Australia and the EU - Into the New Millenium

Speech

Australian Minister for Foreign Affairs, Alexander Downer

Adelaide, 12 May 2000

Australia and the EU - Into the New Millenium

(Check Against Delivery)

Introduction

Thank you <name of chairperson>; good afternoon, ladies and gentlemen.

It is good to be able to speak to you today, and to outline my thoughts on the state of Australia's relations with Europe. And to reflect on the achievements that have been made in Europe in establishing effective unification since Robert Schuman's declaration fifty years ago last Tuesday.

Schuman's declaration that Germany and France were to pool their steel and coal resources, inviting other like minded countries to join them, was a revolutionary innovation in foreign policy that has reshaped Europe to become a world economic power. And, true to Schuman's convictions in 1950, that "a European federation (is) indispensable to the preservation of peace", - peace has ruled.

Schuman's vision for Europe provides others with important lessons to use in regional cooperation - an issue I will return to in a moment.

Australia and the EU have built a strong mutual relationship based on trade, cooperation in industry, science and education, and more recently on development, environment and human rights.

Of course, much of this has occurred through our ties with the UK, which go back much further, and are much deeper. Next year, we are celebrating our Centenary of Federation. In recognition of this event, Australia Week will be held in London in July this year, to celebrate the Centenary of the British Parliament's passage of the legislation to create the Commonwealth of Australia.

Today, we continue our efforts to broaden and strengthen Australia's relations with the European Union, the United Kingdom and its other member states.

Trade with the EU and the UK

It is worth recalling that, taken as a single entity, the EU is Australia's largest trading partner. Some examples prove the point. : Iin 1999, Australia's total merchandise trade with the EU was valued at A$34 billion. The level of EU investment, both portfolio and direct, in Australia in June 1998 was A$193.1 billion, up 7.1% on the previous year. Australian investment also grew strongly, up 19.8% in 1997/98. These figures demonstrate our very substantial, mutually beneficial economic relationship.

Trade with the UK makes up over one quarter of these figures, with A$9 billion of trade recorded with Australia in 1999. Australia's exports to the UK were more than double those to our next largest export market in the EU (Italy) in 1999 - and that's not including one of our most valuable exports, Shane Warne (tipped to kickstart the UK's leg spin market/who should give a new spin to English cricket)!.

The UK not only provides an important trading relationship with Australia on its own. It also plays a vital role in facilitating Australia's trade with the rest of Europe both through its capital market and through its own massive trade with Europe - making these impressive trade figures with the EU possible.

UK - EU and the Euro

A key development in the economic consolidation of the EU was last year's introduction of the Euro.

Australia watches developments in the Euro with great interest, not least because it has a direct effect on the value of our agricultural exports. The Euro's continued decline means that the limits placed by the Uruguay Round on the use of export subsidies may have less impact than would have been the case had the Euro been stronger. On the other hand, a weak Euro has undoubtedly contributed to stronger economic growth in the EU through making its exports more competitive.

We certainly support the European Monetary Union (EMU), because we see it as, potentially, a key element in bringing about long term economic reform and growth in the EU, which in turn will benefit the global economy. It also helps to bind EU countries more closely together.

When or, more accurately, if, the UK decides to join the EMU will be also of great interest to Australia. The flow on effects of this decision will impact significantly on Australia, given our large trade relationship with the UK. Australian companies based in the UK, trading with countries in the Euro zone, would benefit from reduced currency fluctuations and lower currency holding costs.

CAP and Enlargement

Our own experience in Australia suggests that sustained commitment to reform is necessary to achieve genuine economic growth in current circumstances. I believe that, in this context, the EU will need to reform seriously the Common Agricultural Policy, as well as deal with the other the microeconomic challenges it faces. The likely accession of new members from central and eastern Europe over the next decade has both positive and negative connotations. On the one hand, it may be leading to increased subsidisation of agriculture in the accession countries, which is of concern. On the other, there will be pressure during the accession negotiations to place a limit on overall CAP costs.

Our hope is that enlargement will impact positively on the EU. We do not wish to see the EU concentrate exclusively on European matters at the expense of relations with the rest of the world. Australia will be taking a close interest in the timetable for enlargement, and the important decisions on which applicant countries are likely to be admitted in the first wave of accessions.

Australia will be looking to the UK to stand strong against EU protectionism, and to use its considerable influence to advance reform in agriculture, and also in other areas such as development assistance, to ensure that EU policies do not create trade distorting outcomes globally.

Clearly, the benefits of trade liberalisation need to be communicated widely to gain the necessary support for these reforms. These benefits include sustainable development, efficiency and economic growth providing jobs and well being, not only to the EU, UK and Australia, but also to communities around the world.

APEC and Open Regionalism

I mentioned earlier that Europe provided useful lessons for cooperation between countries of other regions. In the Asia-Pacific region, this cooperation has been given effect through APEC. APEC plays a key role in developing regional economic growth, cooperation and stability.

When countries in a region work together cooperatively on economic issues, as Schuman envisaged for Europe through the creation of the European Coal and Steel Community, great benefits can be achieved for all parties involved. The region becomes more economically stable. Its industries are made more competitive and sustainable through open competition. Open border policies lead to more cost-efficient trade. And a cohesive, single voice will give the region more global influence.

It could be said that the EU has similar ambitions to APEC. However, the process chosen by the EU is fundamentally different to that of APEC. Whereas the EU has chosen a preferential treaty to achieve these benefits for member states, it has done so at considerable cost to the rest of the global community through the trade distorting impact of its trade policies.

In sharp contrast to the EU, APEC has a much more outward looking future agenda, based on common goals for growth and prosperity shared by developed and developing members alike. This is demonstrated by the Bogor vision of free and open trade and investment in the region, by 2010 for industrialised countries, and 2020 for developing ones.

A major tenet of APEC is the need for trade liberalisation. This will provide direct and practical benefits to business, both within and outside the APEC member countries, through the reduction of barriers to trade and investment. Real costs to business have been reduced through streamlined standards, regulations, customs procedures and competition principles.

It may be time now for the EU to learn from APEC's approach to regional cooperation, and the important role that trade liberalisation and free global trade plays in strengthening and developing member economies.

International trade policy

As I said earlier, enlargement provides an opportunity for the EU to embrace reform and, in particular, assist the WTO in creating a global level playing field. While it was a disappointment, the recent Seattle WTO Ministerial Conference should be kept in perspective.

Many WTO members, including Australia, remain committed to the launch of a new round of trade negotiations at the earliest possible date. I discussed prospects for the new round with EU Trade Commissioner Pascal Lamy in Brussels during my visit in February. The European Commission and others consider that it might be possible to launch a new round this year, in the narrow "window of opportunity" between the Congress vote on securing normal trade relations with China (in the context of China's WTO accession) and the U.S. Presidential election.

It is important to establish the climate for early re-engagement. A critical mass of agreement between the major players will be important. While contact between the European Commission and the U.S. has intensified, it remains to be seen whether either will show the required flexibility, particularly on investment and competition for the EU, and on anti-dumping and trade and labour standards for the U.S. A number of hard line developing countries will also need to be persuaded that their concerns are being sufficiently addressed.

Nonetheless, some positive steps have been taken. The negotiations on agriculture and services mandated from the Uruguay Round have started. We are working with others, including the Cairns Group on agriculture, to push for concrete progress to help demonstrate that the WTO is firmly back in business.

There is a lot of talk about reform of the WTO's own procedures. We support practical proposals for improvements to WTO processes, but believe that more radical changes, such as the creation of a WTO "Security Council", would be less democratic and less flexible than existing arrangements.

WTO members should focus not on process, but substance. Governments, and business leaders, must explain the advantages of open markets, and freer trade. They must be prepared to undertake the hard reforms necessary for their own economic well-being - and necessary for a trade negotiations agenda which genuinely offers something for all participants, but can achieve results in a short timeframe.

I urge you in your dealings with European governments and business to continue to press for reform. I want to remind you of the words of the UK Minister for Europe, Mr Keith Vaz, that the UK's destiny "is to be a leading partner in Europe....(to) bring (its) influence to bear on the main EU themes to ensure positive outcomes for Britain". In many cases, this will mean positive outcomes for Australia also.

Conclusion

For our part, we will continue efforts to build and enhance our relations with the UK and the EU. In September, I expect to be meeting again with External Relations Commissioner Patten, as part of Australia's annual dialogue with the European Commission, to discuss a range of foreign and trade policy issues. I look forward to the kind of positive, productive and open meeting that I've come to expect over the years.

In concluding, I would like to congratulate the UK and the EU on the progress that has been made over the last fifty years towards European unification. Here, on the other side of the world in Australia, we recognise the importance of the process which Schuman and his colleagues initiated, both in terms of the EU's economic significance and for the stability and security it provides in the world at large.