The Belgian region of Wallonia rejected new amendments to a planned EU-Canada free trade agreement on Thursday, reaffirming its opposition and so threatening the entire deal, a flagship of European Union trade policy.
All 28 EU governments support the Comprehensive Economic and Trade Agreement (CETA), but Belgium cannot give assent without backing from five sub-federal administrations and French-speaking Wallonia has steadfastly opposed it.
Failure to strike a deal with such a like-minded country as Canada would call into question the EU's ability to forge other deals and damage credibility already battered by Britain's vote to leave the bloc and disputes over the migration crisis.
The moves came as leaders began a two-day EU summit in Brussels with trade policy the main topic set for Friday. European Council President Donald Tusk, chairing the summit, said in a tweet that the Europe's credibility was at stake.
Wallonia is home to some 3.5 million people, less than 1 percent of the 507 million Europeans CETA would affect.
The European Commission, which negotiates trade deals for the bloc, offered new concessions in the form of changes to an EU declaration to be appended to the treaty. One EU diplomat said these sought to answer Walloon concerns about farming and how trade disputes with Canadian companies would be settled.
Walloon premier Paul Magnette called an emergency session of his government and was due to address the Walloon parliament on Friday. The government recognised improvements, but believed they did not go far enough, an official said, adding it needed time to reflect.
"At this stage, for us, the document is not sufficient," Magnette told reporters in the regional capital Namur.
Magnette said he hoped to meet Canadian Trade Minister Chrystia Freeland again on Friday. The two met on Wednesday.
"We'll see how we can modify the text that we were given," he added.
At the summit in Brussels, Commission President Jean-Claude Juncker said: "I am still hopeful that we will come to a good result in the course of the night and tomorrow morning."
In Ottawa, an official confirmed Freeland would meet Magnette on Friday and said she was in constant contact with EU Trade Commissioner Cecilia Malmstrom.
"This is now a question for the Europeans to decide," said the official, who requested anonymity because of the sensitivity of the situation.
Canada's Liberal government has shown increasing signs of impatience with the EU over challenges to a deal that supporters say will increase bilateral trade by 20 percent.
CETA is set to be signed at an EU-Canada summit next Thursday in the presence of Canadian Prime Minister Justin Trudeau.
Tusk said the issue was greater than just a trade deal with Canada, the EU's 12th largest trading partner. CETA would be the EU's first agreement with a G7 country.
He told reporters there would be no public support for free trade if people could not be convinced that trade agreements were in their interests, adding: "Which means, I am afraid, that CETA could be our last free trade agreement."
Belgian Prime Minister Charles Michel, whose liberal-led coalition wants the deal, spoke of a looming "moment of truth".
Wallonia's lawmakers share concerns voiced by many on the European left that CETA, and a stalled plan for a similar deal with the United States, risk watering down consumer, labour and environmental protections.
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