After eight years of negotiations, the EU-Australia agreement was signed in Canberra overnight. In less than two months, the Commission completed its third agreement after Mercosur and India. The world is organizing without Donald Trump.
Australia now joins the cohort of over 80 countries that have concluded a free trade agreement with the European Union. Negotiations, which started in July 2018, reached their 15th round in 2023 without any visible political deadlock. A year and a half ago, Ursula von der Leyen and Anthony Albanese reconnected. “We both decided that it couldn’t fail,” said Commission President Ursula von der Leyen in Canberra on the night of Monday 23 to Tuesday 24 March.
The agreement includes a Security and Defense Partnership. Parallel negotiations are underway to offer Australia an association with the Horizon Europe research program. With Australia, Ursula von der Leyen completes her “commercial trilogy” – after Mercosur (which will enter into provisional application on 1 May) and India. Three agreements, three continents, in a few weeks.
Naturally, this acceleration in trade owes much to the trade war unleashed by Donald Trump on the rest of the world. “What I’ve observed with the rise of global unpredictability is that countries aspire to stability and predictability. That’s what the European Union offers,” dodges von der Leyen in response to a direct question from an Australian journalist about Donald Trump. “We believe in free and fair trade,” asserts Australian Prime Minister Anthony Albanese. “At a time when this is under pressure in the world, this agreement sends a message: it is possible to follow the rules and come out as a winner.”
The European Union has added nearly two billion people to its network of 76 trade agreements in less than two months. Essentially, Brussels’ response to Washington’s tariffs is not through confrontation, but through the multiplication of alternatives.
The promises of the agreement include a reduction in customs duties of around one billion euros per year for European exporters. The Commission expects a 33% growth in EU exports to Australia over the next decade, reaching up to an additional 17.7 billion euros annually. Sectors benefiting from the agreement include automotive (+52%), dairy products (+48%), and chemicals (+20%). European investment in Australia could also increase by 87%.
The agreement follows the classic grammar of European free trade agreements, but with some notable innovations. Tariffs on over 100% of EU goods exports are eliminated (with the exception of certain steel products). On the first day of entry into force, customs duties on all European passenger cars will be reduced to zero.
On agriculture, the chapter that makes agriculture ministers tremble with each new free trade agreement, the agreement with Australia was carefully considered. Safeguards were put in place for the agri-food sector, including limited tariff quotas, specific conditions for sensitive products, and close market surveillance to act quickly in case of disruption.
The agreement also protects 165 European agricultural and food geographical indications (GIs) in Australia, along with 231 spirit GIs. For wines, 1,650 protected names, including 50 new GIs, were noted. And for Prosecco, Australian producers have ten years to stop using the term.
The chapter that deals with strategic materials, including lithium, manganese, and rare earths, is particularly noteworthy because it highlights the complementary nature of Australian production and European consumption of critical raw materials.
Ultimately, the security and defense partnership signed by both entities establishes regular strategic dialogues and cooperation on emerging technologies such as AI, space, and non-proliferation. The focus is on countering hybrid threats, cybersecurity, and combating disinformation.
