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Australia Firm In Face Of French Sub Anger

Prime Minister Scott Morrison says a changed security environment is the key reason for scrapping a French submarine contract for nuclear-powered boats.

Australia is holding firm in the face of sustained European anger over a torn-up $90 billion French submarine contract which has sparked a major diplomatic rift.

Scott Morrison insists the nation needs nuclear-powered boats rather than conventional submarines French company Naval Group was enlisted to provide.

The French government claims it was blindsided by the announcement of the AUKUS pact between Australia, the United Kingdom and the United States.

But the prime minister indicated Australia earlier raised concerns about the suitability of the French submarines for strategic situation in the Indo-Pacific.

"We have made it clear for some months that the capability of a conventional submarine, to operate in that environment which we now face, pose serious risks," he told reporters in New York on Wednesday.

"The environment that we're seeking to operate has changed. I don't think there's any dispute about that."

Mr Morrison said Australia had a firm view conventional boats would not be suitable in the future.

"We took the decision that we have every entitlement to take. To protect Australia's interests and advance our national security," he said.

The prime minister told European Council president Charles Michel that Australia wanted to work with the bloc in the Indo-Pacifc but received a frosty response.

"Thank you for your message but as you know for us transparency and loyalty are fundamental principles," Mr Michel said.

After the meeting with European representatives, Mr Morrison said there was an understanding a free-trade deal under negotiation was separate from the submarine deal.

"It's no easy thing to land a trade deal with Europe," the prime minister told reporters.

"But I was very pleased with the discussions we had on that topic today, not just with obviously the European Commission and council, but also the individual member states."

Mr Biden hailed the strong alliance with Australia during his first one-on-one meeting with the prime minister on Wednesday.

"The United States has no closer or more reliable ally than Australia," the president said.

"Our nations have stood together for a long, long time.  We can rely on one another and that's really a reassuring thing."

The submarine deal could also include Australia hosting nuclear-powered submarines from the UK before construction starts.

Mr Morrison confirmed the possibility but said there was no commitments yet.

"Being able to bring that capability to our region and to work with that, that provides training opportunities for Australians as well as we seek to build our capability," he said.

Foreign Minister Marine Payne travelled to the US with Defence Minister Peter Dutton.

Senator Payne described the AUKUS arrangement with the US and UK as about sharing technology rather than a military alliance or a security pact.

Plans to acquire nuclear-powered submarine technology under the AUKUS agreement are aimed at countering China's regional influence.

"The president has a deep understanding of the Indo-Pacific. A very deep understanding. He's been around this space for a very long time and he knows it intimately," Mr Morrison said.

AAP Matt Coughlan and Georgie Moore with The Project