Australia and the European Union (EU) signed a long-awaited Free Trade Agreement (FTA) on 24 March 2026. This, along with a new Security and Defence Partnership (SDP) agreement, contributes to a partnership that according to President of the European Commission, Ursula van der Leyen ‘has matured over time, steadily and consistently.’
Geo-political and geo-economic factors have contributed to driving the ambition in bilateral relations. Both have had to recalibrate their trading relationships with the two global hegemons, the US and China. The decision to launch (October 2017) and commence trade negotiations (June 2018) was a response to the changed global context following the 2016 election of President Trump and the resulting global and regional competition and rivalry.
With Trump’s re-election, Australia and the EU have been forced to re-evaluate their objectives and strengthen existing ties with like-minded partners to mitigate further shocks. At the time the FTA negotiations recommenced in 2025, Australia’s Trade Minister Don Farrell noted that, ‘The world has changed in a very short period of time, and they [the EU] seem very genuine to get back to discussions and reach an agreement’. This marked the end of a long and protracted negotiation which was stalled in 2023 following a failure to reach agreement on key sticking points such as increased Australian agricultural access to the EU and naming rights for food and drink products. Von der Leyen made it clear that the EU was committed to ‘diversifying its trade partnerships’, which was further illustrated with the conclusions of a number of significant trade agreements, such as those with the South American regional grouping Mercosur and India.
The FTA will bring substantial benefits for Australia. The EU is Australia’s third-largest two-way trading partner, accounting for A$109.7 billion in goods and services in 2024. The FTA opens up more of the EU market of 450 million consumers to Australia, which will help Australian producers and industry to further diversify their trade and provide more options to protect Australia’s national interests, given that long-standing partners like the US cannot be relied upon to uphold core principles of free trade and international agreements. The FTA will add to the existing suite of trade and sectoral agreements, such as the Mutual Recognition Agreement and the Wine Agreements. It will build on the Framework Agreement that came into force in 2022. It will build on the current web of agreements and frameworks to strengthen cooperation on critical minerals such as theMemorandum of Understanding and the EU’s partnerships with Australian companies as part of its critical raw materials strategy.
As Farrell noted, the FTA ‘is a strategically important and economically valuable agreement at a time when Australia exporters are navigating choppy trade waters.’ Yet the FTA is not without its critics and will likely face persistent opposition and possible stumbling blocks during the ratification phase. Within Australia, the National Farmers Federation has expressed concern that the agreement fails to go far enough, consistently advocating that Australia be allowed to export 50,000 tonnes of beef and 67,000 tonnes of lamb to the EU. Within the EU, agricultural lobbies have also been vocal in their concerns with the agreement and have indicated that they will seek to bloc national ratification. With the EU-Australia FTA coming shortly after the EU’s deal with Mercosur and India, the appetite for FTAs is lessening within the EU. In January 2026, a group of EU member states (France, Poland, Hungary, Ireland and Austria) joined together to vote against the Mercosur agreement in the Council but failed to reach the minimum blocking minority required to prevent the provisional implementation of the agreement. Final ratification could be stalled at any point during the ratification process, which requires approval from the European Parliament and at the national level. The EU-Australia FTA could experience a similar bumpy path towards ratification, as dissatisfaction among lobby groups continues to grow.
On the security front, von der Leyen invited Australia in May 2025 to commence negotiations on a Security and Defence Partnership (SDP), a recognition of Australia as ‘a strategic partner’. Although Australia’s initial response was lukewarm, negotiations commenced in 2025 with the agreement concluded on 18 March 2026, making Australia the EU’s eleventh security and defence partner. This agreement marks an opportunity to strengthen security and defence relations and demonstrates, as Australia’s Prime Minister, Anthony Albanese, stated, ‘our shared commitment to supporting global peace and security.’ The SDP reflects the EU’s commitment to forging more partnerships with like-minded countries in the context of uncertainties surrounding US security partnerships. For both European partners and Australia, concerns continue to raise over the US’s continued security cooperation, especially relating to NATO and the war in Ukraine, the durability of the Trump Administration’s commitment to the AUKUS agreement and the consequences of Trump’s critiques of NATO members and a number of states (including Australia) for not sending ships to help unblock the Strait of Hormuz.
At a meeting with European counterparts in June 2025, Prime Minister Albanese noted that ‘At a time of global uncertainty, it is our collective responsibility to work together to uphold peace, security and economic prosperity’. The SDP, although not a legally binding document, aims to strengthen bilateral dialogue and collaboration in areas such as crisis management, cybersecurity, maritime security, counter-terrorism, and resilience of critical infrastructure. For Australia, the SDP will bolster existing security cooperation with the EU, along with its security arrangements with EU member states France, Germany and the Netherlands. It could also potentially open the way for increased defence industry collaboration.
Given the challenge of international unpredictability, the signing of the FTA and the SDP provides an opportunity for Australia and the EU to further consolidate their partnership, based on predictability and a shared core set of values and interests. These agreements represent a significant achievement at a time of global turbulence and uncertainty. Despite past differences, both Australia and the EU are increasingly confident that they can chart choppy waters with enhanced cooperation.
Dr Margherita Matera is a Lecturer in International Relations, School of Social and Political Sciences, The University of Melbourne.
Professor Philomena Murray is Honorary Professorial Fellow in the School of Social and Political Sciences at the University of Melbourne and Associate Research Fellow at United Nations University Institute for Comparative Regional Integration Studies, Bruges. She has written extensively on Australia-EU relations and was co-director, with Dr Margherita Matera, of the research project Australia’s Relationship with the European Union: from Tensions to New Paradigms.
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