The European Union (EU) and Australia have finalized a free trade agreement (FTA) after eight years of negotiations. Analysts say the two major economic blocs chose to align to counter the high-tariff policy pushed by the second Trump administration in the United States and the uncertainty in global supply chains centered on China.
According to a compilation of major foreign media reports on the 24th (local time), including AP, Bloomberg and Reuters, EU Commission President Ursula von der Leyen and Australian Prime Minister Anthony Albanese formally signed the final FTA agreement at Australia's Parliament House in Canberra. It is an achievement eight years after the first negotiations began in 2018.
The two sides suspended talks entirely in Oct. 2023 after failing to bridge differences over expanding quotas for Australian beef exports and recognizing the geographical indication for Italy's sparkling wine Prosecco. But as U.S.-driven trade pressure intensified, they returned to the negotiating table last year and found a compromise in less than a year. Albanese said, "This settlement is a defining moment that newly defines the relationship between Australia and the EU."
Under the agreement, Australia will immediately eliminate tariffs imposed on 98% of goods exported to the EU. Wine, seafood and processed horticultural products are cited as key beneficiaries. The EU agreed to establish an annual import quota of 30,600 tons for Australian red meat and to bring in 55% of that quota tariff-free. In return, Australia will be barred from using the name Prosecco, a northern Italian sparkling wine designation, on export products starting 10 years after the agreement takes effect.
Tariff barriers on automobiles will also be significantly lowered. Australia raised the threshold for the luxury tax on European-made electric vehicles to 120,000 Australian dollars (about 106 million won), enabling most European-made EVs to receive tax exemptions. The EU secured a stable supply chain for critical raw materials, including Australia's abundant lithium and tungsten, laying the groundwork to reduce dependence on China and boost competitiveness in advanced industries.
Along with economic cooperation, the security alliance will be strengthened considerably. The two sides separately signed a security and defense partnership, agreeing to jointly promote defense industry cooperation as well as maritime security, cybersecurity and counterterrorism measures. They also reaffirmed unwavering support for Ukraine against Russia.
Driving this rapid rapprochement between the two economies is a profound shift in the global trade environment. The prevailing assessment is that they needed a reliable partner to counter the policies of President Donald Trump, who strongly foregrounded America First, and to replace China, whose trade dependence is overwhelmingly high.
At a press conference immediately after the signing, EU Commission President Ursula von der Leyen said, "This sends a very important message to a changing world where great powers use tariffs as a lever and exploit supply chains as a vulnerability," adding, "Mutual trust is far more important than a simple transaction."