The EU and Australia yesterday struck a long-awaited free-trade deal, while also agreeing to boost defense cooperation and access to crucial rare-earth minerals in the face of global uncertainty over trade.
European Commission President Ursula von der Leyen’s visit to Australia comes as the 27-nation bloc and the import-reliant nation navigate renewed energy vulnerability sparked by the war in the Middle East.
The accord is the latest agreed by Brussels in a push to diversify trade, as Europe faces challenges from the US and China.
Photo: EPA
Key sticking points on Australian use of European geographical names as well as how much beef can be exported to the continent were overcome to reach the deal after eight years of negotiations.
Another compromise would see Australian winemakers allowed to use the term “prosecco” domestically, but they must stop using it for exports after 10 years.
Australia would also be allowed to keep using some geographical names, such as feta and gruyere, in cases where producers have used the name for at least five years.
European automakers would benefit from Australia raising the threshold for a luxury tax on electric vehicles, of which three-quarter would be exempt.
The two sides also agreed to step up cooperation on defense and on critical raw materials.
Addressing the Australian Parliament yesterday, Von der Leyen described a world that was “brutal, harsh and unforgiving.”
In that context, she said the EU and Australia were bound by common values and must work together to mitigate overreliance on countries such as China for rare-earth minerals.
“We cannot be over dependent on any supplier for such crucial ingredients, and that is precisely why we need each other,” she said.
“Our security is your security, and with our new security and defense partnership, we have each other’s back,” she said.
The Chinese Ministry of Foreign Affairs urged the EU to abandon its “zero-sum thinking.”
“We hope the European side will ... refrain from adopting protectionist measures, and view China’s development in a rational and objective light,” ministry spokesman Lin Jian (林劍) said when asked at a regular news briefing about Von der Leyen’s comments.
Under the pact, the EU said it expected exports to Australia to grow by one-third over a decade.
The quota of Australian beef allowed into the bloc would increase more than 10 times the current level over the next decade. That upset both Australian farmers, who had hoped for more, and their European peers, who had pushed for the opposite.
Australia’s National Farmers’ Federation said it was “extremely disappointed” by a deal that European agriculture lobby group Copa-Cogeca said included “unacceptable” concessions.
Others were more pleased. European carmakers group ACEA welcomed the pact and the EU’s top business lobby, BusinessEurope, hailed it as “a win for both sides, geopolitically and economically.”
EU firms exported 37 billion euros (US$42.9 billion) of goods to Australia last year, and 31 billion euros of services in 2024.
Australia said the deal could add A$7.8 billion (US$5.4 billion) to its GDP by 2030.
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