The anticipated free trade agreement (FTA) between the European Union and Australia has reached an impasse, with the political clout of red meat producers proving to be a significant stumbling block.
Preparations for the FTA were well underway, with Australia ready to adopt geographical indications (GI) and overhaul its tax on luxury imported cars, which has been a point of contention for European car manufacturers.
Moreover, an agreement was on the horizon that promised to facilitate EU access to Australia’s critical raw materials, potentially boosting European investments in Australia’s raw materials sector.
Optimism was high among negotiators on both sides ahead of the final meeting between European Commission trade and agriculture commissioners, Valdis Dombrovskis and Janusz Wojciechowski, and Australia’s Trade Minister Don Farrell. However, the talks unexpectedly unravelled before they could commence in Osaka on the sidelines of the G7 meeting.
The accounts of the breakdown vary. EU officials, taken aback by the failure, claim that Minister Farrell reasserted market access demands from the previous December, which would have undone nearly a year of negotiations.
On the other hand, Australian officials refute this, stating that their requests were consistent with prior discussions.
From Australia’s perspective, the EU commissioners presented an unsatisfactory final market access offer for Australian beef and sheep meat, leading to the breakdown of talks.
Ultimately, the crux of the matter lies in the agricultural interests of both blocs. The EU Commission, under pressure from the French and Irish governments, could not concede further, especially in light of the recent agrarian backlash against greener agricultural policies and a rightward shift in several elections.
Similarly, the Australian government, following a significant referendum loss on indigenous rights, was not in a position to compromise further.
The failure of the FTA over agricultural interests is a reminder of the significant role this sector plays in trade negotiations. It also raises questions about the future of such industries, which may need to downsize to meet global climate goals.
The next opportunity for EU-Australian trade negotiations could be after the European elections in 2024 and the Australian elections in 2025.
