International Trade Minister Ed Fast says he has been talking with Newfoundland and Labrador Premier Kathy Dunderdale about trade negotiations between Canada and the European Union, a day after Dunderdale revealed she has been under pressure from the Harper government to make a major trade concession.

Canadian fish products are subject to high EU tariffs. (CBC)

In a speech to the St. John's Board of Trade on Monday, Dunderdale said the Muskrat Falls loan guarantee nearly fell apart when Ottawa suddenly demanded the province give up the requirement that fish landed in Newfoundland and Labrador be processed within the province.

Fast's spokesperson Rudy Husny said in a written statement, "Minister Fast met with Premier Dunderdale last week, to discuss the CETA (Comprehensive Economic Trade Agreement) negotiations and the opportunities an ambitious agreement would bring to Newfoundland and Labrador's workers and exporters."

Husny added that Canada has been seeking a way to eliminate European Union tariffs of up to 25 per cent on fish and seafood exports to Europe, the world's largest seafood market.

"We are committed to achieving an outcome that is in the best interests of Canadians, and opens up new opportunities for Canada's exporters."

Provincial Fisheries Minister Derek Dalley confirmed provincial and federal officials have been working to sort out fishery issues in the CETA negotiations.

"We believe that the end goal for us is zero tariff immediate market access and we'll continue working with the federal government until we achieve that," he said.

However, in connection with changing provincial minimum processing requirements, Dalley said, "I can't stress enough that we fully intended to maintain our jurisdictional right and responsibility to maximize the value of our resources for the people of Newfoundland and Labrador."

Dalley said provincial negotiations in connection with CETA should be complete within a couple of weeks.

Researcher 'astonished'

"Honestly, I'm astonished that the PMO would make such a crude threat," said Scott Sinclair, a senior research fellow with the left-leaning Canadian Centre for Policy Alternatives.

"To link federal financing of a domestic energy project to the elimination of an important provincial fisheries policy, it's almost beyond belief."

Sinclair released a study in January called "Globalization, Trade Treaties and the Future of the Atlantic Canadian Fisheries," which included details reportedly leaked from ongoing closed-door Canada-EU talks.

Sinclair's report indicated that "the EU is strongly pressuring Canada to abolish minimum processing requirements" as the two sides worked toward a deal known as the Comprehensive Economic and Trade Agreement, or CETA.

Sinclair added that there is no telling what concessions other provinces are being asked to make for the free trade deal with Europe, a deal that has been five months overdue.

St. John's East MP concerned

Meanwhile, St. John's East NDP MP Jack Harris said he is concerned that Dunderdale's decision go public over the dispute with Ottawa will hurt the province.

"We'll certainly be very, very careful to see whether or not her public disclosure of this is going be used as a reason, or some kind of backroom reason, for the government of Canada, the Harper government, to try and find a way to weasel out of their commitment to Muskrat Falls," said Harris.

Dunderdale said Monday that she might consider lifting minimum processing requirements if the local industry and province can benefit from it.

But she said her advisors have told her doing that makes little sense for the province's fishing industry.