EU-Canada trade deal on verge of collapse

Belgium's Wallonia region is blocking the deal over fears that an arbitration mechanism will allow foreign companies to bypass domestic standards.

Photo by: Reuters
Photo by: Reuters

Failure to pass CETA could undermine the trust of international partners in the EU.

Hopes for a controversial transatlantic free trade pact between Canada and the European Union have been all but dashed after Belgium failed to endorse the deal on Monday.

The blocking of the Comprehensive Economic and Trade Agreement (CETA) due to the objections of Belgium’s French-speaking Wallonia region over concerns it will allow foreign companies to challenge state interference could throw other EU economic deals into disarray.  

Already reeling from the impact of the UK’s vote to leave the bloc, as well as a growing wave of euroscepticism stemming from economic problems and the worst refugee crisis to hit the continent since World War II, maintaining the trust of international partners has never been so important for the EU.

But CETA’s failure risks undermining that trust, with experts now foreseeing potential obstacles in similar deals with the United States and Japan. The deal needs the approval of all 28 EU members to pass.

Anti-CETA demonstrators are also against a similar deal agreed between the EU and the US known as the Transatlantic Trade and Investment Partnership (TTIP).

Ulrich Grillo, the president of the Federation of German Industries, told Reuters the blockade of the deal implied “dark days for European trade policy."

Geert Bourgeois, the leader of Belgium’s Dutch-speaking Flanders region, described the collapse as “bad for Wallonia, for Flanders, for Belgium, for Europe, for the whole world."

Deal not dead

Authorities in Wallonia, however, say the current conditions of the deal fail to protect public services. Paul Magnette, the leader of the Wallonia region, has raised concerns over an arbitration mechanism known as Investor-state dispute settlement (ISDS) which allows companies to bring lawsuits against tighter rules on public health, environmental and labour standards.

Magnette told French daily Liberation in an interview published on Tuesday that he wants a deal, but would prefer to rely on domestic courts. He added that he may be willing to accept an arbitration court that provides “equivalent guarantees to domestic ones."

Andre Antoine, Wallonia’s parliament speaker, meanwhile, indicated that there was still time to salvage a deal. "A reasonable time frame would be the end of the year. With that, we could get there," he told Reuters on Monday.

Walloon regional parliament head Andre Antoine and Wallonia Minister-President Paul Magnette are willing to negotiate over the use of arbitration courts.

Canada’s Trade Minister Chrystia Freeland also rejected suggestions that the deal was dead, but she had no answers for reporters when asked what would happen if the EU doesn’t resolve the dispute within the week.

European Parliament President Martin Schulz cast doubt that an agreement would be reached in time for an EU-Canada summit scheduled for this Thursday, which is now likely to be postponed.

Speaking to Germany's Deutschlandfunk radio station on Tuesday, Schulz said he was "sceptical" that the federal Belgian government would resolve the issue with the Wallonian authorities any time soon, but believed a compromise would eventually be reached.

TRTWorld and agencies