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The EU-Australia Relationship in Light of Current EU Priorities

24 May 2018
By Dr Fabian Zuleeg

Recent years have been a period of tremendous change for the EU, internally and in its relations with the rest of the world. In a global environment where the rules-based order is challenged, both the EU and Australia would benefit from closer ties with like-minded global actors that share the same values and objectives.

Recent years have been a period of tremendous change for the EU, internally and in its relations with the rest of the world. The EU has been buffeted by a polycrisis: the global financial and economic crisis with its impact on sovereign debt and the Euro, internal and external security challenges and the refugee crisis, together all contributing to a rise of populist, nativist and Euro-sceptic political forces. In the UK, it led to the 2016 vote to leave the European Union but the phenomenon is clearly not limited to Europe as demonstrated by the election of Donald Trump as US President later that year, which threatened a further cornerstone of post-WWII reconstruction in Western Europe: the transatlantic relationship.

The good news is that the tide turned in 2017, with a recovering economy and better than expected election results, including the victory of Emmanuel Macron in the French Presidential election. The pressure from President Trump acted as a unifying force, helping to push Europe closer together, including on defence and security issues. For the UK, Brexit also turned out to be more complicated and economically costly than anticipated, creating domestic political chaos, making it an example no other EU country wants to follow.

This is not to underplay the fact that there are many unresolved issues in the EU including, for example, challenging governments in Hungary and Poland and a run of election results in late 2017-2018 that have been less favourable, such as in Italy. There is also the question of European leadership and in how far President Macron can rely on the weakened Grand Coalition in Germany in his ambitious EU reform plans. But overall, the EU27 is still in a better place than at the height of the crisis and is no longer existentially threatened.

Arguably, this means that the EU could and should have a more international outlook rather than focus on its domestic crises. This would imply taking a greater global role: in part fulfilling the expectation that Europe could somehow take on, or at least contribute to, the defence of the liberal multilateral global order. Even during the crisis period, the EU remained active in global economic relations, including a busy bilateral trade agenda with trade deals including Japan and Canada. But many within and outside the EU were hoping for a more strategic and proactive global European agenda.

In part, this is happening. There are initiatives to increase Europe’s security and defence capabilities and the EU’s Global Strategy envisages greater international engagement for the EU, taking greater responsibilities and investing in partnerships. Countries such as Germany are also (slowly) taking a more active international role. But this is a long process that will not produce decisive results quickly. There has to be a recognition that there are inherent limitations with the EU approach, not least the fragmentation between member states and their different assessments of threats and priorities. An added complication is the Brexit process, which carries significant uncertainty regarding the future UK-EU relationship and thus European international capabilities and capacity.

What does this imply for the EU-Australia relationship? Deepening the economic relationship should be relatively straightforward but there are two caveats. For the EU, the most important consideration is protecting the European integration process. If there were massive public objections to an EU-Australia trade deal, for example driven by concerns for a farming sector that is already likely to suffer from a proposed cut in EU funding, it would be highly tempting for the EU not to push for fast progress. Similarly, if there was any suggestion that the relationship with the UK would be accorded a higher importance by Australia than that with the EU, this could potentially halt progress.

When it comes to wider areas of cooperation, there are certainly shared global objectives, including the pursuit of Sustainable Development Goals, the implementation of the Paris Agreement and peace keeping missions. The protection of maritime trade routes and more generally, support for the global economic order (including the WTO) should be shared interests, as well as cooperation on security questions, such as improved cybersecurity.

But the EU will, in the challenging global environment, also look quite specifically what is in its direct interest. In terms of security, the Asia-Pacific is a long way away and the EU will be reluctant to get involved at a larger scale. In economic terms, the relationship with China is of the highest importance for the EU given that it remains strongly dependent on global supply chains and a global free trade environment. This makes current US trade policy a major concern. It should also not be forgotten that, for the foreseeable future, the EU will continue to be an international actor with uneven powers across different fields of external action, with some international policies run at EU level but many – notably foreign and defence issues – remaining largely a national prerogative.

Despite these limitations, there is significant scope in the development of closer ties. Of course, relations with China, the US and the UK are central to the foreign and economic policy agenda of both the EU and Australia. However, this is not necessarily a hindrance in the development of the EU-Australia partnership. Strategically, it is not the central relationship for either side but there are many specific areas of cooperation that can bring mutual benefit, not only in the economic field but also in areas of security and international policies. And in a global environment where the rules-based order is challenged, both sides would very much benefit from having closer ties with like-minded global actors that in the end, share the same values and objectives.

Dr Fabian Zuleeg is the CEO and Chief Economist of the European Policy Centre and holds a PhD from Edinburgh University. He has worked as an economic analyst in academia and both the public and private sector. He is currently Honorary Fellow at the Europa Institute of the University of Edinburgh and Honorary Professor at Heriot Watt University.

This article is based on a presentation at the EU-Australia Leadership Forum Sectoral Policy Workshop on the Rules-Based International Order which took place on 26-7 April in Brussels. The AIIA is part of the international consortium delivering this project.