French submarine dispute could torpedo EU-Australia trade talks

France is threatening to block talks on a planned free trade agreement between Europe and Australia after the Morrison Government ditched a huge deal to buy French submarines.

The French Government has been seething ever since Australia abandoned its $90 billion deal last week in favour of a new military agreement with the United States and the United Kingdom.

“Keeping one’s word is the condition of trust between democracies and between allies,” France’s European Affairs Secretary Clément Beaune told Politico, in remarks confirmed yesterday by a spokesperson.
France’s European Affairs Secretary Clément Beaune said it was a question of trust. (Julien Behal via Getty Images)

“So it is unthinkable to move forward on trade negotiations as if nothing had happened with a country in which we no longer trust.”

As part of the security pact, known as AUKUS, Australia will be supplied with the technology to construct a fleet of nuclear-powered submarines, considered to be superior to the conventionally powered vessels Canberra had previously agreed to buy from Paris. 

Negotiations on a free trade agreement between the European Union and Australia were launched in June 2018, and so far 11 rounds of talks have been held, covering areas such as removing barriers to exports and intellectual property rights. The next round is scheduled to take place later this fall.

While the European Commission has the power to conduct trade talks on behalf of the 27-country bloc, it is unlikely to go ahead with the deal if the French are opposed to it.

With EU free trade agreement talks due to resume on October 12, Australian Trade Minister Dan Tehan will be trying to patch up the rift when he heads to Europe for the OECD ministerial meeting early next month.

Minister for Trade, Tourism and Investment Dan Tehan. (Alex Ellinghausen)

Yesterday he insisted it was still “business as usual” regarding the trade talks and remained confident the next round — the 12th — would go ahead next month.

“We have a substantial economic relationship with France itself,” Mr Tehan told Sky News.

“Obviously in terms of the EU’s desire to get a foothold into the Indo-Pacific, where the economic weight of the world lies, it is there. 

“It was very apparent when I was in Europe in May this year. Obviously for Australia, the European Union is a key and significant market.”

“It’s one where France exports more to Australia than Australia exports more to France. 

It’s very much in the interests of both countries, for consumers, for businesses and overall the economic relationship benefits both nations. 

“So I can see no reason why that economic relationship shouldn’t continue to grow and flourish, because it’s in the interests of Australia and it’s in the interests of France.”

In an exclusive interview with CNN’s Christiane Amanpour, European Commission President Ursula von der Leyen said yesterday that “a lot of questions” must be answered about the collapse of the submarine deal.

“One of our member states has been treated in a way that is not acceptable, so we want to know what happened and why,” von der Leyen said, adding that the situation must be clarified “before you keep on going with business as usual.”

European Commission President Ursula von der Leyen has sort to clarify the situation. (AP)

The Commission’s chief spokesperson Eric Mamer said earlier that the next round of EU-Australia talks had been scheduled for October and that the Commission was currently analysing “the impact that the AUKUS announcement would have on this schedule.”

The European Union was Australia’s third largest trading partner in 2020, according to the European Commission. 

Goods trade between the two amounted to €36 billion ($58.2 billion) that year while trade in services was worth €26 billion ($42 billion) in 2019.

The deal could add between €1.8 billion and €3.9 billion ($2.9 billion and $6.3 billion) to EU GDP by 2030, according to the European Commission.
President Joe Biden, listens as he is joined virtually by Australian Prime Minister Scott Morrison and British Prime Minister Boris Johnson, not seen, as he speaks about a national security initiative from the East Room of the White House in Washington.
US President Joe Biden, Australian Prime Minister Scott Morrison and British Prime Minister Boris Johnson announced the AUKUS deal in a virtual conference last week. (AP)

France’s ambassador to the United States reiterated in an interview on Monday that the breakdown of the submarine deal last week came as a surprise to Paris.

Speaking on French radio station RTL, Ambassador Philippe Etienne said French Cabinet ministers were not given any indication the agreement would be cancelled when they met with their Australian counterparts just days before Canberra announced an alternative deal with the US and United Kingdom.

“We absolutely weren’t informed of the new course,” he said.

Mr Etienne said his departure from Washington was “already a response” by the French government, and one that “marks the gravity of our reaction.” 

An artist impression of Naval Group’s Future Submarines. The deal has now been scrapped by Australia leaving France fuming. (Naval Group) (Naval Group)

He said senior members of the Macron administration were still discussing what to do next.

“As soon as we learned Wednesday morning (of the new deal), I demanded to be seen, I was seen,” by the White House, Etienne said. 

“(But) it was a little late.”

Analysts say nuclear-powered submarines can carry more firepower farther from Australian shores for much longer periods than conventionally powered subs. 

That means they can be effective in areas like the South China Sea, where Australia is helping partners including the US push back against Chinese territorial claims, and north to areas around Taiwan and Japan.

“A nuclear attack sub is like no other vessel, giving the ability to project power throughout the region, particularly NE Asia where Australia’s interests lie,” Drew Thompson, a former US Defence Department official and visiting senior research fellow at the Lee Kuan Yew School of Public Policy at the National University of Singapore, said on Twitter.

Mr Morrison said that while he understood France’s disappointment, “Australia’s national interest comes first.”

“It must come first and did come first, and Australia’s interests are best served by the trilateral partnership I’ve been able to form with President (Joe) Biden and Prime Minister (Boris) Johnson,” he said at a news conference on Sunday.

The threat to an EU trade deal comes at a time when Australia is looking to develop new export markets after relations with China, its largest trading partner, soured recently.

Mr Tehan told the ABC that Australian ministers would need to “able to sit down and work through issues” with their Chinese counterparts — something that’s impossible in the current diplomatic freeze — regarding the country’s interest in joining the bloc.

Source by [author_name]