Canadian, EU Free-Trade Talks Embark On 'Stickier Issues'

Canadian and European Union negotiators open a new round of talks Monday on an ambitious free-trade agreement amid uncertainty about whether both sides -- and in particular the Ontario and Quebec governments -- are prepared to make politically sensitive concessions.

Negotiators say they're encouraged by the first three rounds of talks that began last fall, though all acknowledge that only the "easy" issues have been settled before next week's session in Brussels. A fifth and final gathering is scheduled for Ottawa this October.

"We're very optimistic (and) we are confident" of meeting the target deadline of a deal by end of 2011, Canadian Trade Minister Peter Van Loan said in an interview.

But negotiators haven't tackled some of the more politically delicate issues such as Canada's supply-management system in agriculture, copyright law and especially government procurement.

"The stickier issues are, as they always are in these negotiations, left to the end," Van Loan said.

The Comprehensive Economic and Trade Agreement is projected to boost two-way trade and investment between Canada and the EU, Canada's second-largest trading partner, by up to 20 per cent, adding $12 billion a year to Canada's wealth by 2014.

Some observers predict modest concessions in Canadian supply management to open up Canada to luxury food items such as French cheeses and Italian hams.

But Canadian nationalist and labour groups warn that an agreement could prevent governments at all levels from using tax dollars to build industries and create jobs.

Negotiators have already agreed in the first three rounds of talks to immediately eliminate all tariffs on 90 per cent of goods still subjected to import charges.

There are warnings that Canada has excessive expectations in return for its agreement to let European firms bid on government projects.

There has been speculation that Canada expects improved access for Canadian pork, beef and grains, an exemption for supply management of poultry and dairy products and equal access to European procurement markets.