The potential for deep integration between Australia and the European Union: what do the trade statistics tell us?

Abstract

This paper aims to identify evidence of any potential costs of preferential liberalisation of trade in goods between the EU and Australia, notably trade diversion; move beyond Australia's exports of commodities to the EU to look for evidence of competitiveness in high-value-added manufactures; and identify evidence of the potential for deep integration that might be promoted by a formal FTA using the Sussex Framework for analysing economic integration and TradeSift software. It concludes that costs of trade Diversion are unlikely to be large; that there is the potential for a mutual recognition agreement to encourage deep integration in areas of high value added manufactures; but that it might require a formal free trade agreement to give the institutional framework to allow mutual recognition to work.