Canberra showdown to settle EU concerns over feta, meat, farming

Hopes of Australia and the European Union striking a landmark trade deal have received a boost, with Europe’s trade chief to head to Canberra next month for talks with senior government officials to try to seal a pact Labor is pitching as an antidote to Donald Trump’s tariff spree.

There is renewed optimism about the free trade negotiations after momentum appeared to fade earlier this year as European negotiators indicated they were instead focused on dealing with the fallout from US tariffs and striking a deal with the South American common market.

Following two years of deadlock over a rift to do with farm exports, Prime Minister Anthony Albanese used last week’s United Nations General Assembly in New York to lobby French President Emmanuel Macron and other European leaders over the trade deal after France and Ireland objected to market access for Australian beef and lamb.

During a meeting with Spanish Prime Minister Pedro Sánchez in London on Friday, Albanese appeared confident a European free trade deal worth $156 billion was in sight, telling him he felt “really hopeful” about the pact and that negotiations were progressing “quite well”.

“I spoke to President [Macron] about some of the issues that were there as well,” he said, referring to a meeting in New York with the French leader.

Trade Minister Don Farrell met EU Trade Commissioner Maros Sefcovic in Kuala Lumpur last week and invited him to Australia for meetings in late October, marking the first negotiations on Australian shores. Negotiators have been clearing obstacles behind the scenes in preparation for renewed talks over the deal that could supercharge commerce worth $156 billion a year.

“In the past, they said they’d like to come, but they haven’t. Well, it looks like now they will come,” Farrell said in an interview.

“I take that as a very, very positive sign the Europeans are serious about trying to achieve an agreement, and so are we.

“Both sides understand just how important it is to send a message in the current environment to the rest of the world. There are countries that do believe in free and fair trade.”

On the key sticking points around farming, Farrell said: “We have an agricultural sector that’s looking to greater access into the European market. They have an agricultural sector that thinks there’s already too much access into the European market, so we have to find a compromise.”

“If I had an answer right now – problem solved. But the fact that we’re looking at it with fresh eyes, so to speak, is very positive.”

The moves in recent days have cleared the ground for talks over Australia’s bid to increase beef and lamb exports to Europe, while the EU is seeking better access for carmakers so they can sell in Australia on the same terms as their Chinese rivals.

There is no agreement yet on Europe’s longstanding demand to protect regional food and wine exports so that prosecco and Parma ham, for instance, could only be sold under those names if they came from Italy rather than Australia.

The deal could remove barriers between Australia and Europe at a time when US President Donald Trump is imposing tariffs that curb trade and raise prices for consumers, including 15 per cent tariffs on most EU exports and 10 per cent on most products from Australia.

With major economies worried about their exposure to the American market, national leaders have stepped up talks on free trade elsewhere – such as meetings between Canada and Mexico, Japan and India and a recent meeting between the EU and Asian ministers. Australia put renewed focus on trade with China when the prime minister spent nearly a week in the Asian superpower in July.

As a bloc, the EU was Australia’s third-biggest trading partner in 2024. Two-way trade was worth $110 billion, while the EU was Australia’s second-largest source of foreign investment last year.

The EU has a population of 445 million people and remains one of the few major markets with which Australia shares no free trade deal. Economic modelling commissioned by the EU found European exports to Australia would increase by 33 per cent with a trade pact.

European carmakers such as Audi, BMW, Mercedes-Benz and Volkswagen incur tariffs of 5 per cent on their exports because of the lack of a free trade agreement with Australia, putting them at a disadvantage compared with Chinese cars that are free of tariffs under a trade deal with China. Vehicles from Japan, South Korea and Thailand are also free of tariffs.

Sefcovic issued a bullish statement on trade deals with Asian countries when he spoke to reporters at the Malaysian meeting, although he did not name Australia.

Australia and the EU suspended their trade talks in October 2023 after a sharp disagreement on agricultural trade, given concerns about competition from Australian beef and lamb for farmers in countries including Ireland and France.

There is wariness on both sides about offering any concessions unless there is confidence that the problems from the past two years can be overcome, according to trade officials who spoke on condition they not be named.

Farrell and Sefcovic met in Paris in June and this led each side to work on a “stocktake” of their positions, setting up a pathway to a potential agreement in 2026 if progress is made over the next few months.

European Commission President Ursula von der Leyen used a meeting with Albanese in Rome in May to make the case for stronger ties. Albanese has warned against restricting the use of product names like prosecco and feta by arguing that migrants had come from Europe and brought their cultures with them.

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