Today's Edition
SYDNEY (REUTERS)
Australia and the European Union signed a trade deal on Tuesday that was eight years in the making, removing tariffs for almost all European goods and for nearly all exports of Australian critical minerals.
But some Australian agricultural products like beef and sheep meat, for example, will be subject to export quotas.
The agreement comes after both sides stepped up talks in the wake of significantly higher US tariffs under the Trump administration, and concerns regarding the supply of rare earths and other critical minerals. The two sides also signed an agreement to boost security and defence ties.
"The EU and Australia may be geographically far apart but we couldn't be closer in terms of how we see the world," European Commission President Ursula von der Leyen said in a statement. "With these dynamic new partnerships on security and defence, as well as trade, we are moving even closer together."
The agreement will remove over 99% of tariffs on EU goods exports to Australia, cutting 1 billion euros ($1.2 billion) a year in duties for companies. EU exports to Australia are now expected to grow by up to 33% over the next decade.
Australian Prime Minister Anthony Albanese told a news conference that the agreement would be worth about A$10 billion ($7 billion) annually to the Australian economy, adding that the removal of almost all import tariffs on Australian critical minerals into the European Union will help stabilise global supply chains.
The deal also signals Europe's growing engagement in the Indo-Pacific, after striking trade accords with Indonesia in September and India in January.
Australian tariffs will drop to zero for European fruit and vegetables and chocolates from day one, and for cheeses over three years.
The EU will remove tariffs for many agricultural products but some key exports will have quotas. For beef - one of the biggest sticking points that sank the previous talks in 2023 - the EU will open two tariff rate quotas of a total of 30,600 metric tons, with about 55% of the volume to enter duty-free.
Australia also agreed to lift the luxury car tax threshold for EU electric vehicles to A$120,000 ($83,600), meaning about 75% of EVs from the region will be exempted from the tax.
Trade between the two sides is substantial, with EU firms exporting to Australia 37 billion euros of goods in 2025, and 28 billion euros of services in 2023.
As a bloc, the EU was Australia's third-largest two-way trading partner in 2024 as well as the sixth-largest export destination, official data showed. The bloc was Australia's second-largest source of foreign investment in 2024.
