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  October 26th, 2016 | Written by

Canada-EU Trade Deal on Hold

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  • Belgium's Wallonia region rejected Canada trade deal.
  • Walloons say CETA is precursor to TTIP.
  • Walloon objections to CETA may be more about regional politics than economics.

The Comprehensive Economic and Trade Agreement (CETA) between the European Union and Canada suffered a major setback last week, as EU trade ministers postponed a decision on the trade deal due to the rejection of the accord by the parliament of Belgium’s southern region of Wallonia.

According to the Associated Press, “Wallonia fears that its farmers will be priced out of the market with cheap Canadian produce and that many of the labor standards they fought for will be swept away.”

Many Walloons also say that CETA is a precursor to the TransAtlantic Trade and Investment Partnership (TTIP) with the United States, which, the AP reported, “they fear will cut even further into their livelihoods and consumer and environmental standards.”

However, data suggests that Wallonia is less exposed to Canadian imports that the whole of Belgium, leading to the conclusion that Walloon objections are more about regional politics than true economic considerations.

Even as all these developments were taking place, the European Council, an executive body consisting of EU member state heads of government, was still pushing for CETA. The council, after a full debate on EU trade policy at a summit meeting, underlined the importance of a “swift decision” to sign and provisionally apply CETA, and encouraged further negotiations with a view to finding a solution to the Wallonia problem as soon as possible.

Speaking at the post-summit press conference, European Commission President, Jean-Claude Juncker, claimed that CETA was the “best agreement” the EU had ever concluded. “We remain fervent supporters of free trade,” Juncker added.

The EU and Canada had aimed to sign the agreement on October 27, but with the action of the trade ministers to postpone a vote, that isn’t going to happen.

Data from global trade intelligence platform Panjiva offers insight into trade relations between Belgium and Canada. Panjiva found that Canada accounted for 2.54 percent of Belgium’s exports and 2.01 percent of the EU’s exports overall in August. Belgium’s trade deficit with Canada averages out to 13.6 percent of total trade in the past year. The EU’s trade surplus with Canada averages out to 11.5 percent over the past year.

Panjiva Research Analyst Chris Rogers suggested that Belgium is more exposed than the EU as a whole to Canada trade but the region of Wallonia itself is much less exposed. This would suggest that the holdup of CETA is more about fractious intra-regional politics in Belgium than it is about the economics of trade policy, making it difficult to see how a conclusion can be reached anytime soon.