EU–Australia deal puts olive oil, sausages and honey on discount

FILE - European Commission President Ursula von der Leyen and Australian Prime Minister Anthony Albanese after agreeing to a free trade deal in Canberra, 24 March 2026.

- 
Copyright 
AP Photo
Published on 26/03/2026 - 7:00 GMT+1•Updated
10:52
After eight years of fraught negotiations, Europe and Australia have finally struck a trade deal
From champagne to critical minerals, here is what changes — and for whom.

It took eight years, fifteen rounds of talks, one suspended negotiation in 2023 and one global trade war
And now, finally, a long-awaited agreement.

This week, European Commission President Ursula von der Leyen and Australian Prime Minister Anthony Albanese shook hands on a free trade agreement that promises to reshape the commercial relationship with Europe's seemingly least complicated trading partner — an enviable feat in tense times for international trade.

Unlike most of the EU's recent trading partners, Australia poses few of the political headaches that have dogged deals with Mercosur countries or India
The deal cuts through it, and the effects will be widely felt, especially by producers of trademark EU products that have seen a reduction in their sales in the US.

FILE - Quality control employee inspects a Parmigiano Reggiano Parmesan cheese in Noceto, Parma, Italy
Buying European, halfway around the world
Europeans have long paid a premium for their own products to reach Australian shelves
Australian tariffs on European wine, sparkling wine, fruit, vegetables and chocolates will drop to zero from day one, with cheese following over three years
Champagne, spirits, biscuits, and pasta will also now be cheaper at the checkout in Australia.

For European producers, it is not just about price
Geographical indications — the EU-backed protections that distinguish Champagne from sparkling wine or Pecorino Romano from generic sheep cheese — have long been a sticking point and will now be fully protected after a short phasing-out period
Feta is messier, with existing Australian producers who have used the name continuously for at least five years may keep doing so, provided the product's origin is clearly labelled
Prosecco producers in Australia's King Valley can keep selling domestically, but exports stop after a decade.

Other food items that will become cheaper down under are the Kransky smoked sausage, EU honey and olive oil, while Europeans will now get to enjoy cheaper seafood — including lobster — as well as Australian walnuts, almonds and macadamias.

EU-Australia trade deal draws ire of farmers and lawmakersWatch: What is the EU-Australia trade deal actually about?

Cars get a fast lane
European carmakers have long chafed at Australia's luxury car tax, a 33% levy that has effectively shut out the upper end of the EU automotive range
The deal does not kill the tax entirely, but it opens a significant door
Australia will raise the luxury car tax threshold for electric vehicles to 120,000 Australian dollars, meaning roughly 75% of EU-made EVs will no longer be subject to it
Australia will also fully liberalise market access for all EU passenger cars, with duties on trucks phased out over a short period
The European Commission projects EU motor vehicle exports could rise by 52%
Germany's premium manufacturers — BMW, Mercedes and Porsche — stand to gain most immediately
Under the deal, those flows get a significant boost, with the Commission forecasting dairy export gains of up to 48%
European industry body Eucolait called it a significant and positive step, welcoming both the tariff eliminations and the protection of geographical indications.

FILE - Heavy machinery moves coal as it is poured onto a stack near Muswellbrook in the Hunter Valley, Australia
The critical minerals play
This is where the deal stops being about shopping baskets and starts being about geopolitics
The agreement eliminates EU tariffs on Australian critical minerals, including lithium and manganese, and important move considering both countries are concerned about the fact that China currently controls roughly 90% of global rare earth processing — minerals essential to EV batteries, wind turbines, and defence technology
"We cannot be over-dependent on any supplier for such crucial ingredients, and that is precisely why we need each other," von der Leyen told Australia's parliament on Tuesday.

Diversifying away from that dependency has been a stated Brussels priority for years.

Bruegel analyst Ignacio García Bercero had argued as recently as May 2025 that the EU's network of trade and investment agreements is critical to strengthening economic resilience and is the best geopolitical instrument in support of alliances to respond to global challenges, with Bruegel explicitly flagging an Australia deal as a priority alongside India and key ASEAN partners.

Von der Leyen clinches Australia trade dealVon der Leyen to visit Australia as trade deal nears finish line
The farmer problem
Not everyone is celebrating
European farm lobbies have been here before — they mounted fierce resistance to the Mercosur deal — and they are not standing down now
Pan-European agriculture group Copa-Cogeca called the concessions unacceptable, citing the cumulative impact of successive trade agreements.

Beef is a major flashpoint
The annual quota for Australian beef will rise over 10 years to 30,600 metric tons — around 0.5% of EU domestic consumption and less than 2% of all Australian beef exports
Both sides retain the right to trigger safeguard measures if import surges threaten domestic producers.

The structural tension here has deep roots
In a 2023 analysis that proved prescient, Bruegel senior fellow André Sapir identified why these talks were always going to be politically painful.

"Agricultural products and raw materials account for almost 85% of Australia's exports, but less than 20% of the EU's exports, while [manufacturing products] account for more than 80% of the EU's exports but less than 10% of Australia's exports," the analysis said
Both sides had to open up in exactly the sectors where their farmers and workers were most exposed.

The bigger picture
The deal did not happen in a vacuum
Since Donald Trump returned to power, trade agreements have taken on sharper geostrategic weight for the EU, which has struck deals over the past months with Mexico, Switzerland, and Indonesia, while the Mercosur pact moves toward provisional application
For a bloc still reconfiguring its energy supply chains in the wake of its rupture with Russian gas, securing preferential access to a major clean hydrogen producer carries weight well beyond the headline numbers.

Hydrogen can be burned as a fuel or used in fuel cells to generate electricity, producing only water as a byproduct — making it one of the cleanest energy sources available
The catch is that producing it requires a lot of electricity, which is why Australia is well-placed with its vast renewable energy potential from solar and wind that can power the production process cheaply at scale.

The EU wants it as a substitute for the natural gas it used to import from Russia, particularly for heavy industry such as steel, chemicals and cement.

Who won and who lost from a year of US tariffs?

Iran war energy shock puts ECB on alert — Lagarde vows timely response
Europe's nuclear leaders: Which countries produce the most?