Chrystia Freeland Still Cautious About CETA After Apparent Breakthrough

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OTTAWA — International Trade Minister Chrystia Freeland sounded a cautionary note Thursday after an apparent European breakthrough in the long-running Canada-EU free trade saga, saying every trade agreement has "exit provisions."

"This morning, we absolutely had a positive development; there are still many steps to be taken," the minister said hours after an agreement was struck between Belgium and its holdout region of Wallonia.

That agreement was heralded as the change that would allow the lucrative trade deal to be signed in the coming days. Wallonia held a veto over the Belgium's ability to support the Comprehensive Economic and Trade Agreement, or CETA, which needs the backing of all 28 EU countries.

The changes contained in the Belgian agreement may give national and regional parliaments throughout Europe new powers over the controversial investor protection provisions of the pact.

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Chrystia Freeland looks on at a meeting in February 2016. (Photo: Michael Bradley/AFP/Getty Images)

"Trade agreements must be structured that way to permit national sovereignty," Freeland said in Ottawa.

"I want to be sure that Canadians appreciate that even after signing, the process will not yet be complete. As with all trade agreements, the next step will be ratification and with CETA that will mean a vote in the European Parliament, if we get past signing."

Belgium said the agreement would pave the way for Prime Minister Justin Trudeau to travel to Brussels soon to sign CETA — an event that had long been set for Thursday before the Walloon dispute forced its postponement.

But some observers say the fix might only be temporary and that the lucrative trade pact could still be doomed to fail at a later stage.

In recent weeks, Wallonia — a tiny French-speaking region of 3.5 million people — took up the cause of opposing the investor-state dispute settlement mechanism — ISDS — and was supported by other European politicians and anti-trade activists.

paul magnette walloniaMinister-President of Wallonia Paul Magnette leaves a meeting on the Comprehensive Economic and Trade Agreement. (Photo: Reuters)

Those groups were concerned that ISDS would give big companies the power to sue governments for creating regulations that affect their profits. They said that would undermine the ability of countries to regulate on the environment, labour and health.

The new Belgian agreement — which still needs the approval of the handful of Belgian regional parliaments as well as the 27 remaining EU countries — essentially gives Europe's individual national and regional parliaments the ability to veto ISDS at a later date.

The agreement also calls for a review of the dispute settlement mechanism by the European Court of Justice.

Freeland's office said in a later statement that Canada and the EU created the "most progressive investment dispute-resolution system in the world'' and that it is "something we are building together with our European partners."

Wallonia President Paul Magnette said his resistance yielded huge results.

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Belgium's Prime Minister Charles Michel arrives at the EU summit in Brussels, Belgium October 21, 2016. (Photo: Reuters)

"We always fought for treaties that reinforced the social and environmental standards, protect the public services and that there is no private arbitration'' in dispute settlements, he said. "All this is achieved as of now."

"I am sorry for all the other Europeans we made wait and for our Canadian partners. But if we took a bit of time, what we achieved here is important, not only for Wallonia but for all Europeans."

In a research note to clients, TD Economics said "uncertainty" still remains around CETA's ultimate fate.

"Should a revised dispute system not be agreed in the coming years, CETA may still be undone (remember that it would only take one member state rejecting the revised dispute system to make the entire agreement null)," the memo said.

Maude Barlow, the president of the Council of Canadians, said the "mishmash of strange compromises" still leaves the deal open to failure.

"We understand that this has been nerve-breaking type of situation. And we really appreciate the understanding we have gotten from the Canadian side."

"This has a long, long way to go before it is real and no amount of ceremony with a formal-looking signing by our prime minister in Brussels can change this fact," she said.

The deal will go through regional legislatures by Friday night and have to be vetted again by the other 27 EU states.

"We're confident now that we will conclude everything by tomorrow and that we will be able to welcome prime minister Trudeau in Brussels in a couple of days," Raoul Delcorde, Belgium's ambassador to Canada, said Thursday.

"We understand that this has been nerve-breaking type of situation. And we really appreciate the understanding we have gotten from the Canadian side."

Trudeau's office was awaiting a call from EU President Donald Tusk's office on Thursday with further details. Tusk said he would contact Trudeau "only once all procedures are finalized" for the European Union to sign the deal.

With files from the Associated Press