After Mercosur and India, the European Union has been building on its momentum since the start of the year, with the conclusion on Tuesday 23 March of negotiations for a new free trade agreement with Australia.
This is “trade deal many thought we might never land”, stressed the President of the European Commission, Ursula von der Leyen, in Canberra. “But this reflects Europe’s changing approach. From Latin America to India, and I am so pleased to add Australia”, she continued.
Australian Prime Minister Anthony Albanese welcomed the agreement as representing “major new opportunities for Australian exporters in the European Union’s massive $30 trillion economy”.
The agreement allows 98% of the current value of Australian exports to enter the EU tariff-free, and removes more than 99% of tariffs on EU goods exports to Australia.
The European Commission estimates that EU exports should grow by up to 33% over the next decade, reaching a potential annual value of €17.7 billion.
Only certain steel products have been excluded from tariff liberalisation by both the EU and Australia.
“There was an understanding with Australia of how serious the over capacity situation was in the world”, explained a European official.
Agricultural products. As with the agreement with the Mercosur countries (see EUROPE 13834/8), agricultural products were the focus of attention, given that Australia is the world’s leading exporter of mutton and the second largest exporter of beef and sugar. An extremely sensitive issue for European farmers (see other news).
It was largely the disagreement over these imports into the EU that derailed the negotiations in 2023 (see EUROPE 13282/5).
In the end, the new agreement will also provide for “limited” imports in “sensitive” agricultural sectors (beef, sheepmeat, sugar, dairy products and rice), “through carefully calibrated Tariff Rate Quotas”, according to the Commission.
For beef, the EU will open two tariff quotas, phased in over ten years, totalling 30,600 tonnes. 55% of this volume (16,830 tonnes) will be imported duty-free. The remaining 45% (13,770 tonnes) will be imported at a reduced tariff of 7.5%.
Several European products, such as cheese, wine, fruit and vegetables, chocolate and processed products, will benefit from ‘zero’ tariffs when entering Australia.
Australian farmers will benefit from the removal of virtually all EU tariffs on agricultural products, including nuts, fruit and vegetables, honey, olive oil, most dairy products, wheat and barley, and seafood.
Safeguard clause. In addition, the agreement introduces a bilateral safeguard mechanism enabling the EU to take measures to protect sensitive European products and their producers in the event of a sharp increase in imports from Australia that could damage the EU market. This mechanism will be implemented by an autonomous European regulation.
Geographical indications. In addition, the agreement will protect 231 geographical indications (GIs) for spirits and 165 agricultural and food GIs, such as Comté, Irish whisky and Queso Manchego.
It does, however, allow Australian producers to continue using terms such as ‘Prosecco’ for a transitional period of ten years.
The partners also reviewed their bilateral wine agreement, updating the full list of EU GIs and protected traditional appellations in Australia.
Critical raw materials. As Ursula von der Leyen said in her speech, “revitalising our partnership on critical minerals” will be crucial in responding to “the threat to the security of our supply chain and the shock to our industrial base”, referring to dependence on China.
Australia represents a new opportunity for diversification as a major producer of raw materials, notably aluminium, lithium and manganese.
As the Commission explains, this agreement facilitates EU access to Australian raw materials, thanks to specific provisions that make the market “more predictable and reliable” for European companies.
Luxury cars. In the automotive sector, Australia will fully liberalise access to its market for all passenger cars and all other vehicles, with the exception of a few tariff lines for trucks.
Luxury cars priced above a certain threshold are subject to import tax in Australia. As part of this agreement, the country has agreed to raise the threshold for electric vehicles to 120,000 AUD. This is a general application, but will benefit the EU proportionately more.
Other possibilities. In addition, the agreement should facilitate digital trade by tackling certain barriers, expand opportunities for service providers and investors from the EU and Australia, and facilitate the participation of European companies in Australian public procurement markets.
For the EU, it also means strengthening its partnerships in the strategic Indo-Pacific region. This new agreement with Australia comes a few months after the conclusion of free trade agreement negotiations with Indonesia in September 2025 and with India in January 2026 (see EUROPE 13795/1).
The texts negotiated as part of this agreement presented in Canberra (more than 2,000 pages) are still subject to internal procedures. The Commission will then submit a proposal to the EU Council for signature and conclusion of the agreement. The EU and Australia will only be able to sign the agreement once it has been adopted by the EU Council. (Original version in French by Pauline Denys)