EU & Australia Sign Landmark Free Trade Agreement: Boost for Trade & Critical Minerals

Australia and the European Union formally signed a comprehensive free trade agreement in Canberra on Tuesday, marking a significant expansion of economic ties between the two regions. The signing occurred during the first visit to Australia by European Commission President Ursula von der Leyen since she took office.

The agreement, reached after eight years of negotiations, aims to boost bilateral trade and comes as both Brussels and Canberra seek to diversify export markets amid growing geopolitical pressures. Australia’s Prime Minister Anthony Albanese described the deal as securing access to the world’s second-largest economy. “This represents an vital moment for our nation,” he stated.

Key sticking points in the negotiations, including the use of European geographical indications by Australian producers and access for Australian beef to the European market, were resolved to facilitate the agreement. A compromise was reached regarding the use of the term “prosecco,” allowing Australian winemakers to continue using it domestically for the next ten years, but requiring them to cease its use on exports after that period. Australia will also be permitted to continue using geographical indications like “feta” and “gruyère” if producers have used those names for at least five years.

European automakers will benefit from an increase in the threshold for Australia’s luxury car tax for electric vehicles, effectively exempting three-quarters of them. The EU anticipates a one-third increase in its exports to Australia over the next decade, with projected increases of 50% in the dairy and automotive sectors. EU exports to Australia totaled €37 billion in goods and €31 billion in services in 2024.

The agreement significantly increases the quota for Australian beef allowed into the EU, multiplying it by more than ten times over the next decade, even though the final quota falls short of the level sought by Australian agricultural representatives. The new quota will be set at 30,600 tonnes of Australian beef, comprised of 55% grass-fed beef eligible for duty-free access and 45% subject to reduced tariffs of 7.5%. The quota will be phased in, with only one-third applied during the first five years. The EU will also allow the entry of 25,000 tonnes of Australian sheep and goat meat from grass-fed animals, implemented over seven years.

Von der Leyen emphasized the shared values underpinning the agreement, stating, “The EU and Australia may be geographically very far apart, but we could not be closer in our vision of the world. We are sending a strong signal to the rest of the world: friendship and cooperation matter even more in times of turbulence.”

The trade agreement now requires approval from the European Council before it can enter into force.