Canada-FTA with European Union.

CANADA-EUROPEAN UNION-FREE TRADE AGREEMENT.

Canada and the European Union have agreed to begin free-trade negotiations that, if successful, could boost Canada’s economy by about $12-billion, the federal government said yesterday.

After months of "scoping exercises," the two parties have come to an agreement on the areas they would like to negotiate, including trade in goods, services and investment, and have now adjourned to prepare their proposals to take to the negotiating table.

But the road to free trade with Canada’s second-biggest export market after the United States promises to be bumpy.

As the EU moved closer on Monday to a ban on seal products that could be adopted as early as this spring, Newfoundland and Labrador refused to support the negotiations amid fears an agreement would be detrimental to its seafood and fur industry..

The EU has signalled it would need the full support of the provinces for a deal to move forward. Stockwell Day, Canada’s federal Trade Minister, said yesterday he expected negotiations to move ahead and that the province’s concerns had been conveyed to the EU.

The EU committee on internal market and consumer affairs approved a proposal on Monday that would prevent its 27 member countries from importing seal products, including pelts, oil and meat. The ban would exclude products from traditional Inuit seal hunts in Canada and Greenland.

A start date for the formal trade negotiations is yet to be announced, but Mr. Day said he hoped talks on the "comprehensive economic agreement" would begin in a few months.

He said the negotiations were a "priority" for the government and that Canada was "in a position to launch comprehensive negotiations as early as possible."

"As our second-largest trading partner, the Canada-EU relationship holds great potential," Mr. Day said.

"During times of economic uncertainty, it is even more important for Canadians to seek out new trade and investment opportunities abroad," he said.

A previously released Canada-EU joint economic study estimated that an economic agreement with the EU could boost bilateral trade by more than 20%.

The Minister’s office said Canadian merchandise exports to the EU rose by 3.5% in 2008 to $36.1-billion, while two-way merchandise trade jumped 7% from the previous year to $90.1-billion.

Canada’s top exports to the EU include precious metals and stones, machinery and mineral fuels and oils, while the EU is one of Canada’s most important sources of new technologies.

The two parties outlined 14 areas to be placed on the negotiating table, some of which include trade in goods and services, investment, trade facilitation, customs regulation, technical barriers to trade, competition policy and sustainable development.

The trade announcement was welcomed by Canada’s business leaders.

"At long last, Canada is poised to realize the immense potential of a closer transatlantic relationship," said Thomas d’Aquino, president of the Canadian Council of Chief Executives. "We strongly encourage Canadian and European officials to seek negotiating mandates and to launch the talks as soon as possible."

Canada and the European Union began scoping exercises to determine what areas should be negotiated on Oct. 17, 2008.

The study found there was potential for improvement in areas such as labour mobility, including temporary entry for business people, environment, regulatory cooperation and science and technology.