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Chirac threatens to veto world trade deal

Posted on: Thursday, 27 October 2005, 15:23 CDT

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)

Source: REUTERS

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