EU foreign ministers to discuss submarine dispute on Monday

FILE PHOTO: European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium May 5, 2021. REUTERS/Yves Herman/File Photo

(Reuters) - European Union foreign ministers will on Monday discuss Australia's scrapping of a $40 billion submarine order with France, a move that has enraged Paris and cast a shadow over free trade talks between the EU and Australia.

The meeting will take place on the sidelines of the United Nations General Assembly in New York at 2200 GMT, a spokesperson for the European Commission told reporters in Brussels.

Australia said last week it would cancel an order of conventional submarines from France and instead build at least eight nuclear-powered submarines with U.S. and British technology after striking a security partnership with those countries under the name AUKUS.

To show its displeasure, France recalled its ambassadors from Canberra and Washington.

It is not clear if the dispute will have implications for the next round of EU-Australia trade talks, scheduled for Oct. 12.

"We are analysing the impact of the AUKUS announcement and what the impact would be on this schedule," a Commission spokesperson said.

Bernd Lange, chair of the European Parliament's trade committee, told a briefing, in English: "I guess this will not lead to stopping negotiations and talks with Australia, but they will be much more complicated."

Lange said the willingness of EU countries, and France in particular, to make compromises in trade talks, notably on agriculture, was likely to be "quite limited".

The United States has sought to assuage the anger in France, a NATO ally. The French government said on Sunday that President Emmanuel Macron would have a call with U.S. President Joe Biden in the next few days.

(Reporting by Sabine Siebold, Philip Blenkinsop and Marine Strauss; Editing by Kevin Liffey)

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