Australia disappoints the EU on trade and metals (but not the US)
Negotiations between the European Union and Australia for a free trade agreement fail: there is no agreement on agricultural trade. Brussels wanted to secure access to Australia's critical minerals. Canberra, meanwhile, is courting the United States…
Australia has rejected European Union proposals for a free trade deal. The failure of the negotiations, mainly due to disagreements over agricultural trade, will now make it unlikely that an agreement will be reached in the years to come, also considering the 2024 European elections.
This is bad news for Brussels, which through this pact hoped to gain greater access to the Australian minerals sector critical for the energy and digital transitions.
The Australian government was applauded by the main agricultural industry organization for refusing to sign an agreement considered disadvantageous for farmers, given the limited access they would have obtained – or so Canberra thinks – to the European agricultural market.
THE EUROPEAN AND THE AUSTRALIAN VERSION
The two sides had been negotiating a free trade agreement since 2018. Australia aimed to increase its agricultural exports to the Union by removing tariffs; Europe, on the other hand, was targeting raw materials for clean energy and digital (mainly lithium, cobalt and rare earths).
The Australian Trade Minister, Don Farrell, did not rule out the possibility of a trade deal in the future: “negotiations will continue,” he said in Osaka, Japan, after a meeting of G7 trade ministers, “and I hope that one day we will be able to sign an agreement that is favorable to both Australia and our European friends."
Agriculture Minister Murray Watt, however, was harsher, according to whom the European Union had only slightly modified its negotiating proposal to respond to Australian requests. “We haven't seen the European Union increase its supply enough for things like beef and sheep, dairy and sugar to make us think this deal was in Australia's national interest.”
The European Commissioner for Trade, Valdis Dombrovskis, said the Union had presented a "significant" proposal to Australia, but taking into account "the interests of the European agricultural sector". Australian producers instead believe that the terms of the free trade agreement would have put them at a competitive disadvantage compared to New Zealand and Canada , for example, which have gained greater access to the EU market.
MEANWHILE, AUSTRALIA AGREES WITH THE UNITED STATES
Just days before the collapse of trade negotiations between Europeans and Australians, Australia's Resources Minister Madeleine King told Bloomberg that the US Export-Import Bank could be the means to increase American investment in critical Australian minerals. This public bank – added King – could allow us to “reduce the risk of some of these projects [on critical minerals, ed. ] and therefore to attract the private investment that we really want to take hold”.
In other words, the US government would act as insurance against the volatility of Australian lithium or rare earth projects, thereby incentivizing the private sector to invest.
THE BIDEN-ALBANIAN MEETING AND THE DEVELOPMENT OF AN ANTI-CHINESE SUPPLY CHAIN
Australian Prime Minister Anthony Albanese recently visited Washington, where he met with President Joe Biden. The two also discussed critical minerals, of which Australia can be an important alternative supplier to China, the nation that currently dominates supply chains for these materials.
Given its grip on supply chains , Beijing could hinder the nascent Western industry of extracting and refining critical metals by flooding the market with raw materials: thus causing prices to collapse, reducing profitability – and threatening its very survival – of Australian or US projects.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/australia-unione-europea-fallimento-accordo-libero-scambio/ on Sat, 04 Nov 2023 06:52:55 +0000.