EU and Australia strengthen bilateral relations

TALLINN - The European Union and Australia have signed a new security and defense partnership and concluded negotiations on a free trade agreement, which will strengthen bilateral relations.

There are also plans to begin official discussions for Australia to join "Horizon Europe," the world's leading research and innovation funding program.

SECURITY AND DEFENSE PARTNERSHIP

The EU and Australia are long-standing allies and partners. The security and defense partnership, established to further strengthen relations, creates a solid framework to help address geopolitical challenges and expand institutional cooperation between the EU and Australia. The partnership includes coordinating strategic priorities, security and crisis management cooperation, as well as collaboration on new technologies and information exchange on the situation in various regions.

FREE TRADE AGREEMENT

With the free trade agreement, the EU opens its market to one of the world's fastest-growing developed economies. EU exports are expected to grow by up to 33 percent over the next decade, with the value of exports potentially reaching 17.7 billion euros annually.

Sectors with high growth potential include the dairy industry (projected growth of up to 48 percent), motor vehicles (52 percent), and chemicals (20 percent). EU investments in Australia could increase by more than 87 percent.

The agreement will give EU businesses preferential access to the Australian market and increase economic prosperity in both regions.

More than 99 percent of customs tariffs on EU goods exports will be eliminated, resulting in an estimated annual saving of 1 billion euros in duties for EU exporters.

The market for financial and telecommunications services will open up to EU companies.

EU businesses will gain better access to Australian public procurement, opening doors to participation in public sector projects.

Rules will be applied to data flows that prohibit data localization requirements.

Secure supply chains for critical raw materials will be ensured by lowering import tariffs and offering investment opportunities.

The EU has a positive trade balance with Australia in agri-food products, which amounted to 2.3 billion euros in 2024. The agreement will eliminate customs tariffs on key EU exports such as cheese, meat products, wine and sparkling wine, certain fruits and vegetables (including processed products), chocolate, and high-sugar confectionery.

The agreement takes into account the interests of EU farmers. For sensitive agricultural sectors-beef, sheep and goat meat, sugar, some dairy products, and rice-the agreement will only allow zero or low-tariff imports into the EU in limited quantities under tariff quotas.

Australia is a major producer of raw materials important for the EU's economic security and competitiveness, such as aluminum, lithium, and manganese. The agreement facilitates EU access to Australia's critical raw materials and ensures that these materials are sustainably mined. The agreement also includes commitments regarding workers' rights, gender equality, climate goals, and sustainable food systems.

The text of the agreement will now undergo the necessary procedures within the Commission, after which the Commission will submit a proposal to the Council for the signing and conclusion of the agreement. Once the Council has approved it, the EU and Australia can sign the agreement.

After signing, the agreement requires the consent of the European Parliament and a decision by the EU Council on its conclusion to enter into force. Once Australia has also ratified the agreement, it can come into effect.