EU, Canada Reach Landmark Free Trade Deal

European Commission President Jose Manuel Barroso, right, looks at Canada's Prime Minister Stephen Harper during a media conference at the European Commission headquarters in Brussels on Oct. 18, 2013. AP Photo/Yves Logghe

BRUSSELS (AP) -- Canada and the European Union have struck a tentative free trade deal meant to boost growth and jobs and which European officials hope will provide a blueprint for a much larger -- but more challenging -- trade pact with the U.S.

The deal agreed on Friday in Brussels will cut tariffs and red tape and was attained after settling bitter disputes over cheese exports and visa requirements. Companies on each side will have improved access to the two lucrative markets -- the 28-member EU's 500 million people and Canada's 35 million.

"This is a big deal. It is the biggest deal our country has ever made," Canadian Prime Minister Stephen Harper said in Brussels.

The value of bilateral trade in goods and services between the EU and Canada was 85 billion euros in 2012 ($116 billion at today's value), according to the European Commission, the EU's executive arm. It estimates the agreement will boost trade by almost a quarter.

The deal still requires approval by the European Parliament, EU member states and from Canada on federal and provincial levels. These are expected to be cleared in 2015.

A total of 99% of tariffs will be removed immediately once the agreement takes effect, with only a few agricultural products being excluded and managed by quota rules.

In numerical terms, the deal appears to be a bigger win for Canada. The EU, a $17 trillion economy, is Canada's second-largest trading partner behind the U.S. By contrast, Canada is only the EU's 12th-largest trading market. The deal would also help reduce the dependence of Canada's $1.8 trillion economy on imports from the U.S.

However, while Canada's export potential grows, its products will also face stiffer competition at home.

Indeed, Canada seemed to have made major concessions for the deal.

Sectors like Canada's dairy products, particularly cheese producers, are likely to see their market share fall. They will receive help from the Canadian government as imports from Europe ramp up, Harper said. He insisted, nevertheless, that the deal is "in the interest of the vast majority of Canadians."

European Commission President Jose Manuel Barroso hailed the agreement as a "win-win for both sides" after four years of negotiations.

The EU's cheese exports proved to be one of the last stumbling blocks in the negotiations, EU officials said. In the final compromise, Canada accepted an increased quota that will allow EU cheese exports to surge by 130%.

Another hurdle was the Czech government's insistence that Canada should waive its visa requirement for Czech citizens. Harper said that Canada will scrap the rule in the coming weeks.

The EU hopes the agreement with Canada will provide a boost to free trade talks with the U.S., which would be the world's largest such pact. The EU and U.S. combined represent just under half of the global economy.

Officials on both sides of the Atlantic hope to agree on the broad outline of that deal by the end of next year, but that schedule is considered highly ambitious as significant hurdles remain.

"We expect this agreement to set some standards, also for other negotiations, including with our American friends," Barroso said, hinting that some of the compromises struck with Canada could serve as blueprints for the negotiations with the U.S.

A study commissioned by the EU estimates that a U.S. deal could add about 120 billion euros ($164 billion) to the EU's gross domestic product and 95 billion euros ($130 billion) to U.S. GDP.

The EU says the main beneficiaries of the agreement with Canada in Europe will be carmakers, car part manufacturers and chemical firms. Among agricultural products, the deal is expected to boost EU exports of wine, spirits, pasta and dairy products like cheese.

"Businesses in both Europe and Canada will be delighted to see new market opportunities open up at a time when global economic performance remains sluggish," said Markus Beyrer, the head of BusinessEurope, a lobby group based in Brussels.

The agreement sets higher standards for the protection of intellectual property as well as access to public procurement contracts.

It also streamlines industry standards, such as for car production, and the use of trademarks.

For example, Canadian hams or cheeses featuring European names -- like Parma ham or Feta cheese -- will still be allowed to be marketed in Canada, but they will no longer be able to use the Italian or Greek flags for marketing purposes, nor will any new producers be allowed to put such products on the market.


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