Australia and the European Union have concluded a new free trade agreement after eight years of talks, EU Commission President Ursula von der Leyen and Australian Prime Minister Anthony Albanese announced at a ceremony in Canberra. The deal accompanies a new security and defence partnership and reflects the EU’s push to diversify trade ties amid tensions involving the United States and China.
Von der Leyen said the two partners “may be geographically far apart but we couldn’t be closer in terms of how we see the world,” and Albanese described the pact as a “significant moment” for Australia. The EU is Australia’s third-largest two-way trading partner and its second-largest source of foreign investment.
Key provisions of the agreement:
– More than 99% of tariffs on EU goods exported to Australia will be removed, a step estimated to save companies about €1 billion (roughly $1.16 billion) a year in duties.
– Australia will immediately eliminate tariffs on wine, sparkling wine, fruit and vegetables, and chocolates; tariffs on cheeses will be phased out over three years.
– The Australian threshold for the luxury car tax on electric vehicles will be raised, making about three-quarters of EVs exempt and benefiting European carmakers.
– Australia will cut tariffs on imports of critical minerals.
– The European Commission projects EU exports to Australia could rise by about 33% over the next decade, with dairy, motor vehicles and chemicals likely to see the strongest gains.
Agricultural access and quotas:
– The agreement resolves long-running disputes over Australian access to the EU beef market by creating two tariff-rate quotas totaling 30,600 tonnes. Under the arrangement, 55% of the quota for grass-fed beef will enter duty-free, while the remaining 45% will be subject to a reduced 7.5% duty. These measures will be phased in over five years to protect EU farmers.
– Australia had initially sought a larger duty-free allocation, reportedly aiming for about 50,000 tonnes per year.
– The EU will also open a quota of 25,000 tonnes for Australian grass-fed sheep and goat meat, phased in over seven years.
Geographical indications and product names:
– Negotiations had previously stalled over protected EU names such as prosecco, parmesan and feta. The agreement allows some Australian producers who have been using certain names for at least five years to continue doing so.
– Australian winemakers will be able to label and export Italian-style sparkling wine as “prosecco” for a transitional period, but exporters must stop using that label after 10 years.
Economic impact and next steps:
– Australian Trade Minister Don Farrell estimated the deal would add about A$10 billion (around $7.1 billion, €6 billion) in trade for Australia in the first year.
– The pact will require formal approval by the European Council and by Australia’s parliament before it is signed and comes into force.
The agreement marks a major expansion of economic and strategic ties between Canberra and Brussels, combining tariff liberalization with safeguards for sensitive sectors and transitional arrangements for long-standing naming disputes.