The Canadian Press | November 2, 2013

EU boasts of gains in Canada free-trade deal

Europeans cite bidding on government contracts, shipments of cheese, wine, spirits as victories

By Julian Beltrame and Mike Blanchfield

A European Union analysis of the just-completed trade agreement with Canada suggests the EU gained more than it expected - and might have settled for less had Ottawa pushed harder.

The internal document, obtained by The Canadian Press, indicates EU exporters expect to make great inroads in the Canada market. Negotiators hope the gains can be used to their advantage in other trade negotiations, including talks with the United States that have just begun.

The Europeans cite bidding on government contracts, as well as shipments of cheese, wine and spirits, as negotiating victories. The Europeans are also touting their success in persuading Canada to adopt the use of geographical indicators to market their goods.

The document also makes clear not all issues have been settled although, like Canadian officials, the Europeans don’t expect major hurdles. A final text could be "initialled" in a few months.

"In many negotiating areas Canada offered more than it has offered to any negotiating partner before," says the document.

"This is a very good outcome in its own right, but it will also provide a solid stepping stone for our negotiations with other partners."

That characterization is similar to claims made by Canadian officials and government ministers, who have called the deal a win for both exporters and consumers. But the European document is unique in claiming to have won concessions beyond their expectations.

The Europeans are particularly pleased about realizing all their goals in the area of geographic indicators or GIs, those products named for their origins, such as Gorgonzola or Feta cheeses.

"Canada ... has accepted that all types of food products will be protected at a comparable level to that offered by EU law and that additional GIs can be added in the future," says the document, noting 125 of Europe’s 145 "priority GIs" will enjoy full protection. On cheeses, the document notes existing Canadian products are grandfathered, but new entrants will need to be identified by such modifiers as "style," "type" or "imitation."

The paper suggests winning the GI battle will give European manufacturers a significant leg up when competing with Canadian producers of similar products.

It also revels in Canada’s concession to extend patent protection on brand-name drugs by up to two years, although it makes clear that their negotiators were trying for the EU standard of five years.

"This is an important and unprecedented concession from Canada in the area of intellectual property rights."

A report by two university researchers this week estimated the cost to Canadians from delaying introduction of cheaper generic medicines will likely range between $800 million and $1.65 billion, once the patents on new drugs expire starting in 2023.

Prime Minister Stephen Harper has acknowledged that the cheese and pharmaceuticals sectors might be adversely affected in the short term by the agreement. He has also said the government will consider compensation for the cheese makers and the provinces, which would bear the brunt of higher drug costs.

One of the priorities for the Europeans was to gain access to lucrative provincial and municipal government procurement contracts. The EU did not obtain full entry into all areas, but the document makes clear negotiators are more than satisfied with the results.

"For the first time, Canadian provinces and municipalities will open their procurement to a foreign partner, going well beyond what Canada has offered (before)."

The document says the issue was particularly difficult to negotiate and was unresolved until both sides gave on the issue of rolling stock for publictransport systems.

Ontario and Quebec accepted a substantially lower local content exclusion to 25 per cent, and to expand the concept of "local content" to "local value," and to include labour, assembly and maintenance in what EU suppliers can provide.

The document also makes clear that discussions of financial services went down to the wire, with both sides putting some water in their wine.

Canada did win a so-called prudential carve-out, meaning federal officials can continue to regulate banks to dissuade them against risky behaviour of the type that brought down Wall Street and European banks in 2008-09.

But Ottawa would need to demonstrate before a "financial services committee" that its actions were to reduce risks and contagion, rather than an attempt to restrict competition.