French vineyards won’t have to worry about cheaper Aussie merlots squeezing them off the shelves at Carrefour. Italian mozzarella makers won’t have to fret about southern hemisphere rivals. After years of talks, a bid to agree a free-trade deal between the EU and Australia has collapsed.
“I came to Osaka with the intention to finalise a free-trade agreement,” said the Australian trade minister Don Farrell. “Unfortunately we have not been able to make progress.”
There was just too wide a gulf between the two sides on agricultural exports and the EU was unwilling to lower the steep tariffs it puts on Australian food. There is little chance of talks reopening again. Australia and Europe will still trade with each other, but there will be cumbersome tariffs and quotas in the way.
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The contrast with the UK could hardly be more clear. After leaving the EU, we negotiated a free-trade deal with Australia fairly quickly, and it came into force in May this year. A few farmers and hardcore Remainers complained that we gave away too much. But the UK stopped trying to protect its farming industry in the 1840s. Cheaper Australian food and wine will be phased in over several years, which will help many families cope with the cost-of-living crisis. It was a win-win for both sides.
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Why the EU can’t do trade deals
The bigger point is that the EU is no longer able to do trade deals. An agreement with the Mercosur group – made up of Brazil, Argentina and a host of other South American countries – has been in the works for 20 years, but still hasn’t been signed off. A deal with the US, Europe’s largest trade partner, was put on hold indefinitely back in 2019. Even a deal with Morocco, eight miles from the EU’s mainland border, was frozen by the European Court last year. It managed to get a deal with tiny New Zealand over the line. But that is about it. Nothing else is on the horizon.
It is not hard to work out why. First, under French influence, and with the British out of the way, the EU is getting more and more protectionist. We can see that in the constant demands for huge industrial subsidies, for “secure supply chains”, and for making sure that domestic production is prioritised over any other consideration. An EU-Australia trade deal was meant to allow farmers greater access to European markets, in exchange for French and German firms having easier access to Australian minerals. Any deal involves compromises, but the EU is no longer willing to make any. Incapable of any sustained growth, the EU is shrinking all the time as a percentage of global GDP. It is down to 15%, half the level of 30 years ago, and getting smaller.
Small economies can do deals, as the UK has shown. But they have to be willing to open, and the EU refuses to do that. Its regulatory systems are becoming more and more cumbersome. From the GDPR data rules to new laws on artificial intelligence, gene editing and carbon emissions, a deal with the EU involves taking on board a vast number of new laws over which you have no say. It is no longer worth the bother for other countries.
Why the UK is better off outside the EU
During the long process of leaving the EU, we kept being told that it was a far more effective trade negotiator than the UK could ever hope to be on its own. Its sheer size, and the formidable skills of its officials, meant that it could conclude many more deals, and on far better terms, than the UK ever could by itself.
It hasn’t turned out that way. We managed to get a pretty good deal with Australia and have joined the CPTPP trade pact that covers most of the emerging Asian nations as well as Canada and Mexico, which the EU is still not a part of. We should soon have a trade deal with India, the fifth largest economy in the world and heading for the top three.
Membership of the EU has become a barrier to trading globally. Remainers, and the leadership of the Labour Party, can carry on insisting that getting closer to Brussels would be better for British trade if they want to. The reality is that the UK is better off out of it.
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