Australia and the European Union (EU) have signed a trade agreement that removes tariffs on nearly all exports of Australian critical minerals, a move driven by concerns over China's dominant position in rare earth supply chains. China controls roughly 90% of global processing for rare earths, which are essential for producing technological equipment such as electric cars, lithium-ion batteries, LED televisions, and camera lenses.

European Commission President Ursula von der Leyen stated that the deal, which was eight years in the making, means the EU and Australia are "moving even closer together." She allegedly told Australia's parliament: "We cannot be over-dependent on any supplier for such crucial ingredients, and that is precisely why we need each other." Von der Leyen also claimed that "for both Europe and Australia, getting China right is a strategic imperative, and this is why bringing to life our critical minerals partnership will be crucial to our success."

Australian Prime Minister Anthony Albanese said the removal of almost all import tariffs on Australian critical minerals into the EU would help stabilize global supply chains. The agreement will also remove more than 99% of tariffs on EU goods exports to Australia, cutting 1 billion euros ($1.2bn) a year in duties for companies. EU exports to Australia are now expected to grow by up to 33% over the next decade.

Albanese told a news conference that the agreement would be worth about 10 billion Australian dollars ($7bn) annually to the Australian economy. Trade between the two sides is substantial, with EU firms exporting 37 billion euros ($43bn) worth of goods to Australia in 2025 and 28 billion euros ($33bn) of services in 2023. As a bloc, the EU was Australia's third-largest two-way trading partner in 2024 as well as the sixth-largest export destination, official data showed. The bloc was Australia's second-largest source of foreign investment in 2024.

Source: www.aljazeera.com