Trade cloud looms over EU-Australia talks

Date: 27/01/2000

By Gareth Harding

AUSTRALIAN Foreign Minister Alexander Downer can expect the usual red-carpet treatment when he arrives for meetings in Lisbon and Brussels next week. But following clashes between the EU and Australia at last month's Seattle world trade talks, the reception is likely to be frostier than in previous years.

In the run-up to last month's World Trade Organisation meeting in Seattle, Agriculture Commissioner Franz Fischler said that while Canberra constantly criticised the Union for erecting trade barriers, exporting agricultural produce to Australia was "like going through the biblical eye of the needle".

Australian Trade Minister Peter Costello reacted angrily to Fischler's comments, insisting: "We have an efficient agricultural sector and we would be happy if Europe ran on the same principles as we do." Canberra has been lobbying the EU for decades to scrap the generous subsidies it pays out to farmers and fought in Seattle for access to agricultural markets to be included on the agenda for the next round of free-trade talks.

The future of the WTO will be high on Downer's agenda when he meets Portuguese Foreign Minister Jaime Gama and External Relations and Trade Commissioners Chris Patten and Pascal Lamy next week.

But there seems little hope of the two sides narrowing their differences in the short term. As the leader of the Cairns group of farm-rich exporting countries, Australia wants the next round to concentrate on opening up agricultural markets while the EU would prefer to broaden the agenda to include labour and environmental issues and liberalisation of the services sector.

Canberra is fiercely opposed to placing environmental hurdles, such as the precautionary principle, in the way of free trade. This has prompted accusations of foot-dragging from the Union, which is still angry at Australia's failure to sign up to ambitious climate change targets at the Kyoto conference in 1997.

Bilateral trade problems are also straining relations between the two sides. The European Commission complains that Australia's strict quarantine rules make it impossible for EU producers to export fresh goods to the country, while Australia shares many of South Africa's gripes about the Union's over-protective ring-fencing of terms such as grappa, port and sherry. Tensions are further heightened by the fact that Australia enjoys a massive trade surplus over the Union and exports to the old continent are rising significantly faster than trade in the opposite direction.

Despite these niggling trade problems, both sides claim that relations between the two are healthy. Australia and the EU were two of the main players which brought peace to the former Indonesian province of East Timor last year and are currently working hand in hand to rebuild the shattered island. The two are also stepping up cooperation in the education sector by twinning universities and combining scientific research efforts.