CAP reform key to EU-Canada accord

Date: 14/06/01

By David Cronin

OTTAWA will use next week's

EU-Canada summit in Stockholm to urge a new transatlantic free trade accord but concedes this goal will remain elusive so long as the Union's farm support regime goes unreformed.

Jean Chretien's government will largely base its argument on a recent report by its foreign affairs committee, which argues that such an agreement could be the "magic bullet to alter the current transatlantic psychology".

But the unanimously-adopted paper adds that the principal obstacle towards reaching this goal is the lack of political will to restructure the EU's Common Agricultural Policy (CAP). The Canadians are also alarmed at the EU ban on foodstuffs such as hormone-treated beef.

Branding the CAP a "costly deterrent to trade", the paper states that: "The average agricultural tariff of the EU is four times as high as that of Canada, and its high support prices and network of subsidies make EU farmers the most heavily subsidised in the world."

At the same time, it predicts that enlargement into central and Eastern Europe will put the Union under intense pressure to reform the CAP, as its budget would be unable to meet demands of some applicant states that subsidies currently awarded to the EU agricultural sector be extended to their farmers.

Although the EU is the destination for only 5% of Canada's exports, the Union is its biggest trading partner outside the US. Trade between the two areas is rising, with the EU accounting for 47% of Canada's export growth in the 1990-98 period.

The two-way trade in both goods and services amounted to €57 billion last year.

Pulp and paper have the highest volume of trade, but there has been a sharp increase in the volume of high-tech equipment, particularly aircraft, their components, computer and tele-communications machinery shipped to Europe from Canada. Concerns over the downturn in the US economy have given Ottawa officials a greater impetus for boosting their European links.

Next week's meeting will also discuss if preparations for November's World Trade Organisation (WTO) conference in Qatar can provide the launching pad for a new round of global talks on liberalising global trade.

Officials on both sides concur that every effort should be made to avoid the pitfalls which led to the collapse of WTO's 1999 talks in Seattle. "Everyone has got a lot wiser since Seattle," said a Brussels-based Canadian business lobbyist. "There is now a general consensus that consultations are necessary with labour and environmental groups, so the prospects for a new round would seem to be good." The EU-Canada summit takes place on Thursday, 21 June.

Preview of the EU-Canada summit in Stockholm, 21 June 2001.