The EU heads of state and government in European Council have been wrangling their heads on how to save the free trade agreement between Europe and Canada, CETA. The focus has been on finding a deal with the government and Parliament of the Belgian region of Wallonia. It failed. Canadian minister for trade Chrystia Freeland just left Brussels in tears concluding the EU isn’t willing to conclude a deal. Rightfully so. The European Union has let down one of our closest partners due to some populist resistance from Walloon minister-president Paul Magnette. That is shameful and something that 500 million Europeans will have to pay the price for.
It is indeed bizarre that a Belgian region of 3,5 million, representing 0,45 percent of European exports to Canada can block a trade agreement that would benefit 500 million Europeans. Whatever the outcome in the coming days, Europe’s trade policy and our reputation as a credible negotiating partner have been damaged. The blame for this should be laid on political games in Wallonia but on also the socialists of Europe that have started to use trade policy as a tool to gain short populist victories. The result of this could be devastating where our trade policy slowly dies and where growing economies rip their barriers shifting the centre of global economic activity even further from Europe to America and Asia.
There used to be a consensus among European socialists that new opportunities for trade could be an engine for growth, new jobs and benefits for consumers if combined with the right policies of redistribution, workers’ rights and consumer protection at home. That did for some time enable a rather broad alliance between socialists, liberals and conservatives to push for trade liberalisation. But recently, people the anti-globalisation left have raised their voices and started spreading more myths and lies about trade agreements. Many European socialists have started listening to these flawed arguments and started to use them in election campaign to get short gains in coming elections.
CETA is the case in point for this development. The agreement took a long time and effort to negotiate until 2014 when negotiations were initially concluded. But after the conclusions the socialist anxiety in Europe forced the Commission to develop a new and so far untested settlement mechanism for investment disputes, called the Investment Court System. The Canadians in had no choice to accept the new system, despite being different from what originally agreed on throughout negotiations.
The lead up to what has now happened is when the Commission made the proposal to sign and conclude the agreement. Despite the fact that lawyers concluded that CETA only covers areas on which the EU has exclusive competence, socialists in France and Germany vehemently called for it to be a mixed agreement that had to be signed and ratified by all member states individually. The Commission bowed down and proposed CETA as a mixed agreement, putting CETA on an uncertain path as any national or in some cases, regional parliament could derail the agreement after it being signed. The Commission might have perceived the decision as a comfortable one at the time but it paved the way for today’s nightmare.
Now, Belgium has refused to sign the agreement, on its own behalf, as the socialist dominated parliament in Wallonia won’t sign off to the deal, something that is required by the constitution of Belgium. The Walloon socialists are pressed by a far-left populist party to oppose the deal. They are now, on their own behalf demanding an entire re-negotiation. By other words, they are saying that the Government of Wallonia and should dictate the trade policy of the entire European Union and our 500 million citizens, in violation of what has been the law of the land for several decades.
In a very generous move, Freeland went to the capital of Wallonia, Namur to find a last minute solution with the regional government to the issue but left empty-handed. But Magnette and his walloon socialist government did not move an inch. Instead they let Canada and 27 & 1/2 other EU countries down. It is a devastating blow to the credibility of the EU as a partner in trade and an ally in the World. No longer will the EU’s bids in trade negotiations be taken seriously as any country will be able to rip that out from an agreed deal.
Europe must now get its act together, one way or the other. Member states must decide if they want a trade policy that delivers for jobs and growth. Should trade be an EU competence as the treaties say, we can no longer have a situation where one regional parliament can derail any agreement. We will see if CETA can be revived, but if it is not we know this was the day when a little regional parliament killed the trade policy of the entire European Union.