EU, Canada hold first round of trade talks
Bridges Weekly Trade News Digest • 28th October 2009
EU, Canada Hold First Round of Trade Talks
Officials from Canada and the European Union held their first official round of free trade talks last week, kicking off a five-round process that the parties say should take about two years to complete. The most controversial issues brought to the table were a decrease in agricultural subsidies for the EU, and an easing of the protections that Canada offers its dairy, poultry, and egg farmers. Ottawa has been particularly unyielding on this issue. “Our supply sectors are not things we negotiate,” said Canadian Trade Minister Stockwell Day in an interview with The Canadian Press.
Under Canada’s current supply management system, provincial markets regulate production quotas in the dairy, poultry, and egg industries to keep prices high. Brussels says that such policies amount to subsidies.
Other points to be negotiated in the agreement include customs procedures, migration, intellectual property rights, and foreign investment.
In 2008, the EU was Canada’s second-largest trading partner, after the United States, having imported US$ 40 billion in Canadian goods. Canada imported US$ 47 billion from Europe. A deal to cut tariffs and other barriers to trade would boost the Canadian economy by a €8.2 billion each year, while the European economy would get an additional €11.6 billion, according to a study released last year.
But some experts claim that a free trade deal would be fruitless and mainly a political exercise, thanks to inflexibilities on both sides. Some observers argue that the current barriers to trade are so insignificant that a free trade agreement would bring only minor benefits to either party. Indeed, tariffs on goods traded between the two major world economies already average less than 3 percent (see Bridges Weekly, 20 May 2009, http://ictsd.net/i/news/bridgesweekly/46976/). Cutting the few duties that remain high could be a significant political challenge.
Groups such as the Council of Canadians are also concerned that talks between the EU and Canada would open the door to privatisation of Canada’s public infrastructure, which would include water and sewage treatment plants.
”Really what the (Europeans) want to see are the removal of whatever protections exist at the municipal level on keeping water services public,” said Stuart Trew from the council.
Ian Lee, from Carleton University, while agreeing that the increase in income might be small, defended the deal as it could make it easier for free trade deals with other countries to occur.
”We should be trying because it sets a precedent,” said Lee. “Whatever we negotiate then could become the foundation for subsequent negotiations with other countries.”
Stockwell Day described the beginning of negotiations as difficult, yet productive, and said that he hopes an agreement can be reached within two years.
ICTSD reporting; “Canada won’t bend on supply management in EU trade talks: Stockwell Day,” OTTAWA CITIZEN, 19 October 2009; “Canada pushes for lower EU subsidies at trade talks,” CANADIAN PRESS, 26 October 2009.
