EU ambassador Gabriele Visentin said Australia had agreed to begin informal talks in Brussels on a security partnership.
The move follows a meeting between Defence Minister Richard Marles and the bloc's High Representative for Security Policy Kaja Kallas at the recent Shangri La Dialogue in Singapore.
Asked if there was an appetite for a deal in Canberra, Mr Visentin pointed to his glass of water and joked "this glass is half-full".
Addressing the National Press Club in Canberra on Wednesday, the ambassador said Australia and the EU must "team up and double down" on policies of open markets based on free and fair trade.
"When dealing with security, freedom of navigation and overflight are fundamental principles which underpin regional security and stability and therefore guarantee that the Indo-Pacific region remains free and open," he said.
It comes as Australia and the EU ramp up action for a free trade agreement, with negotiations first starting in 2018.
Talks stalled over greater market access for Australia's agricultural products.
The EU is Australia's third-largest trading partner, with 450 million people in the bloc, and is worth more than $150 billion a year.
Discussions have resumed following the global uncertainty caused by US President Donald Trump's tariffs on exports to America, up-ending the free-trade order.
Mr Visentin said the US president's actions had played a role in a strong partnership between the EU and Australia on trade.
He said he could not predict when a deal might be struck.
Trade Minister Don Farrell met with his European counterparts while in Paris for the OECD summit last week.
He said he was confident a trade deal could be reached.
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