Australia ends free trade deal with EU

The negotiations between the European Union and Australia for a free trade agreement have broken down, and the Australian government has stated that a deal is now unlikely to be reached during this term of parliament.

After holding discussions with EU representatives on Sunday in Osaka, Japan, on the margins of the G7 ministerial meeting, the Australian trade minister, Don Farrell, stated after the event, “Unfortunately, we’ve not been able to make progress.”

The Australian government had previously stated that it would only enter into an agreement if it was in the nation’s best interest. One of the government’s primary criteria was to ensure that agricultural exporters from Australia would have far wider access to sell their products to customers in the EU.

Both the EU and Australia leveled accusations that the other was hesitant to reach a settlement. According to Murray Watt, Australia’s Minister of Agriculture, the European Union has not provided sufficient market access for Australian exports of cattle, sheep, dairy products, and sugar.

Watt stated that Australia was willing to make certain accommodations, but that the EU had “not significantly budged 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 said on Monday.

Watt stated that the negotiations had been going on since 2018 due to the fact that the EU had taken “a very strong stand” and was “a very protectionist market when it comes to agriculture.”

According to Australian sources who did not desire to be identified, 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”

However, a representative for the EU executive told Politico that “The European Commission regrets the lack of progress made during today’s talks in Osaka.”

“During the most recent weeks, both of our negotiating teams made significant headway, notably in the days coming up to the summit in Osaka. There was reason to believe that a compromise might be found.

The ministerial meetings that took place in Osaka, on the other hand, did not see the same breakthrough. Agriculture-related demands from the Australian side were reintroduced, despite the fact that they did not reflect current negotiations or the process amongst top officials.

The spokeswoman continued, saying that “The European Commission stands ready to continue negotiations.”

Officials of the Australian government believe that it is now becoming too near to the elections for the European parliament, which are scheduled to take place in June 2024, for a settlement to be conceivable in the short term. However, technically speaking, the Australian government has not closed the door to further talks.

Watt stated that the elections for the EU will take place the next year. It’s hard for me to imagine them being able to pick up the bargaining process before that point. We have made it perfectly clear to them that we do not believe it will take place within the remaining timeframe of the present session of the Australian parliament.

The next election for the federal government of Australia will be held in 2025. Farrell, reflecting the pessimistic opinion, stated that he was “hopeful” of completing an agreement with the EU “one day” that would be mutually advantageous to both parties.

The failure of the pact is a setback for Australia’s “trade diversification” plan, which saw the EU as “a huge market of 450 million, mostly middle-income consumers.” The EU was seen as a potential market for middle-income consumers.

According to Foreign Affairs & Trade department, the European Union is already Australia’s third largest two-way trading partner as well as its second largest source of foreign investment. This information comes from the EU as a bloc.

Despite the thawing of relations with China, which continues to be Australia’s most important trading partner, the Australian government has frequently pushed the country’s exporters to diversify their market exposure in order to reduce their overall risk.

However, the government had political cover to back out of the deal with the EU, since agricultural exporters in Australia voiced worries that the proposed quotas for duty-free access were far too restricted.

The previous week, a prominent organization expressed concern that Australian farmers “fear 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,” Fiona Simson, who was the then-president of the National Farmers’ Federation, said last week. “The message from Australian farmers is clear and united,”

Kevin Hogan, who is the trade spokesperson for the opposition, stated that it was “unfortunate” that the negotiations broke down, but he supported the position taken by the government.

On Monday, Hogan stated that the offer for agriculture, notably beef, sheep, and sugar, was insufficient. “The offer was not good enough,”

The EU’s offer on geographical markers would have been overly limited as well, in particular for items such as parmesan, feta, and prosecco.

The demand by the EU to protect such names was one of several sources of contention throughout the discussions. The Australian government made it clear on multiple occasions that maintaining the usage of the names was critical to the country’s agricultural sector.

The failure of the talks is also a loss for the European Union, which is worried about the state of the economy in the wake of Russia’s invasion of Ukraine and is rumored to be interested in gaining access to essential minerals found in Australia.

Ursula von der Leyen, chairperson of the European Commission, gave a state of the union address last month in which she vowed to “continue to drive open and fair trade” and stated that she hoped to finalize a free trade agreement (FTA) with Australia “by the end of this year.”

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