Canada-EU free trade talks 75 per cent done, but hard part remains

OTTAWA – Free trade talks with the European Union are nearing the “end game,” although the most difficult issues still remain on the table, the head of the EU council said Monday.

Pia Olsen Dyhr, the Danish trade minister and president of the council, said she was optimistic a deal could be struck within six months.

“We are actually at the end game. At the moment we have finalized 75 per cent. It’s been one of the most forthcoming negotiations” the EU has ongoing, she told a news conference with Canadian Trade Minister Ed Fast.

“We have to finalize the last bits and I see that coming soon and we might expect within a half a year we have finalized the agreement.”

Fast was more circumspect in his comments, saying progress was being made at a “satisfactory pace” and he hoped for an agreement by the end of the year.

The talks on a Comprehensive Economic and Trade Agreement (CETA) would establish the most wide-ranging trade deal Canada has ever entered, encompassing not only goods, but investment and services, and provincial and municipal government procurement.

Analysts have noted that Ottawa once promised a deal would be struck by the end of last year, suggesting that the contentious parts of the negotiations were proving more difficult to crack than expected.

That should have been anticipated, said trade lawyer Lawrence Herman of Cassels Brock LLP. With multi-national parties involved in Europe and the provinces in Canada, the talks are among the most complex ever attempted.

“There were probably over-optimistic forecasts on the timing,” he said. “The 75 per cent is probably right (but) the last 25 is going to be hard slogging.”

Olsen Dyhr conceded the Canadian system of supply management for poultry, eggs and dairy — which Europe wants to scrap or curtail — and a mutually satisfactory definition of rules of origin have not been resolved.

Agricultural subsidies are also the sticking point in Canada’s attempt to join the Trans-Pacific Partnership trading bloc and is a difficult political issue for Ottawa given the opposition from farmers in Quebec and Ontario.

Herman believes supply management won’t be dealt with an “any meaningful way” in the EU treaty — Europe may need to be satisfied with improved access to the Canadian market for cheese and some minor reductions in tariffs.

But rules of origin — determining what is a Canadian-made product — has emerged as a complex issue since some Canadian manufactured goods, particularly autos, are integrated in North American and global supply chains.

“I don’t think there is a car in North America that is more than 30 per cent Canadian made,” said Stuart Trew, trade analyst with the Council of Canadians, which opposes the deal.

As well, Europe is asking for access to provincial and municipal procurement contracts, now opposed by 32 municipalities, along with copyright extension for drug firms, a change Canada’s generic pharmaceutical makers oppose and critics say would increase the cost of drugs.

“Harper is going to have to expend a lot of political capital to get this deal,” Trew said.

Fast re-iterrated the government would not sign on unless it was convinced the deal would benefit the country.

By Ottawa’s estimates, Canada would gain improved access to a market of 300 million mostly affluent consumers, boost gross domestic product by $12 billion annually and generate an additional 80,000 jobs.

According to Olsen Dyhr, the Canadian minister is underselling the project.

“I would say the estimate put forward by minister Ed (Fast) is not ambitious enough. They are saying 80,000 jobs, probably you can look forward to more jobs in Canada,” she said.

Olsen Dyhr said Alberta’s oil sands is not an impediment in the talks. She said Europe’s desire to control the carbon content in the fuel it imports is a side issue unrelated to free trade.