UPDATE 2-Say cheese: EU strikes trade deal with Canada, looks to U.S.
* EU, Canada finally close talks launched in May 2009
* Deal is Europe's first with a G8 economy
* EU hopes to use it as stepping stone to pact with U.S.
BRUSSELS/LUXEMBOURG, Oct 18 (Reuters) - The European Union and Canada agreed a multi-billion-dollar trade pact on Friday that will integrate two of the world's largest economies and paves the way for Europe to clinch an even bigger deal with the United States.
Canadian Prime Minister Stephen Harper and European Commission President Jose Manuel Barroso sealed the pact - the EU's first with a member of the Group of Eight biggest world economies - by resolving outstanding issues in Brussels.
Launched in May 2009, the talks had been stalled for months over quotas for Canadian beef and EU cheese. In a cheeky touch, chefs served gorgonzola and feta at the four-course lunch laid on for the two leaders.
"This agreement is a landmark achievement for the transatlantic market," Barroso told a news conference, flanked by Harper. "With political will and a good dose of hard work, there is a way to reach a result that benefits people on both sides of the Atlantic," he said.
The deal marks a breakthrough for Brussels' free-trade agenda, which had previously achieved smaller agreements with South Korea and Singapore. It is expected to increase bilateral trade in goods and services by a fifth to 25.7 billion euros ($35 billion) a year, according to the latest EU estimates.
Barroso said he hoped the agreement could come into effect from 2015, after EU governments, the European Parliament and the Canadian provinces give their blessing.
The deal will also make Canada the only G8 country - and one of the only developed nations anywhere - to have preferential access to the world's two largest markets, the EU and the United States, home to a total of around 800 million people.
"This is the biggest deal our country has ever made," Harper said, adding that it outstripped the North Atlantic Free Trade Agreement between Canada, the United States and Mexico.
The Commission is negotiating trade pacts with more than 80 countries on behalf of the bloc's 28 members, following the collapse of the marathon Doha round of global trade talks. The delays that dogged the Canada agreement showed how difficult such deals can be.
European efforts to sign a free-trade accord with the United States faced a setback this month when a second round of negotiations was cancelled because of the U.S. government shutdown.
Despite plans to do a deal by the end of next year, the talks have also been overshadowed by reports the United States bugged EU offices under surveillance programmes made public by fugitive former intelligence contractor Edward Snowden.
Still, the Canada agreement should provide a boost for EU trade chief Karel De Gucht and could serve as a template for U.S. talks. Both deals seek to go far beyond tariff cuts and to reduce transatlantic barriers to business. There are also similar sticking points, such as agriculture.
"It's a good signal. I'm a transatlanticist," German Economy Minister Philipp Roessler told Reuters at a trade ministers' meeting in Luxembourg. "It's a great basis for all other negotiations, such as the TTIP talks with the United States," he said, referring to the proposed deal by its formal name, the Transatlantic Trade and Investment Partnership.
The EU-Canada pact would eliminate tariffs on almost all goods and services, set larger quotas for EU dairy exports and make it easier for EU carmakers to export vehicles to Canada.
The EU will eliminate duties on a range of Canadian agricultural products, from wheat to maple syrup. Canada will be able to export 80,000 tonnes of pork and 50,000 tonnes of beef free of duties to the European Union.
For the first time, provincial governments in Canada will commit to opening their lucrative procurement markets to allow European companies to compete for contracts alongside locals.