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CERC Workshop  on

European Union - Australia Relations

Melbourne, 9 July 2002

Speaking notes for the introductory session

“Putting the Australian- European Union Bilateral  Relationship in Perspective”  Piergiorgio Mazzocchi



I believe this workshop is very timely for many reasons that I will attempt to

sketch during this presentation.  In addition, for me personally, it represents

a  good  opportunity  to  share  with  you  some  perceptions  and  impressions,

after spending 4 months, almost day-by-day, since my arrival in Australia.



Let  me  start  by  saying  that  my  perception  is  that  our  relations  are

fundamentally sound and thriving, notably at the micro level, namely at the

level  of  individuals  and  firms,  but  I  remain  puzzled  by  the  ambiguous

relations that exist between the two parties at the aggregate/official level.



There  seems  to  be  a  somewhat  pervasive  divide  made  of  mistrust  and

abrasiveness on one side, and of irritation and dismissiveness on the other.

This  divide  finds  its  expression  in  rhetorical  and  often  preconceived

formulas that  seem to  concentrate  mainly around  our  agricultural  relations,

even if these only represent a relatively modest part of the overall picture.



I  was  told  recently  that  the  reform  of  the  CAP  and  the  magnitude  of  the

new, good  stories about the European Union should be better articulated and

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explained  in  order  to  convince  Australia  that  we  are  not  the  bad  boys  that

some in Australia still think we are.  This is a task in which this workshop

can help us progress for the mutual benefit of the two parties.  At the core of

the  problem,  there  is,  I  believe,  a  problem  of  perceptions.   The  European

Union  is  still  a  puzzling  entity  that  needs  to  be  viewed  through  the  new

prism of its emerging significance as a single actor, with its own institutions,

in a swiftly transforming world.



Let  me  now  look  at  some  recent  developments  that  may  be  relevant  for

your workshop:



Firstly,  I  am  glad  to  note  that  there  have  been  in  recent  months  strong

expressions  of  interest  and some significant events  at  the political level

aimed at stepping up the bilateral dialogue.  These events include:

- the  visit  to  the  Commission  by  three  senior  Australian  ministers  -

Deputy  Prime  Minister  Anderson,  Foreign  Minister  Downer,  and

Immigration  Minister Ruddock  -  who  went  to  Brussels  on  18  April  last

for the annual European Commission-Australia Ministerials.

- the  visit  of  Trade  Minister  Mark  Vaile  to  Commissioner  Fischler,  in

Brussels on 17 May.

- John Howard made his first visit to Brussels as Prime Minister to meet

with President Prodi on 10 July, the first such visit in eight years.  The

last such visit was between Prime Minister Keating and president Delors

in June 1994.  The meeting will be followed by a working lunch of the

PM with the whole Commission.

- Pascal  Lamy,  the  European  Commissioner  for  Trade,  visited  Australia

on 15-17 July, and met with senior Cabinet members.

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- Commissioner Neilson, the Development Commissioner, will be visiting

Australia on 8 October.

- For  2003,  we  know  already  that  Commissioner  Patten  will  come  to

Australia on 16-17 April.

- And a High Level Environment meeting is also being scheduled for 2003.



These  events  come  in  addition  to  the  regular  troika  meetings  held  under

each new Presidency of the EU.





Secondly,  there  have  been  expressions  of good  intention  on  both  sides  to

further  improve  an  already  healthy  bilateral  relationship,  which  was

formalised by the 1997 Joint Declaration, and at the annual Ministerials on

last 18 April, it was agreed, and I quote from the Joint CommuniquÃÂ©:

“… it  would  be  useful  to  review  progress  in  cooperation  in  light  of  the

objectives of the 1997 Joint Declaration and we have instructed officials to

undertake  such  a  review  as  well  as  to  identify  priorities  for  future

cooperation.”   Thus  both  sides  look  forward  to  receiving  at  next  year’s

Ministerial  Consultations  recommendations  to  advance  the  relationship

further.



This underlines a clear need for a forward looking approach and I believe

that  this  workshop  can  provide  a  very  relevant  and  timely  input  into  the

review process and  contribute towards the development of our thinking for

new areas for cooperation.



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Similarly,  Foreign  Minister  Downer  supported  the  need  for  a  new

perspective on Europe in his speech to the National Press Club on 7 May,

launching  the  new  White  Paper  on  Australia’s  external  relations,  when  he

said,  “We  need  to  work  hard  on  building  our  links  not  only  with  the

individual  member  states  of  the  European  Union,  but  also  with  European

institutions.  We need to see Europe through a new prism, not just through

the United Kingdom and traditional bilateral relationships.”



Thirdly,  there  is  growing  perception  that  the  EU  deserves  a  better

recognition  in  Australia’s  external  policies  and  that  this  can  be  achieved

without  belittling  relations  with  EU  Member  States.   To  this  purpose,  the

ambassadors of the EU submitted at the end of June a note to the Minister of

Foreign Affairs to contribute to the elaboration of the new White Paper on

Australia Foreign Policy to be published later this year.



As  part  of  a  separate  process,  Mark  Vaile,  Minister  for  Trade,  appointed

John  Azarias,  to  report  to  him on  ways  to  improve  business  links  between

Australia and Europe.  I understand Mr Azarias has presented his draft report

to government.



Moving now to the substance, I want to briefly hint to some of the reasons

why  the  European  Union-Australia  relationship  is  important  to  the  two

parties:



First,  in  a  simple  economic  perspective,  the  European  Union  is  an

important and growing player in the global economy:

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- The European Union is a huge single market currently consisting of 381

million  affluent  consumers  from  15  member  states.   With  the

enlargement  that  is  presently  negotiated,  the  EU  will  expand  eastwards

and  to  the  south  and  is  expected  to  incorporate  up  to  13  new  member

states, bringing the total population to more than 500 million.

- At present, the EU is the world’s second largest single market (after the

US) and is more than 20 times the size of the Australian economy.

- The European Union is also a world-leading trader (second after the US),

accounting for $A2.9 trillion or 18% of the world total two-way trade in

2001.   It  is  the  world’s  largest  exporter  and  the  second  largest

importer.   Its  two-way  trade  is  over  double  that  of Japan  and 14  times

that of Australia.



Our bilateral economic and trade relationship is vibrant and growing rapidly.

However, because  the focus is usually  on individual  member  states,  the

importance  of  the  EU  to  Australia  is  not  generally  recognised.   This

point of view has been rightly echoed in recent media reports of comments

by Foreign Minister Downer.  Let me give you some brief statistics:



- The EU has been Australia's largest economic partner for the past 11

years.  By economic, I mean the total of all international transactions that

involve trade in goods, trade in services, investment income and transfer

payments  measured  on  a  two-way  trade  basis.   By  partner,  I  mean  an

established  single  market  like  the  EU  or  the  ASEAN.   APEC,  for

example,  is  not  yet  -  and  probably  will  not  be  for  some  time  -  a  single

market.

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- For  2000-2001  (latest  available),  the  overall  EU-Australia  economic

relationship  grew  by  6.5%,  to  reach  $A70.6bn  and  accounted  for  a

19.5% share of all Australian overseas transactions (the USA’s share was

17.4%, Japan 13.1% and ASEAN 12.7%);

- The EU is Australia’s largest merchandise trading partner (a status it

has held since 1995-96), with two-way trade amounting to $A39.5bn in

2000-01 or 16.6% of the total (Japan's share was 16.3%, the USA 14.3%

and ASEAN 14.0%);

- The EU remains Australia’s largest partner for trade in services, being

both the largest export market for Australia (growing by 12.8% in 2000-01  to  an  estimated  $A6.5bn)  and  the  largest  supplier  of  services

(increasing by 6.9% to $A7.5bn);

- Total two-way trade in services between the EU and Australia was worth

an estimated $A13.9bn in 2000-01 or 21.5% of the total trade (the USA’s

share was 18%, ASEAN 15% and Japan 9%);

- The  EU  remains  Australia’s  leading  investor,  with  an  accumulated

investment  of  about  $A270bn  at  the  end  of  June  2001  or  33%  total

foreign investment in Australia (the USA’s share was 29%, Japan 6%,

and ASEAN 4%);

- Importantly,  investment  by  the  EU  has  created  many  jobs  in  Australia,

estimated (in 1999) to total 350,000;

- The EU is the second major investment location for Australian funds

invested overseas reaching $A99.7bn or 24% of the total by June 2001

(the USA’s share was 43%, Japan 7% and ASEAN 5%).



Secondly, there is the political relationship.  The EU, as an entity, in spite

of the fact that its construction has been underway for 50 years, is still in its

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infancy.   The  areas  of  common  foreign  and  security  policy,  as  well  as  the

cooperation in the field of justice and home affairs, have been added only in

1992 by the Maastricht Treaty.



But  the  EU-Australia  Political  dialogue  that  takes  place  every  six  months,

under each new Presidency,  is becoming an increasingly useful mechanism

to  exchange  views  in  these  areas,  with  Europe  particularly  valuing

Australia’s  security  perceptions  from  its  vantage  point  in  the  Asia-Pacific region.



Thirdly, our healthy bilateral relationship reflects strong similarities between

the EU and Australia. Our societies spring from similar roots and we share

common values, we both:



- support democracy, the rule of law, and respect for human rights and

fundamental freedoms;

- support peace and promote international security in accordance with the

purposes and principles of the Charter of the United Nations;

- support  international  efforts  in  the areas  of non-proliferation  of nuclear,

chemical  and  biological  weapons,  the  non-proliferation  of  missile

technology and the international transfer of conventional weapons;

- pursue  policies  aimed  at  achieving  a  sound  world  economy  marked  by

sustained  economic  growth  with  low  inflation,  a  high  level  of

employment, environmental protection, equitable social conditions and a

stable international financial system;

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- promote  free  market  principles,  improve  market  access  in  conformity

with the WTO rules, and expand, promote and strengthen the multilateral

trade system;

- help developing countries in their pursuit of sustainable development and

their  efforts  towards  implementing  political  and  economic  reforms  by

providing  development  assistance,  broadening  market  access  and

encouraging the efficient use of foreign assistance and national resources.





Fourthly, in addition to these shared values, the EU is well aware of the role

Australia  takes  as  an  independent  medium  size  economy  in  both  its

immediate region and in international fora.



Taking  into account the many  reasons just mentioned to underline the

importance  of  our  relationship,  we  can  ask  whether  the  cooperation  is

adequate and if it can be further enhanced?



In spite of this sound picture of convergence, we mainly hear about the areas

where we disagree because it makes good headlines in the press.  The main

area has been for a long time agricultural support, and climate change has

been  added  recently.   On  climate  change,  incidentally  our  disagreement  is

more about process than principle.



In  fact,  most  often  the  positions  of  Australia  and  the  EU  are  quite  closely

aligned  and  we  work  closely  together.   Good  examples  include  trade  in

services,  most  environmental  issues,  governance,  etc.,  and  since  we  both

follow thorough, open  and transparent decision-making  processes, we have

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much  to  learn  from  the  experiences  each  other  in  developing  new  best

practice policy.



As  already  mentioned,  we  have  the  Joint  Declaration  on  EU-Australia

relations signed 1997, which provides the overall framework for our formal

government-to-government relationship. (Asia Document)



I know that my predecessor has pressed hard for a fully-fledged Framework

Agreement,  rather  than  a  Joint  Declaration.   I  now  believe  that  while  such

formal aspects were perhaps useful in the conditions prevailing in the 1990s,

we have now moved on.



And  I  am  convinced  that  the  Joint  Declaration,  as  an  overarching

framework,  is  already  broad  enough  for  us  to  use  as  a  hook  to  hang

virtually  any  relevant  initiative.   The  focus  should  therefore  be  on

making best use and improving specific existing provisions and possibly

devising new actions.



Let me now look at some of the specific areas:



Science  &  Technology  cooperation  will  be  an  important  focus  of  today’s

discussions.  This is not surprising when one considers that collectively EU

countries constitute Australia’s premier international research partner, when

measured by joint citations in scientific papers published.  An increasingly

important  feature  of  the  Australian-European  research  cooperation  is  the

EC-Australia  Science  &  Technology  Agreement,  which  was  signed  in

1994  and  expanded  in  1999.   This  facilitates  mutually  beneficial  research

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cooperation between Australia and the EU and since 1999 has involved over

$100m  of  joint  research  across  a  range  of  topics  including  health,  global

environment  issues,  transport,  manufacturing,  agriculture  and  importantly

the new economy sectors of the information society and biotechnology.



As  post-industrial  economies,  both  Australia  and  the  EU  must  take  full

advantage of these new technologies if we are to maintain our place in the

world  and  the  living  standards  of  our  citizens.   While  our  traditional

industries will remain important, we must look to the new industries for our

growth.



More  broadly  European  science  &  technology  is  becoming  increasingly

integrated, driven by the increasing cost and complexity of research.  This is

reflected  in  the  European  Research  Area  initiative  and  an  increased

emphasis  in  Europe  on  international  collaboration.   In  recognition  of these

developments the European Union and Australia have established the Forum

for European-Australian  Science  and  Technology  cooperation

(affectionately known as FEAST) as an information and networking tool to

facilitate further collaboration between Australia and Europe, at both an EU

and member state level.



The  need  and  benefits  for  research  cooperation  are  clearly  apparent.  We

have some  instruments  in  place  and  we  have  some  successes.   But  are we

really making the best of the opportunities and if not what can we do to

improve  the  situation?   I  hope  the  answer  to  this  question  will  be  more

articulate than the inevitable request from researchers for more money, and

will also address other issues such as better models for cooperation.

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Cooperation  in  Education  is  also  of  importance  and  perhaps  as  yet

underdeveloped.   It  is  an  area  that  is  of  specific  interest  to  some  here  in

CERC.



There  have  been  discussions  for  some  time  on  the  scope  for  greater

cooperation  in  this  field,  with  the  first  concrete  outcome  being  the

announcement this year of a joint pilot exchange programme aimed at

encouraging cooperation in higher education.



This  pilot  project  will  enable  postgraduate  (Masters)  students  from  the

Member States of the European Union to study in Australia, and Australian

postgraduate students to undertake study in a minimum of two EU Member

States.  The pilot project will involve between 25 and 40 students from each

side,  who  will  undertake  the  exchanges  for  a  period  ranging  from  one

semester to one year.



Last  year  we  provided  significant  EU  funding  to  establish  the  National

Europe Centre.  Whilst this is located at the ANU in Canberra, I have been

emphasising,  whenever  I  have  had  the  opportunity,  that  this  is  a

NATIONAL Centre with a clear mandate, to operate across Australia, in full

cooperation with other centres.  Accordingly, I see the NEC and institutions

such as yours working hand in hand.



The  NEC  has  three  main  aims:  to  foster  improved  relations  between

Australia and the EU and its constituent member states, candidate countries

to the EU, as well as other countries in Europe; to serve as a platform for a

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better  understanding  of  the  EU,  the  constituent  member  states  and  their

institutions in Australia; and to develop as a centre of academic excellence.

I  am looking  forward  to  your  input  on  what  you  would  like  to  see  from

this Centre and how you envisage your engagement with the NEC.  Also

what  further  steps  should  be  taken  to  develop  further  education

cooperation generally.



Looking  more  at  the  business  relationship,  we  have  the  treaty  covering

Mutual  Recognition  Agreement  on  Conformity  Assessment,  signed  in

1999.  This is somewhat of a clumsy title and so is normally referred to as

the MRA.  In short, its purpose is to reduce technical barriers to trade and

to facilitate trade by allowing conformity assessment (testing, inspection and

certification)  of  products  traded  between  Australia  and  the  EU  to  be

undertaken  in  the  exporting  country  rather  than  being  carried  out  at

destination.



In the case of Australian exporters, this means that the compliance with the

requirements  and  technical  norms  contained  in  the  relevant  EC  Directives

can  be established in Australia, and  the CE marking applied to the product

prior to export. In this way the product can be placed on the EU market with

no further intervention by EC authorities.



Again, I believe we should be asking ourselves whether this agreement is

working  to  its  full  potential,  and  if  not,  why  not  and  what  can  be

improved.  Perhaps we should also be asking ourselves the question whether

we  should  not  be  looking  at  more  ambitious  steps,  such  as  moves  to

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harmonise  the  standards  themselves,  such  as  has  largely  happened  in  the

area of pharmaceuticals Good Manufacturing Practice?



There is also the Wine Agreement signed in 1994, and still being worked

on,  which  assists  in  the  development  of  wine  trade  by  addressing  the

necessary regulatory issues required for this product.



The  growth  in  exports  in  wine  is  an  outstanding  success  story  for

Australia.   Australia  has  become  the  number  one  supplier  to  the  EU  of

wine, with over $A1 billion of wine exported to the EU last year.



Importantly  for  Australia,  the  expansion  of  the  wine  industry  provides

opportunities  for  greater  employment  in  rural  areas.   Addressing  rural

development  and  rural  employment  is  a  common  challenge  faced  by

Australia and the EU alike and one where I believe there should be greater

cooperation and sharing of experiences.  Speaking of wine I should mention

that some forward looking attention should be given to olive oil, another

Mediterranean  product  for  which  I  understand  there  have  been  huge

plantations in south Australia and Queensland that  will come to the market

in two years time.



Finally, from the formal Treaty level agreements point of view, there is the

1982 Agreement between the Australia and the European Atomic Energy

Community  (Euratom)  concerning  transfers  of  nuclear  material  from

Australia  to Euratom.   Essentially  this  is  a  safeguards  agreement,  ensuring

that Australian nuclear material can only be used for peaceful purposes.



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There  is  also  a  range  of  lower  level  cooperative  instruments  (exchange  of

letters,  groups  and  arrangements)  across  a  range  of  sectors,  involving

various  levels  of  intensity  of  commitments.   These  include:  agriculture,

energy,  environment,  industry,  development,  information  economy  and

consumer protection.



I  would  be  interested  to  hear  your  views  on  where  any  of  these

instruments  of  cooperation  should  be  intensified  and  the  other  areas

where an improved bilateral dialogue would enhance our relationship.



I  would  now  like  to  conclude  these  considerations  by  briefly  highlighting

some  of  the  major  developments  that  will  impact  on  our  future

relationship:



1.  We had the successful launch of the euro in January this year.  The euro

is extremely important in its own right, both as a symbol of integration and

for the tangible benefits it will bring such as reduced  transaction costs and

increased transparency. Its introduction should also be viewed in the overall

context of an ongoing process of further deepening and integrating the single

European market.



2.   Enlargement  of  the  EU  will  bring  many  challenges  for  the  European

Union  and  opportunities  for  its  partners.   I  have  already  highlighted  the

opportunity  of  a  larger  single  market  of  some  500  million  affluent

consumers - potentially all dealing with the same set of rules and all having

a single currency.  Enlargement will also bring with it pressure for continued

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reform and evolution of EU policies and programmes, notably the CAP,  to

ensure their sustainability in budgetary terms.



3.   In  this  respect,  and  particularly  given  the  Agricultural  focus  on

agricultural matters, the Mid Term Review report of Agenda 2000 released

on  10  July  in  Brussels.   This,  in  spite  of  not  very  favourable  political

conditions, included ambitious proposals for further reorientation of support

away  from  market  support  to  much  less  trade  distorting  support  for  rural

development, food safety, environment and other social values.



4.   The  Doha  Declaration  has  opened  new  negotiations  in  WTO,  during

which practically all trade issues will be on the table.



5.   Still  linked  to  enlargement,  is  the  review  of  EU  structures  and

institutions.  Currently  we  are  at  the  stage where  a Convention formed  last

December is preparing for an Intergovernmental Conference in 2004.  This

IGC  is  expected  to  introduce  the  changes  to  the  existing  Treaties  that  are

considered  necessary  to  accommodate  the  enlarged  Union.   These  may

include a reorganisation and simplification of the existing texts, a new basic

treaty which would in essence be a Constitution for the EU, and make other

institutional  changes,  including  perhaps  changing  the  present  system  of  a

rotating  Council  presidency,  the  number  of  Commissioners,  and  member

state voting rights.



6.  Over time we can expect further developments in the second and third

pillars  of  the  EU,  namely:  common  foreign  and  security  policy  and  home

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affairs and justice.  This will mean that the European Union as an entity will

become an even more important player in addressing global strategic issues.



7.   In  addition  to  agricultural  issues,  let  me  mention  another  area  of

potential  friction  that  has  so  far  been  somewhat  dormant.   It  is  the

attitude  towards  multilateral  solutions  to  international  problems.

Australia has recently tended to side with the United States.  In its position

of  uncontested  single  major  world  power,  the  US  tends  to  adopt  a

philosophy  of  anti-multilateralism,  objecting  to  international  treaties,

perceived  as attempts  to  curtail  the  US freedom of  action.   At  the  basis  of

this approach, there is the American idea of “exceptionalism”, while Europe,

because of its very essence, places far more reliance on multilateral rules and

institutions than the US.



This  is  an  area  of  possible  turbulence  in  our  relations  on  which  some

forward-looking reflection would appear justified.



This  has  been  a  very  brief  review  of  some  of  the  issues  underpinning  the

European-Australian relationship, hoping that in spite of its little analytical

content, will provide some perspective for today’s proceedings.



Let me stop here.



In conclusion, I would like to congratulate the organisers and, in particular,

Professor  Philomena  Murray,  for  picking  such  a  relevant  and  timely  topic

for discussion.  I also wish each and every one of you that the debates during

this workshop will be very fruitful, assuring you that the points that will be

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discussed  today,  and  your  conclusions,  will  be  carefully  taken  into

consideration.



Thank you.

