Chirac threatens to veto any world trade deal

By Sophie Louet and William Schomberg

LONDON/BRUSSELS (Reuters) – French President Jacques Chirac
warned Europe’s trade negotiators on Thursday he would torpedo
a global trade deal if they made further sacrifices in farm
protection measures to keep the negotiations alive.

A day before Brussels tries to revive the talks by putting
a revised farm offer to key trading nations, Chirac told fellow
EU leaders that Paris was prepared to exercise its veto right.

An official French source said Chirac told the summit that
France “reserves the right not to approve … any agreement
that does not respect” a 2003 reform of Europe’s agricultural
budget.

“It’s out of the question for us to take any further step,”
Chirac told reporters after the meeting.

France has piled pressure on EU Trade Commissioner Peter
Mandelson not to go widen EU farm concessions in the talks. At
the same time, he is being told by Europe’s biggest trading
partners to make big cuts to farm import tariffs.

A deadline is fast approaching for a World Trade
Organization (WTO) deal. The WTO’s 148 members are due to meet
in mid-December in Hong Kong to agree on an outline. A deal
could give the world economy a boost and help poor nations.

European Commission President Jose Manuel Barroso said the
new EU farm offer to be made on Friday would be conditional on
other countries following suit in areas such as industrial
goods and services, both key for European companies.

“Time is running out,” Barroso told a news conference.

Officials on both sides of the Atlantic have warned that,
without a breakthrough soon, the WTO round will collapse after
four years of talks.

As EU leaders met in London, European Commission
negotiators in Brussels held back from presenting their new
offer. U.S. trade officials had expected an EU move during the
day.

FRIDAY TALKS

The EU, the United States and fellow core WTO members
Brazil, Australia and India have scheduled a conference call
for Friday in the hope of a breakthrough.

At talks in Geneva last week, the EU failed to come up with
tariff cuts that came close to the demands of its partners.

Mandelson said then that those demands were unrealistic,
and that the other countries had to move on non-agricultural
issues.

A Brazilian diplomat in Brasilia said there was still time
for a deal in Hong Kong, as long as the EU offer was serious.

“If the EU proposal is good, we can make up for this. If
the proposal is late and it’s not good, then there will be
trouble.”

Ambassadors representing EU member states were due to meet
on Friday morning in Brussels to discuss the WTO stand-off
before the teleconference.

Thursday’s EU summit was called to discuss how Europe
should face the challenge of globalization.

British Prime Minister Tony Blair, who has fought to cut EU
spending on farms, says the bloc’s annual budget of over 100
billion euros should be more “rational” by focusing more on
innovation to improve competitiveness.

Farm spending accounts for 40 percent of the budget, and
French farmers are the biggest beneficiaries.

(Additional reporting by Jan Strupczewski and Paul Taylor
in London and Andrew Hay in Brasilia)