Further progress towards the Australia-EU FTA

Governmental Affairs

By Dr Michael Zettinig, German-Australian Chamber

The negotiations for the Australia-EU Free Trade Agreement (FTA) are progressing despite the COVID situation, and a conclusion towards the end of 2021 is likely.

Nine rounds of formal negotiations for the Australia-EU FTA have now concluded, including the last three rounds via videoconference. The German-Australian Chamber continues to be a very active stakeholder, with regular exchanges and provision of input into the Australian side / Department of Foreign Affairs and Trade (DFAT) and the European side, as well as including other partners such as the German Government and other European business chambers.

The progress is overall good, and we think that a conclusion of the formal negotiations towards the end of calendar year 2021 is both possible and likely. We feel a strong commitment from all participating parties to conclude this important FTA this year.

The FTA is recognised as important from both sides for a number of reasons. First of all there is strong strategic interest from both sides for a deeper economic relationship, increased trade, and investments from like-minded partners sharing the same values about rules-based trade and sustainable development – now even more so than when the formal negotiations started in the middle of 2018.

Secondly, there is a very strong business case for this FTA, as was demonstrated by the impact study done for the European Union before the negotiations kicked off. This is also demonstrated by the many submissions received in support of the negotiations for a comprehensive FTA by many business organisations and individual companies. The German-Australian Chamber has made a number of formal submissions to both sides and the latest submission to DFAT can be found on the dedicated EU FTA webpage.

Australia and the member states of the European Union are highly developed economies with high standards in areas such as product standards, investment rules and protection, labour standards and sustainability. Therefore, both sides already complement each other and collaborate closely in many areas such as advanced manufacturing, agritech and investments. However, there are still a number of important tariff and non-tariff trade barriers impacting businesses that want to trade or invest on the other side. The latest rounds of negotiations made good progress on many of the chapters of the FTA to remove barriers in specific areas. Please find details in the report by DFAT about the latest round of negotiations.

However, there are still a number of significant chapters to be concluded, and the FTA still needs to go through a final negotiation round, usually conducted at ministerial level, to find compromise on the most challenging aspects. Some of those are agriculture market access for Australian products in the EU, aspects of the digital trade chapter and product standards harmonisation, as well as important related topics such as the luxury car tax.

...both sides already complement each other and collaborate closely in many areas such as advanced manufacturing, agritech and investments...

The negotiations between the EU and New Zealand for an FTA are separate to the Australian negotiations. The EU-NZ negotiations have progressed well and a conclusion in 2021 is also very likely.

Of course, our governmental affairs and policy work is not limited to the FTA developments. Other aspects include supporting German-Australian businesses with COVID-related border closures, bilateral energy and hydrogen developments (see separate article about the German-Australian Hydrogen Alliance), developments around critical minerals and Industry 4.0. Our governmental affairs work also includes regular exchanges with partner organisations and state government agencies relevant to the bilateral economic and business relationship.

Please get in touch if you have questions or feedback about the FTA update or our other governmental affairs activities.