CETA and the role of Wallonis
by Nicole Mezgolits (November 21, 2016
CETA will remove customs duties and allow EU businesses to bid for Canadian public contracts while upholding the EU’s high standards in terms of democracy, consumers and environment and protecting traditional European products.
Consumers will benefit by being offered a greater choice. CETA is expected to lift EU output by about € 12 billion a year (EC, 2016). CETA will fully entry into force once it is approved by the Council and the European Parliament and ratified by all 38 EU Member States’ national parliaments (EurActiv, 2016g).
Signing CETA was originally planned for October 27, however, the EU-Canada Summit had to be postponed because the trade deal requires approval by all 28 EU Member States. On October 14, the Walloon Minister-President Paul Magnette declared that his government would not approve CETA. As a consequence, the Trade Council meeting on October 18 was not able to adopt legislation by signing and provisionally applying CETA (EurActiv, 2016e). Over the next days, intensive negotiations between Wallonia’s government, Belgium’s federal government and the European Commission took place. Wallonia repeatedly refused to endorse CETA. On October 24, Prime Minister Charles Michel admitted that Belgium cannot sign CETA (EurActiv, 2016f). The European Commission was still hoping for a breakthrough in the final hours, however, an agreement was eventually reached on October 27 (EurActiv, 2016g).
To understand why a region of solely 3.5 million inhabitants is able to block a trade deal affecting more than 500 million people, one has to understand the complex Belgian system. Belgium is a federal state, comprised of the Flemish, French and German communities and the Flemish region in the North, the Brussels-Capital region and the Walloon region in the South. Each region has a parliament and a government, amounting to a total of seven bodies (EU Trio, 2010). Due to the ‘non’ of the Socialist-led Wallonia, the Liberal-led Belgian federal government could not approve CETA.
CETA was not only opposed Wallonia. Also other countries across Europe such as Germany (EurActiv, 2016a), France (EurActiv, 2016b) as well as Bulgaria and Romania (EurActiv, 2016c) first had reservations but decided to approve in the end.
The Walloon government raised concerns about the impact of CETA on public services and farmers, particularly with regard to the risk of lowering EU food, health, environmental and social standards and giving power to foreign investors to sue governments (EurActiv, 2016d). Astonishingly, these two main objections against CETA were not levelled against other on-going trade negotiations such as with Japan, and concluded ones with Singapore and Vietnam. Especially Wallonia’s harsh criticism on the investor-state dispute settlement system (ISDS) is inexplicable. CETA has introduced a more restrictive ISDS system by replacing the current ad hoc arbitration system with a permanent and institutionalized dispute settlement tribunal including strict ethical codes and an appeal system (EurActiv, 2016e).
Looking closely at trade figures afford surprises. Belgian trade with Canada accounted for 7.54% of the entire EU imports and exports in 2015, of that 7.09% were originated by Flanders and solely 0.45% by Wallonia (Van der Marel, 2016). One can ask why did Wallonia so vehemently oppose to sign CETA? It seems like the Walloon government did not care about CETA itself but rather used its power to influence domestic politics whatever the cost. However, blaming Wallonia alone is too easy. Seeing the bigger picture implies that Belgium can be blamed too. The economically disparate country with the rich Dutch-speaking Flanders and the poor French-speaking Wallonia is not only divided by the language but also by seven legislatures that have the power to decide on international policy.
This case also shows the flaws of the Lisbon Treaty. The EU got indeed more power to conclude international treaties. The Common Commercial Policy (CCP) is an exclusive EU competence, however, it still has not been exactly defined what falls under CCP. ‘Qualified Majority Voting’ is foreseen for CCP but after immense pressure Juncker decided to adopt CETA as a ‘mixed’ agreement in July 2015, requiring unanimous backing by all Member States (Borderlex, 2016). Since trade policy is the EU’s cornerstone, this approach could jeopardize future trade agreements if small regions have the power to block deals. Although the European Commission is partly to blame for the disastrous process, Member States with their short-sighted view as well as party politics have had a stronger impact on this tragedy of EU decision-making. (Borderlex, 2016). After all, the future will show whether Wallonia’s trial of strength will have an effect on completing other trade deals.
Nicole Mezgolits is Junior Policy Analyst at Bridging Europe
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