EU chief Ursula von der Leyen and Australian Prime Minister Anthony Albanese struck a long-awaited free trade deal in Canberra on Tuesday, compromising to boost exports in the face of global uncertainty over trade.
A defense and security partnership to boost maritime and cyber security cooperation was also agreed.
"We are sending a strong signal to the rest of the world that friendship and cooperation is what matters most in times of turbulence," said von der Leyen.
"This is a significant moment for our nation as we secure an agreement with the world's second largest economy," Albanese said.
Key sticking points on Australian use of European geographical names and access for Australian beef to Europe were overcome to reach a deal after eight years of negotiations.
A compromise will see Australian winemakers allowed to use the term prosecco domestically, but stop using it for exports after 10 years.
Australia will be allowed to keep using some geographical names, such as feta and gruyere, where producers have used the name for at least five years.
European car makers will benefit from Australia raising the threshold for a luxury car tax on electric vehicles. Three-quarters of EVs will now become exempt.
Under the trade deal, the EU said it expected exports to Australia to grow by a third over a decade, with dairy and car makers seeing strong growth of around 50 percent.
The quota of Australian beef allowed into the EU will increase more than 10 times the current level over the next decade, although that falls short of the level Australian farmers had been seeking.
The deal is expected to be formally signed after it is approved by the European Council.
EU firms exported to Australia 37 billion euros ($42.9 billion) of goods last year, and 31 billion euros of services in 2024.
