EU secures raw materials: Free trade agreement with Australia is ready

After years of sometimes tough negotiations, the breakthrough has been achieved: In Canberra, EU Commission President Ursula von der Leyen and Australian Prime Minister Anthony Albanese sealed an agreement on Tuesday that goes beyond the classic reduction of trade barriers. At a time when global supply chains are being misused as a political lever, the deal is intended to mark a turning point for the European economy. The focus is on securing critical raw materials and reducing one-sided dependencies, particularly on China.

The economic framework of the agreement is significant. According to EU Commission estimates, exports to Australia could increase by up to 33 percent in the next decade, which would correspond to an annual trade value of around 17.7 billion euros. German key industries such as automotive manufacturing and the chemical industry, in particular, are likely to expect significant growth.

But the core of the deal is found in the tariff tables and raw material clauses. More than 99 percent of tariffs on EU goods exports will be eliminated, which should bring European companies annual savings of about one billion euros.

Raw material sovereignty instead of China dependency

Australia is an indispensable partner for the European tech industry and the transition to green tech. It mines, among other things, lithium, manganese, and aluminum – raw materials that are essential for batteries for e-cars and high-performance chips for AI applications. Until now, the EU has often been dependent on imports from countries like China for these strategically important resources, which are increasingly using trade as a geopolitical weapon. In her speech to the Australian parliament, von der Leyen emphasized that such dependencies must be reduced.

The agreement provides a solution by facilitating access to Australian raw materials and reducing investment hurdles. For the first time, there are specific provisions that make the market more predictable for European companies. At the same time, both sides agreed on high sustainability and safety standards to ensure that raw material extraction is ecologically sustainable. The EU thus wants to ensure that no "dirty" imports harm its own climate goals.

Geopolitical Hedging

The cooperation also extends to a defense partnership and research. Australia will become an associate member of the Horizon Europe research framework program. This is intended to promote the exchange of engineers and scientists and accelerate joint developments in the fields of quantum computing, AI, and green energies.

Behind the initiative lies a geopolitical strategy. Following the recent conclusion of similar deals with Indonesia and India, the EU wants to expand its presence in the Indo-Pacific. Furthermore, Brussels is reacting to the uncertain situation in transatlantic relations. In view of the uncertainties under US President Donald Trump and the tensions within NATO, the EU is seeking reliable partners who share similar democratic values and environmental standards.

After legal review, the Council and the EU Parliament must still approve the draft agreement with Australia. Since it also contains binding commitments to the Paris Climate Agreement and labor rights, approval is considered likely. Australia must also ratify the treaty.

(vbr)