Trade deal discussions between the European Union and Australia have been suspended as the Australian trade minister flies to the continent.
The move comes after French displeasure at Canberra’s decision to cancel a $90 billion (US$64 billion)submarine project, following the signing of the AUKUS deal with the United States (U.S.) and the United Kingdom (UK) last month.
Australian Trade Minister Dan Tehan said in a statement to Reuters on Oct. 1, “I will meet with my EU counterpart Valdis Dombrovskis next week to discuss the 12th negotiating round, which will now take place in November rather than October.”
“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,” he added.
“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.”
Last month, the Australian government cancelled the troubled multi-billion-dollar Future Submarine Program with French defence contractor Naval Group.
The original 2016 plan was for Naval to convert 12 of its Barracuda-class nuclear submarines into diesel-electric powered Attack-class submarines fitted with U.S. weapons systems.
However, the French project has been riddled with ongoing delays and cost blowouts, with the Australian Prime Minister Scott Morrison revealing $2.4 billion (US$1.7 billion) had already been sunk into the project.
However, the signing of AUKUS saw the Australians cancel the deal—which Morrison said was within the federal government’s right—and instead explore the acquisition of at least eight nuclear-powered submarines from the United States or the United Kingdom.
French ministers reacted angrily to the deal accusing Australia and the United States of “stabbing it in the back” and recalling its ambassadors from Canberra and Washington D.C.
European Commission President Ursula von der Leyen also questioned whether the incident could affect a potential trade deal with Australia.
In reaction to the delayed EU-Australia trade negotiations, Euan Graham, senior fellow for Asia-Pacific Security at the International Institute for Strategic Studies, wrote on Twitter on Oct. 1, “Astonishing. I’m guessing economic retaliation wasn’t in the EU Indo-Pacific policy guidelines?”
“What’s the betting this suspension was timed to enable (French President Emmanuel) Macron to lobby an incoming German government for a supportive EU position?” he added. “Will be interesting to see if Australia now fast-tracks (Australia-United Kingdom) Free Trade Agreement negotiations.”