EU-Australia Free Trade Deal: Tariffs Lifted, But Farmers Voice Concerns

Australia and the European Union signed a free trade agreement on Tuesday, removing tariffs on almost all goods after eight years of negotiations. The deal, finalized in Canberra, aims to diversify trade networks and reduce reliance on China, while also deepening security and defense cooperation between the two partners.

The agreement is valued at approximately A$10 billion ($7 billion) annually to the Australian economy, according to Australian officials. The European Commission estimates EU exports to Australia will be spared 1 billion euros ($1.2 billion) in Australian duties, with the value of those exports projected to increase by a third over the next decade.

While the vast majority of tariffs will be eliminated, certain agricultural products will be subject to quotas. Australian beef and lamb exports to the EU will face limitations, a point of contention for Australian farmers who have criticized the agreement as delivering “subpar” access to the European market. The agreement will allow imports from Australia at zero or reduced tariffs only in limited amounts and subject to certain conditions for sensitive agricultural sectors including beef, sheep and goat meat, sugar, rice, and certain dairy products.

French farmers have also voiced concerns, arguing that the quotas are too generous. Copa-Cogeca, a pan-European agriculture lobby group, stated that “the cumulative impact of successive trade agreements makes these concessions unacceptable.”

The deal includes provisions for the protection of 165 EU geographical indications (GIs) for agrifood products, such as Comte cheese, and 231 spirits GIs, including Irish whiskey. Some products, like feta and gruyere, will allow continued leverage by prior Australian users who have used the terms for at least five years, provided the origin of the product is clearly labeled. Australian producers of Prosecco will be allowed to continue using the name domestically for ten years, but will be prohibited from exporting under that label after that period.

Beyond agriculture, the agreement will fully liberalize market access for EU passenger cars and other vehicles, with gradual removal of duties on a limited number of trucks. Australia will also increase the luxury car tax threshold for electric vehicles to A$120,000, exempting approximately 75% of EU-produced EVs from the tax.

The agreement also addresses critical minerals, eliminating existing duties on Australian exports of these resources and banning export restrictions. This is intended to create a level playing field for access to Australian resources like aluminium, lithium, and manganese, and to encourage European investment.

The deal aims to ease restrictions on EU firms selling services in Australia, including professional and business services, maritime transport, and financial services. EU investors will receive treatment equivalent to that afforded to any foreign investor in Australia, and in most cases, will be treated the same as Australian investors.

Alongside the trade agreement, Australia and the EU signed an agreement to deepen security and defense cooperation. Negotiations are also underway for Australia to become an associate of the Horizon Europe research and innovation funding program.