After eight years of negotiations, the European Union (EU) and Australia have concluded a landmark free trade agreement – one driven partly by concerns about US and Chinese trade policies.
The agreement eliminates over 99% of tariffs on EU exports to Australia. The deal scraps duties on nearly all Australian goods and critical minerals entering the EU. It opens the EU’s high-income market of 450 million consumers.
It is the fourth-largest FTA the EU has ever concluded by tariff savings, behind only the UK, Mercosur, and India. The two sides already trade more than €89.2 billion in goods and services annually, supporting 460,000 jobs across the EU.
US tariff volatility and China’s tightening export controls accelerated negotiations by reinforcing Europe’s need for supply-chain diversification. The EU finalized free trade agreements with Indonesia in September 2025 and India in January 2026. It cemented three major Indo-Pacific agreements in rapid succession.
Source: Eurostat
“The EU and Australia may be geographically far apart, but we couldn’t be closer in terms of how we see the world,” Ursula von der Leyen, President of the European Commission, said. “We are sending a strong signal to the rest of the world that friendship and cooperation are what matter most in times of turbulence.”
Formal negotiations began in June 2018 but stalled in October 2023. At that point, Australian Trade Minister Don Farrell demanded new beef and sheep meat export quotas. The EU negotiators described it as incompatible with their final offer.
They revived the talks again in 2025 in response to the Trump administration’s imposition of tariffs across the globe. Von der Leyen and Australian Prime Minister Anthony Albanese signed the deal in Canberra on March 24.
EU Runs Trade Surplus with Australia
The EU runs a goods trade surplus of €28 billion with Australia, exporting €37 billion in goods in 2025. The bloc imports just €10.7 billion in goods.
In services, the imbalance is equally pronounced. EU firms supplied €31 billion to Australian clients in 2024, against €11 billion flowing the other way.
About 97.6% of EU exports will be duty-free at entry into force. About 2% will have duties removed over a transition period of up to five years. For Australian exporters, 97.8% of goods will enter the EU duty-free once the agreement starts.
EU exports to Australia are expected to grow by as much as 33% over the next decade. They could reach up to €17.7 billion annually,
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