Australia has agreed on the draft text for a free trade agreement with the European Union (EU). Signing of the FTA is expected in late 2026 or early 2027.

Historically, Australia has had very limited access to the EU dairy market, restricted to small quotas for cheddar and processing cheese both carrying in-quota tariffs. Under the new agreement, tariffs are eliminated on 87.3% of the EU’s dairy tariff lines, including cheese, WMP, dairy spreads and ice cream, with most removals phased in over three years. At the same time, the agreement establishes new annual duty‑free tariff‑rate quotas for key Australian dairy exports: 8,000t of SMP, 5,000t of butter and 2,000t of high‑protein whey. These quotas expand market access but still cap volumes for the most sensitive dairy categories.

While the Australian government presented the agreement as a positive for agriculture, the dairy industry lobby was less enthused about the outcome for dairy. Victorian Farmers’ Federation (VFF) president Brett Hoskins believes Australia’s farmers have been sold out. He called the outcome “embarrassing” and said no deal would have been a better outcome for farmers. Similarly unimpressed was Australian Dairy Industry Council (ADIC) chair Ben Bennett. He said Australia gave up established commercial freedoms without securing for meaningful market access. In 2025, Australia imported significantly more EU dairy totalling 76,821t, against exports of 134t to the EU.

Another sticking point was geographical indications, with Australia protecting 56 EU dairy GIs, including 53 cheeses, two butters and one cream. Some dairy terms, such as feta and gruyere, are grandfathered in with Australian producers continuing to use these labels on their products if they have done so in the past five years in good faith. Other dairy terms, such as Munster and fontina, will be phased out five years after entry into the free trade agreement