The European Union and Australia have concluded negotiations on a free trade agreement, the European Commission announced in March 2026, eight years after talks began in July 2018. The deal is the latest in a series of agreements the EU has struck in the Indo-Pacific region, following similar accords with Indonesia in September 2025 and India in January 2026.
The agreement is expected to eliminate more than 99% of tariffs on EU exports to Australia, with machinery, motor vehicles and chemicals among the immediate beneficiaries from the day the deal enters into force. The EU and Australia already trade more than €89.2 billion in goods and services annually, supporting 460,000 jobs across the EU. Annual duty savings for EU exporters are projected to reach up to €1 billion, with EU exports forecast to rise 33% over the next decade and EU GDP to increase by €4 billion by 2030.
Services, digital and financial access
Beyond goods, EU companies will gain improved access to Australian markets in professional and business services, maritime transport and financial services. The agreement also establishes rules on data flows and prohibits data localisation requirements — a significant step for digital and technology firms operating across both jurisdictions.
Food and farming
EU farmers will gain new export opportunities as Australia eliminates tariffs on cheese, wine, chocolate, biscuits and breads. Sensitive EU agricultural sectors — including beef, sheep and goat meat, sugar, rice and certain dairy products — are protected through import limits and a safeguard mechanism that allows the EU to respond quickly if a surge in Australian imports causes difficulties for European producers.
The deal also protects EU geographical indications, meaning products such as Champagne and Parmigiano Reggiano can only be marketed under those names when genuinely produced in their designated regions. The agreement covers 165 agricultural and food products, 231 spirit drinks and more than 1,600 EU wine geographical indications under a modernised bilateral wine agreement.
Critical raw materials
Australia is a major producer of aluminium, lithium and manganese — materials essential to EU industry, particularly for clean energy and digital technologies. The agreement reduces or eliminates tariffs on these materials and strengthens cooperation on supply chain security, addressing the EU’s heavy dependence on imports of critical raw materials at a time of rising global demand. Special provisions require that extraction is carried out sustainably, and both sides have agreed to co-finance related projects.
Sustainability commitments
The agreement includes legally binding commitments on climate, labour rights and environmental protection. Both parties commit to upholding core International Labour Organisation principles, implementing the Paris Climate Agreement, combating deforestation and illegal wildlife trade, and applying EU health and safety rules to all imports from Australia. Trade in green goods and services, including renewable energy and energy-efficient products, is also liberalised under the deal.
What happens next
The agreement must now go through a ratification process involving legal revision, approval by the Council of the EU, signing by both parties, consent from the European Parliament and a final Council decision. Once Australia also completes its own ratification, the deal can enter into force.
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Photo credit: Caleb, Unsplash