World Bank and IMF warn French farmers to be flexible

The heads of the International Monetary Fund and the World Bank yesterday issued a thinly veiled attack on French farmers they believe could derail global trade talks.

Rodrigo de Rato, the IMF managing director, and Paul Wolfowitz, the World Bank president, issued a joint communiqué urging national governments to "face down interest groups" during the latest round of trade talks.

The joint statement added: "At the heart of the [talks] lies agriculture and rightly so - the sector remains riddled with trade distortions that penalise consumers everywhere and the many poor in developing countries who earn their living from it."

The warning follows strong opposition from French farmers to new proposals from the European Union Trade Commissioner Peter Mandelson. On Friday, after Mr Mandelson offered to cut tariffs on farm goods by up to 60 per cent, the French government said it would ask the European Commission to investigate whether the proposal had breached the Common Agricultural Policy.

Yesterday, the head of France's largest farming trade union described the offer as a "provocation" and called on French President Jacques Chirac to exercise his right to veto the proposals if the Commission failed to act.

Jean-Michel Lemetayer, head of the FNSEA farm union, said: "I hope that the French government, which has shown a lot of firmness in the past few weeks, will not only threaten the use of its veto, but also apply it."

However, the Commission is also under pressure from the United States, which believes Mr Mandelson's latest proposals to cut farm subsidies do not go far enough. The US is concerned that the proposals would increase the number of farm goods classified as "sensitive goods", where tariffs would not be cut so markedly, in effect creating a loophole in any agreement. It wants the EU to agree to cut the proportion of sensitive goods such as beef and poultry to just 1 per cent, down from the 8 per cent which the current proposals could mean.

Trade officials are anxious to secure a deal in the run-up to the next stage of World Trade Organisation talks, which are due to take place in Hong Kong in December. The IMF and World Bank communiqué also urged trade negotiators not to focus on agriculture to the exclusion of all other issues.