EU-Canada trade deal in limbo as Belgium withholds consent

Bloomberg

Europe’s ability to sign trade deals with the rest of the world was thrown into doubt after Belgium’s government said it had failed to persuade its regional parliaments to sign up to a proposed pact between the European Union and Canada.
Despite weeks of talks, Belgium Prime Minister Charles Michel said he hadn’t convinced the Socialist-controlled, French-speaking region of Wallonia to give its assent to the pact — a move that’s necessary for full EU approval. Hours later, Canadian Prime Minister Justin Trudeau’s government set a de facto Thursday deadline for Europe to agree to the deal, known as CETA.
European Council President Donald Tusk said in a Twitter post there’s still time to reach a deal in time for the planned Oct. 27 summit, though the path forward is murky.
While Michel said Belgium’s “no” leaves it up to Canada and the European Council to decide how to proceed, Trudeau’s Trade Minister Chrystia Freeland said Canada’s work is complete.
“We’re ready to sign the agreement on Oct. 27 as planned. It’s now up to the Europeans to be ready to sign on the 27th as well,” Freeland told reporters Monday in Ottawa. She brushed aside questions of what Canada would do if that deadline was missed. “Right now, for this week, our absolute relentless focus is on getting CETA done.”
The collapse of the Comprehensive Economic and Trade Agreement would be another sign of the headwinds facing free trade as politicians around the world fend off a populist threat that taps into voters’ fears that such deals destroy jobs. It could also damage the EU’s credibility as a global player at a time when it’s already struggling to deal with crises across its frontiers, from Brexit to Russia and Syria. Trudeau has said failure to ratify the pact, which has been seven years in the making, would raise questions about the EU’s viability.

DAMAGE ALREADY DONE
“The events of the past few days raise profound questions about the EU’s ability to fulfill one of its core functions: breaking down the barriers to help European companies do business internationally,” said John Clancy, senior adviser at FTI Consulting in Brussels, and a former EU Commission trade spokesman. “Even if the blockage of the EU-CETA trade deal by the Walloon government is solved in the coming weeks, the damage is already done to EU trade policy and to the EU’s credibility as the world’s biggest trading bloc.”
Wallonia, which accounts for less than 1 percent of the EU’s population, has blocked progress, saying it needs more time to negotiate amid concerns about the impact on employment and consumer standards. The stance is tying the hands of the Belgian federal government, which is in favor of the deal, but needs the endorsement of regional authorities. The other 27 out of 28 EU nations support the bloc’s first commercial accord with a fellow member of the Group of Seven industrialized countries.
“We will have to rethink our
governance and to make sure that a small minority cannot take the whole continent hostage for short-sighted political considerations,” Emma Marcegaglia, president of Brussels-based lobby group BusinessEurope, said by e-mail.
Trudeau and Tusk spoke Monday and agreed EU member states “should continue to work towards the Summit on Thursday,” according to a statement from Trudeau’s office, adding he and Tusk would “stay in close contact in the coming hours and days.”

CALL FOR PATIENCE
Earlier Monday, European Commission spokesman Margaritis Schinas said the EU and Canada had to “arm ourselves with patience” if there was to be an agreement. EU negotiators rewrote a declaration accompanying the text of the agreement to try to allay Wallonia’s concerns.
“The commission remains ready to continue to make all contributions necessary to help us to reach the end of this process with a positive outcome,” Schinas said. The EU says the pact would boost its economic output by about 12 billion euros ($13 billion) a year and expand EU-Canada trade by about a quarter. The deal’s failure would complicate separate negotiations with the US, Japan and other countries as a wave of populist parties around the world challenges the benefits of free trade.

Europe must delay summit: Schulz

Frankfurt / AFP

Europe must delay a summit this week when EU leaders hoped to sign the hotly-contested CETA free-trade deal with Canada, European Parliament President Martin Schulz told German radio on Tuesday. “I don’t think we’ll have a solution this week,” Schulz said in an interview on Deutschlandfunk radio. “That seems to me to be very, very difficult.” But the German centre-left politician insisted that delaying the summit would not mean the deal had failed. “A transatlantic trade agreement isn’t any old contract about buying a second-hand car. It’s a first-of-its-kind, really huge trade agreement of global importance that should set rules for globalisation,” Schulz said. “If you need 14 more days then you just push back the summit.” Schulz’s words run counter to European Union President Donald Tusk, who on Monday said “Thursday’s summit is still possible”.
French-speaking Wallonia had earlier refused to give consent for Belgium’s federal government to join other EU member states in signing, casting doubts over whether Canadian premier Justin Trudeau would make the Thursday trip to Brussels at all.
All 28 EU governments must endorse the pact to link the EU’s single market of 500 million people with Canada, the 10th-largest economy in the world, if it is to go ahead. “Canada is ready to sign CETA, but the ball is in Europe’s court and it’s time for Europe to do its job,” Canadian trade minister Chrystia Freeland said on Monday. Europe’s institutions are divided on how to proceed, with the European Council — the gathering of heads of state and government — still pushing for an agreement this week, while the European Commission is ready to offer Belgium more time, an EU source said.
Fears that the CETA deal will fizzle out after seven years of negotiations have been a fresh blow to the European Union, still digesting Britain’s June vote to quit the bloc and yet to fully come to grips with its worst migration crisis since World War II.