Canada-EU trade talks likely to spill into 2013 as key issues remain: officials

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OTTAWA - The Canada-Europe free trade talks are likely to spill into next year after a day-long meeting with the key principals failed to bridge the contentious issues still separating the parties, officials say.

While there is no official deadline for the talks, both sides had signalled their hope that a deal could be signed by the end of the year.

But officials said Friday there were still several contentious issues to be resolved following meetings and dinner between Canadian Trade Minister Ed Fast and his European Union counterpart, Karel De Gucht, in Brussels on Thursday.

The EU is seeking Canadian concessions to extend the patent on pharmaceuticals, the right to bid on provincial and municipal government contracts and relaxation of supply management rules on milk, poultry and egg products.

In a release, both Fast and De Gucht "recognized" there had been "further progress made in negotiations over the past few weeks," but that "some important work remains to be done."

A Canadian official close to the talks suggested there is some frustration among Canadian negotiators about the extent of flexibility being shown by the EU. Europe is not going far enough to bring down barriers against Canadian exports of beef, pork and automobiles, the official said in an interview.

"In our view there's still work to do," said the official, who asked not to be named. "The EU needs to get ambitious on those key issues."

John Clancy, a spokesman for the EU trade commission, would not be specific but agreed that the so-called "endgame issues" had yet to be resolved.

He said the two ministers had given marching orders to officials to re-focus on narrowing the differences, adding that if the talks are not concluded by the end of 2012, "it isn't a negative, it's a reality."

Still, Clancy said both Fast and De Gucht have set their sights on another meeting before Christmas, which could prove pivotal.

"Always it depends on the progress made at the technical level. They want to meet at the optimal moment," he said.

The deal, known as the Comprehensive Economic and Trade Agreement, is being described as a model free trade pact for the 21st century, encompassing goods, services and investment.

Both Canada and the EU, which has been weakened by four years of stagnation and recession, have made CETA their priority trade agenda. For Canada, it would be the first major agreement since NAFTA in the early 1990s.

A 2009 joint study estimated the benefits to Canada's economy at $12 billion annually, while the payoff for the 27-nation EU is expected to be a few billion dollars more.

But CETA also ventures into politically and economically hallowed ground on both sides, including the long-sheltered agricultural sectors.

For Canada, the most contention issue is European demands that patents on prescription drugs be extended nearer to EU standards, which by one calculation could boost drug costs for provincial health plans, employers and consumers from $367 to $903 million a year.