This article is more than 3 years old

This article is more than 3 years old

A landmark trade deal between the EU and Canada is in jeopardy after being rejected by a Belgian regional parliament, raising questions about other agreements such as a future arrangement between the UK and the EU.

EU trade ministers hope to sign the deal on Tuesday, but the outcome is in doubt after the Walloon parliament passed a resolution against it on Friday.

The EU and Canada have spent seven years negotiating the comprehensive economic and trade agreement (CETA), which would eliminate tariffs on most goods between the two parties.

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But EU negotiators have said it can only go ahead with the unanimous agreement of all 28 member states. While several countries have raised last-minute problems, Belgium has become a stumbling block that threatens to bring down the deal.

Belgium’s federal government supports the trade deal but may be unable to give its consent because of opposition from the Socialist-led Walloon parliament, which has argued that the CETA gives too much power to multinationals.



The problems in finalising the CETA hint at the political minefield that the British government will face in agreeing a free trade deal with the EU.



Canada is running out of patience with the EU’s problems in finalising the agreement, with formal negotiations having ended in August 2014.



Speaking before the Walloon parliament vote on Thursday, the Canadian prime minister, Justin Trudeau, said: “If we find in a week or two that Europe is incapable of signing a progressive trade deal with a country like Canada, then who does Europe think it can do business with in the years to come?



“In this post-Brexit [vote] situation, where there are a great many questions about Europe’s usefulness, if Europe cannot manage to sign this agreement, then that sends a very clear message. Not just to Europe, but to the whole world, that Europe is choosing a path that is not productive for its citizens or the world. And that would be a shame.”

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Following the vote, Trudeau told reporters in Alberta: “We’ve always known it’s going to require hard work right to the very end. But I’m confident that there are so many strong European countries, like France as we saw, Germany is fully on board, and others, that this deal is going to make it through.”

His earlier words were echoed by European leaders, who are increasingly concerned that the EU’s reputation as a trading bloc will be irretrievably damaged by failing to sign a deal with a close ally.

Donald Tusk, the president of the European council, said “emotions and confusion” around the CETA and the parallel transatlantic trade and investment partnership (TTIP) with the US were “fuel for Eurosceptics and radicals”.

One senior EU diplomat said: “It is not just about EU-Canada, it is about the future of EU trade policy.”

The European commission has drafted a declaration stating that European environmental and health standards will not be diluted. But this failed to convince the minister-president of Wallonia, Paul Magnette, who has vowed to stop Belgium from signing the deal.



Insiders familiar with Belgium’s intricate political system said it was possible for the executive to override the Walloon parliament. Last-ditch talks between Belgium’s three regions and the federal government are scheduled for Monday.



Even if ministers approve the CETA on Tuesday, this would not be the final hurdle: the agreement would have to be ratified by 28 national and 10 regional European parliaments.

EU member states insisted on this final step of parliamentary ratification in a departure from tradition; previously, EU trade policy was signed off by national governments.



Fredrik Erixon, the director of the European Centre for International Political Economy, said: “What we are witnessing is a degrading of the authority of the EU to do a lot of things in these areas [trade and commercial policy].”

Allowing parliaments to ratify the agreement was “an extraordinary decision”, he said. “It is setting a precedent and having a profoundly undermining effect on EU trade policy, because few countries in the world will want to do trade negotiations with us in the future.”



The Labour MEP David Martin, who sits on the European parliament trade committee, said the Wallonian response to the CETA should send shivers down the spine of Brexit negotiators in London.

“Britain’s final deal with the EU will too be subject to the whim of 38 national and regional parliaments. As we have seen in Francophone Belgium, public opinion in the rest of Europe is volatile on questions of trade, and deluded Brexiteers will get a shock if they think our partners are going to give us an easy ride.”



Supporters of parliamentary ratification say leaving the decision to the EU would have been undemocratic, because the wide-ranging trade agreement affects national politicians’ competences.



The increasing role of national parliaments has complicated EU trade policy: the trend means that the parliament of Belgium’s German-speaking community of 76,000 people could, in theory, block a trade agreement between the EU and the UK.



EU leaders have suggested that it could take five years or longer to negotiate a free trade agreement with the UK.



Erixon said it was too early to tell because the British government had not spelled out its stance on key economic issues that would affect a trade deal, such as farming subsidies, environmental standards and financial services. “No one really knows yet what we are going to negotiate about. I don’t think the [UK] government knows yet,” he said.