France Warns That AUKUS Submarine Row May Thwart EU-Australia Trade Talks

As part of the new security alliance, AUKUS, that also includes the US and UK, Australia will be supplied with technology to build a fleet of nuclear-powered submarines, prompting Canberra to scrap a previous deal with France for 12 conventionally powered vessels. Affronted France recalled its ambassadors to the United States and Australia.

France has warned that it may block talks on a planned free trade agreement between the European Union (EU) and Australia amid the diplomatic row triggered by the announcement of the AUKUS security alliance.

"Keeping one's word is the condition of trust between democracies and between allies… So it is unthinkable to move forward on trade negotiations as if nothing had happened with a country in which we no longer trust," France's European affairs secretary Clément Beaune was cited as saying by Politico.

European Commission President Ursula von der Leyen emphasised earlier that the situation with the scrapped submarine deal must be clarified "before you keep on going with business as usual."

"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 in a CNN interview.

The three-way pact, announced on 15 September, generated backlash from France. Paris claimed that it had been blindsided by the deal that would see the US and UK help Australia build nuclear-powered submarines. Canberra has been accused of delivering Paris a “stab in the back" by reneging on its multi-billion dollar conventional submarine deal with France.

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. In response to the move, France recalled its ambassadors to the United States and Australia on Friday.

EU-Australia Trade Talks

Launched back in June 2018, negotiations on a free trade agreement between the 27-country European Union bloc and Australia, its third largest trading partner in 2020, have witnessed 11 rounds.

The next scheduled round of talks on a deal that would remove barriers to exports and intellectual property rights is slated for October. However, European Commission chief spokesperson Eric Mamer has been cited as saying they were currently analysing "the impact that the AUKUS announcement would have on this schedule."

The European Commission endowed with authority to conduct trade talks on behalf of the bloc, is unlikely to go ahead with the deal if France is opposed, according to analysts cited by CNN.

Goods trade between the European Union and Australia amounted to €36 billion ($42 billion) in 2020, with trade in services worth €26 billion ($30 billion) in 2019, according to the European Commission.

A free trade agreement is estimated to funnel between €1.8 billion and €3.9 billion ($2.1 billion and $4.6 billion) to the European Union’s GDP by 2030.

Australia’s concerns regarding the future of the trade deal with the EU are compounded by the recent souring of trade relations with China – its largest trading partner.

A visitor wearing a face mask to protect against the coronavirus looks at a display of Australian wines at the China International Import Expo (CIIE) in Shanghai on Nov. 5, 2020. China is raising import taxes on Australian wine, stepping up pressure on Australia over disputes including its support for a probe into the origin of the coronavirus.

© AP Photo / Mark Schiefelbein

Relations had deteriorated in May 2020, when Beijing slapped 80 percent tariffs on Australian barley imports in retaliation for the Pacific nation's Prime Minister Scott Morrison's demand for an international inquiry into the origins of COVID-19.

China subsequently slapped similar tariffs on Australian coal, copper, wine, and lobster, and in December Beijing banned timber imports from the Australian states of South Australia and Tasmania after some pests were detected in the inbound cargo.

Experts are cited as warning that the AUKUS pact, viewed as an effort to counter China's assertiveness in the contested South China Sea, has further antagonized Beijing.

China has slammed the "extremely irresponsible” newly-announced alliance as "severely damaging regional peace... and intensifying the arms race".

The #US and #Australia gang up to smear #China, interfere in China's internal affairs out of geopolitical interests and drive wedge between regional countries. China deplores and firmly opposes this. pic.twitter.com/HP9gJ1K43b

— Lijian Zhao 赵立坚 (@zlj517) September 17, 2021

China has, however, sought to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the 11-country free trade pact that came into force in December 2018 and which Australia is a member of.

China formally applied to join the major Asia-Pacific trade partnership last week.

The CPTPP succeeded the Trans-Pacific Partnership (TPP) after the US ditched it under former President Donald Trump in 2017.