Once in a generation: the A-EU FTA

September 2026 | FEATURE | GLOBAL TRADE

Financier Worldwide Magazine

September 2026 Issue

Following eight years of intensive negotiations, the Australia-European Union Free Trade Agreement (A-EU FTA) – a rules-based trade framework affecting a wide range of Australian and European industries – has been concluded.

Prior to the agreement, the EU and Australia traded more than €89.2bn in goods and services annually. Under the new A-EU FTA, finalised on 24 March 2026, investors and exporters can expect enhanced opportunities and greater access to consumers.

“While the EU and Australia have already concluded such in-depth agreements with other trading partners, earlier attempts to conclude this particular agreement had foundered,” says José María Viñals, a partner at Squire Patton Boggs. “However, recent changes to the worldwide political and economic outlook have pushed Australia and the EU to conclude negotiations at this time.”

In a nutshell, the A-EU FTA is a ‘once in a generation’ deal designed to boost the economies of both parties by opening a market that has been effectively closed for decades to many Australian and European agricultural products.

Beyond its traditional trade benefits, the agreement is increasingly viewed as a strategic instrument designed to strengthen supply-chain resilience and economic diversification, particularly in areas such as critical minerals, clean energy and other sectors considered vital to long-term economic security.

Objectives and benefits

From an Australian perspective, the A-EU FTA will see 97.8 percent of the current value of Australia’s exports enter the EU duty-free from its entry into force. It will also provide increased opportunities for trade diversification and bolster Australia’s competitiveness, economic growth and economic resilience in an increasingly uncertain global trade environment.

Among the sectors expected to benefit are food, agribusiness, manufacturing, resources, renewables and foreign investment. Australian services exporters will also benefit from the EU’s market access commitments, including in financial services, education, tourism and communications.

From an EU perspective, the A-EU FTA will result in tariffs being removed on most EU imports, benefitting both EU exporters and Australian consumers. At the same time, Australia will raise its foreign investment screening thresholds for private EU investors in non-sensitive sectors to A$1.498bn.

“In a nutshell, the A-EU FTA is a ‘once in a generation’ deal designed to boost the economies of both parties by opening a market that has been effectively closed for decades to many Australian and European agricultural products.”

The agreement is strategically significant given that the EU is Australia’s third-largest two-way trading partner and second-largest source of foreign investment.

“The A-EU FTA may have a greater impact in terms of economic resilience than of pure economic growth,” observes Guillermo Giralda Fustes, an associate at Squire Patton Boggs. “By committing to each other, Australia and the EU seek to reinforce their strategic alignment as like-minded parties capable of providing natural resources and energy, a considerable internal market, traditional industrial and technological know-how, and diversified geostrategic projection.”

Barriers to trade

While the A-EU FTA promotes transparency and the use of international standards to facilitate market access, differing technical regulations and standards may still create trade barriers and increase compliance costs.

According to Squire Patton Boggs, regulatory differences remain among several issues that have generated debate throughout the negotiating process. For example, EU access for Australian beef, sheep meat, sugar, rice and certain dairy products is capped through tariff-rate quotas backed by a safeguard mechanism designed to protect European farmers from market surges.

Australia is also required to adopt an EU-style system of geographical indication (GI) protection that currently exists only for wines. This will impose relabelling and adjustment costs on Australian producers using names such as prosecco, feta and parmesan, although these impacts will be mitigated by grandfathering provisions and phase-out periods.

Another potential barrier is pressure from livestock producers in France for the European Parliament to block the agreement because of the perceived generosity of beef and lamb quotas. At the same time, the Australian Farmers’ Federation has criticised the Australian government on the grounds that the agreement does not secure a sufficiently significant increase in access to the European market.

“The quota structure, safeguard mechanism and GI transition periods are precisely the instruments designed to neutralise farm lobby resistance,” counters Mr Fustes. “Sustained engagement through ratification, plus clear labelling compliance guidance to affected producers, are the practical levers for overcoming adoption barriers.”

Ratification and beyond

Prior to the signing of the agreement – which is expected to take place in late 2026 or early 2027 – Australia and the EU will complete legal checks and undertake the domestic processes required for signature.

Following the conclusion of negotiations, both parties have already begun legal and linguistic review processes, with provisional treaty texts published ahead of formal signature and ratification.

After the agreement is signed, the Australian and European parliaments will seek to ratify it. These ratification processes are rigorous, meaning it could take some time before the A-EU FTA enters into force and key outcomes such as tariff elimination take effect.

“The A-EU FTA is likely to improve the attractiveness of both Australia and the EU vis-à-vis each other, as well as vis-à-vis third countries,” says Mr Viñals. “It should provide a degree of commercial certainty and legal predictability that is becoming increasingly scarce given the meltdown in the rules-based multilateral order – such as the demise of World Trade Organization rules – and worldwide power dynamics.

“A-EU FTA-derived resilience may also encourage third-country investment,” he continues. “When investing in Australia or the EU, investors may value improved supply chain prospects and market access from those economies, as derived from the agreement. For example, the EU could become a more attractive destination for critical mineral-sensitive investment if the FTA successfully secures the relevant critical mineral supply chain.”

Ultimately, despite opposition from agricultural lobby groups in both Europe and Australia that may seek to obstruct adoption of the deal, the A-EU FTA sends a clear signal of a mutual commitment to open, transparent and rules-based trade.

Fraser Tennant