From the CAP to the Eurozone Crisis: To what extent do bilateral disputes still

negatively influence EU-Australia relations?

Edward YenckenPhD Candidate

School of Social and Political SciencesThe University of Melbourne

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OutlinePresentation based on two cases studies of PhD thesis:

The Common Agricultural Policy (CAP)The Eurozone Crisis

Seeks to examine the way that these two issues have impacted on relations between Australia and the EU

Based on first of two sets of interviews with officialsWill argue firstly that Australia has historically focused on

bilateral disputes (the CAP), at expense of establishing a more broad-based and constructive relationship

Identification of common norms and values however has contributed to a belief that Australia’s interests are best served by seeking a more broad-based relationship with the EU (no longer focus on issues of consternation)

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The CAP as the basis for conflictCAP implemented in 1962, immediate impact

was to restrict the access of third countries such as Australia to the EU agricultural market

Menzies government campaigned strongly against the CAP and impact on Australian exports to the UK in 1960s (should UK join EU)

Accession of the UK to the EU in 1973 seen as having potentially severe repercussions for agricultural exports

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Fears Become Reality?By late 1970s CAP ‘contributing importantly to a

decline in Australia’s export income from some agricultural exports, notably sugar’ (Burnett, 1983, p. 1)Did occur concurrently with significant expansion of

Australian trade in Asia-Pacific regionFormer Prime Minister Malcolm Fraser, described the

CAP ‘as a protectionist monster’ (cited in Renouf, 1983)Criticism reflected how Australian fears about the CAP

were seen as coming to fruitionCAP by end of 1970s becomes all-encompassing issue

dominating bilateral relations

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1958-59 1965-66 1979-80Beef & Veal 71 31 2

Dairy Products & Eggs

69 58 Negligible

Sugar 48 47 Zer0Wheat 48 12 Zero

Share of total value of Australian exports (per cent) to EC (9)

Source: Burnett, 1983

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The Persistence of the CAPContinues to dominate relationship in the 1980sA.D. Brown (1983) ‘so long as agricultural

surpluses are exported by the EEC as a result of subsidised production… there will be difficulties between Australia and the Community’

EU recognition “The so-called misconceptions of the past, were grounded in substance. The EU was a pretty protectionist bloc on the CAP in the 1960s, 70s and 80s, Australia was rightly against it” (Council Official, 2012)

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Impact of Australian CriticismDistracted from broader relationship Ward (2002), overemphasis on the CAP

contributed to ‘missed opportunities’ in non-agricultural trade sectors and the ‘enhancement of cultural and social exchange’

‘Collective amnesia’ (Groom 1989) Australia unaware of important EU developments (single market)

EU becomes Australia’s largest trading partner by early 1990s but criticism continued

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Nicholson, The Australian, 2002

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CAP Reforms and ImpactMacSharry and GATT reforms and positive effectSubsequent CAP reforms impact (Agenda 2000, 2003,

Towards 2020)Australian perceptions begin to shift Reforms seen as not only reducing restrictions on

Australian access to the EU market but improving perceptions of the EU as an open and important international market (DFAT, 1996)

DG Trade Official (2012)“There is certainly a recognition on the Australian side that the EU has moved quite a long way, even if from an Australian perspective we are still not doing things in exactly the same way that perhaps they would see as being close enough to their own policy decisions”

Source: European Commission, 2013

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‘Multilateralising’ or ‘Bypassing’ the CAP?Moving discussions to the WTO, isolating or

‘multilateralising’ the issue supported by both Australia and the EU

Separating from rest of relationshipShared view that WTO ‘right place’ to discuss the

issue CAP no longer defines relations (Australian

Official, 2012)More generally, EU and Australia share common

objectives in relation to the WTO and current Doha round (DG Trade Official, 2012)

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Changing perceptionsEvolution of Australian approach, recognition of

common interests (trade and other policy sectors) “The problem we had with Australia was not that

there were a number of disputes; the problem is the perception of these disputes as an indicator of the level of relations” (EEAS Official, 2012)

“Progress has definitely been made. The Australian Ambassador told me his predecessors were spending 20-30 per cent of their time on agriculture but that he was only spending 5 per cent of his time on agricultural issues” (DG Agriculture Official, 2012)

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Future of the CAP in Bilateral Relations“I think there is an elephant in the room… when it gets

to agriculture for both sides” (DG Trade Official, 2012)FTA negotiations (should they commence). “If ever

there is a Free Trade Agreement then agriculture will become more of an active issue” (EP Official, 2012)

Contrast however, ‘agriculture as being more of a facilitator’ not an ‘impediment’ in the future. “The area of research is an area where we do have commonalities and where we will be cooperating much more than now” (DG Agriculture Official, 2012)

Broad-based relationship (interactions over more areas)

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Between the CAP and the Eurozone CrisisImprovement of political relations under Howard government

(despite public rhetoric) and acceleration under Rudd/Gillard governments

Significant number of bilateral agreements (Joint Declaration, Agenda for Cooperation, PF Agreement, Framework Agreement)

Emphasis on common interests and values, tangible representation of improved bilateral relations

Increased number of high level Australian and EU visits Relationship improving substantially ‘behind the scenes’ over

past two decades EEAS Official (2012)– Downer and Patten relationship

“The current Australian ambassador (Brendan Nelson) has been extremely helpful and effective beyond anything that I have seen before” (EEAS Official, 2012)

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Eurozone Crisis – Early InteractionsEarly Australian government belief that

financial crisis was a global issuesFormer Foreign Minister Stephen Smith

noted ‘the need for a global response to the international financial crisis’ (2012)No specific country or region blamed

Several EU Officials note problems in the global economy as having started in US Instability in the EU connected with GFC

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Australian Criticism EmergesWayne Swan “I accept that they face a European

crisis, for Europeans to solve… but Europe must also recognise that there is a weight of responsibility to all other economies of the world to do this” (cited in Uren & Norington, 2011)

Council Official (on Swan criticism) “It was a bit of an irritant and not that helpful” (2012)

Commission President Jose Barroso “frankly, we are not coming here to receive lessons in terms of democracy or in terms of how to handle the economy” (cited in Wintour, Traynor, & Smith, 2012)

17Lobbecke, The Australian, 2012

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Negative Influence of Australian MediaWidely observed as a problem amongst officials

interviewed (EU and Australian to lesser extent) Contributing to negative perceptions of the EU and

importance of bilateral relationship“Australia, just like many other parts of the world,

has negative perceptions of the crisis but this has been exacerbated by inaccurate Australian press coverage of the issue” (EEAS Official, 2012)

Criticism of handling of the crisis being used to sustain longstanding anti-EU prejudices in Australia Sheridan and McCrann, The Australian

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Need to Change Perceptions“Public perceptions need to be addressed so

as to reflect the strength of bilateral agreements”(EEAS Official, 2012)

“The battle of the Australian Mission in Brussels is to get a different image of the EU through to the Australian public” (Council Official, 2012)

Extent to which this is possible?No Australian journalists in Brussels (noted by

a number of EU officials)

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Impact of Criticism on Bilateral Relationship Australian official, major impact is likely to be

internally within the EU (an ‘EU confidence issue’) but ‘unknown variable’ in the bilateral relationship (2012)

‘On the ground’ it has not ‘practical’ impact. It is more problematic at the political level (EEAS Official, 2012)

More impact in future? “Singling out the Europeans last year, we might have

been willing to take the stick, but this year, I think as our political public begins to have a more mature sense of all this, there will be a greater sense of impatience regarding too much criticism” (EEAS Official, 2012)

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More Internally Focused?Australia in Asia-Pacific and the EU within Europe and

immediate region“I think at the moment it is quite normal and natural because

the Asia-Pacific is close to Australia and there is a similar situation in Europe with countries in the region” (MEP, 2012)

Potential for ignoring each other?“Australia has been more engaged in Asia and more engaged

with Europe at the same time. Australia’s engagement with Asia has reinforced the relationship with the EU” (DG Trade Official, 2012)

“The idea that we are focused on our part of the world and somehow not paying sufficient attention (to other issues) is out of date” (DG Trade Official, 2012)

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Recognition of Impact Council Official (2012) “The Australian

Mission, they are very much aware that what the papers say is not the whole truth and that we still, by far, have the largest economy in the world and we are still one of your largest trade partners”

Crisis has not distracted from bilateral relationship. Cooperation has in fact increased e.g. G20 (Australian Official, 2012)

Divergence between official cooperation and political rhetoric

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A Durable Bilateral Relationship?“Relationship is broad-based enough so as to mean

that one particular issue cannot have a significant impact” (Australian Official, 2012)

Just a political irritant?“It does have an impact but I don’t feel that it has an

impact that really changes the overall relationship” (DG Trade Official, 2012)

Crisis as facilitating further cooperation?“Crisis is forcing the EU to do more with less money,

meaning that closer cooperation with Australia is in its interests” (Australian Official, 2012)

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Beyond Bilateral Disputes?“As it is a controversial issue, the CAP will always

receive attention. It still consumes too much of EU budget” (Australian Official, 2012) Similar with Eurozone crisis?

Cooperation now extend to almost all areas, even trade and agricultural policy

Likely to be reflected in depth and breath of Framework Agreement

Limitations of Framework Agreement?“The real meter for trade negotiators is a Free Trade

Agreement but that isn’t on the table” (DG Trade Official, 2012)

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Shared Interests“We are a natural ally with Australia” and “we are on the

same side as Australia in almost all trade discussions” (Council Official, 2012)

“The relationship is smooth, you can have from time to time surprising issues or small hiccups”. Extent to which the ‘Australian file’ is perceived as relaxing (DG Trade Official, 2012)

Common norms and values as basis of relationship (no longer one dimensional)

“I used to say to my Australian colleagues if you were not on the other side of the world you could easily be an EU member state because of cultural, language, outlook on the economy, human rights issues etc. (EEAS Official, 2012)