European Union trade ministers failed to reach a necessary consensus Tuesday on approving a massive trade deal with Canada as a result of persistent opposition to the landmark agreement by Belgium's French-speaking region.
Belgium cannot vote in favour of the Comprehensive Economic and Trade Agreement (CETA) without the backing of all five regional governments and the economically disadvantaged Walloon region has emerged as a high-profile holdout.
European Union officials are still trying to assuage Walloon's concerns and hope to get Belgium on board in the next few days in order to salvage plans for a signing summit with Canadian Prime Minister Justin Trudeau on Oct. 27.
Canada and the European Union first inked a deal in 2014 but fears over the power it would hand foreign companies to challenge European government policies held up the deal for years. Failure to clinch the agreement – the EU's first accord with a Group of Seven country – would be a major blow to the already-weakened European Union.
EU officials, shaken by Britain's vote in June to quit the bloc, are eager to conclude CETA in order to demonstrate the political-economic union is still moving forward as a viable bloc. Walloon legislators say the deal would benefit big business but do little for smaller enterprises or farmers.
Ottawa and Brussels are rewriting "interpretative declarations" – legally binding plain-language statements intended to mollify Walloon and other critics but EU trade commissioner Cecilia Malmström said the Oct. 27 summit will be cancelled if full approval can't be reached by the end of this week.
"We've been working with them [Wallonia] intensively over the last days, trying to understand their concerns, trying to see whether we could accommodate them. We're not really there yet," Ms. Malmstrom told reporters Tuesday.
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-based auto assemblers and beef and pork producers significant access to EU markets.
Jason Langrish, executive director of the Canada Europe Roundtable, said he thinks Walloon's objections are more deep seated than the Canada-EU deal.
"Walloon's objections seem to go beyond CETA and touch on internal Belgian divisions between the Walloon region, which has deep-seated reservations about trade and globalization, and the more economically successful Flemish region which has embraced international trade agreements."
He said he remains confident that the central government in Belgium will eventually approve the trade deal even if Wallonia sticks to its guns and the summit with the Canadian prime minister next week is cancelled.
The three-step process for passing the Canada-EU deal in Europe starts with approval at EU Council – which had been expected to come this week – and continues with a vote by the 751-member European Parliament by late 2016 or early 2017.
Once it passed the EU Parliament, a 2017 implementation date would be set and the agreement would go into effect on what is called a provisional basis. Each country would have to ratify the deal, and the 10 per cent or so of it that is under national purview in each member would come into force after each state issues its own approval.
With files from Reuters