Lot of work left on Canada-EU trade talks, says senior official

Fri Oct 5, 2012 3:50pm EDT

* Canada says deal could boost bilateral trade by 20 pct

* Several contentious issues remain to be solved

* Canada keen to diversify trade away from United States

By David Ljunggren

OTTAWA, Oct 5 (Reuters) - A large amount of work remains to be done on a proposed free trade treaty between Canada and the European Union, which is supposed to be concluded by the end of the year, a senior Canadian official was quoted as saying on Friday.

Canada, keen to diversify its exports away from the United States, says a deal with the European Union would increase two-way trade by 20 percent.

Ottawa wants to conclude negotiations by the end of 2012 but the two sides have yet to settle contentious issues such as access for agricultural goods, opening up procurement markets and the extension of pharmaceutical patents.

"There is a large amount of work that needs to be done," chief Canadian negotiator Steve Verheul told civil society activists in a phone briefing, adding that the two sides were in constant contact.

Verheul's comments were passed on to Reuters by Stuart Trew of the left-leaning Council of Canadians, which opposes the proposed deal.

University of Ottawa law professor Michael Geist was also on the call and quoted Verheul as saying trade ministers from both sides planned to meet in Europe in mid-November.

Canada and the EU -- who opened negotiations on the treaty in 2009 -- have always said that the most tricky issues would be left to politicians to sort out.

"The pressure to conclude the agreement this year is readily apparent. There appears to be a bit of a disconnect, however, between the aggressive timeline and the number of outstanding issues," Geist told Reuters.

For Canada, the pact would be the biggest since it signed the landmark North American Free Trade Agreement with the United States and Mexico in 1994.

The United States is by far Canada's biggest trading partner and takes around 75 percent of all Canadian exports.

"We are now down to focused sessions on the remaining issues. Solutions to the remaining issues are being actively explored," said Adam Taylor, a spokesman for Canadian trade Minister Ed Fast.

One challenging issue is the EU's demand that Canada extend the patent protection of drugs produced in the EU, which the Canadian generic pharmaceutical industry says would add about C$2.8 billion annually to prescription drug costs.

According to a post on Geist's blog, Verheul said two sides had not even begun to discuss the patent issue.

Another obstacle is Canada's insistence on protecting its agricultural sector through a system of supply management, which sets producer quotas and prices on farm commodities such as milk and poultry, and slaps stiff tariffs on imports.

Trew quoted Verheul as saying Canada was pressing the EU to take more of its beef and pork while the EU wanted more access for dairy products. Neither demand has been resolved yet.

Fast says there are particularly promising opportunities for Canadian firms in the giant EU procurement market, which they say is worth C$2.4 trillion a year.

Critics such as Trew fear that opening up trade with the EU could spell foreign domination of the Canadian provincial procurement market, which has some restrictions. ($1=$0.98)

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