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David vs Goliath? Small Belgium region leaves EU-Canada trade deal in crisis

HERBERT NEUBAUER, APA, AFP | Canadian International Trade Minister Chrystia Freeland (L) and Austrian Vice Chancellor and Minister of Science and Economy Reinhold Mitterlehner (R) during a press conference in Vienna, Austria, on September 21, 2016

Canada's trade minister said Saturday the “ball is in the EU’s court’ to save a landmark free trade deal, which is being blocked by the small Belgian region of Wallonia, after a meeting with the president of the European Parliament Martin Schulz.


"We have done our job. We have finished negotiating a very good agreement. Now the ball is in Europe's court," Chrystia Freeland said after the meeting, and ahead of her flight home.

Supporters of the Comprehensive Economic and Trade Agreement (CETA) say the deal will boost the European Union economy by €12 billion ($13.4 billion) a year and create jobs. The agreement, critically the EU's first with a Group of Seven country, would, according to supporters, increase trade between the partners by 20 percent.

However, Wallonia’s regional assembly in Belgium fear the deal could lead to job losses and hit social welfare.

Canada urges EU to save trade deal

Wallonia’s veto has therefore left the deal in limbo after seven years of tough negotiations between the EU and Canada. All 28 EU governments support CETA, but Belgium cannot give assent without backing from its various regional assemblies.

Diplomatic tensions

The ensuing chaos sparked by the Wallonia vote has created tension between the EU and Canada.

Canada’s trade minister Chrystia Freeland earlier blasted the European Union, saying it was “incapable” of striking an international agreement.

“It seems obvious to me, to Canada, that the European Union is incapable now of having an international agreement, even with a country with such European values as Canada… I think it’s impossible. We have decided to return home and I am very, very sad,” Freeland said in unusually strong and emotional remarks on Friday.

While the failed talks left Belgium’s Prime Minister Charles Michel scrambling to find a solution, officials stressed that it was local governments rather than parliaments that have the final say. Under Belgium’s complex political system, the government cannot approve the deal without support from assemblies representing the country’s three regions and three linguistic communities.

Paul Magnette, the head of Wallonia’s local government that blocked the deal, dismissed the compromises offered during the talks as “insufficient”, though some argue he is simply playing local politics.

David and Goliath

Schulz, who is not directly involved in CETA talks but has good working ties with Freeland, held an emergency meeting with Walloon premier Paul Magnette in a bid to revive the deal. Magnette said Saturday his discussions with Canada were concluded and that the remaining issues were for the EU executive to address.

"We have still some little difficulties among Europeans," he said, without giving details. "We won't hide that so we still have to work and discuss for a certain amount of time."

This David and Goliath debacle has seen Wallonia, home to less than 1 percent of the 507 million European consumers the EU-Canada free trade deal would impact, throw the bloc into chaos. Even within Belgium, the French-speaking region is outnumbered by Dutch-speaking Flemings, whose representatives have already backed CETA.

CETA failure could undermine EU

What CETA represents is greater than just a trade deal with Canada, the EU's 12th-largest trading partner. If CETA fails, the EU's hopes of completing similar deals with the United States or Japan would be in tatters, undermining a bloc already battered by Brexit and disputes over Europe's migration crisis.

EU Trade Commissioner Cecilia Malmstrom said she still hoped to find a solution to the deal, which was due to be signed at a summit next Thursday with Canadian Prime Minister Justin Trudeau. A source at the European Commission, the executive of the 28-nation EU, told Reuters that there is a possibility that the talks could resume.


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