Australia seeks ‘fairer deal’ in trade with EU

Date: 04/07/1996

By Elizabeth Wise

AS its drive towards Asia continues, the Union is systematically ticking off the Pacific rim nations on its checklist - starting with those that seem the least foreign.

After charting a political path with the US and Canada, the European Commission is crafting a second generation of political declarations and pledges for cooperation in a range of social and legal areas.

It hopes to have a cooperation agreement with Australia by the end of this year and is exploring a similar plan with New Zealand.

But the Asian drive will not be a one-way street. For every EU request, petitions in kind come from 'Down Under'.

If the Union wants access to APEC - the Pacific Rim club that includes the two island nations, North America and rich Asian nations - Australia and New Zealand want access to ASEM, the EU-Asia club set up earlier this year.

While political commitments are constantly reiterated by EU and Australian officials, there is no doubt that trade tops their current agenda as the two sides work towards a framework agreement on trade and cooperation.

When Trade Commissioner Sir Leon Brittan visited Canberra in early June, his hosts welcomed him with demands for market openings and a lengthy study of shortcomings in EU trade policy.

The study found that while Australians had invested increasing sums in Europe, their sales of goods and services to the Union had slumped to worrying levels.

Noting a rise in EU exports to Australia after Canberra reduced the level of protection for its manufacturing industries, the government called on the Union to help reverse the trend which resulted in a 9-billion-ecu Australian trade deficit with the EU last year.

Canberra recently published another bulky report, this time on the flaws in EU agriculture policy. In it, Trade Minister Tim Fischer says the Union's 1992 reform of its Common Agricultural Policy (CAP) has “run its course” and the Union must develop new, market-oriented reforms. Arguing for a “fairer deal” for its farm exports, Fischer targets continued farm subsidies and argues further CAP reform must render the Union “more open to market forces” and more able to “accept international commitments”.

Fischer has made a point of noting that Australian gains on European markets are due to multilateral trade talks, implying that the Union has to be forced into opening its markets.

Those openings are sure to come more slowly than Fischer would like. Commission officials respond that on the agricultural front, “the situation is quite clear. The Uruguay Round (of GATT world trade talks) addressed those questions.”

Tariff reductions are not on the agenda for negotiations on the trade and cooperation accord, which foresees reductions in regulatory and administrative trade barriers only. And specific agricultural openings will not be on the table when top-level officials from Canberra meet their Commission counterparts in Brussels on 17 July.

Officials say discussions will continue to be of a general nature, focusing on “future cooperation”.

Australian officials are likely to seek more information on the Commission's current dealings with Mediterranean nations, which include EU concessions for farm products, and South Africa, which foresees free trade in at least part of the agricultural sector.

Union and Australian officials hope to complete negotiations on the trade and cooperation agreement and an accompanying political declaration this year.

Anticipating the problems inherent in increased trade, they are working on features such as an early-warning mechanism that would alert both sides to potential trade disputes - a clause also written into the

EU-Canada accord that failed to be signed last month.

In addition to the so-called framework agreement, which is intended to last five years and will be renewable, the Union and Australia hope to negotiate on customs cooperation.

The two sides are near to concluding talks on a mutual recognition agreement which would ease trade in manufactured goods, as well as a veterinary agreement. While discussions on veterinary cooperation are further behind, Commission officials say they hope to complete both by the end of the year. The Commission is also looking for ways to let Europeans participate in Australian research programmes - Australians already participate in EU research through a bilateral science and technology agreement.

Talks with New Zealand, which the Commission has said is next in line for a cooperation pact, are not nearly so advanced. Informal discussions have begun, providing what a Commission negotiator termed as “soundings”, but apart from a single technical meeting potentially on the calendar this month, nothing is scheduled.

Wellington should play a part, however, in a series of meetings in the run-up to the World Trade Organisation (WTO) ministerial conference in December.

Much EU-Australia energy will be devoted to preparing the Singapore meeting, which both sides hope will be the birthplace of a set of long-term political goals in the multilateral trading system.

Canberra has also alerted the Union that it will be watching the EU's moves during that meeting for pointers on how Union trade policy is developing. The EU's responses, it says, will be critical in forging world-wide trade liberalisation policies.

Fischer has said the Union will have to lead the openness drive in Singapore.

“There is a special onus on those developed countries that give high levels of subsidy and protection to their farm sectors to continue to show leadership in this area,” he said a few weeks ago.

Neither Canberra nor the Union hide the fact that, as traders, they are more interested in Asia than in each other. But they nevertheless stress the political importance of the relationship - and acknowledge that their combined weight may help push Asian partners to open markets as well.