Blow to Europe as Belgium baulks at EU-Canada trade pact

Europe suffered a new blow when Belgium conceded it could not give the support needed for the EU to seal a landmark free trade deal with Canada by a late Monday deadline.

The development deepened the turmoil in a European Union shaken by a series of crises, particularly Britain's shock June Brexit vote, and highlighted growing popular distrust of international trade deals and the leaders who negotiate them.

"We are not in a position to sign CETA," Belgian Prime Minister Charles Michel said after brief talks with the country's regional leaders in Brussels broke up without an accord on the Comprehensive Economic and Trade Agreement (CETA).

To go ahead, all 28 EU member states must endorse the deal that would link the EU market of 500 million people, the world's biggest, with the 10th largest global economy.

Some EU officials said there was still time to conclude the agreement despite fears among some supporters it was now close to collapse.

"The federal government, the German community and Flanders said 'yes.' Wallonia, the Brussels city government and the French community said 'no'," Michel said.

Leaders of Wallonia, a 3.5 million strong French-speaking region south of the capital Brussels, are in particular asking for more time to negotiate terms.

European sources said European Council president Donald Tusk had on Sunday called for an answer from Belgium by late Monday so he would be able to tell Canadian Prime Minister Justin Trudeau whether or not to attend a CETA signing ceremony in Brussels on Thursday.

He was due to call Trudeau to inform him of Monday's turn of events at around 1615 GMT.

Wallonia leader Paul Magnette said as he left the talks that he could not endorse the accord under what he called the pressure of an ultimatum.

"It is evident that in the current circumstances, we cannot give a 'yes' today," he said.

- 'Solid legal basis' -

Wallonia parliament head Andre Antoine told Belgium's RTL radio earlier that it was important to get the deal right as it could pave the way for even larger and more far-reaching trade pacts with economic powers such as the United States and China.

"We must therefore have a solid legal basis," he said.

Magnette and other critics fault terms supposed to protect international investors which, they say, could allow them to force governments to change laws against the wishes of the people.

CETA is opposed by anti-globalisation groups who say it is a test model to push through an even more controversial EU-US trade deal called TTIP, talks on which have also stalled.

Wallonia has support around Europe and from non-government organisations like Greenpeace, which fears the deal will reward "corporate greed" at the expense of hard-won EU health and environmental standards.

Apart from sowing tensions with the European Council and the European Commission which strongly support the deal, Wallonia's position highlights long-standing divisions in Belgium between the northern and wealthier Flemish-speaking region of Flanders, which backs CETA and sees its southern, French-speaking left-leaning compatriots as wasteful spendthrifts.

Canada has made no secret of its anger with Belgium and the EU.

- 'Totalitarian side'

Chrystia Freeland, the Canadian trade minister, appeared on the verge of tears Friday after walking out of negotiations with Magnette and blasted the EU as "incapable" of signing international agreements.

During a press conference on Monday, European Commission spokesman Margartis Schinas sought to give breathing room to the Belgian hold-outs.

He insisted that the Commission, the EU executive, "is not in the habit of working with ultimatums or deadlines" and urged patience for a deal he said was still possible.

Business backs the accord as a guarantee of jobs and growth.

"We still can and we have the duty to urgently bring home the best trade agreement the EU has ever negotiated," BusinessEurope lobby group head Emma Marcegaglia said in a statement.

Bernd Lange, chairman of the International Trade Committee of the European Parliament and fervent CETA supporter, doubted the Belgians will move much further if they have been unable to do so under the current pressure.

"CETA is de facto dead. Possibly there will be another try to sign it in a few weeks but I am not persuaded that this will succeed," Lange said.

France's right-wing National Front joined the opposition to the deal as leader Marine Le Pen denounced an EU ultimatum which she said showed the bloc's "most totalitarian side."