In brief
Australia and the European Union (EU) have concluded negotiations on a free trade agreement (FTA) on 24 March 2026, marking a major step forward in trade and investment between the parties. The EU, with a GDP of around $30tn, is Australia’s third largest two-way trading partner. The FTA is expected to result in 97.2% of the value of EU's exports entering Australia duty free (rising to 99.5% upon full implementation after 7 years) and 97.8% of Australia’s exports entering the EU duty free. The FTA is expected to reduce other trade barriers, create new opportunities in the services sector, and establish a more predictable business environment. While conclusion of negotiations is a significant milestone, the FTA is not yet in force. Businesses should start preparing now to be ready to claim preferential duty rates once implementation of the FTA is complete.
In detail
Why is Australia pursuing an FTA with the EU?
- An FTA with the EU has the potential to provide Australian exporters with a competitive edge, give Australian consumers greater choice in goods and services at lower prices, and strengthen two-way investment flows.
- In 2024-25, Australia exported A$17.1bn in goods and A$9.7bn in services to the EU, while importing A$63.0bn in goods and A$20bn in services.
- Despite a strong bilateral relationship, Australian businesses currently face notable tariff barriers when exporting to the EU, including tariffs of up to 12% on minerals and metals, 10% on wood and paper, and 7% on chemicals.
- A range of key Australian agricultural exports, including beef, sheep meat, sugar, cheese and rice, are significantly constrained by EU tariff quotas, while high and seasonal tariffs impact other commodities such as horticulture.
- This FTA is intended to address these barriers and give Australian businesses a more level playing field in one of the world's largest and most significant markets.
What could the FTA mean for Australian exporters?
- Although the formal FTA text is still pending, the Australian Government has confirmed that nearly all Australian manufactured goods and mineral resource exports are set to enter the EU at zero tariff rates. The removal of EU tariffs on Australian critical minerals and hydrogen is expected to bolster Australia's renewable energy objectives and contribute to greater supply chain stability.
- Australia is also aiming for tariff liberalisation on agricultural products, through the elimination of a reduction or elimination of tariff quotas, high and seasonal tariffs.
- Australian farmers and producers stand to benefit from the removal of nearly all EU tariffs on agricultural products, covering wine, nuts, fruit and vegetables, honey, olive oil, most dairy products, wheat and barley, and seafood. For the wine sector alone, the removal of EU tariffs is estimated to deliver annual savings of around $37m for Australian producers and exporters.
- For other key agricultural products, the FTA provides market access through new or expanded tariff rate quotas, including for beef, sheep meat, sugar, rice, wheat gluten, skimmed milk powder and natural butter.
- Beyond tariff reductions, the FTA is expected to deliver modern customs procedures, streamlined rules of origin and improved trade facilitation, reducing red tape, easing licensing requirements and costs for export operations.
What could the FTA mean for Australian importers?
- In exchange for improved access into the EU, Australia is committing to tariff reductions on imports from the EU.
- The FTA is expected to provide reduced or eliminated duties for imports of goods across key product categories, including:
- machinery and appliances
- chemicals
- motor vehicles and transport equipment
- food and drink
- electronic equipment, and
- metals
- For Australian consumers, this means the price of European wine, spirits, biscuits, chocolates and pasta would be reduced.
- The reduced tariffs are expected to lower costs for businesses (including for machinery and vehicles) and provide greater flexibility in sourcing decisions.
What other commitments should Australian businesses be aware of?
- The FTA preserves Australia’s ability to continue using well‑known food and beverage terms such as parmesan and kransky, and allows Australian winemakers to continue producing and selling Prosecco domestically, with grandfathering and phase‑out arrangements applying to a limited number of geographical indication terms such as feta, romano and gruyere.
- The FTA is expected to establish commitments that balance facilitating modern digital commerce with ensuring appropriate protections in the online environment.
- For businesses that supply to government, the FTA is expected to improve access to EU procurement markets, estimated to be worth around US$845bn annually, based on clear and transparent tendering rules.
- The FTA is expected to address compliance with internationally recognised labour standards and ensure high levels of environmental protection.
What is next for the FTA to enter into force?
- While the conclusion of negotiations is a key milestone, the benefits under the Australia-EU FTA will only apply once each party completes its domestic approval processes and formally confirms entry into force. In Australia, this typically involves parliamentary scrutiny and the passage of any required implementing legislation.
- Once both Australia and the EU have confirmed that their internal procedures are complete and have formally notified each other, the FTA enters into force on an agreed date. Only from that point can businesses begin to access preferential tariff rates and other FTA benefits, subject to meeting the relevant conditions.
The takeaway
What should your business be considering?
While the FTA is not yet in force, the conclusion of negotiations presents a timely opportunity for businesses to assess their readiness. The full benefits of any FTA are not automatically granted, and early preparation is key for businesses to realise potential savings and market opportunities. Some considerations for businesses at this stage include:
- Assessing current exposure to EU tariffs and other non-tariff barriers. Consider which products currently face tariffs or quota restrictions when entering the EU, and how their removal or reduction could impact on pricing, competitiveness and customer demand. For exporters in agricultural markets, the specific outcomes on tariff elimination (e.g. wine, nuts, dairy, seafood) and new or expanded tariff rate quotas (e.g. beef, sheep meat, sugar, rice) should be reviewed closely.
- Reviewing the sourcing strategy from the EU. Consider whether changes to tariffs on imports into Australia could shift landed cost assumptions and supplier decisions for EU origin goods. In particular, businesses importing motor vehicles, machinery, food and drink products or other manufactured goods should assess the potential cost savings.
- Starting to think about rules of origin and compliance. Once the FTA enters into force, businesses seeking preferential tariff treatment would need to substantiate origin and maintain appropriate records. Now is an ideal time for businesses to review documentation, record keeping and origin evidence processes.
- Reviewing services and investment footprint. Consider whether improved market access in financial services, education, tourism and communications, mutual recognition of qualifications or enhanced labour mobility provisions could support businesses in their plans to scale or expand operations in the EU.
- Staying informed as the agreement is finalised. The final terms of the FTA will become clearer in the coming weeks so businesses should monitor developments closely and consider seeking advice on the specific implications of the FTA for their operations and supply chains.
If you would like to discuss how the Australia-EU FTA could impact your business and any next steps, please contact our Global Trade team.
Contact us
Paul Cornick
Partner, Global Trade, PwC Australia
Gary Dutton
Partner, National Global Trade Leader, PwC Australia
Frances Ryan
Director, Global Trade, PwC Australia
Sarah Macchiavelli
Director, Global Trade, PwC Australia
Melissa Camilleri
Director, Global Trade, PwC Australia
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