The EU and Australia will attempt to close the trade deal in the margins of the G7 Trade Ministers meeting in Japan this weekend.

The EU market for beef and lamb are major stumbling blocks to the deal being wrapped up.

Australian negotiators, fresh from their very successful negotiation with the UK, have found the EU much more defensive in giving access for beef and lamb; but the reality for Irish and EU beef and sheep producers is that, when the deal is concluded, competition from Australia will increase.

Australian ambitions

The only question is: by how much? Australian negotiators enter the negotiations with a flurry of statements from across farmer and industry bodies, warning against signing a deal for the sake of a deal.

The National Farmers Federation (NFF) president, Fiona Simson, warned Trade Minister Don Farrell against signing a “dud deal”, saying that “the current proposal would lock Aussie farmers in at a disadvantage for the next half century”, putting Australia at a disadvantage compared with Canada, New Zealand and South America.

Simson described the current offer as like “being asked to sit at the table and watch the EU have its cake and eat it too”.

A similar type of comment was made by Andrew McDonald, chair of the Australia-EU Red Meat Market Access Taskforce, who said that Australia’s access to the EU market “has been largely unaltered for nearly 50 years; but to make matters worse, it has actually been eroded while we’ve been negotiating the FTA.”

This is referring to the deals agreed with Mercosur in 2019 and New Zealand in 2022.

Volumes

Level of access for beef and sheep meat is officially known only to the negotiators, but the Brussels-based trade publication Agra Facts is reporting that market access for beef could be increased to 40,000t from 24,000t.

Given the strong position adopted by the Australian industry, it is clear that they envisage Australia’s position to be on par with that of Canada, who – through the Comprehensive Economic and Trade Agreement (CETA) – secured an access quota for 35,000t of fresh beef and 15,000t frozen beef; 50,000t overall.

However, Canada isn’t a significant sheep meat exporter, so that wasn’t part of the CETA deal, whereas, Australia will be looking to build on the current 5,851t post-Brexit quota – it was 19,186t when the UK was still a member of the EU. On their departure, the quota was divided proportionately to how it had been used.

CETA target

Canada secured generous access to the EU market for beef, but hasn’t made any meaningful increase in its beef sales to the EU.

The main reason for this is the unwillingness of Canadian farmers and the wider industry to forsake the use of growth-promoting hormones, which are illegal in the EU.

The EU are an outlier in banning their use and, so far, the UK has also continued this policy – much to the frustration of the Canadian meat industry.

The Canadian Cattle Association, Canadian Meat Council, and National Cattle Feeders’ Association have launched a campaign to try and persuade the government not to ratify UK membership of the Comprehensive Progressive Agreement for Trans-Pacific Partnership (CPTPP) because the UK continue to exclude Canadian hormone-produced beef.

End game

The scene was set for a deal announcement back in the summer when the Australian prime minister was on a visit to Europe.

This time, the key political event is the meeting of the G7 trade ministers in Osaka, Japan, at the end of this week.

If the negotiators come to a deal or are down to the final points of agreement, it will be handed over to the Australian Trade Minister Don Farrell and his EU counterpart, Trade Commissioner Valdis Dombrovskis, to give it the final seal of approval.

The stated position of the Australian meat and farming industry is that they should walk from a deal that doesn’t meet their expectations, leaving the pressure on the EU to concede more than they might have expected to.

With war continuing in Ukraine and conflict raging in the Middle East, there will be a political desire for global allies to display a united front, and a trade deal between the EU and Australia would fit this narrative, as well as being of general economic benefit, excluding EU beef and sheep producers.

The ingredients are in place for a deal, and the sides are very close, so this could be the time it could finally get across the line.