Tortuous Ceta talks point to EU trade troubles ahead

Financial Times Financial Times

Accord has dealt blow to bloc’s credibility as deal negotiator

Protesters say CETA will give multinationals too much power and weaken EU laws and environmental standards © Reuters

A trade pact between Europe and Canada is back on track after a last-minute reprieve from regional leaders in Belgium who had taken the deal to the brink of collapse.

But the tortuous progress of the Comprehensive Economic and Trade Agreement suggests future trade deals involving the EU could face a similarly rough ride following weeks of bitter haggling over what was considered a done deal two years ago.

The arrangement to save Ceta was agreed on Thursday morning at the official residence of Charles Michel, Belgium’s prime minister, after a deal with the regional leaders who had vetoed his government signing the pact. The parties held 15 hours of inconclusive talks the previous day. Announcing the deal, Mr Michel said it was a “very important agreement for business and the economy”.

The agreement should allow Ceta to enter force provisionally. Still, a deal on a bitterly contested international court system must await final ratification by as many as 38 national and regional parliaments. This could take many years.

The deal was a culmination of a period of fractious engagements in which Chrystia Freeland, Canada’s trade minister, at one point walked out of talks in Namur, capital of the anti-Ceta stronghold of Wallonia. The Namur meeting coincided with last Friday’s EU summit in Brussels at which Mr Michel — and his European counterparts who had all agreed to Ceta — appeared powerless as the Wallonians seemed to scupper the deal.

With Belgium under huge pressure to find a solution, the talk shifted last Saturday to the office of Martin Schulz, the European Parliament president, who had no formal role in the Canadian negotiations. As hopes for a deal faded this week, they were moved again, this time to the Belgian foreign ministry in Brussels.

Wallonia, at one time Belgium’s economic heartland but now hit hard by years of industrial closures, led the anti-Ceta protests. Many objectors in the region were motivated by anti-globalisation sentiment. Although critics said the dominant Socialists were using the issue to reinforce their position against hard-left rivals, there was cross-party support for votes against Ceta.

“I’m sorry for all other Europeans and our Canadian partners that they had to wait, but what we managed to get here is important not just for Wallonia but for all of Europe,” said Paul Magnette, minister-president of Wallonia after the deal was reached.

But that is little comfort to the 27 other EU governments that had to sit on their hands while a region with a population of 3.5m held up a treaty they thought had been agreed. Nor does it provide much consolation to Canada as it waits for Europe to come good on promises made in five years of talks. Justin Trudeau, Canada’s premier, had been due to travel to Brussels to sign the deal but called off the visit at the last minute.

For the EU at large, the affair has dealt a huge blow to the bloc’s credibility as a trade negotiator. With anti-establishment sentiment on the rise, the difficulties faced by Ceta suggest any other EU trade deals would face similar treatment if they also require approval on a country-by-country basis. That may include any post-Brexit deal between Brussels and the UK — already a knotty proposition even before the Belgian ructions.

“What this implies in the overall scheme of trade negotiations is that greater scrutiny by member states is inevitable going forward. This is one of the big lessons that both member states and the EU will have to learn,” said Lourdes Catrain, partner at legal firm Hogan Lovells in Brussels.

Failure was averted only when Belgian leaders endorsed an “interpretative declaration” on the most contentious elements of the Ceta — the court system to deal with trade disputes, which is a particular concern for Walloon MPs. The declaration makes it clear that the objectors will not conclusively ratify Ceta on the basis of this dispute settlement system “unless otherwise decided by their respective parliaments”. This points to problems ahead.

For now the ball is in the court of the five regional Belgian parliaments that voted against Ceta, and which have a deadline of midnight on Friday to withdraw their objections.

“Parliaments will have the last word,” Mr Michel said. The problem for Ceta and other EU trade deals is that parliaments do not always agree with governments.