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The seat of the Walloon government - currently the main negotiator of the free-trade agreement with Canada. (Photo: TriadPtale)

The destructive power of a regional parliament representing less than 1% of the EU

The Comprehensive Economic and Trade Agreement (CETA), the proposed free-trade agreement (FTA) between Canada and the European Union, has been effectively brought to a halt by the regional parliament of Wallonia, the French speaking region of Belgium. CETA has long been overshadowed by the controversial FTA between the US and the EU, TTIP, which faces an uncertain future after huge public outcry and national interventions by EU member states.

by the Know Nothing Enquirer   26/10/2016              

On the other hand, CETA is seen as the lesser evil of TTIP, as European states have a lot more in common with Canada than the US, such as trust in the welfare state. And last year Justin Trudeau took over as prime minister from the pro-business Conservative leader, Stephen Harper. Trudeau was willing to renegotiate the agreement with the EU commission and many of the controversial points were altered. After parts of the agreement were leaked to the public, the EU commission published the entire texts on its website (the secretive negotiations had been criticised heavily). However, the closer the agreement came to being ratified by the European parliament, the more controversially it was debated. In June 2016, Jean-Claude Juncker declared that all national governments/parliaments should be able to have a say in the process “through the relevant national ratification procedures”, meaning that CETA needs an unanimous approval by all states - and in the case of Belgium also the three regions. Of course this has to be seen as a concession to the critics who claimed that bypassing national parliaments and holding secretive talks is undemocratic.

 

For many, especially outspoken globalisation critics on the left and the right, the Walloon parliament is the new hero against capitalism. They see CETA as a deal that favours big business over citizens, where democracy is bypassed by secretive tribunals and a precedent for future FTA. For others the Walloon veto is a huge embarrassment for the EU and manifests the increasing ineffectiveness of European cooperation. Some even claim it’s merely an inner Belgian conflict about financial distribution between the regions. According to this logic, Paul Magnette, the Minister-President of Wallonia, used his region’s say in foreign trade decisions of the Belgian state to publicly hijack one the most discussed topics in Europe to advance his power in Belgium.

 

The European Union has been negotiating the FTA with Canada since 2008. The German and Austrian governments have long criticised the investor-state dispute settlement provisions and managed to make the structure of the dispute settlement system more transparent and accountable through an additional declaration. Romania and Bulgaria insisted on visa-free travel for their citizens (all other EU citizens can already visit Canada without a visa), which seems to have been resolved. And the Slovenian government worried about the effects on municipal water management. According to internal protocols that the investigative journalist group CORRECT!V reviewed, Belgian criticism was until recently very rare. The Walloon parliament only started debating CETA a week before the FTA was supposed to be signed. In other words, those claiming that Magnette acted out of domestic interests is not that far fetched.

 

In the 19th century, Wallonia was the first area in continental Europe to fully industrialise, especially the coal mining regions around Liège and Charleroi. What was once one of the wealthiest places in the world has since dramatically changed. The region failed to diversify its industry and social and economic change caused a huge decline. Now it has one of the highest unemployment rates in Western Europe (in some areas above 30%) and Flanders has overtaken it since - and tensions between the regions have led to an extensive process of power devolution. In 2011, Wallonia's GDP represented only 88% of the EU average, while Belgium as a whole stood at 120%. All other economic indicators are also significantly lower than the Belgian average. Further, Wallonia hardly exports goods and services outside of the EU - in stark contrast to Flanders. Of course there are exceptions, such as the light firearms manufacturer FN Herstal, but in general it is fair to say that Wallonia has suffered significantly from globalisation and economic change and it is not surprising that its socialist government is so critical of CETA.

 

Their main concern is that the additional declaration, with its far-reaching guarantees to calm European concerns, will not be legally binding and should be included in the CETA legal framework. Further, they criticise the investor-state settlement provisions and the effects the FTA might have on Walloon farmers through cheap Canadian meat imports.

 

But why is this FTA with Canada so significant? Assuming TTIP is dead, CETA would be the most comprehensive FTA the EU has ever negotiated, including intellectual property, public procurement, competition, sustainable development and many more. Under normal circumstances the failed negotiations between the Walloon government and the EU wouldn’t be that significant. However, the European Union is currently undergoing an existential crisis. The migration crisis, the looming banking crisis, the rise of populist parties and Brexit have hit the EU at its core. What should have been a FTA between Canada and the EU, representing the combined interests of 28 member states, became dominated by national and fringe group interests. The EU commission eventually gave in to the huge pressure by the member states and let them have a say in the process. A decision that was destined to fail. It is no wonder that Canada is now criticising the EU for its ineffectiveness. The Canadian trade minister, Chrystia Freeland, was forced to negotiate directly with the Walloon government in Namur. Even though the talks seem to have failed, this effectively meant that a regional government representing less than 1% of the EU’s population was in charge of the negotiations at an extremely crucial timing.

“It seems obvious that the EU is now not capable of having an international agreement, even with a country that shares European values such as Canada, even with a country that is so kind and patient. Canada is disappointed. I am personally very disappointed. I have worked very very hard. We have decided to go home. I am truly very, very sad.” - Chrystia Freeland

However, it is wrong to only blame Magnette. The EU commission has failed to take the fears that many Europeans have of globalisation and free trade seriously. It took several years of massive protests in several countries and criticism from opposition parties for the commission to finally intervene and respond to the - in many cases - justified reservations. Yet, letting national and regional parliaments decide on EU trade decisions was a fatal decision. National governments have to concede certain powers to the EU in order for it to work as an effective political actor. This doesn’t mean that the process is not democratic. After all, the European parliament is directly elected by EU citizens and the European Council compromises the heads of government of the member states. But it was a mistake to only include civil society and the public in the process after protests threatened the legitimacy of the entire European project. They should have been included in an earlier stage of the negotiations to counter existing fears and prevent EU institutions from being perceived as arrogant and disconnected from the average citizen.

 

Most importantly, the EU has to prove that it is still capable of negotiating and ratifying FTAs. While TTIP failed because of the huge discrepancies between the Europe and the US, Canada was willing to make many concessions to the EU. Many of the most critical points, especially regarding international investment protection, were altered and made more transparent. If the last-minute Walloon intervention leads to a failure of the negotiations, it will have long-lasting consequences for other FTAs. Can any country take the EU as a negotiating partner seriously anymore? And what are the consequences for the European project? While it is too early to answer these questions, it seems obvious that many Europeans are simply tired of globalisation and free trade (or the benefits weren’t made clear enough) and too many are still suffering from the consequences of the 2007 financial crisis and the euro crisis.

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