EU, Australia free trade talks postponed amid submarine row

A long-planned round of Australia-EU free trade talks have been postponed, a European official confirmed Friday, after fury over Canberra's decision to cancel a major French submarine contract.

"The FTA trade round has been postponed for a month until November," an EU official in Canberra told AFP, throwing the future of the far-reaching pact into doubt.

Australia last month abruptly cancelled a multibillion-dollar contract for 12 French submarines, opting to buy nuclear-powered US-designed vessels instead.

The decision prompted a major diplomatic spat with one of the European Union's largest members and now appears to have hit ties with the entire bloc.

France has publicly said it can no longer trust Australia's government, accusing officials of lying and questioning whether the trade agreement can go ahead.

Australian Trade Minister Dan Tehan, who was scheduled to travel to Europe for the talks, played down the decision.

"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," he said in a statement to AFP.

Tehan indicated he plans to meet EU Trade Commissioner Valdis Dombrovskis – the body that negotiates trade deals on behalf of its member governments – next week to discuss what would be the 12th round of negotiations.

READ MORE: Macron, Biden hold talks to defuse submarine row

Third-biggest trading partner

"We will continue preparing for the 12th round of negotiations and working towards concluding a free trade agreement that is in the interests of both Australia and the EU."

The European Union is Australia's third-biggest trading partner, with trade in goods between the two economies valued at 36 billion euros ($42.4 billion) and at 26 billion euros in services last year.

The next round of talks was due to cover areas including trade, services, investment and intellectual property rights.

Negotiations began in 2018 and officials had hoped to reach a final agreement by the end of the year.

With both Australia and France heading to elections in early 2022, that timeline now appears optimistic.

READ MORE: France, Australia agree submarines dispute won’t derail free trade deal

'Deliberately deceived'

The submarine dispute has made front-page news in both countries.

In response to the decision the French government recalled its ambassadors from Canberra and Washington, a rare move to protest allies' behaviour.

France's ambassador returned to the United States on Wednesday but as yet there is no such indication that ambassador to Australia Jean-Pierre Thebault will return.

Former Australian prime minister Malcolm Turnbull this week said his successor and former party colleague "deliberately deceived" France in scrapping the deal.

"(Prime Minister Scott) Morrison has not acted in good faith. He deliberately deceived France. He makes no defence of his conduct other than to say it was in Australia's national interest," Turnbull told the National Press Club in Canberra.

"France believes it has been deceived and humiliated, and she was. This betrayal of trust will dog our relations with Europe for years," he added.

"The Australian government has treated the French Republic with contempt."

Canberra insists it scrapped the contract as it decided it needs nuclear submarines, which can remain underwater and undetected for far greater stretches, at a time of rising tensions with China.

READ MORE: France says US torpedoed its submarine deal with Australia