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Scott Morrison insists there was no way to avoid France's anger about a scrapped submarine deal as the ambassador prepares to return to Canberra.
French ambassador to Australia Jean-Pierre Thebault was recalled after the prime minister's decision to scrap a $90 billion submarine contract enraged Paris.
The experienced diplomat will now return on a mission to redefine the terms of France's relationship with Australia and defend the country's interests as the deal ends.
Mr Morrison said repairing the relationship would be about picking up on existing co-operation despite the French government calling for actions rather than words.
While France claims it was stabbed in the back by Australia, the prime minister is adamant tearing up the contract couldn't have been handled differently.
"There was no way that we could have taken this decision without it having and causing deep disappointment and hurt to France," he told reporters in Canberra on Thursday.
"There's no way we could have avoided that."
He welcomed the ambassador's return, which he believes "was always going to happen".
Labor argues Mr Morrison failed to engage respectfully with French President Emmanuel Macron, who is now refusing to speak with the prime minister.
"There was no need to have the breakdown in relationships with France and with the European Union that have occurred," Opposition Leader Anthony Albanese told reporters.
Australia torpedoed the agreement for 12 diesel-powered boats from French company Naval Group in favour of access to nuclear submarine technology as part of the AUKUS pact with the US and UK.
Mr Morrison argues Australia has other defence agreements with France.
"The Australia-France relationship is bigger than a contract," he said.
He said the government had a good understanding of how to deal with exiting the contract with French company Naval Group but declined to say how much compensation would be owed.
"Let's be clear - Australia makes decisions in our national interest."
Defence Minister Peter Dutton said the ambassador's return was pleasing.
"We've got an important relationship with France and we want to normalise that relationship," he told 2GB on Thursday.
AUKUS is designed to counter China's increasing aggression, which has seen up to 150 warplanes enter Taiwan's defence air zone.
"As we've seen with China and Taiwan in recent days, there are very worrying signs," Mr Dutton said,
Former prime minister Tony Abbott is in Taiwan meeting with government ministers and addressing an international forum.
Mr Morrison said Mr Abbott was visiting the island nation in a private capacity.
Australia's One China policy does not officially recognise Taiwan as a country but maintains unofficial contacts promoting economic, trade and cultural interests.