Everything, including supply management, is still on the table six months into talks between Canada and the European Union (EU) on a trade deal that could be more comprehensive than the North American Free Trade Agreement (NAFTA), Canada’s chief negotiator says.
“We have agreed from the start everything is on the table,” Steve Verheul of the Department of Foreign Affairs and International Trade told the Canada Grains Council’s grain symposium here Nov. 25. “There is no limit to our ambition and the EU has already stated they’re prepared to consider anything. Even on the agriculture side they have said they are prepared to consider completely open trade. The catch of course is, if we make it worth their while.”
The Canadian government has long defended supply management in trade negotiations.
Verheul told reporters that the Canadian government hasn’t changed its position on supply management, which uses import restrictions and domestic production quotas to dovetail domestic production with demand for Canadian milk, chicken, turkey and eggs resulting in profitable returns to farmers.
ON THE TABLE
“But at this point both sides (Canada and EU) have said everything is still on the table and we’re going to have to see what the Europeans are going to do on agriculture,” he said. “Are they (EU) prepared to give us significant gains or are they going to start pulling things off and start talking about less than full access. In agriculture in particular, the level of ambition will likely be scaled down at some point as we run into some of these political realities. But the objective is to keep it as high as we possibly can.”
Early on in the process that began May 6, the EU said it had a “strong interest” in accessing Canada’s dairy market, especially cheese, Verheul said.
Canada has wanted a free trade agreement with the EU – the world’s largest and wealthiest market consisting of 27 European countries – for years, Verheul said. The EU is Canada’s second-largest trading partner after the United States. If an accord is struck it will be the first free trade agreement between the EU and a developed country, Verheul said.
Two-way trade between Canada and the EU is around $115 billion annually, Verheul said. The value of trade between Canada and the U. S. is more than $500 billion annually.
Getting more access to EU markets for Canadian beef, pork and grain is a top priority for Canada, Verheul said. That means going beyond cutting EU import tariffs and breaking through non-tariff trade barriers such as the EU ban on imports of Canadian beef containing hormones or the low-level presence of genetically modified (GM) organisms. Canada also wants the deal to tackle EU export and domestic farm subsidies.
“But I’m not going to give you any kind of illusion that the EU is going to get rid of the Common Agricultural Policy for the sake of this negotiation,” Verheul said. “That’s not going to happen.”
The EU wants its companies to have access to Canadian investment markets, to be able to compete in supplying good services including government procurement contracts.
“So we’re also hoping to leverage some of the concessions that we’ll be making in those areas to get bigger results within the goods side where we have a lot of strategic interest and agriculture is clearly among them,” Verheul said.
The EU was reluctant to engage in trade negotiations and remains suspicious of Canada’s commitment, but Canada feels the same about the EU, Verheul said.
Both sides want a deal by May 2011 – just two years from when negotiations began, he said. If a deal isn’t in sight by next fall, the process will likely end.
“We will get a very big deal, an ambitious deal, or we won’t get any deal,” Verheul said. “That means some stretching on both sides.”
NEGOTIATING ALL ASPECTS
Canada and the EU have also agreed to negotiate “all aspects of our economic relationship,” including labour mobility, regulatory and sanitary, phytosanitary issues.
“If our objectives are met this will be a more ambitious agreement than NAFTA, it will be a more comprehensive agreement than NAFTA and across the board it will be a bigger deal,” Verheul said.
If a deal is reached with the EU, the U. S. will remain Canada’s largest trading partner, in part because of its proximity to Canada, Verheul said.
Even though these trade talks are the biggest since NAFTA, which, along with the Canada-U. S. Free Trade Agreement before it, sparked heated public debates, so far they’ve flown under the radar. Verheul is consulting with businesses and farmers on a deal he said could be in place 50 years.
The first round of talks in October, which lasted a week, exceeded expectations, Verheul said.
“There was a very positive constructive atmosphere,” he said.
“Neither side was putting hard lines down, neither side was pulling things off the table, neither side was saying there are ‘no go’ areas so we were aiming high through that first round and that’s our intention to continue.”
Negotiations are scheduled for next January, April and July.
For the first time Canada has included provincial and territorial representatives directly in the negotiations that deal with provincial jurisdiction. In some ways it complicates matters, but Verheul said the EU wanted that to ensure provinces and territories will abide by any deal that is reached. [email protected]