Some weeks ago, the Walloon and Brussels regional government, suddenly made headlines worldwide for their defiance. The two regions refused to sign the new EU-Canada trade deal CETA. Why did they decide to do so, were these reasons just and what did it lead to? (Featured Image © Wikimedia Commons)
The normally ever so unnoticed French-speaking , Wallonia quickly rose to international prominence last month. The reason: CETA (Comprehensive Economic and Trade Agreement), a free trade agreement between Canada and the European Union (EU). After seven years of negotiations, the deal was ready to be ratified, only awaiting signatures of all EU member states. However, because of Belgium’s complicated federal structure, competences such as trade belong to the regions1. The EU only recognizes states as members, which is why Belgium as a country needs to sign agreements such a CETA. Before the Belgian federal government could do so, all three regions needed to give their approval.
The normally ever so unnoticed French-speaking , Wallonia quickly rose to international prominence last month. The reason: CETA, a free trade agreement between Canada and the EU.
Wallonia and Brussels initially refused to sign the agreement, as opposed to their Flemish counterpart. After a political struggle between Wallonia, Flanders, the European Commission and Canada, CETA was eventually signed by all involved with only a few days of delay.2 Why Wallonia and Brussels put up such a fight is still ground for debate. Did they raise legitimate concerns, or did it all boil down to political games?
What is CETA?
CETA is a free trade agreement between Canada and the EU. According to the European Commission, CETA will “remove customs duties, end restrictions on access to public contracts, open-up the services market, offer predictable conditions for investors and help prevent illegal copying of EU innovations and traditional products.”3 CETA had been under way for several years but largely remained under the radar due to the controversy over the Transatlantic Trade and Investment Partnership (TTIP), a trade deal between the EU and USA. Recently it has become the focal point of anti- and alter globalization groups, who are afraid that further liberalization of trade will undermine labor rights, consumer protection, environmental regulation and sovereignty.4 Its real surge to prominence was caused by the (un)expected refusal of the Walloon regional government to sign the treaty.
Officially, the Walloon government was not convinced by the nearly 1600 pages long treaty, and raised several points of concern. The three major issues were the protection of Walloon farmers, the transparency and independency of the Investment Court System (ICS) and the possibility of US firms suing EU member states through Canadian subsidiaries.5
The three major issues were the protection of Walloon farmers, the transparency and independency of the Investment Court System (ICS) and the possibility of US firms suing EU member states through Canadian subsidiaries
The first concern was easy to address. The debates about the ICS and linked possibility of US interference on the other hand were more substantial. The ICS was already an amended version of the original Investor State Dispute Settlement (ISDS) that can be found in about 3000 other Free Trade Agreements (FTAs).6 In short, ISDS allows investors to sue nation states for discrimination, lost income or breach of contract in front of an independent court made up of specialized lawyers. ISDS was added to FTAs in the 1960s to protect companies against expropriation and ensure rule of law in countries with less independent legal systems.7
While being very useful to ensure rule of law ISDS has received its fair share of bad attention. Per an in-depth Buzzfeed story from Chris Hamby, ISDS claims have proliferated in the last years. Its use shifting from protecting companies in foreign markets to allowing companies to intimidate governments and prevent them from drafting regulation in the public interest, but against private interests.8 The European Commission was less concerned about the possible abuses of ISDS and tried to sustain this with numbers of ISDS claims in Europe and OECD member states.9
Leftist, anti-globalist groups have long criticized ISDS for providing “an additional channel for investors to sue governments.”10 Additionally, some believe that ISDS “could put strains on national treasuries or that ISDS cases are frivolous.”11 Even the leader of the conservative Cato Institute, Dan Ikenson, listed several reasons in Forbes on why ISDS should be banned; infringement of sovereignty being one of them.12 Academic research has also raised the possibilities of excessive litigation and limited possibility to set policy.13 The Flemish Greens and extreme leftist party PVDA+ have also raised these concerns, calling it anti-democratic and in the interest of large corporations.14
The ISDS procedure was buried a long time ago, and replaced by ICS.15 A more democratic format with less possible abuse by multinationals. The Walloon government, however, still had doubts about the independence of appointed judges and Walloon Regional Prime Minister Paul Magnette wanted to reopen negotiations about the text with Canada, but this was blocked by both the Canadians and Commission President Jean-Claude Juncker.
What the Walloon government did manage to do was add a joint declaration to the treaty. According to its proponents it will have legal value. Critics, however, state that the treaty will always prevail in court, limiting the impact of the declaration
In the end, Wallonia did not manage to change a single letter of the original CETA treaty. What it did manage to do was add a joint declaration to the treaty.16 For the PS (Walloon Socialist Party), this annex supplied enough change and clarification to call this a “new CETA”.17 According to its proponents it will have legal value, as it will be published in the official journals.18 Critics, however, state that the treaty will always prevail in court, limiting the impact of the declaration.19 Magnette stated that Wallonia had made its ratification conditional upon: “the establishment of a genuine jurisdiction whose establishment will be submitted to the European Court of Justice of the EU.”20
Politics at Heart?
The benefits of the Walloon government’s obstinacy are thus limited when it comes to CETA. They did not manage to reopen the negotiations, came under immense pressure from the European Commission and made Belgium look like an unreliable partner in the international arena. Yet the PS spins it as if they saved the EU from a flood of Genetically Modified Organisms (GMOs) and US legal claims. Is this spin a sign of recuperating after a political mistake, or the whole point of the operation?
Perhaps, there was more at play than justified concerns about farmers and ICS. The political show Paul Magnette (PS) and Deputy Prime Minister André Antoine (CdH) put on, could possibly have had more to do with globalization in general, as well as local power politics.
Several right-wing politicians and commentators in Belgium have stated that the PS hoped to reaffirm their position as protector of the left-wing, progressive movement in Wallonia.21 The PS has recently come under serious pressure from the extreme left Parti du Travaille de Belgique (PTB/PVDA+), whose poll numbers jumped from 5,8 in 2014 to 13,9% in 2016.22 The PTB is well under way to pass the PS on the left, claiming leadership of the leftist front. In this story, CETA was more a means to an end.
Additionally, there were protests against CETA (and also TTIP) all over Europe.23 These groups were mostly left-wing and had very little support from mainstream political movements, with the exception of right-wing populists such as Donald Trump and Marine Le Pen who do not support these groups other world views. Again, by taking an anti-CETA stance, they effectively got a lot of media coverage and credibility with active alter-globalization supporters and subsequently railed in support from those groups.24
The political act of refusing served the PS well reclaiming their position as defenders of laborers and small farmers (all those who usually lose out because of globalization).
The discussion about CETA had been going on for two years already in the Walloon parliament, and it is known that the concerns they had, were based in knowledge of the subject. The political reality, in turn, was very clear as well: concerns were raised during the negotiations, a late refusal would have little chance of success. The political act of refusing, in my opinion, served the PS well reclaiming their position as defenders of laborers and small farmers (all those who usually lose out because of globalization).25
The Walloon Christian Democrats (cdH), who were equally threatened by the PTB, and in a regional coalition with the PS, presented themselves as the defenders of democracy and its citizens.26 The only reason they could do this legitimately, was precisely because of their knowledge of the subject. It is sure, however, that Wallonia’s fundamental stubbornness helped unleash a public debate over something that otherwise would have slipped under the radar. Apart from the question of whether their motives were political, this is a significant achievement.
The Walloon resistance was not officially supported by the social-democrat S&D group in the European Parliament (EP) and it quickly made the PS the leading voice within progressive Europe.27 Paul Magnette even declared that Wallonia set an example and declared that, from now on, “Europe must listen to small Wallonia and other parliaments in the Union.”28 Whether or not this means a true restoration of democracy in the EU will depend on the aftermath. Guy Verhofstadt (from the liberal ALDE group in the EP is already calling to change the nature of the treaty so that the European Commission could conclude deals on behalf of the EU with approval of the European Parliament.29 Whether this would be more democratic leads to another discussion: on what level should European democracy work? These are all nerves that have been uncovered by the Walloon ‘non’.
The interesting thing is that Wallonia’s actions were enabled by Belgium’s state structure. The de-federalization of trade made it possible for a regional party to block trade deals on a national and international level. Ironically, these competences were regionalized to avoid such blockages on a national level.
The interesting thing is that Wallonia’s actions were enabled by Belgium’s state structure. The de-federalization of trade made it possible for a regional party to block trade deals on a national and international level.
Leader of the Flemish Nationalist Party (NVA) – the biggest party in Flanders the National Government – Bart De Wever said that Wallonia made itself appear as an unreliable partner and that they further demonstrated why Belgium should be separated.30 Reversely, the institutional freak show could have inspired people to at least consider re-federalizing several competences. This debate has been relaunched by, among others, Kristof Calvo of the Flemish Green party.31 The debate will now reheat as both sides are trying to spin this as a reason to follow either course.