Australia and the European Union have agreed on a free trade deal that could lower the cost of some imported food, drink, cars and machinery, while opening a much bigger market for Australian exporters. But the changes are not immediate, and the agreement still has to be formally signed, approved and brought into force.
Why it’s in the news
After eight years of negotiations, Australia and the EU announced on 24 March that they had concluded talks on the agreement. The draft text will now go through legal checks and translation into the EU’s 24 official languages. Formal signature is expected in late 2026 or early 2027, and further parliamentary and legal steps are expected to take up to another year after that.
What the deal actually does
In simple terms, the agreement lowers or removes many tariffs between Australia and the EU. Tariffs are taxes charged at the border, so cutting them can make imported goods cheaper and exports more competitive.
Australia’s Department of Foreign Affairs and Trade (DFAT) says 97.8 per cent of Australia’s goods exports will enter the EU duty-free once the agreement starts. For some sensitive farm products, including beef, sheep meat, sugar and some dairy, access improves through changed quotas rather than immediate unlimited free trade terms. Under the agreement, for example, Australian farmers will be able to export an additional 30,600 tonnes of beef and 25,000 tonnes of lamb.
The agreement is important because up until now, the EU has been Australia’s largest trading partner without a free trade agreement (FTA). As a single market, the EU is Australia’s third largest two-way trading partner and second largest source of foreign investment.
What it could mean for everyday Australians
For consumers, the most obvious effect is on imported goods. DFAT says European champagne, wine, spirits, biscuits, chocolates and pasta should become more affordable once the agreement is in force. Businesses are also expected to benefit from cheaper car and truck parts, machinery and equipment, and the government says some European motor vehicles, should become cheaper too once the deal takes effect.
That includes EVs, as the agreement includes a new Luxury Car Tax category with a higher threshold of $120,000 for zero-emissions vehicles.
Australia already buys a lot from Europe. In 2024, we imported $64.0 billion in goods and $19.8 billion in services from EU nations. That means the sectors most likely to watch this closely include food and beverage importers, vehicle distributors, machinery suppliers and businesses that rely on European equipment or specialist inputs.
From prosecco to parmesan: why product names matter
One of the hardest parts of the negotiations was over names used on food and drink. The EU protects many of these through “geographical indications”, or GIs, a system that reserves certain names for products tied to a specific place and reputation. From the EU’s perspective, that is about protecting distinctive regional products from imitation.
Australia has agreed to protect 396 EU geographical indications, but it also secured important carve-outs. Common words such as brie and prosciutto are not protected under the deal. Parmesan can continue to be used freely, while some terms including ‘feta’ are grandfathered for existing Australian users.
Prosecco is perhaps the best-known compromise. Australia will protect Prosecco as an EU geographical indication, but it will still be recognised here as a grape variety. That means Australian producers can keep using the name in the local market.
The bigger picture for Australia’s international relations
The deal is about much more than cheaper imported groceries or wine. It improves access for Australian exporters in sectors including wine, seafood, horticulture, grains, sugar, dairy and meat, and it removes tariffs on almost all Australian manufactured goods and mineral resources going into Europe.
Australian service providers in finance, education, tourism and communications also get better market access, and Australian businesses will be able to bid more easily for EU government contracts that are worth more than $845 billion a year.
The agreement also lands at a time when Australia and Europe are trying to broaden supply chains and reduce over-reliance on single markets.
The agreement removes EU tariffs on Australian critical minerals and hydrogen, and the issue had already been gaining momentum in Australia’s talks with Germany. On the same day the trade deal was announced, Australia and the EU also unveiled a Security and Defence Partnership, underlining that this is as much about strategic alignment as it is about tariffs.
