France a hurdle but EU trade deal ‘close’

Assistant Trade Minister Tim Ayres says a free trade deal with the EU is on the verge of agreement, and will secure tens of billions for Australian businesses.

Tim Ayres says Australia is close to a free trade deal with the EU.

Assistant Trade Minister Tim Ayres says a free-trade deal with the European Union is “pretty close”, with a “lot of momentum behind it”, despite some sticking points in regards to French farmers and agriculture.

Just days after Australia celebrated the May 31 implementation of a free-trade deal with the UK – with two-way goods trade worth $10bn, and services worth more than $11bn – the focus is now firmly across the Channel to bring about an EU deal.

Asked if Australia might try to quarantine agriculture from the EU deal to get it across the line, Senator Ayres said “no one is contemplating that’’.

But Australia may find a fierce political roadblock in one of the most powerful EU members as French President Emmanuel Macron is trying to shore up domestic support and stem the flow of French farmers swinging support behind the National Rally party of Marine Le Pen.

Unlike the willingness of the UK to capitulate, despite the concerns of British beef farmers, in order to show the nation a post-Brexit trade win – and, importantly, open the door for the UK to enter the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, worth £1.8bn ($3.38bn) in the long run to the UK economy – French protectionism has long been a thorn in EU free-trade deals.

An EU free-trade proposal with the Mercosur countries – Brazil, Argentina, Paraguay and Uruguay – agreed in principle four years ago after 20 years of talks, has still not been ratified because the deal opens up the EU market to 99,000 tonnes of beef per year at preferential tariff of 7.5 per cent.

A recent EU-New Zealand free-trade deal was only agreed after New Zealand backed down to reduce its exports to limited quantities in regards to dairy produce, beef and sheep meat, ethanol and sweet corn.

Senator Ayres said: “The most difficult issues, particularly around agriculture, traditionally are right at the end and it’s going to require … more work, but that’s what we expect. We want to push hard to get an agreement, but it’s not an agreement at any costs and that’s the case (for) our European counterparts too, so it’s going to be hard work at the end.”

He said Australia was strategically important to the EU because of critical minerals, mining and digital resources, so “while some of the agricultural issues are challenging, they are not insurmountable”.

Senator Ayres visited an Australian wine importer and the Smithfield market in London to talk to importers before attending the two-day Commonwealth trade ministers meeting in London where deepening trade connections between the 56 Commonwealth countries was on the agenda.

He said there would be fast progress in the Australia-UK trade relationship because of the big opportunities with tariff-free access to more than 99 per cent of goods, and in agricultural areas, with some phasing arrangements to allow prime Australian beef and lamb into British shops.

At the trade ministers meeting Senator Ayres will reinforce Australia’s credentials in the region on climate and energy, ahead of the next World Trade Organisation round in February.