UPDATE 2-EU, Canada near trade pact after breaking impasse
* Deal expected to be sealed on Friday
* Deal would generate 25.7 bln euros a year in new business, trade
* Would be EU's first trade deal with G7 major economy
By Robin Emmott and Philip Blenkinsop
BRUSSELS, Oct 17 (Reuters) - The European Union and Canada are expected to close talks on a multi-billion-dollar trade deal on Friday that will integrate two of the world's biggest economies, if they can overcome final disagreements ranging from medicine patents to feta cheese.
Canadian Prime Minister Stephen Harper and European Commission President Jose Manuel Barroso will meet in Brussels to wrap up talks that started in 2009 but stalled in early 2013 over demands for greater access to each other's markets.
"The negotiations have really moved forward, which means that the two leaders will meet tomorrow with the aim of concluding," Commission spokesman Olivier Bailly said.
Harper and Barroso are set to announce the deal - the EU's first with a member of the G7 club of major economies - at a news conference at 1230 GMT on Friday, if they can agree final issues including protecting Europe's distinctive geographically defined products such as feta and Gorgonzola cheeses.
Other tough files included patents for pharmaceuticals, beef exports and access to public procurement tenders.
People familiar with the talks said that such issues had now been resolved, but exact details will still need to be finalised after a political deal between Harper and Barroso.
"There is still lots to be ironed out from a technical point of view, but the political differences look to be bridged to allow the deal to go ahead," said a person close to the discussions who did not want to be identified.
Another source told Reuters: "A deal in principle at a high level is complete ... but when it comes to the dotting of i's and crossing of t's, there's still a fair bit left to be done."
Backed strongly by Canadian and European industry, the accord is expected to increase bilateral trade in goods and services by a fifth to 25.7 billion euros ($35 billion) a year, according to latest EU estimates.
A deal would be a political achievement for Harper's free-trade agenda and a step forward for the EU as the 28-nation bloc seeks to agree a trade deal with the United States. That pact would be the world's largest, encompassing half the world economy and a third of world commerce.
CETA would also be of enormous political help to Harper, who is under pressure at home over a spending scandal.
CANADA TRIES TO CALM ANGRY DAIRY FARMERS
Canada's Conservative government tried on Thursday to calm angry dairy farmers who said they would be hurt by an increase in the EU's cheese export quota under CETA.
Denis Lebel, the federal minister responsible for Quebec, said the government would compensate any farmer who suffered as a result. The dairy lobby is influential in rural parts of Quebec and Ontario that tend to vote Conservative.
For Europe and Canada, the accord would also be one of a new generation of trade pacts that not only remove import tariffs but also harmonise rules on how companies do business across borders. An EU-U.S. deal would likely build on some of the agreements made with Canada to boost transatlantic business.
The EU-Canada pact would eliminate tariffs on almost all goods and services, set larger quotas for EU dairy exports and Canadian beef and pork exports and make it easier for EU car makers to export vehicles to Canada.
For the first time, provincial governments in Canada would commit to opening their lucrative procurement markets to allow European companies to compete for contracts alongside locals.
EU governments, the European Parliament and Canada's 10 provinces will still need to approve any EU-Canada deal.
Jean Charest, the former premier of Quebec and one of the main drivers behind the deal, said while no Canadian province could veto the treaty, it could in theory refuse to take part in areas of provincial jurisdiction, such as procurement.
"Expect everyone to have something about this deal that they don't like. That's par for the course ... I have no doubt this will go ahead," Charest, now a trade lawyer, told Reuters by phone from Beijing.
"We are three percent of the world's economy and if we're going to leave our mark, if we're going to be a player in the economy, we need this deal."
The talks ran into trouble in February when EU Trade Commissioner Karel De Gucht flew to Canada, but could not clinch a deal. At the heart of the dispute was a Canadian demand to be able to export up to 100,000 tonnes of beef to the EU every year.
Two sources close to the talks told Reuters that the two sides had agreed on around 40,000 tonnes, most of it fresh meat.
Canadian beef exports are effectively blocked by the EU at present because they contain hormones. Ottawa has argued it needs a larger quota of hormone-free beef for Europe to make production economically viable.
Beef-producing Irish and French farmers are unhappy with that, while Brussels also needs to leave quota space which the United States will seek under a future free-trade deal.
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