Canada and the EU remain hopeful that CETA, the EU’s most ambitious free trade deal, can still go through

IFM Correspondent

October 25, 2016: The Canadian economy has been facing a serious slump due to a number of reasons. To add to its woes, negotiations over a key trade deal – the Comprehensive Economic and Trade Agreement (CETA) –  are in crisis. The Agreement, which would do away with tariffs on most goods between the EU and Canada, has been in meltdown since October 21.

The Agreement, which has been in the making for seven years, is the EU’s most ambitious free trade deal to date. The breakdown in talks would mean the freezing up of trade worth about $70 billion a year and about $285 billion of direct investment.

Failure of negotiations with Wallonia

Standing between Canada and the trade deal with the EU is the relatively small population – 3.5 million – of Wallonia, a French-speaking region in Belgium, which has refused to favour the deal. The EU, having a population of 510 million people, is a single market and calls for unanimity on trade deals.

Chrystia Freeland, Minister of International Trade, Canada, announced on October 21 the ‘end and the failure’ of talks with the government of Wallonia.

Although Wallonia enjoys some support for its position elsewhere in the EU, of the 28 nations that make up the bloc, Belgium has been the only member state that has not endorsed the CETA.

Why talks derailed

CETA proposes to link the EU market with that of Canada – the world’s tenth largest economy. The trade deal is being opposed by groups that stand against globalisation who claim that that the CETA is a testing of the waters in order to push through an even more contentious EU-US trade agreement by name TTIP, the negotiations surrounding which have also stalled.

The ultimatum to Wallonia

The EU communicated to Belgium that it expected Prime Minister Charles Michel to make its position on CETA clear and had given the Belgian federal government time until October 24 for the same.

The leader of the socialist-run Wallonia region, Paul Magnette, reacted to this mandate by stating that the ‘ultimatum is not compatible with the exercise of democratic rights’. Despite efforts by the EU to reassure his government regarding investment protection, which remains a major obstacle in the negotiations between Brussels and Wallonia, Magnette struck out at the EU, saying, “We will never decide anything under an ultimatum or under pressure.”

Latest developments

If Prime Minister Michel cannot assure European Council president Donald Tusk that Belgium will allow the Agreement to go through, the planned EU-Canada summit to be held on October 27 in order to sign the pact will be indefinitely postponed.

For now, though, things remain hopeful, with Chrystia Freeland, the Canadian Minister of International Trade saying, despite setbacks on October 24, that ‘CETA isn’t dead yet’.