The collapse of an EU trade deal could see Australia pivot to the UAE.

Australia is redirecting its focus to forge a historic economic pact with the United Arab Emirates (UAE) following the breakdown of negotiations with the European Union (EU) over agricultural disputes, reports say. 

The potential deal with the UAE would mark Australia's first free trade agreement with a Middle Eastern nation.

In 2022, bilateral trade between Australia and the UAE rebounded to $9.2 billion after the COVID-19 pandemic disrupted air travel between the two countries. 

The UAE is Australia's primary trade and investment partner in the Middle East, with aluminium ores and concentrates being Australia's major exports to the region.

Senior government sources have allegedly revealed that Australia is actively exploring partnerships with countries like the UAE for free trade. 

The UAE has long sought a deal with Australia, and the Morrison government, in its final months, proposed a comprehensive economic partnership agreement.

The Department of Foreign Affairs and Trade is reportedly soliciting input from stakeholders to evaluate the potential benefits of a trade deal with the UAE. 

The UAE's commitment to green energy and net-zero goals could present opportunities for Australia's renewable energy sector and could attract UAE investments in critical minerals.

Trade Minister Don Farrell, in a recent speech to the Italian Chamber of Commerce, acknowledged the setback in EU negotiations, saying; “My assessment was that the EU was asking too much, and offering too little, to conclude a fair deal which benefited both sides”. 

However, he said that the EU remains an important partner for Australia, and efforts will continue towards a future EU Free Trade Agreement (FTA).

Farrell highlighted progress in negotiations with India for an expanded economic deal and reiterated Australia's commitment to trade liberalisation. 

He mentioned recent updates to the ASEAN-Australia-New Zealand FTA and ongoing efforts to finalise domestic treaties supporting Britain's entry into the trans-Pacific free trade deal.

While expressing disappointment over the EUFTA, Farrell says the EU remains significant as a market and investor for Australian businesses. 

He has affirmed the government's dedication to the Trade 2040 Taskforce, aimed at shaping Australia's trade policy for the next two decades through collaboration with leaders from various sectors.