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Trade talks between Australia and the EU were halted on Tuesday after Australian minister Don Farrell cut short a visit to Brussels without resolving a dispute over meat quotas.
Farrell told EU negotiators that he had to consult his cabinet before he could compromise further on ambitions for more Australian beef, lamb, sugar and dairy to be allowed into the EU’s protected market.
Negotiations will continue, before Farrell holds meetings with his EU counterparts in August. “We will continue constructive discussions with the ultimate aim of reaching an agreement,” Farrell said.
The two sides had hoped to strike a deal during the current trip.
Canberra wants to diversify its economy away from reliance on a hostile China while Brussels is keen for better access to Australia’s vast mineral resources, vital to renewable energy industries and the green transition.
Trade commissioner Valdis Dombrovskis has prioritised the Australia agreement after struggling to conclude deals with developing countries because of the EU’s insistence on high environmental and labour standards.
Miriam Garcia Ferrer, European Commission spokeswoman for trade, said it regretted the breakdown. “We made progress, but more work is required to address key outstanding issues. Our respective teams will continue to work on bridging remaining gaps.”
The agreement “between two like-minded partners is important and will unlock many opportunities for our businesses and farmers”.
Still, question marks remain over how much beef and sheep meat from Australia’s vast ranches should enter the EU tariff-free. The EU increased its initial offer of an annual beef quota of 24,000 tonnes, but the new number and quotas on sheep meat fell far short of what Farrell could accept.
Farrell has noted in the past that current restrictions mean each European can only eat an Australian steak once every 40 years. At present, Australia has a guaranteed quota of 3,389 tonnes of beef that it can export to Europe annually. Even this limited amount falls under a tariff of 20 per cent.
EU officials say the UK’s deal with Australia, which came into force in May, has complicated matters. The UK will eliminate all tariffs and quotas on Australian meat over the next 10 years.
Irish and French farmers fear losing market share in the UK as a result and are not willing to allow a big increase in imports from Australia.
Speaking in an impromptu press briefing in a Brussels park, Farrell said: “We’ve made it very clear right from the start that we won’t simply accept any agreement. The agreement, from the Australian point of view, has to achieve meaningful agricultural access to European markets.”
There are also outstanding disputes on the continued use of EU-protected names, such as feta and prosecco, in Australia, and the pricing of energy and raw materials. Brussels wants a commitment from Canberra that it will not charge EU customers more than what domestic buyers pay.
Australian ministers are wary of disappointing farmers and food producers ahead of a sensitive referendum this year on giving its indigenous communities a greater say in running the country.
Garcia Ferrer added: “We rely on our Australian partners to work with us to get this over the line soon. Our door remains open.”