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Australian and European officials will tell you to listen to the mood music.
There’s a new climate-friendly government in Australia, they say, and it’s making friends with Europe, especially in France.
“We are receiving very positive signals from across the EU institutions that there is a real opportunity now to progress the trade agreement negotiations,” said Australian Ambassador to the EU, NATO, Belgium and Luxembourg Caroline Millar. “Australia’s new climate commitments, the reset in our relations with France and our solidarity with Ukraine have all contributed to this positive momentum.”
Backing up that message, the Labor government introduced a bill Wednesday that expands the country’s initial promise to cut emissions by 26-28 percent between 2005 and 2030. The new goal — which still needs to win approval from the Greens who argue it is too low — would be 43 percent.
Renewed momentum for a trade deal is good for the EU too. It would give the EU a leg up over China, which is also squabbling with Australia at the moment, and restore the EU’s trade agenda after a bout of protectionism under the French. Given the war in Ukraine, the EU’s looking to strengthen and diversify its trade links away from Russia and other more autocratic regimes anyway.
With a deal with New Zealand under its belt, the EU’s trade chief Valdis Dombrovskis told reporters last month that “there are sometimes tendencies that neighbors are watching each other.”
What’s more, Australia also managed to placate France after an acrimonious spat last year when Australia announced it was dumping a €35 billion French submarine contract in favor of an American rival, all the while creating a new security throuple with the U.S. and recently Brexited U.K. France took its revenge by halting the ongoing trade negotiations between Brussels and Canberra.
No done deal yet
But the key issues remain, and the EU is a tough negotiator.
Australians are likely looking hard at how the New Zealand deal was agreed for lessons on how the EU protects its agricultural markets.
The negotiations with New Zealand didn’t close until a couple of hours before Prime Minister Jacinda Ardern and Commission President Ursula von der Leyen were set to jointly announce it. Prime Minister Jacinda Ardern had threatened to leave Brussels without a deal if it didn’t serve Kiwi beef and dairy products, only for the EU to call her bluff.
The EU reminded her of the size of the bloc’s market and who had more to gain out of the deal. “We had our farmers’ interests in mind in these negotiations,” a Commission official said when commenting on the negotiations, and left some New Zealand industries and negotiators feeling stiffed.
One New Zealand negotiator later slammed the EU as the “most protectionist agricultural bloc in the world.”
And negotiations with Australia, an agricultural powerhouse, will be much tougher, with powerful agricultural lobbies on both ends closely watching. The Australians are eyeing better access to the European market for beef, sheep meat, rice, sugar and dairy, officials briefed on the negotiations said, and it’s likely the EU will focus on keeping that access within limits.
Other sensitive issues include intellectual property, raw materials and geographical indications. For Brussels, it’s important to protect the names of European products such as parmesan or gorgonzola, but for Australia, this is especially sensitive for their dairy industry.
Millar conceded “there are clearly some sensitivities we will have to navigate through in the negotiations.”
Closer on climate
And then there’s climate policy.
The EU last month agreed to sanction future trade partners if they don’t live up to their climate and labor promises. The EU expects countries to adhere to the 2015 Paris Agreement, where countries agreed to limit global warming to well below 2 degrees Celsius by setting voluntary targets.
With a new Labor government making the right noises, the EU expects climate to be less of a problem in the trade negotiations, Dombrovskis said, especially given the new Australian government’s more climate-friendly position. He pointed out that Australia is committed to climate neutrality and argued that the new Australian government is “more open to this approach.”
Australia is also hopeful. “There is now some happy expectation, I think, in Brussels that Australia is now back on the bus,” said Duncan Lewis, who was Australia’s ambassador to the EU between 2012 and 2014 and was recently in Brussels for informal talks with European officials.
“One of the great lubricants, if you like, of [a free-trade agreement], would be the fact that there can be some progress on our cooperative climate change arrangements with the EU,” he added.
But that’s not a given.
Australia now has some fresh goals when it comes to climate policy. But it’s a different thing to sign up to climate goals in a free-trade deal with a third country, especially if not adhering to them can lead to retaliation from the other side, for example via tariffs.
“Australia’s new climate commitments have been well received in the EU, but Australia is waiting to see what the EU will propose on climate change in the FTA following its review of trade and sustainable development,” an official briefed on the negotiations said.
And whatever the intention, Australia’s climate policies remain light years behind the EU’s.
Australian Prime Minister Anthony Albanese has moved quickly to set a new overall climate goal. But the Greens, whose votes Labor needs to move the law through the upper house, are yet to commit to backing it. They say 43 percent isn’t a big enough cut and want Labor to commit to halting plans for a huge expansion of new gas and coal extraction. The government, meanwhile, is pleading with the Greens to not let the perfect be the enemy of the good.
That improvement is “significant, but not enough,” said Bill Hare, the Australian CEO of Climate Analytics, a Berlin-based nonprofit. He said a target that aligned with holding global warming at 1.5 degrees — the threshold beyond which the impacts of climate change will spiral — was 57 percent. The EU is aiming to cut its emissions by 55 percent by 2030, although it is from a much earlier peak in 1990 and such targets are not directly comparable.
Beyond a difference in ambition, both parties acknowledge that after a decade of rule by a right-wing coalition that was actively antagonistic to climate efforts, Canberra is an emissions policy vacuum. The EU has renewable energy and energy efficiency targets; is close to legislating the end of the combustion engine; has a carbon market; is developing a system of requirements for financial firms to disclose their climate impacts; plus a host of other proposals working their way into law.
The new Australian government has indicated some plans to flesh out those efforts in time. But currently, Canberra has none of these policies. So while Australia’s climate rhetoric might be welcomed in climate-conscious Brussels, once negotiators scratch below the surface during the next negotiating round in October, the mood music may soon stop playing.
Sarah Wheaton and Ilya Gridneff contributed reporting.
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