Canada, EU inch closer to free trade deal

The Harper government has agreed to smooth the way for more takeovers of Canadian companies by European firms in one of several concessions during free-trade talks, sources tell The Canadian Press.

Canada has also agreed to open up parts of its hydro-electric sector to a limited amount of foreign investment, say sources in Canada with intimate knowledge of the talks.

Other sources close to the talks say issues on wine and spirits have been settled, with Canada agreeing to make a technical change on how duties are applied on imports.

The change is designed to be revenue neutral, but it may have the effect of lowering prices on premium wines and spirits.

As well, Ontario and British Columbia have agreed to freeze the number of independent stores that exclusively sell domestic wines, although there was already a moratorium on new licences.

Overall, the two sides say they will completely eliminate all industrial tariffs within seven years, a measure that will save Canadian exporters $213 million annually – and European exporters $635 million – at current exchange rates.

Canada has also significantly moved to appease European demands for opening up provincial energy utilities, again affecting mostly those in Ontario and Quebec, in procurement of goods and services. Documents obtained by a Quebec civil society network, the Reseau quebecois sur l'integration continentale, suggest that 35 per cent of Hydro Quebec's annual procurement – currently about $1.1 billion – will be up for grabs to European suppliers.

With Prime Minister Stephen Harper in Europe over the next week hoping to hammer out the remaining barriers to the ambitious deal, sources say Canadian negotiators have agreed to a provision to raise the threshold for reviewing foreign acquisitions from Europe to $1.5 billion.

All acquisitions under that value would not be subject to a government assessment about whether they create a net benefit for Canada. Just this Monday, the House of Commons passed the budget implementation bill raising the threshold from the current $334 million to $1 billion over the next four years. The new threshold would only apply to private, not state owned firms.

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