Germany and France agreed on a four-month consultation process yesterday to hammer out a common position on agriculture subsidies and EU reforms in advance of the Copenhagen summit in December.
The German Chancellor Mr Gerhard Schröder and the French President, Mr Chirac, said also that they would participate in a US-led strike on Iraq only if it had a UN mandate.
The two leaders met yesterday in the northern German city of Schwerin, their first meeting since Mr Chirac's return to power.
After what he called a "very intense working day", Mr Schroeder said he was anxious to reach a compromise with France over agriculture subsidies "so that we can present a united front in Copenhagen.
"I said that a way has to be found to reduce the strain on net EU contributors like Germany," said Mr Schröder.
As the EU's largest net contributor, Germany is anxious to reduce the cost of agriculture subsidies before the next wave of enlargement.
French farmers benefit the most from agriculture subsidies and Paris does not want to discuss changes before 2006.
The two leaders agreed on new working groups to address the points of disagreement that have put strain on the Franco-German axis. One group will discuss the reform of the EU currently being addressed by the European Convention. Another will come up with a common position on defence issues.
German Defence Minister Mr Peter Struck signed an agreement with his French counterpart, Ms Michèle Alliot-Marie, to develop a common satellite reconnaissance system to reduce dependency on US technology.
The two leaders agreed that a UN mandate was essential for any participation in a military strike on Iraq.
However, Mr Hans-Ulrich Klose of the Social Democratic Party, head of a parliamentary foreign affairs committee, said it was "conceivable" that Germany would deploy troops without a mandate. Mr Schröder and Mr Chirac agreed to informal monthly meetings in the future, the first scheduled to take place at the German leader's home in Hanover at the end of August.
The next Franco-German summit in January will mark the 40th anniversary of the Elysée Treaty that laid the groundwork for modern Franco-German relations. At that meeting Mr Chirac could find himself facing fellow right-winger Mr Edmund Stoiber, the conservative challenger in September's general election who is currently ahead in the polls.
Mr Stoiber has already signalled his willingness to accede to France's request and postpone until 2006 any reform of agricultural subsidies. But one high-ranking German official said it would be "unrealistic" to assume the Franco-German relationship would improve under two right-wing leaders.
