The President of the European Commission, Ursula von der Leyen, sealed a free trade agreement with Australian Prime Minister Anthony Albanese on Tuesday, reducing tariffs on most agricultural products and exports from the European Union.
This agreement marks a new victory for Brussels, which is striving to diversify its trade relationships and secure strategic partners amid increasing global tensions.
According to the Commission, the deal will save the European Union one billion euros per year in tariffs, and exports are expected to increase by 33% over the next decade.
Agriculture emerged as a sticking point, with European farmers already opposing the Mercosur trade deal and facing a legal challenge from European lawmakers threatening the ratification of the agreement.
Tariffs will be phased out on products such as cheese (over three years), wine, certain fruits and vegetables, chocolate, and processed foods.
On the most contentious issues – beef and sheep, which led to the collapse of negotiations in 2023 – Australia agreed to quotas of 30,600 and 25,000 tons per year, respectively.
A safeguard mechanism will allow the European Union to protect sensitive sectors if an increase in Australian imports harms the Union’s market.
In addition to agriculture, the agreement grants access to critical raw materials from Australia, including aluminium, lithium, and manganese.
Brussels was unable to eliminate the Australian luxury car tax. However, 75% of EU electric vehicles will be exempt.
The agreement is a strategic advancement
The Commission anticipates a significant increase in exports in key sectors, including dairy products (up to 48%), motor vehicles (52%), and chemicals (20%).
Brussels prioritized the agreement as part of efforts to establish partnerships in the Indo-Pacific region, where China’s influence has become central. A security and defense partnership with Canberra was also announced on Tuesday.
“The EU and Australia may be geographically distant, but we could not be closer in our worldview,” said Ursula von der Leyen, adding, “With these new dynamic partnerships in security and defense, the EU and Australia are drawing closer together.”
Since Donald Trump returned to power in 2025, trade agreements have gained greater strategic importance for the EU, which is seeking new markets.
In 2025, Brussels concluded agreements with Mexico, Switzerland, and Indonesia. The Mercosur pact was also signed earlier in the year and will be provisionally implemented from May 1, despite a legal challenge from the European Parliament and strong reservations expressed by France.
Further agreements could follow. Talks are ongoing with the Philippines, Thailand, Malaysia, the United Arab Emirates, and countries in East and Southern Africa, von der Leyen told EU ambassadors on March 9.
