UPDATE 2-EU struggles to ease French fears over Hollywood in U.S. trade talks
* Washington, Brussels want free trade deal by end of 2014
* France trying to shield French culture from Hollywood
* Paris aims to block talks unless audiovisual excluded
* Exclusion could prompt like measure from U.S.
LUXEMBOURG, June 14 (Reuters) - France was adamant on Friday that it would block an EU free-trade deal with the United States unless its culture was shielded from the might of Hollywood and Silicon Valley.
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 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.