“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.”
Prime Minister Anthony Albanese with French President Emmanuel Macron at the United Nations last week.Credit: Dominic Lorrimer
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.
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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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