France threatens US trade veto over culture

EU ministers are expected to sign off on the commission's negotiating mandate in mid-June. The talks are then expected to take up to two years, although trade commissioner Karel de Gucht is hoping to strike a deal in time for next May's European elections.

Bricq also said that Paris would insist on the exclusion of Europe's audiovisual sector from the talks.

"The position of France is that we want exclusion from discussion of cultural items. This is non-negotiable. It is not a surprise. I have said it and if we don't have exclusion, we will have no agreement," she said.

The French demands - with the traditional focus on cultural issues - indicate the delicate balance EU negotiators will need to strike to broker a deal. Officials and other EU governments are concerned that keeping certain sectors away from talks could encourage the US to draft its own 'red lines'.

Irish business and employment minister, John Bruton, who chaired the meeting, struck a more optimistic tone. Ministers had made "real progress towards achieving an agreement," he said.

De Gucht and Mike Froman, International trade advisor to Barack Obama, were also present at Thursday's talks. Froman's presence marks the first time that a US government representative has discussed EU-US trade policy directly with trade ministers.

Officials in Brussels have been talking up the Transatlantic Trade and Investment Partnership with the US which they say could be worth as much as 0.5 per cent of EU GDP and create 400,000 jobs.

A recent paper by the Centre for Economic Policy Research (CEPR), a London-based think tank, indicating that a US trade deal could increase EU economic output by up to €119 billion a year, the equivalent of €545 a year for the average family of four.

But failure to go beyond agreement on tariff barriers would lead to economic gains of no more than €23.7 billion, according to the CEPR. Liberalising the services market and public procurement rules would be worth an additional €5.3 billion and €6.4 billion.