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The EU and Australia did not reach a trade deal

ЕС и Австралия не постигнаха търговско споразумение

A free trade deal between the European Union and Australia, which has been in the works since 2018, will not happen anytime soon after the last attempt to get things done collapsed in dramatic fashion.

Teams from the EU and Australia met in Osaka, Japan to hold a new round of talks on the sidelines of the G7 ministerial meeting. The talks were expected to be final and lead to bridging the remaining gaps and achieving temporary agreement at the political level.

According to senior EU officials, even before the two sides sat down at the table, Don Farrell, Australia's trade and tourism minister, had set out new demands to further expand market access for Australian farmers.

Farrell's last-minute demands, communicated to Valdis Dombrovskis, the European Commission's vice-president in charge of trade relations, were seen by the European side as a "complete undoing of the progress" made in recent months and prompted the abrupt cancellation of the talks.

For his part, Don Farrell said his job as trade minister was to negotiate the best deal for Australia to protect its producers, businesses, workers and consumers.

"I came to Osaka with the intention of finalizing the free trade agreement with the European Union. Unfortunately, we have not been able to make progress," was his laconic comment.

While Dombrovskis and Farrell left the door open to continued talks for some time in the future, the political cards are stacked against them: the EU will soon go into campaign mode ahead of June's European Parliament elections, while Australians are due to head to the polls in mid- 2025

EU and Australia often refer to each other as "like-minded and partners" who share a system of liberal democracy and an open market economy, with total trade in goods estimated at €56.4 billion in 2022. Achieving a free trade agreement has long been a common goal to strengthen bilateral relations.

But since the process was officially launched in 2018, the pace of discussions has been very slow and full of ups and downs. The war between Russia and Ukraine has given new impetus as the two countries have worked closely together to impose sanctions on the Kremlin, cap Russian oil prices and diversify energy suppliers. This opened the way for trade rapprochement, raising hopes that the long-running endeavor could be concluded by the end of the year.

Although the European and Australian versions differ on who is to blame, they point to two identical factors behind the failure of the negotiations: agricultural exports and geographical indications.

According to Dombrovskis, the proposed free trade agreement would provide "commercially significant" market access for Australian agricultural products such as beef, sheep, sugar and dairy products. The entry of these goods into the single market the bloc has traditionally been subject to high tariffs because of their potentially disruptive effect on European farmers, who tend to reject any kind of foreign competition.

The European Commission has come up with a proposal to reduce those tariffs and create market access worth 1 billion Australian dollars (about 600 million euros) each year, senior EU officials said, speaking on condition of anonymity.

The proposal was designed to be economically and politically sustainable for both countries. But then, EU officials said, Farrell surprised negotiators with new demands for greater market access that were fundamentally inconsistent with the Commission's proposal, particularly on beef and sheepmeat.

In an interview with Sky News, Australia's Agriculture Minister Murray Watt disputed the European claims, saying they were "absolutely false".

"The offer that Don Farrell had and put on the table was exactly what we have been discussing with the EU for the last three months. Unfortunately, what has happened is that the EU has barely walked away from a deal that was acceptable just three months ago."

"The last thing we were prepared to do was sell out Australian farmers for the sake of a possible deal with the EU," he concluded.

"I regret that we were not able to successfully conclude the bilateral negotiations. To move forward, we need more realistic expectations and a balanced approach that fully respects the viability of European farmers and the sustainability of our food system," Commissioner Wojciechowski said on social media.

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