PM to intervene in deadlocked EU-Canada trade negotiations

Canadian prime minister Stephen Harper is seeking to break a deadlock in trade talks with the EU by stepping up his part in negotiations, people familiar with the strategy said.

Mr Harper’s office is moving beyond the formal negotiating process to resolve disputes in areas such as beef and dairy, two people familiar with the matter told Bloomberg News on condition they not be identified. Mr Harper’s advisers are now dealing with European Commission president Jose Barroso’s office, escalating talks led by Canadian trade minister Ed Fast and EU counterpart Karel De Gucht.

With negotiations dragging into a fifth year, Canadian executives warn Mr Harper may be running out of time to complete his signature trade agreement amid concern that talks with the US will leapfrog Canada as a priority for Europe.

“To resolve difficult outstanding issues in any trade negotiation, ultimately it requires negotiations at the most senior level,” said Lawrence Herman, a former senior Canadian trade official who now works at law firm Cassels Brock & Blackwell LLP in Toronto. Given the size of the pact, “it is critical for the prime minister to become directly involved”, said Mr Herman.

Mr Herman said it was a tactic former prime minister Brian Mulroney was forced to use with US president Ronald Reagan in the 1980s when deadlock was reached during talks for the Canada-US free trade deal.

“Canada-US negotiators were unable to resolve a number of key issues and the only way those issues could be unblocked and move to resolution was for Brian Mulroney to engage directly with the president on this matter,” he said.

Carl Vallee, a spokesman for Mr Harper, declined to comment on the prime minister’s involvement.

“Our government will only sign an agreement that is in the best interest of Canada,” Mr Vallee said.

The push by Mr Harper comes after he met Mr Barroso on the sidelines of the G20 leaders’ summit in St Petersburg. Mr Harper said after the Sept 6 meeting that “significant” differences remain in the negotiations.

“Discussions continue — at all the necessary levels — as both sides work to conclude these important negotiations as soon as possible,” said John Clancy, the commission’s trade spokesman.

One of the biggest sticking points for Canada is access for the country’s beef and pork producers, a concession that faces resistance from France and Ireland, two of Europe’s biggest meat suppliers. The Europeans are seeking more access to Canada’s protected dairy market.

Canadian companies such as Toronto-based insurer Manulife Financial and Montreal’s commercial-jet maker Bombardier have backed a deal, while European firms including engineering conglomerate Siemens AG and miner Rio Tinto Plc are supportive.

The Canadian Council of Chiefs Executive told the PM the talks are at a “make-or-break” point.

“Unless both sides move quickly to make the necessary concessions, we fear that the Comprehensive Economic and Trade Agreement may slip out of reach and, with it, Canada’s opportunity to secure preferential access to one of the world’s largest markets,” said John Manley, chief executive of the CCCE.

Canada has relatively more to gain from a deal, according to a 2008 joint study by the Canada and the European Commission. A deal would raise annual Canadian GDP by €8.2bn, equivalent at the time to about 0.77% of the country’s output, the study found. The EU economy would increase its annual output by €11.6bn, or 0.08%.

While the EU bought 8.9% of Canadian exports in 2012, Canada represented 1.9% of total EU exports, according to Statistics Canada and Eurostat data. The US received three quarters of Canada’s exports in July.

Canada wants its beef producers to be allowed to export 40,000 metric tons to Europe, said Matthias Brinkmann, the EU’s ambassador to Canada.

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