Canada promotional blitz urges free trade with EU

(OTTAWA) - Government ministers on Friday set out across Canada to promote a free trade pact with the European Union described as the "most ambitious" deal in Canadian history.

However, key obstacles must still be overcome in the ongoing negotiations, such as Canada's clinging to its dairy supply management system and a few EU member states irked by visa restrictions.

"This is, by far, the most ambitious trade initiative in our nation's history, with the potential to be broader in scope and produce even more benefits to Canadians than the historic NAFTA," Trade Minister Ed Fast said in a speech to the Economic Club of Canada in Ottawa.

The 1994 North American Free Trade Agreement (NAFTA) created the largest trading bloc in the world by eliminating import tariffs on goods circulating among partners Canada, the United States and Mexico.

A trade accord with the EU, the largest integrated economy in the world with over 500 million consumers, would boost bilateral trade by 20 percent, adding $12 billion a year to Canada's economy and 80,000 new Canadian jobs, according to a joint Canada-EU study.

A trade deal is expected to be finalized within six months, Denmark's Trade Minister Pia Olsen Dyhr said on Monday.

But Canada's dairy supply management system and rules of origin labeling -- as much as 65 percent of Canadian manufactured goods contain foreign parts -- still need to be hammered out, she said.

The EU currently has a small import quota for dairy products, but anything beyond that is slapped with a heavy tariff that makes European cheese and other dairy products expensive to buy in Canada.

As well, Canada may have to satisfy EU member states Bulgaria, Romania, and the Czech Republic, which are irritated by Canadian visa requirements on their citizens, Maurizio Cellini, head of the economic and commercial affairs section at the European Union Delegation to Canada, told AFP.

"We're not talking about a trade question, but it's related," he said.

Canada imposed visa requirements for travelers from the Czech Republic in 2009 after refugee claims soared particularly among Roma people. Bulgaria and Romania have long faced visa requirements.

"The important thing for Canada is not to have a solution to the problem now but at least to have a credible plan that may convince them that within a certain period of time visa restrictions would be lifted," said Cellini.

Canada has signed trade agreements with nine countries since 2006 and is negotiating with several more now. "It's a vision that includes India, China, Japan, Latin America and, of course, the European Union," said Fast.

Canadian ministers said in their promotional blitz to expect free trade to boost Canadian exports to the EU in areas such as agriculture and forestry, engineering services, manufacturing, renewable energy and environmental services, and fish and seafood (the EU is the largest fish import market in the world).

With EU tariff and non-tariff barriers removed, "Canadian firms will have a huge advantage over many other exporters, including those from the United States," said Fast.

Dismissing concerns raised by critics of the proposed pact, he noted that town halls "will remain free to use measures such as grants, loans and fiscal incentives to support local businesses and address local needs."

Municipalities will also retain the option of selecting vendors based on quality, price, experience, and social and environmental factors, as well as regulate services like water. Small procurement projects will be excluded from the pact altogether.

Health care, public education and other social services maintained for a public purpose will also not be part of any trade agreement with the EU.

"Our products, services and expertise are for sale, our government powers and our water are not," Fast said.