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Published May 10, 2013, 10:57 AM

Agricultural issues stalling Canada-Europe trade deal, EU official says

The Canada-European Union free trade talks are nearing an end with agriculture issues the last major stumbling block to an agreement both sides say will boost economic growth, the EU ambassador Matthias Brinkmann said Thursday.

OTTAWA — The Canada-European Union free trade talks are nearing an end with agriculture issues the last major stumbling block to an agreement both sides say will boost economic growth, the EU ambassador Matthias Brinkmann said Thursday.

In a free-wheeling discussion with Canadian reporters, Brinkmann suggested that most other issues in the four-year talks have been resolved or are close to being resolved, and that two specific sticking points — how much Canadian beef to Europe and how much European cheese to Canada — is keeping the sides from a deal.

“I think we have the landing zones identified for all sectors ... but like in most negotiations it’s agriculture which is the most difficult one,” he said.

“Canada wants to export beef to the European Union and wants better market access, but the European Union wants also better market access for dairy products, cheeses and yogurt and so on. The beef sector is protected in the European Union and dairy products in protected in Canada, so there has to be a certain give and take.”

Specifically, Brinkmann said the EU has offered to allow the minimum quantity Canadian beef producers say would be required to justify separate streams of hormone and antibiotics-free cattle — 40,000 tons a year — and even beyond that number, but Canada has demanded more.

“We are ready to deliver that and even go beyond that, but there’s a certain limit which we can’t go above,” he said, because European producers such as Ireland and France would not agree. “It would be suicidal for them to accept things which would wipe out (their industry).”

He added that the quota the EU can accept from Canada is further affected by Europe’s desire to negotiate a free trade pact with the United States, which will also want to ship beef into the continent.

In return, Brinkmann said the EU has not asked Canada to change its controversial supply management system which protects Canadian dairy and poultry farmers, but is insisting that Canada accept more imports of dairy products, especially cheese. He would not name a specific number.

“It doesn’t have to be same amount we give in beef, but there must be some kind of correlation,” he said.

Reacting to the comments, Canadian Trade Minister Ed Fast agreed the two sides are close to a deal, but would not discuss the specific issues or agriculture quotas being discussed.

“I can tell you with absolute confidence that each day our negotiators met this week, they made significant progress in bridging the remaining gaps,” he said, adding there are a “very small handful of issues” to be resolved.

Aside from agriculture, the two sides have named country of origin rules for autos — how much Canadian content must be in exports of North American vehicles — provincial government procurement limits, drug patent protection that could potentially increase drug costs in Canada, and “geographical indications,” the ability to claim exclusivity for products named after regions, as issues still on the table.

But Brinkmann, who said he has participated in some of the discussions, said the two sides essentially know the meeting place on those issues. Agriculture, however, is proving a harder nut to crack, although he said he was hopeful of a deal by the summer.

Observers have speculated that Canada needs to hammer home an agreement soon or risk a distracted Europe turning its attention to bigger fish, free trade deals with the United States and Japan.

Fast disagreed, but Brinkmann noted the EU chief negotiator on the Canada file is already starting to work on the Japanese talks.

Brinkmann also said Europe was taken back by the warning this week from Canadian Natural Resources Minister Joe Oliver that Ottawa is prepared to launch a trade action against the 27-country bloc over plans to designate oilsands crude as dirty oil.

He noted that the new quality directive implementation rules have yet to be adopted, adding any measure will be “non-discriminatory and science based and will stand the test at the WTO (World Trade Organization).”

It is up to oil exporting countries, including Canada, to meet limits on greenhouse gas emission targets European determines appropriate for their market, he said.

“So we are not prohibiting the import of Canadian oil derived from bitumen, or any oil derived from coal. It’s up to the operators to get the mix right to get this level,” he said.

Both Brinkmann and Fast agree the side dispute should not impact the free trade negotiations, however, saying they are on a separate track.

If a trade deal is reached, Brinkmann estimated it would take the EU nations about two years to ratify.

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