EU leaders face ‘credibility’ test with CETA

Trade Commissioner Cecilia Malmström highlighted that if EU cannot strike a deal with Canada, "I don´t think we can make it with the UK". [European Commission]

Belgium’s Wallonia region will be at the centre of attention when EU heads of states and government meet tomorrow and Friday (20-21 October), as the French-speaking region’s opposition to a proposed EU-Canada free trade agreement is expected to dominate summit talks.

Officials underlined the importance of concluding the ratification process of the EU-Canada Comprehensive Economic and Trade Agreement (CETA), as the bloc seeks a new relationship with Britain and eyes new trade deals, including with Japan.

Romania and Bulgaria are still demanding Canada allow visa-free travel for its citizens. But the biggest risk to finding unanimity was Wallonia.

Bulgaria and Romania maintain reservations on CETA

Bulgaria and Romania have asked for written assurances by Ottawa yesterday (18 October) before removing their veto on the proposed Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada.

“We are working to find a solution, including for Wallonia,” a senior EU official said on Tuesday (18 October).

Belgian region of Wallonia blocks EU-Canada trade deal

Lawmakers in the small Belgian region of Wallonia today (14 October) voted to block an EU-Canada trade deal in a move set to have serious implications for future trade talks with the US and a non-EU UK.

EU Trade Commissioner Cecilia Malmström conceded that much more was at stake than just the EU-Canada trade deal.

“There are of course bigger things at stake than only this agreement,” she said after EU trade ministers failed to come up with a solution at a meeting in Luxembourg on Tuesday.

“It’s about the credibility of the European Union to conclude trade agreements in the future,” she added, passing on the hot potato to EU leaders who are meeting in Brussels.

European Council President Donald Tusk, who chairs EU leaders’ talks, said he expected to find a solution during the Brussels summit.

But a senior EU official explained that the only deadline is the EU-Canada summit scheduled for 27 October.

Canadian Prime Minister Justin Trudeau was expected to stamp his signature in Brussels. But if no solution is found by then, “we will have to refund his tickets,” an official jokingly said.

Despite Wallonia’s rejection of CETA, Belgium’s federal government kept the door open to a compromise that could see the trade agreement signed during the EU-Canada summit.

Wallonian deputies blocked the ratification process last week, citing concerns about the impact of the trade deal on public services and farmers.

Germany free to sign CETA after top court rejects case

Germany’s Constitutional Court has rejected an appeal brought against the EU’s free trade deal with Canada (CETA). The door is now open for Berlin to sign the agreement. EURACTIV Germany reports.

Negotiations between Belgium’s federal government, Wallonian authorities and the European Commission intensified on Tuesday in order to find a solution.

“We all agree on how important the agreement is for Canada and the EU,” a senior EU official commented.

He admitted that the EU is not “the easiest” negotiating partner. “We are creating a lot of problems that sometimes surprise our partners,” the official said.

“The Canadians have been very patient,” Malmström commented. “It’s not easy. We are 28 and we have slow procedures,” she noted.

Opposition to free trade agreements, including CETA and the EU-US Transatlantic Trade and Investment Partnership (TTIP), has grown over the past months in Europe. Citizens’ organisations and left-wing politicians warned in particular that the agreement could jeopardise EU’s safety, environmental or consumer protection standards.

They also warned that the draft deal “weakens governments’ rights to regulate in the public interest”.

CETA not the progressive agreement it claims to be

The EU-Canada trade agreement (CETA) will raise international standards while creating jobs, according to its supporters. Both assumptions are wrong: if CETA really was such a progressive agreement, it would have been negotiated in a transparent way and democracy would not have been undermined by preliminary application, argue a number of MEPS.

Anti-trade demonstrations in Europe have echoed the rise in protectionism in the US led by Republican candidate Donald Trump.

A precedent for Britain?

CETA is also seen as a test case for the EU’s future negotiations with Britain. The agreement could serve as a “precedent” for Brexit talks, Spain’s acting foreign affairs minister, Jose Manuel Garcia Margallo said on Monday.

Last March, Brexiteer and Foreign Affairs minister Boris Johnson said he expected that Britain could strike a deal with the EU “as the Canadians have done based on trade and getting rid of tariffs.”

Canadian envoy: To make CETA succeed, governments must redistribute wealth

Wealth created by trade needs to be evenly shared, so that everyone profits from it, Canada’s Ambassador to the EU, Daniel Costello, told, ahead of a likely signing of the EU-Canada trade deal.

“It’s a very, very bright future I see,” he said.

But Malmström was less positive. On Tuesday, she warned: “if we can’t make it with Canada, I don’t think we can make it with the UK”.

Any deal between the UK and the EU will have to be ratified across the EU’s 28 member countries, including Belgium’s Wallonia region.

A new consensus on trade

In light of public opposition to trade deals, Tusk wants to renew the consensus on trade policy. While he intends to underline the benefits brought by commerce with foreign partners, he is aware of the concerns raised in EU member states.

The goal is “to regain citizens’ trust,” a senior EU official explained.

According to the latest draft conclusions of the summit, seen by EURACTIV, the EU “will continue to address citizens’ concerns.”

“EU trade interests include fully defending and promoting the social, environmental and consumer standards that are central to the European way of life as well the right of governments to regulate,” reads the draft text.

EU leaders will also discuss the modernisation of trade defence instruments, in particular the so-called “lesser duty rule” that limits the bloc’s ability to slap anti-dumping duties, like in the EU-China dispute on steel.

EU division dilutes efforts against steel dumping

Over 5000 steel employers and workers will take the streets in Brussels today (15 February) calling for more protection from Chinese imports, as the Commission and Dutch presidency were passing the buck on increasing tariffs.

The EU could not impose higher anti-dumping measures as member states failed to adopt a position on this issue since a proposal was put forward by the Commission in 2013.

Although no decisions are expected during the summit, officials said the bloc aimed at reaching an agreement by the end of the year.

The sense of “urgency” on trade has increased since the EU is expected to grant market economy status to China by December 2016.

Trade issues will be on the leaders’ plate on Friday. The day before, they will discuss migration and Russia. Conclusions will also be adopted on Syria.

British Prime Minister Theresa May is also expected to inform the Heads of State or Government about her decision to trigger article 50 next March.

Dutch Prime Minister Mark Rutte will explain to his colleagues how he intends to proceed with the ratification process of the EU-Ukraine free trade deal after Dutch citizens voted against the pact last April.

Greenpeace EU trade policy adviser Shira Stanton said: “After years of secret negotiations and last-minute declarations to paper over the cracks, it’s no surprise that CETA does not have unanimous political support. The disagreements among ministers show how out of touch most of them are with their citizens. It’s time to hit the reset button and put people, health and environmental protection at the heart of trade policy.”

The EU's current trade relations with Canada are guided by a Framework Agreement for Commercial and Economic Cooperation, in force since 1976.

The EU and Canada launched CETA negotiations in May 2009 and agreed on the content and its general strategy in June 2009.

The European Commission proposed the signature of the EU-Canada Comprehensive Economic and Trade Agreement (CETA) to the Council of the EU in July 2016. If the Council approves the agreement, it will need the European Parliament consent for it to be finalised.

The national parliaments of the EU Member States would then also need to ratify CETA for the areas which fall under their responsibility to take effect.

This ratification procedure follows the release of the legally reviewed CETA text in February 2016.

In 2015 Canada was the EU's 12th most important trading partner, accounting for 1.8% of the EU's total external trade. The EU was Canada's second most important trading partner, after the US, with around 9.5% of Canada's total external trade in goods in 2015.

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