Canada-EU Trade Talks Hinge on Beef and Pork Access

Prime Minister Stephen Harper’s trade agreement with the European Union, which would be his most ambitious to date, hinges on access to the single market for Canadian beef and pork producers.

An impasse over meat imports means a pact probably won’t be reached during Harper’s trip to Europe next week, a person with knowledge of the negotiations said yesterday. European officials may be trying to use Harper’s visit to pressure Canada into accepting unfavorable terms, said the person, who spoke on condition of anonymity because the talks aren’t public.

The proposed pact is a test of Harper’s efforts to diversify Canada’s trade away from the U.S., its largest trading partner. The two sides have struggled to close a deal because of differences over agricultural goods, procurement and financial services. When talks began in 2009, Canada had been hoping for a agreement by as early as 2011.

“The Europeans aren’t easy to do deals with,” said Peter Clark, an international trade strategist at Grey Clark Shih & Associates in Ottawa. “It may be the price they want is too much to pay but there is a tendency to look at things in the short term” when a longer-term approach is needed.

The EU delegation office in Ottawa declined to comment on the talks. Andrew MacDougall, a spokesman for Harper, said the negotiations are continuing and declined to comment further.

Harper is traveling to Europe on an eight-day trip that will take him to London before a stop in Northern Ireland for a summit of Group of Eight leaders.

Trade Accords

While Harper has made trade a key plank of his economic agenda, completing six trade accords since 2006, none have been with major economies. Former Bank of Canada Governor Mark Carney has said the nation’s poor export performance since 2000, the second worst in the Group of 20 after the U.K, is due to the country’s reliance on a slowing U.S. economy.

To alleviate that, Harper has begun free trade talks with Japan and India and last year joined in negotiating a Pacific-region trade agreement.

“This Canada-EU agreement is very important, not so much to increase our access to the European market, but to make Canadians more globally oriented,” said Walid Hejazi of the Rotman School of Management at the University of Toronto.

Harper may need to make some difficult choices in order to finalize an agreement with the EU, said Clark.

While the EU bought 8.9 percent of Canadian exports in 2012, Canada represented 1.9 percent of total EU exports, according to Statistics Canada and Eurostat data.

‘Pay More’

“We will pay more than we thought we would because we need the deal more than the Europeans do,” Clark said.

Still, the EU is hoping to use the Canadian free trade agreement as a template for trade negotiations with the U.S. and other countries, according to Matthias Brinkmann, the European Union’s Ambassador to Canada.

“It will help us in the negotiations with the U.S. and other developed countries if we can show we managed this and we can do such a comprehensive agreement,” Brinkmann told reporters May 9.

Canada wants its beef producers to be allowed to export more than 40,000 metric tons to Europe, Brinkmann said.

“We are ready to deliver that, even go beyond that,” he said. “But there’s a certain limit that we cannot go above, because then our own producers in some countries depend very much on that, like Ireland and France.”

Dairy Market

In addition to the beef and pork dispute, sticking points have included European access to Canada’s dairy market as well as public procurement contracts at the provincial and municipal levels, according to Clark.

Canada’s request to exclude financial services from the investor-protection section has been a bone of contention in Europe, while the EU’s request for stronger patent protection for pharmaceutical companies may drive up Canadian health-care costs.

European Union Trade Commissioner Karel De Gucht said earlier this year that Canada was responsible for the lengthy negotiations.

“What was on the table simply didn’t please me, so I didn’t make an agreement,” De Gucht told the European Parliament’s international trade committee Feb. 21 in Brussels. “They need to make additional steps and, if not, there will not be an agreement.”

In a March 13 interview with Bloomberg in New York, Trade Minister Ed Fast said negotiators had made progress since those comments from De Gucht.

“We’re now into the end game where there is only a small number of issues left to be addressed,” Fast said at the time, adding an agreement is expected to increase bilateral trade by 20 percent and add C$12 billion ($11.6 billion) annually to Canada’s economy.

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