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Canada, EU to push ahead with trade talks

(Reuters) — Free trade negotiations between Canada and the EU are more ambitious than most such talks, particularly when tackling sensitive sectors that each side wants to protect, Canada’s federal Trade Minister Peter Van Loan said Wednesday.

Van Loan and European Union Trade Commissioner Karel De Gucht said they had agreed in a stock-taking exercise that, after five rounds of talks, there was enough common ground to justify continuing the process. The next round is set for January in Brussels.

The officials would not say how they plan to resolve some of the thornier issues not yet discussed, which include agricultural subsidies and procurements.

But in an interview with Reuters, Van Loan said the way officials were dealing with sensitive areas is what would set this deal apart from other, more conventional ones.

“This has been fairly conventional negotiating with one exception… Where we have run into difficult issues, on many of them the approach on both sides has been, instead of being less ambitious, we’ve said let’s try and be more ambitious,” Van Loan said.

“That’s why I say this will be the broadest trade agreement we’ve ever entered into.”

The two sides aim to strike a deal by the end of 2011 that they say would generate extra annual income of about 11 billion euros (US$14.2 billion) for the EU and eight billion euros for Canada.

Although two-way trade is relatively small, a deal with the EU would be a major breakthrough for Canada as it seeks to diversify markets in the face of weaker U.S. demand for its exports. It has also begun free trade talks with India, with a second round of negotiations scheduled for March.

Critics fearful

Critics have speculated that the Conservative government might cede too much control to clinch a far-reaching deal such as opening up sensitive industries to more foreign investment, or giving European companies too much access to prized public works contracts.

Van Loan would not respond to those allegations, but said one side effect of a deal could be the elimination of interprovincial trade barriers in Canada.

He said warnings about loss of sovereignty voiced by anti-free trade groups were not believable as the groups had made the same dire predictions when Canada joined the North American Free Trade Agreement (NAFTA) in 1994.

“When you go down the scenarios of doom that they painted, none of those negative consequences came to pass with the United States, the biggest economy in the world right next door to us.”

For its part, Canada has vowed to keep intact its supply management system, which protects farm industries through a system of quotas and tariffs.

Another challenge is public procurement contracts offered by Canadian provinces, which have traditionally been reluctant to open this market up to outsiders.

When asked about the EU approach to procurement, De Gucht said in a separate Reuters interview: “We are trying to make away with obstacles. That’s what I’m supposed to do — to resolve problems that exist.”

The Canadian provinces are directly involved in the negotiations, and Van Loan said they are “on side” with the federal government.

— Louise Egan is a reporter for Reuters in Ottawa. Additional reporting for Reuters by David Ljunggren.

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