During a question and answer session following a dinner hosted by the Atlantic Institute for Market Studies (AIMS), Jim Flaherty was asked by an audience member what it was that "kept him up at night."
"Europe", Flaherty replied. He added the European economy is still in recession and doesn't look like it's about to "leap out."
"This is the largest group of consumers in the world, 500 million people," said Flaherty. "Some very serious housing bubbles in Ireland and Spain and so on."
As for whether a trade deal is close, Flaherty wouldn't comment.
But he cautioned the agricultural sector is always a big issue in trade talks. He said it was the main reason the World Trade Organization's Doha Round aimed at lowering global trade barriers had ground to a halt.
"It tends to come up early and in the middle and at the end of negotiations — it's always there," Flaherty said.
He said most countries, including Canada, have protectionist measures in place and would have to deal with them over time if global free trade was going to be accomplished.
Key trouble spots in the negotiations to date are said to be better access for Canadian beef and Quebec's insistence that it should be able to favour local transportation and manufacturing.
Friction also arose with Newfoundland and Labrador with Premier Kathy Dunderdale saying her province was being pressured by federal officials to forfeit minimum seafood processing requirements that protect local fishery jobs in order to ease the trade talks.
However, on Tuesday Dunderdale said there was now "alignment'' with Ottawa after the province developed a position on the seafood processing issue that federal negotiators will take to Brussels.
AIMS chairman and businessman John Risley said a free trade agreement with Europe would be a big deal because there are currently many barriers to Canadian products in that market, including to seafood.
Risley said it was also important to beat the United States to the punch.
"If we don't get this done and the talks with the United States heat up we are going to be completely forgotten about," he said.
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