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The euro zone continues to struggle with a major financial
crisis. Essentially, vastly different levels of competitiveness
within a single currency zone cannot be sustained unless there are
constant transfers of wealth from the strongest to the weakest.
While leaders of the G8 called for Greece's continuing with the
euro, Germany is the key and Germany's tolerance for supporting
Greece seems to be nearing its political limits. Greece will hold
another election on June 17 and if the result favours a rejection
of the previously agreed austerity package, all bets are off and
Greece may have to exit the euro.
The election of President Hollande in France will not bring
about drastic change in handling the crisis, rather it will focus
the debate within the euro zone on measures to stimulate growth and
employment. Most leaders are now speaking both of fiscal
consolidation and growth. Especially troubling, however, is the
situation in Spain, a large economy deeply in recession, with youth
unemployment at a staggering 50 percent and some banks in
trouble.
So clearly Europe needs growth and enhanced international trade
is one potential source of such growth. Hence, in the midst of all
this turmoil, the Europeans still place a high priority on
completing the Canada - EU trade negotiations this year. Europe
sees Canada as a stable and prosperous place in which to do
business. The strongest and most competitive European countries
(notably Germany) stand to gain the most from an agreement with
Canada.
For Canada, while a deal with a troubled Europe might seem at
first glance less appealing than it once did, the Harper government
is absolutely determined to conclude an agreement, preferably by
the end of 2012. It sees this deal as an important strategic and
political goal. The provinces are, for the most part, onside and
negotiations are in their final stages.
A key priority for European governments and companies remains
the opening up of government procurement by Canadian provinces,
notably Quebec and Ontario. Significant progress is apparently
being made on this important issue. Intellectual property rights
and the treatment of investment are also key goals for Europe.
Another achievable goal for the EU will be improved access to the
Canadian market for European cheese.
Canada will receive improved access in some important sectors,
for example pork, beef and fish products. One of the biggest
unresolved issues involves "rules of origin". Europe is
insisting that 60 percent of the final value of any Canadian
product being given improved access to the EU be created in Canada.
In a globalized world, products are often of multinational origin
(e.g. autos). Calculating the percentage of Canadian content is not
always straightforward.
The EU does not want the Canada-EU agreement to be a back door
for easier access for American goods to Europe. That said, some in
Europe see the Canada - EU deal as a foot in the door in North
America and a starting point for an eventual EU - NAFTA deal down
the road.
The bottom line is that, despite Europe's continuing
financial crisis and the headline treatment it receives, the EU
commitment to closing a deal with Canada in 2012 remains strong.
Canada is equally committed.
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Carrying on Business in Canada is a general overview of, and introduction to, Canadian legislative and business considerations involving starting and operating a business, and investing in Canada.
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