France and Britain have agreed the European Union should build a significant, independent defence force to allow it to respond more effectively to international crises.

The agreement was reached at a summit between the French President, Jacques Chirac, and the British Prime Minister, Tony Blair, in the French port of St.

Malo.

Mr Blair said the EU's military plans should not affect the European commitment to NATO.

British and French leaders also discussed tax questions, agreeing that the next EU summit in Vienna should look again at the proposed abolition of duty-free shopping within the EU.

Mr Blair said he would be happy to discuss some issues of European tax harmonisation.