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U.S.: EU trade offer falls short

BRUSSELS, Belgium (Reuters) -- The European Union on Friday offered more sacrifices on farm goods as it tried to keep alive a global trade deal, but the United States said it fell short and France protested it appeared to go too far.

With a meeting of the World Trade Organization just weeks away, the EU's executive Commission has been caught between demands for more concessions by big trading partners and a threat by France to use its veto powers to defend its farmers.

The Commission said it would nearly halve its average tariff on agricultural imports to just over 12 percent.

"By any measure, what we are putting forward is a very deep cut," EU Trade Commissioner Peter Mandelson told reporters, before he resumed talks via a video conference with trade negotiators from the United States, Australia, Brazil and India.

But Washington said it was unimpressed by the new offer.

"From our early analysis, we are disappointed," said U.S. Trade Representative spokeswoman Christin Baker. "While in some ways it is a step in the right direction and we acknowledge the EC's efforts, much more needs to be done."

She said the EU's proposal to classify 8 percent of its tariff lines as "sensitive goods" -- meaning those tariffs would be cut less -- represented a substantial loophole.

The United States and other countries want the EU to cut the proportion of sensitive products such as beef and poultry to just 1 percent of the total.

The WTO's 148 members are due to meet in December in Hong Kong to agree on a blueprint for a deal.

The lack of progress so far on farm reform means an accord originally planned to give the world economy a boost and help poor countries could flop after four years of talks.

An EU official said the new offer represented an average cut in the EU's farm import tariffs of 38 percent.

The United States and other countries have demanded average cuts of at least 54 percent and they rejected a previous EU offer they said meant average cuts of under 25 percent.

But Brussels is also under intense pressure from France.

President Jacques Chirac said on Thursday that Paris might veto the deal if Brussels went any further.

Mandelson said the new offer was within his mandate from EU member states, although it was at its "outer limit".

A French source said Paris believed the new offer might have gone too far.

"We have doubts about the compatibility of the offer with the mandate and about the appropriateness of making this offer now," the source said.

He said Paris was seeking clarification from the Commission.

The Commission said its new proposals were conditional and "must unlock immediate progress" in areas such as industrial products and services, of key interest to European companies.

But the French source said the Commission was wrong to have allowed the talks to focus on farm concessions before Brussels had secured any equivalent gains in the other areas.

Brazil, for one, has refused to make any such concessions if the EU does not make a bold offer on farm access.

The United States shifted the spotlight on to Europe this month by announcing a long-awaited cut in trade-distorting U.S. farm subsidies and proposing sharp import tariff cuts.
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