Economic Policy

Albanese falls short on both trade and NATO

July 13, 2023

Jacquelin Magnay and Tricia Rivera

The Australian

Thursday 13 July 2023

French President Emmanuel Macron has been at the centre of dual stumbling blocks for Australia at the NATO summit in Vilnius this week: the collapse of a free-trade deal with the EU and NATO’s failed expansion into the Indo-Pacific.

Anthony Albanese emerged from two days of talking with various world leaders with plenty of photo souvenirs, but not the prized signature that he wanted on the EU free-trade deal. 

European Commission chief Ursula von der Leyen had also come to Vilnius expecting to complete the trade agreement with Mr Albanese, but instead has expressed “deep disappointment” to her team in Brussels that Australia has walked away.

“Democracies have to stand together to deepen their friendship, their partnership but also strengthen their economic ties,’’ she said, referring to the need for the EU to diversify supply chains.

Mr Albanese told her on Wednesday that the free-trade deal issues were “complex and required a lot of hard work”. He said, however, that Australia would continue to work towards finalising such an agreement.

This week, EU negotiators had believed that their offer of tight quotas and limits of imports to grass-fed beef – described as “derisory” by someone who has seen the offer – would have been sufficient for Australia to accept.

A counteroffer was just tinkering, insiders said.

Trade Minister Don Farrell said from Brussels: “Australia’s point of view was to achieve meaningful agricultural access to European markets.” He then reinforced Australia’s ace card, which was to help Europe decarbonise.

“We want to be good partners with the Europeans on critical minerals,’’ he said.

“Australia intends to be a renewable superpower. We have all of the critical minerals that you are going to need to build the electric engines of the future to decarbonise our world. We want to work with the Europeans on that.”

EU sources say that Australia should have been cognisant of the political impediments that constrain EU leaders like Mr Macron from agreeing to what Australia wants: open market access for beef, sheep meat, dairy and sugar.

With Mr Macron facing rebellion from farmers, and the persistent thorn in his political side from Marine Le Pen, he cannot give way and allow any movement by the EU negotiators, even with Australia’s sweetener of providing easy access to valuable minerals like lithium.

European leaders are increasingly nervous and feel they have given up as much as they can regarding foreign agricultural imports in a previous deal with Canada, having seen Mark Rutte’s coalition government in the Netherlands’s collapse under pressure from the populist Farmer-Citizen Movement.

Mr Macron had already scuppered the NATO plans to open an office in Japan, telling the NATO administration that they needed to focus on their European remit, rather than interfere in the Indo-Pacific, an area where the French have considerable influence.

Xavier Chatel, Mr Macron’s adviser on strategic affairs, said the geographic scope of the alliance was the North Atlantic, and France opposed the concept of expansion on principle. He said Mr Macron had “very clearly told” NATO secretary-general Jens Stoltenberg that France did not support creating a regional office in the Indo-Pacific.

When the French leader met with Mr Albanese in a tiny room on the sideline of the summit which barely accommodated the delegation teams, he appeared annoyed. He wouldn’t allow his blandest of opening remarks to be recorded, unlike other leaders.

Mr Albanese too was a little flustered, fiddling with his jacket. Significantly, neither side gave details of their talks, apart from some cultural references to World War II commemorations.

None of the French decisions has anything to do with the cancelled $40bn Australian submarine contract, but there remains ­little political capital from the French side to relinquish their fierce agricultural protections, nor their influence in the Indo-Pacific, in any way, shape or form.

Agriculture Minister Murray Watt said he made “no apologies” for fighting for an Australian-EU trade agreement in the national interest. “Obviously, it’s disappointing that at this stage the EU has not been prepared to make a good enough offer to Australia under this trade agreement. I’ve been speaking to Don Farrell in the middle of the night while he’s been overseas to stay updated and give my views, and we remain hopeful that over the coming weeks and months we can still try to strike a deal with the EU,” Senator Watt told Sky News.

Opposition home affairs spokesman James Paterson says the government failed in delivering an Australia-EU trade deal despite promising it would do so within its first year in power, but added: “We certainly should not agree to a substandard deal with the EU if the offer on the table is not good enough.”

National Farmers’ Federation president Fiona Simson said the EU’s offer to Australia would not have benefited the nation “in any way, shape or form”.

“This is an agreement … I know I’ve personally been involved since its inception in 2018. So we’ve been working very hard on this. And certainly it offers a lot of opportunities for both the EU and Australia,” she told Sky News on Wednesday. “But at some point, it has to come to the pointy end. We do want the deal to absolutely ­succeed.”

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