EU strikes trade deal with Canada, looks to pact with U.S.


BRUSSELS, Oct 18 (Reuters) - The European Union and Canadaagreed a multi-billion-dollar trade pact on Friday that willintegrate two of the world's largest economies and paves the wayfor Europe to do an even bigger deal with the United States.

Canadian Prime Minister Stephen Harper and EuropeanCommission President Jose Manuel Barroso resolved remainingissues in Brussels, wrapping up talks launched in May 2009 butstalled for months over quotas for Canadian beef and EU cheese.

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

The deal, the European Union's first with a member of the G8club of the world's biggest economies, marks a breakthrough forBrussels' free-trade agenda that so far has only achievedsmaller deals with South Korea and Singapore.

The accord is expected to increase bilateral trade in goodsand services by a fifth to 25.7 billion euros ($35 billion) ayear, according to the latest EU estimates.

"This is the biggest deal our country has ever made," Harpersaid, adding that it was bigger than the North AtlanticFree-Trade Agreement between Canada, the United States andMexico.

The European Commission is negotiating trade pacts with morethan 80 countries on behalf of the bloc's 28 members followingthe collapse of the Doha global trade talks.

Delays to agreeing the Canada pact show how difficult suchdeals can be.

European efforts to sign a free trade agreement with theUnited States that would encompass half the world economy faceda setback this month when a second round of negotiations wascancelled because of the U.S. government shutdown.

The Canada agreement should provide a boost for EU tradechief Karel De Gucht and could serve as a template for U.S.talks because both deals seek to go far beyond tariff reductionand to reduce transatlantic barriers to business. There are alsosimilar sticking points such as agriculture.

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