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Factba.se: Australia DFAT Country Briefs - European Union


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Australia and the European Union (EU) enjoy a constructive and substantial bilateral relationship built on a shared commitment to freedom and democratic values and a like-minded approach to a broad range of international issues. In support of these shared commitments Australia and the EU work together to support global efforts to combat terrorism and the proliferation of nuclear and conventional weapons, to coordinate our efforts to respond to the challenges of climate change and the global financial crisis and to promote peace, sustainable development, good governance and human rights.

The 27 members of the EU as a bloc constitute one of Australia's largest trading and investment partners. Australia and the EU cooperate increasingly closely in the Asia-Pacific region, including to enhance security, stability and good governance, and to improve the coordination of development cooperation assistance among donors to the region. The EU is a significant provider of aid to the Pacific and South East Asia. Australia has a number of formal bilateral agreements with the EU and its institutions. Some of the key recent agreements are described in this brief.

For information on Australia's bilateral relations with the individual member states of the EU, select the appropriate country:

-- Austria (http://www.dfat.gov.au/geo/austria/index.html)
-- Belgium (http://www.dfat.gov.au/geo/belgium/index.html)
-- Bulgaria (http://www.dfat.gov.au/geo/bulgaria/index.html)
-- Cyprus (http://www.dfat.gov.au/geo/cyprus/index.html)
-- Czech Republic (http://www.dfat.gov.au/geo/czech_republic/index.html)
-- Denmark (http://www.dfat.gov.au/geo/denmark/index.html)
-- Estonia (http://www.dfat.gov.au/geo/estonia/index.html)
-- Finland (http://www.dfat.gov.au/geo/finland/index.html)
-- France (http://www.dfat.gov.au/geo/france/index.html)
-- Germany (http://www.dfat.gov.au/geo/germany/index.html)
-- Greece (http://www.dfat.gov.au/geo/greece/index.html)
-- Hungary (http://www.dfat.gov.au/geo/hungary/index.html)
-- Ireland (http://www.dfat.gov.au/geo/ireland/index.html)
-- Italy (http://www.dfat.gov.au/geo/italy/index.html)
-- Latvia (http://www.dfat.gov.au/geo/latvia/index.html)
-- Lithuania (http://www.dfat.gov.au/geo/lithuania/index.html)
-- Luxembourg (http://www.dfat.gov.au/geo/luxembourg/index.html)
-- Malta (http://www.dfat.gov.au/geo/malta/index.html)
-- The Netherlands (http://www.dfat.gov.au/geo/netherlands/index.html)
-- Poland (http://www.dfat.gov.au/geo/poland/index.html)
-- Portugal (http://www.dfat.gov.au/geo/portugal/index.html)
-- Romania (http://www.dfat.gov.au/geo/romania/index.html)
-- Slovakia (http://www.dfat.gov.au/geo/slovakia/index.html)
-- Slovenia (http://www.dfat.gov.au/geo/slovenia/index.html)
-- Spain (http://www.dfat.gov.au/geo/spain/index.html)
-- Sweden (http://www.dfat.gov.au/geo/sweden/index.html)
-- United Kingdom (http://www.dfat.gov.au/geo/united_kingdom/index.html)
Political overview

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The EU's 27 member states have an estimated total population of 501 million people and a combined economy worth USD18.0 trillion in 2010 (A$ 17.7 trillion, around 13 times the size of Australia's economy). The EU has a combined GDP greater than the United States and includes four of the world's ten largest economies (Germany, France, the UK, and Italy).

EU member governments run their economies according to a comprehensive strategy of macroeconomic, microeconomic and employment policies, coordinated at EU level. Member states draw up national reform programs within this framework, using the tax and social welfare policy mix they think best suits national circumstances.

The Stability and Growth Pact (SGP) prohibits member states from taking policy measures which would unduly benefit their own economies at the expense of other EU countries. A key principle of the Pact is the rule that all member states keep their budgets close to balance or in surplus. Deficits should not exceed 3% of gross domestic product (GDP) and the debt-to-GDP ratio should not be more than 60%. Automatic stabilisers and discretionary fiscal stimulus measures taken in 2008 and 2009 in response to the global financial crisis increased public expenditure, resulting in few EU member state budgets remaining within these limits. Public finances are beginning to improve, with the EC forecasting that the general government deficit in the EU will fall from around 6.5% of GDP in 2010 to 4.7% of GDP in 2011 and 3.8% of GDP in 2012. Overall government debt is expected to increase to 83% of GDP in the EU in 2012 (88% of GDP in the euro area.)

Seventeen of the 27 EU member states have taken integration a step further by adopting the same currency, the euro: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain. Denmark and the United Kingdom have so far opted to remain outside the euro. Bulgaria, the Czech Republic, Hungary, Latvia, Lithuania, Poland, Romania, and Sweden have no target date for joining. Entry criteria for the euro include two prior years of exchange rate stability via membership of the 'Exchange Rate Mechanism' (ERM). Three EU members are in the ERM: Denmark, Latvia and Lithuania. Other criteria for adopting the euro relate to interest rates, budget deficits, the inflation rate, and the debt-to-GDP ratio. The European Central Bank (ECB) has responsibility for monetary policy throughout the euro area, including setting benchmark interest rates, managing the euro area's foreign exchange reserves and ensuring payments move smoothly across EU borders.

The EU entered recession in the second quarter of 2008 and returned to positive growth in the third quarter of 2009, ending the longest and deepest recession in the EU's history. The EC estimates GDP in the EU fell by 4.3% in 2009 (4.2% in the euro area) and that the magnitude of the recession across the 27 members of the EU (measured as a decline in GDP from peak to trough) was a contraction of 5.1% between the first quarter of 2008 and the second quarter of 2009. The EC's spring forecast (released in May 2011) estimated growth of 1.8% in 2010 in the EU as a whole and in the euro area. For 2011, it forecasted growth of 1.8% in the EU (1.6% in the euro area), rising in 2012 to 1.9% in the EU and 1.8% in the euro area. The EC's interim forecast, issued in September 2011, maintained the forecast of 1.8% growth in the EU and revised down the euro area growth to 1.7%, noting that stronger than expected growth in the first quarter (in both areas) would be offset by slower growth in the second half of the year. Expected growth in 2011 varies considerably among member states — from 4.0% or more in Poland, Sweden, Estonia and Lithuania to a low of -3.5% in Greece. All EU countries other than Greece and Portugal are expected to be out of recession in 2011.

Unemployment appears to have stopped falling. The July 2011 unemployment rate was 9.54% in the EU and 10.0% in the euro area, both rates unchanged over the past two months but lower than in December 2010. Unemployment varies widely across the EU, from 3.7% in Austria to 21.2% in Spain.

Following a crisis of confidence in Greece's ability to repay its debt, in May 2010 EU Finance Ministers and the IMF agreed to a package of €110 billion in loans to Greece (€80 from the EU and €30 from the IMF) subject to strict conditionality. Concerns that other euro area countries may also require assistance led the EU set aside an additional €500 billion to be available over three years — through an increase of €60 billion in the existing European financial stability mechanism (EFSM) and €440 billion in a new European financial stability facility (EFSF) (guaranteed by euro area members on a pro-rata basis). The IMF agreed to lend up to €250 billion as part of any assistance package the EU provided. On 21 July 2011, EU Leaders agreed to a second package for Greece with €109 billion in official finance and a private sector financing of €50 billion. Leaders agreed to extend the maturity of loans under the EFSF to up to 30 years with a ten year grace period and to reduce the interest rate to around 3.5%. Leaders also said that private sector involvement in the package was due to particular circumstances in Greece and would not be part of future packages in the euro area. On 3 October, Greece announced that it would miss its fiscal deficit target in 2011, but that it will meet its absolute fiscal targets for 2012 and will have a primary surplus for the first time in many years. Euro area finance ministers have postponed until mid-November the next bail-out payment and are reviewing the private sector's involvement in the aid package.

In November 2010, Ireland requested assistance and was granted financial assistance totalling €85 billion (€22.5 billion from the IMF and the balance from the EU), conditional on further austerity measures. Portugal also requested assistance in April 2011, which was unanimously approved by EU Finance Ministers in May. The assistance package includes finance of up to €78 billion, with equally shared contributions of €26 billion from the EFSM, EFSF and IMF.

In March 2011, EU leaders agreed on the key features of the European Stability Mechanism (ESM), a permanent mechanism to safeguard the financial stability of the euro area as a whole, which will replace the EFSM and EFSF in 2013. The ESM will have an effective lending capacity of €500 billion. On 21 July, with the aim of improving the effectiveness of these measures and containing contagion, Leaders agreed to increase the flexibility of the EFSM and ESM, including by allowing them to buy euro area government bonds in the market. Following an announcement on 7 August, that it would 'actively implement its Securities Market Programme' to provide price stability to euro area government debt, the European Central Bank (ECB) has purchased Italian and Spanish sovereign debt.

The Leaders also agreed to a 'Euro Plus Pact' for the euro area countries and Bulgaria, Denmark, Latvia, Lithuania, Poland, and Romania. The Pact aims to strengthen economic policy coordination and improve competitiveness, thereby leading to a higher degree of convergence. The Pact focuses primarily on areas that fall under national competence and that are considered to be key for increasing competitiveness and avoiding harmful imbalances. It recognises that competitiveness is essential to help the EU grow faster and more sustainably in the medium and long term, to produce higher levels of income for its citizens, and to preserve its social models. Other member states are able to participate in the Pact on a voluntary basis.

In September 2011, the European Parliament approved a package of six legislative measures aimed at strengthening EU economic governance, particularly within the euro area. The package comprises four proposals dealing with fiscal issues, including reform of the Stability and Growth Pact, a mechanism for policing debt and deficit levels, and two regulations aimed at detecting and addressing macroeconomic imbalances within the EU. It establishes the legal framework for the European Semester, including an annual assessment of national budgets. EU Finance Ministers formally approved the package in early October 2011.

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The Australia-EU Partnership Framework (http://www.dfat.gov.au/geo/european_union/australia_partnership_framework.html) currently sets out the future direction of bilateral cooperation. The framework was launched during Australia-EU Ministerial Consultations in Paris on 29 October 2008. It is a document which outlines specific cooperative activities and is designed to be revised regularly. The first revision of the Partnership Framework, launched during the Australia-EU Ministerial Consultations in Stockholm on 8 October 2009, provides an updated focus on practical cooperation in the following areas:

-- shared foreign policy and global security interests

-- the multilateral rules-based trading system and the bilateral trade and investment relationship

-- the Asia-Pacific region

-- energy issues, climate change and fisheries and forestry

-- science, research, technology and innovation, education and culture and facilitating the movement of people.

The original framework replaced the June 1997 Australia-European Union Joint Declaration on Relations (PDF) (http://www.foreignminister.gov.au/releases/2007/Joint_Statement.pdf) and the subsequent March 2003-08 Agenda for Cooperation (PDF) (http://www.dfat.gov.au/geo/european_union/au_eu_agenda_coop_0303.pdf). During her visit to Brussels in October 2010 (see below), Prime Minister Gillard proposed a treaty-level bilateral Framework Agreement between Australia and the EU. Formal negotiations on the Framework Agreement opened in Canberra on 31 October 2011; it is expected they will conclude before the end of 2012.

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On her first overseas trip as Prime Minister, Ms Gillard visited Brussels in October 2010 and met with European Commission President José Manuel Barroso and European Council President Herman Van Rompuy. Their discussions reinforced the joint commitment made in April 2008 by then Prime Minister Rudd and President Barroso to a new, invigorated bilateral relationship between Australia and the EU. During the visit, Ms Gillard discussed with EU counterparts her proposal for a treaty-level Framework Agreement (see above) to underpin the very comprehensive and strong relationship between Australia and the EU. While in Brussels Ms Gillard also met with a number of European Heads of State and represented Australia at the 8th Leaders' Summit of the Asia-Europe Meeting - another avenue by which Australia is strengthening its relations with the EU.

President José Manuel Barroso reciprocated the Prime Minister's visit to Brussels with bilateral talks in Australia from 4-7 September 2011. The first by a European Commission President since Gaston Thorn's in 1982, this visit is a statement of our ever strengthening ties. The joint statement by Prime Minister Gillard and President Barroso (http://www.pm.gov.au/press-office/joint-statement-president-european-commission) showcases the breadth of issues covered in our vibrant bilateral relationship. The President's visit also included a Key Note Address at the Finkle Lecture Theatre, ANU (http://www.delaus.ec.europa.eu/News&events/Barroso-visit-2011/speech-ANU.htm) , and a European Australian Business Council Oration (http://www.delaus.ec.europa.eu/News&events/Barroso-visit-2011/speech-EABC.htm).

The Australian Foreign Minister holds regular annual consultations with EU counterparts. In October 2011 Catherine Ashton High Representative of the Union for Foreign Affairs and Security Policy visited Canberra as a Guest of Government for Australia-EU Ministerial Consultations. In a joint media statement (http://www.foreignminister.gov.au/releases/2011/kr_mr_111031.html) Mr Rudd and HR Ashton announced: the launch  of negotiations on a treaty-level Australia-EU Framework Agreement; the opening of negotiations and cooperation on delegated aid projects in South Sudan and Fiji.

Mr Rudd held talks with the President of the European Council, Herman Van Rompuy, during a visit to Brussels in January 2012. Mr Rudd expressed support for the EU’s efforts to implement fiscal consolidation plans, address contagion, and press ahead with structural reforms. Discussions also covered key elements of the Australia-EU bilateral relationship, including the treaty level Framework Agreement, climate change cooperation, and development assistance cooperation. Mr Rudd also held talks with the European Commissioner for Economic and Monetary Affairs, Olli Rehn.

European Commissioner for Trade Karel De Gucht visited Australia 15-17 March to hold talks with Dr Emerson, Australian Minister for Trade. The EU Commissioner for Development, Andris Piebalgs also visited Australia on 7 March 2011 where he held talks with Mr Richard Marles, Parliamentary Secretary for Pacific Island Affairs. The EU Commissioner for Climate Action, Connie Hedegaard, visited Australia on 5 September 2011 and held talks with Mr Greg Combet MP, Minister for Climate Change and Energy Efficiency.

The Australian Parliament has maintained contact with the European Parliament for many years. The European Parliament is an important conduit for advocacy of Australia's interests and has an Inter-parliamentary Delegation for Relations with Australia and New Zealand. Reciprocal visits by parliamentary delegations are held each year. The most recent visit to Australia by a delegation from the European Parliament was in February 2011 and Secretary-General of the European Parliament, Klaus Welle visited Australia in May 2011. An Australian Parliamentarian last visited the European Parliament in January 2011.

Australian and EU representatives regularly meet for discussions and consultations at Ministerial and officials level in the margins of international conferences, in addition to regular officials level bilateral forums covering specific policy issues, such as the Trade Policy Dialogue, the Agricultural Trade and Marketing Experts' Group (ATMEG) talks and the Australia-EU Talks on Asia (Co-ASI).

The EU has been represented in Australia since 1981 by a Delegation of the European Commission, now a Delegation of the European Union (http://www.delaus.ec.europa.eu/). The Delegation's role is to represent the EU; to further develop bilateral relations in the political, economic, commercial, environment, social and cultural fields, including new opportunities for cooperation; to inform the EU on political, economic, trade and development matters in both Australia and New Zealand; to promote and protect the EU's interests and values and to spread knowledge and to raise awareness of the EU in Australia and New Zealand. The Delegation is not responsible for trade promotion or consular matters, which are handled by the embassies, consulates, trade commissioners or national tourism offices of EU member states.

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People-to-people links between Australia and Europe are deep and longstanding. Australia's cultural identity draws heavily on our predominantly European heritage. Nearly 70 per cent of Australians have European ancestry. Almost 30,000 new European migrants arrive annually and over 1.3 million Europeans visit Australia and 1 million Australians travel to Europe each year. The great sacrifices made by Australians during two world wars in Europe are an integral part of our national history and identity and represent a strong Australian contribution to Europe's evolution over the past century.

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Australia and the EU are cooperating to address challenges to global peace and prosperity, including terrorism, the proliferation of weapons of mass destruction, and failing states. For example, Australia and the EU have a cooperation agreement to facilitate the exchange of information between the Australian Federal Police and EUROPOL, the EU's law enforcement agency.

In our region, the EU makes an important contribution to promoting development and security outcomes for East Timor and for the countries of the Pacific region (see also Development Cooperation below). The EU provides support for the Jakarta Centre for Law Enforcement Cooperation (JCLEC), a joint Australian - Indonesian initiative to enhance the expertise of South-East Asian law enforcement agencies in combating terrorism and transnational crime, and for the Bali process on enhancing regional cooperation on people smuggling, trafficking in persons and related transnational crime. Australia has welcomed the EU's constructive role in Aceh where, along with five ASEAN countries, the EU deployed a Monitoring Mission (AMM) for the implementation of the peace agreement signed between Indonesia and the Free Aceh Movement in August 2005 in Helsinki, Finland.

During President Barroso's visit in September 2011, Australia and the European Atomic Energy Community (EURATOM) signed an agreement which will deepen our cooperation in the areas of nuclear safeguards, security and safety.

Development cooperation

The EU is an important development partner for Australia in development cooperation activities in the Pacific region. It is a significant donor in the region and participated in the Pacific Islands Forum (PIF) post-Forum Dialogue in September 2011 in Auckland. Under the tenth European Development Fund, for the period 2007-2013, the EU will provide the Pacific with approximately €500 million (around $800 million). The EU's Pacific policies are set out in its Pacific Communication (http://europa.eu/legislation_summaries/development/african_caribbean_pacific_states/r12556_en.htm) ,adopted in May 2006. The Communication outlines the EU's commitment to strengthening political relations with Pacific countries; bringing greater focus and coordination to its development activities, including through more emphasis on regional cooperation; and improving the effectiveness of aid delivery, including through closer coordination with other partners, in particular Australia and New Zealand. In September 2011, President Barroso and Prime Minister Gillard welcomed the establishment of delegated cooperation arrangements for aid delivery between Australia and the EU [delegated cooperation is a practice by which one development agency delivers an aid program on behalf of a partner agency]. The first two Australia-EU delegated aid projects will be in South Sudan - where the EU will deliver food-security assistance on Australia's behalf - and in Fiji, where Australia will deliver a component of the EU's assistance.he European Investment Bank (EIB) - which provides development loans to African, Caribbean and Pacific (ACP) countries - opened its Pacific regional headquarters in Sydney in December 2007. The presence of the EIB office contributes to donor coordination between Australia, the EU and developing country partners and improves overall aid effectiveness in the Pacific region.

Further information on Australia's development policies and programs can be obtained from AusAID (http://www.ausaid.gov.au/) .

Climate change, environment and energy

Australia and the EU hold high-level consultations to strengthen cooperation in advancing environmental protection, both through policy dialogue and by facilitating joint projects to address specific environment-related issues. Australia and the EU regularly exchange views on energy security and climate change and explore complementary approaches to addressing these issues. Australia and the EU share a common concern about the importance of mitigating and adapting to climate change.

During European Commission President Barroso's visit to Australia in September 2011, Prime Minister Gillard and President Barroso issued a Joint Statement in which they welcomed each other's commitment to reduce greenhouse gas emissions, noting the importance of market mechanisms to reducing carbon emissions at the lowest possible cost and stimulating investment, competitiveness and innovation in clean energy. They agreed that both sides had a strong mutual interest in working to expand and deepen global carbon markets and agreed to establish Senior Officials Talks to exchange experience on design and implementation of emissions trading mechanisms and to address cooperation on economy-to-economy measures, including the conditions which would allow for linking of our emissions trading schemes at an appropriate point in the future.

Australia has participated in the EU-initiated International Carbon Action Partnership (ICAP) since April 2008. On 19 May 2009 in Melbourne, then EU Energy Commissioner, Mr Andris Piebalgs, signed an MOU making the EC a founding member of the Global Carbon Capture and Storage Institute. As a permanent coordinator of the Umbrella Group (a grouping of the non-EU developed countries) Australia continues to closely engage the EU on climate change matters.

Science and research

In 1994, Australia became the first non-EU member country to sign a Science and Technology Agreement with the EU. Since then cooperation has been active and steadily increasing in a diverse range of research areas. Australian researchers are able to join their European counterparts as full participants in research programs which are managed by the European Commission under the EU's Framework Program for Research and Technological Development. The Agreement also encourages European participation in Australian research activities. A Joint Science and Technology Consultative Committee (JSTCC) meets every one to two years to exchange information and discuss ways to enhance research collaboration and agree on priorities and actions to strengthen the relationship. In June 2010 the 11th JSTCC was held in Sydney, attended by the largest ever EU science and research delegation to Australia. The meeting communiqué (PDF) (http://www.dfat.gov.au/geo/european_union/communique_090610.pdf) set out a comprehensive plan of action to take the relationship forward. The Australia-EU Science and Technology Cooperation Roadmap has been published. (http://www.innovation.gov.au/Science/Documents/AustraliaEUJSTCCRoadmap.pdf)

Australia and the EU jointly fund the Forum for European-Australian Science and Technology cooperation (FEAST) which promotes cooperation between researchers and research stakeholders and promotes opportunities for cooperation in areas of mutual interest and benefit. In addition, the Australian Government supports research cooperation with the EU through dedicated funding streams, including the joint National Health and Medical Research Council (NHMRC) - European Union Collaborative Research Grants program.

In 2008 the Australian Research Council opened its fellowships to international candidates for all schemes, providing funding for eligible organisations to promote collaboration, movement and networking between Australia-based and overseas researchers. This has resulted in several successful research projects between Australian and EU researchers and enhanced the opportunity for them to strengthen their networks internationally.

Australia's participation in the EU Framework Program is underpinned and reinforced by its strong bilateral research cooperation links with a number of EU Member States.

Education and training

Australia's education relationship with the European Union (EU) is active and wide-ranging with activities including policy interaction and supporting student mobility. These activities are listed under Objective Five of the Australia-European Union Partnership Framework. In 2011 the key activities are policy dialogues and the on-going student mobility projects. Two research projects will also be completed: a Tuning Australia pilot Project and a Qualifications Framework Project.

Policy dialogues seek to address strategic issues related to the state of education systems and policies pursued in the EU and Australia. Dialogues aim to reinforce bilateral and multilateral cooperation at both the administrative and policy level and provide enhanced understanding of education and training policies and developments in the EU and Australia.

The EU and Australia have undertaken dialogues in the following areas:

-- University reform and the modernisation agenda (2009)

-- Qualifications frameworks (2010)

-- Early childhood education (2011)

Joint cooperation mobility projects seek to grow student mobility as well as support innovative curricula and joint credit transfer arrangements. Operating since 2003 these projects involve consortia of universities and vocational education and training institutions in Australia supporting students to study for a semester at an EU partner institution. Students from EU consortia partners also study at Australian partner institutions. Project funding is for three years. Funding is also provided for exchanges of staff members.

A seventh round of projects was launched in 2010 with five projects funded.

In 2010 Australia and the EU launched two research projects: a Pilot Tuning Australia Project and a joint comparative study on Qualifications Frameworks. The Pilot Tuning Australia project aims to define the learning outcomes representative of higher education degrees in specific disciplines across different degree levels. The joint comparative study on Qualifications Frameworks is considering the impact of qualifications frameworks on student mobility and if qualifications frameworks can serve as instruments for pursuing closer international cooperation in the field of qualifications recognition. The results of both studies are due in 2011.

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Australia and the EU have a convergence of views on many global economic issues and work together in the G20 context to meet the current challenges facing the international economy, including the sovereign debt crisis in the euro area, and to promote global economic recovery and growth.

The 27 members of the EU as a bloc constitute one of Australia's largest trading and investment partners. Total two-way trade with the EU was valued at A$78.0 billion in 2010; a small increase of 0.9% on 2009, representing 14.1% of Australia's total trade (trade figures exclude imports of aircraft since September 2008).

Australian merchandise exports to the EU were worth A$18.6 billion in 2010, a 6.7% increase over 2009. Australia's major merchandise exports to the EU include gold, coal, wine, medicines and zinc ores and concentrates. Australia's merchandise imports from the EU in 2010 totalled A$38.4 billion, down 2.7% on 2009. Australia's merchandise imports from the EU were dominated by manufactured goods, with the top categories of imports including medicines, passenger motor vehicles, chemicals and civil engineering equipment and parts. The EU is one of Australia's largest two-way services trading partners, with two-way services trade in 2010 valued at A$21.0 billion. Australia's services exports to the EU were worth A$8.5 billion in 2010, a decrease of 2.5% compared to 2009. Australia's services imports from the EU rose by 7.1 per cent in 2010 to A$12.6 billion. Recreational travel services was the largest single services export to, and import from, the EU in 2010. Australia and the EU are like-minded on most issues in services trade and recognise the increasing contribution to exports made by this sector.

Australia and the EU enjoy a broad-based trade relationship and on many international trade issues Australia and the EU are like-minded. Market access to the EU market is generally open, although Australia continues to encourage the EU to improve market access in the important area of agriculture. Both Australia and the EU are disappointed by the current impasse in WTO Doha negotiations and share ambition to overcome the current challenges to achieve a successful outcome in the WTO Doha round of multilateral trade negotiations. Australia and the EU work together, including through the G20, to promote international prosperity and see trade as an important element. Providing clear multilateral rules, enhancing global trade by measures such as the abolition of export subsidies in agriculture and putting in place mechanisms which limit the ability of countries to resort to the retrograde step of protectionism will make a strong contribution to economic recovery and growth, including increased employment. The trend towards a more market-friendly EU agriculture policy presents opportunities for more constructive bilateral engagement, as is reflected in the brochure on agricultural reform (PDF) (http://www.dfat.gov.au/publications/advancing_agriculture/advancing_agriculture.pdf) which DFAT has produced for distribution in Europe.

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The 27 members of the EU as a bloc constitute Australia's largest foreign investor. At the end of 2010, EU foreign direct investment in Australia totalled A$131.6 billion - approximately 28% of Australia's total inwards foreign direct investment. The UK dominates EU foreign direct investment in Australia (accounting for 40% of the EU total). The Netherlands (24%), Germany (12%), and France (10%) are also significant investors. The EU accounted for A$102.7 billion of outwards Australian direct investment as at 31 December 2010. Our largest direct investments in Europe were in the United Kingdom (70% of Australian direct investment in the EU) and Germany (9%).

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Though the EU is already one of Australia's largest trade and investment partners there are opportunities to expand the trade and investment relationship, particularly in continental Europe. With its abundant natural resources, Australia is well placed to be a reliable and efficient supplier of energy to Europe for many years to come. Europe is now a major market for Australian wine and for medicines. The EU services market, particularly in the education and tourism sectors, is a major market for Australian service providers. Product niches are being found in the food and beverage industries. For assistance with market access and trading with the EU, see the Austrade country profiles (http://www.austrade.gov.au/Country/default.aspx) for the various member states.

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Last Updated: February 2012

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