Buying a Mercedes-Benz or a BMW would be cheaper for Australians if European negotiators get their way under a new trade agreement.

A key demand from the EU in the negotiation of a new free trade agreement will be that Australia ditches both its 5 per cent duty on imported European cars and the luxury car tax that applies to higher-priced vehicles.

EU trade negotiators are pushing for the abolition of a tariff and luxury car tax on European cars imported into Australia.

The EU and Australia are negotiating a free trade deal with a number of products up for debate including beef and other foods, electronic equipment, clothing and footwear.

Senior EU trade negotiator Cornelis Keijzer told The Age and The Sydney Morning Herald on Wednesday that Australia had agreed to discuss the removal of the automotive taxes which he argued would give local consumers cheaper cars and more choice.