Australia, EU seal long-awaited trade deal amid global trade tensions

By Renju Jose

SYDNEY, March 24 (Reuters) - Australia and the European Union signed a trade deal on Tuesday that was eight years in the making, removing tariffs for almost all European goods and for nearly all exports of Australian critical minerals.

The agreement comes after both sides stepped up talks in the wake of significantly higher U.S. tariffs under the Trump administration. The two sides also signed an agreement to boost security and defence ties.

"The EU and Australia may be geographically far apart but we couldn't be closer in terms of how we see the world," European Commission President Ursula von der Leyen said in a statement.

"With these dynamic new partnerships on security and defence, as well as trade, we are moving even closer together."

The agreement will remove over 99% of tariffs on EU goods exports to Australia, cutting 1 billion euros ($1.2 billion) a year in duties for companies. EU exports to Australia are now expected to grow by up to 33% over the next decade.

Australian Prime Minister Anthony Albanese told a news conference that the agreement would be worth about A$10 billion ($7 billion) annually to the Australian economy, adding that the removal of almost all import tariffs on Australian critical minerals into the European Union will help stabilise global supply chains.

The EU has been seeking to reduce dependency on China, particularly in critical minerals where Beijing has imposed export controls on some key resources, and the deal signals Europe's growing engagement in the Indo-Pacific, after striking trade accords with Indonesia in September and India in January.

AUSTRALIA AGREES TO BEEF QUOTAS

In services, the EU will gain more access for telecoms and financial services, while in agriculture, Australian tariffs will drop to zero for wine, sparkling wine, fruit and vegetables and chocolates from day one and for cheeses over three years.

For beef - one of the biggest sticking points that sank the previous talks in 2023 - the EU will open two tariff rate quotas of a total of 30,600 tons, with about 55% of the volume to enter duty-free.

Trade between the two sides is substantial, with EU firms exporting to Australia 37 billion euros of goods in 2025 and 28 billion euros of services in 2023.

As a bloc, the EU was Australia's third-largest two-way trading partner in 2024 as well as the sixth-largest export destination, official data showed. The bloc was Australia's second-largest source of foreign investment in 2024.

Under the agreement to expand defence and security ties, the two sides will expand intelligence-sharing to counter global security threats and deepen cooperation to combat online radicalisation and terror financing.

($1 = 0.8611 euros)

($1 = 1.4318 Australian dollars)