More beef from Australia will be exported to Europe and cheaper European wine, cheese, and chocolate will find their way into Australian kitchens under a long-awaited free trade agreement.
The agreement, worth about A$10bn (£5.2bn), came two years after negotiations broke down over Australian demands for more red meat market access and complaints about Australian products labelled with traditionally European names such as prosecco.
European Commission president Ursula von der Leyen and Australian prime minister Anthony Albanese signed the agreement at Australia’s Parliament House on Tuesday, bringing an end to protracted negotiations that began in 2018.
The leaders also announced a new defence partnership that will bring closer military cooperation and the start of negotiations for Australia to become an associate of the research and innovation funding programme Horizon Europe.
The breakthrough comes as both the EU and Australia seek to diversify their trading networks and reduce their economic reliance on China, and exposure to uncertain US tariffs.
“Today marks a defining moment in the relationship between Australia and the European Union,” Mr Albanese told reporters.
“After eight years of negotiations, Australia and the European Union have signed a landmark trade deal,” he added.
"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 said in a statement.
“With these dynamic new partnerships on security and defence, as well as trade, we are moving even closer together.”
Under the trade deal, Australian producers of prosecco, traditionally a sparkling wine from northern Italy, will be banned from using the name on exports 10 years after the pact takes effect.
But some Australian agricultural products like beef and sheep meat, for example, will be subject to export quotas, and Australian farmers sharply criticised the pact for delivering “subpar” access to the bloc.
The EU will open two tariff rate quotas of a total of 30,600 metric tonnes for Australian red meat, with 55 per cent of that duty free.
The agreement will remove over 99 per cent of tariffs on EU goods exports to Australia, cutting $1.2bn a year in duties for companies. EU exports to Australia are now expected to grow by up to 33 per cent over the next decade.
The pact will secure the EU’s supply of critical raw materials.
“For both Europe and Australia, getting China right is a strategic imperative, and this is why bringing to life our critical minerals partnership will be crucial to our success,” Ms Von der Leyen told Australia’s parliament.
“We cannot be over-dependent on any supplier for such crucial ingredients, and that is precisely why we need each other.”
The deal also signals Europe’s growing engagement in the Indo-Pacific, after striking trade accords with Indonesia in September and India in January.
Australian tariffs will drop to zero for European wine, sparkling wine, fruit and vegetables and chocolates from day one and for cheeses over three years.
However, Australian farmers have expressed their displeasure over the trade negotiations. They “concluded without commercially meaningful agricultural market access gains since Australia last walked away from negotiations,” said Hamish McIntyre, president of the National Farmers Federation in Australia.
Under the agreement, some EU “geographical indications” names for products such as Pecorino Romano or Ouzo, will be fully protected after a relatively short phasing-out period. But some producers of goods like feta will be able to continue to use those names, provided there is clear labelling of the product’s origin.
Australia also agreed to lift the luxury car tax threshold for EU electric vehicles to A$120,000, meaning about 75 per cent of EVs from the region will be exempted from the tax.
