‘Strategically important’ Australia-EU free trade agreement creates new opportunities

The “balanced and ambitious” free trade agreement is expected to deliver economic benefits to both parties, with the EU projecting that exports to Australia could rise by up to a third over the next decade, reaching €17.7billion annually once the agreement is signed, ratified and implemented.

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In return, 98% of the current value of Australia’s exports will enter the EU duty‑free, opening the bloc’s consumer market to Australian producers, with tariffs removed on wine, nuts, fruit and vegetables, honey, olive oil, most dairy products, wheat and barley, and seafood.

Other agricultural industries – including beef, sheep meat, sugar, rice, wheat gluten, skimmed milk powder and butter – will gain increased access through new or expanded tariff rate quotas.
Tariffs on most European goods flowing into Australia have also been removed and the agreement will strengthen Europe’s access to Australian critical raw materials, bolstering supply chain resilience in the face of global shocks.

Totis Kotsonis, an international trade expert at Pinsent Masons, said: “This is the latest in a raft of new trade deals that were being negotiated over many years, with important sticking points creating an impasse and delaying a successful outcome. Ultimately, the mood music change and a new impetus was found in light of president Trump’s tariff policy which led both sides appreciating the need to diversify market access for their products and strengthen ties with like-minded partners.”

“The deal is strategically important for both the EU and Australia in a number of other respects.  For example, it will help Australia to pivot further its economy away from reliance on China and the EU to gain preferential access to critical minerals,” he said.

“Also noteworthy is the defence dimension of the deal, which amongst other things will provide for regular dialogue between the two partners with a view to enabling coordination on strategic priorities.”

The security and defence partnership includes not only increased coordination on strategic priorities but also closer cooperation on crisis management missions, and enhanced cooperation on maritime security, cyber-defence and disinformation. Australia and the EU have also agreed to coordinate on emerging technologies, artificial intelligence, space security, non‑proliferation and disarmament.
Andrew Fisken, a Melbourne-based expert in cross-border mergers and acquisitions at Pinsent Masons, said: “From an Australian perspective, we are expecting to see key benefits flow through into Australia’s mining, agriculture and manufacturing sectors.” 
“EU investors into Australia will also be placed on an even playing field with Australia’s other FTA-partner investors, having access to the preferential investment screening thresholds under Australia’s foreign investment laws,” he said.

“Australia is an attractive investment destination due to its consistent economic growth, geographical location, and political stability; we expect that EU investors will increase investment into Australia in the wake of the new trade deal to take advantage of these opportunities.”

Other aspects of the agreement include increased public procurement access, professional mobility through streamlined qualification recognition and increased market access across financial services, education, tourism and communications between Australia and the EU.