French Sub Spat Could Torpedo EU-Australia Trade Talks

France is threatening to block talks on a planned free trade agreement between Europe and Australia after the Australian government ditched a huge deal to buy French submarines, Diksha Madhok reported for CNN Business.

Photo Insert: Royal Australian Navy Collins Class Submarines HMAS Collins, HMAS Farncomb, HMAS Dechaineux, and HMAS Sheean were joined in formation by United States Navy Submarine USS Santa Fe in the West Australian Exercise Area.

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

"Keeping one's word is the condition of trust between democracies and between allies," France's European affairs secretary Clément Beaune told Politico. His remarks were confirmed on Monday by a spokesperson.

"So it is unthinkable to move forward on trade negotiations as if nothing had happened with a country in which we no longer trust," Beaune added.

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

While the European Commission has the power to conduct trade talks on behalf of the 27-country bloc, it is unlikely to go ahead with the deal if the French are opposed to it. In an exclusive interview with CNN's Christiane Amanpour, European Commission President Ursula von der Leyen said Monday that "a lot of questions" must be answered about the collapse of the submarine deal.

“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, adding that the situation must be clarified "before you keep on going with business as usual."

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