allows Australian researchers access to the European Union’s Framework Programmes on Research and Technological Development at their own cost, and on a mutual basis it guarantees European researchers access to Australian programmes. Originally the Agreement was limited to six clearly identified areas, but in 1999 it has been broadened to allow Australian researchers to participate in all EU thematic research programmes and to access all substantial research facilities of the European Union. 34 formal projects were launched under FP435, with a value of 72 million AUD. Under FP5 41 projects were launched and was worth 310 million AUD (three of those projects were New Zealand project though). Table 1:

State of EU-Australian Collaboration

FP4 FP5 (1994-98) (1998-02) Projects - Full Contractor 30 36 Projects - Subcontractor 4 5 Value 72 million AUD 310 million AUD Source: The European Commission’s Delegation to Australia and New Zealand36

35

FP = Framework Programme

29


2.2. Australia’s trade policy

For better understanding prime motives of trade relations between Australia and the European Union, it is important to examine Australia’s trade policy first. “Australia’s trade policy is flexible, pragmatic and result-orientated with a multilateral approach to secure an optimum of overseas market access opportunities.”37 Australia is strongly dependent on international trade since it has an exceedingly limited internal market; then again it possesses enormous reserves of raw materials and energy sources, as well as agricultural products produced at low cost but in large quantity, an extensive service sector and an increasingly significant industrial production structure. For that reason one of its primary interests includes the liberalization of world trade, especially on the area of agriculture (unimpeded agricultural market access, the elimination of agricultural and export subsidies). However, before the 1990s it was characterized by a high degree of national protection. It was only after 1997 when Australia’s attitude toward multilateral trade has changed, since then promotion of trade and investment liberalization became of particular interest. On the 28th of August in 1997 Australia’s first White Paper on Foreign and Trade Policy was released by the Minister for Foreign Affaires, Alexander Downer and the Deputy Prime Minister and Minister for Trade, Tim Fischer. The White Paper determined the principles and priorities of the government’s foreign affairs and trade policy, and acted as an action plan for the forthcoming fifteen years. The essential message it carried was that national interests should have been the centre of Australia’s foreign and trade policy: “in all that it does in foreign and trade policy the Government will apply a basic test of national interest; how does it advance the security of Australia

36

http://www.ecdel.org.au/scienceandtech/index.htm Europa – Trade Issues – Australia - http://europa.eu.int/comm/trade/bilateral/australia/index_en.htm

37

30


and the jobs and standard of living of the Australian people.”38 It also stated that because of the continuing economic rise of East Asia, Australia’s relative economic standing in the region could change. In the light of that outcome Australia would have to make serious efforts to advance its interests and to influence the regional agenda. To meet those challenges, the White Paper developed a framework for Australia, with elements of vital importance including: -

a declaration of commitment to the Asia Pacific region, defining the region as the highest priority in the government’s foreign and trade policy;

-

an emphasis on bilateral relationships as the basic building blocks of foreign and trade policy;

-

involvement only in multilateral issues which are of closer national interests;

-

recognition of trade liberalisation that contributes to Australia’s standard of living;

-

support for practical measures which advance Australia’s trade interests through the WTO and the free trade and investment objectives of APEC;

-

the importance of security policies resulting a strong national defence capability, including the alliance with the United States of America, expanding bilateral and regional security dialogue, stronger regional security institutions, support for global regimes against the weapons of mess destruction;

-

the adoption of framework that recognizes a flexible labour market, investment in research and development, strong education, good infrastructure, and effective savings and taxation policies all come from Australia’s international competitiveness.

The White Paper also contains Australia’s effort to secure recognition for fundamental human rights and to eliminate racial discrimination. With the emphasis having also been placed on further trade liberalization, Australian business has been exposed to increased competition. The policy of economic reform (reduction of subsidies, deregulation and privatisation of services) increased competitiveness and stimulated exports. In 2000, Australian exports grew by 25% and

38

Foreign and Trade Policy White Paper – Joint Statement, 28 August 1997 - http://www.dfat.gov.au/media/releases/foreign/1997/fa106_97.html

31


amounted to a total value of 143 billion USD, which in 2001-0239 reached 152 billion USD. This figure was the highest for 21 years back. Figure 1 Australia's total exports (million USD) 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 19961997

19971998

19981999

19992000

20002001

20012002

Source: DFAT, Trade and investment40

Executed structural reforms such as the liberalization of the labour market, more flexible labour law, the deregulation of the financial system and product markets, and the moderation of market protection rules leaded to a more flexible economy. Moreover, Australia’s export markets became more diversified, and new markets were opened. Between 1991-2002, merchandise exports to Saudi Arabia grew by an average of 27% annually, and by 13% per annum to India. In 2001-02 education, communications, insurance, financial, computer and other professional service exports totalled to 10,5 billion USD, and tourism amounted to 10% of Australia’s total export, becoming Australia’s leading service export item.

39 40

The Australian financial year starts on the 1st of July and ends on the 30th of June the next year. http://www.dfat.gov.au/aib/trade_investment.html

32


Figure 2 Australia's exports by sector (million USD) 45000 40000 35000 30000 25000 20000 15000 10000 5000 0

Agriculture Mining Manufacturing Other merchandise Services

19961997

19971998

19981999

19992000

20002001

20012002

Source: DFAT, Trade and investment41

Australia is a leading global supplier of agricultural products. The agricultural sector has long been export-orientated, approximately 70% of total production is sold to overseas markets. Between 1989-2001, the composition of agricultural exports has changed. In 1989-90, Australia’s leading three export items were wheat, beef and wool, they added up to 55% of the total value of agricultural exports, but in 2000-01, their combined share fell to 38%. Other items took their place, such as cotton, wine, diary products, meat (other than beef and veal), seafood, oil-seeds, rice, fruits and vegetables. Their share of agricultural exports increased from 17% in 1989-90 to 38% in 2000-01. There are two items making up a greater share among them: processed food and wine. Processed food and beverage exports increased by 24% up to 13,8 billion AUD, in this category best performers were wine (growth of 28%), beef and veal (29%), mutton and lamb (35%), and milk (39%). Unprocessed food exports grew 12% to 9,4 billion AUD.42 This upturn of agricultural exports can be partially thanked to more open world markets, as well as to tariff cuts on imports in Australia, which enabled rural companies to reduce costs and increase competitiveness. Market diversification and technical innovation also helped exporters, just as value adding. Particularly the wine industry was able to make use of the latter one by changing from exporting bulk wine in the 1980s to bottled wine from the early 1990s.43 Australia became the third largest wine 41

http://www.dfat.gov.au/aib/trade_investment.html http://www.dfat.gov.au/geo/australia/tradingnation/agribusiness.html 43 Of course there were other beneficiaries of value adding, for example the processed meat, lobster, tuna, vegetables and cut flower industries that deliver their products by air freight thus keeping them fresh. 42

33


exporter of the world, increasing the volume of its export by nearly 500%, and its value almost by 900% between 1991-2001. High export quality of agricultural export products can be explained by the following factors: -

geographic closeness to major food markets,

-

low environmental pollution level,

-

freedom from pests and diseases which can be found in other regions (thanks to Australia’s geographic location),

-

counter seasonal production cycles which comes from Australia’s climatic condition,

-

world-class technology,

-

and Australia’s committed research and development.

Australia maintains its position as a leading exporter of basic commodities. Main items in 2001-02 included: -

crude petroleum (6 billion USD),

-

iron ore (5,2 billion USD),

-

gold (5,1 billion USD),

-

wheat (4,5 billion USD),

-

aluminium (4,4 billion USD),

-

beef (4,3 billion USD),

-

aluminium ores (4 billion USD),

-

coal (3,4 billion USD),

-

and wool (3,4 billion USD).

With the rise of the export in the mining sector (see Figure 2), mining technologies and services also became important. Annual exports of mining related intellectual property exceeds 1 billion AUD. On the 12th of February in 2003 the second White Paper on Foreign and Trade Policy44 was released by Foreign Minister Alexander Downer and Trade Minister Mark Vaile. In the light of the East Asian financial crisis in 1998, the events of 11 September 2001, the Bali bombings and the public debate about immigration the focus has been

44

White Paper on Foreign and Trade Policy – Advancing the National Interest

34


shifted to security issues (especially in connection with terrorism) and economic prosperity. In this context the alliance with the United States is considerably underlined, as the alliance with the South Pacific region, New Zealand, the European Union and its member states, and Latin America were also highlighted. The Asian region remains a key objective though. Furthermore, the White Paper set out new challenges and objectives as follows: -

maintaining security and prosperity by confronting terrorism and global threats to security;

-

building prosperity through market liberalization (in that field Doha remained Australia’s highest priority, besides, Australia shall continue to seek free trade agreements with countries throughout the world);

-

consolidating and expanding regional and bilateral relationships;

-

active engagement with Asia;

-

strengthening alliance with the United States of America;

-

supporting neighbours in the Pacific region to help them consolidate their future;

-

developing cooperation with the enlarged and increasingly cohesive European Union;

-

advance wider global interests (paying regard to the Middle East, Canada, African and Latin-American countries);

-

projecting Australia and its values through promoting good governance, human rights and development;

-

protecting Australians abroad;

-

and projecting a confident Australia.

Both the 1997 and the 2003 White Paper on Foreign and Trade Policy attach importance to forming close links with the Asia Pacific region while they also underline the significance of keeping up close relations with the European Union. It again proves that Australia pursues a trade policy that relies on several countries rather then a single alliance. Albeit following the 1998 East Asian financial crisis Australia turned towards the European Union seeking closer cooperation with it (in order to compensate the effect of the crisis), in 2003 the need of fitting into the Asia Pacific region again came into the limelight. 35


2.3. Australia’s trade with neighbouring countries

Due to its geographic location, Australia has developed close ties with the Asia Pacific region, they play an important role in Australia’s foreign and trade policy. Beside Japan, China, South Korea and Indonesia, New Zealand, Papua New Guinea and the other island states of the South Pacific are of particular importance. Australia continuously endeavours to strengthen the partnership with those countries, several agreements were established for the sake of that cause. In 1983 the Closer Economic Relations Free Trade Agreement (CER) with New Zealand came into force45, which eliminated all tariff and quantitative restrictions on trade in goods and outlined the possibility of non-tariff measures for services. On the 14th of July in 1980 Australia signed the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) with the South Pacific Forum. A similar bilateral agreement was also concluded with Papua New Guinea (PATCRA II Agreement on Trade and Commercial Relations) and was signed on the 21st of February in 1991. In November 1989 the officials of 26 countries met in Canberra (including the United States, Japan and six ASEAN countries) to the proposal of Australian Prime Minister Robert Hawke to establish the Asia Pacific Economic Cooperation (APEC). Since 1989 APEC became the leading forum of the Asia Pacific region. Its work is based on trade and investment liberalisation, business facilitation, as well as economic and technical cooperation. APEC membership is a huge market opportunity for Australian business through access to over 2,5 billion consumers. APEC members have a share of approximately 75% of Australia’s merchandise exports as well. On the 14th September in 2002 the AFTA-CER Closer Economic Partnership was signed by the ten nations of the ASEAN Free Trade Area (AFTA), New Zealand and Australia. It is striving after doubling the region’s trade and investment by 2010.

45

It was signed on the 28th of March in 1983.

36


A Free Trade Agreement with Singapore (SAFTA) was established on the 17th of February in 2003. Just like the CER with New Zealand, it also aims the elimination of tariffs on goods, as well as foresees a framework for bilateral trade and investment (including trade in services, telecom regulation, competition policy, government procurement, technical standards, intellectual property, electronic commerce and customs procedures). Negotiations started with the United States of America in March 2003 about a possible Free Trade Agreement (FTA). The negotiation was concluded and currently awaits the approval of the US congress and the Australian Parliament. Negotiations were concluded in October 2003 on an Australia-Thailand Free Trade Agreement, the Agreement will come into force in 2004. There is a possibility for an FTA with Indonesia; Egypt and Mexico have also expressed interest in FTAs with Australia. Other ongoing negotiations in the field of trade: -

discussions with Japan on a closer economic cooperation in twelve areas;

-

closer ties with China have been agreed, negotiation on a framework for economic cooperation;

-

a possible Trade and Investment Facilitation Agreement with Korea;

-

an option for a trade deal with the United Arab Emirates.

Regarding the rankings of Australia’s main trading partners, there have not been significant changes over the last few years, on the basis of bilateral trade the European Union remains Australia’s most important partner (17,2%), followed by Japan (16,6%), then the United States of America (14,6%), China (7,8%), South Korea (6%) and New Zealand (5%).

37


Figure 3 Australia's trade with main partners (2001)

17,2% 32,8%

16,6% 5,0%

EU

Japan

6,0%

USA

7,8% China

South Korea

14,6%

New Zealand

Other

Source: DG TRADE46

These figures barely changed in 2002, the European Union again became the most important trading partner with a 18% share.47

2.4. Australia’s trade with the European Union

The European Union is Australia’s largest economic partner. Not only in terms of two-way trade in goods an in services but it is the largest investor in Australia, and the second largest destination for Australian investment overseas. The European Union has a combined GDP of 15,8 trillion AUD (in 2001), the world’s second largest single market and after the enlargement it will grow even bigger, therefore meaning a great market opportunity to Australia. It was the world’s largest exporter of merchandise goods (totalling up to 18,4% of world merchandise exports), and in terms of imports it was the second with a share of 18,2%.

46 47

DG TRADE – A2/CG/SG/WB, Brussels, November 2002 Hungarian Ministry of Foreign Affairs

38


Table 2: Leading exporters and importers in world merchandise trade (2001) Rank Exporters

Value (billion AUD)

Share Rank Importers

1 EU 1 USA 1714 18,4% 2 USA 2 EU 1433 15,4% 3 Japan 3 Japan 791 8,5% 4 China 4 China 522 5,6% 16 Australia 13 124 1,3% Australia Source: WTO, International Trade Statistics 2002, table 1.648

Value (billion AUD)

Share

2314 179 685 478 125

23,5% 18,2% 7% 4,9% 1,3%

The European Union, as a single market, has long been Australia’s largest economic partner, and the trade between the two partners continued to grow up to 2001, but then a slight recession was noticeable. The value of Australia's overall bilateral relationship with the European Union fell by 4,0% in 2001-02, although it must be mentioned that the situation in the case of other trading partners like the United States or Japan was just the same. Regarding diversity of trade, Australia’s relationship with the European Union is much more balanced then in the case of other partners, because merchandise trade is less dominant and other sectors can have there shares too. Figure 4 Australia's economic transactions with leading trading partners, by sectors, in 2001-2002 (billion AUD) 80 70 60

Merchendise

50

Services

40

Investment income

30

Transfers

20 10 0 EU

USA

Japan

ASEAN

Source: Australian Bureau of Statistics49

48 49

http://www.ecdel.org.au/eu_and_australia/2001-02EconomicRelationship.htm http://www.ecdel.org.au/eu_and_australia/2001-02EconomicRelationship.htm

39


2.4.1. Merchandise trade between Australia and the European Union

Regarding two-way merchandise trade, the European Union remained Australia’s most important partner. It has been this way since 1995 when Austria, Finland and Sweden joined the European Union, thus contributing to the existence of a larger market. Figure 5 Australia's two-way merchandise trade with major trading partners (billion AUD) 45 40 35 30 25 20 15 10 5 0

EU Japan USA ASEAN

19997-1998

1998-1999

1999-2000

2000-2001

2001-2002


In 2002 the two-way trade between Australia and the European Union reached 44,2 billion AUD which is 17,9% of total Australian trade in goods, with the export to the EU amounting to 14,9% billion AUD and the import from the EU totalled to 29,3 billion AUD. In reference to the balance of trade, Australia’s usual deficit with the European Union was reduced in 2001-02, because Australian exports have grown faster in recent years compared to imports from the EU. Concerning the composition of Australia’s merchandise exports, it has changed over the last fifteen years by that agriculture became relatively less important and the export continued to grow particularly in Elaborately Transformed Manufactures (ETMs) – their exports almost quadrupled since 1986-87.

50

http://www.ecdel.org.au/eu_and_australia/2001-02EconomicRelationship.htm

40


Figure 6 Australia's merchandise exports to the EU by broad category ( billion AUD) 16 14 12 10 8 6 4 2 0

primery products STMs ETMs other merchandise

1986-1987

1991-1992

1996-1997

2001-2002


The top Australian export items to the EU during 2001-02 were: -

coal (it amounted to 2,2 billion AUD, which was 17% of total Australian coal exports and 15% of all Australian exports to the EU);

-

non-monetary gold (totalled to 1,2 billion AUD which was almost a quarter of exports of this item and 8% of total exports to the EU);

-

alcoholic beverages, chiefly wine (1,1 billion AUD, nearly 8% of total Australian exports to the EU).

Those items, whose exports to the EU have significantly increased were: -

measuring and controlling instruments (since 1997-98 their exports grew by 32% and reached a total growth of 204%, in 2001-02 it amounted to 228 million AUD);

-

zinc (with 119 million AUD it almost doubled the value of exports for 2000-01 and that is 51 times than what the value of exports for this item had been four years earlier);

-

other electrical machinery (amounted to 104 million AUD, it is more than three times what the value of exports for this item had been in 199798);

51


41


-

aircraft and parts (their exports showed an outstanding growth in 2002, caused by fleet restructuring after the collapse of Ansett Airlines, but is unlikely to be repeated in the forthcoming years).

Table 3 Australia's principal exports to the EU % share in 2001-02 of

% change on

1997- 1998- 1999- 2000- 2001- Total Total 1998 1999 2000 2001 2002 item EU

20002001

million AUD

1. 2. 3. 4. 5.

Coal 1215 1513 1280 1743 Non-monetary gold 328 1,759 769 701 Alcoholic beverages 481 621 791 947 Wool 1382 889 915 1193 Aircraft and parts 138 141 157 149 Medicament (including 6. 153 225 495 464 veterinary) 7. Other ores 244 284 376 563 8. Iron ores 469 411 381 366 9. Nickel ores 224 147 270 345 Measuring and 10. 75 104 120 178 controlling instruments 11. Lead 175 210 160 140 Meat (excluded bovine) 12. 134 142 134 180 fresh, chilled or frozen 13. Copper 75 84 209 216 14. Electrical equipment 72 171 173 203 15. Computer parts 151 115 116 143 16. Medical instruments 56 65 86 114 17. Zinc 2 11 19 51 Telecommunications 18. 78 69 88 148 equipment Other electrical 19. 32 45 63 96 machinery 20. Cotton 112 112 85 117 Source: DFAT, Composition of Trade Australia, 2001-02

2232 1186 1090 936 478

16,6 23,1 48,2 27,6 36,2

15,4 8,2 7,5 6,5 3,3

28 69,2 15,1 -21,5 220,9

429

21,5

3

-7,5

411 336 256

29,7 6,5 56

2,8 2,3 1,8

-26,9 -8,1 -25,7

228

30,7

1,6

28,2

204

50,2

1,4

45,8

183

10

1,3

1,8

168 158 139 123 119

11,1 32,8 12,1 22,4 14,7

1,2 1,1 1 0,8 0,8

-22,3 -22,3 -2,9 7,7 133,9

113

11,3

0,8

-23,8

104

26,3

0,7

8,1

97

6,3

0,7

-17

42


Australia’s merchandise imports from the European Union usually exceeds the exports, and that is what happened in 2001-02 too. Australia’s main import items from the European Union in 2001-02 were the following: -

medicaments (totalled to 2,8 billion AUD, which was 70% of Australia’s total imports of this item and more than 10% of all imports from the EU);

-

passenger motor vehicles (worth 2,4 billion AUD, which is almost 9% of total imports from the EU);

-

telecommunications equipment (added up to to1,2 billion AUD, and just as in the case of passenger motor vehicles, it is also more than a quarter of total imports of this item and approximately 4% of total Australian imports from the EU).

Australia’s “high-growth” merchandise imports from the European Union for 2001-02 were: -

medicinal and pharmaceutical products (it had stood on the 30th place in 1996-97 and in 2001-02 became the 10th among imports from the EU with a value of 519 million AUD risen from 175 million AUD);

-

medicaments, including veterinary (it has been the top import item since 199899, with its value rising 28% alone in 2000-01);

-

perfumery and cosmetics (added up to 339 million AUD (it is more than an average 13% growth-rate since 1997-98).

43


Table 4 Australia's principal imports from the EU % share in 2001-02 of

million AUD

1997- 1998- 1999- 2000- 2001- Total Total 1998 1999 2000 2001 2002 item EU Medicaments (including 1417 veterinary) 2. Passenger motor vehicles 1626 Telecommunications 897 3. equipment 648 4. Paper and paperboard Measuring and controlling 432 5. instruments Medicinal and 227 6. pharmaceutical products 351 7. Motor vehicle parts 8. Other electrical machinery 408 515 9. Specialised machinery Organo-inorganic 452 10. compounds 363 11. Printed matter 1.

12. Other food products

268

20002001

1729

1995

2192

2802

70

10,3

27,8

1675

1587

2076

2360

26,4

8,7

13,7

955

1583

1414

1153

25,6

4,3

-18,5

644

676

713

678

36,3

2,5

-4,9

480

525

488

567

29,6

2,1

16,2

266

259

430

519

51,5

1,9

20,6

512 408 465

476 380 414

447 452 389

461 452 444

20,8 25,8 46,6

1,7 1,7 1,6

3,2 0 14,1

590

655

546

440

40,6

1,6

-19,4

389

354

375

397

38,3

1,5

5,9

341

239

158

386

40,7

1,4

144,1

349

365

34,6

1,3

4,7

243

352

28,2

1,3

44,8

365

349

59,9

1,3

-4,4

311

342

43,9

1,3

10,1

292

342

42,1

1,3

17,2

304 322 342

339 326 313

43,9 29,3 6,2

1,3 1,2 1,2

11,7 1,1 -8,4

Electrical equipment for 361 374 339 circuits Civil engineering 327 309 255 14. equipment 272 282 325 15. Alcoholic beverages Non-electrical machinery, 280 291 285 16. tools Mechanical handling 294 310 270 17. equipment 206 236 267 18. Perfumery and cosmetics 342 399 295 19. Pumps for gas 319 256 263 20. Computers Source: DFAT, Composition of Trade Australia, 2001-02 13.

% change on

From Australia’s point of view, the European Union is the third largest export market to Australia (see Figure 7), and the most important source of merchandise imports.

44


Figure 7 Direction of Australia's merchandise exports (2001) Japan USA

19%

20%

ASEAN EU

6%

10%

China Taiwan

3% 8%

12%

4% 6%

12%

South Korea South Asia New Zealand Other

Source: ABS Recorded Trade data in DFAT STARS Database52

However, from the European Union’s standpoint Australia was only ranked the 14th most important export market, while it stood on the 27th place as a source of imports (both in 2002). Nonetheless, there are some specific products which are of particular importance for the EU. Australia is the European Union’s largest source of imports in the case of: -

beverages (was worth 815 million euro in 2002, which was 23% of all beverage imports);

-

textile fibres and their wastes, including wool (in 2002 it reached 642 million euro, that was 19% of imports for this item).

Besides, Australia is an important trading partner in other products like: -

metalliferous ores and metal scrap, including copper, nickel, aluminium and uranium (their sum totalled to 1,109 million euro in 2002, which makes Australia the EU’s 3rd most important source of this product);

-

medicinal and pharmaceutical products (with 1,717 million euro or 3% of total exports, Australia is the EU’s 5th largest export market, and the 6th largest source of imports with 295 million euro, that is 2% of total);

-

passenger cars (amounted to 1,603 million euro in 2002, which is 3% of exports for this product).

52

http:// www.dfat.gov.au/toos/archive/2002/ch5.html

45


2.4.2. Trade in services between Australia and the European Union

The service sector accounts for approximately 70% of the Australian GDP. Australia raises few barriers to foreign service operators and has a rather liberal regime. It has already opened its market for basic telecommunication services, but still maintains some restrictions to foreign ownership. Australia is an active participant in GATS 2000 negotiations, and has a huge interest in air transportation, therefore considering its further liberalization. The sector of maritime transport is still waiting for to be reformed, but both Australia and the European Union are in favour of resuming the negotiations. Trade in services between Australia and the European Union is constantly rising. The EU is Australia’s largest overseas market for services with a value of 13,2 billion AUD in 2002 in two-way trade, which is 21% of Australia’s total trade in services. This figure represents approximately 40% of total trade between Australia and the European Union. Figure 8 Two-way trade in services with major trading partners (billion AUD) 16 14 12

EU

10

USA ASEAN

8

Japan

6 4 2 0 1997-1998

1998-1999

1999-2000

2000-2001

2001-2002


53


46


Major items of the European Union’s services exports include: -

transportation (air and sea),

-

travel,

-

royalties and licence fees,

-

financial and computer services,

-

communication services.

Trade in travel services are the most dominant part of Australia’s and the European Union’s services trade relationship. In 2001-02 it ran to 56% of all services credits and 44% of all services debits with the EU. Two-way trade had an average of 9% growth between 1997-98 and 2001-02. Australia’s overall trade in travel services was also dominated by the European Union with an amount of 6,5 billion AUD, that is 25% of Australia’s two-way trade in travel services. On the basis of figures for arrivals to Australia of short-term overseas visitors, the European Union was the major source of visitors (accounted for 22%, followed by New Zealand for 16%). Similarly, most Australians chose the European Union as their destination (accounted for 18%). Trade in transportation services is also an important part of the relationship, in 2001-02 it reached 25% of all trade in services with the European Union, just as well as computer and information services which showed strong growth of 10% per annum during 1997-2002. In terms of the two-way services trade the predominance of the United Kingdom is noticeable among the member states of the European Union (just as well as on other areas of the relationship between the EU and Australia). In 2002 it accounted for 54% (worth 7,4 billion AUD) of Australia’s total two-way trade in services to the European Union, followed by Germany (15%, worth 2 billion AUD) and France (6%, worth 809 million AUD).

47


2.4.3. Obstacles in trade relations between Australia and the European Union

Australia has often been criticized because of its strict quarantine regime (which is claimed to be used by Australia in a discriminatory manner), although Australia asserts the contrary, notably that its trade is highly liberalized. That statement is backed up by the fact that Australia is one of the twenty three founder members of GATT54 which, in 1947, recognized that “relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, developing the full use of the resources of the world and expanding the production and exchange of goods.”55 Australia has been an active member ever since and played an important role in the Uruguay round, especially within the domain of agricultural trade’s liberalization. Australia also is a considerable member of the Cairns Group of agricultural exporters which pushes for free trade in agricultural products.56 Australia met its obligations undertaken in the Uruguay negotiations: remaining quantitative restrictions have been replaced by tariffs in agriculture. Although government support is also low for agriculture (with the exception of diary, wheat and other grains), SPS measures still discourage agricultural trade in spite of low tariff and non-tariff protection. Sanitary and Phytosanitary Measures (SPS measures) “SPS measures deal with food safety and animal and plant health standards. The WTO’s SPS Agreement encourages member countries to use standards set by international organizations (like the FAO-WHO Codex Alimentarius Commission for food safety, the International Office for Epizootics for animal health, or the FAO’s Secretariat of the International Plant Protection Convention for plant health), but it also allows countries to set their own standards. These standards can be higher then the internationally agreed ones, but the agreement says they should be based on scientific evidence, should not discriminate between countries, and should not be a disguised restriction to trade.”57 54

General Agreement on Tariffs and Trade GATT 1947, Preamble – http://www.fd.uc.pt/CI/CEE/OI/OMC.GATT/GATT-1947-ingles.htm 56 Members of the Cairns Group are: Argentina, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Paraguay, Philippines, South Africa, Thailand, Uruguay, and of course Australia. 57 http://www.wto.org/english/thewto_e/minist_e/min99_e/english/about_e/08sps_e.htm 55

48


Furthermore, Australia joined the WTO Information Technology Agreement (ITA – Ministerial Declaration on Trade in Information Technology Products),58 as well as the WTO Agreement on Trade in Telecom Services, and supports ITA II negotiations with the aim of expanding product coverage. Still, it has to be mentioned that in spite of all these efforts made in the area of trade liberalization, Australia still maintains a number of obstacles which makes it more difficult for EU exporters to access the Australian market. Some of the EU exporters’ main complaints are: •

While EU applies tariffs of a maximum of 5% for industrial products, in the case of Australia they reach 15% for textiles, footwear, motor vehicles and parts, and 25% for clothing for EU exports. Also, a maximum of 25% tax is imposed on luxury cars imported from the EU. To resolve this situation, Australia has announced that it will reduce tariffs autonomously; from 2005 17,5% will belong to clothing (instead of 25%) and 10% to textiles, footwear, motor vehicles and parts instead of 15%.

•

Australia is inclined to use antidumping and countervailing duty measures and has currently nine trade defence measures into force against the EU, concerning agricultural products like brandy, peaches, tomatoes, cherries, as well as manufactured products like chemicals, air conditioners, paper and skin closure strips. As the 1998 reform of Australian antidumping legislation did not result better transparency, EU exporters has to go through complicated and lengthy bureaucratic procedures.

•

Australia did not sign the WTO Agreement on Government Procurement and applies local content rules for its own suppliers on certain goods. As a result, foreign bidders (except New Zealand) may be excluded.

•

Mainly in the case of wine and cheese, intellectual property rules are often overlooked.

58

“The ITA is solely a tariff cutting mechanism… There are three basic principles that one must abide by to become an ITA participant: all products listed in the Declaration must be covered, all must be reduced to a zero tariff level, and all other duties and charges (ODCs) must be bound at zero.” - http://www.wto.org/english/tratop_e/inftec_e/itaintro_e.htm

49


•

Following the BSE crisis Australia introduced special measures which require beef and beef products exported from the EU to be sourced from cattle herds free from BSE. In terms of agricultural-food products accessing the Australian market is

especially difficult, due to “Australia’s cautious approach to quarantine, sanitary and phytosanitary regulations” that “reflects its island geography, which has isolated it from many diseases and pets in its flora and fauna.”59 All plant and animal products which are likely to contain micro-organisms capable of having a harmful effect on public health, flora or fauna require an import permit. Among those products are: fruits, vegetables, fresh herbs, plants, wood, live animals, fresh or frozen meat, dairy products, some therapeutic and veterinary products. Nevertheless, foreign products not only have to comply with Australian requirements on quarantine and inspection services but must conform to its national Food Standards Code. Other problems involve EU export of timber - manufactured more than three months prior to export – and its packaging, which have to go through a special treatment (fumigation, immunisation) before it is allowed to enter the Australian market. EU exports of fresh pork, poultry meat and Roquefort cheese also meet with difficulties because of lengthy risk assessment procedures. On the other hand, Australia also meets some difficulties in terms of accessing the EU market. During high level meetings in 2003 only one particular complaint has been expressed on Australia’s part that concerns the 12% tariff rate the EU applies on the Australian exports of lobsters and prawns. Some further problem may occur as a result of the EU’s Common Agricultural Policy (CAP) where the EU strives for high level of self-sufficiency in primary agricultural products like meat, dairy products and wheat. Australia is continuously challenging the European Union to execute reforms in its CAP, because it subsidises EU farmers and distorts world agricultural markets. 59

Europa – Trade Issues – Australia - http://europa.eu.int/comm/trade/issues/bilateral/countries/australia/index_en.htm

50


The difficulties listed above brings considerable tensions to the relationship between the two sides, and sometimes can only be smoothed out through the WTO. Regarding dispute settlement procedures, Australia has requested two panels against the European Union. Australia joined Brazil and Thailand in seeking investigation on the EU’s export subsidies on sugar, claiming that the European Union is not meeting its WTO commitments to reduce them. After WTO consultations failed in November 2002, Australia decided to request the establishment of a panel at the Dispute Settlement Body meeting in Geneva on the 21st of July in 2003. The second panel is against the European Union’s protection of trademarks and geographical indications for agricultural products and foodstuff. On the 29th of August in 2003, the European Union announced that it would request a panel to be established against Australia, because the two parties had not been able to reach an agreement during previous discussions on Australia’s quarantine regime. The European Union claims that Australia had breached WTO rules by applying unnecessary restrictions to certain agricultural products, and uses them in a discriminatory manner. The products concerned include tomatoes, fresh fruits, apple, peach, nectarine, cucumber, lettuce, carrot, apricot, egg and poultry meat. There are extremely strict conditions in the case of pig meat: Australia only allows imports of boned pig meat from Denmark, which must be heat-treated in Australia. The European Union does not dispute Australia’s right for an appropriate level of protection, but claims that Australia uses unfairly protection of its market and producers.

2.5. Investments

“Australia recognises that inward foreign investment is a key element in achieving increased living standards and economic prosperity and welcomes foreign investment, subject to legislative guidelines.”60

60

Australia in Brief, DFAT - http://www.dfat.gov.au/aib/trade_investment.html

51


Australia encourages a foreign investment policy if it is consistent with Australian interests, because it contributes to the economy and employment growth.61 The European Union has long been the leading foreign investor in Australia. Total foreign investment in Australia from EU countries including both direct and portfolio investment added up to 294,4 billion AUD in 2001-02. There were a significant increase in the foreign portfolio investment, which was able to compensate the slight decline in FDI. 29% of EU investment in Australia is orientated towards the financial-insurance sector, but sectors such as mining, petrochemicals, metal products and food are important as well. The major investors to Australia among the EU member states in 2001-02 were: -

the United Kingdom (223,9 billion AUD),

-

the Netherlands (16,1 billion AUD),

-

Germany (14,7 billion AUD). Figure 9 Level of foreign investment in Australia by major trading partners (billion AUD) 350 300 250

EU

200

USA Japan

150

ASEAN

100 50 0 1998

1999

2000

2001

2002


61

According to a survey in 1999, the EU investment in Australia leaded to the creation of approximately 350000 jobs. Another survey in 2000-01 of foreign-owned IT companies, conducted by the Australian Bureau of Statistics showed that European-owned companies paid higher salaries (of an average more than 40%) than Australian-owned ones. 62 http://www.ecdel.org.au/eu_and_australia/2001-02EconomicRelationship.htm

52


EU investors in Australia can profit from the fast-growing Australian market and stable economy. Australia has also strong links with the Asia Pacific region which is also a possibility for EU investors to access Asian markets. The European Union is the second largest destination for Australian investors, in 2001-02 total foreign investment in the European Union from Australia was worth 127 billion AUD. The major destinations in 2001-02 among EU member countries were: -

the United Kingdom (26 billion AUD),

-

the Netherlands (2,5 billion AUD).

Some examples of internationals investors in Australia: -

in the field of agriculture

International Bongrain (France) cheese-making industry

Nutreco (the Netherlands) aquaculture

-

in the fields of minerals and energy

Rio Tinto (United Kingdom) minerals discovery and processing

Royal Dutch Schell (the Netherlands) oil and petroleum products

-

in the field of manufacturing

Schefenacker (Germany) automotive products

GlaxoSmithKline (United Kingdom) pharmaceutical and compressed air equipment

BOC Gases (United Kingdom) industrial, medical and speciality gases, welding products

-

in the fields of services

Axa (France) insurance and asset management 53


Staffware (United Kingdom) business process management

Investing in regional Australia sometimes can be more beneficial since advantages are granted in order to attract capital to regions other then the Sydney area. Regional Australia offers a variety of advantages for foreign investors such as: -

well positioned land for industry,

-

access to leading universities and research centres,

-

lower costs for construction and rental of commercial property,

-

low operating costs,

-

local organizations that can provide establishment advice and assistance.

54


3. Relations between Australia and Hungary

Probably because of the huge distance and the lack of traditions relations between Australia and the European Union are of no real importance, although they share similar values which create the basis of their relationship. Both countries are committed to a stable and predictable world system which is based on the protection of democracy, human rights and the rights of the ethnic minority, as well as on a sound world economy. They have similar political, economic and social systems, they both have an interest in the liberalization of trade, the liquidation of terrorism and supporting non-proliferation of nuclear, chemical and biological weapons. Hungarians living in Australia have also been playing an important role in the relationship, and have contributed to Australia’s cultural and scientific achievements. However, the enlargement has recently drawn Australia’s attention to Hungary. Australian political circles hoping for a beneficial cooperation as before the accession and expect Hungary to reinforce openness in the Common Foreign and Security Policy of the European Union. Basically there are four areas in which Hungary is important for Australia: •

The Australian party hopes that Hungary (since it has a great interest in agriculture) would press for a CAP reform which is one of Australia’s main pursuits.

•

As a committed ally of the United States of America, Australia attaches importance to the US-EU relationship and their mutual understanding in international issues. In this respect Australia considers Hungary as an unambiguous ally.

•

Australia expect that after the enlargement growth of the purchasing power and different development projects in Hungary will create new market opportunities for Australian companies.

•

The approximately 60000 Hungarian living in Australia by itself demand dialogue between the two sides.

55


3.1. Political relations between Australia and Hungary

Diplomatic relations between the two country started when Hungary opened a Consulate General in 1967 in Sydney but it was not until April 6, 1972, when full-scale diplomatic relations were established. The Hungarian Embassy started operations in 1975 under the direction of Zsigmond Kázmér, the first consul general and later the first Hungarian ambassador to Australia. Hungary has four Honorary Consulates in Australia, they are operating in Melbourne, Brisbane, Adelaide and Perth. The first resident Australian ambassador accredited to Budapest presented his credentials in 1985. The following high-level visits took place between Australia and Hungary since diplomatic relations were established: -

from the Hungarian part: • Speaker of the Hungarian Parliament Katalin Szili paid visit to Australia in 2002. • Viktor Orbán, Prime Minister of Hungary visited Australia in September 2000, during the Olympics, where he met with his Australian counterpart, John Howard. • Hungarian President Árpád Göncz paid visit to Australia in February 1999. • In 1995 Zoltán Gál, Speaker of the Hungarian Parliament participated on a meeting in Canberra. • Hungarian Foreign Ministers paid visit to Australia only twice: Géza Jeszenszky in 1990 and Péter Várkonyi in 1988.

-

on the part of Australia: • Prime Minister Robert Hawke held official talks in Budapest in 1989. • The Head of the Australian Senate paid visit to Hungary three times: once in 1989, in 1991 and in 1996. • Australian Foreign Ministers visited Hungary twice: Bill Hayden in 1984 and Gareth Evans in 1989 (accompanying Prime Minister Robert Hawke). 56


Those rather rare high-level visits indicate that although attempts were made to keep up political dialogue, relationship between the parties can not be called intense. Visits did not happen on a regular basis, they has been occasional-like instead. Education is an important part of the relationship between Australia and Hungary, because it helps better understanding each other’s culture and contributes to the development of a closer partnership. Australian scholarships of 12 months are granted every year for Hungarian undergraduates, and Hungary offers 24 months of post-gradual scholarships for Australian students in return. Ten Australian Universities maintain cooperation agreements with five Hungarian Universities. Among them are the Budapest and Sydney Technical Universities where academic and student exchange programmes promoting common research and education have been operating since 1992. An agreement on Cooperation in Higher Education between Australia and Hungary had also been concluded and was signed between the Australian ViceChancellors’ Committee (AV-CC) and the Hungarian Vice-Chancellor’s Conference on the 30th of May in 2002. It aims to facilitate and promote cooperation through university student exchange, as well as exchange of researchers. The parties are committed to share information on e-learning and adult training, as well as on other information related to research and development. The Agreement is effective for the following five years, and will be extended automatically for subsequent five years except the parties decide to end it earlier and therefore present a written statement about their intention. In the field of cultural relations there is currently no interstate agreement on cultural cooperation in force between Australia and Hungary, and neither Hungarian Institute nor Hungarian language department is operating in Australia.63 There are some Hungarian community centres operating in Australia,64 although they are relatively lesser-attended. The so-called “individual-Hungarians” are in the majority, who try to adapt themselves to the new surroundings as soon as possible. However, Hungarians

63

Attempts were made to establish a Hungarian language department in Canberra in 2000 but the Hungarian party pulled out. 64 Since in Australia the culture falls within the competence of the federal states, cultural institutions formed on an economic basis are managed by the different states, but their preservers could be local (urban) communities (this latter case is the most frequent one). In general they can only produce their capital needed for their maintenance and operation with the help of different private funds. Those funds are maintained by individual donations and financial support of sponsor companies.

57


living in Australia play a particularly important role in keeping up Hungarian culture in Australia.

3.2. Economic relations between Australia and Hungary

Australia established a number of bilateral agreements with Hungary, which provide a basis and gives a framework for economic relationship between the parties. •

Trade agreement – 1967 (renewed in 1974)

•

Agreement on the avoidance of double taxation – 1992

•

Agreement on the protection of investments – 1992

•

Agreement on extradition – 1997

•

Agreement on customs cooperation – 1997

•

Agreement on legal assistance – 1997

•

Nuclear safeguard agreement – 2001

These agreements will have to be reviewed after Hungary’s accession to the European Union. Regarding Science and Technology, there is currently no intergovernmental agreement in that field, and there is a little possibility of taking the initiative of such agreement in the near future. The reason for that is partly the huge distance lying between the two countries, which highly increases the cost of logistics. However, it is possible to develop relations through the exchange of experience of researchers and experts in technology. Australian experts coming from Hungary represent a specific form of relations. Five Australian experts coming from Hungary are external and honorary members of the Hungarian Academy of Sciences.

58


3.2.1. Trade relations between Australia and Hungary

According to the Hungarian Bureau of Statistics65 exports to Australia reached 102,6 million USD, while imports totalled 20,6 million USD in 2002. That is a growth of 134,7% compared to the previous year. Exports to Australia grew significantly (up to 427,2%), while our imports decreased (27,7%). Although in 2001 the balance of trade showed a small Australian surplus, in 2002 it ended with a Hungarian surplus worth 80 million USD. Figure 10 Trade between Australia and Hungary (million USD) 140 120 100 80 60 40 20 0 1998

1999

2000 Export

Import

2001

2002

Total

Source: Hungarian Ministry of Foreign Affairs

Exports of the X-Box video game produced by Flextronics’s factory at Sárvár played an important role in the outstanding export-result of 2002. According to Hungarian statistics its share of total value of 2002 exports was worth 68,2 million USD.66 In the meantime Flextronics put an end to the game’s Hungarian production, therefore in 2003 a significant reduction is to be expected in exports to Australia. Regarding the effect of X-Box it may be concluded that deliveries between multinational companies and their marketing strategies strongly influence our exports to Australia (although marketing activity of Hungarian companies in Australia is strongly limited, mainly because of the long distance which increases costs significantly). 65

Központi Statisztikai Hivatal (KSH) According to Australian statistics imports of X-Box from Hungary was worth 68 million AUD, that is approximately 38,5 million USD.

66

59


According to the Australian Bureau of Statistics (ABS) Australian exports to Hungary amounted to 24,993 million AUD in 2002 (that is approximately 14,17 million USD), while Australian imports from Hungary totalled to 171,390 million AUD (around 97,5 million USD), which places Hungary 56th in terms of two-way trade, preceding all candidate countries of our region. According to Australian statistics Hungarian exports to Australia showed growth of 80%, our imports decreased by 4,5%, while two-way trade increased by 63,4%. Differences in trade statistics probably originates from the fact that Australian statistics put exports to Australia down by breaking them down into countries of origin, thus keeping a record of products arriving through reexport as imports originating from Hungary. Although Hungarian data on imports probably stands closer to reality. Compared to previous years Hungarian product structure in exports has not changed significantly (considering X-Box as a single occurrence), ETMs of high added value still dominate. Computers and parts, electrical machineries, motor vehicle parts are also of particular importance, followed by tyres, household appliances, chemicals, entertaining electrical equipments and other machineries. Our top item imported from Australia is wool (worth 17,145 million AUD), and plant protecting materials with a smaller volume. Table 5 Product structure of trade between Australia and Hungary (million USD) Imports Exports Balance 2001 2002 2001 2002 2001 2002 Food, beverages and tobacco 1,1 1,0 1,2 1,3 -0,2 -0,2 Raw materials 0,0 0,0 8,1 8,7 -8,1 -8,7 Energy resources 0,0 2,8 3,0 -2,8 -3,0 Manufactured products 8,3 80,2 14,2 5,4 -6,0 74,8 Machinery 14,7 21,4 2,2 2,3 12,5 19,1 Total 24,0 102,6 28,5 20,6 -4,5 82,0 Source: Ausztrália, Magyarország külgazdasága 200267

67

http://www.kulugyminiszterium.hu/NR/rdonlyres/A92D0B39-A101-4138-998B68EAED3AC5B9/o/44Ausztralia.pdf

60


Because of the low level of Australian exports to Hungary the Austrade68 has decreased its branch office’s sphere of authority in Budapest, that has been operating as a regional centre. The office remained though, but with a much smaller apparatus, and is managed by a local representative, not by an Australian delegate. Furthermore, only the local (Hungarian) market falls within its competence, regional missions has been transferred to Warsaw. Nevertheless, Australia’s aim is to strengthen economic relationship with countries of our region, and increase Australian exports which have fallen significantly in recent years. The Australian Parliament established a committee to examine Australian opportunities which may arise in connection with the EU enlargement: how much will it influence Australian export-perspectives and are there any realistic opportunities for Australian companies on markets of the region. In April 2003 eight members of the Australian Parliament visited Budapest to investigate development opportunities in terms of economic relations between Australia and Hungary. Establishing the Forum of Australian-Central-European Executives also proves the interest in our region. The creation of the Forum was initiated by Peter Fritz, an Australian businessman who has Hungarian origins. The first session was held between 12-13 March in 2003 in Sopron, with the participation of an Australian delegation led by Richard Alston, Minister for Communications and Information Technology. Raw materials and agricultural products dominate in Australian exports to Hungary, although the current change in the product structure of Australian exports is noticeable: the share of services and manufactured products have started to grow, particularly in other countries of the region. The Australian party hopes that this trend will occur more prominently on the Hungarian market. They have particular interests on the market of online-governmental, health and social insurance services, and see an opportunity in the telecommunications and information-technology cooperation. Australia’s strict SPS measures create an obstacle for Hungarian agricultural exports to Australia, although Hungarian companies do not strive for entering the Australian market. According to Australian trade statistics Hungarian exports of food to

68

Australian Trade Commission

61


Australia totalled to 1,778 million AUD in 2002. There are two items dominating in our exports: small cucumber and sour cherry bottled fruit.

3.2.2. Investments

Although the agreements required are available (like the Agreement on the protection of investments or the Agreement on the avoidance of double taxation), Australian investments in Hungary fell considerably in recent years. In the mid 1990s the value of Australian investments in Hungary reached 500 million USD which has dropped to 45 million USD by 2002. This drastic loss is the result of the change in the ownership of the Hungary-based Coca Cola Amatil and the sale of the multiplex movie network of Australian ownership. Australian investors that remained in Hungary are mainly concerned in the insurance and the mining sector, and are interested in the establishment of an information technology centre. Main Australian investments in Hungary include:69 •

QBE-Atlasz Biztosító Rt. In 1998 the QBE insurance company purchased the Atlasz Biztosító (which is also an insurance company), since then QBE Atlasz became the company’s East-European centre. It provides life, accident and property insurance.

•

Sydney Apartment Hotel This hotel offers luxury apartments for its guests.

•

Stanley Electric Hungary Kft. This factory was established in 2002 in Gyöngyös, it produces headlights for vehicles.

69

Australian Trade Commission (Austrade)

62


Conclusion

Australia and the European Union are natural political and economic partners of each other. Still, despite their similar democratic parliamentary systems, their common goals and views on international issues and their interwoven past political relations between the parties are less determinant than their economic partnership. So Leon Brittan was probably right, the most significant part of the relationship remains economic. The European Union as a single market is Australia’s largest merchandise trading partner, as well as Australia’s largest overseas market for services exports, and largest source of imported services. In spite of successful trade and economic relations, political partnership has not really deepened since diplomatic relations were established.. The European Union still does not have a comprehensive agreement with Australia: the Joint Declaration on Relations between Australia and the European Union (which governs their bilateral relationship) is a non-binding, non-treaty status political declaration. Although it assisted in intensifying political dialogue, and as a result some bilateral agreements were established, the lack of an all-embracing agreement hinders further development of political partnership. In my opinion a certain degree of lack of interest can be observed on the behalf of both sides in recent times. The European Union is much more concerned with the enlargement (which is completely understandable), while Australia seems to “rediscover” the Asia Pacific region. Australian Prime Minister John Howard’s “whychange-if-nothing-has-gone-wrong” policy may contribute to that situation, so a sudden change is not really expected. Because Australia is strongly dependent on the EU market, a complete turn towards to the Asia Pacific is also quite unimaginable; it shall try to take advantage of every opportunity in the future too. (The EU enlargement is one of those huge opportunities.) Otherwise, neither the region welcomes Australia as an 63


Asian country, stated objections included the country’s European culture as the biggest obstacle to became part of Asia. The EU enlargement could also bring positive change into the relationship of Australia and Hungary, Australia highly welcomes Hungary’s accession. Although our relations can not be called strong or intense at all (actually it is rather trifling), it can increase after the enlargement within the frames of the European Union. The Australian party hopes that our relationship will remain amicable in the future too and that it would find a new ally in Hungary (Australia particularly count on Hungary in the field of agriculture, hoping that it would too urge a CAP reform which is of particular importance of Australia).

64


Table of figures and tables

Figures: 1. Australia’s total exports (million USD) – (page 32) 2. Australia’s exports by sector (million USD) – (page 33) 3. Australia’s trade with main partners (2001) – (page 38) 4. Australia’s economic transactions by leading trading partners, by sectors, in 2001-02 (billion AUD) – (page 39) 5. Australia’s two-way merchandise trade with major trading partners (billion AUD)– (page 40) 6. Australia’s merchandise exports to the EU by broad category (billion AUD) – (page 41) 7. Direction of Australia’s merchandise exports (2001) – (page 45) 8. Two-way trade in services with major trading partners (billion AUD) – (page 46) 9. Level of foreign investment in Australia by major trading partners (billion AUD) – (page 52) 10. Trade between Australia and Hungary (million USD) – (page 59)

Tables: 1. State of EU-Australian Collaboration (page 29) 2. Leading exporters and importers in world merchandise trade (2001) – (page 39) 3. Australia's principal exports to the EU – (page 42) 4. Australia's principal imports from the EU – (page 44) 5. Product structure of trade between Australia and Hungary (million USD) – (page 60)

65


Bibliography

Balázs Péter: Az Európai Unió külpolitikája és a magyar-EU kapcsolatok fejlődése KJK-KERSZÖV Jogi és Üzleti Kiadó Kft., Budapest, 2002, page 103-104 Balogh László: A világ nemzetei Balogh Gyűjtemény, 1994, page 30-31 Egedy Gergely: Ausztrália története Aula Kiadó Kft., Budapest, 2000 Kunz Egon: Magyarok Ausztráliában Teleki László Alapítvány, Budapest, 1997 Macintyre, Stuart: A Concise History of Australia Cambridge University Press, Cambridge, United Kingdom, 1999 Dr. Majoros Pál: Magyarország a világkereskedelemben Nemzeti Tankönyvkiadó Rt., Budapest, 1999, page 123-124 Magyar Larousse Enciklopédia (I. kötet) Akadémiai Kiadó, Budapest, 1991, page 195-197

Web pages

Australian Government – Department of Foreign Affairs and Trade: http://www.dfat.gov.au/aib/trade_investment.html - Trade and investment http://www.dfat.gov.au/cer_afta/ - AFTA-CER 66


http://www.dfat.gov.au/geo/european_union/eu_brief.html - European Union in brief http://www.dfat.gov.au/geo/european_union/index.html - European Union http://www.dfat.gov.au/geo/australia/tradingnation/agribusiness.html - Australia’s agribusiness trade http://www.dfat.gov.au/geo/australia/tradingnation/regional_australia.html - Regional Australia http://www.dfat.gov.au/geo/australia/tradingnation/successful_exporters.html - Successful exporters and investors in Australia http://www.dfat.gov.au/geo/european_union/eu_trade_investment.html - Australia’s trade and investment relations with the European Union http://www.dfat.gov.au/media/releases/foreign/1997/fa62_97.html http://www.dfat.gov.au/media/releases/foreign/1997/fa106_97.html http://www.dfat.gov.au/publications/eu_exports/exporteu/index.html - ExportEU http://www.dfat.gov.au/publications/eu_exports/exporteu/section1-2.html - ExportEU http://www.dfat.gov.au/toos/archive/2002/ch5.html - Australia’s trade performance in 2001 http://www.dfat.gov.au/trade/negotiations/wto_disputes.html - Australia and WTO dispute settlement http://tradewatch.dfat.gov.au/TradeWatch/TradeWatch.nsf/vExportWeb/European+Uni on - EU – Export potential and Australian government initiatives

The European Commission’s Delegation to Australia and New Zealand: http://www.ecdel.org.au/archive/economyandtrade.htm - Economic and trade relationship http://www.ecdel.org.au/education/index.htm - Cooperation in education http://www.ecdel.org.au/eu_and_australia/agreements.htm 67


- EU agreements with Australia http://www.ecdel.org.au/eu_and_australia/agreements_mra.htm - MRA http://www.ecdel.org.au/eu_and_australia/Aus_trade_in_goods_2002.htm - Australia’s trade in goods in 2002 http://www.ecdel.org.au/eu_and_australia/2001-02EconomicRelationship.htm - EU-Australia economic relations (2001-02) http://www.ecdel.org.au/eu_and_australia/politics.htm - Political relations http://www.ecdel.org.au/pressandinformation/2003_ministerials/index.htm - EU-Australia Ministerial Consultations 2003 http://www.ecdel.org.au/scienceandtech/index.htm - S&T cooperation

The European Union On-Line: http://europa.eu.int/comm/dgs/energy_transport/galileo/index_en.htm - GALILEO http://europa.eu.int/comm/external_relations/australia/intro/eucoop.htm - An agenda for future cooperation http://europa.eu.int/comm/external_relations/australia/intro/mc160403.htm http://europa.eu.int/comm/trade/issues/bilateral/countries/australia/index_en.htm - Australia http://www.europa.eu.int/eur-lex/en/lif/reg/en_register_114070.html - Bilateral agreements with Oceanian countries

Mark Vaile, Minister for Trade, Australia: http://www.trademinister.gov.au/releases/2003/mvt052_03.html http://www.trademinister.gov.au/releases/2003/mvt083_03.html

68


Austrade: http://www.austrade.gov.au http://www.iranyausztralia.hu

Hungarian Ministry of Foreign Affairs: http://www.kulugyminiszterium.hu/Kulugyminiszterium/HU/Vilag_orszagai/oceania/au sztralia/ausztralia.htm

Australian Bureau of Statistics: http://www.abs.gov.au/Ausstats/[email protected]/0/BE75D8FF866CBA97CA256AAA007FE1 75?Open http://www.abs.gov.au/Ausstats/[email protected]/0/2CD22A84525A8071CA2569DE002A303 0?Open http://www.abs.gov.au/Ausstats/abs%40.nsf/94713ad445ff1425ca25682000192af2/6b8 9ae7f0f459199ca2568a900154ad6!OpenDocument - Year Book Australia 2002

Australian Mission to the European Union: http://www.austemb.be

Other web pages: http://www.austlii.edu.au/au/other/dfat/treaty_list/bilist/European_Community.html - Bilateral treaty list http://www.austlii.edu.au/au/other/dfat/treaties/1982/31.html - SPARTECA 69


http://www.austlii.edu.au/au/other/dfat/treaties/1991/37.html - PATCRA II http://www.austlii.edu.au/au/other/dfat/treaties/2003/16.html - SAFTA http://environment.about.com/cs/glossary/g/MFN.htm - MFN clause http://www.fd.uc.pt/CI/CEE/OI/OMC.GATT/GATT-1947-ingles.htm - GATT http://www.stroudgate.net/eab/articles/026.php - Australia and the EU http://www.wto.org/english/thewto_e/minist_e/min99_e/english/about_e/08sps_e.htm - SPS measures http://www.wto.org/english/tratop_e/inftec_e/itaintro_e.htm - ITA

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ANNEXES

71


Annex I

The World Factbook Australia

Introduction Australia Background: Australia became a commonwealth of the British Empire in

1901. It was able to take advantage of its natural resources to rapidly develop its agricultural and manufacturing industries and to make a major contribution to the British effort in World Wars I and II. Long-term concerns include pollution, particularly depletion of the ozone layer, and management and conservation of coastal areas, especially the Great Barrier Reef. A referendum to change Australia's status, from a commonwealth headed by the British monarch to a republic, was defeated in 1999.

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Geography

Australia

Location: Oceania, continent between the Indian Ocean and the South

Pacific Ocean Geographic 27 00 S, 133 00 E coordinates: Map Oceania references: Area: total: 7,686,850 sq km

water: 68,920 sq km note: includes Lord Howe Island and Macquarie Island land: 7,617,930 sq km Area - slightly smaller than the US contiguous 48 states comparative: Land 0 km boundaries: Coastline: 25,760 km Maritime contiguous zone: 24 NM claims: territorial sea: 12 NM

exclusive economic zone: 200 NM continental shelf: 200 NM or to the edge of the continental margin Climate: generally arid to semiarid; temperate in south and east; tropical

in north Terrain: mostly low plateau with deserts; fertile plain in southeast Elevation lowest point: Lake Eyre -15 m extremes: highest point: Mount Kosciuszko 2,229 m Natural bauxite, coal, iron ore, copper, tin, gold, silver, uranium, resources: nickel, tungsten, mineral sands, lead, zinc, diamonds, natural

gas, petroleum Land use: arable land: 6.88%

permanent crops: 0.03% other: 93.09% (1998 est.) Irrigated 24,000 sq km (1998 est.) land: Natural cyclones along the coast; severe droughts; forest fires hazards: Environment soil erosion from overgrazing, industrial development, - current urbanization, and poor farming practices; soil salinity rising issues: due to the use of poor quality water; desertification; clearing

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for agricultural purposes threatens the natural habitat of many unique animal and plant species; the Great Barrier Reef off the northeast coast, the largest coral reef in the world, is threatened by increased shipping and its popularity as a tourist site; limited natural fresh water resources Environment party to: Antarctic-Environmental Protocol, Antarctic-Marine - Living Resources, Antarctic Seals, Antarctic Treaty, international Biodiversity, Climate Change, Desertification, Endangered agreements:

Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Marine Life Conservation, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands, Whaling signed, but not ratified: Climate Change-Kyoto Protocol

Geography - world's smallest continent but sixth-largest country; population note: concentrated along the eastern and southeastern coasts;

regular, tropical, invigorating, sea breeze known as "the Doctor" occurs along the west coast in the summer People

Australia

Population: 19,731,984 (July 2003 est.) Age 0-14 years: 20.2% (male 2,045,783; female 1,949,864) structure: 15-64 years: 67.1% (male 6,680,531; female 6,553,141)

65 years and over: 12.7% (male 1,099,275; female 1,403,390) (2003 est.) Median age: total: 36 years

male: 35.2 years female: 36.8 years (2002) Population 0.93% (2003 est.) growth rate: Birth rate: 12.55 births/1,000 population (2003 est.) Death rate: 7.31 deaths/1,000 population (2003 est.) Net migration 4.05 migrant(s)/1,000 population (2003 est.) rate: Sex ratio: at birth: 1.05 male(s)/female

under 15 years: 1.05 male(s)/female 15-64 years: 1.02 male(s)/female 65 years and over: 0.78 male(s)/female total population: 0.99 male(s)/female (2003 est.) Infant total: 4.83 deaths/1,000 live births mortality female: 4.4 deaths/1,000 live births (2003 est.) rate: male: 5.23 deaths/1,000 live births Life total population: 80.13 years

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expectancy male: 77.27 years at birth: female: 83.13 years (2003 est.) Total fertility 1.76 children born/woman (2003 est.) rate: HIV/AIDS - 0.1% (2001 est.) adult prevalence rate: HIV/AIDS - 12,000 (2001 est.) people living with HIV/AIDS: HIV/AIDS - less than 100 (2001 est.) deaths: Nationality: noun: Australian(s)

adjective: Australian Ethnic Caucasian 92%, Asian 7%, aboriginal and other 1% groups: Religions: Anglican 26.1%, Roman Catholic 26%, other Christian 24.3%,

non-Christian 11%, other 12.6% Languages: English, native languages Literacy: definition: age 15 and over can read and write

total population: 100% male: 100% female: 100% (1980 est.) Government Australia Country name: conventional long form: Commonwealth of Australia

conventional short form: Australia Government democratic, federal-state system recognizing the British type: monarch as sovereign Capital: Canberra Administrative 6 states and 2 territories*; Australian Capital Territory*, New divisions: South Wales, Northern Territory*, Queensland, South

Australia, Tasmania, Victoria, Western Australia Dependent Ashmore and Cartier Islands, Christmas Island, Cocos areas: (Keeling) Islands, Coral Sea Islands, Heard Island and

McDonald Islands, Norfolk Island Independence: 1 January 1901 (federation of UK colonies) National Australia Day, 26 January (1788) holiday:

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Constitution: 9 July 1900, effective 1 January 1901 Legal system: based on English common law; accepts compulsory ICJ

jurisdiction, with reservations Suffrage: 18 years of age; universal and compulsory Executive chief of state: Queen of Australia ELIZABETH II (since 6 branch: February 1952), represented by Governor General Maj. Gen.

(Ret.) Michael JEFFREY (since 11 August 2003) head of government: Prime Minister John Winston HOWARD (since 11 March 1996); Deputy Prime Minister John ANDERSON Deputy Prime Minister John ANDERSON (since 20 July 1999) cabinet: Parliament nominates and selects, from among its members, a list of candidates to serve as government ministers; from this list, the governor general swears in the final selections for the Cabinet elections: none; the monarch is hereditary; governor general appointed by the monarch on the recommendation of the prime minister; following legislative elections, the leader of the majority party or leader of a majority coalition is sworn in as prime minister by the governor general note: government coalition - Liberal Party and National Party Legislative bicameral Federal Parliament consists of the Senate (76 seats branch: - 12 from each of the six states and two from each of the two

mainland territories; one-half of the members elected every three years by popular vote to serve six-year terms) and the House of Representatives (150 seats - this is up from 148 seats in 2001 election; members elected by popular vote on the basis of preferential representation to serve three-year terms; no state can have fewer than five representatives) elections: Senate - last held 10 November 2001 (next to be held by February 2005); House of Representatives - last held 10 November 2001 (next to be held by February 2005) election results: Senate - percent of vote by party - NA%; seats by party - Liberal Party-National Party coalition 35, Australian Labor Party 28, Australian Democrats 8, Green Party 2, One Nation Party 1, Country Labor Party 1, independent 1; House of Representatives - percent of vote by party - NA%; seats by party - Liberal Party-National Party coalition 82, Australian Labor Party 65, independent and other 3 Judicial High Court (the chief justice and six other justices are branch: appointed by the governor general) Political Australian Democrats [Andrew BARTLETT]; Australian parties and Labor Party [Mark LATHAM]; Australian Progressive leaders: Alliance [Meg LEES]; Country Labor Party [leader NA];

Australian Greens [Bob BROWN]; Liberal Party [John 76


Winston HOWARD]; The Nationals [John ANDERSON]; One Nation Party [Len HARRIS] Political Australian Monarchist League [leader NA]; Australian pressure Republican Movement [leader NA] groups and leaders: International ANZUS, APEC, ARF (dialogue partner), AsDB, ASEAN organization (dialogue partner), Australia Group, BIS, C, CP, EBRD, participation: ESCAP, FAO, IAEA, IBRD, ICAO, ICC, ICCt, ICFTU,

ICRM, IDA, IEA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, IOM, ISO, ITU, NAM (guest), NEA, NSG, OECD, OPCW, PCA, Sparteca, SPC, SPF, UN, UNCTAD, UNESCO, UNHCR, UNMEE, UNTSO, UNU, UPU, WCO, WFTU, WHO, WIPO, WMO, WTrO, ZC Diplomatic chief of mission: Ambassador Michael J. THAWLEY representation consulate(s) general: Atlanta, Chicago, Honolulu, Los in the US: Angeles, New York, and San Francisco

FAX: [1] (202) 797-3168 telephone: [1] (202) 797-3000 chancery: 1601 Massachusetts Avenue NW, Washington, DC 20036 Diplomatic chief of mission: Ambassador J. Thomas SCHIEFFER representation embassy: Moonah Place, Yarralumla, Canberra, Australian from the US: Capital Territory 2600

mailing address: APO AP 96549 telephone: [61] (02) 6214-5600 FAX: [61] (02) 6214-5970 consulate(s) general: Melbourne, Perth, Sydney Flag blue with the flag of the UK in the upper hoist-side quadrant description: and a large seven-pointed star in the lower hoist-side

quadrant known as the Commonwealth Star, representing the federation of the colonies of Australia in 1901; the star depicts one point for each of the six original states and one representing all of Australia's internal and external territories; the remaining half is a representation of the Southern Cross constellation in white with one small five-pointed star and four larger, seven-pointed stars Economy

Australia

Economy - Australia has a prosperous Western-style capitalist economy, overview: with a per capita GDP on par with the four dominant West

European economies. Rising output in the domestic economy has been offsetting the global slump, and business and consumer confidence remains robust. Australia's emphasis on reforms is another key factor behind the economy's strength. The stagnant economic conditions in major export partners 77


and the impact of the worst drought in 100 years cast a shadow over prospects for 2003. GDP: purchasing power parity - $525.5 billion (2002 est.) GDP - real 3.6% (2002 est.) growth rate: GDP - per purchasing power parity - $26,900 (2002 est.) capita: GDP - agriculture: 3% composition industry: 26% by sector: services: 71% (2001 est.) Population NA% below poverty line: Household lowest 10%: 2% income or highest 10%: 25.4% (1994) consumption by percentage share: Distribution of 35.2 (1994) family income Gini index: Inflation rate 2.8% (2002 est.) (consumer prices): Labor force: 9.2 million (37256) Labor force - services 73%, industry 22%, agriculture 5% (1997 est.) by occupation: Unemployment 6.3% (2002) rate: Budget: revenues: $86.8 billion

expenditures: $84.1 billion, including capital expenditures of $NA (FY 00/01 est.) Industries: mining, industrial and transportation equipment, food

processing, chemicals, steel Industrial 4.3% (2002 est.) production growth rate: Electricity - 198.2 billion kWh (2001) production: Electricity - fossil fuel: 90.8% production by hydro: 8.3% source: other: 0.9% (2001)

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nuclear: 0% Electricity - 184.4 billion kWh (2001) consumption: Electricity - 0 kWh (2001) exports: Electricity - 0 kWh (2001) imports: Oil - 731,000 bbl/day (2001 est.) production: Oil - 796,500 bbl/day (2001 est.) consumption: Oil - exports: 523,400 bbl/day (2001) Oil - imports: 530,800 bbl/day (2001) Oil - proved 3.664 billion bbl (37257) reserves: Natural gas - 33.08 billion cu m (2001 est.) production: Natural gas - 23.33 billion cu m (2001 est.) consumption: Natural gas - 9.744 billion cu m (2001 est.) exports: Natural gas - 0 cu m (2001 est.) imports: Natural gas - 2.407 trillion cu m (37257) proved reserves: Agriculture - wheat, barley, sugarcane, fruits; cattle, sheep, poultry products: Exports: $66.3 billion (2002 est.) Exports - coal, gold, meat, wool, alumina, iron ore, wheat, machinery commodities: and transport equipment Exports - Japan 18.5%, US 9.6%, South Korea 8.3%, China 6.9%, partners: New Zealand 6.5%, UK 4.7%, Singapore 4.1%, Taiwan 4%

(2002) Imports: $68 billion (2002 est.) Imports - machinery and transport equipment, computers and office commodities: machines, telecommunication equipment and parts; crude oil

and petroleum products Imports - US 18.3%, Japan 12.3%, China 10.1%, Germany 5.7%, UK partners: 4.6% (2002)

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Debt - external: $176.8 billion (yearend 2002 est.) Economic aid - ODA, $894 million (FY 99/00) donor: Currency: Australian dollar (AUD) Currency code: AUD Exchange Australian dollars per US dollar - 1.84 (2002), 1.93 (2001), rates: 1.72 (2000), 1.55 (1999), 1.59 (1998) Fiscal year: 1 July - 30 June Communications Australia Telephones - 10.05 million (2000) main lines in use: Telephones - 8.6 million (2000) mobile cellular: Telephone general assessment: excellent domestic and international system: service

domestic: domestic satellite system; much use of radiotelephone in areas of low population density; rapid growth of mobile cellular telephones international: submarine cables to New Zealand, Papua New Guinea, and Indonesia; satellite earth stations - 10 Intelsat (4 Indian Ocean and 6 Pacific Ocean), 2 Inmarsat (Indian and Pacific Ocean regions) (1998) Radio AM 262, FM 345, shortwave 1 (1998) broadcast stations: Radios: 25.5 million (1997) Television 104 (1997) broadcast stations: Televisions: 10.15 million (1997) Internet .au country code: Internet 571 (2002) Service Providers (ISPs): Internet 10.63 million (2002) users:

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Transportation Australia Railways: total: 41,588 km (4,612 km electrified)

broad gauge: 2,193 km 1.600-m gauge narrow gauge: 15,456 km 1.067-m gauge dual gauge: 291 km dual gauge (2002) standard gauge: 23,648 km 1.435-m gauge Highways: total: 811,603 km

paved: 314,090 km (including 18,619 km of expressways) unpaved: 497,513 km (1999 est.) Waterways: 8,368 km (mainly used by small, shallow-draft craft) Pipelines: condensate 36 km; condensate/gas 243 km; gas 27,321 km;

liquid petroleum gas 240 km; oil 4,779 km; oil/gas/water 104 km; water 40 km (2003) Ports and Adelaide, Brisbane, Cairns, Darwin, Devonport (Tasmania), harbors: Fremantle, Geelong, Hobart (Tasmania), Launceston

(Tasmania), Mackay, Melbourne, Sydney, Townsville Merchant total: 51 ships (1,000 GRT or over) 1,415,810 GRT/1,806,554 marine: DWT

note: includes some foreign-owned ships registered here as a flag of convenience: France 2, UK 2, US 14 (2002 est.) ships by type: bulk 20, cargo 6, chemical tanker 3, combination bulk 1, container 2, liquefied gas 4, passenger 2, petroleum tanker 7, roll on/roll off 6 Airports: 444 (2002) Airports - total: 294 with paved over 3,047 m: 10 runways: 2,438 to 3,047 m: 11

1,524 to 2,437 m: 126 914 to 1,523 m: 134 under 914 m: 13 (2002) Airports - total: 150 with unpaved 1,524 to 2,437 m: 20 runways: 914 to 1,523 m: 116

under 914 m: 14 (2002) Military

Australia

Military Australian Army, Royal Australian Navy, Royal Australian branches: Air Force Military 17 years of age (2003 est.) manpower military age:

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Military males age 15-49: 5,037,538 (2003 est.) manpower availability: Military males age 15-49: 4,339,011 (2003 est.) manpower fit for military service: Military males: 142,377 (2003 est.) manpower reaching military age annually: Military $11.39 billion (FY02) expenditures - dollar figure: Military 2.9% (FY02) expenditures - percent of GDP:

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Transnational Australia Issues Disputes - maritime delimitation and resource sharing agreements signed international: with East Timor resolve dispute over "Timor Gap"

hydrocarbon reserves; no agreement reached on dividing Timor Sea with Indonesia (see Ashmore and Cartier Islands disputes); Australia asserts a territorial claim to Antarctica and to its continental shelf (see Antarctica) Illicit drugs: Tasmania is one of the world's major suppliers of licit opiate

products; government maintains strict controls over areas of opium poppy cultivation and output of poppy straw concentrate

Source: CIA – The World Factbook (http://www.cia.gov/cia/publications/factbook/geos/as.html)

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Annex II

84


Annex III

Ministerial Consultations between Australia and the European Union 1981 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. 1983 13-14 July: Second Ministerial Consultations were held in Brussels with the participation of J. Scully, Australian Secretary of Department of Trade, and Jos Loeff, Deputy Director-General for External Relations of the European Commission. 1984 March: Third Ministerial Consultations took place in Canberra between EC VicePresident Haferkamp and Minister for Trade Lionel Bowen, Minister for Industry Senator Button, Minister for Finance Senator Walsh and Minister for Primary Industry John Kerin. The participants agreed to hold regular meetings between agricultural trade and marketing experts of both the European Economic Community and Australia. 1985 14 June: Forth Ministerial Consultations took place in Brussels with the participation of Commissioner Willy de Clercq, Vice-Presidents Frans Andriessen and Narjes, Commissioner Mosar of the European Commission and Foreign Minister Bill Hayden, Trade Minister John Dawkins and Primary Industry Minister John Kerin of Australia.

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1986 12 November: Fith Ministerial Consultations took place in Canberra with the participation of Commissioner Willy de Clercq on the EC’s part and Trade Minister John Dawkins, Industry Minister John Button, Primary Industry Minister John Kerin and Resources and Energy Minister Gareth Evans of Australia. 1987 12 October: Sixth Ministerial Consultations were held in Brussels with the participation of Australian Primary Industry Minister John Kerin and Trade Minister Michael Duffy, Commissioner Willy de Clercq and Commission Vice-President Frans Andriessen of the European Commission. 1988 2-4 May: Seventh Ministerial Consultations were held in Canberra. The EC delegation included Commissioner Willy de Clercq while the Australian delegation led by Prime Minister Bob Hawke included Foreign Minister Bill Hayden, Industry Minister John Button, Primary Industry Minister John Kerin and Trade Minister Michael Duffy. The EC delegation met opposition leader john Howard as well. 1990 5 June: Eight Ministerial Consultations took place in Brussels. The Australian delegation included Foreign Minister Senator Gareth Evans and Primary Industry Minister John Kerin. The Commission delegation included Vice-Presidents Andriessen and Pandolfi, and Commissioner MacSharry. The participants agreed that Australian and EC aid officials would consult more often their counterparts. 1991 20 May: Ninth Ministerial Consultations were held in Canberra with the participation of Vice-President Andriessen of the European Commission, Foreign Minister Senator Evans, Primary Industry Minister Kerin and Trade Minister Neal Blewitt of Australia. Through an exchange of letters an arrangement for regular consultations on environmental issues was established.

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1992 16 March: Tenth Ministerial Consultations, focusing on the Uruguay Round, took place in Brussels. The Commission delegation included Vice-President Andriessen, the Australian delegation was led by Foreign Minister Senator Evans and Primary Industry Minister Kerin. Australia and the European Community signed a memorandum in which the parties agreed that the European Business Cooperation Network (BC-NET)70 would be extended to Australia. 1994 23 February: Eleventh Ministerial Consultations took place in Canberra. Australia and the European Community signed the Agreement on Scientific and Technical Cooperation. 1995 15 May: Twelfth Ministerial Consultations were held in Brussels between Senator Bob McMullan, Minister for Trade of Australia and Commission President Jacques Santer. 1996 3 June: Thirteenth Ministerial Consultations were held in Brussels. 1997 11 September: Fourteenth Ministerial Consultations were held in Brussels with the participation of Australian Deputy Prime Minister and Minister for Trade Tim Fischer, and Vice-President Leon Brittan of the EC. 1998 24 June: Fifteenth Ministerial Consultations were held in Canberra. The Australian delegation included Deputy Prime Minister and Trade Minister Fischer, Foreign Minister Downer. The EC delegation was led by Sir Leon Brittan, Vice-President of the European Commission.

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BC-NET is a database designed to develop business contacts between small and medium sized enterprises.

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1999 24 May: Sixteenth Ministerial Consultations too place in Brussels with the participation of Australian Deputy Prime Minister and Trade Minister Fischer, and Sir Leon Brittan, Vice-President of the European Commission. 2001 19 April: Seventeenth Ministerial Consultations were held in Canberra attended by Australian Foreign Minister Alexander Downer, Trade Minister Mark Vaile, and Chris Patten, EU Commissioner for External Relations. 2002 18 April: Eighteenth Ministerial Consultations took place in Brussels. The Australian delegation included Deputy Prime Minister John Anderson, Minister for Foreign Affairs Alexander Downer and the Minister for Immigration and Multicultural and Indigenous Affairs, Philip Ruddock. The European side included Commissioners Patten, Fischler, Lamy and Vitorino. 2003 16 April: Nineteenth Ministerial Consultations took place in Canberra attended by Australian Foreign Minister Downer and Minister for Trade Vaile, and Commissioner Patten of the European side.

Source: 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)

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Annex IV EU Cooperation with Australia - Exchange of Letters 1968

Agreement with Australia negotiated under Article XXVIII (5) of GATT

1970

Agreement with Australia negotiated under Article XXVIII (5) of GATT

1975

Agreement between the EEC and Australia negotiated under Article XXVIII of the GATT and modifying the Common Customs Tariff on lead and zinc.

1980

Conclusion of voluntary restraint Agreement with Australia in the sheepmeat and goatmeat sector.

1982

Agreement between the Government of Australia and the European Atomic Energy Community (Euratom) concerning transfers of nuclear material from Australia to Euratom.

1984

Andriesson Agreement not to introduce export restitutions for beef exports to certain markets in the Asia/Pacific region.

1984

Conclusion of an Agreement in the form of an exchange of letters between the EEC and the Government of Australia on the Arrangement between Australia and the Community concerning cheese.

1991

Conclusion of an Agreement in the form of agreed minutes between the EEC and Australia relating to certain agricultural products negotiated under Article XXVIII of GATT.

1991

Exchange of Letters establishing the European Community/Australia High Level Group on Energy.

1991

Exchange of Letters for future cooperation on environmental matters.

1992

Exchange of Letters establishing the Australia/EU Joint Group on Industrial Cooperation (JGIC).

1992

Memorandum allowing for the computerised European BC-NET to be put at the disposal of the Commonwealth of Australia (Lapsed).

1993

Commitment on Coal negotiated between the EC and Australia in the GATT Multilateral Trade Negotiations - Uruguay Round.

1994

Framework Partnership Agreement with Care Australia.

1994

Conclusion of an Agreement relating to Scientific and Technical cooperation between the European Community and Australia.

1994

Agreement between the European Community and Australia on trade in wine.

1997

Exchange of Letters 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 and the EFTA countries of Norway and Switzerland.

1997

Joint Declaration on relations between the European Union and Australia.

1999

Euratom/Australia Cooperation Agreement - Exchange of Letters on the return of plutonium to Japan.

1999

Agreement of Mutual Recognition in relation to Conformity Assessment, Certification and Markings between the European Community and Australia.

2002

Consumer arrangement

Source: the European Commission's Delegation to Australia and New Zealand

- http://www.ecdel.org.au/eu_and_australia/exchange_of_letters.htm

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RELATIONS BETWEEN AUSTRALIA AND THE EUROPEAN UNION

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