View from City Road: Gatt threatened by French foolishness

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The French government is behaving foolishly in the end- game over the Gatt trade talks. At any given point in a negotiation, there is a time for temper tantrums. In the Gatt talks, the time has passed.

The French have driven a very hard bargain already. The European Commission negotiated the Blair House agreement on farm trade, which was satisfactory to the US and to every European Union member except France. Yet that deal has been so modified that the adjustments French farmers will have to make have yet again been postponed. French officials concede that nothing further can be expected. Agriculture is settled.

But that is not the end of the matter. There is also an EU-US deal on cinema subsidies. The US has conceded, quite rightly, that any European government should be able to subsidise its cultural activities. There is everything right with a dash of cultural Gaullism when faced with the screen behemoths of Hollywood. But the US objects to the French government levying a special tax on cinema admissions, including US films, to fund the subsidy, and the French refuse to relent.

Another French sticking point is whether the start-up aid for civil aircraft can be 33 per cent (the previous EU-US deal) or just 20 per cent - as the Americans want, knowing that Boeing is in a better position to fund development than the Airbus consortium. Neither issue can seriously be said to represent a vital national interest for any EU member state. The cinema can be protected, albeit by different means. The Airbus consortium will be able to fund new generations of aircraft.

It is surely not worth throwing away the whole process on these issues alone. If the Uruguay round of trade talks fail, the economic consequences will be dire. There is quite likely to be a new wave of protectionism and job losses. World financial markets will fall sharply. The French government should also be aware that its EU partners - certainly the British, but probably the Germans too - will hold it responsible. Edouard Balladur would be unwise to have a Gatt disaster on his conscience.

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