The EU and Australia have agreed to launch negotiations on a free trade agreement (FTA) during the margins of the G20 summit in Turkey, whilst also on Monday (16 November), the Council gave the go-ahead for negotiations to start on an FTA with the Philippines.
“We believe that a FTA will support sustainable growth and investment, open up new commercial opportunities and promote innovation and employment in Australia and the EU,” European Commission President Jean-Claude Juncker, European Council President Donald Tusk and Australian Prime Minister Malcolm Turnbull said in a joint statement.
The Australian prime minister secured the backing of the German chancellor, Angela Merkel, for Australia to negotiate a free trade agreement with Europe during his one-day visit to the chancellery in Berlin last Friday.
Finalising a trade pact between EU and Australia would likely take several years, but it was long overdue, the EU being Australia’s second largest trading partner after China, and its most significant trading partner in services. It is also the largest source of foreign direct investment (FDI) and the largest destination for Australian FDI overseas.
Given the export orientation of the EU, the 28-country bloc has no other choice but to seek parallel negotiations with current and future members of Trans-Pacific Partnership (TPP), of which Australia is a partner.
TPP, which will create a free trade and investment zone covering 40 percent of the world economy, was agreed last month. The landmark treaty includes labor and environmental standards as well as enhanced protection of international property rights. All parties must now ratify that agreement.
The EU is currently negotiating with two ASEAN countries – Malaysia and Thailand – whilst talks with two others, Singapor and Vietnam, have concluded.