Ursula von der Leyen and Australian Prime Minister Anthony Albanese.Image: keystone
The European Union and Australia have agreed on a free trade agreement around eight years after the start of the first negotiations.
Mar 24, 2026, 4:15 a.mMar 24, 2026, 4:15 a.m
EU Commission President Ursula von der Leyen made it clear on Tuesday that it is important for the European Union to diversify international trade relations. Von der Leyen and Australian Prime Minister Anthony Albanese also presented a new security and defense partnership in the Australian capital Canberra.
According to von der Leyen, it is important for the EU to expand international trade relations in order to reduce risks and dependencies – especially at a time when the USA under President Donald Trump is an increasingly difficult partner with its aggressive customs policy. The agreement with Australia also follows the EU’s political goals of expanding relations in the Indo-Pacific region and strengthening cooperation with like-minded democracies.
The agreement aims to reduce tariffs and trade barriers in order to stimulate the economies of all partners. According to the EU Commission, industrial sectors that could particularly benefit from the agreement include mechanical engineering, chemicals, the vehicle industry and agriculture.
“A strong signal to the rest of the world”
“We are sending a strong signal to the rest of the world that in times of turbulence, friendship and cooperation are the most important things,” said the German Commission President. The EU and Australia are geographically far apart, but in terms of their view of the world they can hardly be closer. The new partnerships in the areas of security and defense will also bring us even closer together. Among other things, it provides for greater cooperation against cyber risks, hybrid threats and foreign information manipulation and interference.
The EU assumes that exports from member states to Australia could grow by up to 33 percent to 17.7 billion euros annually in the next decade. According to the information, the key sectors with strong growth potential include dairy products with an expected increase of up to 48 percent, motor vehicles with 52 percent and chemicals with 20 percent. EU investments in Australia could increase by more than 87 percent, it is said.
According to information from Brussels, the EU is Australia’s third largest trading partner after China and Japan. However, Australia is only a relatively small trading partner for Europe: the country, with almost 28 million inhabitants, ranks 20th in goods trade with the 27 EU states.
Almost all tariffs should be eliminated
The agreement provides for the abolition of more than 99 percent of tariffs on EU goods exports to Australia, which would save companies of all sizes around one billion euros in tariffs annually, according to information from Brussels.
The agreement also includes the opening of the Australian services market in financial services and telecommunications, better access for EU companies to public contracts in Australia and measures to improve the supply of critical raw materials to Europe from Australia.
It is also intended to make it easier for EU specialists to work in Australia and to strengthen innovative strength on both sides with entry quotas for engineers and researchers.
It is still unclear when the agreement with Australia can be signed. The text of the contract still needs to be legally checked and translated into all official languages of the EU. It must then be approved by the Member States and the European Parliament.
Years of negotiations, failure and new beginnings
The EU decided in 2018 to start talks for a free trade agreement with Australia. In the meantime, there was unrest because Australia negotiated a new security pact for the Indo-Pacific region called Aukus with the USA and Great Britain behind the EU’s back in 2021 – including a deal on nuclear-powered submarines. The government in Paris in particular was angry because a billion-dollar contract for the delivery of French-built submarines fell through.
At a meeting in Osaka, Japan in 2023, the free trade agreement ultimately failed due to disputes over agricultural imports – then the talks stopped.
Negotiations only really picked up speed again since Trump became US President again. He is shaking up the once rather predictable world of international trade with ever new customs decisions. With his political solo efforts, he is also indirectly making good publicity for the EU’s more cooperative approach – and the arduous work to strengthen reliable trade relationships through free trade agreements.
At the beginning of the year, after decades of negotiations, the EU signed an agreement with four South American countries from the Mercosur alliance. It also recently agreed with India on a large new free trade zone.
Now Australia also wants to limit risks and diversify its trade relationships through increased cooperation with the EU. As a result of Trump’s behavior towards even his closest allies, there have recently been increasingly critical questions in the country about the traditionally rock-solid geopolitical ties to the USA. Australia also wants to reduce its dependence on its largest trading partner, China, which is becoming increasingly demanding in the Indo-Pacific region and wants to further expand its power position. (sda/dpa)