What Flaherty and Atlantic businesses want from the EU trade deal

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Finance Minister Jim Flaherty says he stays awake at night worrying about Europe.

"The economy is in recession. It doesn't look like it's about to leap out of recession. This is the largest group of consumers in the world – 500 million people, largely middle class – there's a very serious housing bubble in Ireland, Spain and so on," Mr. Flaherty said in Halifax recently.

Europe is on the mind of many Canadians right now as the Harper government tries to conclude a free trade deal with the European Union. As Mr. Flaherty frets, Prime Minister Stephen Harper is across the Atlantic this week pressing for the deal, one that seems tantalizingly close but has so far eluded the Conservative government.

On Thursday, the Prime Minister was talking about the possibilities of free trade with the EU as part of his address to the British Parliament.

"It remains our hope that we will soon achieve a comprehensive economic and trade agreement with the European Union, Canada's second largest trading partner after the U.S.," he said. "For Canada and for Great Britain, as a member of the EU, this will be a historic step, a monumental one, in fact … a commercial agreement of this type would increase two-way trade by 20 per cent."

Liberalized trade, Mr. Harper told his UK audience, is at the "heart" of his government's economic plan. He noted that Canada has concluded nine free-trade agreements and is in talks about potential deals with 50 countries.

Closing the EU deal, however, has proved nearly impossible for the Harper government. There was speculation that the Prime Minister would be able to sign an agreement during this European trip.

But he is not committing to a time frame and neither would his finance minister, when he was asked about it at a recent dinner. Nova Scotia seafood magnate John Risley posed the questions, including one about the status of the trade deal.

Mr. Flaherty wouldn't bite. "You don't have a deal until you have a deal," he said.

Mr. Risley also asked him about supply management as agriculture is one of the trickiest issues in the negotiations – Europe wants more duty-free access for cheese and other dairy products. But the Harper government isn't moving on removing tariffs protecting the dairy industry.

Mr. Flaherty noted that it was agriculture that stymied the so-called "Doha round" – the World Trade Organization's latest round of global trade negotiations. This round started in November 2001 – and so far there has been no agreement.

"Agriculture caused the end of the Doha round," asserted Mr. Flaherty. "That was a great disappointment I think for the world actually that the Doha round of negotiations failed."

He noted that agriculture is "always a big issue."

"It tends to come up in the early and in the middle and at the end of negotiations. It is always there. Most countries … have protectionist agricultural policies."

For Mr. Risley, and other business people in the Atlantic, free trade with Europe is critical – as is the timing of successfully concluding the deal. "While it's got some problems," Mr. Risley said, acknowledging Europe's economic difficulties, "it's a still a huge, huge market and there are many barriers for many Canadians products in that market. There are barriers to seafood products."

Calling the trade agreement a "big deal for us," Mr. Risley said the Harper government needs to get the deal signed before the Americans start negotiating for a deal of their own.

"Because the concern is if we don't get this done and the talks with the United States heat up we are going to be completely forgotten about," he said. "There is a sense of urgency to get this negotiation done."

Jane Taber is The Globe's Atlantic bureau chief.