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Canada can sell more cars, engineering services, beef and pork to Europe as a result of a tentative European free-trade deal.

Todd Korol/REUTERS

Canada can sell more cars, engineering services, beef and pork to Europe as a result of a tentative European free-trade deal, gains which come partly at the expense of the Canadian dairy industry.

As part of an expected agreement with the 28-member European Union, Canada will see Europe more than double its duty-free access to the domestic cheese market.

Prime Minister Stephen Harper said Wednesday via Twitter that Canada and the Europe Union would conclude negotiations "soon." The long delayed deal must still be approved by the provinces, which have been closely involved in what has been more than four years of negotiations.

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With the talks now winding down, Ottawa is expected to turn its attention to several other proposed deals, including the 12-country Trans Pacific Partnership talks plus bilateral agreements with Japan and South Korea.

Major business groups applauded the European deal, which Ottawa says will create 80,000 jobs and add $12-billion a year to the economy.

"That's underestimated," said Jayson Myers, president and chief executive of the Canadian Manufacturers and Exporters. "We see a lot more business between Canada and the European Union than what has been predicted."

Just as importantly, the agreement will become a model for future free-trade deals, including the Trans Pacific Partnership and U.S. Europe free-trade agreement, he said.

The Dairy Farmers of Canada, which speaks for the country's 12,500 milk farms, warned that the deal "gives away" the country's cheese market and will spell the demise of countless specialty cheese makers.

"We are shocked and dismayed," said Wally Smith, the group's president, who owns a small Vancouver Island dairy farm.

The deal goes beyond tariff reductions to cover a vast array of services, intellectual property, product standards and certification as well as local government purchasing markets.

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"This agreement really sets the standard for our trade agreements in the future," Mr. Myers added. "It's a major opportunity and we can't afford to miss it."

Whatever Canada loses in the home market, businesses will more than make up for by exporting more to Europe, including Canadian cheese, Mr. Myers predicted.

"As with every bilateral deal, neither side will get everything it wants," John Manley, president and chief executive of the Canadian Council of Chief Executives, said in a statement.

Many Canadians may be taken aback by the sheer scope of the agreement, which will make the North American free trade agreement look "modest" by comparison, according trade lawyer Lawrence Herman of Cassels Brock. "The government hasn't prepared Canadians well enough," he said.

Pork and beef producers expect the deal will add as much as $1-billion in exports.

The pork industry, which now exports virtually nothing to Europe, said it expects to gain "tens of thousands" of metric tonnes of additional access, worth roughly $400-million, according to Martin Rice, executive director of the Canadian Pork Council. That access will allow the industry, battered by a drop in U.S. sales, to invest in new plant capacity, he said.

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The Detroit Three automakers could also emerge as winners in the deal. Canada exported a mere 13,000 vehicles last year to Europe, versus 114,000 imported from Europe.

Europe has apparently made significant concessions on the minimum Canadian content in vehicles that would allow car makers to export as many 100,000 vehicles duty free.

That has caused some consternation among the Japanese automakers, who worry that the Canadian units of the Detroit Three – General Motors, Ford and Chrysler – will now have unfair access in the European market for cars made in Canada.

Officials of Canada's Research-Based Pharmaceutical Companies, which are expected to secure greater patent protection, declined to comment, saying they had not yet seen the deal.

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More


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