Australia will not get a “second chance” at a free-trade deal with the EU, Trade Minister Don Farrell has warned, as sources say the Coalition will move to scupper the $10bn-a-year agreement clinched in March. Against a backdrop of strained supply chains, heated strategic competition and fracturing economic security, Senator Farrell said on Monday the countries that would successfully navigate the turbulence were “not those that close themselves off from the world or subvert the global rules of trade”.

“They are those that build strong partnerships, diversify their markets and remain active participants in the global economy,” he told the Australian Industry Group event. Touting a $300bn surge in two-way trade since 2022, he said the EU deal – which promises to scrap tariffs on 98 per cent of Australian goods – would “open doors for Australian businesses that have effectively been closed for decades”. “Now is not the time to hamstring the operations of businesses in this room, limiting your opportunities to expand and risking your existing customer bases, all on the fairytale promise of an Australian economy that simply cannot exist except for in the imagination of politicians selling an empty promise,” Senator Farrell said.

The remarks come as Coalition and industry sources say Nationals leader Matt Canavan is poised to announce the opposition will actively try to block the free-trade agreement from passing parliament next year. If successful, it would be the first free trade agreement not to pass parliament. Senator Canavan, the opposition trade spokesman, has long been an outspoken critic of the agreement, decrying it the “worst trade deal ever”. After meeting with the European Australian Business Council earlier this month, he said “the Coalition will not be supporting Labor’s disastrous EU Free Trade Agreement”. He took issue with legally binding climate obligations.

“This agreement even allows the EU to impose trade sanctions on us if we do not adhere to (the Paris Agreement),” Senator Canavan said. He also said the deal is “not reciprocal”. “We scrap tariffs on EU imports uncapped, putting many of our industries at risk,” he said. “All while the EU continues to undercut us by subsidising their own industries and holding tariff free import quotas on beef and lamb.”Senator Canavan demanded the Albanese government “send this rotten deal back and go back to the drawing board”.

“There must be no binding Paris obligations, and there must be a fair go for our own Aussie industries,” he said. Innes Willox, of AiG, said the Australia-EU FTA was not perfect, but no agreements ever were. “Easier and greater access to a market of 450 million people has the potential to be a general boost to our economy and to thousands of individual businesses,” he said.

“We have been in protracted negotiations for a decade and while we have not got all we want, to turn our backs on the agreement now would be a major blow to Australia’s long held support for free trade and open markets. We really can’t afford to miss this opportunity.”Jeff Connolly, of Thales, said it was a good deal for Australia and would help insure against global shocks and trade uncertainties.

“Thales Australia welcomes the opportunities that will come from the free trade agreement,” he said. “The agreement can help strengthen Australia’s sovereign defence industry by creating opportunities for Australian businesses to access global supply chains, grow exports, and attract the investment to help build deterrence and capabilities. “In particular, the associated Security and Defence Partnership will deepen our industrial collaboration in an uncertain global environment.”