EU banking stance puts Canadian economy at risk, Ottawa warns: documents

OTTAWA – Financial services are proving to be one of the key issues stubbornly holding up a free trade agreement between Canada and the European Union.

The information comes from Canadian sources close to the talks and internal European documents obtained by The Canadian Press.

Negotiators are meeting in Brussels in yet another attempt to finalize the wide-ranging pact, which would not only break down trade barriers but also liberalize investment and movement of people.

Canada wants to keep a so-called “prudential carve-out” that would give Canadian regulators leeway to impose demands on European banks in the name of financial stability.

But the EU says financial services should be treated just like any other sector.

An internal European analysis of the Canadian position says Canada is warning that giving in to the EU position would create a “chilling effect” on the country’s economy.