Matthias Brinkmann, head of the European Union Delegation to Canada, said the most contentious issues on the table have yet to be resolved, but he's confident a deal can be reached.
"The most difficult issues, we always keep them until the end," he said.
The diplomat said the talks could drag into next year, blowing a year-end deadline that Ottawa had planned for.
The proposed Comprehensive Economic and Trade Agreement would establish the most wide-ranging trade deal Canada has ever entered. It would encompass not only goods, but investment and services, intellectual property rights and provincial and municipal government procurement.
Brinkmann, in Halifax to meet with Premier Darrell Dexter and other officials, said talks in Brussels have yet to tackle several thorny issues, including patent protection for pharmaceuticals.
"Canada is lagging behind international standards," he said.
Europe wants brand-name drugs to be protected by patents from the moment a company files an application with Canadian regulators.
However, government research results obtained by The Canadian Press show the European demand for extended patent protection would cost Canadians up to $2 billion a year.
The proposal has faced strong opposition from many provinces, the generic drug industry and some health-care advocates.
Brinkmann dismissed those concerns.
"You read a lot of things in the media," he said, adding that generic drugs in Canada already cost more than in Europe.
"If you want new products, you must give the companies the possibility to make profits so they can do their research. ... It's in the interest of Canadian consumers to get the newest products on the market that make treatments more effective."
He said trade negotiators are also grappling with procurement rules for public projects, rules of origin and investment protection.
But it's clear that the other main sticking point is market access for agricultural products.
Brinkmann said beef and poultry producers in Western Canada are pushing Europe to let more Canadian products in, but the EU is also pressing Canada to allow for the sale of more European dairy products, particularly cheese.
He said the EU is not interested in dismantling Canada's complex supply management system.
"Supply management is a Canadian thing. It's not an issue for us," he said. "What we need is market access."
The protectionist system governing Canada's poultry, dairy and egg producers drives up prices for Canadian consumers, critics say, but proponents say it protects domestic farmers.
The Conservative government has indicated it wants to close a Canada-European Union free-trade pact by year's end, saying it could boost the economy by $12 billion annually.
The government estimates the deal would give Canada improved access to a market of 300 million mostly affluent consumers, creating 80,000 jobs across Canada.
But critics say the talks could lead to higher drug costs, increased privatization of public services and place too many limits on the ability of governments to control large corporations.
"It's not really about tariffs and borders, it's about adding to the list of things that governments can't do if they interfere at all with the corporate sector's unfettered right to make a profit," the Canadian Centre for Policy Alternatives said in a paper released in June.
As for public procurement, Brinkmann said the EU wants all levels of Canadian government to stop favouring local companies when tendering contracts, a practice European countries gave up 50 years ago.
He challenged opponents who have suggested such a move would lead to increased privatization of government services, including municipal drinking water systems.
"Nothing in the agreement will oblige Canadian municipalities or provinces to privatize any of their public services. It's up to them."
But critics say it's not that simple.
"The biggest private water companies in the world are in the EU," says the Centre of Policy Alternatives. "(The trade deal) would give those companies a huge club to use against cities to make them open up their water systems to privatization."
If a deal is struck, it would likely have to be ratified by the European Parliament as well as the individual legislatures of the EU's 27 member countries.
That in itself may be tough to achieve.
In April, Brinkmann warned the trade deal could be blocked because of anger in the Czech Republic, Hungary and Bulgaria over travel visas imposed on their citizens by Ottawa.
On Monday, Brinkmann said that dispute was also unresolved.
"That's a sting for them," he said.Suggest a correction