Australia and the European Union reached a new trade agreement after eight years of negotiations, EU chief Ursula von der Leyen and Australian Prime Minister Anthony Albanese announced at a ceremony in Canberra. The pact comes as the EU seeks to diversify trade amid challenges from the United States and China. Albanese and von der Leyen also agreed on a security and defense partnership.
“The EU and Australia may be geographically far apart but we couldn’t be closer in terms of how we see the world,” von der Leyen said after meeting Albanese. “With these dynamic new partnerships on security and defense, as well as trade, we are moving even closer together.” Albanese called the deal a “significant moment” for Australia. The EU is Australia’s third-largest two-way trading partner and second-largest source of foreign investment.
Key elements of the trade deal
– The agreement will remove over 99% of tariffs on EU goods exported to Australia, a move AFP said will cut about €1 billion ($1.16 billion) a year in duties for companies.
– Australian tariffs will drop to zero immediately for wine, sparkling wine, fruit and vegetables, and chocolates; tariffs on cheeses will be phased out over three years.
– European carmakers will benefit as Australia raises the threshold for its luxury car tax on electric vehicles, making about three-quarters of EVs exempt.
– Australia will lower tariffs on imports of critical minerals.
– The European Commission projects EU exports to Australia could grow by about 33% over the next decade, with dairy, motor vehicles and chemicals likely to see the strongest increases.
Agricultural access and quotas
– Negotiators resolved disputes over Australian access to the EU market for beef. The EU will open two tariff-rate quotas totaling 30,600 tonnes: 55% of grass-fed beef will enter duty-free, and 45% will face a reduced duty of 7.5%. These measures will be phased in over five years to protect EU farmers.
– Australia had initially sought larger duty-free access, reportedly aiming for 50,000 tonnes annually.
– The EU will allow a quota of 25,000 tonnes of Australian grass-fed sheep and goat meat, phased in over seven years.
Geographical names and protected products
– Talks had previously stalled over Australian use of names such as prosecco, parmesan and feta, which are protected in the EU as geographical indications.
– The agreement permits Australian producers who have used certain names for at least five years to continue doing so. Australian winemakers may label and export Italian-style sparkling wine as “prosecco” but must stop using that label for exports after 10 years.
Economic impact and next steps
– Australian Trade Minister Don Farrell said earlier the deal would add about 10 billion Australian dollars ($7.1 billion, €6 billion) in trade for Australia in the first year.
– The agreement is expected to be formally signed after approval by the European Council and Australia’s parliament.
Edited by: Louis Oelofse