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European Union

European Union brief

Overview

Australia and the European Union (EU) enjoy a substantial bilateral relationship built on a shared commitment to democratic values and a like-minded approach to a broad range of international issues.

Australia and the EU work together on a wide range of global issues, including climate and energy, biodiversity and other environmental issues, sustainable development, human rights and gender equality, human health, maintaining the multilateral rules-based trading system, and cyber and security issues including hybrid threats. Since 2022, Australia and the EU have worked closely to respond to Russia's invasion of Ukraine.

Australia and the EU cooperate increasingly closely in the Indo-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 development assistance to the Pacific and South East Asia.

In 2022, the 27 members of the EU as a bloc constituted Australia's third largest trading partner and second largest source of foreign investment stock.

Political overview

The main institutions of the EU are the European Council, the Council of the European Union, the European Commission and the European Parliament. The European External Action Service is the EU's foreign service.

The European Council comprises the heads of state or government of the member states, the European Council President and the President of the European Commission. It defines the overall political direction and priorities of the EU. The President of the European Council is appointed by the EU Heads of State and Government. The current President is Charles Michel, former Prime Minister of Belgium (2014-2019). President Michel took office on 1 December 2019.

The Council of the European Union (not to be confused with the European Council) is composed of member state ministers meeting in ten 'configurations', based on policy areas including Environment; Transport Telecommunications and Energy, Economic and Financial Affairs, Competitiveness, and Foreign 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 Foreign Affairs Council is chaired by the High Representative of the Union for Foreign Affairs and Security Policy, currently Josep Borrell.

The European Commission, comprising one Commissioner from each member state, each responsible for a policy area, and led by a President, has the sole right of initiative to propose laws at the EU level, which, following approval by the Council of the European Union and the European Parliament, member states are obliged to include in their national legislation. The Commission is the EU's executive body and public service. The current European Commission President, Ursula von der Leyen, took office on 1 December 2019.

The European Commissioner for Trade is responsible for the EU's common trade policy governing international trade. The current Trade Commissioner is Valdis Dombrovskis.

The European Parliament is the only directly elected EU institution. It shares decision‑making power with the Council of the European Union on most internal market policies and has budget approval powers. The Parliament has the right to approve or reject the nomination of Commissioners. The EU last held parliamentary elections in May 2019. The next elections will be held in June 2024.

Economic overview

As a bloc, the EU is equivalent to the third largest economy in the world (USD $16.7 trillion in 2022), behind the US and China. Excluding intra-EU trade, it is the world's second largest merchandise importer, and second largest merchandise exporter. It has the largest stocks of foreign direct investment abroad and is the world's largest host of foreign direct investment.

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 competition rules.

Since 1993, the EU 'internal' or single market has facilitated 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.

The EU's Economic and Monetary Union (EMU) involves the coordination of economic and fiscal policies, a common monetary policy, and a common currency, the euro. While all 27 EU member states take part in the economic union, 20 member states (collectively called the Eurozone) have adopted the euro as their currency.

Bilateral relationship

Australia and the EU have a long-standing and fruitful bilateral relationship. 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.

On 7 August 2017, then Foreign Minister Bishop and then High Representative Mogherini signed the Framework Agreement between Australia and the EU, which builds upon the 2008 Australia-EU Partnership Framework. The agreement entered into force on 21 October 2022 following ratification by Australia, the EU and all EU member states. It provides a platform for enhanced cooperation on a broad range of issues with the EU and/or the EU member states. These issues include economic and trade cooperation, research and innovation, counter‑terrorism, development, non-proliferation, human rights, democracy promotion, climate change and environment, education and culture, and justice. Since 2018, under a provision of the agreement provisionally applied between Australia and the EU, officials from both sides have been meeting annually in the Joint Committee Meeting to advance cooperation. Australian and EU officials also meet regularly in a number of specialised dialogues.

Alongside strong people-to-people links and practical collaboration in a wide range of fields, regular engagement between Australia and the EU at the leader and ministerial level continues to strengthen the relationship. The President of the European Council, Charles Michel, the President of the European Commission, Ursula von der Leyen, and the Prime Minister of Australia, Anthony Albanese, held a Leaders' Meeting on 16 November 2022, in the margins of the G20 Summit in Bali, Indonesia, following which they issued a joint media release.

Development cooperation

The EU is an important partner for Australia in development cooperation activities, particularly in the Pacific where it is a significant donor. See further information on Australia's development program.

The EU in Australia

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 Australia, to promote and protect the EU's interests and values, to spread knowledge, and to raise awareness of the EU in Australia.

Bilateral trade and investment relationship

As a bloc, the EU was Australia’s third largest trading partner in 2023, with two-way trade valued at A$106.2 billion. Australian exports to the EU totalled A$25.5 billion and imports from the EU totalled A$80.7 billion.

The EU was Australia’s third largest source of foreign investment in 2023, valued at A$786.8 billion. Foreign Direct Investment (FDI) in Australia in 2023 was worth A$120.6 billion. European investment is present across all sectors, particularly renewables, infrastructure, transport, and advanced manufacturing.

In 2023, Australia’s total stock of investment in the EU was A$460.2 billion. Australian FDI into the EU the same year was worth A$84.8 billion. 

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