Bridging Great Distances: The EU and Australia Deepen their Relations

This year marks another milestone in the EU’s expanding network of international partnerships: the conclusion of a new Free Trade Agreement (“FTA”) and the establishment of a Security and Defense Partnership with Australia. On 24 March 2026 in Canberra, European Commission President Ursula von der Leyen and Australian Prime Minister Anthony Albanese announced the political agreement on the FTA’s substance; the Security and Defense Partnership had already been signed virtually beforehand. Together with recently concluded agreements — including those with the Mercosur countries and India — the new FTA further diversifies the EU’s network of trading partners in strategically important regions. For the EU, the agreement promises far-reaching economic benefits, including the near complete elimination of tariffs on goods exports, improved access to critical raw materials, and simplified conditions for participation in Australian public procurement procedures.  

Tariff Reductions

A core component of the FTA is the substantial reduction of mutual tariffs. Upon entry into force, many tariffs will be abolished immediately, while others will be phased out over defined transition periods. In total, approximately 99 % of EU exports to Australia will become tariff-free. This particularly benefits industrial goods, machinery, transport equipment, chemical products, and agricultural goods. Certain steel products, however, remain excluded from preferential treatment.

To safeguard European agriculture, selected sensitive agricultural goods — including beef, sheep and goat meat, sugar, certain dairy products, and rice — will be subject to tariff-rate quotas. Once these quotas are exhausted, higher tariff rates will continue to apply. The European Commission expects that EU exports to Australia could increase by around 33 % in the medium term as a result of the agreement.

Access to Critical Raw Materials

The agreement also significantly enhances EU access to critical raw materials (“CRMs”), which are essential for fast-growing sectors such as net?zero technologies and the digital economy. Given the EU’s strong import dependence on many of these materials — including lithium (100 %) and tantalum (99 %) — Australia’s role as a major global producer is strategically vital. Upon the FTA’s entry into force, bilateral tariffs will be reduced or eliminated both for the raw materials themselves and for goods manufactured from them.

Safeguard-Clauses

To prevent economic harm or market disruption triggered by sudden import surges, the agreement includes bilateral safeguard clauses. These mechanisms allow either party to temporarily reintroduce higher tariffs or impose time-limited quantitative restrictions on imports where justified.

Security and Defense Partnership

Beyond trade, the newly established Security and Defense Partnership aims to deepen cooperation in core security areas, including maritime security, cybersecurity, countering hybrid threats, and combating foreign information manipulation and interference. The partnership foresees regular security and defense dialogues as well as enhanced exchanges of security-relevant information.

Outlook

The negotiated texts were recently published by the European Commission; however, relevant annexes are still partially missing. The next step will be for the Commission to submit a proposal to the Council for authorization to sign the agreement. The Council will decide by qualified majority under Article 218(5) TFEU, as the agreement falls within the scope of the Common Commercial Policy under Article 207(4) TFEU. For its formal conclusion, the consent of the European Parliament is required pursuant to Article 218(6)(a) TFEU. Parliament may grant or withhold consent and may also request an opinion from the Court of Justice of the European Union under Article 218(11) TFEU on the agreement’s compatibility with EU law. To the extent that the agreement includes provisions outside the EU’s exclusive competence — such as those concerning investment protection or certain safeguard mechanisms — ratification by the Member States will also be required. Once all procedural steps have been completed, the agreement will be formally signed by the EU and Australia.