Thursday, June 7, 2007

First free-trade deal in 6 years expected

Federal Trade Minister David Emerson is expected to announce Thursday that Ottawa is wrapping up free-trade talks with four European countries: Norway, Switzerland, Iceland and Liechtenstein, sources say.

He is also expected to announce that Canada is commencing similar negotiations with Peru and Colombia.

A successful conclusion of talks with Norway and its other three partners in the European Free Trade Association would mark the first free-trade accord that Canada has signed in six years.

It would also be a sign, however small, that Ottawa is serious about gaining ground in the global race to sew up preferential commercial partners.

Such an agreement would build on $11-billion of existing annual commerce with the four members of the European Free Trade Association (EFTA), all countries that have so far avoided joining the European Union.

Mr. Emerson is expected announce the conclusion of talks with EFTA at what the Harper government is calling “Trade Day” on Thursday.

The European Free Trade Association deal would be a boon for the Harper government, which will sell it as more proof — in addition to the Canada-U.S. softwood dispute truce — that it has succeeded where its Liberal predecessors have failed.

One obstacle the Conservatives must overcome is fear about the impact of an agreement on Canada's shipbuilding industry: the very hurdle that stalled late-stage EFTA deal talks in 2000 under then-prime minister Jean Chr├ętien's watch.

Under the Liberals, Ottawa was reluctant to scrap its 25-per-cent duty on foreign-made ships and wanted to retain the right to subsidize its domestic shipbuilding industry — a sticking point for Norway, an exporter of marine vessels.

To that end, the Conservatives have also scheduled a shipbuilding announcement for Thursday in Halifax, an event they are expected to use to help placate the marine construction industry.

Critics believe the Tories will have to steer work to domestic shipyards to placate anger should they lower or scrap the tariff on foreign ships.

Mr. Emerson's office refused to say whether they are announcing the EFTA deal Thursday.

The Conservatives quietly resumed negotiations with the EFTA countries last fall amid speculation that they were preparing to scrap the tariff on foreign-built ships, perhaps phasing it out over a period of years.

Mr. Emerson hinted earlier this week that Ottawa was close to clinching the EFTA deal.

“We are cleaning up a few fine points there, but I am feeling cautiously optimistic,” Mr. Emerson told reporters on Monday.

Nations are scrambling to sign up free-trade partners as multi-country talks to liberalize international commerce flounder, from the World Trade Organization's Doha round to the stalled Free-Trade Area of the Americas project.

Canada has signed only one free-trade agreement in the last six years, with Costa Rica in 2001. By comparison, the U.S. Congress has approved seven deals with 12 countries over roughly the same period.

Canada's shipbuilding industry has been in decline for years and operates at only about one-third of its capacity today.

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