Canada faces new trade tests from Italy as feds battle challenges on many fronts

OTTAWA — Add Italy to the growing list of Canada’s trade headaches.

Italy’s agriculture minister said his country’s new government won’t ratify the Canada-European Union free trade accord, media reports said Thursday. Gian Marco Centinaio, whose government is led by a populist coalition, also insisted he’s heard doubts about the 28-country deal from many of his European colleagues.

The development adds to Canada’s collection of trade challenges, which already include deep uncertainty surrounding the future of the North American Free Trade Agreement, hefty steel and aluminium tariffs imposed recently by the United States and the threat of more to come on automobiles.

Foreign Affairs Minister Chrystia Freeland, in Washington on Thursday to try to jump start stalled NAFTA negotiations, told reporters she believes Italy will eventually sign on to the Comprehensive Economic Trade Agreement, or CETA.

Freeland noted that Austria was initially reluctant to ratify CETA, but eventually came around.

“I’m confident we will have full ratification at the end,” said Freeland, who added she had a “good” conversation about CETA with Italian Prime Minister Giuseppe Conte during last weekend’s G7 summit in Quebec.

Ninety-eight per cent of CETA came into effect last September on a provisional basis. The deal was settled in 2016 after years of talks, but all E.U. nations must now vote on it independently.

NAFTA, however, was the main topic of discussion for Freeland on Thursday during an hour-long meeting with U.S. trade czar Robert Lighthizer.

Canada, Mexico and the U.S. will continue negotiating NAFTA through the summer, although specific dates haven’t been set, she said.

“We’re going to make a real push over the summer,” said Freeland, who called the meeting “constructive.”

“I think all three countries are clear that meaningful progress has been made to date and we need to keep working hard to get to a deal.”

Several Canadian cabinet ministers have been reaching out to their American counterparts this week in an effort to advance NAFTA talks and to persuade the Trump administration to back down from his steel and aluminum tariffs.

Lighthizer and Freeland also discussed the tariffs, which have been at the centre of an increasingly ugly dispute between the U.S. and many of its closest allies, including Canada.

Prime Minister Justin Trudeau has called the tariffs “insulting” because they are based on the premise Canada poses a national security risk to the U.S. and has announced dollar-for-dollar retaliatory duties on a wide range of American imports. Trudeau’s push back earned him an unprecedented personal attack from Trump and his emissaries after the G7 summit.

The E.U. and other countries have also threatened retaliatory tariffs against the U.S. The Canadian countermeasures are to go into effect July 1.

During her meeting with Lighthizer, Freeland said she underlined Canada’s concerns over what she calls the “illegal” national-security consideration.

“I was very clear about that. I’m confident that Ambassador Lighthizer heard and understood that,” she said.

“The Canadian strategy on the tariffs was, and will continue to be, that we will not escalate and we also will not back down.”

Brian Kingston of the Business Council of Canada was encouraged to hear the NAFTA talks could continue this summer. He said staying at the table could lead to progress on smaller issues while the process navigates the upcoming Mexican presidential election and the U.S. congressional midterms, which are both expected to slow things down.

“You can kind of clear out that undergrowth, take brackets off texts and get to a point where we’ve just got those big issues and we can make a deal,” said Kingston, the council’s vice-president of international and fiscal policy.

On CETA, Kingston said the comments from Italy were “concerning.” But he noted its provisional implementation means the commercial benefits are already being realized and that there’s no set timeline for E.U. states to ratify.

Without ratification, however, the agreement’s investment provisions and its investor court system won’t come into force, he said.

“Obviously, for certainty reasons, people prefer this to be done relatively quickly,” said Kingston, whose group represents many of Canada’s largest corporations.

“Companies always benefit from having investment certainty when they’re entering into a market. So, having those investment provisions would be absolutely beneficial.”

International Trade Minister Francois-Philippe Champagne visited Italy a few days ago to sell the merits of CETA to the new Italian government, which took power on June 1.

On Thursday, Champagne said 12 countries have already ratified the deal and he argued Italy’s exports to Canada are up eight per cent since the provisional agreement came into effect. He called it a “gold standard” deal because it offers protections for the environment and labour rights.

Champagne also introduced legislation Thursday in Parliament in support of the controversial 11-nation, Pacific Rim trade pact, which is known as the Comprehensive and Progressive Trans-Pacific Partnership.

Ottawa attracted criticism for the move as groups, including the United Steelworkers and Council of Canadians, warned the CPTPP is a business-friendly deal that will give multinationals the power to sue governments in Canada.

“The Liberal government is set to fast-track Canada’s inclusion in the TPP, while most Canadians know little about the impact of this secretly negotiated trade agreement,” United Steelworkers national director Ken Neumann said in a statement.

“It will worsen inequality, further erode Canada’s manufacturing and industrial base. It will eliminate more middle-class jobs, increase drug prices and drive down wages, working conditions and environmental standards.”

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