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.”
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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.
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.
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