EU leaders left Brussels at the end of a two-day summit with the main question of the day unresolved – the ratification of the EU-Canada trade deal.

Seven years after negotiations on a comprehensive economic and trade agreement (Ceta) between the EU and Canada was opened, there are now serious doubts about the future of the agreement.

As EU leaders arrived at the European Council building in Brussels on Friday morning for their second day of talks, 50km away in Namur, Belgium's French-speaking regional parliament was meeting to discuss the ongoing impasse in the EU-Canada deal.

A week after the Wallonian government rejected the trade deal, the president of the parliament, Paul Magnette, told the parliament that his concerns still had not been adequately addressed. This included worries about the impact of the trade pact on Belgium's agriculture industry and continuing concerns about an investor court which would give private companies the right to sue national governments in certain cases.

While all EU member states have signed off on the provisional application of the agreement, Belgium cannot ratify the agreement without the agreement of all five regional parliaments.

By 5pm, following negotiations with Canada's trade minister Chrystia Freeland, Canada declared the deal dead.

"It is evident to me, for Canada, the European Union is not capable right now to have an international agreement, even with a country that has European values like Canada," Ms Freeland said.

Serious blow

The decision by Canada to walk out of the talks presents a serious blow to the European Union and to its credibility as a trade partner. While some believed the move may be a negotiating position by Canada, which could pressurise the Wallonian parliament into agreeing to the pact at the weekend, Friday’s developments appeared to leave the deal on the precipice.

Ironically, the debacle unfolded as EU leaders were meeting to discuss the union’s future trade policy, an issue that had been scheduled on the agenda for months.

Following the discussion, EU leaders agreed to reform their existing trade defence measures – the tools it uses to put duties on imports – mandating EU trade ministers to return to the issue in November.

But within the EU strong differences remained between member states on the issue. While the European Commission has said it wants to toughen defence measures that the union can take against countries like China and the United States, more traditional supporters of free trade, including Ireland, are wary of any measures that could signal a protectionist stance.

Speaking after the summit, Taoiseach Enda Kenny said that Ireland, as a small, open economy, was strongly in favour of trade agreements and was well aware of the benefits of trade. He described the EU-Canada trade deal as a “new-generation agreement that will remove tariffs between the European Union and Canada”, adding that he was confident the impasse could be resolved over the coming days.

But commission president Jean-Claude Juncker said that the European Union needed to react to threats to its industry. “I am against stupid, basic protectionism, but I cannot accept that the Americans and others are protecting their industry and that we are naive guys wanting to charm others,” he said.

Steel industry

In particular, the concerns of the European steel industry are weighing on the decision-making process. Earlier this week representatives of more than 50 European steel companies urged the European Commission to take a tougher stance against cheap imports amid accusations that China is dumping cheap steel on the European market.

With a December 11th deadline looming, when China is due to gain “market economy status” under WTO rules which would give China greater access to EU markets, EU member states will be forced to clarify their trade policy in the coming month.

As Britain, one of the strongest proponents of free trade around the EU table, prepares to leave the bloc, the European Union faces a tricky balance as it tries to convey that it is still a liberal, open economy, while at the same time show that it is listening to the concerns of its citizens at a time when free trade has never seemed so under attack.