Under the deal, Australian beef quotas will rise more than tenfold over the next decade – Image: David Gray/AFP
Squeezed by Trump’s tariffs and China’s industrial muscle, the EU and Australia bury old trade disputes to finalize a long-delayed free trade deal.
After nearly a decade of stop-start negotiations, the EU-Australia free trade deal has finally crossed the finish line.
“Australia used to have Europhobia — now we have at least some Eurovision,” Tim Harcourt, of the University of Technology Sydney, told DW.
As recently as 2023, talks collapsed at the last hurdle, derailed by fierce opposition from Australian farmers over beef quotas.
So what changed? Not so much the fine print of the agreement, experts say, but the shifting pressures of a far more combative global trade landscape.
New deals in a new trade order
Rising tariffs from the United States have squeezed both Australian meat exports and European carmakers. At the same time, China’s willingness to weaponize access to critical minerals has left Europe scrambling to secure supplies.
Against that backdrop, the deal offers both sides something rare: relief — and reassurance.
“There’s a lot more at stake in this day and age,” Evgeny Postnikov of the University of Melbourne told DW. “It’s no longer the time to sacrifice vital agreements to particular domestic interests.”
EU Trade Commissioner Maros Sefcovic, in Canberra alongside European Commission President Ursula von der Leyen, struck a similar tone: “We are sending a strong signal that we prefer low tariffs — or in this case, no tariffs — and that we want rules-based cooperation.”
The EU-Australia agreement is also part of a broader push. Brussels has been on a deal-making streak, sealing major trade pacts this year with Mercosur, a grouping of South American countries, and India.
The EU and Australia also agreed to boost access to crucial rare earth elements – Image: Lukas Coch/AAP/REUTERS
Stuck in the middle
Australia may rank only around 20th among the EU’s trading partners, but its strategic value is rising fast.
For Europe, the deal is another step in reducing dependence on the United States while strengthening ties with so-called “middle powers,” countries increasingly shaping global trade flows.
Australia is also a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a bloc of 11 Asia-Pacific economies accounting for roughly 15% of global trade.
“This is a very significant market,” said Holger Görg of the Kiel Institute for the World Economy, a Germany-based economic research institute. “A deal with Australia is effectively a gateway into the CPTPP network and a much larger opportunity for European firms.”
The crux: Critical raw materials
For Brussels, one of the biggest prizes of this deal lies underground.
Australia holds the world’s third-largest reserves of rare earth elements and is the top global producer of lithium, a cornerstone of battery production for electric vehicles. European and German carmaker associations have already expressed their support for the trade deal.
Access to these key minerals matters more than ever as China has tightened its grip on them over the past year, heightening fears of supply disruptions just as Europe ramps up its green and digital transitions.
“What has become clear in the past two years is that we should never be too dependent on other partners when it comes to critical raw materials,” Görg said.
The meat of the deal
For Australia, the headline gain is access to the EU’s 450 million consumers.
“It’s an impressive deal for the Australian side,” said Postnikov. Nearly all EU tariffs on Australian agricultural exports, from wine and olive oil to most dairy products, will be scrapped.
There are symbolic wins too. The EU will, for now, allow Australian producers to continue using protected names like parmesan and feta. Australia will also become the only country outside Italy permitted to label its sparkling wine as prosecco.
But beef remains the most contentious issue.
Under the deal, Australian beef quotas will rise more than tenfold over the next decade — from 3,389 metric tons to 30,600 tons annually. That falls short of Canberra’s ambitions, with Brussels holding firm against demands for even higher volumes.
Australian farmers remain unimpressed. The National Farmers’ Federation said they were “extremely disappointed” with the outcome.
Yet the deal’s survival despite domestic backlash may be the clearest signal of all: In a more fractured and competitive global economy, strategic trade partnerships are starting to trump local resistance.
DW.com/NAN 26-3-26
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