German concerns over allowing companies to sue government could scupper a EU-Canada free trade pact.
It would allow firms to take legal action against countries perceived to have breached the treaty.
EU and Canadian officials marked the end of negotiations in Ottawa by underlining the supposed benefits.
“By giving Canadian exporters a privileged access to 500 million prosperous consumers in the EU, this agreement will reinvent the business relationship with the biggest market of the world,” said Canadian PM Stephen Harper.
The pact will boost two way trade by 20 percent to an estimated 26 billion euros a year, according to the European Commission.
“It is about generating more trade and investment for both sides, about creating growth and jobs. These are key interests and concerns for both of us.”
Germany is worried that major multinationals could use the proposed deal to bully EU governments into watering down environmental and labour laws.
“It is completely clear that we reject these investment protection agreements,” said German Economy Minister Sigmar Gabriel on Thursday.
Any deal would need to be approved by all 28 EU parliament and MEPs before it can become law.