Australia’s treatment of France not acceptable’, European Commission president Ursula von der Leyen says

Australia’s free trade talks with the EU on a knife-edge as political leaders probe cancelling of French submarine contract.

“One of our member states has been treated in a way that is not acceptable”: European Commission President Ursula von der Leyen. Picture: AFP

Australia’s free trade talks with the European Union are poised on a knife-edge as political leaders in Europe begin an investigation into Australia’s cancelling of its submarine contract with France.

Australia and the EU have been in three years-long discussions over the trading deal, but next month’s round of talks could be postponed or the talks abandoned because of French anger at being sidelined by the sudden trilateral partnership of Australia, the United Kingdom and the United States to build nuclear-powered submarines.

French President Emmanuel Macron (right) is seen with European Commission president Ursula von der Leyen during the MED7 Mediterranean countries summit in Athens, Greece last week. Picture: AFP

Over the past few days, French president Emmanuel Macron, through the French foreign secretary Jean-Yves Le Drian, has been rallying European allies to shore up a European military alliance, even at the expense of being part of the leadership of NATO. As for future trade with Australia, the French say they have been betrayed and such a development would be “unthinkable”.

European Commission president Ursula von der Leyen said overnight (AEST) that many questions needed to be answered on the AUKUS 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,” Ms von der Leyen said, adding that the situation had to be understood “before you keep on going with business as usual”.

This came as one of Mr Macron’s closest political allies, French European secretary Clément Beaune, told Politico that it would be unthinkable to continue trade negotiations with Australia “as if nothing had happened with a country in which we no longer trust”.

“Keeping one’s word is the condition of trust between democracies and between allies,” Mr Beaune said.

European Commission spokesman Eric Mamer said while EU-Australia talks had been scheduled for October, the Commission was currently analysing the impact that the AUKUS announcement would have on this schedule.

The European Union represents 27 member states, and all countries must agree to any free trade discussions, meaning France’s ongoing anger at being ill-treated by Australia could scupper any meaningful trade progress.

This is especially so as any trade deal with Australia could impact French farmers in particular, and Mr Macron will not want to have any deleterious impact hovering over his re-election bid in 2022.

A free trade deal between Australia and the EU could add between $2bn to $4.6bn to the EU GDP by 2030, according to the European Commission.