EU-Australia trade talks postponed after submarine deal dispute

EU-Australia trade talks postponed after submarine deal dispute
Australian Prime Minister Scott Morrison was criticised for cancelling the submarine contract (Patrick Semansky/AP)

A round of free trade talks between the European Union and Australia has been postponed in the wake of a dispute over Canberra’s decision to cancel a multibillion-euro French submarine deal.

Miriam Garcia Ferrer, the EU commission spokesperson in charge of trade, confirmed the decision but did not give any specific reason for the postponement.

Australian Trade Minister Dan Tehan said he will continue with plans to meet with his EU counterpart Valdis Dombrovskis next week to discuss the November negotiations.

“A free trade agreement is in the interests of Australia and the European Union and will strengthen our relationship that is built on a shared commitment to democracy, human rights, the rule of law and economic openness,” Tehan said in a statement.

“We understand the French reaction to our submarine decision but ultimately any nation must act in its national interest – which is what Australia has done,” he added.

The EU launched negotiations for a trade agreement with Australia in 2018. The 12th round of talks was scheduled to take place later this month via video conference.

Australia had signed the 90 billion Australian dollar (£49 billion) deal with French majority state-owned Naval Group in 2016 to build 12 conventional diesel-electric submarines.

But Prime Minister Scott Morrison cancelled the deal last month as part of an alliance with the United States and Britain that will deliver an Australian fleet of at least eight nuclear-powered submarines.

The move angered France and also prompted criticism from European Commission President Ursula von der Leyen.

European Commision President Ursula von der Leyen criticised the Australian PM’s move (AP)

France has accused the United States and Australia of betrayal over the cancelled contract and the replacement trilateral alliance negotiated in secret.

France briefly recalled its ambassador from Washington in protest. There is no word of when a French ambassador might return to Australia.

According to EU data, the 27-nation EU represented Australia’s third largest trading partner in 2020, after China and Japan, and ahead of the United States.

After the previous round of talks in June, the EU said discussions were held in a “good and constructive atmosphere and showed a shared commitment to negotiate an ambitious and comprehensive agreement.”

An EU official directly aware of the matter said the submarine row played a role in the decision to delay the talks but insisted a deal was not ready to be sealed in any case.

The official said the postponement does not mean the end of negotiations and was adamant both parties will continue to work toward reaching an accord.

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