• Tue
  • Sep 23, 2014
  • Updated: 2:01pm
BusinessEconomy

EU ministers face French hurdle on US free trade talks

France insists that culture and its special status within the EU is a no-go area and has threatened to a free trade deal with the US rather than accept a carefully worded compromise.

PUBLISHED : Thursday, 13 June, 2013, 2:22pm
UPDATED : Thursday, 13 June, 2013, 2:22pm

EU trade ministers will try on Friday to resolve deep differences with France on whether its prized “cultural exception” should be included in free trade talks with a United States which believes there should be no exceptions at all.

Negotiations with Washington already promise to be difficult but France insists that culture and its special status within the EU is a no-go area and has threatened to block agreement rather than accept a carefully worded compromise minimising possible damage.

France jealously guards its own cultural assets and those of Europe as a whole, fearing US influence in the shape of low-brow TV soap operas and Hollywood’s dominance of the film industry.

To get around the problem, the current Irish EU presidency has suggested a compromise -- culture and the audiovisual sector would be included in the EU negotiating mandate but it would also be made clear that there would be no change to current quota and subsidies in a future accord.

An EU source said this was how South Korea had resolved a similar problem when it negotiated its Free Trade Agreement with the United States. “It was not necessary for South Korea to exclude it to get what they wanted,” the source said.

“Starting the negotiations by excluding some sectors would not be wise ... and would come at a cost,” the EU source said.

But France fears that if the audiovisual sector is included, it might get caught up in the inevitable horse-trading.

French Prime Minister Jean-Marc Ayrault threatened Wednesday to veto the talks.

“France will oppose the opening of the negotiations if culture and the cultural industries are not protected, are not excluded,” Ayrault told the French parliament, saying this was a “crucial issue.”

The EU source refused to be drawn on how Brussels would deal with such an outcome, arguing that it would be up to a dissenting member state to push the issue to a unanimous vote.

“I can’t imagine Europe launching the biggest trade negotiation ever without consensus,” the source added.

Washington and Brussels hope the EU-US Transatlantic Trade and Investment Partnership will deliver a major boost to growth and jobs, especially in Europe where the debt crisis has left the economy stuck in the doldrums.

The numbers involved are enormous in what would be the world’s largest FTA. Last year, the EU exported goods worth 292 billion euros to the United States and took imports of 206 billion euros in return, according to European Commission figures.

In services, last year exports and imports were more evenly matched at around 140 billion euros (HK$1.5 billion) each.

EU-US trade and investment flows are made easy by a very low tariff regime but there are still important non-tariff and regulatory barriers.

An accord to remove these would add some 119 billion euros (HK$1.2 trillion) annually to the EU economy, with 95 billion euros (HK$982 billion) for the US, the EU says.

While the stand-off with France dominates the run-up to Friday’s meeting, there are other issues to be considered, not least a series of trade disputes with China which have also exposed deep differences within the EU.

France supported imposing provisional punitive tariffs on imports of Chinese solar panels, announced last week to the anger of Germany which wants a negotiated solution.

In six months time, EU members will have to vote whether to make the tariffs permanent “and we will see very quickly then that the majority is in favour of negotiations” and not sanctions against China, German Economy Minister Philipp Roesler said on Tuesday.

In addition, ministers will review apparently stalled efforts to conclude an FTA with Canada, where agriculture is proving difficult.

They will also look at how to offer workers better social protection in Bangladesh, a major supplier of textiles to the EU, after more than 1,000 died when their factory collapsed there last month.

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