By Robert-Jan Bartunek and Philip Blenkinsop
BRUSSELS (Reuters) - Belgian politicians failed to break their deadlock over a planned EU-Canada free trade agreement on Wednesday, but agreed to resume talks on Thursday in a sign they may be nearing a consensus that would keep the deal alive.
The Comprehensive Economic and Trade Agreement (CETA), seven years in the making, is backed by all 27 other EU governments but rejected by the French-speaking south of Belgium, meaning Belgium as a whole cannot sign it.
Prime Minister Charles Michel worked with the heads of Belgium's regions and linguistic communities to produce a common text to allay concerns about agricultural imports and a dispute settlement system that critics say could be abused by multinationals to dictate public policy.
"We made a lot of progress, but we are not there yet. We will continue tomorrow, but we are close to an agreement," Oliver Paasch, the head of Belgium's 76,000-strong German-speaking community, told reporters after a third joint meeting on Wednesday.
The resumption of talks is set for 1000 CET (0800 GMT). Foreign Minister Didier Reynders said a meeting of ambassadors from other EU countries was set for an hour later.
"We will see if it is possible to go to that meeting with a joint Belgian position," he said.
European Council President Donald Tusk said earlier that a planned EU-Canada summit to sign the accord was still possible on Thursday, although the chances were waning.
Speaking in Canada's parliament, Canadian Prime Minister Justin Trudeau said: "We are confident that in the coming days we will see a positive outcome for this historic deal."
Belgium's centre-right government backs CETA as it stands, but its stance is only shared by the Dutch-speaking Flanders region, where a majority of Belgians live.
European Commission President Jean-Claude Juncker told the European Parliament he was optimistic there would be an agreement.
"When it happens is less important than that it happens," he said.
Paul Magnette, Socialist premier of the Walloon region, which has led opposition to a deal, said he was not looking for Ottawa to relaunch negotiations.
"Between the EU and Canada the agreement is closed and we are very happy with that, but we still have some problems in Europe and Belgium and we're doing our best to solve them," he told reporters.
European Council President Tusk said that there would be consequences for Europe's global position if it failed to strike a free trade deal with Canada, "the most European country outside Europe and a close friend and ally".
British trade minister Liam Fox said the CETA difficulties showed the importance of Britain reaching an agreement over its future relationship with the EU before it leaves the bloc.
Canada hopes the trade agreement will reduce its reliance on the United States as an export market.
John Manley, the head of the Business Council of Canada, which represents the country's largest companies, said CETA should not be confused with a trade deal being negotiated between the EU and the United States, the larger and even more contentious Transatlantic Trade and Investment Partnership.
"CETA is not TTIP. It is not a stalking horse for TTIP," he said.
(Additional reporting by David Ljunggren in Ottawa and Kylie MacLellan in London; Editing by Robin Pomeroy and James Dalgleish)