Minister-President Rudy Demotte of the Federation of Wallonia-Brussels | Olivier Hoslet/EPA Walloon revolt against Canada deal torpedoes EU trade policy Regional Belgian parliament delivers potentially fatal blow to EU trade agenda and sets a worrying precedent for UK talks.

The EU’s once-mighty trade negotiators never dreamed that their powers would be stripped from them so unceremoniously — and possibly for good.

The Francophone parliament of the Federation of Wallonia-Brussels — only 10 minutes’ walk from EU headquarters — stands to win a place in history for sinking the EU’s landmark trade deal with Canada and potentially for scuppering the European Commission’s ability to lead the world’s biggest trade bloc for many years.

Failure to conclude the Comprehensive Economic and Trade Agreement (CETA) by this month’s deadline would be a devastating blow to the EU, which has spent seven years working on the tariff-slicing agreement with Ottawa.

“It’s crazy. If we allow a regional parliament to block a trade deal that will benefit the whole EU, where does this lead us to?” — Christoph Leitl

“It’s crazy. If we allow a regional parliament to block a trade deal that will benefit the whole EU, where does this lead us to?” said Christoph Leitl, president of the Global Chamber Platform, a worldwide alliance of business chambers. “CETA is not just a deal with Canada, it has model character for Europe’s future trade relations.”

The Federation of Wallonia-Brussels parliament, which focuses on the cultural and educational concerns of 4.5 million French speakers in Belgium, voted Wednesday evening to reject CETA because of worries about public services and agriculture. Laetitia Naklicki, a spokesperson for Minister-President Rudy Demotte, said this vote meant that the government of the French-speaking community “would not issue its full power for signing CETA to the federal government.”

Unless the Belgian central government can find an imaginative compromise quickly, the EU will be unable to corral the signatures of all 28 EU countries before an EU-Canada summit on October 27. The pressure on Belgian Prime Minister Charles Michel is only likely to increase Friday, when another regional assembly, Wallonia, also voted against CETA.

Under Belgium’s complex constitution, all five regional governments must approve the trade deal before the federal government can give consent.

The ease with which CETA was vetoed by 68 junior Belgian legislators also sends an ominous signal to Britain, which is studying the pact as a potential model for U.K.-EU trade relations after Brexit.

Similar cases of disagreement between regional governments and the federal administration “have happened in the past, but only on minor files like agriculture or environment,” said Hendrik Vos, professor of European affairs at Ghent University. “Now, it’s the case with this file, which is way bigger.”

Diplomatic sources in Brussels say it is even unclear whether the EU-Canada summit will take place if Belgium has not secured its support by Tuesday, when trade ministers gather in Luxembourg to vote on CETA’s provisional application, planned for next year.

In a sign of increasing frustration on the Canadian side, the normally cheery Prime Minister Justin Trudeau warned Thursday that not signing CETA would issue a “deplorable” message that Europe is heading towards an “unproductive path" post-Brexit. Both the EU and Canada have cast CETA as an unusually progressive accord that will allow some of the world’s most like-minded economies to boost trade and create jobs.

But critics in Wallonia see the deal as a Trojan horse that will allow multinationals, including from the U.S., to sue governments, undercutting European labor, health and environmental standards.

Canadian deputy trade minister David Lametti pledged during a visit to Wallonia to continue working together as “friends,” according to Belgian television station RTBF, but some of Ottawa’s language was hardening sharply. “If you reject this text … there will be consequences,” he was quoted as saying.

Core competence lost

The fact that power over trade — one of the EU’s core negotiating competences — has shifted to Europe’s 38 national and regional parliaments is a major embarrassment for Commission President Jean-Claude Juncker. In July, he was pushed by French and German Socialists into designating CETA as a “mixed agreement” requiring ratification in national and regional assemblies.

That was a worrying precedent for British officials who realized that countries such as Poland and Romania would have strong powers to challenge any EU trade deal with the U.K. over issues such as immigration, workers’ rights and visa-free access.

The decision was highly controversial, because Juncker and his chief lawyers believed this wasn’t necessary from a legal point of view, but was a gesture of political goodwill.

That goodwill has not been returned, leaving the Commission to scramble.

“We’re following the events and we are in close contact with representatives from the Belgian governments to convince them of the agreement’s benefits and to dispel concerns,” a European Commission source said. “But after all this is an internal matter of the Belgian state.”

André Antoine, president of the Wallonian parliament, said his house was not to blame for the demise of CETA. “It was Jean-Claude Juncker who decided that this is a mixed treaty, which means all national parliaments must express their opinion,” he told RTBF Thursday. “And we are, following the [Belgian] constitution and the treaty of Lisbon, a national parliament.”

Meanwhile, the French Socialist government has realized how problematic CETA’s subjection to regional Belgian assemblies has become and has started a last-minute offensive to save the trade deal.

Salvaging the deal

French President François Hollande has invited Wallonian regional Minister-President Paul Magnette to the Elysée Friday afternoon to convince him not to reject CETA. Behind the scenes, some French Socialists are actively lobbying their Belgian counterparts not to scrap the deal, sources told POLITICO.

French Trade Minister Matthias Fekl’s office had no immediate comment.

There are also some signs that Prime Minister Michel may try to win support from Magnette and Demotte despite their parliaments. He would want to keep the issue from heightening internal divisions with the more economically powerful Dutch-speaking Flanders, which is a strong advocate of CETA.

The action follows another embarrassment for Belgium: It came to light last week that Trade Minister Pieter De Crem was attending a course at Harvard rather than extinguishing fires at home.

Michel’s spokesperson Frédéric Cauderlier said it’s hard to predict what might happen next.

“As long as the regional government hasn’t officially notified us, we cannot comment on the situation,” he said. “It is difficult at this point to comment on hypothetical scenarios whether we still might be able to back the deal despite the rejection of a regional government.”

However, Cauderlier said, “the prime minister has repeatedly expressed that, in his view, Europe’s ability to conclude a deal with Canada shines a direct light on the possibilities to seal a future trade agreement with the U.K.”

Laurens Cerulus and Quentin Ariès contributed reporting.