LUXEMBOURG, Oct 18 (Reuters) – EU governments failed on Tuesday to approve a free trade agreement with Canada, as continued opposition from French-speaking southern Belgium threatened the entire deal.
Almost all 28 EU governments, whose ministers were meeting in Luxembourg, now back the Comprehensive Economic and Trade Agreement (CETA), which would be the bloc’s first trade accord with a G7 country.
Failure to strike an accord with such a like-minded country would call into question the EU’s ability to forge any more such trade deals and would show the difficulties Britain may face in seeking a new trade relationship with the EU after it leaves.
Romania and Bulgaria were still demanding Canada allow visa-free travel for its citizens. But the biggest risk to finding unanimity between all 28 EU countries was opposition from the French-speaking south of Belgium.
“A formal agreement was not possible because Romania, Bulgaria and Belgium still have reservations,” German Economy Minister Gabriel told reporters after the meeting, adding these issues could be resolved in the coming days
Belgium’s centre-right coalition government is firmly in favour, but the country’s peculiar structure means it cannot sign without backing from all five sub-federal administrations representing its regions and its linguistic communities.
Belgian Foreign Minister Didier Reynders earlier told reporters that he hoped to find a solution to his domestic quandary by the time EU leaders meet in Brussels for a summit on Thursday and Friday.
EU and Canadian negotiators sealed an accord in 2014 after five years of talks. Since then they have revised a particularly contentious section on investment protection and, in the past month, drafted a binding declaration to show the limits of the trade pact.
The latter won over most doubters, including wavering Austria. But Belgium’s French speakers continued to say ‘Non!’.
The EU trade ministers were due to approve CETA on Tuesday, paving the way for it to be signed at an EU-Canada summit attended by Canadian Prime Minister Justin Trudeau on Oct. 27.
EU trade commissioner Cecelia Malmstrom said EU and Belgian officials would see if Walloon concerns could be answered by the existing declaration or if it needed to be expanded.
“If I didn’t think we could solve the Belgian issue we wouldn’t keep on engaging with them of course,” she said, adding a solution would need to be found without reopening the treaty.
“That is not even on the agenda,” she said.
Gabriel, whose own Social Democrats had shared some of the centre-left Walloon government’s reservations that CETA could undermine consumer and labour protection in Europe, said EU authorities had done well to add binding guarantees.
“The agreement cannot fail,” he said.
With support from EU governments and the European Parliament, CETA could enter into force provisionally next year.
This would allow an immediate removal of import tariffs on 98 percent of goods, but would initially leave out the most contentious aspect of the deal – a court to protect foreign companies’ investments.
CETA’s critics say the special investor court – which would come into being only after the pact is ratified by all national parliaments – would give big business the ability to dictate government policy by threatening legal action. They say the trade deal would start a ‘race to the bottom’ in labour and environmental standards.
CETA’s supporters say it will increase bilateral trade by 20 percent and boost the EU economy by 12 billion euros ($13 billion) per year and Canada’s by C$12 billion ($9 billion).
The deal would be the first time Canada’s states and municipal governments have committed to opening their markets for procurement to EU suppliers. It would also allow Canadian farmers to export much more pork, beef and wheat to Europe.