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Chirac threatens to veto any world trade deal

Posted on: Thursday, 27 October 2005, 13:52 CDT

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)

Source: REUTERS

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