WTO TRADE TALKS: FRENCH BUSINESS BEGINS TO

UNCLAS SECTION 01 OF 02 PARIS 008149

SIPDIS

SENSITIVE

STATE FOR E, EB, EB/TPP AND EUR/WE
STATE PASS USTR (SDONNELLY, DDWOSKIN)
USDA/FAS for BIG/SIMMONS/RICHEY/JONES and ITP/WOOLSEY

E.O. 12958: N/A
TAGS: ETRD EAGR PREL FR
SUBJECT: WTO TRADE TALKS: FRENCH BUSINESS BEGINS TO
CRITICIZE FRENCH PRO-FARM POSITION



1. SUMMARY. In a first public breach of the French
position on agricultural trade, French business leaders --
with French Ministers of Economy and of Trade present --
openly criticized the GOF's support for the interests of the
agricultural sector and maintenance of the EU's Common
Agricultural Policy (CAP). At a public meeting sponsored
last week by MEDEF, the French employers association,
business leaders expressed their strong support for the WTO
talks, and called for the GOF not to neglect France's
"offensive" interests in non-agricultural market access and
services. Farm groups have reacted angrily. This is the
first time that the GOF's pro-farm interest "solidarity" has
been broken publicly. Despite reassurances to the contrary
by MEDEF, if upcoming WTO negotiations end in a stalemate,
business leaders may well blame farm interests. END SUMMARY


2. (SBU) At a MEDEF meeting Nov 25 with the French Ministers
of Finance and Trade, French entrepreneurs, managers and
business leaders expressed their strong support for the WTO
talks. Flanked by Economy Minister Thierry Breton and Junior
Trade Minister Christine Lagarde, MEDEF President Laurence
Parisot, France's top private sector representative, said
the Doha Round was vital for economic growth in France and
in Europe. Other business representatives were more
critical, publicly and privately expressing their concern
over the current stalemate in which French officials had
rallied almost exclusively to the defense of narrow
agricultural interests at the expense of manufacturing and
service industries. According to press reports, one
businessman reminded the Ministers that industry and
services accounted respectively for 85 percent and 12
percent of France's exports and employed 62 percent of
France's workforce.

BUSINESS: GOF IS "HOLDING WTO POSITION HOSTAGE"
-------------- --

3. (SBU) In her main address, Parisot agreed that the
negotiations should not be limited to agriculture. In
personal comments to the press, other private sector
representatives strongly criticized the GOF's unquestioning
support of the French farm lobby's position at the expense
of France's other economic interests. At the meeting, one
business leader vocally criticized the government for
"holding the French WTO position hostage" to narrow farm
interests.


4. (U) The leading French farm union FNSEA reacted
immediately, publishing a press release following the forum
condemning "the naivety of MEDEF". The press release called
for MEDEF to unite with other organizations such as FNSEA to
preserve the so-called French model (of economic
development). Farm leaders argued that an agreement on
agriculture would certainly not lead to increased
liberalization for industry and services. Some French farm
leaders even openly expressed their wish for a failure of
the Hong Kong Ministerial, saying that no agreement would be
better than a bad agreement.


5. (U) In later interviews to the press, Parisot denied the
implication that business would blame farmers if the Doha
trade talks failed. She added that the French business
community fully supports EU trade negotiator Mandelson in
his call for a balanced agreement, involving agriculture,
industry and services.

COMMENT: A FIRST BREACH IN THE WALL
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6. (SBU) This incident highlights the growing discontent
within the French business community about EU farm policy
and the EU's negotiating stance leading up to Hong Kong.
This is the first time that business has openly criticized
the French government's unswerving support for maintaining
the EU's Common Agricultural Policy (CAP) and protecting its
main beneficiaries, increasingly corporate farmers and
absentee landlords. Until now, government ministers have
publicly tripped over each other to show their allegiance to
President Jacques Chirac's strong pro-farm position.
However, Breton and Lagarde's presence at this MEDEF forum
highlights a subtle shift, if not a potential breach, in
that solidarity. Despite reassurances to the contrary by
MEDEF, if upcoming WTO negotiations do end in a stalemate,
French business leaders may well blame farm interests.
Curiously, MEDEF has already recommended that in case the
Doha WTO talks should fail, the EU should follow the U.S.
example and sign more bilateral or regional free-trade
agreements.
STAPLETON