EU, Australia trade talks postponed amid subs row

A long-planned round of Australia-EU free trade talks have been postponed, a European official confirmed yesterday, after fury over Canberra's decision to cancel a major French submarine contract.

"The FTA trade round has been postponed for a month until November," an EU official in Canberra told AFP, throwing the future of the far-reaching pact into doubt.

Australia last month abruptly cancelled a multibillion-dollar contract for 12 French submarines, opting to buy nuclear-powered US-designed vessels instead.

The decision prompted a major diplomatic spat with one of the European Union's largest members and now appears to have hit ties with the entire bloc.

France has publicly said it can no longer trust Australia's government, accusing officials of lying and questioning whether the trade agreement can go ahead.

Australian Trade Minister Dan Tehan, who was scheduled to travel to Europe for the talks, played down the decision.

"We understand the French reaction to our submarine decision but ultimately any nation must act in its national interest -- which is what Australia has done," he said in a statement to AFP.

Tehan indicated he still plans to meet EU Trade Commissioner Valdis Dombrovskis -- representing the EU executive that negotiates trade deals on behalf of its member governments -- next week to discuss what would be the 12th round of negotiations.

"We will continue preparing for the 12th round of negotiations and working towards concluding a free trade agreement that is in the interests of both Australia and the EU."

In Brussels, EU spokeswoman Miriam Garcia Ferrer underlined that that "it is not the end of these negotiations".

Trade deal negotiations "are always about substance over speed and there are many open issues to negotiate. A one-month delay will also allow us to better prepare," she said.

The European Union is Australia's third-biggest trading partner, with trade in goods between the two economies valued at 36 billion euros ($42.4 billion) and at 26 billion euros in services last year.