UPDATE 1-Germany to reject EU-Canada trade deal -Sueddeutsche newspaper
(Adds Canadian reaction, background, paragraphs 11-14)
BERLIN, July 26 (Reuters) - Germany is to reject a multi-billion free trade deal between the European Union and Canada which is widely seen as a template for a bigger agreement with the United States, a leading German paper reported on Saturday.
Citing diplomats in Brussels, the Sueddeutsche Zeitung said Berlin objects to clauses outlining the legal protection offered to firms investing in the 28-member bloc. Critics say they could allow investors to stop or reverse laws.
The German government could not sign the agreement with Canada "as it has been negotiated now", reported the paper quoting German diplomats in Brussels.
It also said the clauses in the Canada deal were similar to those in the U.S. agreement, which is still under negotiation.
"The free trade treaty with Canada is a test for the agreement with the United States," said one senior official at the Commission in Brussels, according to the paper.
If the deal with Canada is rejected "then the one with the United States is also dead", added the official.
Asked about the report, a spokesman for Germany's Economy Ministry referred to correspondence which outlined Germany's concerns about investor protection in talks with both countries.
"The German government does not view as necessary stipulations on investor protection, including on arbitration cases between investors and the state with states that guarantee a resilient legal system and sufficient legal protection from independent national courts," wrote Deputy Economy Minister Stefan Kapferer. Continued...