Canadian Pact

Belgium Clears Path for E.U.-Canada Trade Deal

  • Why it matters

    Why it matters

    The collapse of E.U.-Canada trade talks had threatened to undermine the European Union’s entire trade policy. Businesses had pushed hard for a breakthrough.

  • Facts

    Facts

    • The E.U.-Canada trade deal known as CETA was agreed between the European Commission and Canadian government, but still had to be approved by all 28 E.U. governments.
    • Canadian Prime Minister Justin Trudeau had initially planned to travel to Brussels Thursday for a signing ceremony but cancelled his trip earlier Thursday.
    • The French-speaking region of Wallonia in Belgium had opposed the deal, blocking the entire European Union from approving it. A compromise Thursday has cleared a path.
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POLITICS CONSULTATION COMMITTEE
Belgian Prime Minister Charles Michel on Thursday confirmed a breakthrough on the E.U.-Canada trade deal. Source: DPA

A major breakthrough in negotiations will allow the E.U.-Canada free-trade pact to go forward after all, the Belgian government said Thursday.

Belgium had been blocking the 28-nation European Union from approving the pact amid objections from its French-speaking province Wallonia. The country’s prime minister, Charles Michel, on Thursday afternoon said a compromise with the Wallonians had been reached that should allow the Belgian government to sign the deal, known as CETA.

“All parliaments are now able to approve by tomorrow at midnight,” Mr. Michel said in a statement posted on Twitter.

The collapse of the trade talks had been seen as a major embarrassment for the European Union and a threat to its ability to negotiate trade deals. The German government has been a strong backer of the E.U.-Canada agreement despite the objections of many of its citizens.

The problem: CETA is just one of many trade hurdles on the horizon. A senior member of Chancellor Angela Merkel’s center-right Christian Democrats, Michael Fuchs, said the European Union cannot allow such an impasse to happen again. 

“The E.U. has to remain a strong and reliable partner,” Mr. Fuchs, who leads the Christian Democrats in parliament, told Handelsblatt. “It can’t allow this kind of back and forth. On the contrary, the E.U. has to become better able to act in the face of increased global challenges.”

Although the E.U.’s executive arm leads trade negotiations for the bloc, the governments of all 28 nations have demanded that they too must approve any deal reached. Due to Belgium’s own quirky government construct, made up of regional parliaments for each different language section of the country, Wallonia had been able to block the entire European Union from signing the pact with Canada.

Wallonia demanded stronger guarantees for its farmers and better protections for European labor, environmental and consumer standards.

Last-gasp negotiations to bring Wallonia on board have been continuing since last week, and had long looked doomed to fail. Canada’s trade minister, Chrystia Freeland, walked out of talks Friday, expressing frustration with Wallonia’s stance and declaring the pact likely dead.

Canadian Prime Minister Justin Trudeau had hoped to fly in on Thursday to sign the deal, but cancelled the trip earlier in the morning amid the stalemate. Negotiations have continued regardless.

European Council President Donald Tusk in a statement Thursday welcomed the “good news” on the breakthrough, but said he would contact Mr. Trudeau “only once all procedures are finalized for the E.U. signing CETA.” Canada’s Foreign Minister Stéphane Dion offered a similarly cautious welcome, saying it would be “fantastic news” once it has been fully substantiated.

The socialist prime minister of Wallonia, Paul Magnette, also welcomed the agreement reached with the Belgian central government as a “victory” for Wallonia and all Europeans. Mr. Magnette also apologized for holding up the process to approve CETA.

“I am sorry that the other Europeans and our Canadian partners had to wait,” Mr. Magnette said.

Justin Trudeau
Canadian Prime Minister Justin Trudeau can breathe more easily too. Source: DPA

A large segment of the European public has turned sour on free-trade deals over the past year – similar to the anti-trade undercurrent in the United States – with consumer groups and other non-governmental organizations arguing it could undermine product, environmental and labor standards.

But the business community had lobbied hard for Brussels not to turn its back on the Canada pact, warning about serious consequences for the E.U.’s credibility and for the continent’s economy.

“We finally need clarity in Europe,” Ulrich Grillo, president of the German industry association BDI, said in a statement Thursday morning, shortly before the compromise was announced. “The unclear competences on E.U. trade policy are threatening to create a total E.U. blockade.”

Guy Verhofstadt, a former Belgian prime minister who now heads the liberal party wing in the European Parliament, said the entire episode should serve as a warning: “Europe should learn from this: take the citizens’ concerns on board and get rid of the unanimity rule paralyzing the E.U.,” he said in a statement on Twitter.

Thursday’s deal doesn’t necessarily make an E.U. trade pact with the United States any more likely. Brussels and Washington have been negotiating a trans-Atlanctic treaty for the past few years and initially promised to finish by the end of this year. But the stumbling blocks remain large and opposition even stronger than that facing the E.U.-Canada agreement.

 

Christopher Cermak is an editor with Handelsblatt Global Edition in Berlin. Dana Heide of Handelsblatt also contributed to this story. To contact the author: cermak@handelsblatt.com

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