After nearly a decade of negotiations, punctuated by numerous interruptions, the free trade agreement between the European Union and Australia has finally come to fruition.
“There used to be a certain Europhobia in Australia; now, at least, we have a bit of Eurovision,” said Tim Harcourt from the University of Technology Sydney to DW.
In 2023, negotiations had failed at the last minute, blocked by strong opposition from Australian farmers to beef farming quotas. What has changed this time? According to experts, it’s not so much the clauses of the agreement that have changed, but rather the increasing pressure.
The increase in American tariffs put pressure on Australian meat exporters and European car manufacturers. At the same time, China’s willingness to use access to critical minerals as a means of pressure forced Europe to reconsider the security of its essential raw material supply. In this context, the agreement offers both parties a rare thing: relief and security.
The European Commissioner for Trade, Maros Sefcovic, who visited Canberra with European Commission President Ursula von der Leyen, stated: “We are sending a strong signal: we prefer low tariffs, or, in this specific case, the complete absence of tariffs, and we want cooperation based on rules.”
The agreement between the EU and Australia is also part of a broader initiative. Brussels has concluded several important trade agreements this year, including with Mercosur, a bloc of South American countries, and with India.
Australia may only be the EU’s 20th largest trading partner, but its strategic importance is rapidly growing. For Europe, this agreement is a new step towards reducing its dependence on the United States while strengthening its relations with middle powers which influence global trade flows.
Australia is also a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade agreement among eleven economies representing about 15% of global trade.
One of the main advantages of this agreement for Brussels lies in Australia’s underground resources. Australia has the world’s third-largest reserves of rare earths and is the leading global producer of lithium, an essential element for electric vehicle battery manufacturing.
Last year, China strengthened its grip on critical minerals, fueling concerns of supply shortages. This situation presents a challenge for the EU if it wants to continue its ecological and digital transition.
For Australia, the main advantage is access to the EU’s 450 million consumers. “It’s a remarkable agreement for Australia,” highlights Evgeny Postnikov from the University of Melbourne. Almost all European tariffs on Australian agricultural exports, from wine and olive oil to most dairy products, will be removed.
Symbolic successes have also been achieved. The EU will allow Australian producers to continue using protected geographical indications such as Parmesan and Feta. Australia will also be the only country, outside of Italy, allowed to market its sparkling wine under the Prosecco name.
Under the agreement, Australian beef quotas to the EU will be multiplied by over ten times over the next ten years, increasing from 3,389 tonnes to 30,600 tonnes annually. This figure falls short of Canberra’s ambitions. Brussels had firmly opposed Australian demands to increase quotas. The National Farmers’ Federation of Australia expressed extreme disappointment with this decision.
The fact that the agreement survived this internal political obstacle may be the clearest signal of all: in an increasingly fragmented global economy where competition is fierce, strategic trade partnerships are too important to be blocked by local resistance.
