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Canada, EU seek new trade pact

21 October 2008

MONTREAL — Canada and the European Union are committed to forging a comprehensive economic partnership, Prime Minister Stephen Harper announced Friday.

The global financial crisis makes liberalising trade between Canada and the EU even more crucial, Harper said after a meeting with French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso at the annual Canada-EU Summit in Quebec City.

"Among other things, this means rejecting the frequent tendency in difficult times to turn inward and erect barriers between our economies and our citizens", Harper said. "Indeed, we must stand against protectionism and work to lower and eliminate barriers".

The ongoing global economic crisis topped the agenda of talks between Harper, Sarkozy and Barosso as they met Friday to launch a process that might eventually lead to an economic partnership between Canada and the EU similar to the North American Free Trade Agreement (NAFTA) between Canada, the United States and Mexico.

The EU and Canada agreed to take their relations "to an entirely new level", Harper said.

"The European Union and Canada have completed a comprehensive economic study and have agreed to define together the formal mandates for negotiating an ambitious, deeper and comprehensive and truly historic economic partnership agreement".

This will commence as early as possible in 2009, he said.

Experts said the negotiations would focus on producing agreements to liberalise trade in services, rather than manufactured goods and agriculture. Past negotiations between Canada and the EU were minimised by objections from Canadian provinces and territories that protect their own areas.

Harper said the EU and Canada already directed their negotiators to complete a comprehensive air-services agreement over the next few weeks.

Joe Martin, professor of business history at the University of Toronto, said the push for closer economic ties with the EU comes as Canada, which sends more than 80 percent of its exports to the United States, is desperately trying to find alternative markets to diminish the consequences of a looming US economic slump.

"I think what Canadian businesses are learning is that there is a danger in having all our eggs in one basket, in the United States market", Martin said, "particularly, given the high degree of likelihood that you’re not only going to have a Democratic president, but a Democratic Congress and a protectionist House of Representatives.

"So all Canadian business that are relying on the US market have to be looking for alternatives".

Although the EU is Canada’s second largest trading partner after the United States, Canada is Europe’s 11th largest trading partner.

According to the Statistical Office of European Communities (Eurostat), between 2000 and 2007, EU exports of goods to Canada grew from EUR 21.1 billion to EUR 25.9 billion, while EU imports from Canada rose from EUR 19 billion to EUR 23.3 billion.

The main EU exports to Canada were medicine, cars, crude and refined oil and aircraft engines, while the main imports were uranium, nickel, diamonds, coal and aircraft.

David Long, professor of international affairs at Carleton University in Ottawa, said the collapse of the Doha round of World Trade Organisation talks is another reason for the EU and Canada to work on a free-trade agreement.

"Part of the reason we see increased activity between Canada and the EU right now is because there are problems in the wider trade agenda at the WTO", Long said. "The Europeans would much prefer that be moving forward, but if they can’t get that, then they’ll move forward with Canada".

Long said a joint EU-Canada study released Thursday shows that both sides could gain about EUR 20 billion a year by liberalising mutual trade.

Harper, Sarkozy and Barroso discussed a number of international issues, including Canadian and European efforts in Afghanistan.

"And, of course, we are key partners in the broader global effort to meet the pressing challenges of global warming and energy security", Harper said. "Today we reconfirmed our shared objectives in these areas and committed to expanding cooperation on energy efficiency and clean energy technology".

[Dpa / Expatica]