Published in the National Business Review (Auckland), 28 October 2016
If you are familiar with The Adventures of Asterix, you probably remember the beginning: “The year is 50 BC. Gaul is entirely occupied by the Romans. Only one small village of indomitable Gauls still holds out against the invaders.”
Well, the year is 2016 AD but everything else is still exactly the same. Except that we are not talking about Gaul (France) but its smaller neighbour Belgium. And it is not the Romans that have captured the continent but the European Union. And it is not Asterix and his tribe leading the resistance but the Belgian region of Wallonia.
Figure this: The European Union has been negotiating a free trade agreement with Canada for years. The history and pre-history of their Comprehensive Economic and Trade Agreement (CETA) go back to at least 2004. This week was supposed to be the time when the final deal should have been signed by European and Canadian leaders.
At the time of writing this column, there is still a slim chance this might eventually happen. But there is an even bigger question mark hanging over the project. And that question mark is Wallonia.
The French-speaking part of Belgium, which accounts for about 0.7% of the EU’s population, is blocking the passage of CETA. More precisely, it is Wallonia’s regional parliament.
But it is unfair to blame those indomitable Walloons for the likely death of CETA. It is the EU itself, and its member states, that have to take responsibility for this policy disaster.
To understand what has gone wrong in EU trade policy, we need to go back to late June. It was the week after the Brexit vote when EU Commission President Jean-Claude Juncker boldly declared that CETA was something the EU could decide on – on its own. Member states, their governments and parliaments would have no say when it comes to ratifying CETA. It was an “EU only issue.”
Probably still under the impression of Brexit, various European politicians strongly criticised Juncker at the time. They argued Brexit had demonstrated there is widespread dissatisfaction with Brussels making lone decisions and that therefore member states had to be involved in the process. Especially in an area as politically sensitive as trade, brushing national democracies aside and leaving matters entirely to the EU would be the wrong thing to do post-Brexit.
German Chancellor Angela Merkel, for example, demanded a vote on CETA in the Bundestag. Her deputy Sigmar Gabriel called Juncker’s position “unbelievably foolish.”
It may have been politically insensitive for Juncker to push ahead with CETA as if Brexit had not happened. However, Juncker was quite right to insist that CETA should have been dealt with by EU institutions only.
Legally, trade is what the EU is responsible for. In fact, it is its raison d’être. The EU is all about organising Europe’s common market and its trade relationship with the rest of the world.
Even on the question of democratic legitimacy, Juncker could have pointed out that this was ensured through the involvement of the European Parliament. Admittedly, the European Parliament does not have the rights or standing of any parliament at a national level. But it is a democratically elected body and therefore the right place to debate and approve trade matters affecting the whole EU.
Juncker was therefore entirely right and justified when he initially wanted to deal with CETA at the EU level. Pressure from member states was too strong, however, so he had to buckle in the end. In early July, he announced that the commission had decided to propose CETA as “mixed” agreement. This meant CETA would only be entering into force after the conclusion of the EU-led negotiation through a European Council decision with the consent of the European Parliament and by all member states through the relevant national ratification procedures. In other words, CETA would only come into force if everyone agreed. Quite a high hurdle.
To make jumping that hurdle a little harder still, CETA’s original timetable was not changed. CETA was always meant to be signed at a special EU-Canada summit in Brussels on October 27. Now all member states had to deliver their national agreements by that day too.
Incidentally, doing so would not only take 28 parliaments to approve the deal. Because some member states operate under bicameralism or with regional parliaments, it would take a total of 42 parliamentary votes across Europe to get CETA over the line.
If only one of them decided to hold up the deal or use it to extort special concessions, there would be serious trouble for Brussels. The regional parliament of Wallonia had already sent strong signals it would block CETA if given the chance.
And this is precisely what has happened. At the end of over a decade of EU-Canadian talks, CETA looks dead in the water – thanks to Wallonia. It is unbelievable how a tiny part of an EU of more than 500 million people and 28 nations managed to block one of its most important trade deals.
This is not because Wallonia had any specific or valid concerns about CETA. It is mainly because its politicians are using (or rather abusing) CETA as a tool for their own grandstanding.
The CETA fiasco has seriously diminished the EU’s reputation as an organisation to do business with. Any other country thinking about doing trade deals with the EU will now think twice. You may invest a lot of time and effort into these negotiations but in the end the EU’s word may not count much if the likes of Wallonia can still block the deal.
The CETA debacle also provides ammunition for proponents of a hard Brexit. Britain’s Europhiles had always argued the EU guaranteed access to its own common market but also favourable trade conditions with the rest of the world. As one big bloc, so the argument went, the EU could negotiate better what a single country on its own could have never achieved.
Well, if CETA is anything to go by, the UK could probably reach bilateral agreements with other nations much faster than the EU could. And it could do so on its own without any Wallonian interference.
The real home of Asterix of 2016 AD, fighting the EU’s dominance over everything, is not Wallonia anyway. It is Brexit-Britain. And Wallonia’s obfuscation of a sensible trade deal only proves the Brexiteers right.