If EU can’t do deal with Canada, how will it do one with UK?

There are a couple of obvious points looking at the troubles that have hit the EU-Canada trade deal, seven years after the talks started. The first is the huge difficulty of doing any trade deal, given the complexity of modern business and the public mood of cynicism on how it operates.

The second is that if Europe cannot tie up a deal with Canada, how on earth can it do what could be a much more controversial deal with Britain?

The proposed EU/Canada deal is called the Comprehensive Economic and Trade Agreement, or Ceta. In negotiation since 2009, it aims to boost trade between Canada and the EU. It supporters have said it could increase trade by 20-25 per cent over time, though these kind of things are notoriously difficult to estimate.

Tariffs In years past, trade agreements typically focused on reducing tariffs – special import taxes

that countries can apply on goods and that were traditionally a way to protect home producers.

The Ceta deal aims to reduce these tariffs on EU/Canada trade by 98 per cent. It also aims to go further, introducing common protections on intellectual property and moves to free the movement of employees – for example by agreeing common recognition of qualifications in areas like accounting and engineering.

The proposed deal, which is now under serious threat, has drawn the fire of anti-globalisation protestors.

A lot of the fire has been directed against provisions that would have put in place special arbitration mechanisms under which foreign investors from Europe into Canada or vice versa could have sued the government of the country where they had invested if they were unfairly discriminated against.

There have also been claims that the deal would damage labour , safety and environmental standards by limiting controls in these areas – so-called non-tariff barriers to trade. These are the issues pointed to by Walloon politicians – supported by lobby groups such as Greenpeace – who say more time is needed for talking, much to the annoyance of the more industrialised northern and eastern parts of Belgium.

A strong local farming lobby, fearing increased competition, is also a factor.

Row In turn this is all being seen as a build up to a bigger row on the even more controversial EU/US trade deal, the Transatlantic Trade and Investment Partnership (Ttip), where measures to open up new areas to foreign investors and rows over environmental standards and protection

have also been central.

While Ttip is mired in rows, Ceta appeared to be on the way, after five years of negotiations and two years of an EU approval mechanism. That a regional government representing 3.6 million people, out of an EU population of over 500 million, could block this has damaged the EU’s status as a trade negotiating group.

Ironically, it was the controversial nature of the investment dispute mechanism that was one factor that led the EU Commission to decide to send the whole deal for parliamentary approval across Europe in the first place, to try to underpin popular support. As the competent body for trade negotiations, the European Council could – arguably – have approved the deal.

Now, even if the Wallonia issue were to be overcome, more trouble could lie ahead in national approval processes.

Bridging gap The deal was to have been signed off in principle at an EU-Canada summit this week. Now this looks very doubtful, even if attempts will continue to bridge the gap.

There are two wider points here. The first is the difficulty in concluding any trade deals, given the current international mood, which is sceptical of big business and globalisation. Both candidates in the US presidential race have said they would not support a deal done between the US and Pacific Rim countries currently stuck in Congress.

The second is that trade deals take an age to negotiate and are even more complex now in an era of digital trade and cross-border investment. Imagine all the competing agendas in the EU/British trade talks to come. Both sides could agree at a high political level to some straightforward principles that would help, but given the current mood, this does not, right now, look likely.

As EU trade commissioner Cecilia Malstrom said: "If we can't make it with Canada, I don't think we can make it with the UK."