Rare Earths and Strategic Autonomy: What Lies Behind the EU-Australia Agreement

Translated by Gaia Baraldi

The President of the Commission, Von der Leyen, is expected in Canberra between March 23 and 25, 2026, for the possible conclusion and signing of the new free trade agreement with Australia. Attempts to finalize this agreement date back to 2018, when the EU and Australia suspended negotiations due to a lack of agreement on meat import volumes.

The agreement, although not yet fully finalized, it would present both advantages and drawbacks, with many potential benefits as well as significant pitfalls.

What does a free trade agreement with Australia mean?

The signing of an FTA (Free Trade Agreement) would entail the elimination or, more commonly, the reduction of import tariffs with the partner country. The agreement is applied bilaterally, offering benefits to both parties aimed at increasing trade volumes, both imports and exports.

The agreement is not all-encompassing but concerns a range of products and sectors, which are defined and written down. Once decided, the total or partial abolition of import tariffs is usually gradual, to allow domestic markets to adjust over time.

The elements that required the most attention during the 2018 round of negotiations, and which will also be central in the current ones, are the agriculture, minerals, and industrial goods. Brussels and Canberra will try to avoid an impasse, as occurred in previous negotiations, which ended over disagreement on meat. It will therefore be crucial for the Australian government to obtain guarantees on import volumes of beef and sheep, as well as dairy products, rice, and sugar.

Although the Australian Department of Foreign Affairs and Trade has stated its objective of achieving complete tariff liberalization for the agricultural sector, negotiations are expected to be particularly challenging. Agri-food is, in fact, one of the EU's key sectors, where many member states are unwilling to make concessions, fearing external competition.

The EU, on the other hand, will seek to once again impose a cap on imports of animal products—a factor that once again threatens to derail the agreement—and, above all, to obtain greater guarantees on the import of critical minerals and rare earths.

Criticism

The main criticism comes from the agricultural sector itself, which has greeted the news of the reopening of negotiations with concern. Copa Cogeca—the main European organization of farmers' associations—has warned of the major imbalances the agreement could alleviate.

First of all, the discrepancy in size between the two markets would end up benefiting the Oceanian partner in a one-sided manner. The fact that the EU has around 450 million consumers, while Australia has only 28 million, would expose European farmers to even more intense internal competition, combined with the prospect of a new but ultimately not very attractive market outlet in the long term.

A second controversial element concerns geographical indications. This particularly affects Australian producers who use names of typically European products for sales on the domestic market. Brussels and Canberra will have to decide whether to allow them to continue using the same names or force Australian producers to change them. European associations warn that otherwise, EU producers could face a new type of competition, further damaging the agreement's popularity.

Sector representatives, who are still fighting against the recent approval of the agreement with Mercosur (which has also been accused of disadvantaging EU agricultural producers in favour of products from the signatory countries), are fuelling the debate over the long-term sustainability of the agreement with Australia, questioning its real benefits.

What does the European Union stand to gain from this?

The question naturally arises at this point: why is the EU so determined to pursue this agreement, despite the significant risks and opposition?

The Commission’s main objective – apart from the prospect of securing a new market for European products – is to diversify its trading partners, particularly with regard to the supply of rare earths. These are a group of metals essential to the production of technological components – especially for the energy, electronics and defence sectors – considered ‘critical’ because they are in high demand, yet only a few countries have a monopoly on their extraction and refining.

It is precisely these latter elements that are receiving attention: Australia is currently the world's fourth-largest producer of rare earths, while China is the largest, with approximately 60% of global production and nearly 90% of refining. Indeed, while extracting these elements is labor-intensive, refining them is a complicated, costly, and potentially highly polluting process. Australia, although rich in rare earth deposits, has poor refining infrastructure, for which it relies primarily on Chinese companies.

However, the Australian government has recently launched a major campaign of public investment aimed at boosting the development of the refining sector and researching new technologies. Added to this is the agreement with the US, signed just last October, which provides for joint investments of $1 to $3 billion to be allocated to rare earth processing activities.

It is therefore no coincidence that negotiations for the EU–Australia free trade agreement are reopening now. Brussels would like to be part of this investment framework, hoping to gain access to Australian refining products, cutting its dependence on Beijing. The EU would have every interest in contributing to the growth of this sector, where China alone is responsible for approximately 50% of its rare earth imports.

This FTA is part of a series of trade agreements with "non-traditional" partners that began in 2025. In particular, the agreement with India—focused on textile, pharmaceutical, and automotive products—and with Mercosur entered into force in January, while the one with Indonesia is about to be signed.

This sudden acceleration is part of the EU’s policy of strategic autonomy and reducing dependence – primarily on China and the United States. This approach is being implemented through the diversification of trade and strategic partners, and has been on the agenda in Brussels since 2023. The unstable tariff policies of Trump and the introduction of new tariffs on European imports by China have pushed Brussels to intensify its efforts in this direction.

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