It was billed as the very model of a modern trade deal, a new kind of pact between two advanced economies designed for a world grown uneasy about globalization. The European Union’s Comprehensive Economic and Trade Agreement with Canada wouldn’t only remove 98% of tariffs, open up the EU’s protected agricultural markets to Canadian farmers and allow EU companies access to Canada’s lucrative public-procurement market. It would also do so while setting new safeguards for national choices over labor and environmental standards, public services and the role of the state.

Yet CETA’s future now lies in doubt, held for ransom by the tiny Belgian region of Wallonia, with a population of just 3.5 million, whose parliament voted on Friday to block Belgium’s ratification of the deal at a planned EU-Canada summit on Oct. 27, citing concerns that the deal gives too much power to multinationals. That followed a ruling by the German constitutional court earlier in the week, which gave the green light for Berlin to ratify CETA but set conditions that EU officials fear could create new obstacles.

What is clear is that CETA’s failure would be a humiliation for the EU. “It would put EU trade policy into a deep coma,” says one senior trade official. If the EU can’t deliver a deal with Canada—with which it shares much of the same outlook on the role of the state and provision of public services—who can it do a deal with? The EU currently has seven other trade deals covering 31 countries awaiting ratification and 20 trade negotiations covering 50 countries in progress, including proposed deals with the U.S., Japan and Mexico. CETA’s rejection would undermine confidence in the EU’s credibility as a negotiating partner, signaling that it can’t deliver.

EU officials also know that failure to deliver CETA would further undermine the EU’s credibility in the eyes of its own citizens. After all, responsibility for trade policy is one of the main powers of the EU—member states aren’t allowed to cut their own deals.

When CETA was first proposed in 2009, Brussels believed an ambitious new trade agenda was one way the EU could demonstrate its relevance to increasingly skeptical voters by helping governments find new sources of growth as they struggled to respond to the global financial crisis. Even now, the overwhelming majority of governments support CETA and other trade deals.

But if CETA can be derailed by Wallonia, it will embolden those who argue that the EU is no longer capable of delivering free trade, held back by the protectionism of some of its members and its own dysfunctional governance. Indeed, this argument featured heavily in the Brexit referendum.

EU officials are fully aware that since the Brexit referendum, the EU faces a “beauty contest” to persuade potential partners that they should prioritize EU deals over bilateral deals with the U.K. If the U.K. can strike better deals than the EU, others may yet question the benefits of membership. On the other hand, the difficulties over CETA point to a wider issue that goes to the crux of the crisis of globalization: a growing popular hostility to supranational institutions that is increasingly undermining political support for all free trade deals.

The core of the resistance to CETA and the proposed Trans-Atlantic Trade and Investment Partnership deal between the EU and the U.S.—in Germany, Wallonia and other EU member states—is the creation of independent tribunals to settle disputes between investors and governments, which opponents fear hand too much power to multinational companies to challenge the political choices of national governments.

Confusingly, similar concerns over sovereignty lay at the heart of the Brexit referendum, in which opponents of EU membership campaigned against the jurisdiction of the European Court of Justice, the ultimate legal authority in disputes between members of the EU’s single market.

The European Commission insists that strong safeguards have been built into CETA, including clear commitments that the tribunals can’t be used to force governments to privatize services or prevent them from being nationalized. But if voters remain skeptical, it is in part because modern trade deals go well beyond simply eliminating tariffs, seeking in addition to remove regulatory barriers, ending discrimination, limiting state aid and ensuring fair competition.

That, in turn, takes them deep into areas that touch on national sovereignty, creating new scope for politically sensitive legal challenges. Recognizing this reality, the EU has reluctantly agreed to allow national parliaments a future vote on the supranational elements of CETA, raising the prospect that the deal could still fail, even if governments decide to ratify it.

Ironically, the biggest victim of this awkward precedent may be the U.K. Prime Minister Theresa May made clear this month that a post-Brexit Britain won’t accept the jurisdiction of the ECJ, implicitly signaling that the U.K.’s best hope of avoiding future barriers to trade with the EU is to seek a CETA-style free-trade deal. But that would require the consent of each of the EU’s 38 different parliaments and assemblies—including that of Wallonia.