Australia signed on to a trade agreement with the EU in March after eight years of negotiations.
But Nationals leader Matt Canavan said the coalition would oppose the trade deal during a parliamentary vote to ratify the agreement, arguing it was unfair for Australian jobs and industry.
The opposition from the regional party comes despite the coalition being yet to formally agree its position on the issue.
But Liberal frontbencher Sarah Henderson said the concern held by the Nationals was valid and the coalition was united on the topic.
"There's widespread concern that this deal is not good enough for farmers, for businesses, for exporters," she told News24 on Sunday.
"We want to see better trade with the EU, but it cannot be a one-sided agreement, and particularly for beef and dairy, we are very concerned about some of the proposals."
Under the deal, Australia would remove a five per cent tariff on imports of European products, which hits car makers such as BMW and Mercedes, along with goods such as fashion products, food and drinks.
EU tariffs would in turn be removed on a wide range of imported Australian goods, including critical minerals, manufactured items and many dairy products.
However, farmers were left angered by the arrangement, with some saying it would deliver no commercially meaningful market access.
Industry Minister Tim Ayres said the EU free-trade deal was in the interest of Australians.
He said Opposition Leader Angus Taylor needed to decide where his priorities were in formalising his stance on the deal.
"This is an economic credibility test for Mr Taylor," he said.
"Are the 50 Liberals in the parliament really going to be led by the nose of these fanatics led by Senator Canavan?
"Or are they going to vote for mainstream economic credibility, for free trade, for market access, for 98 per cent of Australian goods entering Europe without a tariff?"
Energy Minister Chris Bowen said getting the agreement through the Senate would obviously be trickier without coalition support but the government would find a path.
"We'll work with people of good faith because it's important for the Australian economy," he said.
"They don't really stand for what the once-great Liberal Party of Australia stood for, which is free markets and trade."
14°C