Canada-Europe trade deal concluded in Brussels, ratification up to two years off

Dairy farmers says it's a giveaway

Canada's Prime Minister Stephen Harper, left, looks at European Commission President Jose Manuel Barroso during a media conference at the European Commission headquarters in Brussels, Friday, Oct. 18, 2013. Canada and the European Union finalized a landmark free trade agreement to boost growth and employment in both economies. (AP Photo/Yves Logghe)

Canada’s Prime Minister Stephen Harper, left, looks at European Commission President Jose Manuel Barroso during a media conference at the European Commission headquarters in Brussels, Friday, Oct. 18, 2013. Canada and the European Union finalized a landmark free trade agreement to boost growth and employment in both economies. (AP Photo/Yves Logghe)

BRUSSELS – Canada and the European Union have agreed to free the movement of goods, services, investment and labour with a pact-in-principle that challenges Canadian business to expand overseas.

“This is a big deal; this is the biggest deal Canada has ever made. Indeed, it is a historical achievement,” said Prime Minister Stephen Harper.

The prime minister announced the agreement-in-principle Friday with European Commission president Jose Manuel Barroso in Brussels.

But the text of the Comprehensive Economic and Trade Agreement or CETA remains a confidential document that still requires “drafting and fine tuning,” a Canadian official said in Brussels on condition he not be identified.

It could be another 18 to 24 months before final European approval is given, and Canada will likely proceed along a similar time frame, officials say.

Ottawa instead released a 44-page overview and other summary documents. The material is largely silent on what Canada had to cede to Europe, especially in sectors such as dairy and patent protection for pharmaceuticals.

The dairy sector’s farmers immediately accused the government of a “giveaway,” and the generic drug industry warned that health-care costs will rise.

Harper addressed their concerns head on, acknowledging there might be some pain. But he defended the deal as “excellent” for Canada in the long-term, and one that would be good for families looking for cheaper products and business seeking new opportunities in a huge market.

Harper said the dairy industry gains “virtually unfettered access to the European market.” But he added that for cheese producers, “we do think there is a possibility of some small and transitory negative effects in the years to come.”

The prime minister said Ottawa would provide compensation to “fully address” any negative effects on the dairy industry, and said he has the support of Quebec and Ontario.

Similarly with pharma, Harper acknowledged that “it is also likely the case that in the future there will be some upward pressure on pharmaceutical prices as a consequence of this agreement.

“However, it’s important to note we don’t expect those to be large, and we do not expect them to even begin for roughly a decade.”

Harper said the provinces were told during the negotiations that Ottawa would compensate them for any additional cost to the Canadian health-care system.

An internal government report estimated the patent extension could add up to $1 billion a year to drug costs, simply because cheaper, generic drugs will take longer to become available, but industry officials say it will be difficult to quantify that far into the future.

Harper also took a shot at opponents of free trade, branding them as on the wrong side of history.

“I think anyone who opposes it, will lose and make a big historic mistake politically for so doing,” he said.

“Ideological opposition to free trade in Canada is really today part of a very small part of the political spectrum, a very small and extreme part.”

The Council of Canadians and its some of its European allies loudly denounced the deal, and called for the immediate release of the text.

“If this deal is so important, shouldn’t Canadians have the chance to accept or reject it?” said council head Maude Barlow.

Paul Murphy, an Irish member of the European parliament, decried the secrecy of the negotiations, saying they had “been driven by Canadian and European multinationals and agrobusiness that want market access and access to vital public services so they can profit at the expense of working-class people.”

But Harper also won some political cover from Barroso, with whom he traded warm smiles and words from the podium of a joint news conference.

Harper beamed at Barroso when he said the prime minister is a “well known as a strong negotiator” who in the end, “defended Canadian interests.”

The show of solidarity marked a sharp reversal from their meeting five weeks earlier on the margins of the G20 summit in Russia when Harper emerged to say that “significant gaps” remained.

The Canadian documents trumpeted buy-in by beef and pork producers, who gained additional access to the European market.

“CETA will not affect Canada’s supply-management system, which will remain as robust as ever,” says the government summary.

“The vast majority of supply-managed products will be exempt from increases in market access.”

The proposed deal is broad, intended to eliminate virtually all tariff barriers and many non-monetary impediments to trade, investment and even labour mobility.

But ratification could be complex, perhaps requiring all 28 EU members to sign on, as well as requiring a green light on key issues from Canada’s 10 provinces. Harper said he expected it to be fully ratified in Canada before the next federal election in 2015.

If so, it would cement a major political victory for Harper.

While the documents released Friday paint a rosy picture of gains from Canada’s most ambitious trade negotiation since the North American Free Trade Agreement of two decades ago, the European gains are also considerable.

They include access to billions of government procurement dollars at the provincial and even municipal level — something not found in NAFTA — and eliminating all tariffs in the lucrative auto trade that will give major European car makers a chance to increase sales through lower prices.

The Europeans also secured their demands on geographical indicators, which essentially patent the local names of their products, such as Prosciutto di Parma.

In all, the agreement calls for the elimination of about 98 per cent of tariffs on both sides of the Atlantic from day one of implementation, and 95 per cent of agricultural products. Some tariffs are being phased out over seven years.

Canada also won some turf battles. The domestic auto industry will have room to sell more cars to Europe. And beef and pork farmers boosted their quota too. The catch is that Canadian producers will have to convert to hormone-free product for the European market, which experts say can add about 15 per cent to costs.

Punitive European tariffs on fish and seafood products will be phased out — 96 per cent immediately upon implementation — but Newfoundland will need to eliminate its minimum processing requirement that guaranteed jobs stay in the province.

But the big prize for Canada, say government officials, is in the deal’s potential and the sheer size and wealth of the European market — 500 million people and an economy approaching $17 trillion — that will now be open to Canadian manufacturers, entrepreneurs, investors, service providers and even professionals, such as engineers, under improved conditions and mostly duty-free.

“Under CETA, not only will world-class Canadian products enjoy preferential access to the EU, Canadians will also have the tools and support they need to succeed in this lucrative market,” boasts the government’s glossy brochure.

A joint study estimated bilateral trade will increase by about 20 per cent, resulting in a $12 billion boost to the Canadian economy and the creation of about 80,000 new jobs. The deal may also be a major political victory for the Harper Conservatives, who have made expanded trade a key plank of their economic agenda.

With success in dealing with a large, developed, sophisticated entity like the EU, Canada has also burnished its credentials as a willing partner in other trade talks, particularly in the Trans-Pacific Partnerships, India and Japan, say analysts.

— with files from Julian Beltrame in Ottawa

Note to readers: This is a corrected story. An earlier version had an incorrect spelling for Jose Manuel Barroso’s name.