The context of Trump’s tariffs has accelerated negotiations. After the U.S. president imposed tariffs on allies including Australia and the EU, the two sides intensified contacts with renewed motivation to diversify their trade relations.

Ministerial meeting: no agreement in principle

Ministerial negotiations held in Brussels on February 13-14 between the Australian Trade Minister and the European Commissioners for Trade and Agriculture failed to reach an agreement in principle.

For this reason, the final decision has been elevated to the political level: Von der Leyen and the Australian Prime Minister will have to make the final decision. The elevation of the decision to the leadership level suggests that the remaining hurdle is not a technical drafting problem.

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Scope of the agreement: a “supersized deal”.

Sources in Brussels and Canberra describe the agreement as a “supersized deal” that goes beyond traditional trade and encompasses three dimensions:

• Elimination of 98% of tariffs between the EU (27 countries, 450 million consumers) and Australia.
• Mutual recognition of professional qualifications
• Labor mobility: Scheme that would allow Australian professionals to live and work in EU countries, and vice versa.
• Access to public procurement: Improving access to the EU public procurement market, valued at EUR 2 trillion
• Critical minerals. Strategic partnership for European access to critical Australian minerals (lithium, rare earths, cobalt), which are essential for the European energy transition and for reducing dependence on China.

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The remaining obstacle: agricultural quotas

The agreement is practically closed except for the beef and sheep meat quotas. This agricultural issue is the only one preventing the agreement from being signed, but it has important political implications in several EU member states (especially France and Ireland).

Australia is seeking significant access to the European market, arguing that it needs quotas comparable to those the EU has granted to other trading partners such as Brazil or Canada.

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Preparing for the entry into force of the agreement

• Identify products currently facing tariffs in Australia
• Calculating the impact of tariff elimination on price competitiveness
• Review entry strategies for the Australian market
• Consider Australia as a diversification alternative in the context of tariff uncertainty with the United States and dependence on China.