The EU has backed away from its offer to Canada to start talks on becoming an “associate member” after disagreements between members states just as an EU-Canada summit was set to begin in Montreal.

A draft of a joint statement to be issued after the end of the summit, which runs Thursday and Friday, showed a watered-down version offering “an ever closer association of Canada to the EU, short of full membership itself”.

The issue was triggered after the European Commission president, Ursula von der Leyen, surprised nearly everyone by announcing in last month’s state of the union address that the EU would consider “associate membership” for Canada.

The declaration had been hailed as a landmark in EU history, offering a non-EU country such close ties to the bloc, which has not allowed any state membership since Croatia joined in 2013.

It was also seen as a sign that the call by Canada’s prime minister, Mark Carney, at the Davos summit in January for “middle powers” to work together was paying off.

But instead of announcing a work programme on developing “associate membership”, the draft communique, seen by the Guardian, states the two sides would “work to define by the 2027 EU-Canada summit the concept of an ever closer association of Canada to the EU, short of full membership itself, to reflect, through this even closer association, our common endeavour and cooperation towards our shared goals of prosperity, economic security and strategic autonomy”.

Associate membership had been mooted, and rejected, previously for countries such as Ukraine.

Von der Leyen’s declaration caught EU capitals by surprise and led to pushback politically and legally. Given “associate status” has no definition, diplomats wondered about such issues as whether Canada could join the European Council, legislative bodies or decision-making processes without a vote.

At a meeting on Monday, ambassadors in the EU raised concerns about the dramatic offer, but vowed to make efforts to seek a diplomatic path to rescinding the offer of “associate” membership without embarrassing Von der Leyen. It is understood that Italy suggested “associate membership as proposed by the commission”, with the definition to be thrashed out later by member states.

Germany walked back further, suggesting the wording “an ever closer association of Canada” to the EU.

“Nobody was consulted about associate membership apart from [Von der Leyen’s] closest staff, it would seem. Many member states, including Germany, were not happy. This is all about fixing the plane while it is flying,” said one diplomat.

Germany had argued that “associate membership” should be reserved as an interim step for prospective candidate countries, such as Ukraine or Montenegro, noting that the status has no formal grounding in current EU treaties.

Donald Trump, the US president, previously called the EU’s proposal to make Canada an associate member “laughable”, and said if he ​interpreted the move as a “hostile act” the US might stop trading with Europe “on many things”.

Carney told reporters on Tuesday that the summit this week was the launch of further formal negotiations that will take place another year.

“The good news is it doesn’t matter about ⁠specific names or nomenclature,” Carney said. “What matters is the difference it will ​make to the lives ​of Canadians.”

A previous draft statement ​had included at least two references to Canada as an “associate member”, ​including an acknowledgment that ‌defining the ​term would take ​another year.