Dan Tehan faces detente test before trade talks

Trade Minister Dan Tehan will urge France to ‘sit down and discuss issues face-to-face’ ahead of free-trade agreement negotiations with EU officials.

Trade Minister Dan Tehan. Picture: Martin Ollman

Trade Minister Dan Tehan will urge France to “sit down and discuss issues face-to-face” ahead of free-trade agreement negotiations with European Union officials, which Paris has reportedly threatened to scuttle, resuming on Thursday.

Mr Tehan, who will travel to Europe and meet with EU trade representative Valdis Dombrovskis in Brussels next week, on Wednesday will say he understood “France’s deep disappointment with the decision on the submarines”.

“But ultimately any nation must act in its national interest – which is what we have done. Australia is always open to sitting down with our friends and working through difficult issues. With France our ties are deep,” Mr Tehan will say in a speech to the National Press Club.

After the French government withdrew their ambassador Jean-Pierre Thebault in response to the AUKUS military pact and nuclear submarine deal with the US and UK, Mr Tehan will call for restraint from Paris in its approach to the FTA.

“For the French, who export $6.17bn in goods and services to Australia while we send $1.37bn the other way – a comprehensive FTA is very much in their interest. It would see our economic partnership grow even further,” he will say.

“And for Australia, with the EU our second largest trading partner, liberalised, open trade is always in our interests. We have a strong relationship with the EU, built on our shared commitment to democracy, human rights, the rule of law and economic openness.

“And the sign of a healthy relationship is the ability to sit down and discuss issues face-to-face and, where necessary, to have difficult conversations.”

Paris has sought to lobby fellow EU nations to join with them and pullout of the talks, accusing the Morrison government of siding with the US to betray France and undermine its broader strategy in the Indo-Pacific region.

With the EU trade deal making “substantial progress” during rounds 10 and 11 of negotiations, Mr Tehan will reveal he had signed off on Australia’s geographical indications offer to the Europeans which would be discussed by negotiators on Thursday.

“The Australia-EU FTA is in the best interests of all parties,” he said. “The EU will use it as a foothold into the Indo-Pacific because they realise that the region carries the economic weight of the world. When I was in Europe in May visiting Germany, Belgium and France, I heard one common refrain: if Europe can’t negotiate a FTA with Australia, who in the Indo-Pacific could they negotiate one with.”

Senior government sources told The Australian they hadn’t expected to conclude the EU deal until next year at the earliest.

Scott Morrison, who is in New York and was due to meet US President Joe Biden overnight, was also scheduled to speak to European leaders, including NATO Secretary General Jens Stoltenberg; European Commission President Ursula von der Leyen; Swedish Prime Minister Stefan Lofven; and the Chancellor of Austria, Sebastian Kurz.

In his NPC speech, Mr Tehan will address China’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, saying “you have to be able to sit down, look your economic partner in the eye”.

“We want a constructive relationship with China and we remain open to sitting down and working through our differences,” he said. “… There are clearly challenges in our relationship that shouldn’t overshadow the strong mutual interests in the bilateral trade and investment relationship … we are also being proactive in supporting Australian exporters to diversify their international customers.”

Mr Tehan will also travel to the United Arab Emirates after the Gulf nation – Australia’s largest trading partner in the Middle East – raised an FTA possibility.