The collapse of a free trade agreement with the European Union could undermine Canada's plans to reduce its economic dependence on the United States. Seventy-five percent of Canadian exports go to the US.
The failure of the Comprehensive Economic and Trade Agreement (CETA) could also complicate talks on other trade pacts with India and China.
CETA would allow Canada preferential access to the European market of over 500 million people. The deal could also add over $8.9 billion in revenue to the country's economy and increase trade by 20 percent, a joint Canada-EU study estimated.
READ MORE: Belgium's Wallonia rejects EU-Canada free trade agreement
The deal with the EU has potentially wider scope than the North American Free Trade Agreement (NAFTA). Canadian dependence on the US market has put the NAFTA deal under pressure.
"We are one of the most dependent countries in the world in regards to trade," said former Quebec Premier Jean Charest, who started negotiations on the EU-Canada trade deal during his tenure.
"If this agreement [CETA – Ed.] fails, it will be a disappointment," he told Reuters last week.
CETA was expected to eliminate tariffs on 98 percent of goods traded between the EU and Canada. The deal was blocked by Belgium because of the opposition from regional parliaments. Belgium’s French-speaking region of Wallonia has refused to approve the deal, fearing an influx of Canadian pork and beef products would undermine local farmers.
EU trade treaties can only enacted with the unanimous agreement of all 28 member states.
After a 24-hour ultimatum from the EU to patch up differences over CETA, Belgium’s Prime Minister Charles Michel said on Monday the country was not ready to sign the pact.
Despite that Canada’s Prime Minister, Justin Trudeau, did not immediately postpone a trip to Brussels this Thursday for an EU-Canada summit where the treaty was expected to be signed.
“We encourage all parties to find a solution. There’s yet time,” the head of the European Council Donald Tusk tweeted after speaking to the Canadian leader.
The EU and Canada have spent more than seven years negotiating the pact. The talks have been followed by protests in Europe with the opposition claiming the deal will violate workers' rights and benefit the interests of the wealthy elite and corporations.