Germany to reject EU-Canada trade deal: report

Prime Minister Stephen Harper in The Hague, Netherlands, on March 24, 2014. (THE CANADIAN PRESS / Sean Kilpatrick)

MONTREAL -- The Canadian government isn't commenting directly on a report Germany is poised to reject a proposed trade deal between Canada and the European Union, instead insisting that work to finalize the agreement remains on track.

The German newspaper Sueddeutsche Zeitung cited diplomats in Brussels as saying Berlin won't sign the deal in its current form.

The sticking point is the legal protections granted to foreign investors, the newspaper said Saturday.

Critics say such provisions give companies too much power by allowing them to sue governments for unfair treatment.

A senior European Commission official told the German newspaper the trade deal is seen as a test on the issue for a far larger deal in the works with the United States, the Transatlantic Trade and Investment Partnership.

Shannon Gutoskie, a spokeswoman for International Minister Ed Fast, did not speak to the German newspaper report and would only say negotiations to put the finishing touches on the deal continue.

"Excellent progress is being made," she said in a statement.

Canada and the EU reached an agreement in principle on the deal last October after four years of negotiations.

The Harper government trumpets the deal, known as the Comprehensive Economic and Trade Agreement, as one of the biggest ever -- one it says could benefit Canadian business more than NAFTA.

A longterm setback has the potential to be politically damaging to Prime Minister Stephen Harper, who has staked his government's reputation on the potentially lucrative agreement.

Karel de Gucht, the EU's trade commissioner, said this week a finalized agreement was still within reach, though he acknowledged negotiations have been difficult and complex.

"It has been very, very arduous to do this," he told the European Parliament's international trade committee on Tuesday.

The Council of Canadians cheered the possibility that Germany could reject the proposal.

Maude Barlow, the organization's national chairwoman, said her group has been warning the legal protections granted to investors give foreign corporations the right to dictate domestic policy.

"We call it corporate rule. What these investor-state deals do is they give corporations the right to challenge domestic law, and we feel that is profoundly undemocratic," Barlow said.