The Albanese government has shelved plans for a free trade agreement with the European Union and will begin official talks in the new year on a deal with the United Arab Emirates.

Trade Minister Don Farrell said the UAE, which needs to import just about everything and is already Australia’s largest trade partner in the Middle East, offered lucrative opportunities for exporters of goods and services, especially agricultural and industrial products which are subject to tariffs of up to 5 per cent.