Belgian regions set to block EU-Canada free trade deal

[October 11, 2016]  By Philip Blenkinsop

BRUSSELS (Reuters) - Southern Belgium is set to block a planned EU-Canada free trade agreement, threatening to undermine the EU's entire trade policy and serving as a warning to British hopes of a speedy deal after Britain has left the European Union.

EU trade ministers will vote in a week on the Comprehensive Economic and Trade Agreement (CETA), which requires unanimous support to enter force. Belgium's federal government favours the pact, but needs the backing of the country's three regions and linguistic communities to give its formal approval.

Lawmakers in French-speaking Wallonia, except Prime Minister Charles Michel's liberal MR, oppose CETA because they see it as a threat to farmers, through a flood of imported pork and beef, and public services and over its system of investor protection.

"We had hoped that the negotiators would have at least tried to find some improvements, some corrections for Belgium. Today that's hasn't happened," Andre Antoine, president of the Walloon regional parliament told Reuters.

"We will probably have, though I will leave it for each to say, a rejection by Brussels, in Wallonia and likely too the German-speaking side. Simply put, the south of Belgium is not in favour," he added in a telephone conversation late on Monday.

Trade experts say failure to seal a deal with Canada will undermine the EU's credibility as a potential trade partner.

"If the EU cannot do a deal with Canada, I think it is legitimate to say who the heck can it do a deal with," Canadian Trade Minister Chrystia Freeland said in June.

The European Commission, which negotiates on behalf of the 28 EU nations, is also seeking trade agreements with a series of other countries, including the United States and Japan.

Britain, set to leave the EU, would also have to forge a new trading arrangement with the EU27, any one of which could block a negotiated settlement.

Critics, including environmental groups and labour unions, say CETA and other trade deals will worsen standards and allow big business to challenge governments across Europe. [L8N1BW3TG]

Thousands of people demonstrate against the Transatlantic Trade and Investment Partnership (TTIP) and the EU-Canada Comprehensive Economic and Trade Agreement (CETA) in the centre of Brussels, Belgium September 20, 2016. Reuters/Eric Vidal

CETA supporters say the deal, the EU's first with a G7 nation, will increase trade in goods and services by more than 20 percent and EU economic output by about 12 billion euros ($13.4 billion) per year, boosting the economy and employment at a time of low growth.

Belgium's regions are not the only threat to CETA.

Austria's Social Democrat Chancellor Christian Kern is wavering, Slovenia's government has concerns, Hungary may still put it to a parliamentary vote, while Romania has said its support is conditional on Canada agreeing a separate deal to allow visa-free travel access.

Germany's Constitutional Court will also rule on a legal challenge to CETA on Thursday.

(This version of the story corrects the name of Walloon parliament president)

(Additional reporting by Marja Novak in Ljubljana and Krisztina Than in Budapest; Editing by Alexandra Hudson)

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