Australia and EU sign free-trade deal, with sweeping tariff cuts expected once fully implemented

Australia and the European Union have signed a landmark free-trade agreement on 24 March 2026, concluding eight years of negotiations in a deal that has the potential to deepen trade and investment with Australia’s third-largest two-way trading partner and second-largest source of total foreign investment.

Once fully implemented, the agreement provides that 98% of the current value of Australia’s goods exports will enter the EU duty-free. Agriculture is a major beneficiary: 94.8% of the value of Australian agricultural exports will enter the EU without tariffs, with duties eliminated entirely on products including wine, tree nuts, barley, seafood, onions, carrots, honey and olive oil.

For key farm products where full tariff removal was not achieved, the deal establishes annual tariff rate quotas for beef, sheep meat, most dairy products (including cheese), sugar, rice, ethanol, wheat gluten, natural butter, skimmed milk powder and high-protein whey.

On the industrial side, all tariffs on Australia’s advanced manufacturing and other industrial goods—except steel—will be eliminated once the agreement is fully in force. Covered categories include machinery and electrical goods, textiles, auto parts, aluminium, zinc, lead and silicon, chemical and pharmaceutical products, plastics and rubber products, and optical and photographic products.

All tariffs will also be eliminated on Australian energy and resource products, including critical minerals, lithium hydroxide, and hydrogen and its carriers. The agreement will remove most Australian tariffs on EU imports as well, which will reduce the cost of European goods such as wine, spirits, chocolates, biscuits, pasta, motor vehicles and machinery.

Tariffs will also be eliminated on what the agreement refers to as environmental goods, including wind turbines, lithium batteries and solar panel components. It is expected this will be mutual, with both Australian and EU tariffs eliminated; the extent of these exemptions is expected to become clear as the ratification process progresses.

The deal is set to make it easier for Australian service suppliers and professionals to travel to and operate within the EU. It creates a streamlined framework for the recognition of Australian professional qualifications, reducing behind-the-border barriers such as restrictive licensing requirements.

Greater market access has been secured for Australian service providers across key sectors including financial services, education, tourism and communications. On investment, the agreement supports two-way productive foreign investment between Australia and the EU, which in 2024 was Australia’s second-largest source of foreign investment, with total investment stock worth $869.3 billion.

The EU will provide Australian investors non-discriminatory treatment in sectors of commercial interest such as mining, manufacturing, energy, tourism and education. The agreement will also provide greater predictability for EU investors seeking to invest in Australia, including in mining, manufacturing, critical minerals and renewable energy.

Australia will raise its foreign investment screening thresholds for private EU investors in line with thresholds applied to other free trade agreement partners, reducing administrative costs and compliance burdens for less-sensitive transactions while maintaining Australia’s right to screen investments on national interest and national security grounds.

This mirrors the approach under the Australia–UK FTA and is expected to have a positive effect on EU investor confidence. The agreement also addresses the protection of intellectual property rights. Further details, including on environmental goods coverage, are expected to be clarified as ratification proceeds.