The European Union and Australia reached a long-awaited free-trade deal on Tuesday, while also agreeing to boost defense cooperation and access to crucial rare-earth minerals in the face of global uncertainty over energy and trade.

The announcement of the deal came after eight years of negotiations, during EU chief Ursula von der Leyen's visit to Australia, as the 27-nation bloc and the import-reliant nation navigate renewed energy vulnerability sparked by the war in the Middle East.

The agreement aims to remove tariffs and commercial barriers on both sides to boost trade in goods and services.

The conclusion of talks is part of an EU push to diversify trading partners as tensions with China over alleged market distortion persist and relations with the U.S. have become tense under President Donald Trump.

"Today, we are telling an important story to a world that is deeply changing, a world where great powers are using tariffs as leverage and supply chains as vulnerabilities to be exploited," von der Leyen told journalists in Canberra.

"In our story, open, rules-based trade delivers positive outcomes. Trust matters more than transactions," she said.

"We are sending a strong signal to the rest of the world that friendship and cooperation are what matters most in times of turbulence."

Australia's Prime Minister Anthony Albanese said the agreement would benefit both sides.

"I am proud that we have been able to secure this deal, which will deliver benefits for both Australia and the European Union for generations to come," he said.

Albanese and von der Leyen also presented a new Australia-EU security and defense partnership.

The Australian government said the "wide-ranging partnership" would boost cooperation across the defense industry, cyber, economic security, counterterrorism and hybrid threats.

Agriculture

One notable part that stands out in the trade deal is agriculture. The deal is expected to open the path to the flow of a variety of goods, but the move threatens to face objections from EU-based producers.

Tariffs will go down to zero from day one for key EU export products ‌such as wine and sparkling wine, some fruit and vegetables, including preparations and fruit juices, chocolate, sugar, confectionery and ice cream and many processed agricultural products, a Reuters report said, citing highlights from the deal.

Tariffs on EU cheese will go down to zero over three years.

The EU will ​also remove tariffs on most Australian agricultural products, including wine, nuts, fruit and vegetables, honey, olive ​oil, most dairy products, wheat, barley and seafood.

Australian beef, sheep meat, sugar, rice, ⁠wheat gluten, skimmed milk powder and natural butter will get either new or expanded tariff rate quota ​volumes.

European farmers' group quickly slammed concessions easing exports of Australian beef, sugar and lamb to the EU in a trade deal struck Tuesday, saying they piled pressure on sectors already hit by previous accords.

"The cumulative impact of successive trade agreements makes these concessions unacceptable," pan-European agriculture lobby group Copa-Cogeca said in a statement.

One of the sticking points in the negotiations was also the treatment of certain agricultural products whose names are protected in Europe and must meet specific production criteria, such as feta cheese, Gruyère and Parmesan. The use of the name "Prosecco" for Australian-produced wine was also a point of contention for the EU.

However, both sides ultimately showed willingness to compromise.

Approval needed

The deal needs to be approved by EU member states and the European Parliament, as well as by Australia, before it can be signed.

It is yet to be determined when the deal would enter into force, which will also depend on whether it is approved in the EU without delay.

The agreement provides for the abolition of more than 99% of tariffs on EU goods exports to Australia, which would save companies of all sizes around 1 billion euros ($1.15 billion) annually in duties, according to Brussels.

The agreement is also intended to make it easier for EU professionals to work in Australia.

According to the commission, industrial sectors that could particularly benefit from the agreement include mechanical engineering, chemicals, the automotive industry and agriculture.

The EU is also set to gain improved access to Australia's strategically important raw materials, such as rare earths and lithium.

For Australia, the removal of tariffs on exports such as wine and seafood is significant, while more agricultural products, such as beef, could be exported to the EU in the future.

EU-Mercosur deal

The deal also follows a landmark free trade agreement between the EU and the Mercosur states Argentina, Brazil, Paraguay and Uruguay, which was recently referred to the European Court of Justice for a legal review by EU lawmakers, threatening to derail the deal even after a provisional implementation date has been set for May 1.

The EU-Mercosur deal, which was negotiated for over two decades, is viewed critically by European farmers as they fear increased competition.

Ahead of Tuesday's announcement, the European Commission tried to dispel EU farmers' concerns about the possible removal of protective measures by stressing the EU's big trade surplus in agricultural goods.

According to EU figures, the bloc was Australia's third-largest trading partner after China and Japan in 2024.

For the EU, however, Australia is a relatively minor partner, ranking 20th in terms of trade volume.

The difference is also due to the market sizes. The EU's 27 member countries together have a population of over 450 million, while Australia has just under 28 million inhabitants.