The Daily Update: EU / Australia Spat

The ongoing spat between France and Australia over the cancellation of a multibillion-dollar submarine contract has now escalated to an Australia-EU problem after the European Union postponed for a month the next round of negotiations for a free trade agreement with Australia. The rescheduling comes after France publicly stated that it can no longer trust Australia's government, accusing both Australia and the United States of stabbing it in the back. Paris then recalled its ambassadors from both Washington and Canberra. The EU is Australia's third-biggest trading partner, last year trade in goods between the two economies was valued at over EUR36bn and approximately EUR26bn in services.

The postponement comes after Ursula von der Leyen, the European Commission President, earlier this week berated the United States, joining Germany and France, for negotiating a security pact in secret with Britain and Australia that cost Paris the lucrative defence deal, adding that such behaviour was unacceptable. Von der Leyen said ‘One of our member states has been treated in a way that is not acceptable, so we need to know what happened and why’.

However, Australia hit back saying the United States' offer of access technology to build nuclear-powered submarines was too good to refuse. As a mark of how good the offer was, Australia is only the second country (after the UK, and that was over 60 years ago) to be given access to the technology. Dan Tehan, the Australian Trade Minister said he understood the French reaction ‘but ultimately any nation must act in its national interest -- which is what Australia has done’.

Tehan also believed that both the French and the EU would get over their strop and the planned free trade deal with Australia would go still go ahead ‘It’s just very much business as usual when it comes to our negotiations on that free trade agreement’ adding ‘Everything points to the fact that it’s in both the European Union and Australia’s interests that we continue that FT’.

Enjoy the wet weekend.