EU and Australia seal trade deal worth $6.9 billion a year after eight years of talks

Anthony Albanese and European Commission President Ursula von der Leyen confirmed the agreement in a joint statement on Monday evening Australian time. The Prime Minister said the deal could add about $10 billion a year to Australia's economy. Von der Leyen called it a signal that democracies are choosing to trade with each other.

"This is the broadest trade agreement Australia has ever struck with a European partner," Mr Albanese said. "It covers goods, services, investment, critical minerals and government procurement. It took eight years, and it's worth the wait."

What changes for Australian exporters

The EU will eliminate around 98 per cent of its duties on Australian goods. Wine, dairy, wheat, barley and seafood all gain duty-free access. Australian beef exporters will receive a significantly expanded quota, though the specific tonnage has not been published.

Critical minerals are the centrepiece of the agreement. All tariffs on Australian lithium hydroxide, rare earths and hydrogen exports to the EU will be abolished. Both sides agreed to ban export restrictions on these commodities, a provision aimed squarely at securing European supply chains away from Chinese processors.

"The critical minerals chapter is what got this deal over the line," Trade Minister Don Farrell told reporters in Canberra. "The Europeans need lithium. We have lithium. That's the basis of a deal."

What changes for European exporters

Australian tariffs will drop to zero on EU wine, sparkling wine, fruit, vegetables and chocolates from the day the agreement takes effect. Cheese tariffs will phase out over three years. The deal abolishes more than 99 per cent of tariffs on EU goods entering Australia, saving European companies roughly 1 billion euros a year in duties.

EU exports to Australia are projected to grow by up to 33 per cent over the next decade, reaching 17.7 billion euros a year. French wine producers, Italian cheesemakers and German machinery manufacturers are expected to be the biggest European beneficiaries.

Eight years in the making

Negotiations opened in June 2018 under the Turnbull government. They stalled repeatedly over agriculture, with the EU resisting expanded access for Australian beef and lamb. Talks collapsed entirely in October 2023 when then-Trade Minister Farrell walked away from a deal he said was not good enough on agricultural access.

The revival began in early 2025. Two factors shifted the dynamic. Trump's return to the White House in January 2025 and his escalating tariff regime pushed European policymakers to diversify trading partners. The Iran conflict and its impact on supply chains made access to Australian minerals more urgent.

Von der Leyen flew to Canberra for the final round of negotiations last week. Clayton Utz trade partner Claudia Beaufils said the speed of the final talks was unusual.

"This deal was on life support for 18 months," Ms Beaufils said. "Geopolitics resuscitated it. The Europeans realised they couldn't keep relying on the same supply chains while Washington was tearing up the trade architecture."

The Trump factor

The agreement is the latest in a series of deals between US allies reconfiguring trade relationships as Trump's tariff regime reshapes global commerce. The EU recently concluded an agreement with Mexico and is negotiating with Indonesia and the Philippines.

Mr Albanese was careful not to frame the deal as a response to American policy. Mr Farrell was not.

"When your largest trading partners start putting up walls, you build more doors," Mr Farrell said. "That's exactly what this agreement does."

Australian Grape and Wine chief executive Lee McLean said the deal would transform the European market for Australian winemakers.

"We've been paying between 14 and 32 per cent tariffs on wine into the EU for decades," Mr McLean said. "That drops to zero from day one. For a $15 bottle of Australian shiraz, that's the difference between sitting on a shelf in Hamburg and collecting dust in a warehouse."

Minerals Council of Australia chief executive Tania Constable said the critical minerals chapter was the most consequential trade provision Australia had secured in a generation.

"The ban on export restrictions gives European manufacturers confidence to sign long-term offtake agreements with Australian miners," Ms Constable said. "That's what unlocks investment. Not the tariff reduction. The certainty."

The agreement still requires ratification by the European Parliament and member states. Australian trade deals do not require parliamentary approval. The government expects the agreement to take effect in the first half of 2027.