Ceta failure deepens EU trade crisis

She said it was "impossible" to find an agreement with the Belgian region's leadership over a declaration to give guarantees on some elements of the Comprehensive Economic and Trade Agreement (Ceta).



Earlier on Friday, Wallonia's minister-president Paul Magnette, backed by the region's parliament, said that he wanted more details on a settlement mechanism and public services.

Wallonia's consent was necessary to allow the Belgian government to back Ceta, and in turn allowing the EU to formally sign the deal at an EU-Canada summit next week.

However; the European Commission said on Friday evening, that the talks failure did not mean the end of the agreement.

Ceta's apparent failure came just hours after EU leaders reaffirmed their commitment to free trade, but admitted they had to "take into account the concerns of [European] citizens."

The discussion at an EU summit in Brussels had been planned for a long time, but "Ceta cast a shadow" on the meeting, an EU official said.

Leaders were updated several times about the talks in Namur between the Walloon government, Canada, and the European Commission, and the region's parliament's debate.

Faced with a growing popular opposition to free-trade deals such as Ceta and the in-the-works Transatlantic Trade and Investment Partnership (TTIP) with the US, EU leaders insisted that "many millions of jobs in the EU depend on trade, which is and will remain a powerful engine for growth."

They added that "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 as the right of governments to regulate."

A senior diplomat pointed to opposition to EU trade policies as part of "the growing contestation of the negative consequences of globalisation, of which trade deals are considered a vector".

He noted that trade negotiations used to be on goods and market access and were mainly about the level of protection for producers. Now they are about services and environmental, social, consumers issues, and consumers and citizens are more concerned than companies.

Litmus test

To regain support for free trade, the EU must "demonstrate that new agreements contribute to the regulation of economy that we need to have," the diplomat said.

While TTIP had been the main targets of trade critics in recent years, the signature process for Ceta and Walloon resistance makes the EU-Canada deal a litmus test for Europe.

Ceta "could be our last free trade agreement, if we are not able to convince people that we negotiate to protect their interests," European Council president Donald Tusk warned on Thursday.

"The debate is about which globalisation we want," Wallonia's leader Paul Magnette said on Friday.

But this argument is lost on one official.

"I am astonished that when we conclude a trade agreement with Vietnam, which is known worldwide for applying all democratic principles, nobody raises his voice. Whereas if we conclude an agreement with Canada, which as we know is an accomplished dictatorship, everybody gets excited to tell us that we don't respect human rights and economic rights," Juncker said ironically on Friday.

EU leaders tasked on Friday the commission with pursuing talks with Japan and the US. But on a cautious note asked the EU executive to "be able to present" an "ambitious, balanced and comprehensive" TTIP agreement, while in earlier versions of the summit conclusions the commission was merely asked to "conclude" the deal.

It is the first time that no commitment on a date is taken, but it is "an acknowledgment of reality," the diplomat said. "The gap is too wide" between EU and US positions.

Trade defence

As a way to reassure citizens on the impact of free trade, EU leaders also said insisted that "unfair trade practices need to be tackled efficiently and robustly."

They discussed the so-called trade defence instruments to protect EU economy from trade dumping, especially on Chinese products.

A proposal to strengthen anti-dumping measures have been blocked in the council of EU trade ministers since 2013, especially over the issue of a lesser duty rule, by which tariffs are imposed at the lowest level possible.

Britain and Nordic countries still resist an increase in tariffs, which other countries led by France and Germany are pushing for.

"'Effective trade defence instruments should be proportionate, not protectionist," a UK source said, while British prime minister Theresa May insisted that they should be decided in the "interest of users, producers and consumers."

On the opposite, Juncker said that the EU should not abstain from imposing high tariffs "if Americans and others are doing these things."

"We are not protectionist, but we are not naive," he told journalists after the meeting.

Diplomats said that the discussion on trade defence between leaders who share the same concerns over the overall trade policies allowed a "change of atmosphere" that could lead to an agreement at ministers level later this year.

Backlash

The focus on the lesser duty rule was shifted to a more political call for "a comprehensive modernisation of all trade defence instruments."

Besides concerns over the popularity of trade deals, the political aspect of the discussion was reinforced by the looming deadline to decide whether the EU grants China a market economy status (MES).

The MES issue was discussed only on the sidelines, several leaders mentioning Chinese dumping in discussions.

While protecting Europe from cheaper goods is an issue, the failure on Ceta shows that the way the EU negotiates trade deals needs to be reviewed.

International trade deals are an exclusive power of the EU commission. That leads to reproaches of a lack of transparency, with a backlash when national politicians or NGOs start looking into the details.

In the end, a 3.5-million strong Belgian region negotiated directly with Canada and doomed an agreement that had been under discussion for seven years.