BRUSSELS (Reuters) - A region of Belgium is set to block a planned EU-Canada free trade agreement, which could undermine the European Union's entire trade policy and dim Britain's hopes of a speedy deal once it leaves the bloc.
EU trade ministers will vote in a week on the Comprehensive Economic and Trade Agreement (CETA), which requires unanimous support to enter force. Belgium's federal government favors the pact, but needs the backing of the country's three regions and linguistic communities to give its formal approval.
Lawmakers in French-speaking Wallonia, except Prime Minister Charles Michel's liberal MR party, oppose CETA because they see it as a threat to public services and to farmers, through a flood of imported pork and beef, and they also reject what they see as its over-protection of foreign multinational firms.
"We had hoped that the negotiators would have at least tried to find some improvements, some corrections for Belgium. Today that hasn't happened," Andre Antoine, president of the Walloon regional parliament, told Reuters.
"We will probably have, though I will leave it for each to say, a rejection by Brussels, in Wallonia and likely too the German-speaking side. Simply put, the south of Belgium is not in favor," he added in a telephone conversation late on Monday.
The government of Belgium's 70,000-strong German-speaking community said it had still not decided. The Walloon parliament will debate the issue on Friday. Virginie Defrang-Firket, an MR lawmaker in Wallonia, said she doubted there would be a change of course.
"They have gone so far in their opposition that, whatever is proposed, they can't take a step back. They are not in a constructive attitude that could lead to a solution," she said. "What message are we giving to our European partners?"
Trade experts say failure to seal a deal with Canada will undermine the EU's credibility as a potential trade partner.
"If the EU cannot do a deal with Canada, I think it is legitimate to say who the heck can it do a deal with," Canadian Trade Minister Chrystia Freeland said in June.
The European Commission, which negotiates on behalf of the 28 EU nations, is also seeking trade agreements with a series of other countries, including the United States and Japan.
Britain, which voted in June to leave the EU, would also have to forge a new trading arrangement with the EU27, any one of which could block a negotiated settlement.
Critics, including environmental groups and labor unions, say CETA and other trade deals will lead to deteriorating standards and allow big business to challenge governments across Europe. [L8N1BW3TG]
CETA supporters say the deal, the EU's first with a G7 nation, will increase trade in goods and services by more than 20 percent and EU economic output by about 12 billion euros ($13.4 billion) per year. They say the boost to the economy and employment is essential at a time of low growth.
Belgium's regions are not the only threat to CETA.
Austria's Social Democratic Chancellor Christian Kern is wavering, Slovenia's government has concerns, Hungary may still put it to a parliamentary vote, while Romania has said its support will hinge on Canada agreeing a separate deal to allow visa-free travel access.
Germany's Constitutional Court will also rule on a legal challenge to CETA on Thursday.
Additional reporting by Robert-Jan Bartunek in Brussels, Marja Novak in Ljubljana and Krisztina Than in Budapest; Editing by Mark Heinrich