EU-Australia Free Trade Agreement Could Benefit Croatian Companies

By 17 December 2019

As Poslovni Dnevnik/Ana Blaskovic writes on the 16th of December, 2019, in addition to traditional topics such as customs and market access, this should be a new generation agreement as it will also address regulatory issues, barriers and more with a significant impact on trade and investment. Just how much could the EU-Australia free trade agreement benefit Croatian companies?

The Free Trade Agreement, which has plagued the European Union and Australia for the past eighteen months, and could take a year to open, also opens up the opportunity for Croatian companies to step into the large, and hitherto poorly explored, Australian market, which has been continuously recording positive growth rates for the last thirty years. As Croatia formally takes over the rotation of the EU presidency in a mere fifteen days, an Australian mission was staying in Zagreb last week, talking with the Croatian Government and various business representatives about the new agreement.

''The importance of a this agreement which provides business security is that Australian companies, much like others, go wherever the opportunity is. The competition is huge, if opportunities exist and trade is not facilitated, then they will go and look for other potential opportunities elsewhere, where it may be easier, where it's easier to negotiate, where the market may be familiar,'' said Australia's Ambassador to Croatia, Elizabeth Petrovic.

''Almost every Croatian company that has built a successful export model could find a good market for their products in Australia, whether they're in agriculture, construction, logistics, or the pharmaceutical industry. European companies are present in all these sectors in Australia and there are certainly plenty of opportunities for Croatian companies, but many have not explored this market, and many Australian companies have not done so in Croatia either,'' says Jason Collins, Director of the European Australian Business Council in Sydney.

He adds that Australia has very few barriers to business, such as customs, as a result of the reforms, but also says that there are more companies investing in the EU and they're keen to discuss opportunities to come and invest in Croatia.

Despite a diaspora of about 200,000 expatriates from Croatia and their descendants, of the 55 billion dollar annual exchange between Australia and the EU, Croatia contributes a negligible 23.8 million dollars, and Croatian companies such as Podravka and Mlinar remain exceptions. A free trade agreement could open the door to stronger ties, which, with five rounds of talks in a year and a half, is extremely fast for Brussels.

The reasons for this are to be sought in the US-China trade war, which are leading trading partners to both sides in these negotiations.

"The EU's and Australia's main trading partners are going through some tough times, trade is insecure, it can't be taken for granted anymore based on rules," says Juliana Nam of the Australian and EU Mission to Australia.

Australia has concluded eleven trade agreements with countries in the Asia-Pacific over the last fifteen years and today 68 percent of trade is facilitated through preferential arrangements. If it successfully completes negotiations with the EU, that figure will reach 80 percent. The negotiations, however, are entering a phase where more difficult issues are raised, such as EU barriers to agricultural products, customs on EU industrial goods that directly affect the European automotive industry, and also the issue of protection of geographical origin.

"These are difficult areas for us, but we're pragmatic and we want the negotiations to move forward," Nam stated.

It is worth noting that of the total trade value of the EU and Australia, almost half is made up by services. Although Australia is relatively small in population of just 25 million, it is the thirteenth largest economy in the world and this coule represent an exciting opportunity for Croatian companies wanting to broaden their horizons.

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