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Will EU trade deal really go nowhere?

With the EU enacting bans on Canadian seal products and Canada enacting its own ban on Czech refugees, not to mention the ongoing spat over European state bans on Canadian frankenfoods like GE corn, it’s easy to see why Macleans columnist Paul Wells may be right when he says the Canada-EU “free trade” negotiations are going nowhere.

Wells wrote about a poorly attended session on Canada-EU trade at the Economic Forum of the Americas in Montreal last month where Mauro Petriccione, director for bilateral trade relations for the European Commission and lead negotiator for a deepened economic partnership agreement with Canada, made a guest appearance. Presenting the session were Roy MacLaren, a former Chretien trade rep who runs the Canada-EU Business Roundtable (CERT), and Canada’s ambassador to the EU, Ross Hornby.

The conversation was “gloomy,” writes Wells, who quotes MacLaren: “We have in Canada this ridiculous system of supply management in the dairy and poultry industry… and the Europeans have an array of remarkably ingenious subsidies. If I had to guess I would assume that what we would see in the negotiation is that we’ll identify particular forms of protectionism that we cannot readily deal with in a Canada-EU bilateral negotiation.”

Wells writes that it wouldn’t be the first time negotiations fell apart: “Canada and the EU spent the mid-’00s negotiating a trade agreement that fell apart over the usual subsidies on both sides, and on provinces’ refusal to abandon local preferences for their big-ticket procurement and service contracts.”

He adds that “If this negotiation is to succeed, each side will have to give up what it hasn’t been prepared to give up before.”

And that will include supply manement in dairy and agriculture, as well as municipal government procurement, which is currently excluded from WTO and NAFTA rules restricting conditions on federal spending on public projects.

Interestingly, considering all parties in Canada are committed to supply management, Wells reports that “The lead Canadian negotiator, who will face Petriccione at five negotiating sessions between now and the end of 2010, is Steve Verheul… Canada’s agricultural trade negotiator at the WTO round that just fell apart after most big countries-including Canada-refused to give up agriculture subsidies.”

I’m told the dairy lobby keeps Canada’s agriculture ministers on a short lease and are watching the EU negotiations very closely. Giving in to EU demands could be very costly for the Harper government, both financially and at the polls.