EU-US trade deal in doubt as France urges end to talks

By Sophie Louet and Philip Blenkinsop

PARIS/BRUSSELS (Reuters) - France cast serious doubt on Tuesday on the prospects of an EU free trade deal with the United States, adding to opposition within Germany just two months after their countries' leaders reaffirmed support for an accord.

Washington and Brussels are officially committed to sealing the Transatlantic Trade and Investment Partnership (TTIP) before U.S. President Barack Obama leaves office in January, but their chances of doing so are being eroded by approaching elections and Britain's vote in June to leave the European Union.

"Everything is moving. In this situation it's just not going to happen," said Peter van Ham, senior research fellow at Dutch think tank Clingendael and author of a paper on Tuesday called "TTIP is dead, long live transatlantic trade".

French Trade Minister Matthias Fekl said he would request a halt to TTIP talks at next month's EU trade ministers' meeting in Bratislava after German Economy Minister Sigmar Gabriel declared at the weekend that talks were "de facto dead".

Observers say both are responding to public mistrust of a deal that critics say would lower environmental and food standards and allow foreign multinationals to challenge government policies.

Stop TTIP campaigns have been particularly vocal in Germany and Austria, which supporters of TTIP say are among the countries most likely to benefit from increased U.S. trade.

German Foreign Minister Frank-Walter Steinmeier, of Gabriel's Social Democratic Party (SPD), urged diplomats and business chiefs on Tuesday to counter anti-globalization sentiments that are fuelling opposition to free trade deals.

Ahead of elections in France and Germany next year, politicians are keenly aware that TTIP is not a vote winner.

The Bertelsmann Foundation poll showed only 17 percent of Germans saw TTIP as a good thing in April, down from 55 percent two years earlier.

"There may be an economic rationale, but everyone is scrapping for votes and you lose votes if you support TTIP," Van Ham said, adding that any credit from potential free trade gains would be two to three years away.

Supporters say TTIP could boost each economy by $100 billion, creating jobs at a time of economic uncertainty as growth and consumption slow in China and emerging markets. EU leaders backed TTIP talks at a summit in June.

Three years of negotiations have failed to resolve multiple differences, however, including over public procurement and rules to protect foods from particular regions, such as Parma ham, which the EU wants, and greater access to services and for its agricultural products, as demanded by the United States.

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"Practically there's no real change. It's been stuck for the better part of two years," said Hosuk Lee-Makiyama, director of Brussels-based think tank ECIPE.

EU trade chief Cecelia Malmstrom told journalists negotiations had not failed and that many EU countries had said they still backed TTIP.

They included Italy, whose trade and industry minister said it was essential for Italian exporters that the negotiations bore fruit.

Germany's Gabriel is the chairman of the SPD who share power with Chancellor Angela Merkel's conservatives. Merkel backs the talks and her spokesman insisted on Monday that they should continue.

Malmstrom added that it made no sense to suspend talks in September because the two sides could still make advances in regulatory cooperation, agreeing standards that are important to industries such as the auto sector, and that could be picked up by Obama's successor even a deal was not sealed this year.

"The more work we have done, the easier it is to resume," she said.

The office of U.S trade chief Michael Froman said talks were making steady progress. But Froman has said that Britain's EU withdrawal would alter TTIP dramatically because Britain currently consumes about a quarter of U.S. exports to the bloc.

Trade analysts say that Washington may be preparing for the end of trade talks, which typically conclude with each side holding the other responsible for failure.

President Francois Hollande told ambassadors on Tuesday that talks were "bogged down" and "unbalanced" and it was an illusion to imagine that a deal could be sealed during Obama's term.