European Union Trade ministers agreed on May 22 to begin free trade talks with Australia and New Zealand, a move that is aimed at demonstrating the bloc’s ability to form new alliances while trade tensions continue to grow with the administration of US President Donald J. Trump.
The EU’s Foreign Affairs Council for Trade granted the European Commission the right to negotiate on behalf of the 28 EU Member States, who will seek ambitious and comprehensive agreements with Australia and New Zealand, as the bloc’s big producers look forward to opening up European markets to farm produce from the two South Pacific nations.
According to EU forecasts, its exports to Australia and New Zealand could increase by a third if Brussels’ successfully agrees to new comprehensive trade deals with the Australian government in Canberra and New Zealand’s current administration in the capital, Wellington.
The EU is Australia’s third largest trading partner with annual bilateral trade amounting to more than €47.7 billion in 2017 and a positive trade balance of more than €21 billion on the EU side. Europe’s exports to Australia are dominated by predominantly manufactured goods, while Australia’s main exports to the EU include mineral commodities and agricultural products.
The EU’s bilateral annual trade with New Zealand in 2017 amounting to more than €8.7 billion, making the EU Wellington’s second largest trading partner after Australia. New Zealand’s exports to Europe include mainly agricultural products, while the EU’s exports to New Zealand are focused on manufactured and industrial goods.
For the EU, trade with New Zealand resulted in a positive trade balance of €1.9 billion in 2017. European companies hold more than €10 billion in foreign direct investment in New Zealand.
Since Trump’s move to freeze the EU-US trade relations by announcing stiff tariffs on aluminium and steel, the EU has shifted its focus to other lucrative open markets where trade accords are pending.
European Commission President Jean-Claude Juncker suggested last September that the EU should conclude its free trade agreements with Australia and New Zealand by 2019 in order to give Brussels an advanage over the UK in its negotiations with two key British Commonwealth Members, as London will not be able to negotiate independent trade deals until it leaves the EU in March 2019.