Australia's prime minister Malcom Turnbull and trade minister Steven Ciobo met EU commissioner Cecilia Malmström in Canberra to discuss a possible agreement, although the first round of negotiations on the detail of such a deal is set to be held early next month in Brussels.
In a statement, the European Commission said a new trade agreement between the EU and Australia could boost trade in goods between the two jurisdictions by more than a third. It is currently valued at almost €48 billion, while their bilateral trade in services is worth an estimated €28bn.
For European businesses, a free trade deal would put them "on an equal footing with those from countries that have signed up to the Trans-Pacific Partnership or other trade agreements with Australia" when exporting to or doing business in Australia, the Commission said.
The Australian government said Australian businesses are currently at a "disadvantage" when seeking access to the EU market compared to companies in other countries that have "preferential access".
"We will be working to secure better access for Australian food and agriculture products, creating the framework for open, fair and equitable trade," the Australian government said. "Making Australian exports more competitive means our farmers can sell more produce, our professionals can provide more services and our manufacturers can make and sell more goods. The more Australia sells to the world, the more Australian jobs are created."
"We will look to lock in access and create new commercially meaningful opportunities for Australian services exporters, with a focus on education, financial and professional services. We will also explore rules and initiatives to support the digital economy, innovation and increase opportunities for high-technology start ups," it said.
Victor Lau, an expert in infrastructure at Pinsent Masons, the law firm behind Out-Law.com, said: "The free trade agreements are aimed at facilitating trade in goods and services. Australia stands to gain about $7 billion if the agreement is reached. Early reports indicate that sustainable developments, energy and regulatory cooperation will be discussed. These are matters that will be of interest to our energy and infrastructure clients."
"As always, the devils are in the details, and what will finally be agreed. For example, there have been reports that investor-state dispute settlement, or ISDS, which provides rights for foreign investors to sue governments, will be dropped. That will remove an important mechanism that is available in a number of foreign investment treaties that allow foreign investors to resolve investment disputes," he said.
Malmström is also expected to open trade negotiations between the EU and New Zealand on Thursday.