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European Union brief

Australia's relations with the European Union

Overview

Australia and the European Union (EU) enjoy a constructive and substantial bilateral relationship built on a shared commitment to freedom and democratic values and a like-minded approach to a broad range of international issues. In support of these shared commitments Australia and the EU work together to support global efforts to combat terrorism and the proliferation of nuclear and conventional weapons, to coordinate our efforts to respond to the challenges of climate change and the global financial crisis and to promote peace, sustainable development, good governance and human rights.

The 28 members of the EU as a bloc constitute one of Australia's largest trading and investment partners. Australia and the EU cooperate increasingly closely in the Asia-Pacific region, including to enhance security, stability and good governance, and to improve the coordination of development cooperation assistance among donors to the region. The EU is a significant provider of aid to the Pacific and South East Asia. Australia has a number of formal bilateral agreements with the EU and its institutions. Some of the key recent agreements are described in this brief.

For information on Australia's bilateral relations with the individual member states of the EU, select the appropriate country:

Political overview

Key EU institutions

The main institutions of the EU are the European Council, the Council of Ministers, the Commission and the European Parliament.

The European Council, the highest authority, is composed of the Heads of State and Government of the Member States. It does not legislate but defines the general political direction and priorities of the EU, and to that end provides guidance to the Council of Ministers and the Commission (the president of which is also a member of the European Council). The Lisbon Treaty on EU reform, which entered into force on 1 December 2009, created the new position of permanent President of the European Council, appointed for a two-and-a-half-year term renewable once. The President of the European Council chairs its meetings, is the face of the EU internationally and holds discussions on its behalf with heads of state and government of third states. On 19 November 2009 the EU Heads of State and Government appointed Mr Herman Van Rompuy, then Prime Minister of Belgium, as the first permanent President of the European Council.

The Council of Ministers is the EU's pre-eminent decision-making body. It has both executive and legislative powers. and meets in 10 subject-based configurations, including Economic and Financial Affairs (ECOFIN), Competitiveness (including internal market and industry) and Transport and Social Affairs. All configurations, except Foreign Affairs, are chaired by the Minister from the country that holds the Presidency of the Council, which rotates every six months.

The European Commission (EC), comprising one Commissioner from each member state and led by a President, has the sole right of initiative to propose laws (called directives) at EU level, which—when approved by the Council and the Parliament—member states are obliged to include in their national legislation. The Commission is also the EU's executive body and public service. The current European Commission President, Mr José Manuel Barroso, was confirmed for a second five-year term by a vote of the European Parliament on 16 September 2009.

The European Parliament (EP) is the only directly elected EU institution. It shares decision-making power with the Council on most internal market policies and has budget approval powers. The Parliament has the right to approve or reject the nomination of Commissioners. With the entry into force of the Lisbon Treaty, the Parliament gained an expanded role in a number of new areas including trade, agriculture and justice and home affairs. The EU will hold parliamentary elections in May 2014. Other leadership changes will also occur in 2014, with both the Commission and Council presidential terms coming to an end.

Since the Lisbon Treaty’s entry into force in 2009, the EU’s external relations are managed by a High Representative of the Union for Foreign Affairs and Security Policy, who is also a Vice-President of the European Commission. The first person to hold this position is former European Commissioner for Trade, Baroness Catherine Ashton of the UK. The High Representative chairs the Foreign Affairs Council and exercises authority over the EU foreign service—the European External Action Service.

The EU has been represented in Australia since 1981 by a Delegation of the European Commission, now a Delegation of the European Union. The Delegation's role is to represent the EU; to further develop bilateral relations; to inform the EU on political, economic, trade and development matters in both Australia and New Zealand; to promote and protect the EU's interests and values and to spread knowledge and to raise awareness of the EU in Australia and New Zealand. The Delegation is not responsible for trade promotion or consular matters, which are handled by the embassies, consulates, trade commissioners or national tourism offices of EU member states.

The Commissioner for Trade is responsible for the EU’s common trade policy governing international trade. The current Trade Commissioner is Mr Karel De Gucht, former Belgian Minister for Foreign Affairs and European Commissioner for Aid and Humanitarian Development.

Economic overview

Operating as a single market with 28 member states, the EU is the world’s largest trading bloc and the world’s largest economy. The EU is the world’s largest trader of services and manufactured goods, and the largest source of outbound foreign investment. The EU’s combined GDP in 2012 was USD 16.7 trillion (AUD 17.3 trillion) and it includes four of the world’s 10 largest economies (Germany, France, the UK and Italy). 

Member state economies operate within an EU system of ‘competences’ or responsibilities for policy areas. The EU (rather than individual member states) has exclusive responsibility for the EU customs union, trade and investment policy and competition rules. Because of the great differences in per capita income among member states and in national attitudes toward inflation, debt and foreign trade, the EU faces challenges in devising and enforcing common economic policies.

The EU ‘internal’ or single market commenced on 1 January 1993 to facilitate the free movement of goods, capital, services and people within the EU. The internal market was intended to drive economic integration amongst member states to become a single EU wide economy. Eighteen member states have adopted the euro as their currency.  Collectively these countries are known as the Eurozone. In December 2013 Ireland and Spain exited the financial assistance packages developed to assist EU member states affected by the Eurozone’s sovereign debt crisis. A number of member states remain subject to financial assistance.

The financial crisis resulted in the loss of significant investor and consumer confidence in the European banking sector. The Council of the European Union committed to a ‘banking union’ [PDF 150 KB] in June 2012 to support financial stability. Legislative work underpinning the banking union is expected to be finalised in 2014. 

Unemployment remains high in the EU, with the unemployment rate at 10.8 per cent in January 2014. Among the member states, the lowest unemployment rates for January 2014 were in Austria (4.9 per cent) and Germany (5.0 per cent) and the highest rates were in Greece (27.5 per cent—December 2013) and Spain (25.8 per cent).

Bilateral relationship

Australia and the EU have a long-standing and fruitful bilateral relationship, and in 2012 celebrated 50 years of formal diplomatic relations. Sir Edwin McCarthy, Australian public servant, trade negotiator and diplomat, took up his position as the first Australian Ambassador to the European Economic Community in March 1962.

The Australia–EU Partnership Framework currently sets out the direction of bilateral cooperation. The framework was launched during Australia–EU Ministerial Consultations in Paris in 2008. It outlines specific cooperative activities and is designed to be revised regularly. The first revision was done in October 2009, and provides an updated focus on practical cooperation in the following areas:

  • shared foreign policy and global security interests
  • the multilateral rules-based trading system and the bilateral trade and investment relationship
  • the Asia–Pacific region
  • energy issues, climate change,fisheries and forestry
  • science, research, technology and innovation, education and culture and facilitating the movement of people.

The original framework replaced the June 1997 Australia–European Union Joint Declaration on Relations [PDF] and the subsequent 2003–08 Agenda for Cooperation [PDF 120 KB].

During her visit to Brussels in October 2010 (see below), then Prime Minister Julia Gillard proposed a treaty-level bilateral Framework Agreement between Australia and the EU. Formal negotiations on the Framework Agreement opened in Canberra on 31 October 2011 and are continuing.

Recent high-level visits

The Governor-General, Her Excellency Ms Quentin Bryce, led a delegation of members of the Europe-Australia Business Council to Europe in June 2013. In Brussels she met with European Commission President José Manuel Barroso and European Council President Herman Van Rompuy.

The Australian Prime Minister last visited Brussels in 2010.  During that visit, then Prime Minister Gillard met with Commission President Barroso and Council President Van Rompuy. While in Brussels, Ms Gillard represented Australia at the 8th Leaders' Summit of the Asia-Europe Meeting (ASEM)—another avenue by which Australia is strengthening its relations with the EU.

Commission President Barroso visited Australia in September 2011. The first by a European Commission President since Gaston Thorn's in 1982, this visit was an expression of strengthening Australia–EU ties. The joint statement by then Prime Minister Gillard and President Barroso showcased the breadth of issues covered in the bilateral relationship.

The Australian Foreign Minister holds regular consultations with EU counterparts. Former Foreign Minister Carr visited Brussels in April 2012 and again in April 2013. During the latter visit, he addressed the Foreign Affairs Committee of the European Parliament—the first Australian Foreign Minister to do so.

In October 2011 High Representative Catherine Ashton visited Canberra as a Guest of Government for Australia-EU Ministerial Consultations. In a joint media statement then Foreign Minister Rudd and High Representative Ashton announced: the launch of negotiations on a treaty-level Australia–EU Framework Agreement and a Crisis Management Agreement as well as cooperation on delegated aid projects in South Sudan and Fiji (see Development cooperation).

Commissioner for Taxation, Customs Union Audit and Anti-Fraud, Algirdas Semeta, visited Australia in December 2013.  Commissioner for Trade, Karel De Gucht, visited Australia in March 2012 to hold talks with the then Minister for Trade, Dr Craig Emerson. Commissioner for Development, Andris Piebalgs, visited Australia in March 2011 and Commissioner for Climate Action, Connie Hedegaard, visited Australia in September 2011.

The Australian Parliament has maintained contact with the European Parliament for many years. The European Parliament is an important conduit for advocacy of Australia's interests and has an Inter-parliamentary Delegation for Relations with Australia and New Zealand. Reciprocal visits by parliamentary delegations are held each year. The most recent visit to Australia by a delegation from the European Parliament was in February 2013 and the Secretary-General of the European Parliament, Klaus Welle, visited Australia in May 2011. An Australian parliamentary delegation last visited the European Parliament in April 2012.

Australian and EU representatives also regularly meet for discussions and consultations at Ministerial and officials level in the margins of international conferences, in addition to regular officials-level bilateral forums covering specific policy issues, such as the Trade Policy Dialogue, the Agricultural Trade and Marketing Experts' Group (ATMEG) talks and talks on the Asia–Pacific.

Community presence in Australia

People-to-people links between Australia and Europe are deep and longstanding. Australia's cultural identity draws heavily on our predominantly European heritage. Nearly 70 per cent of Australians have European ancestry. Almost 30,000 new European migrants arrive annually and over 1.3 million Europeans visit Australia and 1 million Australians travel to Europe each year. The great sacrifices made by Australians during two world wars in Europe are an integral part of our national history and identity and represent a strong Australian contribution to Europe's evolution over the past century.

Key areas of cooperation

Security

Australia and the EU cooperate to address challenges to global peace and prosperity, including terrorism, the proliferation of weapons of mass destruction, and failing states.

In our region, the EU makes an important contribution to promoting development and security outcomes. The EU provides support for the Jakarta Centre for Law Enforcement Cooperation (JCLEC), a joint Australian–Indonesian initiative to enhance the expertise of South-East Asian law enforcement agencies in combating terrorism and transnational crime, and for the Bali process on enhancing regional cooperation on people smuggling, trafficking in persons and related transnational crime. Australia welcomed the EU's constructive role in Aceh where, along with five ASEAN countries, the EU deployed a Monitoring Mission for the implementation of the peace agreement signed between Indonesia and the Free Aceh Movement in August 2005 in Helsinki, Finland.

During President Barroso's visit in September 2011, Australia and the European Atomic Energy Community (EURATOM) signed an agreement designed to deepen our cooperation in the areas of nuclear safeguards, security and safety.

Development cooperation

The EU is an important partner for Australia in development cooperation activities in the Pacific and is a significant donor in the region. Under the tenth European Development Fund, for the period 2007–2013, the EU provided the Pacific with approximately €500 million (around $800 million). The EU's Pacific policies are set out in its 2006 Pacific Communication. The Communication outlines the EU's commitment to strengthening political relations with Pacific countries; bringing greater focus and coordination to its development activities, including through more emphasis on regional cooperation; and improving the effectiveness of aid delivery, including through closer coordination with other partners, in particular Australia and New Zealand.

In September 2011, President Barroso and then Prime Minister Gillard agreed that Australia and the EU would enter into delegated cooperation arrangements for aid delivery. Delegated cooperation is a practice by which one development agency delivers an aid program on behalf of a partner agency. In April 2014, Foreign Minister Bishop and the European Commissioner for Development, Mr Andris Piebalgs, signed a declaration marking the commencement of the first two Australia–EU delegated aid projects in South Sudan—where Australia will fund an EU food security initiative—and in Fiji, where EU funding will support an employment training program.  

The European Investment Bank (EIB)—which provides development loans to African, Caribbean and Pacific (ACP) countries—has its Pacific regional headquarters in Sydney. The presence of the EIB office contributes to donor coordination between Australia, the EU and developing country partners and improves overall aid effectiveness in the Pacific region.

Australia and the EU are also both major contributors to Indonesia’s Education Sector Support Program (ESSP) (2011–12 to 2015–16) which supports Indonesia to achieve universal basic education.

Climate change, environment and energy

Australia and the EU hold high-level consultations to strengthen cooperation in advancing environmental protection, both through policy dialogue and by facilitating joint projects to address specific environment-related issues. Australia and the EU regularly exchange views on energy security and climate change and explore complementary approaches to addressing these issues. Australia and the EU share a common concern about the importance of mitigating and adapting to climate change.

Australia has participated in the EU-initiated International Carbon Action Partnership (ICAP) since April 2008. In 2009, then EU Energy Commissioner, Mr Andris Piebalgs, signed an MOU making the EC a founding member of the Global Carbon Capture and Storage Institute.

Science and research

In 1994, Australia became the first non-EU member country to sign a Science and Technology Agreement with the EU. Since then cooperation has been active and steadily increasing in a diverse range of research areas. Australian researchers are able to join their European counterparts as full participants in research programs which are managed by the European Commission under the EU's seven-year Framework Program for Research and Innovation, ‘Horizon 2020’. The Agreement also encourages European participation in Australian research activities. A Joint Science and Technology Co-operation Committee (JSTCC) meets every one to two years to exchange information and discuss ways to enhance research collaboration and agree on priorities and actions to strengthen the relationship. The 13th JSTCC meeting will be held in the second half of 2014.

Australia and the EU jointly fund the ‘Connecting Australian European Science and Innovation Excellence’ (CAESIE) bilateral partnership initiative, which aims to establish science and technology collaboration and partnership between small to medium enterprises (SMEs) and researchers in Europe and Australia.

 In addition, the Australian Government supports research cooperation with the EU through the joint National Health and Medical Research Council (NHMRC) – European Union Collaborative Research Grants program.

In 2008 the Australian Research Council opened its fellowships to international candidates for all schemes, providing funding for eligible organisations to promote collaboration, movement and networking between Australia-based and overseas researchers. This has resulted in several successful research projects between Australian and EU researchers and enhanced the opportunity for them to strengthen their networks internationally.

Australia's participation in Horizon 2020 is also underpinned and reinforced by its strong bilateral research cooperation links with a number of individual EU member states.

Education and training

Australia's tertiary education relationship with the EU is active and wide-ranging with activities including policy interaction and supporting student mobility.

Policy dialogues seek to address strategic issues related to education systems and policies pursued in the EU and Australia. Dialogues aim to reinforce bilateral and multilateral cooperation to provide enhanced understanding of education and training policies in the EU and Australia.

The EU and Australia have undertaken dialogues in the following areas:

  • University reform and the modernisation agenda (2009)
  • Qualifications frameworks (2010)
  • Early childhood education (2011)
  • International Education (2012)
  • Rethinking Education: challenges and opportunities (2013)

Since 2003 Australia and the EU have jointly funded eight rounds of bilateral joint cooperation projects known as ‘Encounter: Australia–Europe’. Encounter is part of the EU’s Industrialised Countries Instrument Education Cooperation Programme (ICI ECP). The EU undertakes these bilateral projects with a number of countries in the Asia–Pacific region: Australia, Japan, New Zealand and South Korea.

To date, Encounter has seen 22 higher education and vocational education and training (VET) projects funded. At the completion of the eighth round, over 1400 Australian and European students will have studied overseas in either the EU or Australia as part of these projects.  Encounter mobility projects and joint degrees aim to develop innovative curricula, joint credit transfer arrangements, support academic cooperation and encourage student mobility in a variety of disciplines.

Bilateral economic and trade relationship

Australia and the EU have a convergence of views on many global economic issues and work together in the G20 context to meet the current challenges facing the international economy, including the sovereign debt crisis in the euro area, and to promote global economic recovery and growth.

The EU is Australia's second largest trading partner and largest source of foreign investment. In 2012–13 two-way merchandise trade was valued at $56.8 billion and two-way services trade was worth $22.3 billion. In 2012–13 Australia exported $23.8 billion worth of goods and services to the EU. Australia's major merchandise exports to the EU include gold, coal, oil-seeds and wine. The major merchandise imports from the EU include medicaments (incl. veterinary), passenger motor vehicles, civil engineering equipment and parts and pharmaceutical products. Other personal travel services (mainly recreational travel) were the largest single services export ($3.6 billion) to the EU in 2012–13 and were also the largest single services import ($5.1 billion) from the EU during the same period.

Australia and the EU enjoy a broad-based trade relationship and on many international trade issues Australia and the EU are like-minded. Australia and the EU work together, including through the WTO and G20, to promote international prosperity. Market access to the EU market is generally open, although Australia continues to encourage the EU to improve market access in the important area of agriculture. The EU’s trend towards a more market-friendly EU agriculture policy presents opportunities for more constructive bilateral engagement, as is reflected in the brochure on agricultural reform [PDF] which DFAT has produced for distribution in Europe.

Investment

The 28 members of the EU as a bloc constitute Australia's largest foreign investor. At the end of 2012, the EU’s foreign direct investment in Australia totaled $156 billion—approximately 28.3 per cent of Australia's total inwards foreign direct investment. The UK dominates EU foreign direct investment in Australia followed by the Netherlands and Germany. The EU accounted for $80 billion of outwards Australian direct investment as at 31 December 2012, with the UK and Germany the leading investment destinations.

Export opportunities

Though the EU is already one of Australia's largest trade and investment partners there are opportunities to expand the trade and investment relationship, particularly in continental Europe. With its abundant natural resources, Australia is well placed to be a reliable and efficient supplier of energy and resources to Europe for many years to come. Europe is a major market for Australian wine and for medicines. The EU services market, particularly in the education and tourism sectors, is an important market for Australian service providers. Product niches are being found in the food and beverage industries. For any questions regarding market access and trading with the EU, see the Austrade country profiles for the various member states.