Canada, EU to seek “economic partnership”

Canadian farmers are seen being among the beneficiaries of a proposed “economic partnership agreement” between Canada and the European Union.

Meeting Wednesday in Prague in the Czech Republic, Prime Minister Stephen Harper, EU President Mirek Topolanek and European Commission President Jose Manuel Barroso announced the launch of negotiations between Canada and the 27-nation EU.

“This partnership has the potential to bring a $12 billion boost to the Canadian economy and lead to significant gains for both Canada and the EU,” the federal government said in a release.

“At a time when many countries are retreating into protectionism, Canada is showing the way,” Harper said. “We are working to open new markets and positioning our country for the future.”

“Canada and the EU agree that we should be seeking an ambitious agreement, and will negotiate a wide range of areas, including trade in goods, technical trade barriers, trade facilitation, customs procedures and rules of origin, trade in services, investment, central and sub-central government procurement, food safety and animal and plant health measures, regulatory co-operation, intellectual property, competition policy, dispute settlement and sustainable development,” the government said.

Ottawa noted that a bilateral agreement with the EU “could deliver commercial benefits across many sectors of the Canadian economy, including aerospace, chemicals, wood products, automotive vehicles and parts, agricultural products, and transportation and other business services.”

In 2008, two-way merchandise trade between Canada and the EU totalled $90.4 billion, up seven per cent from 2007, the government said. The EU is Canada’s second largest export market, after the U.S., and Canadian merchandise exports to the EU alone were up 3.5 per cent in 2008, reaching $36.4 billion.

The investment relationship is even stronger, the government said, noting the EU is Canada’s second most important investment partner and Canada the EU’s fourth most important investment partner.

In October last year, the EU and Canada released a joint study indicating that the liberalization of trade in goods and services has the potential to give a $12 billion boost to the Canadian economy and increase bilateral trade by over 20 percent.

Ottawa is responsible for negotiations in international treaties, but the provinces and territories are responsible for implementing the treaty obligations that fall within their jurisdiction, including through enacting legislation, as required.

Thus the government said it will provide a process for the participation of the provinces and territories and “ensure that their views are fully taken into account in the development of Canadian negotiating positions, both before and during these negotiations.”

To that end, Quebec Premier Jean Charest on Wednesday appointed former premier Pierre-Marc Johnson as the province’s chief negotiator on this agreement.

Deal on beef?

Ottawa’s move for closer economic ties with the EU comes as the U.S. government has announced an agreement in principle to ease out of its trade dispute with the EU over hormone-treated beef.

Both Canada and the U.S. have imposed trade sanctions against the EU over its ban on beef from cattle treated with growth-promoting hormones. Beef industry observers say a deal between Washington and the EU suggests a similar deal between Ottawa and the EU can’t be far off.

Washington’s agreement in principle would give the U.S. additional duty-free access to the EU market for U.S. beef from cattle not treated with hormones, to the tune of 20,000 tons in the first three years, increasing to 45,000 tons beginning in the fourth year.

The agreement also calls for the U.S. to maintain existing sanctions, but to not impose new sanctions on EU products during the initial three-year period. Washington would then eliminate all its related sanctions during the agreement’s fourth year.

According to a release Wednesday from U.S. Trade Representative Ron Kirk, the agreement also calls for both the U.S. and EU to “refrain from further litigation at the World Trade Organization regarding the EU’s ban on beef treated with certain growth-promoting hormones for at least 18 months.”

Before the end of the four-year period, Kirk’s office said, the two sides will “seek to conclude a longer-term agreement.”

FIPA with Czechs

Harper on Wednesday also announced the signing of an updated Foreign Investment Promotion and Protection Agreement (FIPA) with the Czech Republic.

Canada has had such an agreement in place with the Czechs since 1992, but these updates bring it into compliance with EU law and provide for “a number of improvements requested by Canada, including a new clause for environmental, health and other safety standards and greater transparency during investor-state arbitration.”

The updated FIPA is meant to “encourage two-way investment by providing investors with the clarity and certainty they need when investing in foreign markets.” Canada currently has 23 such agreements in force, six of which are with EU member countries.

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