EU-Canada Trade Deal in Limbo as Belgium Withholds Consent

  • Belgian region of Wallonia refuses to endorse CETA agreement
  • Visit by Canada’s Trudeau for Brussels summit now in doubt

Fmr. Ambassador: Cautiously Optimistic on EU-Canada Deal

Europe’s ability to complete trade deals with the rest of the world was thrown into doubt after Belgium’s government said it had failed to persuade its regional parliaments to sign up to a proposed pact between the European Union and Canada.

Despite weeks of talks, Belgium Prime Minister Charles Michel said he hadn’t convinced the Socialist-controlled, French-speaking region of Wallonia to give its assent to the pact -- a move that’s necessary for full EU approval. Hours later, Canadian Prime Minister Justin Trudeau’s government set a de facto Thursday deadline for Europe to agree to the deal, known as CETA.

European Council President Donald Tusk said in a Twitter post there’s still time to reach a deal in time for the planned Oct. 27 summit, though the path forward is murky. While Michel said Belgium’s “no” leaves it up to Canada and the European Council to decide how to proceed, Trudeau’s Trade Minister Chrystia Freeland said Canada’s work is complete.

QuickTake Free-Trade Feud

“We’re ready to sign the agreement on Oct. 27 as planned. It’s now up to the Europeans to be ready to sign on the 27th as well,” Freeland told reporters Monday in Ottawa. She brushed aside questions of what Canada would do if that deadline was missed. “Right now, for this week, our absolute relentless focus is on getting CETA done.”

The collapse of the Comprehensive Economic and Trade Agreement would be another sign of the headwinds facing free trade as politicians around the world fend off a populist threat that taps into voters’ fears that such deals destroy jobs. It could also damage the EU’s credibility as a global player at a time when it’s already struggling to deal with crises across its frontiers, from Brexit to Russia and Syria. Trudeau has said failure to ratify the pact, which has been seven years in the making, would raise questions about the EU’s viability.

Damage Already Done

“The events of the past few days raise profound questions about the EU’s ability to fulfill one of its core functions: breaking down the barriers to help European companies do business internationally,” said John Clancy, senior adviser at FTI Consulting in Brussels, and a former EU Commission trade spokesman. “Even if the blockage of the EU-CETA trade deal by the Walloon government is solved in the coming weeks, the damage is already done to EU trade policy and to the EU’s credibility as the world’s biggest trading bloc.”

Wallonia, which accounts for less than 1 percent of the EU’s population, has blocked progress, saying it needs more time to negotiate amid concerns about the impact on employment and consumer standards. The stance is tying the hands of the Belgian federal government, which is in favor of the deal, but needs the endorsement of regional authorities. The other 27 out of 28 EU nations support the bloc’s first commercial accord with a fellow member of the Group of Seven industrialized countries.

“We will have to rethink our governance and to make sure that a small minority cannot take the whole continent hostage for short-sighted political considerations,” Emma Marcegaglia, president of Brussels-based lobby group BusinessEurope, said by e-mail.

Trudeau and Tusk spoke Monday and agreed EU member states “should continue to work towards the Summit on Thursday,” according to a statement from Trudeau’s office, adding he and Tusk would “stay in close contact in the coming hours and days.”

Call for Patience

“We do not work on the basis of deadlines and ultimatums,” Alexander Winterstein, a spokesman for the European Commission, told reporters on Tuesday. “At this stage, we are monitoring the discussions in Belgium aimed at finding a solution.”

The EU says the pact would boost its economic output by about 12 billion euros ($13 billion) a year and expand EU-Canada trade by about a quarter. The deal’s failure would complicate separate negotiations with the U.S., Japan and other countries as a wave of populist parties around the world challenges the benefits of free trade.

“CETA is not dead, it’s still alive,” Manfred Weber, leader of the Christian Democrats in the European Parliament, told reporters in Strasbourg, France, on Tuesday. “And over the next few weeks we will be doing everything we can to make sure it’s concluded.”

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