Talks to salvage the Canada-European Union trade deal fell apart Friday after Canada's International Trade Minister Chrystia Freeland walked out of negotiations in Belgium, saying she feels the 28-member bloc is incapable of reaching a deal with Ottawa.
In remarkably blunt, undiplomatic language, Ms. Freeland even said she considers it "impossible" for a trade agreement to be concluded with the EU, a sprawling political-economic union whose approval of the agreement has faltered because of opposition from the regional government of Wallonia in Belgium.
One European Union diplomat, however, who spoke on condition of anonymity, said they considered Ms. Freeland's abrupt departure a pressure tactic, and expected conversations between Canada and the EU to continue this weekend.
Ms. Freeland spoke of going home but hours later, Friday evening, the President of the European Parliament, Martin Schultz, announced on Twitter that he was meeting with Canada's International Trade Minister Saturday morning in Belgium. Her office could not confirm this would take place, saying Ms. Freeland is still booked to return to Canada early Saturday morning and "If there's a solution, it will need to come from inside Europe."
Friday's collapsed talks threw the future of the Canada-EU trade deal into doubt and, coming only months after the United Kingdom voted to quit the European Union, is a blow to the EU's efforts to demonstrate it is still moving forward as a viable entity. The Comprehensive Economic and Trade Agreement is the European Union's first trade deal with a Group of Seven country.
"Canada has worked, and I personally have worked, very hard, but it is now evident to me, evident to Canada, that the European Union is incapable of reaching an agreement – even with a country with European values such as Canada, even with a country as nice and as patient as Canada," Ms. Freeland said Friday when she exited negotiations in Namur in Belgium's region of Wallonia.
"Canada is disappointed and I personally am disappointed, but I think it's impossible. We are returning home. At least I will see my three children tomorrow," the minister said, inserting a personal note that reflects her frustration at the past year of work to shore up approval across Europe for the massive deal to lower trade barriers.
Not even a phone call Thursday night between Prime Minister Justin Trudeau and Belgian Prime Minister Charles Michel helped. Canada has resisted all entreaties to reopen the deal for further negotiation and Mr. Trudeau reiterated this in his conversation with Mr. Michel, a source familiar with the call said.
Steve Verheul, the lead Canadian negotiator, is also supposed to returning home with Ms. Freeland, suggesting the federal government no longer considers it useful to keep their point man on CETA in Europe.
Ms. Freeland's breaking point came after three days of talks in Europe, including a visit to the heart of French-speaking Belgium – the centre of opposition to the Comprehensive Economic and Trade Agreement. Wallonia is home to 3 1/2 million people.
The European Council has been unable to reach a consensus on approving the Canada-EU deal because Belgium is unable to give its assent. Politically decentralized Belgium can't say yes because it requires the assent of five regional governments on major international agreements, and the French-speaking Wallonia region has opposed signing the deal.
As Belgian Foreign Minister Didier Reynders put it this week: "We can practically say 27-and-a-half countries … want to move forward" with CETA.
Barring a last-minute change of heart, a CETA signing summit between Mr. Trudeau and European Union leaders planned for Oct. 27 is now likely cancelled.
A European official with knowledge of Wallonia's demands said Wallonia's Minister-President Paul Magnette had requested that Canada reopen a section that allows foreign investors to sue countries if decisions are taken that hurt their investments – a standard feature of Canadian trade and investor protection agreements with other nations.
"We spent today here working very hard with the Walloons and the commission to respond to the concerns expressed by the Walloons," Ms. Freeland said.
She noted the Canadian government has worked over the past year with all European countries where opposition has arisen to the deal, including Germany, Austria, Bulgaria and Romania. This included rewriting the investor-dispute mechanism to assuage concerns over a loss of sovereignty in settling legal challenges from big business.
The Walloons are concerned about the impact of the deal on European health and environment standards, and are also worried it could allow beef containing growth hormones to make inroads in Europe. The EU has advised its member states, however, that CETA would not affect restrictions on the import of beef with growth hormones.
The European Union reacted to Ms. Freeland's statement by saying Brussels doesn't consider the talks dead.
"Talks that started early this morning with the regional government of Wallonia have come to a halt," a European Union official who spoke on condition of anonymity told The Globe and Mail.
"The European Commission doesn't consider that this is the end of the process paving the way for the signature of the trade deal reached between the European Union and Canada."
EU Trade Commissioner Cecilia Malmstrom echoed that on Twitter, saying "I sincerely believe this is not the end of the process."
Reacting in Canada on Friday, Quebec Premier Philippe Couillard decried the "protectionist, negative, populist" politics that threaten to derail CETA and warned that "Belgium itself will suffer" economically if it doesn't sign the deal.
"Open markets create jobs. Closed markets destroy jobs. And it's true everywhere, on both sides of the Atlantic," Mr. Couillard told reporters in Toronto, where he was co-hosting a joint cabinet meeting with Ontario Premier Kathleen Wynne. "It's the most economically disadvantaged populations that are the most negatively affected. This discourse from the opponents of free trade who portray themselves as protecting disadvantaged people – their actions actually do the opposite."
Still, Mr. Couillard said, he hasn't entirely lost hope for a deal and that there "are still conversations" to be had about making it happen.
Ms. Wynne said losing CETA would be tough for Ontario at a time when the province is seeking business opportunities around the world and trying to ease its historic dependence on trade with the United States.
"If we are going to compete globally, and we are going to develop our export capacity, we need that openness," she said. "The political discourse around protectionism right now is very dangerous. It's a real problem."
The Canada-EU deal would eliminate duties on tens of thousands of products, covering more than 95 per cent of everything Canada now sells to Europe, and dismantle many non-tariff barriers to commerce. It would give Canada's auto assemblers and beef and pork producers significant access to EU markets.
With files from reporter Adrian Morrow in Toronto