EU–Australia Free Trade Agreement: Deal Finally Done

After eight years of negotiations, Australia and the European Union have finally reached agreement on a long-awaited free trade deal—closing the last major gap in Australia’s global trade network.

While the official text is yet to be released, early government announcements point to a deal that will significantly benefit trade flows between the two economies.

What We Know So Far

From an Australian perspective, several key benefits are already clear:

• Tariffs eliminated on most goods: Australia’s standard 5% tariff on EU imports will largely disappear on implementation. This includes passenger motor vehicles, where duties drop to zero from day one.

• Gradual reductions for sensitive products: Some goods—such as certain cheeses and heavy vehicles—will see tariffs phased out over time.

• Targeted exclusions remain: Notably, some steel products will sit outside the agreement.

  
  

A Long Road to Implementation

Despite the breakthrough, businesses shouldn’t expect immediate change. The agreement is unlikely to take effect until late 2027 or 2028.

Why the delay? The process is extensive:

• Translation into multiple EU languages

• Approval by the European Council

• Formal signing by both parties

• Legislative approval through Australian and European parliaments

  
  

Simpler Rules, Greater Flexibility

One of the more business-friendly features is the flexible approach to origin documentation. Instead of Government issued certificates of origin:

• Importers may claim preferential treatment based on their own knowledge of compliance; or

• Exporters/producers can provide a formal statement of origin

This should reduce administrative friction—but also raises the stakes for compliance.

Opportunities (and Safeguards) for Agriculture

The agreement opens the door further for Australian agricultural exports into Europe. However, this access comes with safeguard mechanisms, allowing protections to be triggered if imports cause serious market disruption.

A Bonus for Automotive Imports

Although not strictly part of the FTA, a related policy shift will lift the luxury car tax threshold for electric vehicles to $120,000—a notable win for European manufacturers.

EU Exports to Australia: The Big Picture

Current trade flows highlight where the biggest impacts may be felt:

• Machinery – €13 billion

• Transport equipment – €5.8 billion

• Pharmaceuticals – €4.8 billion

• Chemicals – €2.2 billion

• Metals and metal goods – €925 million

• Plastics – €770 million

• Textiles – €535 million

  
  

What Importers Should Do Now

With implementation still 18–24 months away, businesses must continue to actively manage duty exposure on EU imports.

Once the agreement is in force, it won’t override existing anti-dumping or safeguard measures.

The Bottom Line

This agreement promises a meaningful reduction in long-term supply chain costs. But accessing those benefits won’t be automatic.

Importers will need to:

• Understand which goods qualify

• Ensure compliance with the rules of origin

• Be audit-ready for scrutiny from the ABF

We will continue to monitor developments and provide updates as the agreement moves from negotiation to implementation.