The EU’s new deals with Australia are really about minerals, missiles, and the retreat of American reliability.
In September 2021, France recalled its ambassadors from Washington and Canberra after Australia cancelled a 56 billion euros submarine contract in favour of a nuclear deal with the United States and Britain under the AUKUS pact. Jean-Yves Le Drian, then France’s foreign minister, called it a stab in the back. The recriminations lasted years.
Which makes what happened in Canberra this week rather instructive. European Commission President Ursula von der Leyen met Prime Minister Anthony Albanese, and the two sides not only concluded an ambitious free trade agreement, but also signed a formal Security and Defence Partnership, and agreed to open talks on associating Australia with Horizon Europe, the EU’s 95.5 billion euros research programme. The AUKUS submarines were not mentioned. Diplomacy, in the end, follows interest.
The trade deal has been a long time coming. Negotiations started in July 2018, stalled badly in 2023 when Canberra pushed for bigger beef and lamb quotas and Brussels pushed back, then accelerated sharply after Donald Trump’s second administration began treating even its closest allies as tariff targets.
Both sides, facing a world that was becoming measurably less reliable, found common cause. EU Trade Commissioner Maroš Šefčovič expects EU exports to Australia to grow by a third over the next decade, with export value reaching up to 17.7 billion euros annually. Key sectors with strong growth potential include dairy (expected to increase by up to 48 per cent) motor vehicles (52 per cent), and chemicals (20 per cent). EU investment into Australia has the potential to grow by over 87 per cent. More than 99 per cent of tariffs on EU goods exports to Australia are eliminated outright, cutting about one billion euros a year in duties. European farmers, reassured by carefully calibrated tariff-rate quotas on beef, sheep, sugar and rice, will sleep marginally easier. The 165 protected geographical indications (from Comté to Irish Whiskey to Istarski pršut) will be covered in Australia, as will 231 spirit drinks.
The figures that really matter to Brussels, though, do not appear on a cheese label. Australia holds substantial reserves of lithium, manganese, aluminium, and rare earths, materials in which China controls roughly 90 per cent of global processing capacity and over which Beijing has, in recent years, begun exercising export controls. The FTA eliminates tariffs on Australian critical mineral exports to Europe and opens investment opportunities in the sector for EU firms. Von der Leyen told Australia’s parliament that the minerals partnership was “crucial”, and the word was not deployed rhetorically. “We cannot be over-dependent on any supplier for such crucial ingredients, and that is precisely why we need each other,” she said. Šefčovič was plainer still: “Australia is blessed with huge natural wealth and they have possession of almost all critical minerals we need.”
A deal driven by necessity
The Security and Defence Partnership (SDP) is more modest in scope. It includes dialogue structures, cooperation on maritime security, cyber threats, and emerging technologies including AI, but is perhaps more striking in what it implies. The EU has traditionally left defence to NATO and its member states. Signing a formal SDP with a country 15,000 kilometres away suggests that posture is shifting. The Indo-Pacific, once a polite asterisk in EU strategy documents, is becoming something more concrete. The bloc concluded FTA talks with Indonesia in September 2025 and India in January 2026; von der Leyen noted, with some satisfaction, that the EU had added “nearly two billion people to our free-trade network” in under two months. A pattern is emerging.
What is driving it is not hard to identify. Trump’s campaign to target even US allies with hefty tariffs, combined with surprise military actions in Venezuela and Iran without prior warning to major partners, has strained ties between Washington and many of its traditional friends. CNBC The EU is responding, as any sensible actor would, by building alternative networks. Australia, for its part, is playing the situation with considerable dexterity—securing American commitment to AUKUS, inking a critical minerals deal with Washington in October 2025, and now pulling Brussels into a formal partnership. It is not choosing between the Anglosphere and Europe. It is collecting partners.
None of this will be swift. The FTA must clear the European Parliament and member-state ratification—a process with a long history of delays, last-minute political crises, and agricultural lobbies finding objections they had somehow not raised earlier. French farmers, in particular, will scrutinise the beef and dairy provisions in their usual understated manner. The text must also pass through Australia’s parliament. It will be years, not months, before the deal fully comes into force.
Still, the direction is clear. The EU is building an Indo-Pacific trade and security network, one agreement at a time, with China’s supply-chain dominance and America’s erratic reliability as the twin motors. For European businesses with exposure to Australia, and for Australian mining companies looking for long-term agreements and investment partners, the rules of access are improving. For security planners, the SDP provides institutional scaffolding for a relationship that will matter more as the decade advances.
As for the submarines: the wound, it turns out, heals when the prize is large enough.
Photo: Dreamstime.