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Canadian Prime Minister Stephen Harper and President of the European Commission Jose Manuel Barroso leave a joint media availability at the European Union in Brussels, Belgium, Wednesday May 5, 2010.

ADRIAN WYLD

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With Prime Minister Stephen Harper and European Commission President Jose Manuel Barroso now handling negotiations directly, there is increasing confidence within the the Conservative government that a trade agreement between Canada and the European Union will be in place before the end of the year.

The Comprehensive Economic and Trade Agreement, if ratified, would be the most important advance in Canadian trade in a generation. It could also help revive the fortunes of a government that has seen little in the way of good news for many months.

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When Mr. Harper and Mr. Barroso met earlier this month on the sidelines of the G20 in St. Petersburg, they resolved to negotiate "at the highest level," according to a senior government official speaking on background. Their respective staffs are now at work attempting to bridge the remaining gaps impeding an agreement.

Such leader-to-leader talks are the best, and perhaps only, hope for nailing down an accord that was supposed to have been concluded by the end of last year.

Disagreements over meat and dairy exports, government procurement contracts, financial services and patent protection on pharmaceuticals have stymied the deal.

With the Europeans launching free-trade talks with the United States, there was growing fear that the Conservative government had let the opportunity of a Canada-EU accord slip away.

Coupled with setbacks to the proposed Keystone XL and Northern Gateway oil pipelines, it seemed every major economic initiative of the Conservative government was dead in the water.

But the Canada-EU talks were not at a complete impasse. European leaders were presented with a set of proposals in July that negotiators from both sides had worked on and that were meant to bridge the remaining differences.

Politicians in Europe take August off. They returned with their responses to the proposals in September. At the G20, Mr. Harper and Mr. Barroso agreed to intervene personally to settle any remaining areas of disagreement. Advisers to the Prime Minister and the EC President are now speaking with each other directly, in preparation for a final accord.

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There is some talk in Ottawa that a framework agreement could be the centrepiece of the Throne Speech that will launch a new session of Parliament on Oct. 16. But since any proposed framework agreement would still have to be sent to the provinces for signoff, a more realistic time frame is late October or November.

And it is still not certain that there will be a deal. The Conservatives played down a press report that the key stumbling block of setting a quota for Canadian beef exports has been overcome. A final deal on agriculture, the government official cautioned, is still not in place.

But the two sides are close enough that all remaining obstacles appear surmountable. If so, it will be the second major piece of good news for the government since the summer.

Jim Flaherty unveiled the framework for a new national securities regulator, last week, a dream of the Finance Minister that appeared to have been scuttled by opposition from some provinces and a ruling from the Supreme Court that such a regulator would intrude on provincial jurisdiction.

The new proposal, which Ontario and British Columbia have signed on to, would be jointly managed with the provinces. If it survives any legal challenges, then the new regulator would cut through at least some of the skein of securities regulations across Canada.

A Throne Speech that trumpeted the securities regulator and, at the least, offered highly optimistic language on a free-trade agreement with Europe could help reset a Conservative agenda beset by failures and frustration and distracted by the Senate scandal.

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But first, Mr. Harper, Mr. Barroso and their aides need to bring the talks home. After more than four years of those talks, there can't really be much more left to say.

John Ibbitson is the chief political writer in the Ottawa bureau.

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