Mandelson berates US, France

The chief EU trade negotiator, Peter Mandelson, criticized both sides of the Atlantic on Friday, lashing out at the US for blaming stalled trade talks on Europe, while accusing France of using hyperbole to try to delay an overhaul of agricultural subsidies.

The comments, which provoked retorts from both Washington and Paris, illustrated the tension just two months before a crucial meeting of the WTO in Hong Kong.

With negotiations apparently at their worst impasse in years, trade analysts said that Mandelson was trying to appeal to both European and US camps in an attempt to reach an agreement before the Hong Kong meeting.

"Mandelson is showing European machismo in an effort to play to the gallery in France and to try and make the US and countries like Brazil and India retrench from their demands," said Jean-Pierre Lehmann, professor of political economy at the IMD business school in Lausanne, Switzerland.

Returning from a week of talks in Geneva with no progress to report, Mandelson dismissed US charges that European intransigence risked derailing the process.

"I will not take any lessons from people saying `Why is Europe holding things up?'" he said.

He noted that Europe had proposed significant cuts in agricultural subsidies in 2003 -- an offer rejected as inadequate by other WTO members -- while a US counter-offer had only come last week.

Mandelson had similar words for Paris, saying that French fears that additional cuts in agricultural subsidies risked undermining Europe's status as a farm power were exaggerated.

The French interior minister, Nicolas Sarkozy, used that argument last Thursday, writing in Les Echos, a business newspaper, that additional subsidy cuts were "not acceptable."

Mandelson said he was eager to make a new offer next week, but only if he had the broad support of the other European governments.

"If France were to disavow the proposal," he said, "then I would need to know that other member states will clearly back it."

He also emphasized that Europe would not become engaged in a protracted concessions war. "If we make an offer, it will be an endgame, not an auction to push up the bidding" by other countries, he said.

Europe had been expected to offer a proposal this past week after the US offered to reduce its farm and export subsidies -- part of efforts to restart the Doha round of trade talks. The US and several other countries, including Australia and Brazil, blamed France and Europe for the lack of progress.

On Friday, Washington showed little inclination to back down.

"The responsibility at this point rests squarely with the member states of the European Union and their ability to come forward with a proposal that is meaningful and credible," said Neena Moorjani, a spokeswoman for the US trade representative, Rob Portman.

She said that Washington was dismayed that the Europeans appeared to lack a sense of urgency just two months before the meeting.

Mandelson also hit back at France, which has accused him of overstepping his mandate as trade commissioner. He said that Sarkozy's opinion piece in Les Echos amounted to "hyperbole" and that he would not go beyond the limits of the farm reforms agreed to by the EU in 2003.

On Friday, French officials said that they had no intention of abandoning their position, and warned that they could use a veto at the beginning of 2007, when European governments will probably need to vote on a final trade package.

"We are not afraid of being isolated or standing alone," said Nicolas de la Grandville, spokesman for the French representation to the EU. He said that France was making its case now to avoid having to use a "nuclear option" later.

Mandelson came under pressure from France after he offered subsidy cuts of 70 percent, up from 65 percent, in response to a US offer to cut subsidies by 60 percent and tariffs by 55 percent to 90 percent.

The US now wants Europe to agree to similar cuts in tariffs. But the European package envisages much smaller reductions.