Australia’s Free Trade Negotiations With EU Break Down

‘I think it will be quite some time before any Australian government or any EU leadership is able to negotiate a deal,’ said an Australian minister.

European flags fly at the EU headquarters in Brussels, on Sept. 9, 2022. John Thys/AFP via Getty Images

Negotiations over a free trade deal between Australia and the European Union (EU) have broken down again as the two sides failed to overcome hurdles.

Australian Trade Minister Don Farrell, who’s currently visiting Japan for a G7 meeting, held sideline talks with his European counterparts during the two-day event in an effort to ink a last-minute deal before the bloc enters its election cycle in 2024.

However, the talks didn’t go well, and the trade minister pulled out of negotiations, causing the deal to remain in limbo.

“My job as Australia’s trade minister is to get the best deal that we can for our producers, our businesses, our workers, and our consumers,” Mr. Farrell said in a statement.

“Unfortunately, we have not been able to make progress. Negotiations will continue, and I am hopeful that one day, we will sign a deal that benefits both Australia and our European friends.”

Why Negotiations Collapsed

In an interview with ABC Radio, Agriculture Minister Murray Watt explained that the EU didn’t make significant changes to the offer that it made during previous stalled rounds of negotiations.

“Three months ago, negotiations didn’t proceed because the EU wasn’t offering enough, particularly when it comes to agriculture,” he said.

“And they’ve come back now with essentially the same offer with a couple of tweaks there.”

Australian Trade Minister Don Farrell attends a press conference in Beijing on May 12, 2023. Florence Lo/Pool/AFP via Getty Images

The agriculture minister said that this happened even though Australia was willing to make some concessions.

“I’m not sure whether it was about the impending election cycle that’s coming in the EU or the political influence of their farmer lobbies,” he said.

“But we just weren’t able to see the EU increase its offer for things like beef, sheep, dairy, sugar, enough for us to think that this deal was in Australia’s national interest.”

One of the major hurdles to the free trade agreement was the issue of geographical indicators—a type of trademark that establishes intellectual property rights for specific products whose qualities are linked to the production region.

The EU has demanded that Australia extend geographical indication protection to hundreds of product names for the deal to go through.

However, Australia has been pushing back the EU’s request because agreeing to it would ban local producers from using protected names such as Parmesan, feta, or prosecco for their products, potentially imposing substantial costs and drawbacks on Australian businesses.

While there were disappointments after negotiations broke down, the Australian government had prepared for a negative outcome.

In June, the federal government said it was willing to walk away from the free trade agreement if the deal wasn’t in the country’s national interest.

At the time, Mr. Farrell declared that Australia wouldn’t back down on the issue of geographical indications.

“If the Europeans play too hard, then we won’t have an agreement,” he said.

“It’s not that we don’t have other options, but ... that’s a big, relatively wealthy community, so it’s an important one to get.”

Negotiations Unlikely to Resume Soon

In the face of the collapsed negotiations, Mr. Watt doesn’t expect to see the trade deal finalised before the current term of federal parliament ends in 2025.

“The EU next year will go into its election cycle. It’s always much harder for countries and regions to negotiate these sorts of trade agreements on the eve of elections,” he said.

“So, I think it will be quite some time before any Australian government or any EU leadership is able to negotiate a deal. And that’s a bit of a shame for both Australia and the EU.”

Opposition trade spokesman Kevin Hogan regretted to see the trade deal break down again but agreed with walking away from a deal that didn’t benefit Australian farmers.

“The offer for agriculture, particularly beef, sheep, and sugar, was not good enough,” he said.

“The EU offer on geographical indicators would have also been too restrictive, particularly for products like Parmesan, feta, and prosecco.”

Currently, the EU is Australia’s third-largest trading partner after China and Japan and has a longstanding trade surplus with Australia.

In 2022, the total goods trade between Australia and the EU reached about $90.5 billion (US$60.8 billion), with a surplus of $33 billion for the EU.

While a successful free trade agreement with the EU would allow Australian producers to have greater access to a market of 450 million people, there have been concerns that a rushed deal could bring massive disadvantages to many local industries.