European Union officials voiced their shock after Australia’s top negotiator pushed back from a potential trade deal with the 27-nation bloc for the second time in a matter of months. 

Despite optimism ahead of planned discussions in Osaka, Japan, the two sides were never actually able to sit down to make a final breakthrough over the weekend. 

The plans ended in tatters on Sunday at a meeting between EU Trade Commissioner Valdis Dombrovskis and Australian Trade Minister Don Farrell, where the latter made demands for agricultural market access which went well beyond what had been discussed recently.

“We’ve not been able to make progress” in the talks, Farrell said in a statement issued late on Sunday. “Negotiations will continue, and I’m hopeful that one day we will sign a deal that benefits both Australia and our European friends.”

Confidence of a pact in Osaka had been buoyed with both sides meeting in Brussels up to last week to narrow their differences, according to EU officials. That confidence was underscored by the EU’s decision to bring a team of almost 10, including the Agriculture Commissioner Janusz Wojciechowski, to get a deal over the line.

“Unfortunately, our Australian partners were not able to engage on the basis of previously identified landing zones,” Dombroskis said in a statement. “We were therefore unable to make progress with our FTA negotiations.”

Australia stepped back from a previous round of negotiations in July, with Farrell saying that the offer on agricultural market access wasn’t enough. Prior to the trip to Osaka, he told Australian media that unless the EU came with a better offer than in July he would do the same again.

Five Years Work

The two sides have been working on a free trade agreement, or FTA, for more than five years and while there was broad consensus across most areas, a few remaining agricultural issues were threatening to derail the entire compact. 

Australia was pushing for greater access to the European market for its beef, mutton and sugar, while Brussels wants an end to the use of certain geographic locators on products such as Prosecco and feta. 

EU officials said that it would be more difficult for the bloc to significantly change its position on red meat, and with elections scheduled for the next couple of years, talks could be pushed even further into the future. 

Farrell’s move was applauded by Australian business groups, farmers, and even the center-right opposition parties. 

The National Farmers’ Federation said the free trade deal would have “disadvantaged” the country’s agriculture sector.

“Today’s decision was a hard one, but ultimately it was the right one,” NFF President David Jochinke said in a statement on Monday. “It’s disappointing the Europeans weren’t willing to put something commercially meaningful on the table.”

Other stakeholders were more critical.

Not concluding the deal in Osaka is a “disastrous result” for something that is strategically important to both sides, according to Jason Collins, chief executive officer of the European-Australian Business Council. 

For Australia, the center-left Labor government has come under attack after the heavy defeat of a national referendum it backed to set up an Indigenous advisory body. 

Opposition politicians have accused it of not focusing enough on the economy and a trade deal with Europe would have countered that narrative. 

Meanwhile, the administration of European Commission President Ursula Von Der Leyen was looking for a victory on trade after a missed attempt with the US to remove steel and aluminum tariffs imposed by former President Donald Trump’s administration. It’s also having difficulty concluding an agreement with the Mercosur bloc that includes Brazil, Argentina, Paraguay and Uruguay.

The failure of the talks may make cooperation on critical minerals more difficult, the EU officials said. Clarifying the investment environment in Australia through the FTA would have helped attract more European investment into a sector that is increasingly important for geopolitical reasons and to help power the green energy transition.

“The window of opportunity is closing and there is no more time for delay, there is a deal ready to be done,” according to the EABC’s Collins, who was in Osaka for the talks.