CANBERRA, AAP – Scott Morrison has shrugged off warnings Australia’s decision to ditch a $90 billion French submarine contract risks derailing free-trade negotiations with the European Union.

The prime minister insists Australia must act in its national interests and is confident issues can still be worked through in coming months.

“It’s not an easy thing to do, to get an agreement with the European Union on trade. I think everyone understands that,” he told reporters after landing in the US on Tuesday morning Australian time.

Australia last week announced a new security pact with the United States and the United Kingdom (AUKUS) which includes an agreement for nuclear-powered submarines.

It also scrapped the contract with French company Naval Group, sparking a major diplomatic rift.


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Mr Morrison is scheduled to meet with NATO secretary general Jens Stoltenberg and European Commission president Ursula von der Leyen during his trip.

“It would be naive to think a decision of this nature was not going to cause disappointment, obviously, to the French. We understand that,” the prime minister said.

“It was not possible for us to be able to discuss such secure issues in relation to our dealings with other countries at the time.”

Mr Morrison also talked up Australia’s commercial relationships with various EU countries, including a defence contract with Germany.

“We’re looking to establish even more of those relationships directly,” Mr Morrison said.

Meetings with Austrian Chancellor Sebastian Kurz and Swedish Prime Minister Stefan Lofven are also on the prime minister’s agenda.

Bernd Lange, who chairs the European Parliament’s trade committee, warned Australia’s submarine decision had damaged trust and was seen as an attack on European interests.

The German politician said some member states were struggling to find compromises on agriculture as part of the trade talks.

“Some members could ask for more safety nets, for more safeguards in such agreement. So I guess the dialogue and the negotiation will take more time,” he told ABC radio.

Mr Lange suggested the about-turn could make the EU more reticent to cooperate with Australia in other areas such as clean hydrogen.

“The question of trust and the question of safeguards will, I guess, be the consequence of the situation we are faced with,” he said.

He proposed Australia offer an apology to France for the “unkind” situation imposed on it.

Opposition Leader Anthony Albanese emphasised France was important in the Indo-Pacific region.

“Friends need to treat each other with respect,” he said.

“The prime minister needs to make sure that he concentrates not just on the announcement, but on the details around announcements as well.”