Canadian and European officials traded public barbs yesterday over the inability to finalize the Canada – EU Trade Agreement. EU Trade Commissioner Karel De Gucht said unless Canada makes some additional steps, there will be no deal. Canadian officials responded that Europe has yet to meet Canada’s core concerns.  The comments come after a ministerial meeting this month was unable to yield an agreement. De Gucht and Canadian International Trade Minister Ed Fast met in Brussels in November 2012, but those talks failed to solve the outstanding issues. The two ministers met again in Ottawa two weeks ago with a similar result.

While officials continue to put a brave face on the talks, the latest comments suggest mounting frustration at the unwillingness of either side to cave on key issues in order to strike a deal. The major remaining issues have been the same for months: agriculture, patent protection for pharmaceutical companies, investor access and protection, public procurement, automotive issues, and cultural protections.  Indeed, these issues were identified years ago as the major areas of disagreement (copyright was initially on this list but the defeat of ACTA removed it as an issue). 

Canadian officials likely view the deal as a good one for Europe and can’t understand why it won’t compromise on the remaining issues since even European officials acknowledge that Canada has given far more than it has received. European officials, meanwhile, presumably want to leverage their stronger position – Canada needs a deal more than Europe right now – to wait out the Canadians and win on all their issues. But were Canada to cave on everything it would leave an agreement with serious costs and questionable benefits. For example, giving in on pharmaceutical patent demands is a clear political loser – the changes would cost billions in additional health care costs just as Eli Lilly is suing the Canadian government (using NAFTA provisions) to demand that Canadian taxpayers pay the company $100 million in compensation for the loss of a patent case in court. Not an easy sale for the Canadian government (bad policy rarely is), even with better access for Canadian beef. As a result, CETA remains in limbo with the prospect that both Canada and the EU may soon find other trade negotiations more attractive.