Australia’s free trade deal with EU collapses as both sides accuse the other of being unwilling to compromise
Negotiations for a free trade agreement between the European Union and Australia have collapsed, with the Albanese government saying a deal is now unlikely in this term of parliament.
The Australian trade minister, Don Farrell, held talks with EU representatives on the sidelines of the G7 ministerial meeting in Osaka, Japan, on Sunday but said afterwards: “Unfortunately we’ve not been able to make progress.”
The Australian government had said it would only do a deal if it was in the national interest, with one of its key demands being to secure much greater access for Australia’s agricultural exporters to sell to EU consumers.
Australia and the EU each accused the other of being unwilling to compromise. The Australian agriculture minister, Murray Watt, said the EU had not offered enough access for beef, sheep, dairy and sugar exporters.
Watt said Australia had been prepared to make some concessions, but said the EU had “not budged significantly from the offer it put forward three months ago”.
“They’ve come back now with essentially the same offer, with a couple of tweaks,” Watt told the ABC’s Radio National on Monday.
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Watt said the negotiations had been going on since 2018 because the EU took “a very strong stand” and was “a very protectionist market when it comes to agriculture”.
Australian sources who did not wish to be named said Farrell “could not have been clearer that if the Europeans came to Osaka with the same deal he rejected in July, he would give them the same response”.
But a spokesperson for the EU executive told Politico: “The European Commission regrets the lack of progress made during talks in Osaka today.
“Our negotiating teams made good progress in recent weeks, including in the days leading up to the Osaka meeting. There was optimism that a deal was within reach.
“However, ministerial discussions in Osaka did not see the same progress. The Australian side re-tabled agricultural demands that did not reflect recent negotiations and the process between senior officials.”
The spokesperson added: “The European Commission stands ready to continue negotiations.”
Technically, the Australian government has not closed the door to further talks, but officials believe it is now getting too close to the European parliament elections – due in June 2024 – for a deal to be possible in the short term.
“The EU elections will be next year,” Watt said. “I can’t see them being in a position to resume negotiations before that. We’ve made clear to them that we think it’s unlikely to occur within this current term of the Australian parliament as well.”
The next Australian federal election is due by 2025. Reflecting the gloomy assessment, Farrell said he was “hopeful” of signing a mutually beneficial deal with the EU “one day”.
The collapse of the deal is a blow to Australia’s “trade diversification” strategy, with ministers seeing the EU as “a huge market of 450 million, mostly middle-income consumers”.
As a bloc, the EU already is Australia’s third largest two-way trading partner and second largest source of foreign investment, according to the Department of Foreign Affairs and Trade.
The Albanese government has repeatedly urged exporters to spread their risk across a range of markets despite the thaw in relations with China, which remains Australia’s largest trading partner.
But the government had political cover to walk away from the EU deal, amid concerns from Australian agricultural exporters that the proposed quotas for tariff-free access were far too restrictive.
One leading group said last week that Australian farmers were “fearful of being sold out at the 11th hour”.
“The message from Australian farmers is clear and united: if it’s a dud deal, keep the signing pen in your pocket,” the then-president of the National Farmers’ Federation, Fiona Simson, said last week.
The opposition’s trade spokesperson, Kevin Hogan, said the collapse of the negotiations was “unfortunate” but he backed the government’s position.
“The offer for agriculture, particularly beef, sheep and sugar, was not good enough,” Hogan said on Monday.
“The EU offer on geographical indicators would have also been too restrictive, particularly for products like parmesan, feta and prosecco.”
The EU’s push to protect such names was one of several sticking points in the negotiations, with the Albanese government repeatedly emphasising that continued use of the names was important to Australian producers.
The collapse of the talks is also a setback for the EU, which is concerned about economic security following Russia’s invasion of Ukraine and is known to be interested in access to Australian critical minerals.
In a state of the union address last month, the European Commission president, Ursula von der Leyen, vowed to “continue to drive open and fair trade” and said she aimed to complete an FTA with Australia “by the end of this year”.