Could Europe’s Cyprus halloumi dispute derail CETA? Maybe, but solution likely

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A revived trade agreement between Canada and the EU could be worth billions to both economies.

Halloumi might be known to many as a salty cheese good for throwing on the grill but this week, it’s the centre of a political dispute that threatens to derail Canada’s free trade deal with the European Union.

Cypriot lawmakers last week voted against ratifying the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), most of which has been in force since September 2017.

It’s a move that sets up a potential showdown given that each EU member state must have its parliament ratify the deal before it is locked into place — one veto could, technically, kill the whole deal.

Trade experts say while that outcome is unlikely, the tiny Mediterranean nation wants the same special geographic protections given to Champagne and feta and is using CETA as leverage to try to force the EU to agree.

“They’re using the fact that they can ratify the agreement, that they have this veto power, to put pressure to at least get this recognition for their cheese producers and obviously make some political capital at home,” said Patrick Leblond, an associate professor of international affairs at the University of Ottawa.

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Read more: Just 7% of Canadian exporters familiar with CETA as Trudeau pushes trade diversity, survey suggests

First, a bit of background: the Greek and Turkish communities of Cyprus have been at odds for roughly 40 years and the island is divided by a United Nations buffer known as the Green Line.

The European Union wants the country to move towards reunification. And as part of 2017 talks towards that goal, EU officials have dangled the prospect of what’s known as geographical indication as an economic carrot to try to bring the two political sides together.

Geographical indication is basically legally protected status, often assigned to food products.

It is the reason why fizzy wine from Niagara or California can only be called sparkling wine, while the bubbly beverage from France’s Champagne wine region gets dubbed with the eponymous label.

Such products can command much higher prices, meaning the producers make more money.

In Cyprus, lawmakers who have been prodded by EU officials with the promise for years now appear to be trying to exert pressure of their own by withholding support for CETA unless they get the designation for halloumi cheese that the EU has for years linked to reunification talks.

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Trudeau praises trade agreement with European Union

“It’s really an internal thing,” said Leblond, whose research focuses on international trade.

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Nathaniel Lipkus, a partner specializing in international trade and intellectual property at Osler — one of Canada’s best-known business law firms — also shared his perspective on the matter.

“Halloumi wasn’t protected as a geographic indication in the EU at the time CETA was being negotiated and so there wasn’t really a basis to include it in CETA, but I understand it’s incredibly valuable,” he said.

“It looks like they now want to try to try to see what they can get by holding back ratification.

Lipkus said while geographic indications aren’t something often used for Canadian products, they are a big deal for producers in European countries and were a major issue during the CETA negotiations.

In order to move concretely towards torpedoing the deal, Cyprus would need to give formal notification to the EU that it can’t ratify the trade agreement — something it hasn’t done yet.

Talks are currently underway in Cyprus between the government and the parties that voted against the deal, according to local media on the island.

Next steps, however, are unclear, though Leblond noted there likely isn’t much that can be done on the Canadian end of things until European officials reach some kind of agreement.

“I’m sure there will be some kind of negotiation taking place between Brussels and the Cyprus governments, and they will come to some kind of agreement,” he said.

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“What that will be is not clear.”