Authorities to accelerate Australia-EU free trade as agri sector calls for limited concessions

24 Apr 2023 --- Copa-Cogeca is urging to “level the playing field” in the Australia-EU trade agreement which is entering into another stage of negotiations. Authorities on both sides should seek a balanced outcome regarding trade concessions to protect producers, already facing a barrage of high costs, the impact of geopolitical tensions and pressure from the forthcoming EU Green Deal.

Australia and EU delegations have been working on a deal since May 2018.

The EU is Australia’s second-biggest trade partner and bilateral trade of goods amounted to €48 billion (US$52.54 billion) in 2017, according to the European Commission. An impact assessment revealed that trade in goods and services between the two partners could increase by around a third if a deal is struck.

Sensitive sectors
Sugar, beef and sheep are highlighted as sectors “overly exposed to international trade” and under increased pressure domestically.

Low and non-alcoholic NPD is expanding almost three times faster than the general wine category.“The EU is exposed to a doubling of volumes effectively, of these same commodities entering the EU-UK market following Brexit as the UK pursues its own deals with other countries. Hence, as a general principle, neither of these sensitive sectors can accept more concessions given to third-country partners in the context of trade negotiations,” notes Copa-Cogeca.

European sugar producers have struggled in recent years due to low prices and increased competition with cheap sugar from countries like India. Nonetheless, according to the UN Food and Agriculture Organization, sugar prices, which were relatively unaffected by inflation in 2022, started soaring this year and are now at their highest level since October 2016.

Protected denominations
In the current round of negotiations, the EU is expected to hold talks with Australia over its efforts to protect its distinctive regional EU food and drink products from imitations in Australia. 

Protecting geographical indications is one of the cores of the future agreement, according to the EC.

The most heated topic of debate will be over prosecco, a growing market valued at around US$205 million per year in Australia in 2021 – compared to US$60 million in 2017, according to the Australian Grape&Wine association.

While international sales are 5% of the Australian prosecco sales, they are growing 32% per year and are a significant point of contention in negotiations with the EU.

The debate is around prosecco being a grape variety or an Italian region. 

“The evidence speaks for itself. Prosecco has been recognized as the name of a grape for centuries, but not as a geographical indication (GI). Protecting the term as a geographical indication is a cynical attempt to avoid competition from Australian wine producers,” says Mark Davison, Professor of Law at the Australian Monash University, who finished a five-year research project on the topic last week.

Low and non-alcoholic NPD is expanding almost three times faster than the general wine category after the start of the COVID-19 pandemic, according to Innova Market Insights.Global sugar prices are at their highest level since October 2016.

Give and take
The EC explains that the deal will show a shared commitment to labor rights and environmental protection (including climate change).

“Of course, a trade negotiation is a give and take exercise, but it must lead to a balanced outcome for the agriculture sector. It is key that the agreement with Australia considers the cumulative impact, but also provides the opportunity to tackle outstanding sanitary and phytosanitary measures (SPS) issues, avoid market disturbance, make important progress on the recognition of GIs, while also leading to concrete market access for the EU’s products as well,” explains Copa-Cogeca.

“Furthermore, with the additional sustainability requirements being placed on our farmers and agri-cooperatives with the EU’s Green Deal agenda, ensuring reciprocity of norms as well as a level playing field is necessary. It is an expectation that this agreement should feature an ambitious Sustainable Food Systems Chapter, such as the one previously concluded with New Zealand,” the agri cooperatives conclude.

The EU and New Zealand brokered a trade agreement in July 2022. 

By Marc Cervera