The Belgian government has stated that it is unable to sign the proposed EU-Canada free trade agreement, CETA, due to opposition in the region of Wallonia. Bob Hancké outlines the complicated federal arrangements in the country which have derailed the agreement and suggests that while previous Belgian compromises indicate CETA can still be saved, popular dissatisfaction with globalisation across Europe is only likely to grow.
The comprehensive free trade agreement between the EU and Canada (CETA), is stuck in the mud of Belgian federalism. Since its far-reaching constitutional reforms began in the 1970s and accelerated in the 1990s, the country has (by last count) seven parliaments and a handful of regional governments. I’ll spare you the details, but the good news is that, even though Belgium did not have a national federal government for almost two years half a decade ago, most public services that are relevant to ordinary people and which are decentralised (think of schools, hospitals and rubbish collection), kept on running without problems.
The bad news is that the distribution of competences across these parliaments are Byzantine on a good day and usually downright impenetrable for most of us who are not Belgian constitutional lawyers. One of these regional parliaments, the one in the Walloon city of Namur, has voted against CETA, thus prohibiting the national government from ratifying the EU-wide trade agreement.
It is not entirely clear why a policy competence that fundamentally resides with the European Commission (and not the member states) is subject to a ratification vote at sub-national levels, but there you go: other countries rely on referendums to clear up international relations, and deep decentralisation is far from unique, if we think of the highly devolved policy responsibilities of Swiss cantons. What is perhaps a bit surprising is the scale of the problem: representatives of 3-4 million people can block a trade agreement for over 500 million. And, while the concerns raised by the Walloons are legitimate – such as democratic control over economic policy-making, social and environmental dumping – it is quite late in the day to raise them.
Wallonia has a bit of a special place in the Belgian political economy. Long the economic and political point of gravity of the country (the first industrialised region on the continent in the nineteenth century), it fell into decline after the Second World War due to a mixture of traditional heavy industries and a lack of political strategy toward new sectors (declaration of interest: I am Flemish, though far from militant, and left the country over a quarter of a century ago). Until the last waves of constitutional reform, which led to the decentralised decision-making structure, Wallonia felt to many, especially those on the political left, as a desert region with a very high unemployment rate, kept alive by subsidies and transfers from the wealthier north but without a convincing future. The particular form of leftish nationalism in Wallonia has its roots in that protracted process of deindustrialisation.
The good news, I guess, about the Wallonian resistance (yes, comparisons with Asterix have been made) is that it did not emanate from rabid populists but from the mainstream political parties. And, given the history of the region, which witnessed European integration and globalisation from a distance – even now, only about 15-20 per cent of Belgian exports are produced in Wallonia – a certain measure of resentment against free trade is understandable.
The Brexitophile north of the UK has been in a similar position since the 1980s, and part of the support for anti-EU far-right populism in Germany seems to have its roots in a similar post-unification political-economic disenfranchisement. What complicates matters in Belgium is that the left-leaning Walloon region is at loggerheads with the centre-right national government – a relation not unlike Scotland and Westminster, but with slightly more complicated outcomes because of the veto position of the regional governments.
Complicated it may be, but the silver lining for CETA is that the EU is very, very good at asking voters in the member states to think again about what they are doing until they get it right and that Belgium is the land of political compromise – top politicians are sometimes also known as ‘plumbers’ on account of their ability to unclog problematic situations. Just wait a few months: the Walloons will discover the virtues of a slightly revised CETA, and the EU will look again as if it can actually negotiate important trade treaties. But underneath it all, the current of popular dissatisfaction with how globalisation is playing out will strengthen. That is why the vote in Namur needs to be taken seriously.
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Note: This article gives the views of the author, and not the position of EUROPP – European Politics and Policy, nor of the London School of Economics. Featured image: a protest against CETA and TTIP in Berlin, February 2015. Credits: Chris Grodotzki/Campact (CC BY 2.0)
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Robert Hancké – LSE European Institute
Bob Hancké is Associate Professor in Political Economy at the LSE. His research interests include the political economy of advanced capitalist societies and transition economies as well as macro-economic policy and labour relations. His books include Unions, Central Banks, and EMU: Labour Market Institutions and Monetary Integration in Europe (Oxford University Press 2013), Intelligent Research Design (Oxford University Press 2009) and Debating Varieties of Capitalism (Oxford University Press 2009).
Please can the author explain what Wallonia objects to in more detail.
“while the concerns raised by the Walloons are legitimate – such as democratic control over economic policy-making, social and environmental dumping”
This doesn’t really explain what is in CETA that Walloons consider bad – or why.
Perhaps they have a point !
In response to Jules: the objections are very similar to those raised on TTIP: Europe has stricter social and environmental standards than most other countries with which it trades and the fear is that those will be undercut. The investor protection clause is also a red rag: if a country decides to change it laws in a way that differs significantly from what they were when a company decides to invest, the company can bypass parliament and go to a special tribunal. And then there are some specific concerns, such as the fear of price dumping by Canadian farmers. Hope this helps.
“The investor protection clause is also a red rag: if a country decides to change it laws in a way that differs significantly from what they were when a company decides to invest, the company can bypass parliament and go to a special tribunal.”
This is one of the important points that are obscure to the general public (on purpose?). What Bob refers to as a ‘special tribunal’ are in fact private arbitration tribunals where, simply put, any company that feels its interests were damaged by e.g. a change in legislation (e.g. stricter environmental regulations introduced post CETA) can sue the government of that country for very high damages. These private arbitration tribunals often vote in favour of private companies. This is not a conspiracy theory – this is what has been happening since the 1990s as similar regulations on arbitration accompanied many of the FDIs in South America, Central-Eastern Europe and other regions. They were signed automatically by the governments that considered them standard parts of the investment and trade agreements, but were unaware of consequences. In the past few years the number of cases in such private tribunals has been continuously rising.
“it is quite late in the day to raise them”
Well, actually, they were raised by Magnette directly Malmström on Oct the 2nd, 2015 (yes 2015). Here’s how Magnette describes it: « J’ai rappelé à la commissaire que dans l’état actuel des négociations et des informations qui sont connues, la Wallonie n’acceptera pas d’adopter le traité. Le parlement régional soutenu par le gouvernement a voté une motion claire qui exige des balises précises. »
Some basic research before writing would come in handy.
Source: Le Soir
Fairly obnoxious tone of that comment aside, it’s pretty obvious that given the deal has now been done, it was clearly possible to have come to an agreement earlier. Both sides can argue who is at fault for that, but it’s the EU way I suppose to leave things to the last minute before a compromise is reached.