Von der Leyen says Indo-Pacific tension highlights need for ties with Australia

Brussels: The President of the European Commission Ursula von der Leyen says rising tensions in the Indo-Pacific show why Australia and the European Union need to build stronger economic ties, one day after make-or-break trade talks failed to reach an agreement.

Speaking ahead of their bilateral meeting in Vilnius, Lithuania on the sidelines of the NATO summit, Prime Minister Anthony Albanese reassured von der Leyen that Australia wanted to negotiate a trade deal, after talks ended in another deadlock in Brussels on Tuesday.

European Commission President Ursula von der Leyen and Australian Prime Minister Anthony Albanese at NATO.Credit: Reuters

“I think it’s very important that we meet in these times because these are times where we see the shifting of the geopolitical landscape, not only the atrocious war that Russia unleashed against Ukraine in Europe but also rising tensions in the Indo-Pacific,” von der Leyen said.

“So these are times where democracies have to stand together and democracies have to stand together to deepen their friendship, their partnership, but also to strengthen their economic ties.

“It is important for us to have sound supply chains, to diversify to like-minded partners.”

Albanese dropped the tough talk about the trade deal he has so far used during his European trip and said economic links with the EU were important.

“I am a strong supporter of us being able to finalise a free trade agreement,” he said.

“These issues are complex and they require a lot of hard work and I appreciate the work that the European Union and Australia will continue to do to progress the finalisation of that agreement.”

Speaking after the talks ended, Trade Minister Don Farrell said Australia would walk away if a deal is not struck by the end of the year.

Australia wants the EU to grant it meaningful access to its agricultural markets and allow producers of foods like prosecco, Parmesan and feta to be able to sell them under those names.

Trade Minister Don Farrell (left) with European Commissioner for Trade Valdis Dombrovskis in Brussels last month.Credit: Twitter

But the European Union, which heavily subsidises its agricultural sectors, is resisting opening up its markets to Australian producers at a level Australia says is commercially meaningful. And it wants to protect the names of foods first produced and named in European countries under its system of Geographical Indicators.

Farrell, who broke his European holiday to dash to Brussels for the two days of talks, said he was still optimistic of making progress next month when the two sides have agreed to reconvene.

“We’re disappointed that we couldn’t finalise a new FTA with the Europeans today but we’ve agreed a process to continue the negotiations and I view that very positively,” he said in an interview.

“We’re narrowing down the number of issues in dispute between us, we’re getting closer on those outstanding issues but we’ve still got a way to go. Time will tell.

Trade Minister Don Farrell in Brussels on Tuesday, July 11, 2023. Credit: Latika Bourke

“I think there’s a desire on both sides to reach an agreement and the next few weeks will tell whether that’s possible or not.

“I’ve taken the trouble to come here, this is my third visit to Brussels over the last six months, I think we’ve demonstrated our bona fides about wanting to get a fair agreement for Australia and now we’ve got to finalise that process.

“We’ll know this year whether or not we’re capable or not or getting a result and I’m optimistic that we will.”

The EU’s trade spokeswoman Miriam Garcia Ferrer said Australia had wanted more time to consult internally.

“We note there were several issues on which the Australian side required further internal consultations,” Garcia Ferrer said.

“We rely on our Australian partners to work with us to get this over the line soon. Our door remains open.

“The EU side has made every effort to arrive at a balanced agreement that meets our mutual strategic interests, while also protecting the interests of our stakeholders.

“We regret it was not possible to conclude our talks with Australia this week. Our respective teams will continue to work on bridging remaining gaps.

Europe wants access to Australia’s critical minerals with both countries looking to diversify their economies away from dependencies on China.

“We want a diversified trading relationship, we never again want to be reliant on one single market,” Farrell said.

While Australia can still sell critical minerals – required for the green transition and to make technological goods – a trade agreement would lessen foreign investment screening requirements and encourage European investment in the sector.

“We are on the cusp of a golden age in terms of our critical minerals, there’s never been a time, probably since the gold rush, when our products have been so valuable,” Farrell said.

“Do we sell all of our products to the Americans? No, we’d like the Europeans to come in. We want to give them some advantages if they’re prepared to invest in our country.”

However, Europe is reluctant to allow competitors into its agricultural markets. France and Ireland are particularly sensitive.

Australian Prime Minister Anthony Albanese speak with NATO Secretary General Jens Stoltenberg, right during the NATO summit.Credit: AP

As a result of Brexit, Ireland will face competition from Australia in the UK, its primary market, which will eventually allow unlimited imports of Australian beef under a post-Brexit trade agreement.

Farrell said Europe could not expect Australia to be satisfied with the sort of deal it struck with New Zealand.

“At the moment, let’s take the beef quota and we only get access to one steak per European consumer every 50 years, that’s an unsustainable position for the Australian meat industry,” he said.

Political leaders to take up the baton

While trade officials continue to work out the details behind closed doors, the case will be taken up at the political level.

Albanese has already raised the matter with German Chancellor Olaf Scholz in Berlin and with French President Emmanuel Macron during their meeting on the sidelines of the NATO conference underway in Vilnius, Lithuania.

He said he had told Macron that Australia wanted a better deal on the amount of meat that could be sold to Europeans than was currently on offer.

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