Blog

The Australia EU Free Trade Agreement Hits a Roadblock; What Now?

 

In a surprising turn of events the much-anticipated free trade agreement negotiations between Australia and the European Union have reached a standstill. With both sides pointing fingers, the question that arises is; What now?

 

Background

Australia has been actively pursuing an ambitious FTA with the EU aiming to boost exports, economic growth and job opportunities. The core objective was to establish a shared commitment to open markets, free trade and a rules-based global trading system. The potential of this agreement was immense considering that the EU represents around 450 million middle-income consumers and boasts a GDP of US$15 trillion.

 

Where did things go wrong?

Several issues emerged during the negotiation process;

  1. Agricultural Exports: A major point of contention revolved around Australia’s request for increased access for its exporters to the EU market. The EUs reluctance to grant access for products such as beef, sheep meat, dairy and sugar became an obstacle.
  2. Intellectual Property: The protection of geographical indications for products like parmesan, feta and prosecco, was another sticking point. Australia emphasised the importance of retaining the use of these names for its producers.
  3. Lack of Compromise: Both parties accused each other of inflexibility. While Australia was ready for some concessions, they felt that the EU remained largely unchanged from their initial offer.

 

What could this mean for key objectives?

The suspension of negotiations between Australia and the EU has raised concerns about achieving Australia’s objectives in the FTA. Here’s an explanation of what might happen to some key objectives;

  1. Trade in Goods: Australia’s aim to secure improved market access for its agricultural and industrial products may face challenges. The EU’s hesitance to provide comprehensive access for Australian agricultural goods means the country may need to look elsewhere to diversify its export markets or reconsider its terms.
  2. Rules of Origin & Customs: While Australia seeks rules that reflect modern production processes and facilitate trade, the stalemate could slow down progress in establishing clear customs and trade facilitation measures that benefit both parties.
  3. Technical Barriers to Trade: Efforts to ensure that standards and regulations don’t create unnecessary obstacles might be put on hold. The aim to achieve convergence on international standards could be delayed. Efforts to enhance digital trade and establish a secure online environment might also be affected.
  4. Intellectual Property Rights: One of the major points of contention, the protection of geographical indications, will remain unresolved. This could affect Australian producers who use names that the EU wishes to protect if flexibility is required to progress.
  5. Trade in Services & Investment: Australia’s objectives to expand its services market, especially in education, financial and professional services, might face roadblocks in market accessibility.
  6. Dispute Settlement & Regulatory Cooperation: Establishing a transparent and efficient dispute settlement mechanism will be challenging without an active negotiation process. Efforts to foster greater regulatory cooperation might also face setbacks.

Putting negotiations on hold not only delays the advantages of the FTA but also leaves Australia’s objectives uncertain. The country might have to reevaluate its strategies and priorities in areas that were controversial during the negotiations.

 

What Now?

Given the current impasse, the future of the FTA remains uncertain. However, several factors could influence the next steps:

  1. Elections: With the European elections scheduled next year and the Australian federal election due by 2025, it’s possible that the political landscape could influence the resumption of negotiations.
  2. Economic Security: The EU’s concerns about economic security, especially after Russia’s invasion of Ukraine, could reignite interest in securing access to Australia’s critical minerals.
  3. Public Interest & Transparency: Both parties have a strong commitment to transparency and public interest. The Australian government’s consultative approach, involving business, civil society, and individuals, could be instrumental in rekindling discussions.
  4. Stakeholder Input: Continuous feedback and input from stakeholders, including industry and civil society, can provide fresh perspectives and potential solutions to contentious issues.

Although the failure of the FTA negotiations is undoubtedly a setback it does not mean that everything is over. Both parties have a lot to gain if they can reach an agreement. With time diplomacy and a commitment, to benefits, there is still hope that the FTA could eventually come into effect.

 

Author: Mitchell Folkard, Head of International Policy at Professionals in International Trade (PIT). Mitchell is a seasoned expert in global trade, specialising in global trade operations, regulations and strategic development. With an extensive background in the trade industry, Mitchell has provided consulting services guiding businesses in navigating the complex waters of international commerce. His experience extends to leading digital trade platforms within the industry, where he has spearheaded innovations and streamlined operations to facilitate smoother international transactions.