Dan Tehan caught off-guard by fresh delay on EU FTA talks

The EU has postponed its next round of free trade negotiations with Australia amid ongoing fallout over the Morrison government’s cancellation of the French Attack-class submarines.

Trade Minister Dan Tehan. Picture: NCA NewsWire / Martin Ollman

The EU has postponed its next round of free trade negotiations with Australia by at least another three months amid ongoing fallout over the Morrison government’s cancellation of the French Attack-class submarines.

The 12th round of negotiations on the proposed Australia-EU FTA had already been put off until November but now is scheduled for February.

The EU confirmed the decision to The Australian but declined to offer an official explanation for the delay.

Trade Minister Dan Tehan was caught off-guard by the latest delay, hearing the news from The Australian. He later confirmed the negotiations had been postponed after consulting with the Department of Foreign Affairs and Trade.

“The European Union has advised the Australian government that round 12 of the FTA negotiations will now take place in February, with our chief negotiators to meet in December,” he said.

It followed advice from EU Trade Commissioner Valdis Dombrovskis when the pair met last month that the FTA talks would resume in November.

Simmering French anger over Australia’s “stab in the back” decision to cancel the $90bn submarine program in favour of US or British nuclear-powered boats has dulled EU enthusiasm for the deal.

But the Morrison government is working its diplomatic networks to urge the EU to stick with the talks, arguing an FTA ­remains in the interest of both parties.

“This was reinforced to me by everyone I met with on my recent trip to Europe, including when I visited Brussels,” Mr Tehan told The Australian.

“The EU will use our FTA to strengthen its economic foothold in the Indo-Pacific, where so much of the world’s economic activity is taking place.

“For Australia, an FTA will secure liberalised and open trade with our second largest two-way trading partner.”

EU officials previously have indicated the parties are yet to reach agreement over “geographical indication” rules governing product labelling, together with regulations on market access, intellectual property rights, public procurement and sustainable development.

An Australia-EU FTA would give the nation’s exporters priority access to a market of almost 450 million people. Australia wants the EU to slash tariffs of 7 to 12 per cent on key exports to Europe. It also wants to secure greater access by Australian investors into the EU.

But French Trade Minister Franck Riester has played down the prospect of a deal, declaring “we can’t go on as if it was business as usual”.

Mr Tehan’s requests for talks with Mr Riester have been ignored so far.

Opposition foreign affairs spokeswoman Penny Wong said the Morrison government was continuing to face the fallout from its “diplomatic failures” over the AUKUS submarine decis­ion.

“In racing to make the AUKUS announcement, it is clear that Scott Morrison failed to do the diplomatic legwork required to manage the relationship with our French partners,” she said.

“Mr Morrison’s idea of diplomacy was a text message to President Macron dumping the $90bn future submarines program hours before announcing it publicly. Mr Morrison has his work cut out for him if he wants to rebuild trust with our European partners.”

The EU is Australia’s second largest trading partner, with two-way trade in goods and services between the two economies representing almost $58bn and $41bn respectively.

Mr Tehan, who met G20 counterparts in Italy this month, previously said he was not concerned by the delay in FTA talks.