Jean-Paul Votron, Fortis chief from October 2004 to July
2008, said he had received a fine from the regulator, without
saying how much, while Herman Verwilst, Fortis deputy CEO until
he succeeded Votron, was fined 250,000 euros ($334,800).

Both challenged the regulator’s findings and plan to appeal
against the fines.

The regulator also imposed a 500,000 euros fine on Ageas,
the Belgian insurance company left over after Fortis was carved
up. The company said it too would contest the ruling at the
appeals court in Brussels.

Fortis, once one of Europe’s largest banks, got into trouble
after paying a top-of-the-market 24 billion euros to buy the
Dutch operations of banking group ABN AMRO just before the
financial crisis struck.

Shareholder groups have complained that Fortis repeatedly
assured investors that its balance sheet was strong and it would
not change its dividend policy. But at the end of June 2008,
Fortis scrapped its interim dividend and sold new shares to prop
itself up.

The regulator ruled that Fortis had communicated too late or
incorrectly between May and June 2008 on the remedies required
by the European Commission related to the ABN AMRO deal and on
its future solvency.

Votron said many people within Fortis had had to clear the
company’s communications with the market and that the CBFA, the
precursor to the FSMA, had also been involved.

“I never got any complaint from these guys about
communication at any point of time in 2008, so I feel
particularly astonished about such a judgment,” he told Reuters.

“Why is it that five years after the fact, they suddenly
find the CEO… said something wrong on a particular day,” he
said.

A Dutch civil court last year found Votron and ex-finance
director Gerald Mittler had misled shareholders from May to June
2008, but cleared Chairman Maurice Lippens. Both have appealed
and the case is pending.

Fortis was finally split up in October 2008, a week after a
11.2 billion euro capital injection failed to calm markets over
its finances. The Dutch nationalised Fortis’s activities there,
while BNP Paribas bought a majority in Fortis’s
Belgian banking operations.

The remaining Fortis business, renamed Ageas, was left as an
insurance group centred on Belgium with life and non-life
insurance operations elsewhere in Europe and Asia as well as a
host of legacy issues to clear up related to Fortis’s collapse.
($1 = 0.7467 euros)

(Editing by Jane Merriman and David Holmes)

After 12 hours of talks, EU officials announced that the 27 EU trade ministers had finally agreed a negotiating mandate towards what could be the world’s most ambitious trade agreement.

The breakthrough came only after the ministers telephoned their leaders, including French President Francois Hollande, British Prime Minister David Cameron and German Chancellor Angela Merkel, diplomats said.

Paris had refused to join the 26 other EU governments unless television, movies and developing online media were left out.

The final mandate given to EU trade chief Karel De Gucht, who will lead negotiations, does not include the audiovisual sector. However, it does give the Commission the right to ask member states for a broader mandate at a later stage.

“I can live with this,” De Gucht told a news conference.

French Trade Minister Nicole Bricq said it was “written clearly in black and white” that culture was excluded.

“We are satisfied, but I don’t want to call it a victory,” she told reporters after the deal was struck late on Friday.

Trade between Europe and the United States is worth almost $3 billion (2 billion pounds) a day and an accord could boost both the EU and U.S. economies by more than $100 billion a year each – an attractive prospect when both are emerging from low or no growth and are keen to create jobs.

Together the United States and European Union account for half of global economic output and a third of all trade.

G8 LAUNCH

With a mandate agreed, European leaders and U.S. President Barack Obama plan to use a summit of the Group of Eight countries next week to launch talks. EU and U.S. negotiators aim to finish their work by the end of next year.

Free-trade advocates Germany and Britain had argued that excluding an industry from the talks would prompt a similar U.S. opt-out, such as to protect its closed shipping sector.

Nevertheless, they said it was vital to push ahead with what would be the world’s biggest trade agreement, because of the economic benefits it would bring, especially when much of western Europe is in recession.

“This is historic,” said a contented Swedish Trade Minister Ewa Bjorling. “The Commission now has a broad mandate.”

The United States has said it also wants to go into the talks with as broad a mandate as possible.

“We do not think carve-outs for new audiovisual quotas before we even begin negotiations are helpful,” said a spokesman for the U.S. trade representative’s office in Washington.

The European Union needed French agreement not just because it is Europe’s second largest economy but because under EU rules, trade deals touching on cultural issues need unanimous support.

France, widely considered the birthplace of cinema, has a proud tradition of more than a century of publicly and critically acclaimed movies and pumps in more public funds to its film industry than any other EU member.

The EU audiovisual sector is worth 17 billion euros ($22.68 billion) and provides jobs for a million people.

The United States already sells the European Union far more music, movies, radio and television programmes than it buys from Europe. Its net surplus for the sector averaged 1.5 billion euros ($2 billion) a year from 2004 to 2011.

France fears this imbalance will only increase under a trade deal as digital and Internet services – already dominated by U.S. technology companies – become ever more popular.

(Additional reporting by Ethan Bilby in Brussels and Doug Palmer in Washington; Editing by Mike Collett-White)

Paris has refused to join the 26 other EU governments that want talks to start in July, unless television, movies and developing online media are left out of a deal.

Trade between Europe and the United States is worth almost $3 billion (1 billion pounds) a day and an accord could boost the EU and U.S. economies by more than 100 billion dollars a year each – an attractive prospect when both are emerging from low or no growth and are keen to create jobs.

But after eight hours of talks among 27 EU trade ministers in Luxembourg, the gap between France and free-trade proponents such as Sweden, Germany and Britain appeared just as wide as when the meeting began.

“We have 26 member states that can agree what is on the table at the moment and one member state who can’t. It seems France is rather isolated for the moment,” said Swedish Trade Minister Ewa Bjorling.

A French diplomat present at the talks said there was no room for manoeuvre. “It’s black and white. There’s nothing to negotiate,” the diplomat said.

The bloc needs French agreement not just because it is Europe’s second largest economy but because under EU rules, trade deals touching on cultural issues need unanimous support.

France, widely considered the birthplace of cinema, has a proud tradition of more than a century of publicly and critically acclaimed movies and pumps in more public funds to its film industry than any other EU member.

French Trade Minister Nicole Bricq told fellow ministers that American films made up a far higher proportion of the movies shown in European cinemas, compared with the number of European films shown in United States.

“Who is open and who is closed?” she said, according to a copy of her speech circulated by diplomats.

She has said the EU audiovisual sector is worth 17 billion euros $22.68 billion and provides jobs for a million people.

SEARCH FOR A COMPROMISE

Free-trade advocates say it is vital to push ahead with what would be the world’s biggest trade agreement, because of the economic benefits it would bring, especially when much of western Europe is in recession.

They also fear excluding an industry from the talks would prompt a similar U.S. opt-out, such as to protect its closed shipping sector, a concern for Denmark and Greece with their large shipping industries.

The United States also wants to go into the talks with as broad a mandate as possible.

“We do not think carve-outs for new audiovisual quotas before we even begin negotiations are helpful,” said a spokesman for the U.S. trade representative’s office in Washington.

Together the United States and European Union account for half of global economic output and a third of all trade.

The European Commission, which negotiates the bloc’s trade deals, is ready to give member states a much greater say on cultural issues in the talks with Washington.

Richard Bruton, the Irish minister chairing Friday’s meeting, said the latest proposal guaranteed EU members’ rights to maintain existing quotas and subsidies and allowed the EU to pass future legislation on Internet and digital services.

If EU ministers agree a mandate, European leaders and U.S. President Barack Obama plan to use a summit of the Group of Eight countries next week to launch talks.

The United States already sells the European Union far more music, movies, radio and television programmes than it buys from Europe. Its net surplus for the sector averaged 1.5 billion euros ($2 billion) a year from 2004 to 2011.

France fears this imbalance will only increase under a trade deal as digital and Internet services – already dominated by U.S. technology companies – become ever more popular.

EU and U.S. negotiators aim to finish their work by the end of next year.

(Additional reporting by Ethan Bilby in Brussels and Doug Palmer in Washington; Editing by Pravin Char)

Paris has refused to join the 26 other EU governments that
want talks to start in July, unless television, movies and
developing online media are left out of a deal.

EU trade ministers meeting in Luxembourg tried to resolve
the issue at a closed-door session on Friday, but officials told
Reuters that France stuck to its position in initial exchanges.
The bloc needs French agreement not just because it is Europe’s
second largest economy but because under EU rules, trade deals
touching on cultural issues need unanimous support.

“I would say the chances for an agreement are 50-50,” said
Alexander Stubb, Finland’s minister for Europe and foreign
trade, as he went into the meeting. “There is nothing that
threatens the French or the European film industry and I shall
certainly continue to watch all of my beloved French movies even
after this free trade negotiation,” he told reporters.

French Trade Minister Nicole Bricq told fellow ministers
that France rejected outright any mandate that did not clearly
exclude the audiovisual sector.

She said the United States already had a 60 percent share of
European cinema screens but Europe’s share in America was
between 3 to 6 percent. “Who is open and who is closed?” she
said, according to a copy of her speech circulated by diplomats.

Free-trade advocates such as Germany and Britain say it is
vital to push ahead with what would be the world’s biggest trade
agreement, because of the economic benefits it would bring,
especially when much of western Europe is in recession.

They also fear excluding an industry from the talks would
prompt a similar U.S. opt-out, such as to protect its closed
shipping sector, a concern for Denmark and Greece with their
large shipping industries.

“In the maritime area, the agreement would make it easier
for Danish shippers to sail into the USA. That is a vital
element,” said Danish Trade Minister Pia Olsen Dyhr.

CONVINCING FRANCE

Together the United States and European Union account for
half of global economic output and a third of all trade.

A trade deal, called the Transatlantic Trade and Investment
Partnership (TTIP), could boost the EU economy by 119 billion
euros ($159 billion) per year, and the U.S. economy by 95
billion euros, according to an EU-commissioned study.

The European Commission, which negotiates the bloc’s trade
deals, is ready to give member states a much greater say on
cultural issues in the talks with Washington.

Richard Bruton, the Irish minister chairing Friday’s
meeting, said the latest proposal guaranteed EU members’ rights
to maintain existing quotas and subsidies and allowed the EU to
pass future legislation on Internet and digital services.

In addition, EU trade chief Karel De Gucht would have to
consult EU governments before negotiating any aspect of access
to European movie, television and online entertainment markets.

If France agrees to the compromise proposal, European
leaders and U.S. President Barack Obama plan to use a summit of
the Group of Eight countries next week to launch talks.

The United States already sells the European Union far more
music, movies, radio and television programmes than it buys from
Europe. Its net surplus for the sector averaged 1.5 billion
euros ($2 billion) a year from 2004 to 2011.

France fears this imbalance will only increase under a trade
deal as digital and Internet services – already dominated by
U.S. technology companies – become ever more popular.

EU and U.S. negotiators aim to finish their work by the end
of next year.

Paris, which is trying to shield French-language culture from the global might of Hollywood, has refused to join the 26 other EU governments that want talks to start in July, unless movies and digital media are left out of any deal.

EU trade ministers must resolve the issue when they meet in Luxembourg. They need French agreement not just because it is Europe’s second largest economy, but because under EU rules, trade deals touching on cultural issues need unanimous support.

“We need to work this out. It’s about finding language that people would be satisfied with,” said Richard Bruton, Ireland’s minister responsible for trade, who will chair Friday’s talks.

Free-trade advocates Germany and Britain say it is vital that Europe push ahead with what would be the world’s biggest trade agreement, because of the economic benefits it could bring, especially when much of western Europe is in recession.

Together the United States and EU account for half of global economic output and a third of all trade.

The European Commission, which normally negotiates the bloc’s trade deals, is ready to give member states a much greater say on cultural issues in the talks with Washington, an EU source said on Thursday.

EU trade chief Karel De Gucht will propose at Friday’s meeting that the trade ministers be consulted before the Commission negotiates on audio-visual services, said the source.

First considered three decades ago but knocked down by France in the 1990s, the idea of an EU-U.S. free-trade deal has gathered momentum since last year because the United States is also achieving only modest economic growth, while China’s rise is another incentive to deepen Western integration.

A deal would essentially shape the future global trading system, something that raises concern in Beijing.

Following mutual gestures of goodwill, such as lifting bans on some of each other’s meat imports, European leaders and U.S. President Barack Obama will use a summit of the Group of Eight countries next week to mark the opening of negotiations – provided the ministers reach agreement in Luxembourg.

A trade deal, called the Transatlantic Trade and Investment Partnership (TTIP), could boost the EU economy by 119 billion euros ($159 billion) per year, and the U.S. economy by 95 billion euros, according to an EU-commissioned study.

An agreement would go much further than bringing down already low tariffs. It would also aim to synchronies U.S. and European regulations in areas ranging from car seatbelts to pharmaceutical packaging, lowering the cost of doing transatlantic business, particularly for smaller companies.

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STAR SUPPORT

Obama gave his backing in February for talks to start in earnest, and EU and U.S. negotiators say they could finish their work by the end of next year because there have already been 14 months of preparatory discussions.

“We have an opportunity to give both of our economies a major shot in the arm and to redefine the global trading system for the 21st century,” said Robert Sturdy, a British member of the European Parliament, which must ratify any final agreement.

Persuading France to agree to the talks has been the focus of the European Commission, the EU executive that will negotiate on behalf of the member countries.

Commission President Jose Manuel Barroso met European filmmakers this week, as well as actress Berenice Bejo who starred in the French film “The Artist”, to underline that their cultural subsidies and working conditions would not be at risk.

De Gucht, who met officials in Paris last month, stresses that an accord would not threaten any EU country’s right to subsidize domestic production and set quotas for film and TV.

Paris is unconvinced and says the entire audiovisual sector should be excluded from negotiations, including developing online entertainment and future technologies. Trade Minister Nicole Bricq said on Thursday she had no reason to back down.

The United States already sells the EU far more music, movies, radio and television programs than it buys from Europe. Its net surplus for the sector averaged 1.5 billion euros ($2 billion) a year from 2004 to 2011.

France fears this imbalance will only increase under a trade deal as digital and Internet services – already dominated by U.S. technology companies – become ever more popular.

The Commission and pro-free-trade EU members say excluding an industry from the talks would prompt U.S. demands for a similar opt-out such as to protect its closed shipping sector, undermining the benefits of an eventual trade pact.

(Additional reporting by Luke Baker in Brussels and Nick Vinocur in Paris; editing by David Stamp)

The difficulties underline how challenging bilateral and regional trade deals are to reach, and how groups like farmers can punch above their weight.

Canada’s Conservative government has made trade a priority, but has yet to deliver a major deal. For the EU, a deal with Canada would be a first with a country in the G7 group of industrialized nations and a possible template for a EU-U.S. agreement.

Privately, sources close to the talks say the two sides are not far apart. But after months of deadlock and with trade talks with other partners on the horizon for both sides, the potential $28-billion accord could just as easily fall apart in weeks.

A deal would offer new markets for Canadian grains, beef and pork and for European cheese, as well as give EU companies more freedom to bid on Canadian government contracts and extend patent protection on European-made pharmaceuticals.

Yet Irish farmers see threats from expanded beef imports from Canada, and Ottawa is trying to appease both dairy farmers – who currently thrive under supply management achieved by quotas and a tariff wall against foreign cheese and milk – and export-focused beef ranchers.

(Graphic on global cheese trade: link.reuters.com/zev78t)

Watching from the sidelines, Canada’s largest meat plants, owned by U.S. based Cargill Inc CARG.UL, Brazil’s JBS SA (JBSS3.SA: Quote, Profile, Research, Stock Buzz), Maple Leaf Foods Inc (MFI.TO: Quote, Profile, Research, Stock Buzz) and Olymel LP, stand as potential winners.

European dairy producers, such as the world number one and Parmalat SpA (PLT.MI: Quote, Profile, Research, Stock Buzz) owner, Lactalis, Bongrain SA (BONG.PA: Quote, Profile, Research, Stock Buzz) and cooperatives FrieslandCampina and Arla Foods Amba ARLAF.UL, also want access to high-income Canadian consumers.

DEAL STALLED OVER QUOTAS

Ottawa and Brussels started negotiations on a trade deal in 2009, targeting end-2011 as the likely completion date.

But talks have just dragged on even though the two sides have agreed not to liberalize sensitive areas of beef, pork, and sweet corn for the EU, and dairy, poultry and eggs for Canada, and instead boost market access with bigger quotas.

Establishing those quotas has proven “a major stumbling block,” according to the EU General Secretariat, which accuses Canada of wanting to ship large volumes of beef and pork to the EU while offering “very modest” access for European dairy products.

Canadian Prime Minister Stephen Harper said on Wednesday his government would not be rushed into signing a free trade agreement with the European Union this week just to coincide with meetings he is holding with European leaders. <ID: nL2N0EO15C>

Talks are complicated by the fact that both sides are looking beyond this deal, said James McIlroy, an advisor to the Canadian trade minister during the 1980s U.S. free trade talks.

If the EU boosts access for Canadian beef, it will face pressure to do the same for the United States in any future U.S.-Europe trade deal, while Canada knows new access for European dairy will come into play in talks on a Trans-Pacific trade partnership.

And even if the trade chiefs agree, the European Parliament and the EU’s 27 member states must all approve a deal. Irish or French opposition to a high beef import quota or a low dairy export allowance could sink an accord.

FARM LOBBIES

Agriculture represents less than 5 percent of the Canadian economy, and yet the lobbying muscle of supply management groups representing dairy, poultry and egg farmers, has caused Ottawa to tread cautiously, McIlroy said.

“All political parties in Ottawa are captive to supply management and they’re frightened of them,” he said.

In Europe, the situation is similar. Agriculture makes up barely 2 percent of EU gross domestic product, but absorbs some 40 percent of the EU’s budget. Farming lobbies are strong, able to shut down national capitals with tractor blockades and to influence voting in rural constituencies.

Looking at specific issues, farmers in Ireland, which exports 90 percent of its beef, mostly to other EU countries, fear being undermined by cheaper Canadian supplies, given that Canada imposes fewer costly regulations on its cattle industry.

“It’s like tying my hands if thousands of ton come in and undermine the price,” said Henry Burns, a farmer with 60 beef cattle in central Ireland and chairman of the Irish Farmers’ Association’s national livestock committee. “If the standards were the same, then we would have some hope.”

The Canadian beef industry says it is not worth setting up separate production lines to ensure meat achieves EU standards unless it can export a significant annual volume – presumably more than the 40,000 tons that EU Ambassador Matthias Brinkmann tipped in May as a possible target.

Canada is the world’s seventh-largest beef and veal exporter, and the EU is the third-biggest consumer.

At present, Canada shares two quotas with other countries for beef exports to the European Union, totaling nearly 60,000 ton annually.

Canadian pig farmers are also seeking their own duty-free quota for pork, rather than sharing a quota with other countries, said Gary Stordy of the Canadian Pork Council.

CHEESEMAKERS KEEN ON CANADA

Cheese is another contentious issue, given Canada’s status as the world’s seventh biggest cheese consumer. Almost all the 320,000 tons of cheese that Canadians consumed last year was produced at home, with European imports just 13,000 tons.

Pekka Pesonen, secretary general of the EU farmers association Copa-Cogeca, said a mooted Canadian offer to nearly double imports of European cheese by allowing in another 12,000 tons per year was far too low.

“We have to accept a quota for Canadian (beef) exporters, but there has to be something in return. The balance is not even close yet. We need far better access,” he said.

But Wally Smith, president of the vocal Dairy Farmers of Canada, which follows the Canadian government to each round of trade talks, said allowing more European cheese wouldn’t be a fair fight, given high European subsidies.

Smith, a second-generation British Columbia dairy farmer, said Canadian farmers want to see no increase in quotas of foreign products and no tariff reductions.

The Canadian government, falling in popularity, cannot weaken protection for the dairy farmers without drawing fire from the separatist provincial government in vote-rich Quebec.

“We stand behind the supply management system,” Quebec Premier Pauline Marois told reporters on Monday. “It has allowed farmers to make a decent living from their production.”

McIlroy, the former Canadian trade advisor, said the deal must get done this month or it may “crater,” because EU talks with the United States begin next month, taking the focus away from Canada.

“Trade agreements have a certain life,” he said. “They either get done in a certain number of years or they don’t happen.”

(Additional reporting by David Ljunggren and Louise Egan in Ottawa; Editing by Janet Guttsman and Tim Dobbyn)

Two days before EU countries are supposed to give the go-ahead for negotiations, France said it would veto the talks unless the sector – that it sees as crucial to its cultural identity and under threat from Hollywood – is excluded.

“France defends and will defend the cultural exception to the end – that’s a red line,” Culture Minister Aurelie Filippetti told Reuters TV, referring to current EU rules that allow governments to preserve “cultural diversity” by setting subsidies and quotas that might otherwise be considered contrary to free trade.

The first round of talks – which would seek to establish free trade for all manner of goods – has been tentatively scheduled for July, but both sides must first agree the scope of the negotiations, something EU trade ministers are due to finalize on Friday.

Prime Minister Jean-Marc Ayrault told parliament: “France will go as far as using its political veto. This is about our identity, it’s our struggle.”

The Transatlantic Trade and Investment Partnership could increase Europe’s economic output by 65 billion euros ($86.3 billion) a year, according to the European Commission, with the United States getting a similar boost.

But for the talks to start, EU trade ministers must reach a unanimous agreement in their discussions on Friday. France’s stance would appear to make that impossible at this stage.

“TOO BIG TO FAIL”

Paris says it will not be pushed into signing up until it is satisfied that its system of support for film, radio and other audio-visual products remains shielded from Hollywood. It also wants to make sure any future technologies in the cultural sphere, such as visual arts downloads, are protected.

While other EU countries want to protect against too much U.S. content and preserve subsidies, they are happy with a compromise put forward by EU Trade Commissioner Karel De Gucht.

That would allow EU members to retain subsidies and quotas for traditional media, but leave space for U.S. and European companies to compete in the rapidly developing Internet and digital areas, including TV on demand and music downloads.

Britain, Germany and others argue that if the EU excludes the audio-visual sector completely, as France demands, the United States will exclude its own closed sectors.

French Trade Minister Nicole Bricq said the U.S. would, in any case, seek to exclude certain sectors such as maritime transport and financial services. She told newspaper Liberation that culture risked becoming a negotiating pawn in the talks if it was not excluded from the start.

“It’s very sensitive for the French,” Irish Trade Minister Richard Bruton, who will chair Friday’s EU talks, told Reuters.

“If you start taking sectors off the table, complete carve-outs, so will the other side.”

Following 14 months of preparations, Brussels and Washington say the time is right for a deal first mooted three decades ago but considered too difficult because of the concerns over the impact of opening markets, especially the farming sector.

German Economy Minister Philipp Roesler said the free trade deal was “too big to fail”.

“We should avoid building up taboos at the moment,” he said at a conference hosted by the American Institute for Contemporary German Studies in Berlin.

William Kennard, the U.S. ambassador to Brussels, has warned against setting red lines before talks begin, telling the European Parliament that the moment to start talks was now.

“The alignment of stars won’t last forever. We need to seize the opportunity,” he said last week.

(Additional reporting by Robin Emmott in Brussels, Pauline Mevel and Leigh Thomas in Paris and Michelle Martin in Berlin; Writing by Robin Emmott; Editing by Robin Pomeroy)

Two days before EU countries are supposed to give the
go-ahead for negotiations, the EU is struggling to find a
compromise that satisfies France’s “cultural” concerns without
exempting the audiovisual sector from the wide-reaching talks.

“France defends and will defend the cultural exception to
the end – that’s a red line,” French Culture Minister Aurelie
Filippetti told Reuters TV, referring to current EU rules that
allow governments to preserve “cultural diversity” by setting
subsidies and quotas that might otherwise be considered contrary
to free trade.

Asked if Paris would go as far as blocking the opening of
talks on what would be the world’s largest free-trade agreement,
she replied: “France is extremely determined.”

The first round of talks has been tentatively scheduled for
July, but both sides must first agree the scope of the
negotiations, something EU trade ministers should finalise at
talks on Friday.

The Transatlantic Trade and Investment Partnership could
increase Europe’s economic output by 65 billion euros ($86.3
billion) a year, according to the European Commission, with the
United States getting a similar boost.

But for that to happen, EU trade ministers must reach a
unanimous agreement in their discussions on Friday. France’s
stance would appear to make that impossible at this stage.

DIGITAL COMPROMISE

Paris says it will not be pushed into signing up until it is
satisfied that its system of support for film, radio and other
audio-visual products remains shielded from Hollywood. It also
wants to make sure any future technologies in the cultural
sphere, such as visual arts downloads, are protected.

While other EU countries want to protect against too much
U.S. content and preserve subsidies, they are happy with a
compromise put forward by EU Trade Commissioner Karel De Gucht.

That would allow EU members to retain subsidies and quotas
for traditional media, but leave space for U.S. and European
companies to compete in the rapidly developing Internet and
digital areas, including TV on demand and music downloads.

Britain, Germany and others argue that if the EU excludes
the audio-visual sector completely, as France demands, the
United States will exclude its own closed sectors, such as
maritime cargo or public procurement.

“It’s very sensitive for the French,” Irish Trade Minister
Richard Bruton, who will chair Friday’s talks, told Reuters.

“If you start taking sectors off the table, complete
carve-outs, so will the other side.”

Following 14 months of preparations, Brussels and Washington
say the time is right for a deal first mooted three decades ago
but considered too difficult because of the concerns over the
impact of opening markets, especially the farming sector.

William Kennard, the U.S. ambassador to Brussels, has warned
against setting red lines before talks begin, telling the
European Parliament that the moment to start talks was now.

“The alignment of stars won’t last forever. We need to seize
the opportunity,” he said last week.

The “EU steel action plan” is the first comprehensive
attempt by the Commission to stem a decline in the steel sector
since the Davignon Plan sought to tackle an industry slump in
the mid-1970s.

The plan, presented by Industry Commissioner Antonio Tajani,
aims to cut red tape, boost apprenticeship schemes and
innovation, create a level international playing field and study
ways to lessen the burden of energy costs, which account for
about 40 percent of steelmakers’ operating expenses.

It says existing EU funds should be used to ease the social
cost of restructuring, which has caused the loss of 40,000 jobs
in recent years, including the planned closure of most
facilities at ArcelorMittal in Liege, Belgium.

“The Action Plan is a good starting point, but there still
is a lot of work to be done until our sector will substantially
benefit from the proposals,” said Gordon Moffat, director
general of European steelmakers association Eurofer.

Critics said the plan lacked concrete measures and that much
more decisive action would be required to save a sector
afflicted by overcapacity, weak demand and tight financing.

“On the key issue of overcapacity, the report has little to
offer,” Wood Mackenzie steel consultant Patrick Cleary said.

Germany’s steel association said the plan was vague on
Europe’s climate and energy policy.

Austrian steelmaker Voestalpine, while describing
the plan as an important milestone, said European steel firms
faced higher energy prices and rising costs for cutting
greenhouse gases, with no obvious technological breakthrough.

Steelmakers say carbon emission costs could drive steel
production abroad.

FALLING DEMAND, JOB CUTS

European steel demand is 27 percent below peak 2007 levels
and forecast to fall even further this year. The number of jobs
in the industry dropped 10 percent between 2007 and 2011.

To boost demand, the plan points to existing EU initiatives
- CARS 2020 and Sustainable Construction – to help the
automotive and building sectors, which make up some 40 percent
of steel demand.

The Commission invited the EU member states to consider
reducing or removing tariffs on energy-intensive industries to
make them more competitive internationally.

The Commission will also start monitoring imports and
exports of steel scrap, a measure sought by Italian steelmakers,
many of which operate electric arc furnaces, which use scrap as
their main raw material.

Eurofer said Europe had become the world’s second-largest
scrap exporter, while over 20 countries imposed export caps.

The Commission is proposing using existing EU funds to help
workers who lose their jobs as a result of plant closures, a
measure most steelmakers have called for.

The plan does not propose state intervention to keep local
steel plants alive, a step sought by unions.

Bart Samyn, deputy general secretary of European unions
federation IndustriAll, said the plan was weakened by an absence
of concrete measures. The challenge now was to implement what
had been agreed.

The French government last year threatened to take over the
ArcelorMittal plant in eastern France after the company of
Indian-born tycoon Lakshmi Mittal announced plans to close its
blast furnaces.

In Belgium, the Wallonia region is nationalising the
ArcelorMittal steelworks in Liege, where most facilities are due
to close.

The majority of European steelmakers oppose giving subsidies
to help troubled companies survive, Eurofer President and
Voestalpine Chief Executive Wolfgang Eder said in a
recent interview.

(Additional reporting by Maria Sheahan in Frankfurt; editing by
Jane Baird and Tom Pfeiffer)

The “EU steel action plan”, presented by Industry
Commissioner Antonio Tajani, is the first comprehensive attempt
by the Commission to stem the steel sector’s decline since the
Davignon Plan of 1977.

The plan aims to cut red tape, boost apprenticeship schemes
and innovation, create a level international playing field and
study ways to lessen the burden of energy costs, which account
for about 40 percent of steelmakers’ operating costs.

It also says existing EU funds should be used to ease the
social cost of restructuring, which has caused the loss of
40,000 jobs in recent years, including the planned closing of
most facilities at ArcelorMittal in Liege, Belgium.

“The Action Plan is a good starting point, but there still
is a lot of work to be done until our sector will substantially
benefit from the proposals,” Gordon Moffat, director general of
European steelmakers association Eurofer, said in a statement.

Critics said the plan contained few new measures and that
much more decision action would be required to save a sector
afflicted by overcapacity, weak demand and tight financing.

“On the key issue of overcapacity the report has little to
offer,” Wood Mackenzie steel consultant Patrick Cleary said.

“This is perhaps unsurprising given current fiscal
constraints and the lack of direct state involvement in the
steel industry and confirms that serious steps to address
overcapacity will need to come from within the steel industry
itself.”

European steel demand is 27 percent below peak 2007 levels
and forecast to fall even further this year. The number of jobs
in the industry dropped 10 percent between 2007 and 2011.

To boost demand, the plan points to existing EU initiatives
- CARS 2020 and Sustainable Construction – to help the
automotive and building sectors, which make up some 40 percent
of steel demand.

The Commission also invited the EU member-states to consider
reducing or removing tariffs on energy-intensive industries to
make them more competitive internationally.

It added coking coal to the list of critical raw materials
that it monitors for the risk of supply interruption.

The Commission will also start monitoring imports and
exports of steel scrap, a measure sought by Italian steelmakers,
many of which operate electric arc furnaces, which use scrap as
the main raw material. [ID:nL6N0DX4HS

“What gives rise to concerns here is the fact that Europe
has become the second-largest scrap exporter in the world, while
at the same time there are more than 20 countries elsewhere in
the world that impose export restrictions on their own scrap
production,” Moffat said.

SOCIAL COSTS OF CLOSURES

The Commission is proposing using existing EU funds to help
workers who lose their jobs as a result of plant closures, a
measure most steelmakers have called for.

The plan does not propose state intervention to keep local
steel plants alive, a measure sought by unions.

The French government last year threatened to take over the
ArcelorMittal plant in eastern France after the company of
Indian-born tycoon Lakshmi Mittal announced plans to close its
blast furnaces.

In Belgium, the Wallonia region is nationalising the
ArcelorMittal steelworks in Liege, where most facilities are due
to close.

The majority of European steelmakers oppose giving subsidies
to help troubled companies survive, Eurofer President and
Voestalpine Chief Executive Wolfgang Eder said in a
recent interview.

Eurofer said it was disappointed by the absence of concrete
proposals about EU climate policy after 2020, including charges
for carbon emissions, a cost steelmakers elsewhere do not face.

Steelmakers say carbon emission costs could drive steel
production abroad.

(editing by Jane Baird)