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Tunisian free trade talks on the horizon

Embassy Magazine, Canada

Tunisian free trade talks on the horizon

Qatar also singled out for potential deal in Foreign Affairs department

By Carl Meyer

22 June 2011

Canada is expected to enter into negotiations toward a free trade
agreement with Tunisia next year, and is looking at another deal with Qatar.

The revelation, confirmed by the Tunisian ambassador, is contained in
the latest strategic planning document tabled in the House of Commons by
the Department of Foreign Affairs and International Trade on June 13,
which reads that "outreach initiatives will be undertaken to increase
support among Gulf Cooperation Council states and key regional partners
(e.g. Jordan, Qatar, Tunisia) for negotiations on trade liberalization."

Tunisian Ambassador Mouldi Sakri confirmed that exchanges for FTA talks
have already taken place at the foreign minister level between Canada
and Tunisia, and the two countries have informally agreed to launch
negotiations once the country has in place a new constitution in 2012.

"We agreed to negotiate with Canada, over the next two or three years, a
free trade agreement which will really knit together all the [bilateral]
economic activities," he said.

In the meantime, Canada will have to wait out Tunisia’s
post-revolutionary clock, as the Maghreb country elects a constitutional
assembly on Oct. 23 that will draft Tunisia’s new constitution, a
process that is expected to take six months, according to Tunisian Prime
Minister Beji Caid Essebsi.

Oil industry pushing for deal

The explicit mention of Tunisia as a general trade priority for Canada
is the first time the country has been singled out in such a way. Last
year’s DFAIT planning document wrote that Canada hoped to push forward
talks for a foreign investment promotion and protection agreement with
Tunisia, which was launched in 2009, but it made no mention of general
trade liberalization.

The inclusion therefore caps a years-long process by the Tunisian
government to grab Ottawa’s attention, according to Mr. Sakri. He said
his embassy first began hashing out details on a new comprehensive
proposal to increase bilateral relations in 2008, a central pillar of
which was a free trade agreement. That proposal was then formally
presented to then-foreign minister Lawrence Cannon during a visit to
Ottawa by then-Tunisian foreign minister Kamel Morjane in April 2010.

The ensuing Tunisian revolution in January 2011, when the country ousted
president Zine el Abidine Ben Ali from power, ended up being a political
push that helped the new interim Tunisian government forge greater
relations with Western countries, Mr. Sakri said, which in turn has
helped along the Canadian relationship.

For example, as a result of the revolutions in Tunisia and Egypt, the G8
ponied up $20 billion from international financial institutions at the
conclusion of their summit in Deauville, France, on May 27, to loan to
the new governments on the condition they follow through with democratic
reforms, noted Mr. Sakri. As well, Canada has frozen the foreign assets
of the Ali family.

In the last few weeks, Mr. Sakri has again started approaching the
Canadian government with suggestions they forge ahead with the trade
agreement they had agreed to earlier. The inclusion of Tunisia in the
DFAIT planning document shows Canada is now firmly behind that effort
and is supporting the fledgling democracy, he argued.

"With the new dynamic in the area, with the revolution that’s happened
in our country that will really establish a democracy, it will help
Canada to [forge] ahead in this negotiation," he said. "It’s a kind of
support from Canada to the new Tunisia."

Canada has roughly $1 billion invested in Tunisia, making it the
country’s 10th largest foreign investor. Most of that money is pouring
into Tunisia’s oil and gas sector, making it the second largest investor
in the industry after the British, according to a speech given by
Canadian Ambassador to Tunis Ariel Delouya on May 17.

In fact, there are nine TSX-traded companies active in Tunisia: Bolivar
Energy, Canoel International Energy, Chinook Energy, Columbus Energy,
CYGAM Energy, DualEx Energy, Madalena Ventures, Candax Energy and Lundin Petroleum. That is set to increase, as Calgary-based Sonde Resources
recently discovered a 768,000-acre oil and gas field off the coast of
Tunisia that is straddling the offshore border with Libya, deemed the
Zagat field.

The oil and gas industry is expressing keen interest in Tunisia, Mr.
Sakri said. The Canadian Association of Petroleum Producers did not
respond in time for publication.

There are other major Canadian interests there, including construction
giant SNC-Lavalin, which led a consortium recently to win a $340-million
contract to design and build a gas and thermal power plant in the country.

Canadian envoy Mr. Delouya, whose speech was to mark the opening of a
new Canadian Embassy in Tunis on May 9, said Canadian trade officials
had visited the Maghreb country recently to identify areas where Canada
can invest to support the transition to democracy in the country.

Qatar also on the radar

Canada also intends to put into force its deal with Jordan, and pursue
trade talks with Qatar.

Unlike Tunisia or Jordan, however, Canada has had no formal trade talks
with Qatar. However, there has been some recent diplomatic activity
indicating a strengthening of ties. For one, the two countries have been
moving to establish embassies in each other’s capitals. Previously,
Canada was represented in Doha by its embassy in Kuwait, while Qatar was
represented by its embassy in Washington, DC. But Canada will open an
embassy in the capital of Doha this year, and in March, Qatar assigned
Salem Mubarak Al-Shafi to become ambassador to Ottawa, opening a
temporary office operating out of a hotel while it looks for more
permanent digs.

There is also a growing level of business interest. Over 70 per cent of
Qatar’s economy is in the oil sector, an industry that Canadian
suppliers are sure to desire. As well, Qatar Airways will be offering
direct flights between Montreal and Doha three times per week starting
this month. Montreal-based aerospace company Bombardier was also in line
to sell several of its commercial jets to Qatar Airways at the recent
Paris Air Show, though that deal fell through.

As well, the two countries do not yet have significant trade relations.
Canadian exports to Qatar in 2010 totaled just $86 million, while
imports totaled $100 million.

Despite the mention, trade talks with India, the European Union and the
United States remain the Harper government’s top priorities. As such,
the DFAIT document shows where Canada considers its next "tranche" of
trade targets, said Phil Rourke, executive director of the Centre for
Trade Policy and Law. He said he considered the three states to be in a
lower tier of focus for the department.

"I think they’re probably having exploratory meetings or discussions,
but they haven’t figured out what the agenda is," he said.