Dispute over French submarines could torpedo EU-Australia trade talks

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The French government has been seething since Australia scrapped its A $ 90 billion ($ 65 billion) deal last week with France in favor of a new military agreement with the United States and the United Kingdom.

“Keeping your word is the condition for confidence between democracies and between allies”, declared Clément Beaune, Secretary of State for European Affairs. Politico said. His comments were confirmed on Monday by a spokesperson. “It is therefore unthinkable to move forward in trade negotiations as if nothing had happened with a country in which we no longer trust,” added Beaune.

As part of the security pact, known as AUKUS, Australia will be equipped with the technology to build a fleet of nuclear-powered submarines, considered superior to the conventionally-powered ships that Canberra had previously agreed to d ‘buy in Paris. In response to this decision, France recalled Friday its ambassadors to the United States and Australia.

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

While the European Commission has the power to conduct trade negotiations on behalf of the bloc of 27 countries, it is unlikely to move forward with the deal if the French oppose it.

“At the end of the last round with Australia, which took place in June, it was agreed that the next round would take place in October. This is the current state of play,” said Eric Mamer, porte -Chief speech of the European Commission, after the comments of the French minister. “We are analyzing the impact the AUKUS announcement would have on this timeline.”

The European Union was Australia’s third largest trading partner in 2020, according to the European Commission. Merchandise trade between the two stood at 36 billion euros ($ 42 billion) in that year, while trade in services amounted to 26 billion euros ($ 30 billion) in 2019. .

The deal could add between 1.8 billion and 3.9 billion euros (2.1 billion and 4.6 billion dollars) to the EU’s GDP by 2030, according to the European Commission.

The threat of a trade deal with the EU comes as Australia seeks to develop new export markets after relations with China, its biggest trading partner, recently deteriorated.

Australian coal, wine, barley and beef have all already been hit by trade tensions with China, and experts say UKUS has upset Beijing even more.
Meanwhile, China has sought a path in Australia’s other great trade deal – the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), which is an 11-country free trade pact that came into effect in December 2018. China officially applied to join this last week.

– Joseph Ataman and Saskya Vandoorne in Paris, and James Frater in London contributed to this report.

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