Market Power and Misunderstandings: The Case of EU‐Australian Trade Diplomacy

Abstract

The article critically examines EU‐Australia relations through the negotiation of the 1994 and 2008 Agreements between Australia and the European Community on Trade in Wine. EU‐Australia relations are often characterised as defined by Australia's focus on the UK and the EU's agricultural policies. This article moves beyond these assumptions and analyses the negotiation of the wine trade agreements through three factors: the pattern of political institutions, power asymmetry and subjective utility of non‐agreement alternatives. It argues that perceptions, miscalculations, and misunderstanding have had an impact on how these factors shaped negotiation outcomes. These negotiations are an under‐studied case in the development of EU‐Australian relations, and are useful in understanding how the perceptions of negotiators shape outcomes in the EU's negotiations with Australia.