Chirac threatens to veto world trade deal

By Sophie Louet and William Schomberg

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

A day before Brussels tries to revive negotiations by
putting a revised farm offer to key trading nations, Chirac
told EU leaders Paris was prepared to exercise its veto right
to block the required unanimous European approval of any
agreement.

Chirac told a news conference he had made clear at a summit
that France reserved the right not to approve any agreement
that went beyond a 2003 reform of Europe’s agricultural
spending.

“It’s out of the question for us to take any further step,”
he said. “It’s a red line of what would be acceptable for us.”

France has piled pressure on EU Trade Commissioner Peter
Mandelson not to widen EU farm concessions in the talks. At the
same time, Europe’s biggest trading partners are urging him 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 boost the world economy 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 on agriculture and 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 and will brief a special meeting of EU ambassadors on
Friday before presenting the proposal to key trading partners.

FRIDAY TALKS

U.S. trade officials had expected an EU move on Thursday.
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.”

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.

Chirac denied charges of protectionism, saying the EU had
opened its markets fully to produce from the world’s poorest
nations and took some 80 percent of African exports.

But Danish Prime Minister Anders Fogh Rasmussen said it was
hypocritical for Europe to pride itself on being the world’s
biggest aid donor while protecting its farmers with
trade-distorting subsidies and barriers that blocked poorer
countries from earning a living.

(Additional reporting by Jan Strupczewski, Marie-Louise
Moller and Paul Taylor in London and Andrew Hay in Brasilia)