Freeland ‘walks out’ on talks with Belgian holdouts on Canada-EU trade deal

OTTAWA – They’re listening carefully to the noisy argument spilling out of their neighbour’s house — but for the moment they’re giving the appearance of keeping their noses out of it.

That essentially is the Canadian government’s position with the deadline looming for European Union countries to approve their wide-ranging free trade deal with Canada.

The EU’s internal dispute centres on persuading the president of the Belgian region of Wallonia to climb down from his opposition to the deal.

Because of Belgium’s constitution, Wallonia — a tiny region of 3.5 million people — now holds a deal-killing veto over the pact between the EU’s 500 million citizens and Canada.

Unless Wallonia can be persuaded to buy into the Comprehensive Economic and Trade Agreement, a deal that took seven years to negotiate will go down in flames.

Paul Magnette, the president of Wallonia, spent hours talking with International Trade Minister Chrystia Freeland to find a compromise after she held talks on Thursday with Belgium’s foreign minister.

Freeland reportedly walked out of today’s talks without any progress.

“Difficulties remain,” Magnette says, adding that a key issue was how nations and multinational corporations would settle disputes under the deal.

Magnette said the talks would continue, but suggested any deal might not be ready in time for Canadian Prime Minister Justin Trudeau’s visit to Brussels next Thursday.

“I plead that, in an amicable way, we jointly postpone the EU-Canada summit and that we give ourselves time,” he says.

If the deal fails, it will likely destroy any possibility of the EU ever negotiating a similar trade deal, including with the United States, not to mention Canada’s ambitions of deepening economic relations with the richest group of countries in the world.

“This is now a question for Europeans to decide,” said a senior Canadian official, who was not authorized to speak on the record about the talks.

EU Commission President Jean-Claude Juncker said he had invited Freeland to join in the talks with the EU and Belgium.

Belgian Prime Minister Charles Michel said he had worked through the night in an effort to broker a deal, including speaking to Prime Minister Justin Trudeau, who is supposed to fly to Brussels next week to sign the deal.

But with the deal hanging in the balance, Trudeau has yet to publicly announce whether he will attend the Oct. 27 Canada-EU summit, a date set months ago as the official signing date for CETA.

Entering an EU summit early Friday, Michel said he did not want to say anything “that would pour oil on the flames” and said he feared positions were hardening as efforts continued to find a solution.

“We need this trade arrangement with Canada,” said Juncker. “It is the best one we ever concluded and if we will be unable to conclude a trade arrangement with Canada, I don’t see how it would be possible to have trade agreements with other parts of this world.”

EU President Donald Tusk said Thursday that if the EU can’t convince people that trade agreements are in their interest, then, “I am afraid that CETA could be our last free trade agreement.”

Trudeau and his ministers have issued similar warnings in recent weeks.

But in these final tense days, they are holding their fire in an apparent attempt to give their EU partners space to work on the Walloons — and to avoid inadvertently saying anything that would further offend or embolden them.

“This is an internal matter for the EU, but that doesn’t mean Canada isn’t listening, watching — being attentive,” said the senior Canadian official.

The Walloons want more guarantees to protect farmers and fear being crushed by large trade deals, including the one with the United States that would be pursued if CETA succeeds.

Proponents say the deal would yield billions in added trade through tariff cuts and other measures to lower barriers to commerce. At the same time, the EU says it will keep in place the region’s strong safeguards on social, environmental and labour issues.

German Chancellor Angela Merkel insisted Thursday that it was still business as usual for the world’s largest trading block.

“I tell you: You can continue to trust Europe as a trading partner,” she said.

There are two main ways the Walloons could be placated:

— Stronger language favoured by the Walloons could be added to the current five-page joint interpretative declaration that is being appended to the deal.

— A deal among the European Commission, the Belgian government and the Wallonia regional government could allow the Walloons to claim some sort of face-saving victory.