LONDON (Bloomberg) — Plans to regulate hedge funds and private equity in the European Union have exposed disagreements across the bloc and the US, even as lawmakers publicly press for greater cooperation.

The current proposals on alternative investment firms would damage the hedge-fund industry, Paul Myners, the UK Treasury minister who oversees London's financial district, said yesterday. France welcomes most of the plans, drafted in the wake of the financial crisis, and Germany contends that some measures do not go far enough.

"A number of technical and important provisions in the draft are either without purpose or if they do have a legitimate purpose, are not fit to achieve that purpose," said Myners at a conference in London organised by Britain's Financial Services Authority and attended by officials from the US, France and the EU. He called on the industry to lobby lawmakers in other European countries.

Global lawmakers from the Group of 20 Nations will meet in Pittsburgh next week to discuss how much progress has been made in reforming financial regulation in the wake of the worst economic crisis since the Great Depression. At their last summit in London in April, they agreed that hedge funds should come under supervision, and that regulators needed to cooperate more.

"There is much that can go wrong if we as regulators do not respect our differences while working to forge consistency," said David Vaughan, US Securities and Exchange Commission Senior Fellow, at the FSA conference. "We should not impose our standards on one another."

Around 80 percent of assets under management in Europe's hedge-fund industry are managed in the UK. Myners detailed his opposition yesterday to proposals that would force a cap on how much borrowing funds could use, and on forcing private equity firms to disclose their investments. The draft rules must be amended before they are passed, he said.

"Passions have been running high," said David Wright, Director General for Internal Markets and Financial Services at the European Commission, the executive arm of the EU, which drafted the fund rules. "The bit I don't like is when comment is tinged with blatant anti-Europeanism." He said it was normal that proposals would be amended before being passed. The earliest rules could come into force would be mid-2012, he said.

German Finance Minister Peer Steinbrueck said separately in Berlin that a "strong lobby" opposes tighter rules on financial markets. The City of London is seeking to blunt efforts at new financial market rules, he said.

The biggest point of contention between the French and the British on the funds proposals concern so-called passporting, Myners said. This may help funds move freely throughout the EU, with only home-country regulators overseeing activities. Non-EU countries where funds are based would have to meet stringent requirements on rules and taxes.

France is strongly opposed to allowing offshore funds to passport, said Jean-Pierre Jouyet, Chairman of France's financial markets regulator.

"We are not seeking to undermine London to profit Paris," said Jouyet. "It is common sense to protect ourselves by controlling who comes through the front and back doors."

The SEC's Vaughan says the draft rules, in their current shape, would have a negative effect on US fund managers.

"As a general matter, managers should be able to provide services, directly or through a fund, if that manager and the fund are willing to be regulated by the investor's jurisdiction, even if the manager's jurisdiction doesn't have an equivalent regime," he said.