Market in focus – EU

Mary Johnson moved to MLA’s Europe office in January 2020 as Market Access Manager. Here, Mary reflects on the first few months in the market, with an update on Brexit, the Australia-EU Free Trade Agreement (A-EU FTA) negotiations, and some of the early impacts of COVID-19 on the European market.

Now that ‘Brexit’ has officially occurred, what does this mean for Australian red meat?

I moved to London the week that the UK officially withdrew from the EU (the UK “Brexited” on 31 January 2020). A transition period now applies until the end of 2020 following the UK’s withdrawal – with Australia’s beef and sheepmeat access to the EU retaining the status quo for the time being. This is because the UK effectively remains inside the EU market for the remainder of this year.

However, now that the UK has left the EU, the opportunity also exists for the UK to commence FTA negotiations with other countries, including of course Australia.

How is the A-EU FTA progressing?

The sixth round of A-EU FTA negotiations was held in Canberra in February 2020. While our red meat products (and a number of other EU classified ‘sensitive’ agricultural products) are yet to hit the negotiating table, reports from both the Australian and EU negotiating teams are that the discussions are progressing well.

The Australian red meat industry, represented by the EU/UK red meat market access taskforce, has a regular interface with the Australian Trade and Agriculture Ministers, their staff and relevant representatives from their departments to ensure that our industry’s interests are brought to the negotiating table.

Why is an FTA with the EU important?

Australian red meat exports to the EU are currently restricted by the EU’s low volume import quotas and high out-of-quota import tariffs. Australia consistently fills its country-specific quotas and once fully subscribed is unable to respond to additional EU customer demand for high quality imported red meat.

The A-EU FTA, currently under negotiation, provides an opportunity to reshape the trading regime and break down significant barriers that restrict trade.  There are potentially significant benefits to the red meat supply chain, from Australian producers, processors and exporters, through to European importers, wholesalers, distributors, foodservice and retail operators.

How has COVID-19 impacted the EU and UK markets?

As in Australia, the early impacts of COVID-19 has seen the food service sector, the segment of the market that Australian red meat products generally service, grind to a halt. While there has been increased demand for red meat products at retail, potential for disruption to supply chains remains an ongoing concern with the closure of borders and potential for workers to succumb to illness, further disrupting logistics.

The impacts of COVID-19 will also be felt in terms of market access negotiations, with the movement of people banned or discouraged, in many cases for the foreseeable future. Nevertheless, the EU and UK are reportedly forging on with their trade talks via videoconference, with the British Government ruling out any Brexit extension beyond 31 December 2020, at least at this stage, and the UK indicating it is still willing to withdraw with no-deal. 

In relation to Australian red meat interests, the seventh round of A-EU FTA negotiations are scheduled to be held in Brussels in May, however, these too are likely to occur via online platforms.