Australia and the European Union sign off on a free trade agreement

On 24 March 2026, leaders of Australia and the European Union (EU) announced that they had completed negotiations for a free trade agreement (FTA), for which negotiations had commenced on 18 June 2018. The announcement was a welcome counterpoint to challenges to world trade posed by United States (US) tariffs, various military conflicts and a perceived shift away from liberalisation of multinational trade towards protectionism.

The announcement of the Australia-European Union Free Trade Agreement (A-EU FTA) was accompanied by the signing of separate agreements on a new security and defence partnership and an agreement to speed up Australia’s entry into the world’s biggest research and development fund, ‘Horizon Europe’ — a $170 billion research and innovation program.

According to the Australian Department of Foreign Affairs and Trade (DFAT) website:

“This comprehensive, balanced and commercially meaningful agreement will deliver economy-wide benefits to Australia, including significant new opportunities for Australian exporters, producers, and skilled professionals. The EU is a massive, high-income market of around 450 million people that had a nominal GDP of US$21.1 trillion in 2025. As a bloc, it is Australia’s third largest two-way trading partner and second largest source of total foreign investment.

“The agreement is important economically and strategically, for both Australia and the EU, and will provide new opportunities in a highly significant market for Australian goods and services. It will see the elimination of EU tariffs on Australian goods and provide Australian exporters with more choices about where they do business. Australian consumers and companies stand to benefit from a wider choice of more affordable products at lower prices.”

Selected outcomes and benefits for trade in goods

As reported on the DFAT website and various media sources, some of the outcomes and benefits for trade in goods include:

• The A-EU FTA will assist in accessing markets for ‘sustainable Australian agricultural products’ and processed foods including for important commodities such as beef, sheep meat, sugar, grains, nuts, horticulture, dairy, seafood and wine. This includes significant increases in guaranteed access for Australian beef and sheep meat to EU markets.
• EU tariffs on vegetables and fruits (including potatoes, onions, apples and pears), and tree nuts (including almonds, walnuts and macadamias) will be eliminated.
• The EU will eliminate tariffs on 87.3 per cent of dairy products including duty-free access into the EU for cheese, whole milk powder, dairy spreads and fats and oils, ice cream, yoghurt, milk and cream. However, there will be limits on access into the EU for natural butter, skimmed milk powder and high-protein whey.
• The EU will eliminate tariffs on all manufactured goods, except steel, including machinery, electrical goods, textiles and auto parts. Imported goods from the EU will also be more affordable.
• The A-EU FTA boosts trade and cooperation on critical minerals. EU tariffs on critical minerals will be eliminated, making Australian exports more competitive in the EU.
• Australia and the EU will eliminate tariffs on environmental goods, including energy efficient, renewable energy and battery products.
• The A-EU FTA will introduce a new Luxury Car Tax (LCT) category with a threshold of $120,000 for zero emissions vehicles. The general 5 per cent tariff on other vehicles from the EU will be removed, but the LCT will remain for other EU vehicles imported into Australia.
• Imports of other goods from the EU will be more affordable. European champagne, wine, spirits, biscuits, chocolates and pasta will no longer be subject to duty.
• Farmers and businesses will benefit from cheaper auto-parts, machinery and equipment.

More details of the A-EU FTA outcomes and benefits can be found here.

ESG issues

The A-EU FTA makes commitments on the environment, climate change, gender equality and women’s economic empowerment, and workers’ rights and standards.

Geographical indications

Australia has succeeded in safeguarding key terms and securing flexibilities that allow Australian businesses and producers to continue using terms such as prosecco, kransky and parmesan. Existing feta manufacturers may continue to use that term however ouzo manufacturers will have to stop using the term seven years after the agreement comes into effect. Prosecco producers will be able to label their wine prosecco in Australia indefinitely, but the term will be phased out for Australian wine for export over a period of 10 years.

Rules of origin

• The AU-EU FTA establishes ‘simple, low-cost origin documentation requirements for traders wishing to claim preference’. Importers will be able to claim preferential tariff treatment based on either the importer’s knowledge that the good is originating; or a statement of origin (SoO) made out by the exporter or producer that certifies the good is originating (a form of self-certification).
• There is no requirement for exporters to obtain a certificate from an ‘authorised body’.
• We have yet to receive details on ‘consignment’ provisions which state how goods can be transported without losing preferential status.

As the comments above are largely taken from summaries made available through DFAT and media sources, a more detailed assessment will need to be undertaken once the ‘legally scrubbed’ version is made available to all parties.

Other responses to the announcement of the A-EU FTA

While most responses have been positive, there have also been negative responses including:

• Europe’s farm lobby has reportedly demanded that lawmakers vote against the A-EU FTA complaining that the new tariff-free quotas for beef exports will do more damage to EU producers in addition to the damage from other recent EU deals.
• The Australian National party as part of the Federal opposition has stated that the deal does not do enough for Australian interests especially beef producers and its leader has described it as the “worst trade deal ever”.
• The Australian National Farmers Federation has described the agreement as “extremely disappointing” and “subpar” saying there has been no meaningful gains for the agricultural sector in the last three years of negotiations.
• Representatives of Australian red meat exporters, cane growers and the dairy industry have all criticised the agreement as not having improved market access as promised and expected.

Timetable to commencement of the A-EU FTA

While there is no set timetable for commencement of the A-EU FTA, the steps to commencing include:

• Provision of a ‘legally scrubbed’ version of the agreement and its translation into many other European languages.
• Completion of relevant implementation steps. In Australia, the agreement needs to be reviewed by the Joint Standing Committee on Treaties and relevant legislation will need to be passed, including amendments to Customs legislation. There will no doubt be some controversy in the EU given its reputation for protectionism and recent approval of other trade deals. This agreement may be seen as ‘one too many’ in sensitive segments of the EU economy.
• Agreement on a commencement date.

This could take 18 months to two years or even longer given the background of US tariff changes, international conflicts and other trade developments, such as interactions with China and its trade agenda.

Contact us

For further information on the A-EU FTA, or to discuss how it could affect your business, please contact a member of Customs & Trade team. We will keep you advised on developments.