Volkswacht Bodensee - EU chief in Australia with eyes on trade deal

It is the EU chief's first trip to Australia since taking office and comes as the bloc and import-reliant nation navigate renewed energy vulnerability sparked by the war in the Middle East.

She arrived in Sydney on Monday for a meeting with Australia's head of the state, the Governor-General, and a traditional welcoming ceremony.

From Sydney, the EU chief will head to Canberra, where she is expected to meet Prime Minister Anthony Albanese and address the country's parliament.

Von der Leyen is joined by EU trade commissioner Maros Sefcovic -- sparking speculation the two sides may finally put pen to paper on a long-awaited free trade deal.

Both are still ironing out the details of the agreement, with improved access to the European market for Australia's lamb and beef a key source of contention.

Australia has previously said it could drop a luxury car tax on European vehicles in return for greater access to the EU agriculture market.

The country's use of geographical indicator names for cheese and wine products was also a sticking point.

Australia's largest export market is China and the United States is its largest source of investment.

But Canberra has redoubled efforts to diversify export markets for farmers since a 2020 dispute with Beijing saw agriculture exports blocked for several years, and then last year's global imposition of US trade tariffs.

The European Union is Australia's third largest two-way trading partner and second largest source of foreign investment.

Trade Minister Don Farrell last week said that an EU deal would add Aus$10 billion (US$7.1 billion) in trade for Australia in the first year.

"They are potentially our second largest trading partner if we can pull this off, and we've just got to get over those last few hurdles," he told Sky News Australia.

Front and centre in meetings will also likely be the war in the Middle East, which has sent oil prices soaring.

In Canberra, International Energy Agency chief Fatih Birol said on Monday the world faced an energy crisis not seen in decades if the conflict was not resolved.

And Von der Leyen this month said the conflict had served as a "stark reminder" of the continent's vulnerabilities.

Australia -- which is heavily reliant on fuel from abroad -- has also felt the pressure from the global energy squeeze.

While conceding that some petrol stations had run out of fuel, Energy Minister Chris Bowen said Monday the country was a "long way" from rationing.

D.Schlegel--VB