Belgian region blocks Canada deal

EU’s executive commission called for patience in an attempt to save the free trade deal

In a major embarrassment to the European Union, a small region of Belgium continued to withhold yesterday its necessary support for a landmark free trade deal that the rest of the bloc and Canada wanted to sign this week.

While it remained unclear whether negotiations would resume with the francophone region of Wallonia, it was highly likely the EU would have to call off Thursday’s summit to sign the deal with Canadian Prime Minister Justin Trudeau.

“We have been asked to give a clear answer today,” on whether Belgium could sign up as the last of 28 member states,” said Belgian Prime Minister Charles Michel after meeting with Wallonia leader Paul Magnette. “And the clear answer, at this stage, is no.”

Eager for deal

Even though Michel is eager to sign the deal, Belgium’s byzantine constitutional setup means every single region in the country needs to back it, not only the national government. As a result, opposition from a region of 3.5 million could now nix a deal between over 500 million EU citizens and 35 million Canadians.

The EU’s executive Commission called for patience in an attempt to save the free trade deal and had already dismissed yesterday night’s deadline as counterproductive. EU Commission chief Jean-Claude Juncker and EU President Donald Tusk, representing the world’s biggest trading bloc, were due to speak with Trudeau by phone later yesterday to explain the situation.

Yesterday, Wallonia President Business activity in the Eurozone has expanded at the fastest pace this year so far in October, as a buoyant Germany offset the impact from firms raising prices at the sharpest rate in more than five years, a survey showed.

The upturn in both activity and prices will make welcome reading for policymakers at the European Central Bank, who left their ultraloose policy unchanged last Thursday but kept the door open to more stimulus in December.

IHS Markit’s Eurozone flash composite Purchasing Managers’ Index, seen as a good overall growth indicator, jumped to 53.7 from September’s 52.6.

It was far above the 50 point line indicating growth in activity and smashed even the highest forecast in a Reuters poll of economists which had predicted a more modest rise to 52.8. Paul Magnette insisted he would agree to nothing under the threat of an ultimatum but remained open to further talks.

“Each time they put forward such an ultimatum it makes a serene discussion and a democratic debate impossible,” Magnette said. “I indicated that other parallel political contacts are still going on and that we could give counter proposals.”

The EU Commission, which has negotiated the deal on behalf of the 28 nations, insisted that this week’s summit was not the final deadline.

“Now, we need patience,” said EU Commission spokesman Margaritis Schinas. “The Commission traditionally does not set deadlines or ultimatums.”

Over the past week, Belgium missed two deadlines that the EU had set to agree to the deal.