Australia and EU sign sensitive trade deal

The European Union and Australia have concluded talks on a free trade deal that could boost export volumes by as much as one third, European Commission President Ursula von der Leyen announced in Canberra.

Von der Leyen shook hands on the agreement with Prime Minister Anthony Albanese Tuesday, on the second of her three-day visit to Australia — finally sealing the accord after a previous attempt collapsed amid acrimony in 2023. 

The Commission president told the Australian parliament the trade deal was necessary to build resilience to economic shocks. 

“None of us is immune to the shocks, both geopolitical and economic, that the war in Iran brings to our populations,” von der Leyen said.

Von der Leyen told the special parliamentary sitting of MPs and senators — she was the first woman to address a joint sitting in Australian history — that the deal would send a message that “when it comes to trade, Europe is open for business.” 

“We are rearming. We are decarbonizing. We are preparing. We are becoming an independent Europe. And this means a more outward Europe. And this is why I am here today. Because showing up matters,” she said. 

With U.S. President Donald Trump slamming tariffs on allies globally, Brussels and Canberra rekindled their negotiations last year.

EU Trade Commissioner Maroš Šefčovič, who was in Canberra for the signing of the free-trade deal, stressed both countries’ commitment to a rules-based world order when he briefed journalists on Monday ahead of the final talks.

“We are sending a strong signal that we prefer a low tariff — or in this case: no tariffs — and that we want to work on rules-based mechanisms,” Šefčovič said.

Sensitive market access for Australian beef and sheep meat, plus sugar, rice and some dairy was the last point of discussion. 

The two sides are believed to have agreed that Australia will be able to export between 30,000 and 35,000 tonnes of beef to Europe a year, up from the current 3,389 tons. Brussels had held firm to 30,000 metric tons during talks in recent weeks.

In an earlier joint press conference, Albanese also suggested that Australia had extracted some concessions from the EU on the issue of geographic indicators, which could enable Australian producers to continue using names including feta, halloumi and Parmesan. 

The issue was politically sensitive, with Australia’s European communities arguing they should be allowed to continue producing their food products under their original names. 

“Whether it’s Greeks coming here and creating feta, or Italians coming and doing Parmesan [cheese], or people from Eastern Europe doing Kransky sausages … It’s a connection with Europe. It’s part of our strength,” Albanese said.  

Australia will agree to protect the names of 165 European food products and 237 spirits. The two sides also agreed to modernize an existing wine agreement, which covers 50 new ones and includes — in a win for Brussels — prosecco as well. 

Coming just two months after the EU signed a deal with the Latin-American Mercosur bloc — also a major beef producer — the Australian agreement is meant to deliver benefits for farmers, Šefčovič said. 

“I believe that we are bringing very good news to our farmers,” he said, arguing that wine, sparkling wine, chocolate, sugar, confectionery, ice cream, some fruits and vegetables and many processed agricultural products will all “go down to zero from Day 1.”

Cheeses, which are more sensitive for the Australians, will see tariffs phased out in three years. The trade chief also underlined EU agrifood exports to Australia already enjoy a surplus of €2.3 billion. 

EU exports to Australia totalled €37 billion in goods and €28 billion in services in 2024, with the deal set to eliminate tariffs on almost all EU goods and many services. The agreement could boost that by one third in 10 years, the Commission estimates.

A major win for the EU will be easier access to Australia’s natural resource wealth and incentives for European investments for Australian mining and refining. “Australia has almost all the critical minerals we need,” Šefčovič said.

Speaking of the EU’s need for critical minerals, von der Leyen told lawmakers that a new partnership with Australia would be “crucial” to the EU, which ran the risk of becoming over-dependent on Chinese supplies. “That is precisely why we need each other,” she said. 

Brussels also won a pledge from Australia to raise the threshold for its luxury car tax by almost 50 percent. Canberra currently charges a 33 percent levy on foreign-made cars above A$80,000 (or A$92,000 for a fuel-efficient one). Šefčovič said that will rise to A$120,000. 

Koen Verhelst reported from Brussels; James Panichi reported from Melbourne.