EU-Canada trade deal hangs in the balance

A free-trade deal between Canada and the European Union is on the brink of ruin in a case being watched closely by those preparing for Brexit.

Belgian Prime Minister Charles Michel has told European Council President Donald Tusk that his country cannot agree to the deal.

Known as CETA (Comprehensive Economic and Trade Agreement), the deal needs unanimity among the 28 EU nations.

Mr Michel had to get agreement from each region in his country but French-speaking Wallonia remains opposed, arguing the deal would undermine labour, environment and consumer standards.

Wallonia President Paul Magnette, whose region has a population of just 3.5 million, said the main problems were not with Canada, which has already agreed to changes, but with the EU authorities.

He says he wants to push for a better deal to improve standards and set a good precedent for future deals.

Canadian Prime Minister Justin Trudeau is due in Brussels on Thursday for a summit that would culminate in the signing of the pact.

It is unclear whether the Wallonians can be convinced to back the deal in time but Mr Magnette said he would not agree under the threat of an ultimatum.

"Each time they put forward such an ultimatum, it makes a serene discussion and a democratic debate impossible," he said.

EU Commission spokesman Margaritis Schinas said that Thursday's summit was not a deadline.

"Now (Frankfurt: 11N.F - news) we need patience," he added. "The Commission traditionally does not set deadlines or ultimatums."

The other 27 EU nations have already given their support to the arrangement, which would eliminate 98% of tariffs between the EU and Canada and could increase trade by 20%

Pressure has increased on Wallonia to drop its objections over a deal seven years in the making and covering over 500 million EU citizens and 35 million Canadians.

Some of the Wallonians' objections rest with an arbitration system - the Investor State Dispute Settlement (ISDS) - that allows foreign companies to challenge what is described as state interference.

"We do not want private arbitration in which multinationals can attack nations," said Mr Magnette.

Critics say it allows multinationals to dictate public policy, but those involved in the EU-Canada negotiations say that the tribunals would be appointed by governments on both sides, with no corporate input.

The system is a staple of trade agreements, included in more than 1,400 investment treaties.

The negotiations are seen by some as a litmus test ahead of Brexit talks.

Attending her first EU summit this week, Prime Minister Theresa May said it was "important" the bloc concluded its deal with Canada.

But she added: "We're not looking to adopt another model that somebody else has in relation to their trade with the European Union.

"What we want is to develop what is a new relationship for the UK when we're outside the EU.

"What we want is to ensure that we have the right deal for the United Kingdom. And I'm optimistic about that."