6 Potential Stumbling Blocks to Canada-EU trade deal
Negotiators from the federal and provincial governments are spending a second week in Brussels
for intensive negotiations toward a Canada-European Union Free TradeAgreement.
The Canada-EU talks were originally supposed to wrap up by the end of 2011. That timeline was
extended by a year as negotiators on both sides said talks were progressing, albeit more slowly
than hoped. In the last few months of 2012, Prime Minister Stephen Harper has repeatedly said he
hoped to see talks conclude before the end of the year.
The impetus to conclude the talks for the EU is to show theAmericans they are willing to make
reasonable compromises in future talks when it comes to agriculture.
For Canada, beyond boosting international trade by as much as 20 per cent and diversifying its
economy away from reliance on the U.S., Harper wants to show critics and other trading partners
that Canada can negotiate a comprehensive trade agreement while leaving intact Canada's supply
management system for dairy, poultry and eggs.
Despite the delays, sources familiar with the negotiations say they believe a deal is within reach in
the coming weeks, but at the outset of the latest talks, six key points remained unresolved:
The sticking point on this issue is "origin of content" regulations for vehicles.
Due to the integrated nature of the NorthAmerican manufacturing sector, many of the components
of a car assembled in Canada are from the U.S. or Mexico. Sources familiar with the negotiations
say the Europeans estimate a "made in Canada" car could contain as little as 25 per cent Canadian
Sources say Europe is offering an escalating quota — the greater Canadian content in a line of
vehicles, the more would be allowed into Europe tariff-free. Canada is said to have balked at the
initial offer as being too low.
Another compromise Europe is offering, according to sources, is a commitment to count U.S.-
made parts as Canadian when or if the U.S. and EU conclude their own trade agreement.
This has been a difficult issue from the beginning. Europe wants greater access to the Canadian
market for dairy and poultry products and Canada wants to ship more beef to Europe.
The Europeans are said to be satisfied with modest increases to its quota share in Canada, but