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EU aims to fend off populist backlash to save Canada trade pact

European Union negotiators hastened across the Belgian countryside to quell domestic concerns that a free-trade agreement with Canada isn’t fair, as some of the bloc’s leaders voiced skepticism about the bloc’s ability to rescue the deal.

Twenty-seven of the 28 EU nations endorsed the agreement while Belgium’s French-speaking southern region of Wallonia threatens to scuttle the bloc’s first commercial accord with a fellow member of the Group of Seven leading industrialized countries. European Commission representatives were still huddling with Walloon diplomats in Namur after a leaders’ summit dispersed in Brussels where they discussed the deal, which requires unanimous support.

“All of us including the commission have been working hard on the Canada agreement,” European Commission President Jean-Claude Juncker said after the meeting in the Belgian capital. “I hope that we’ll be able to see an agreed settlement in a few days with the Walloons, our friends, because I believe this CETA agreement is the best agreement we have ever been able to negotiate to date.”

At stake is an accord known as the Comprehensive Economic and Trade Agreement that the EU says would boost its economic output by about 12 billion euros ($13 billion) a year and expand EU-Canada trade by about a quarter. Any collapse of CETA, which took five years to negotiate, would take the steam out of a series of separate negotiations with the U.S., Japan and other countries as a wave of populist parties around the world challenge the benefits of free trade.

Canadian Trade Minister Chrystia Freeland on Friday walked out of talks aimed at clinching final EU backing for the pact, Freeland spokesman Alex Lawrence said.

The U.K.’s plan to leave the EU has hovered over the CETA-ratification drama because trade is a core European policy and the bloc’s push over many years to use its economic weight to open markets worldwide has been a central argument for the merits of membership. Should the EU falter in ratifying the deal with Canada, the bloc risks losing credibility both with global partners and with a host of its own trade-friendly member nations long allied on commercial matters with Britain.

“I’m afraid we won’t be able to negotiate free-trade agreements if we don’t prove in practice that we are very serious about protecting European consumers, workers and companies,” EU President Donald Tusk said after the meeting. I remain concerned “for Europe’s reputation,” he said.

The accord would end 98 percent of tariffs on goods traded from the outset and 99 percent after seven years. Each side would dismantle all industrial tariffs and more than 90 percent of agricultural duties. Markets for services and public procurement would also be opened.

Canadian Prime Minister Justin Trudeau has signaled the EU’s raison d’etre would be in doubt should CETA falter during the ratification process.

“If in a week or two we see that Europe is unable to sign a progressive trade agreement with a country like Canada, then with whom does Europe think it could do business in the years to come in this post-Brexit situation when there are many questions about Europe’s usefulness?” Trudeau said last week, according to Radio Canada International.

Wallonia, which accounts for less than 1 percent of the EU’s population, wants CETA reopened to add safeguards. The stance is tying the hands of the Belgian federal government, which is in favor of CETA.

Earlier this week, the Belgian bickering prevented EU trade ministers from taking the first step in the European ratification process of CETA by giving the green light to the deal. Instead, the ministers left it to EU government leaders to tackle.

Lithuanian President Dalia Grybauskaite signaled that the EU has faced a basic dilemma in trying to find the right degree of consultations on CETA with Wallonia. “Partly we are hostages of internal politics of one country,” Grybauskaite said.

Belgian Prime Minister Charles Michel told reporters on Friday that he “wasn’t reassured” because there has been a “radicalization of the positions of the Walloon government.” Room for compromise has been offered through a declaration that the European Commission, the EU’s executive arm, has been drafting to accompany the trade deal.

Estonian Prime Minister Taavi Roivas said after the leaders’ meeting that the EU’s “credibility as a union is at stake” and signaled the collapse of CETA would bury the separate European negotiations with the U.S. on the Transatlantic Trade and Investment Partnership.

“If Europe fails with CETA, it’s very difficult to imagine we can be successful with TTIP,” Roivas said. “This is very serious.”

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