Euro-vision: Could Australia join the European Union? One key minister is open to it

When Donald Trump announced his so-called Liberation Day tariffs on just about every country on earth, while excepting Russia, of course, I asked an eminent economist how bad the damage would be. Warwick McKibbin told me that it certainly wouldn’t be helpful because it’d increase global inflation. Which everyone except Trump seemed to understand.

But it wouldn’t be calamitous for the world economy, said McKibbin, a former Reserve Bank board member and ANU professor.

Why not? Because Trump’s domineering share of global news noise is not matched by America’s material heft in the world economy. The US accounted for only 15 per cent of global trade; the other 85 per cent would simply restructure itself around the US, McKibbin predicted.

He was right. It’s happening. For example, Canada, suffering brutal trade hostility from Trump, is pressing the European Union for much deeper economic ties.

Prime Minister Mark Carney is building Canada’s post-American future. Perhaps even creating a new category of EU membership with Canada as its first “associate member”. The Europeans are open to the idea, according to a weekend report by The Wall Street Journal .

Australia concluded a hard-won trade deal with the EU just six months ago. It’s so fresh that it hasn’t yet been ratified. And might yet be struck down by the Coalition in a parliamentary vote.

The deal is not a champagne-class deal. Use of that regional name would remain restricted to French producers and not every trade barrier would be dismantled. But it is prosecco-level deal. Australian makers would become the only ones in the world outside Italy to be permitted to use the sweet sparkling name. And it would abolish tariffs on 98 per cent of categories of Australian exports to the EU. For Australian shoppers, European chocolate, wine and cars would become cheaper if the deal is ratified.

Yet Canberra is following Carney’s progress closely. And is open to pursuing something similar with the EU. “We are on the same page,” Australia’s trade minister, Don Farrell, tells me. “We will take great interest in what Carney does.”

The Canadian leader “has instructed his special envoy to Europe to scope out the most ambitious possibilities short of full membership in the EU or its common market”, the WSJ reported.

“Wouldn’t it be lovely if Canada was the 28th state of the European Union rather than the 51st state of the United States?” posed Finnish President Alexander Stubb, an interlocutor of Carney’s.

The Journal reported that the Canadian-EU talks so far encompass trade, investment, defence, scientific collaboration, joint satellite networks, preferential visa-free access and new fibre-optic underwater cables to connect Canada with the EU’s 27 member nations.

Farrell says he’s open to all possibilities in potential new arrangements with the EU, with the exception of extra fibre-optic cables; it’d be a stretch.

“The world,” says Farrell, “is dividing into protectionists and free traders. It’s indisputable that Australian prosperity of the last 50 years has all been about our engagement with the world.”

Europe, like Canada, is attempting to develop greater independence from the US.