US embassy cable - 03OTTAWA327

UNCLAS SECTION 01 OF 02 OTTAWA 000327 
 
SIPDIS 
 
GENEVA FOR USTR 
 
STATE FOR EB/TPP/BTA, EUR/ERA AND WHA/CAN 
 
DEPT PASS USTR FOR NOVELLI, MELLE AND BOMER-LAURITSEN 
 
USDOC FOR 4320/MAC/WH/ON/OIA/BENDER 
 
USDOC PASS ITC - JENNINGS 
 
Treasury for OASIA/IMI - Mathieu 
 
E.O. 12958: N/A 
TAGS: ETRD, CA, WTRO 
SUBJECT: EU-CANADA TRADE AND INVESTMENT "ENHANCEMENT" 
 
REF:  BRUSSELS 00165 
 
1. (U) THIS MESSAGE IS SENSITIVE, BUT UNCLASSIFIED.  PLEASE 
TREAT ACCORDINGLY. 
 
2. (U) Reftel reported Brussels perspectives on plans for an 
EU-Canada "Trade and Investment Enhancement Agreement," 
which were announced at the December 19 2002 EU-Canada 
Summit in Ottawa.  Embassy Ottawa ECON staff visited 
counterparts at the Delegation of the European Commission in 
Ottawa on January 28 to obtain their views of this 
announcement. 
 
3. (SBU) EC Delegation staff confirmed reftel's perception 
that the EU is not enthusiastic about this initiative, and 
they were forthcoming in explaining their position.  They 
emphasized that their top concern is to avoid diverting 
resources from the Doha round of multilateral trade 
negotiations.  Another important concern is not to send any 
signal to WTO members which might be misunderstood as 
implying that the EU lacks confidence that the Doha Round 
will reach a successful conclusion and deliver desired 
results, particularly on market access. 
 
4. (SBU) Following is a summary of key points made by 
Delegation staff: 
 
-- (SBU) GOC representatives have been very persistent in 
pushing for a Canada-EU free trade agreement.  This 
continues a lengthy GOC history of (sporadic and 
unsuccessful) efforts to diversify Canada's economic 
relations away from the United States (which now receives 
over 85 percent of Canada's merchandise exports). 
 
-- (SBU) Over the past year, GOC demands for an FTA with the 
EU gained urgency, presumably due to outgoing Prime Minister 
Jean Chretien's well-known desire to leave a policy 
"legacy." 
 
-- (SBU) The European Commission did not see an 
economic/commercial case for a full-fledged FTA, and did not 
want to risk detracting from multilateral negotiations.  GOC 
trade policy experts (including International Trade Minister 
Pierre Pettigrew) sympathized with this position, but other 
factions in the GOC pushed very hard for FTA negotiations. 
 
-- (SBU) There was some difference of opinion regarding the 
value of a FTA among EU member states, and especially among 
a few resident missions who have been lobbied by the GOC. 
The EU Trade Policy Body, however, remained unified in their 
position against a FTA. 
 
-- (SBU) If immediate FTA negotiations were not attainable, 
the GOC wanted an announcement prior to Chretien's 
retirement that Canada and the EU would negotiate an FTA 
following the conclusion of the Doha Round.  The EU also 
said no to this option, not only on the grounds cited above, 
but also because it was considered a mistake to "stockpile" 
trade policy commitments for the post-Doha era. 
 
-- (SBU) On the eve of the December 19 bilateral summit, 
Minister Pettigrew and EU Trade Commissioner Pascal Lamy 
(who the EC delegation describe as having a superb 
relationship) struck a compromise:  negotiations will begin 
as soon as possible (probably in 2004), but will not aim for 
an FTA - rather, for a "Trade and Investment Enhancement 
Agreement." 
 
-- (SBU) The FTA-TIEA distinction is meaningful, indicating 
that TIEA negotiations will not/not address "core trade 
issues" on the table in Geneva - specifically, it will not 
address market access for either agricultural or non- 
agricultural goods.  Areas which a TIEA could address 
include trade and environment issues, government procurement 
(in which the EU seeks better access to Canadian markets at 
all levels), and regulatory cooperation.  There are likely 
to be parallels with recent EU-US liberalization efforts. 
 
-- (SBU) The GOC has already conducted a tariff study and a 
telephone business survey; the EU has done a more extensive 
business survey. 
 
-- (SBU) The likely timeline is for the trade ministers to 
present leaders with an "architecture" for the TIEA at the 
December 2003 summit, with leaders then mandating 
negotiations to begin in 2004. 
 
CELLUCCI