EU-Australia trade deal cuts agri-food tariffs but farmers raise concerns over concessions

The EU and Australia have concluded negotiations on a free trade agreement (FTA) after eight years, eliminating tariffs on European agri-food exports, including cheese, wine, spirits, chocolate, and confectionery. The European Commission projects EU exports to Australia will grow by up to 33% over the next decade, with dairy alone expected to rise by 48%. 

The deal comes days after Brussels confirmed the EU-Mercosur agreement will apply provisionally from May 1. F&B industry bodies have broadly welcomed the agreement, though farming representatives warn successive trade deals risk pushing EU producers to “the breaking point.” 

The EU held a positive agri-food trade surplus with Australia of €2.3 billion (US$2.7 billion) in 2024, according to the commission’s agri-food factsheet. Tariffs will now drop to zero across all EU agri-food exports, covering cheeses — where Australian duties of approximately 11% will be removed — pasta and cereal preparations at €460 million (US$531 million), chocolate and confectionery at €355 million (US$410 million), and wines and vermouths at €327 million (US$378 million). 

The commission projects annual duty savings of over €1 billion (US$1.2 billion) for EU exporters.

New market access for alcohol 

Australia is the EU wine sector’s 11th-largest export market, with exports exceeding €300 million (US$347 million) annually. “At a time of geopolitical uncertainty and rising production and marketing costs, this agreement offers a concrete opportunity to diversify exports and strengthen the global competitiveness of EU wine companies,” says Marzia Varvaglione, president of the Comité Européen des Entreprises Vins (CEEV).

The EU-Australia FTA eliminates a 5% tariff on European wines and spirits, covering over 1,800 geographical indications across both categories.The agreement enhances protection for over 1,600 EU wine geographical indications (GIs) –- protected labels that reserve product names like “Champagne” for goods genuinely produced in their designated regions — with around 50 new additions. A key point of contention was the designation “Prosecco” — Australian producers will retain domestic use as a varietal name but must phase out the term on exports within ten years. 

“The phase-out of the use of ‘Prosecco’ for Australian exports, together with clearer labeling rules to avoid consumer confusion, is not a bad result considering the complexity of the discussions,” says Ignacio Sánchez Recarte, secretary general of CEEV.

The deal also eliminates a 5% tariff on EU spirits entering Australia, the bloc’s 12th-largest spirits export market at €150.2 million (US$173.5 million) in 2025, according to Spirits Europe. It additionally protects 231 spirit drink GIs. 

“This agreement sends a strong signal about the importance of open, rules-based trade and the EU’s ambition to not only talk the talk, but also walk the walk when it comes to trade diversification,” says Pauline Bastidon, trade and economic affairs director of Spirits Europe.

Dairy sector eyes growth beyond €380M

The European Dairy Association (EDA) welcomed the deal, noting EU dairy exports to Australia reached €380 million (US$439 million) in 2025. “Congratulations to EU Commissioner Maroš Šefčovič and his team for yet another breakthrough in both the European trade strategy and the global trade arena,” says Alexander Anton, EDA secretary general. 

Dairy trade body Eucolait similarly backed the expanded market access, highlighting tariff elimination on cheese and GI protection.

The European Commission projects EU dairy exports to Australia could grow by up to 48% under the new trade agreement.The commission has calibrated tariff rate quotas on sensitive dairy imports: 8,000 metric tons for skimmed milk powder (around 1.1% of EU consumption), 5,000 metric tons for butter (0.25%), and 2,000 metric tons for whey protein concentrates. For the dairy processing industry, the GI framework marks a turning point. 

“The in-principle acceptance of the GI system and its value by our Australian partners — the details of the agreement remain to be seen — but this is certainly a very important step for us,” Anton says. In total, the agreement protects 165 agricultural and food GIs in Australia.

Farming lobby warnings

Copa-Cogeca, representing EU farmers and agri-cooperatives, takes a sharply different view. The organization says the deal has used agriculture “clearly and once again as the bargaining chip of the EU strategy to secure broader trade and political objectives.”

It points to quota concessions on beef (30,600 metric tons), sheep meat (25,000 metric tons, only 27% frozen), sugar (35,000 metric tons), and rice (8,500 metric tons). EU trade organizations recently warned that “rice has no future” in Europe unless existing trade agreements are revised.

“In a post-Mercosur context, the cumulative impact of successive trade agreements makes these concessions unacceptable,” Copa-Cogeca states, adding that the commission’s safeguard mechanisms remain “more like communication tools” than effective crisis instruments.

Trade diversification momentum

The deal arrives amid a broader acceleration in the EU’s trade agenda. Spirits Europe’s Bastidon links it to the confirmed provisional entry into force of the EU-Mercosur agreement on May 1, calling for equivalent ambition in ongoing negotiations with Southeast Asian partners and the UAE. 

“Removing both tariff and non-tariff barriers remains critical to unlocking export potential for EU spirits globally,” she says.

The commission describes the EU-Australia FTA as the bloc’s fourth-largest after the UK, Mercosur, and India. It still requires European Council and Parliament approval, a process Australia has indicated could take up to two years.