A trade deal between the EU and Canada is on the brink of collapse because a Belgian region with a population of just 3.6 million opposes it.
An emotional Canadian Trade Minister Chrystia Freeland left the talks in Brussels, saying the EU was “not capable” of signing a trade agreement.
Belgium, the only country blocking accord, needed consent from the regional parliament of Wallonia.
The wide-ranging deal, seven years in the making, was to be signed next week.
Speaking outside the seat of the Walloon government, Ms Freeland told reporters: “It seems evident for me and for Canada that the European Union is not now capable of having an international accord even with a country that has values as European as Canada.”
She added: “Canada is disappointed, but I think it is impossible.”
It was unclear whether the EU would keep negotiating with Wallonia in coming days to solve the impasse.
At a glance: Ceta
- Negotiations began in 2009 and ended in August 2014
- The deal aims to eliminate 98% of tariffs between Canada and EU
- It includes new courts for investors, harmonised regulations, sustainable development clauses and access to public sector tenders
- The deal is opposed by various groups, including environmental activists, trade unionists and Austrian Socialists
Why is Wallonia standing in the way?
The Comprehensive Economic and Trade Agreement, or Ceta, was expected to boost bilateral trade, but Wallonia sees the accord as a threat to farmers and welfare standards.
The region has a strong socialist tradition. Its fears echo those of anti-globalisation activists, who say Ceta and deals like it give too much power to multinationals – power even to intimidate governments.
There have also been big demonstrations in several EU countries against Ceta and the TTIP trade talks with the US.
Years in the making, days to unravel – Jessica Murphy, Canada News Editor
The Canada-EU trade deal was seven years in the making but it took far less time to unravel.
Canada has been scrambling to keep Ceta together after the Walloon regional assembly in Belgium voted last week to reject it.
The deal was completed under Canada’s former Conservative government but is a major priority for the Liberals, who are under pressure to boost the country’s economy.
They dispatched special envoy Pierre Pettigrew, a former cabinet minister with a wealth of experience on the international trade file, to help save the flagging agreement.
Federal Trade Minister Chrystia Freeland has met repeatedly over the past months with European leaders to shepherd it through, but with no luck.
An embarrassment for the EU – Laurence Peter, Europe Editor
The failure to clinch the EU-Canada Ceta deal is an embarrassment for the EU. Wallonia, a region of just 3.6 million people, has all but scuppered a trade deal affecting 508 million Europeans and 36.3 million Canadians.
The European Commission says this blow does not mean that Ceta is over, but it also refuses to unpick the massive text that was agreed with Canada in 2014.
Any EU free trade deals with the US, China or India now look remote. Anti-globalisation groups, anxious to protect Europe’s welfare and environmental standards, may feel they are winning the argument.
For now, any Ceta boost for small businesses and jobs has been postponed. The failure gives us a sense of how tough the Brexit talks will be, despite the UK’s current alignment with its EU partners.
Failure is bad news for Brexit – Andrew Walker, Economics Correspondent
One very obvious lesson from this impasse is that it is going to be difficult for the European Union to implement trade and investment deals, perhaps with anyone.
For the UK post-Brexit it suggests two contrasting implications. Negotiating a trade agreement that gives British exporters barrier free access to the EU’s single market could be a huge challenge.
For sure, there will be some important differences. For the EU, Britain is a more important export market than Canada, so some EU states will have a good deal to lose from failing to agree. But securing the agreement of all of them is unlikely to be straightforward.
On the other hand, negotiating an agreement with other countries outside the EU should become easier. To put it bluntly, the British government won’t need to care what the Walloon parliament, for example, thinks.
Ceta: EU ‘not capable’ of signing deal says Canadian minister