Australia and EU fail to reach free trade deal

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Talks over a free trade agreement between Australia and the EU have foundered after the sides failed to reach a deal over the weekend, scuppering five years of negotiations.

The impasse, which arose on the sidelines of the G7 trade ministers’ meeting in Japan, means that a deal is unlikely until 2025, according to Australian officials, with EU parliamentary elections in June next year and a federal poll in Australia before or in 2025.

Don Farrell, Australia’s trade minister who met his EU counterpart Valdis Dombrovskis in Osaka, said the two sides had not made progress in the latest round of talks. Farrell said he remained “hopeful” that a deal would be struck “one day” to the mutual benefit of Australia and the EU.

Australia has said it is unhappy about EU demands to restrict the labelling of Australian feta cheese and prosecco, which are protected categories in the bloc, and has also complained that the bloc has not been prepared to open its market to tariff-free beef and sheep imports.

Murray Watt, Australia’s minister for agriculture, told national broadcaster ABC that the government had been prepared to compromise going into the Osaka talks, but that the EU took “a very strong stand” and the sides had not been able to strike an acceptable deal.

“It’s a very protectionist market when it comes to agriculture and they weren’t prepared to budge enough for it to be in our interests,” Watt said. 

Australia walked away from a proposed deal in July, arguing that it did not open up trade enough for the country’s agricultural products. Australian farmers have pressured Farrell in recent weeks not to sign what the former president of the National Farmers’ Federation Fiona Simson called a “dud deal” that could disadvantage the sector for decades to come. 

David Uren, a senior fellow at the ASPI think-tank, said the failure of talks was an indication of how hard it was to secure free trade agreements as countries around the world become increasingly protectionist.

“It augurs poorly,” he said, adding that the breakdown “suggests we have moved into a world where large industrialised powers are finding it harder to pursue free trade agreements in their constituencies”.

Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, said it was “disappointing” a deal had not been brokered but the body agreed with the Australian government that a “required standard for a successful trade agreement had not been reached”.

Australia struck a free trade agreement with the UK, the first in Britain’s post-Brexit economic strategy, that included tariff cuts to a range of goods on both sides.

Canberra has also worked towards reaching a deal with India and improving relations with China, its largest trading partner, following three years of trade tensions that saw Beijing impose tariffs on a range of Australian products including wine, barley and coal.

In the EU talks, Dombrovskis said Australia had gone back on previous commitments. “We had presented a commercially meaningful agricultural market access offer to Australia, while being mindful of the interests of the European agricultural sector,” he said, adding that Brussels “remains open to continue negotiations on an FTA that mutually benefit our consumers, businesses and agricultural sectors”.

The EU agreed a trade deal with New Zealand last year but agricultural and environmental demands have stymied progress with India and prevented final approval of a pact with the Mercosur bloc in South America that was signed in 2019.