Australia and EU agree sweeping trade deal in face of global uncertainty

 

Ursula von der Leyen has inked an EU-Australia trade deal with Anthony Albanese (Image: Getty Images)

Australia and the European Union have agreed a sweeping free trade deal after eight years of negotiations.

 Australia's prime minister and the visiting President of the European Commission, Ursula von der Leyen, referred to the agreement signed in Canberra as a mutual "win-win." It is estimated to be worth approximately A$10 billion, or $7 billion, or £5.2 billion. She described the deal as having a focus on "collective resilience" in a world that is "deeply changing".

 The two sides agreed to increase cooperation in the areas of critical minerals and defense, in addition to removing nearly all trade tariffs. European carmakers welcomed the deal but farmers in both Europe and Australia were unhappy at export quotas agreed for Australian beef and lamb.

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In the upcoming ten years, the amount of Australian beef that can enter the EU is expected to more than tenfold, but Australian farmers wanted more, while European farmers opposed increases. Tuesday's accord in Canberra is the latest trade deal struck by Brussels as it tries to diversify its global trading relationships, given the fast changing geopolitical landscape and unpredictability of US President Donald Trump.

 After nearly two decades of on-and-off negotiations, the EU and India announced a historic trade agreement in January. Another major trade deal the EU struck with the Mercosur bloc of South American countries was recently derailed in the European Parliament, amid criticism from the farming lobby.

 "Today, we are telling a significant story to a world that is going through profound change. A world where great powers are using tariffs as leverage and supply chains as vulnerabilities to be exploited," von der Leyen told a news conference in Canberra - a nod to Trump's use of tariffs and China's control of the critical minerals market.

 She added that "trust matters more than transactions", noting Australia and the EU had a "unique relationship" that was "built for the long term".

What's in the deal? Beef, wine and defence

Australian agricultural products like wine, fruit and vegetables, olive oil, seafood, the majority of dairy products, and wheat and barley will be exempt from nearly all EU tariffs under the agreement. This will mean a saving of about A$37m for local wine producers and exporters, the government said.

 For Australian consumers, the deal will mean cheaper European wine, spirits, biscuits, chocolates and pasta.

 The deal means Italian-style sparkling wine made in Australia can still be sold as prosecco domestically, though the name will be phased out over 10 years for exports.

 Australian producers can also continue to use names including parmesan though feta will be subject to "grandfathering and lengthy phase-out periods".

 The issue of food naming rights is sensitive in both Europe and Australia and Australia is now the only country outside of Italy to have secured EU permission to use the name prosecco.

 Referring to the matter, Australian Prime Minister Anthony Albanese noted the country's modern history was built on migrants.

 "That's why there is a connection with Europe, whether Greeks come here and make feta, Italians come here and make parmesan, or people from Eastern Europe make kransky sausages," The trade agreement was a "perfect balance", von der Leyen said, as it will be easier for Australians to export to the EU while more EU-made goods will be available in Australia.

 But Andrew McDonald from Meat and Livestock Australia said the deal on meat exports was not a fair outcome for Australian farmers who had wanted an annual quota of at least 50,000 tonnes - the deal allows for about 30,000 tonnes, up from 3,389.

 He stated, "This is without a doubt a missed opportunity for Australia's red meat exporters, processors, and producers." The agreement was criticized by the European agriculture lobby group Copa-Cogeca for adding pressure to a sector that, according to them, had already been impacted by previous trade agreements. "The cumulative impact of successive trade agreements makes these concessions unacceptable," it said in a statement.

 The new security and defence partnership will see greater co-operation in the defence industry, counter-terrorism, space and maritime security.

 Von der Leyen also announced greater co-operation on several critical minerals projects between Australia and the EU, including lithium and tungsten.

Source: BBC