The EU’s Australia trade deal might well turn out to be the first victim of the ongoing submarine crisis, even if Australian and French government officials suggest that talks are still ongoing for now. However, skeptical reactions from non-French members of the European Parliament highlight the structural risks: the political lobby for such deals is limited in Europe, given a long list of concerns ranging from agricultural competition to “food miles” – i.e., their ecological and climate impact. Recall how the environmental track record of Brazil’s government provided an, in many ways, convenient justification for putting on ice a trade deal difficult to sell in many EU countries.
At the very least, the EU and France specifically can be expected to use the incident to extract better terms from Australia. French and European reminders of Australia’s interest in the deal are a case in point. Meanwhile, the EU-US Transatlantic Trade and Technology Council (TTC) is in some ways an opposite case: the trade relationship at stake is much bigger than that between the EU and Australia, but the forum now at risk of a delay is less tangible than a trade deal and was always unlikely to deliver any substantial mutual trade gains.
In security terms, meanwhile, Aukus surfaced right when the EU was unveiling its Indo-Pacific strategy. Senior EU representatives have been quick to conclude that Aukus, therefore, underlines the need for the EU to increase its “strategic autonomy”. However, beefing up the EU’s trade defense capabilities in this context might be easier than making progress on a united security policy. In any case, the EU will not be able to project independent military strength in Southeast Asia. The more relevant question over the medium term might be whether the EU may not be better off focusing more on security in its direct neighborhood, for instance, in Northern Africa. This might be one lesson from the Aukus-instilled realization that the US increasingly subjugates everything – even relations with its oldest ally, France – to the new strategic competition with China.
However, any EU move in such a direction might continue at a slow pace unless and until the US directly questions its security support to Europe to the same degree as done last by President Trump. Short of such immediate pressures, many in Europe will be willing to look at greater capabilities over the medium term, but not necessarily with the goal of actual “autonomy” from the US. This counts for Central and East European countries but also for others who have lent rhetorical support to France over recent days, including Germany. The UK – which France is still trying to woo into closer EU security cooperation post-Brexit – will insist on the same.
Meanwhile, the Aukus fiasco is unlikely to move Europe closer to China again. The investment agreement remains on ice amid a lack of majorities in the European Parliament. Europe’s most export-dependent economies remain more open for economic exchange, but within an overall opinion corridor that has become more alert to a new strategic rivalry. Among divided EU policymakers, this situation reflects the minimum common denominator. In sum, in an increasingly bipolar world, the EU is likely to continue avoiding choosing sides unless forced to do so.