Australia opens free trade talks with EU as Trump tariffs rock global commerce

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Australian Financial Review | 18 June 2018

Australia opens free trade talks with EU as Trump tariffs rock global commerce

by Andrew Tillett

As tit-for-tat tariff hikes between the US and China threaten to spiral out of control, Australia and the European Union will strike a blow for free trade, formally opening negotiations on a pact in Canberra on Monday.

Trade Minister Steven Ciobo and EU Trade Commissioner Cecilia Malmstrom will launch talks on a deal that can potentially add $15 billion to both economies.

"The European Union is one of the best opportunities for Australian businesses and is a key part of the Turnbull government’s ambitious trade agenda," Mr Ciobo said. "We will now have agreements, or negotiations under way, with all of our top 10 trading partners."

With European farmers traditionally enjoying high levels of protection, agriculture is one area Australian negotiators are focusing on, with beef, sheep meat, sugar, cheese and rice just some of the commodities constrained by EU tariff quotas.

Mr Ciobo also wants to lock in access for service providers, particularly education, finance and professional services.

The Turnbull government has highlighted a number of potential "win-win" tariff reductions that can end discrimination against Australian exports and lead to lower prices for European and global customers.

Half a billion consumers

Among them are almond exports, which are worth $223 million to Australian growers but are hit with a 5.6 per cent tariff, silicon exports that are worth $49 million but face a 5.5 per cent tariff and electronic cabling used in aerospace and telecommunications, which is worth $25 million but has a 3.7 per cent tariff.

Striking a trade deal can open the door to a market of half a billion consumers with a gross domestic product of $US17.3 trillion ($23.23 trillion), and Mr Ciobo says it can be one of Australia’s biggest FTAs.

"Australia produces clean, green and premium products," he said. "From Ferrari parts to premium Australian produce for fine dining, Australian exports are in demand in Europe.

"This agreement will make them more competitive. That means our farmers can sell more produce, our professionals can provide more services and our manufacturers can make and sell more goods.

"I want to see more Australian premium produce on plates from Prague to Paris, more Australian know-how helping build infrastructure from Italy to Belgium, and more Australian services providers making their mark across Europe in finance, engineering and education.

’Opportunities for high-technology starts-ups’

"Establishing a framework for the mutual recognition of professional licensing and qualifications will improve the ease of doing business across the EU market. We will also explore rules and initiatives to support the digital economy, innovation and increase opportunities for high-technology starts-ups."

The start of negotiations comes as a trade war between China and the US escalates. Following US President Donald Trump’s imposition of $US50 billion of tariffs on Chinese products, Beijing retaliated with its own tariffs on US exports, in particular agricultural commodities. There are fears Mr Trump will announce a further round of tariff hikes in response.

The breakdown in trade talks with China follows Mr Trump slapping tariffs on steel and aluminium imports from allies Canada, Mexico and the European Union.

Mr Ciobo is warning the outbreak of protectionism is a threat to global economic growth.

"While countries are building barriers, we are knocking them down to create new opportunities for Australian businesses," he said.

"The launch of these negotiations signals the shared commitment between Australia and the European Union to more open markets, free trade and the rules-based global trading system."

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