Canada: Canada-EU Trade Negotiations – Racing To The Finish Line

Last Updated: July 8 2011
Article by Peter E. Kirby

World Trade Executive: North American Free Trade & Investment Report, Vol. 21, No.11

In May 2009, Canada and the European Union ("EU") began negotiating an ambitious and wide ranging Comprehensive Economic & Trade Agreement ("CETA") and those negotiations are on track for conclusion by the end of this year.

The proposed agreement would have a major impact on the Canadian economy, and would begin the process of lessening of what many see as Canada's excessive and strategically risky dependence on trade with the United States. With a GDP of $19 trillion in 2009, the 27 Member States of the EU make up the world's largest single market and enhanced access to even a fraction of that market could bring enormous economic benefits for Canadian exporters. The negotiators will shortly exchange offers – a critical step in the negotiations - and then focus on the remaining unresolved issues. Here is a summary of some of the issues to watch.

Market Access for Non-Agricultural Goods

Tariffs on most products traded between the EU and Canada are relatively low or non-existent but, in a few particularly sensitive areas, tariff rates remain high and the negotiators will be looking for major concessions in those areas. The limited high tariff sectors include shipbuilding, textiles and automobile and both Canadian and European negotiators are looking to move to a zero tariff across the board when the agreement comes into force; i.e. there would be no phase-in.

Apart from the few instances of high tariffs, the most important trade in goods issue will be the rules of origin or how goods will qualify as Canadian or European.

Under NAFTA's influence, industrial production has rationalized on a North American basis and Canada no longer has the manufacturing depth to support origin rules that require a majority of Canadian content. Canada needs rules of origin that will permit a significant amount of non-Canadian content but the EU does not want Canada to serve as a back door to the EU market for U.S. or Mexican goods. Traditionally, the EU has required 60% domestic content to confer origin and Canada does not have the manufacturing depth to be able to produce manufactured goods with 60% Canadian content. The Canadian government admitted as much in the 2010 budget when it unilaterally eliminated all tariff on imports of manufacturing inputs. It made that concession to allow Canadian producers to have duty-free access to inputs that were not produced in Canada.

Without origin rules that are significantly more lenient than is usual, zero tariffs will be simply irrelevant for Canadian manufacturers, and that would be major blow for Canada's automobile industry.

Market Access for Agricultural Goods

Talks on market access in the agriculture and agrifood sectors are proving tough. Farmers everywhere have serious political clout and both the EU and Canada aggressively protect their farmers with a wide range of protectionist measures.

The EU protects its farmers with high tariffs, regulatory barriers and massive subsidization. Canada does it through supply management and tariff rate quotas which exclude all but a small amount of imports in supply managed commodities. Canada also maintains a monopoly in wheat and other grains through the Canadian Wheat Board.

Canada's negotiating strategy is complicated by the differing goals of the Provinces and regions. Ontario and Quebec's main objective is to protect supply management and that means excluding European cheese and butter. The Western provinces are pushing for greater access to European markets for Western beef, pork and wheat and are much less concerned about imports.

Getting the right rules of origin is also important for Canada. Given the reality of cross-border livestock movement in Western Canada and the degree of integration between the Canadian and U.S. producers, the definition of what constitutes a Canadian product will need to be flexible. However, the EU does not want the CETA to be a backdoor to the European market for U.S. farmers and will be looking for strict rules of origin.

Finally, the EU is pushing hard for recognition of geographical indicators (GIs) for many agrifood products. Recognition of GIs would prohibit Canadian producers from using certain names (or even derivations or variations of those names) on Canadian products. In the recent EU‑Korea FTA, Korea agreed to recognize a wide range of EU GIs including: Roquefort, Camembert de Normandie, Brie de Meaux, Emmental de Savoie, Jambon de Bayonne, Mortadella Bologna, Prosciutto de Parma and Gorgonzola.

While recognition of the GIs themselves is unlikely to pose a problem, the EU policy is that the use of derivatives or variations of the GI are also prohibited. Recognition of its GIs has been a major policy goal of the EU for a long period and it is unlikely that the EU will sign any agreement that does not provide protection of its GIs and many Canadian producers will be surprised to realize the impact of that, for example, in 2005, the European Court of Justice that only cheese originating in Greece could be called "feta".

Trade in Services

Liberalizing trade in services is, in many respects, more difficult to negotiate than liberalizing trade in goods but carries enormous economic potential for the Canadian economy. Traditionally, service negotiations have focused on specific service sectors such as financial, insurance, telecommunications and the four modes of delivery of those services, with concessions being made on a "per sector/per mode" basis. The CETA negotiation appears to be going well beyond those traditional approaches.

For the first time ever in trade negotiations, the EU has agreed to adopt a "negative list" approach to service coverage, whereby all services and all modes of delivery are included unless specifically excluded. That has been such a radical departure for the EU, it has stalled the offer process as the Member States take their time to make sure that everything they want excluded is listed. In return, the EU has asked for major service concessions from provincial and municipal governments (who have traditionally offered little or nothing) in sectors such as water treatment, transport, education and health care. If provinces and municipalities offer concessions in those sectors, it will be a first for Canada and will provide significant opportunities to EU companies.1

Government Procurement

The single most important goal for the EU in these negotiations is to get access to Canada's government procurement market, at the federal, provincial and municipal levels. The EU insisted that the provincial governments be included in the negotiations as a pre-condition for the start of talks. The EU wants to eliminate discriminatory procurement practices by provincial governments that favour local suppliers, like Montreal's decision to award a subway railcar contract to Bombardier without tender or Ontario's preferences for local products in its Green Energy Act.

Canadian provinces (and some municipalities) have shown their willingness to give up discriminatory practices temporarily by signing the 2010 Canada – U.S. Agreement on Government Procurement and its seems a safe bet that Canadian provinces, territories and municipalities will make significant concessions on procurement in the CETA because without such concessions there will be no agreement. What remains to be seen is the extent to which the EU will provide access to its own sub-national procurement markets to Canadian exporters.

Non-Tariff Barriers

In many cases, it is not high tariffs that are keeping Canadian goods out of the European market but complicated regulatory standards that vary both in content and application, form one country to another. Thus, a Canadian exporter may face twenty-seven different sets of requirements – one for each country in the Union. The issue of technical barriers to trade and, in particular, the lack of uniformity, clarity and transparency in regulatory standards is a major issue for Canadian negotiators.

All governments regulate to promote policy goals in areas such as health, safety, environmental protection, consumer protection and the like, but those regulations can be, and often are, used to protect domestic goods against imports, either by effectively excluding them or by making the cost of compliance so high as to dissuade foreign competition.

In these negotiations, Canada is looking for a formal, cooperative framework that would see EU and Canadian regulators obliged to regularly meet and consult on regulatory initiatives. While no country will abandon its right to regulate as it sees fit in the public interest, a formal mechanism to examine regulatory differences may well be as much progress as Canada can expect. Greater transparency, advance notice of regulatory initiatives and some efforts at mutual recognition of approvals or certification would all go a long way to easing the regulatory burden that faces businesses in foreign markets.

Intellectual Property

Intellectual property is proving to be a difficult area of negotiation for Canada. In a leaked draft of an early version of the negotiating text, it seems that the European position was that Canada should simply adopt the EU's strict rules for the protection of intellectual property. The EU is seeking greater copyright protection, longer patent protection for pharmaceuticals and recognition of its geographic indicators (GI).

The Harper government is committed to providing stronger copyright protection but has repeatedly failed to get the necessary legislation through Parliament. Now, with a majority government, revisions to the Copyright Act are expected to be passed quickly and the new legislation is likely to satisfy the EU on copyright protection.

Extended patent protection or pharmaceuticals is a much thornier issue. Canada hosts a strong generic drug sector and the Harper government has not shown that it is ready to extend the life of drug patents; any attempt to do so would be opposed by Canada's generic drug industry, would significantly add to the cost of Provincial medical plans and would be widely unpopular with consumers. It is impossible to predict what Canada will do on the issue but it is unlikely that any concessions will be made in the CETA negotiation.

Labour Mobility

A major Canadian objective is to gain greater access to the EU labour market for Canadians, particularly for temporary business entry and inter-corporate transfers and to make progress on the mutual negotiation of qualifications. The deal will likely have easier access to the EU for temporary entry for businessmen and professionals but will not touch permanent entry or visa issues. On the difficult mutual recognition issues, the most likely outcome will be an institutional framework within which progress can be made over time.


While the prospects for an ambitious deal look good, there are still road blocks ahead. Five provincial elections will be held this fall, including one in Ontario and the proposed agreement calls for major concessions from the provinces. While the negotiators proudly claim agreement on well over 90% of the issues, they have pushed all of the difficult issues to the end, hoping that once politicians see how much is on the table, difficult political choices and concessions will become easier. In Canada, those difficult choices will include making concessions on supply management, provincial monopolies such as Hydro-Quebec and the LCBO procurement and many others.

Even if a deal is signed, implementation may take years. While the 2009 Treaty of Lisbon gave the EU increased authority to act in international matters, it is not clear that it has the authority to sign the agreement and bind all the Member States. If any part of the CETA requires ratification by Member States, that process could easily take five years. The issue is still unresolved. In April the EU published the text of the EU Agreement with Columbia and Peru and the title page contained a bracketed reference to [Member States] as signators – confirming that doubt still exists on the EU's authority to sign comprehensive trade agreements. In light of that, the negotiations are exploring provisional implementation pending ratification.


In the 2010 Canada-U.S. Agreement on Procurement, provinces and municipalities did provide significant but temporary access to their procurement markets in return for limited concessions on U.S. Buy America rules.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions