Canada-EU trade deal's July 1 target threatened by new cheese dispute

Plans to bring most of Canada's new trade deal with the European Union into effect by July 1 may be unravelling due to a new dispute over who gets to import EUcheese.

Under the terms of the Comprehensive Economic and Trade Agreement (CETA), Canada has agreed to allow nearly 18,000 additionaltonnesof European cheese to be importedtariff free.

But CBC News has learned that when Canadian officials briefed their European counterparts on how they would allocate thequota forimportingthis new cheese, not everyone around Europe'scabinet table felt Canada's approach lived up to the spirit of the negotiations.

• European cheese imports serve up tough choice for Champagne
• 'We are ready': Canada-Europe trade deal set to kick in, mostly, by July 1

A European official, speaking on the condition of anonymity because he was not authorized to speak, characterized the state of thingsas a "row."

Canadianshaven't been transparent enough about several aspects of CETA's implementation, the source said, and presented thecheese quota decisionas a non-negotiable fait accompli. It was a final straw for upsetEuropeans who had beenotherwise eager to get on with the deal.

The source said Canada informed the EU that 60 per cent of the new import quota would go to domestic dairy producers and processors. Europeans feartheywon't use it, so fewer new cheeses compete with their domestic products.

If the quota'sunused, or there's any incentive to delay imports, Europe couldbe effectively denied themarket access it fought for yearsto get. CETAprovides a way for complaintslike this to be resolved, but Europeans would prefer not to have to sue Canada after the fact, the source said.

A spokesperson for the EU delegation in Ottawa would not comment on rumours about why the July 1 date hasn't yet been confirmed.

But aCanadian dairy industry source, also not authorized to be named,cited European pushback as thereason CETA's implementationmay be delayed.Domestic sources say their sectorhas not been told how much quota is coming theirway.

Trudeau on new Canada EU cheese dispute

7 years ago

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Trudeau on new Canada EU cheese dispute

"We're always going to make sure that we're protecting Canada's interests in standing up for economic benefits for our citizens and for our small businesses," Prime Minister Justin Trudeau told reporters on his way to the Liberal caucus meeting Wednesday morning.

Quota announcement delayed

Stakeholders have been waiting for monthsfor International Trade MinisterFranois-Philippe Champagne to reveal hownew cheese imports would be managed, and more significantly, who could profit.No explanation hasbeenoffered for what'staking so long.

Consultations wereheld last year.Retailers arguedthey would offer consumers the most choice and the lowest pricing, through their efficient distribution channels.

But producer groups and dairy processors argued that if they were given a stake, they couldbalance outany losses from new competition with potential profits from the imports. The dairy industry would bring in different and unique cheeses, they argued,and benefit from new relationships with European cheesemakers.

The Quebec government weighed in on the side of the industry.

More recently, hints emerged from federal officials that the dairy sector'sarguments may winthe day.

In an interview with a French-language agriculture publication last month, Agriculture Minister LawrenceMacAulay said he believed producers would be happy with Champagne's announcement.

Interprovincial trade dealmatched date

The European Parliament ratifiedCETAin February. Canada's cabinet has also ratified the agreement, and the bill to implement it by changing the necessary federal laws and regulationsreceived royal assent last month.

Both sides agreed to exchange diplomatic notes to signal their readiness for CETA to take hold and set a date.

Canada's provinces and territories needed to signal they're ready to comply as well. The final province to do so, Quebec, voted to approve and implement the trade deal on Wednesday.

• $350Mdairy programs to help dairy farmers, processors compete underCETA

More details on how promised dairy compensation programs will work are expected soon after Champagne's cheese quota announcement.

It'sthe final hurdlebefore most of CETAcantake effect provisionally. For jurisdictional reasons, afew partsof the deal must waituntil individual EU members'legislatures also ratify the deal. So far, only Latvia and Denmark have done so.

Neither Canada nor the EUcarved July 1 in stone. But provinces and territoriesset their newinterprovincialfree trade deal to start on the same date. Some of its measures aredirectly tied to what they agreed to underCETA.

'We're very confident'

Both Canadian and EU sources suggestthings may suddenly be resolvedat the last minute.It's happened before when something has threatened the deal. Diplomatic notes can be drafted on short notice.

The European objections are not believed to be widespread. It's a specific constituency that needspersuading.

The Canadian government is trying to provide assurances that the full quota will be used and Canada is living up to the spirit of the deal.

Champagne last spoke to his EU trade counterpart, CeciliaMalmstrom, last week atOECDmeetings in Paris.

"The final few days before provisional application involve a number of conversations and discussions to make sure that both sides understand the regulations that are being put into place,"Champagne's spokesperson, Joseph Pickerill,told CBC News. "That process is very much underway.

"We are very much in the final stages," he said. "But we're very confident that this deal is going to be brought into effect very soon."

When CETAwas negotiated, the new market access for European cheeses was one of the final, and most contentious, things Canada agreed to in the wide-ranging agreement, which cuts tariffs, harmonizes rules and otherwise liberalizes trade forbillions of dollars worth of goodsand services.

Until this gets sortedout, it appears everything else must, again, wait.

"It always comes back to cheese, doesn't it?" quipped former Conservative cabinet minister Tony Clement on Wednesday. "I think a deal is a deal and let's implement it."