At the last minute, the European Commission has postponed negotiations with Australia on a new free trade agreement. The talks were scheduled for this month but have now been pushed back.
The official reason for the delay is that EU diplomats need more time to prepare, but reportedly the Europeans are angry that the Australians secretly agreed to establish a new American-Australian-British military defense alliance for the Indo-Pacific region.
As a result, Australia canceled a major naval order for the construction of dozens of new submarines (valued at 56 billion euros) with the French Naval shipyard. The government in Paris is furious about this. France has publicly stated that it no longer trusts the Australian government. It is questioning whether the trade agreement can proceed.
The free trade talks between the European Union and Australia began in 2018. The negotiations focus on dismantling tariffs, but also on services, investments, and competition issues. Australia has mainly offensive interests regarding agriculture, specifically in fruit, meat, and dairy products.
The EU is currently Australia’s third-largest trading partner. In 2020, trade between the two economies was valued at 36 billion euros in goods and 26 billion euros in services. The EU mainly exports finished products, such as cars, and imports mineral resources and agricultural products from Australia. The country is the third largest supplier of beef and ranks eighth for grains.
Due to the vulnerability of European agriculture to excessive Australian imports of meat and dairy, France has been skeptical of the negotiations for several years. French President Emmanuel Macron previously said that French agriculture threatens to collapse under the accumulation of various trade agreements.
“The trade round of the free trade agreement has been postponed by one month until November,” said an EU official in Canberra, casting doubt on the future of the far-reaching pact.
Australian Trade Minister Dan Tehan indicated he intends to meet next week with EU Trade Commissioner Valdis Dombrovskis to discuss the next round of negotiations.