Australia’s potential free trade deal with Europe has reached deadlock, with our trade minister, Senator Don Farrell, travelling to Brussels this week to negotiate. Even without an FTA, the EU is Australia’s third-largest trading partner, worth $97 billion in two-way trade in the past financial year. Europe is picking on Australia’s use of terms for our cheeses and grapes, but the real sticking point is their protectionism.
The European Union, which heavily subsidises its agricultural sectors, is resisting opening up its markets to Australian producers at a level Australia says is commercially meaningful. France and Ireland are particularly sensitive to this. As a result of Brexit, Ireland will face competition from Australia in the UK, its primary market, which will eventually allow unlimited imports of Australian beef under a post-Brexit trade agreement.
Australia wants greater trade access for beef, lamb, sugar, cheese and rice exports into a market with almost 250 million people. And Europe needs access to Australia’s critical minerals. Both sides are looking to diversify their economies away from dependencies on China. Australia does not want to rely on a single market again, as we had done with China in recent years.
While Australia can still sell critical minerals – required for the ‘green transition’ and to make technological goods – an EU free trade agreement would lessen foreign investment screening requirements and encourage European investment in the sector.
In return, Europe is saying it wants Australian producers to give up the use of terms such as prosecco, mozzarella, feta and parmesan – foods first produced and named in European countries under its system of Geographical Indicators – restricting the use of those names to products originating from specific regions. But its protectionism remains the real snag.
Ahead of his trip, Senator Farrell flagged he was prepared to extend negotiations on the deal into the second half of the year if needed. Now, after two days of negotiations, both sides have failed to reach a compromise and it looks like they will reconvene next month.
As we reported last month, Australia is not prepared to complete a free trade agreement with the EU ‘just for the sake of it.’
After his meeting with French President Macron on the sidelines of the NATO meeting yesterday PM Mr Albanese said . “[…] we’ll continue to argue the case for a free trade agreement in the interests of both Australia and Europe, but we won’t just sign up to a deal for the sake of it. What we want is a good deal for Australia and we’ll continue to do that.”
Nationals leader David Littleproud said he was not disappointed Australia did not reach a deal. “It’s got to be the right deal for us … and we’re also very concerned about this push by the EU to impose their production systems on Australia. We’re in a different continent and they want to remove much of our herbicides and pesticides and fertilisers, and think they have better animal welfare standards than ours. It’s important the government holds firm and gets the best deal for Australian agriculture, and if it’s not there they should walk away.”
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