After around eight years, the European Union and Australia have concluded negotiations on a comprehensive free trade agreement.
The agreement will reduce tariffs and trade barriers, stimulate the economy and thus ensure greater prosperity, said EU Commission President Ursula von der Leyen and Prime Minister Anthony Albanese in the Australian capital Canberra.
Chancellor Friedrich Merz spoke of very good news for the economy. “Now it’s about implementing this quickly,” he explained at the conclusion of the negotiations.
Specifically, the agreements provide for the abolition of more than 99 percent of tariffs on EU goods exports to Australia, which, according to the EU, will save companies of all sizes around one billion euros in tariffs annually. The agreement is also intended to make it easier for EU specialists to work in Australia. According to Prime Minister Albanese, one of the important things for Australia is the elimination of tariffs on wine and seafood exports. In addition, more agricultural products such as beef could be exported to the EU in the future.
According to the EU Commission, industrial sectors that could particularly benefit from the agreement include mechanical engineering, chemicals, the vehicle industry and agriculture. The EU should also have better access to Australia’s strategically valuable raw materials such as rare earths and lithium.
“Strong signal to the rest of the world”
Von der Leyen made it clear that it is important for the EU to expand and diversify international trade relationships in order to reduce risks and dependencies – especially at a time when the USA under President Donald Trump is an increasingly difficult partner with its aggressive customs policy and China is appearing ever more self-confident.
“We are sending a strong signal to the rest of the world that in times of turbulence, friendship and cooperation are the most important things,” said the German Commission President. The EU and Australia are geographically far apart, but in terms of their view of the world they can hardly be closer.
Together with Albanese, von der Leyen also presented a new security and defense partnership that aims to strengthen cooperation against cyber risks, hybrid threats and foreign information manipulation and interference. EU foreign policy chief Kaja Kallas said: “Australia and Europe are separated by oceans, but the security of Europe and Australia is closely linked.” She cited the Ukraine War as an example of China’s claim to ownership of Taiwan. “If Russia asserts itself in Ukraine, it would set a dangerous precedent for the Indo-Pacific region,” she said.
“Prosecco” dispute could not stop agreement
What was controversial in the negotiations surrounding the trade agreement until recently was, among other things, the handling of certain agricultural products whose names are protected in Europe and which must meet certain manufacturing criteria – such as cheeses such as Feta, Gruyère and Parmesan. The “Prosecco” produced in Australia was also a thorn in the side of the EU. But both sides were ultimately willing to compromise. Australian wine producers are therefore allowed to continue producing Prosecco and selling it under this name, but are not allowed to export it, as Albanese explained.
The EU side responded to concerns from the European agricultural lobby by pointing out that the agreement would eliminate tariffs on important EU exports such as cheese, meat preparations, wine and sparkling wine, some fruits and vegetables including processed products, chocolate and sugar products. At the same time, duty-free or reduced-duty imports from Australia will only be permitted to a limited extent for sensitive goods such as beef, sheep and goat meat, sugar, some dairy products and rice.
German automotive industry welcomes deal
The EU assumes that exports from member states to Australia could grow by a third to up to 17.7 billion euros annually in the next decade. According to the information, there is particular growth potential in dairy products, motor vehicles and chemicals. EU investment in Australia could increase by more than 87 percent, it says.
The President of the Association of the Automotive Industry, Hildegard Müller, said the trade agreement would “open up significant opportunities” for the European automotive industry, especially for export-oriented German manufacturers. They have strong competition in the Australian market from China and Japan. The industry association of German and European mechanical and plant manufacturers VDMA and the Federal Association of Wholesale, Foreign Trade and Services (BGA) also expressed positive opinions.
In 2024, Australia, with its almost 28 million inhabitants, was ranked 20th among the EU’s most important partners in goods trade. Conversely, the EU was recently Australia’s third largest trading partner after China and Japan. Through increased cooperation with the EU, Australia also wants to reduce its dependence on China, which is becoming increasingly demanding in the Indo-Pacific region and is making Australians clearly aware of its position of power.
Years of negotiations, failure and new beginnings
It is still unclear when the agreement with Australia can be signed. The text of the contract still needs to be legally checked and translated into all official languages of the EU. It must then be approved by the Member States and the European Parliament.
The EU decided in 2018 to start talks for the trade agreement with Australia. In the meantime, there was resentment because the Australians negotiated a new security pact for the Indo-Pacific region with the USA and Great Britain behind the back of the EU in 2021 and let a billion-dollar submarine deal with France collapse. At a meeting in Osaka, Japan, in 2023, the agreement ultimately collapsed due to disputes over agricultural imports – then the talks stopped.
The negotiations only really picked up steam again when Trump moved back into the White House. Since then, he has been shaking up the once rather predictable world of international trade with ever new customs decisions. With his political solo efforts, he is also indirectly making good publicity for the EU’s more cooperative approach
– and the arduous work of establishing reliable trade relationships
Strengthen free trade agreements. Examples of this are the agreement recently signed with four South American countries of the Mercosur alliance after decades of negotiations and the newly agreed large free trade zone with India.
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CANBERRA (dpa-AFX)
