The new Australian-European Union Free Trade Agreement: What it means for business

The landmark Free Trade Agreement (FTA) between Australia and the European Union (EU), signed on 24 March 2026 following eight years of negotiations and multiple rounds of discussions as reported previously, has the potential to further strengthen trade and investment between Australia and its third largest two-way trading partner and second largest source of total foreign investment. Although this could benefit all sectors across the board, there are a few that are best placed to take immediate advantage of the FTA.

Trade in goods

Once fully implemented, 98% of the current value of Australia's goods exports will enter the EU duty-free. The FTA delivers substantial agricultural market access, with 94.8% of the value of Australia's agricultural exports entering the EU without tariffs. Tariffs will also be eliminated entirely on products including wine, tree nuts, barley, seafood, onions, carrots, honey and olive oil.

For key agricultural products where full tariff elimination was not achieved, the FTA establishes annual tariff rate quotas, including 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 on full implementation, covering 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 removal of most Australian tariffs on EU imports will also reduce the cost of European goods, including wine, spirits, chocolates, biscuits, pasta, motor vehicles and machinery.

The FTA will also eliminate tariffs on what it refers to as "environmental goods", which include wind turbines, lithium batteries and solar panel components. It is expected this will be mutual – ie., both Australian and EU tariffs will be eliminated. The extent of these exemptions is expected to become clear as the ratification process progresses.

Services and professional mobility

The FTA will make it easier for Australian service suppliers and professionals to travel to and operate within the EU. Australian professionals will benefit from a streamlined framework for the recognition of their professional qualifications in the EU, reducing behind-the-border barriers such as restrictive licensing requirements. Greater market access has been secured for Australian services providers across key sectors of commercial interest, including financial services, education, tourism and communications.

Investment

The FTA also supports two-way productive foreign investment between Australia and the EU, which was Australia's second-largest source of foreign investment in 2024, with total investment stock worth $869.3 billion. Key investment outcomes include the following:

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

• 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 adopted under the Australia–UK FTA and is expected to have a positive effect on EU investor confidence.

Intellectual property and geographical indications

The FTA addresses the protection of intellectual property rights, seeking to maintain a balance between the interests of rights holders, users and the broader public interest. A significant outcome relates to geographical indications, which had been one of the most contentious negotiation points.

Government procurement

Australian businesses, including small and medium-sized enterprises, will have better access to bid for EU government contract opportunities, which are worth approximately $845 billion annually, including in sectors such as rail and construction. The agreement ensures improved access on the basis of clear and transparent rules for tendering.

Labour, environment and sustainable development

The FTA does more to protect labour rights and environmental standards than any previous Australian trade agreement. It promotes compliance with internationally recognised labour standards and commits both parties to ensuring high levels of environmental protection, consistent with internationally agreed principles and rules. The agreement also recognises the interests of Australian First Nations peoples, including in relation to art and intellectual property.