By Philip Blenkinsop and Ethan Bilby
LUXEMBOURG (Reuters) - EU states sought to reassure France on Friday that its culture would be shielded from the might of Hollywood and Silicon Valley, urging Paris not to block a free-trade deal with the United States that could boost transatlantic business.
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.
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 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.
EU and U.S. negotiators aim to finish their work by the end of next year.
(Additional reporting by Robin Emmott; Editing by Jon Boyle)