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The Australia - Europe Relationship

BACKGROUND

Institutional values and practices in Australia are largely a product of the adaptation of European ideas to unique surroundings. Though Australia has developed distinctive cultural symbols, economic structures and strong elements of a national identity the heritage and influence of Europe is pervasive. Moreover, our relationship is evolving in fresh and exciting directions; European integration and Australian engagement with the Asia-Pacific region have generated new and far-reaching dialogues.

The Australian National University sees the National Europe Centre as a locus of excellence for advancing our understanding of the workings of European and Australian societies, especially the development of the European Union itself. The Centre will also promote the development of effective social systems within our joint cultural, political and economic contexts.

AUSTRALIA AND EUROPE

Over the past 20 years Australia and the European Union have established several important bilateral agreements in economic, energy, agriculture, employment, education and industrial policy.

Australia and the European Union have forged common global goals, notably the support of democracy and the rule of law, the promotion of peace and security, a sound (low inflation, high employment) economy, a stable international financial system and a strong multi-lateral trading system.

The commonality of these objectives reflects the broad social, cultural, political and historical compatability of Australia with the nations of the European Union which has helped greatly in sustaining amicable, mutually beneficial trading relations.

THE ECONOMIC RELATIONSHIP

With a population of 371 million and a GDP of over $7000 billion, the EU has been Australia's largest economic partner for the past 11 years. In 2000-01, the overall economic relationship reached a value of $70.6 billion which represents a fifth of all Australian overseas transactions. European markets remain a solid basis for earning export dollars, particularly in the service sectors. In terms of two-way trade in services, the EU is Australia's most important trading partner with 21% of the total in 2000-01. This stands against traditional arguments about the ‘tyranny of distance’.

FOREIGN INVESTMENT AND TRADE

Investment and trade lie at the core of this economic relationship between Australia and the EU. Not only is the European Union the leading foreign investor in Australia. It is the main destination for Australian investment abroad. In 2000, the total trade merchandise was valued at $38 billion. Australian merchandise exports to the EU were valued at $12.5 billion making the EU Australia's second largest merchandise export market. Imports from the EU were $25.5 billion making the EU Australia's largest trade merchandise importer. There was also a vigorous exchange in services with the EU the largest overseas market for Australia (accounting for 20% of Australia's total service exports). The EU was the largest source of imported services (accounting for 23% of Australia's total service imports).

The EU was Australia's largest source of foreign investment in 2000-01. Flows from the EU increased by 4% over the financial year, while Japanese investment in Australia declined. Stocks of EU investment in Australia represented almost one-third of all foreign investment in Australia. The flow of capital to Australia from Europe has consistently outstripped that from the US and Japan. Significantly, the historical emphasis on British investment in Australia has been replaced by increasing flows from "continental Europe". Some of these states have increased their investment in Australia by 80-90% over the past five years.

Equally, the increasing value-added nature of the EU's investment in Australia suggests that Europe also appreciates the opportunities provided by Australia's push into Asia. As former Prime Minister Paul Keating expressed it, "Australia's engagement in Asia makes us more, not less, important to Europe".

For more information on the Australia-Europe trade relationship visit (www.dfat.gov.au/geo/european_union/index.html)

THE CULTURAL RELEVANCE OF EUROPE

The origins of white Australia were, of course, strictly European. Immigration over the past twenty years, most notably from Asia, has added much diversity to a predominantly European-based population. The 1996 Census found that of a total of 3.9 million Australians born overseas, 2.2 million were from Europe and more than half of these were from Britain.

Given this continuance of a strong European population, and the intractability of Australia's European-based political, social and cultural institutions, a keen understanding of European culture and an awareness of its past and future direction, remains an imperative.

POLICY

The economic and social problems faced by modern Europe are essentially those Australia is experiencing. Many countries in the EU share Australia's concern about the future of work, growing income inequalities, state dependency, educational directions and social cohesion generally. This heightens the importance of Australia/EU collaboration to discover and develop optimal ways to address these problems.

In several domains both Australia and the EU expect similar population projections over the next 30 years. Europe's OECD nations expect the percentage of the population aged 65 and over (as a percentage of the population aged 15-64) to increase by 17.1% between year 2000 and 2030. The corresponding Australian figure is 16.3%. Not surprisingly, therefore, both Australia and EU nations are exploring welfare reform in light of the considerable strain expected on existing pension systems.

Trade links aside, collaborative efforts have been strongest in the area of education. Recent meetings between delegations from the EU and Australian representatives have led to an exchange of ideas and experience on issues of common interest in education and training. Both recognise the importance of collaborative efforts in this area and the exponential benefits of both its direct market application - through joint research and development projects - and the opportunity it affords for cultural and economic exchange. Increasingly, Australian universities are offering student exchange programs which provide an important channel for access by students to a global environment for the development of career prospects and personal development.

THE EUROPEAN UNION

"The European Union (EU) is a family of democratic European countries, committed to working together for peace and prosperity. It is not a State intended to replace existing states, but it is more than any other international organisation. The EU is, in fact, unique. Its Member States have set up common institutions to which they delegate some of their sovereignty so that decisions on specific matters of joint interest can be made democratically at European level. This pooling of sovereignty is also called 'European integration'." (http://europa.eu.int/abc/index_en.htm)

The EU is made up of 27 member states. These include Austria, Belgium, Bulgaria, Cyprus, The Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, The Netherlands and The United Kingdom. Turkey is an applicant.