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Say cheese: EU strikes trade deal with Canada, looks to U.S.

European Commission President Jose Manuel Barroso poses with Canadian Prime Minister Stephen Harper (L) ahead of a meeting at the EU Commiss
European Commission President Jose Manuel Barroso poses with Canadian Prime Minister Stephen Harper (L) ahead of a meeting at the EU Commiss

By Robin Emmott and Philip Blenkinsop

BRUSSELS/LUXEMBOURG (Reuters) - The European Union and Canada agreed a multi-billion-dollar trade pact that will integrate two of the world's largest economies and paves the way for Europe to clinch an even bigger deal with the United States.

Talks were launched in May 2009 but stalled for months over quotas for Canadian beef and EU cheese. Canadian Prime Minister Stephen Harper and European Commission President Jose Manuel Barroso met in Brussels on Friday to resolve outstanding issues.

In a cheeky touch, chefs served Italian gorgonzola and Greek feta cheese at a four-course lunch laid on for the two leaders to celebrate the EU's first trade deal with a member of the Group of Eight biggest world economies.

"This agreement is a landmark achievement for the transatlantic market," Barroso told a news conference, flanked by Harper. "With political will and a good dose of hard work, there is a way to reach a result that benefits people on both sides of the Atlantic," he said.

EU trade chief Karel De Gucht called the Canada accord a "template" for Europe's negotiations with the United States.

The deal marks a breakthrough for Brussels' free-trade agenda, which had previously achieved smaller agreements with South Korea and Singapore. It is expected to increase bilateral trade in goods and services by a fifth to 25.7 billion euros ($35 billion) a year, according to the latest EU estimates.

Barroso said he hoped the agreement could come into effect from 2015, after EU governments, the European Parliament and the Canadian provinces give their blessing.

However, France signaled some reservations about an influx of Canadian beef under the deal, even if its Munster and Camembert cheese will now fill shelves in Canada's supermarkets.

"I am waiting for confirmation from the Commission that this accord, particularly in agriculture, does not a set a precedent for talks with the United States," said French Trade Minister Nicole Bricq at a meeting with De Gucht and her peers in Luxembourg.

For Canada, the deal will make it the only G8 country - and one of the only developed nations anywhere - to have preferential access to the world's two largest markets, the EU and the United States, home to a total of 800 million people.

"This is the biggest deal our country has ever made," Harper said, adding that it outstripped the North American Free Trade Agreement between Canada, the United States and Mexico.

'OUTRAGEOUS' BEEF DEAL

The Commission is negotiating trade pacts with more than 80 countries on behalf of the bloc's 28 members, following the collapse of the marathon Doha round of global trade talks. The delays that dogged the Canada agreement showed how difficult such deals can be.

European efforts to sign a free trade accord with the United States faced a setback this month when a second round of negotiations was cancelled because of the U.S. government shutdown.

Despite plans to do a deal by the end of next year, the talks have also been overshadowed by reports the United States bugged EU offices under surveillance programs made public by fugitive former intelligence contractor Edward Snowden.

Still, the Canada agreement should provide a boost for EU-U.S. negotiations. Both deals seek to go far beyond tariff cuts and to reduce transatlantic barriers to business. There are also similar sticking points, such as agriculture.

"It's a good signal. I'm a transatlanticist," German Economy Minister Philipp Roesler told Reuters in Luxembourg.

"It's a great basis for all other negotiations, such as the TTIP talks with the United States," he said, referring to the proposed deal by its formal name, the Transatlantic Trade and Investment Partnership.

The EU-Canada pact would eliminate tariffs on almost all goods and services, set larger quotas for EU dairy exports and make it easier for EU carmakers to export vehicles to Canada.

For the first time, provincial governments in Canada will commit to opening their lucrative procurement markets to allow European companies to compete for contracts alongside locals.

The EU will eliminate duties on a range of Canadian agricultural products, from wheat to maple syrup. Canada will be able to export 80,000 tons of pork and 50,000 tons of beef free of duties to the European Union.

But French beef farmers said they were "outraged". "Worst of all, the (European) Commission is blindly preparing for a deal with the United States that will hasten the bankruptcy of farms and jobs in the sector," France's beef farm federation FNB said.

(The story has been filed again to correct to North American Free Trade Agreement in paragraph 11.)

(Additional reporting by Luke Baker in Brussels and Ingrid Melander in Paris; editing by Tom Pfeiffer)

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