Trade Minister Don Farrell interrupted his holiday to fly to Brussels this week in a bid to clinch a deal — his third visit to the Belgian capital in six months.
But the two sides were unable to reach an agreement, with another round of talks to be held in August.
"We continue to argue that the sensible thing to do ... is to establish meaningful economic access for Australian agricultural products into the European markets," Senator Farrell said.
"I’m confident that if there’s goodwill, if we can make progress towards an agreement, that we’ll have good news for Australian businesses and Australian producers."
A European Commission representative said in a statement progress had been made on the free trade agreement but "more work is required to address key outstanding issues".
"We regret it was not possible to conclude our talks with Australia this week," it read.
Prime Minister Anthony Albanese has been holding talks with European leaders including French President Emmanuel Macron on the sidelines of the NATO summit in Lithuania.
Federal Treasurer Jim Chalmers said the government was committed to securing a deal.
"This is a big market for our exporters, our farmers and workers," he said.
"We want a good deal here but it cannot be a deal at any cost. If it takes a bit longer to strike a deal which is in Australia's national interest, then so be it."
Mr Albanese also discussed the trade deal with Portuguese leader Antonio Costa, who the prime minister said had been a strong supporter of the agreement.
National Farmers' Federation chief executive Tony Mahar, who was also in Brussels, backed the Federal Government's strong line on negotiations while remaining optimistic an agreement could be struck.
"We applaud minister Farrell and the negotiating team for rejecting a sub-standard deal," Mr Mahar said.
"A lesser minister might have folded in what continues to be a tough negotiation.
"We’re hopeful that with some grit and goodwill from both sides, we can get this thing done in a way that benefits everyone, including Aussie farmers."
One sticking point in the trade talks is the EU's objection to Australian food producers using terms such as feta and prosecco.
Australian negotiators argue it is reasonable for farmers to use the terms to represent varieties rather than European regions.
Negotiations were launched in 2018 to seal an agreement that could especially benefit Australian exports of beef, sheep meat, sugar, cheese and rice, which are significantly constrained by EU tariff quotas.
Australia is arguing for full tariff liberalisation of agriculture in the agreement.
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