After the £48bn sub-contract row, EU has suspended trade negotiations with Australia

After a dispute over Canberra’s decision to cancel a multibillion-euro submarine deal with France, the European Union announced this morning that it will suspend trade talks between Australia and the bloc.

Miriam Garcia Ferrer (the spokesperson for EU Commission Trade) confirmed the decision but didn’t give any reason.

In 2018, the EU began negotiations to reach a trade deal with Australia. The 12th round was to be held via videoconference later in the month.

Australia signed the £48bn agreement with France’s majority state-owned Naval Group to build 12 conventional diesel/electric submarines in 2016.

However, Scott Morrison, Prime Minister of Australia cancelled the agreement last month. This was part of an alliance with Britain and the United States that will provide an Australian fleet with at least eight nuclear-powered subs.

France was angered by the move, and it also provoked criticism from Ursula von der Leyen, President of the European Commission.

France accuses Australia and the United States of betraying France over the cancellation contract and the secretly negotiated replacement trilateral alliance.

France temporarily recalled its Washington ambassador in protest. It is not known when the French ambassador will return to Australia.

According to EU data, Australia was the third-largest trading partner of the EU in 2020, behind Japan and China, and ahead of the United States.

The EU stated that discussions took place in a constructive and positive atmosphere, and they shared a commitment to reach an ambitious and comprehensive agreement.

An EU official who was directly involved in the matter stated that the submarine row played an important role in delaying the talks, but insisted that a deal was not possible in any case.

The official said that the postponement did not mean the end to negotiations, and insisted both sides will continue to strive for an agreement.

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