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.

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 appears to be increasingly self-confident.

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”

“We are sending a strong signal to the rest of the world that in times of turbulence, friendship and cooperation are the most important thing,” 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. They also want to move closer together with a new security and defense partnership that provides for stronger cooperation against cyber risks, hybrid threats and foreign information manipulation and interference.

Prime Minister Albanese said the free trade agreement would benefit both sides. The elimination of tariffs on wine and seafood exports is significant for Australia. In addition, more agricultural products such as beef could be exported to the EU in the future. Conversely, the agreement provides for the abolition of more than 99 percent of tariffs on EU goods exports to Australia, which, according to the EU, would 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.

“Prosecco” dispute could not stop agreement

What was controversial in the negotiations 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 feta cheese, 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, stated in advance that 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 EU is Australia’s third largest trading partner after China and Japan. Conversely, Australia is only in 20th place in goods trade with the 27 EU countries. The country with almost 28 million inhabitants also wants to use increased cooperation with the EU to reduce its dependence on its largest trading partner China, which is becoming increasingly demanding in the Indo-Pacific region and is making Australians clearly aware of its position of power.

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.

Years of negotiations, failure and new beginnings

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 laborious work to strengthen reliable trade relationships through 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.