Lucas Red /
European Commission President Ursula von der Leyen and Australian Prime Minister Anthony Albanese
Pressured by Trump’s tariffs and China’s industrial might, the EU and Australia are putting aside old trade disputes to finalize a long-delayed free trade deal.
After almost a decade of intermittent negotiations, the free trade agreement between the EU and Australia has finally been concluded.
“A Australia used to have Europhobia — now we at least have Eurovision,” Tim Harcourt of the University of Technology Sydney told DW.
In 2023, negotiations failed at the last hurdle due to strong opposition from Australian farmers to beef quotas.
So what has changed? Not so much the details of the agreement, experts say, but rather the pressures of a global trade scenario much more competitive.
New agreements in a new trading order
Rising US tariffs have affected both Australian meat exports and European carmakers. At the same time, China’s willingness to use access to critical minerals as a weapon has left Europe in a desperate search for supplies.
In this context, the agreement offers both sides something rare: relief and security.
“There’s a lot more at stake these days,” Evgeny Postnikov of the University of Melbourne told DW. “Already This is not the time to sacrifice vital agreements in favor of specific domestic interests”.
European Trade Commissioner Maros Sefcovic, in Canberra alongside European Commission President Ursula von der Leyen, struck a similar tone: “We are sending a strong signal that we prefer low rates — or, in this case, no tariffs — and that we want rules-based cooperation.”
The EU-Australia agreement is also part of a broader effort. Brussels has closed several agreements, sealing this year important trade pacts with Mercosura group of South American countries, and with India.
Stuck in the middle
Australia may only rank 20th among the EU’s trading partners, but its strategic value is growing quickly.
For Europe, the agreement represents another step in reducing dependence on the United States, while strengthening ties with the so-called “medium powers“, countries that increasingly shape global trade flows.
Australia is also a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a bloc of 11 Asia-Pacific economies which represent around 15% of world trade.
“This is a very important market,” said Holger Görg of the Kiel Institute for World Economy, an economic research institute based in Germany. “An agreement with Australia is, in practice, a gateway to the CPTPP network and a much greater opportunity for European companies”.
The crux: the essential raw materials
For Brussels, one of the biggest benefits of this agreement lies underground.
Australia holds the third largest world reserve of rare earth elements and is the largest global producer of lithium, a key element in the production of batteries for electric vehicles. European and German car manufacturers’ associations have already expressed their support for the trade agreement.
Access to these essential minerals is more important than ever as China tightened its control over them last year, raising fears of supply interruptions precisely when Europe accelerates its green and digital transitions.
“What has become clear over the past two years is that we should never be too dependent on other partners when it comes to critical raw materials,” said Görg.
The core of the agreement
For Australia, the main gain is the access to 450 million consumers of the EU.
“It’s an impressive deal for the Australian side,” Postnikov said. Almost all EU tariffs on Australian agricultural exports, from wine and olive oil to most dairy products, will be eliminated.
There are also symbolic achievements. For now, the EU will allow Australian producers to continue use protected names like parmesan and feta. Australia will also become the only country outside Italy allowed to label its sparkling wine as prosecco.
But beef remains the most controversial issue.
Under the terms of the agreement, Australian beef quotas will increase more than tenfold in the next decade — from 3389 tonnes to 30,600 tonnes per year. This falls short of Canberra’s ambitions, with Brussels firmly resisting demands for even greater volumes.
Australian farmers remain unhappy. The National Farmers Federation stated being “extremely disappointed” with the result.
Yet the deal’s survival despite domestic backlash may be the clearest sign of all: In a more fragmented and competitive global economy, strategic trade partnerships are beginning to overcome local resistance.
