Canada and EU
Much hangs in balance if Wallonia objects to trade deal
The proposed trade deal between Canada and the European Union was supposed to be simple.
On the Canadian side, the Comprehensive Economic and Trade Agreement (CETA) had the full support of both Stephen Harper’s Conservatives, who first negotiated it, and Justin Trudeau’s Liberals, who inherited it (Tom Mulcair’s New Democrats maintained a studied neutrality). On the European side, initially at least, most politicians didn’t much care one way or the other.
Canada just isn’t that important to the 28-member EU. However, if the Canadians wanted a trade deal with Europe – then why not?
But the world has changed since CETA was first broached back in 2007. In a Europe increasingly suspicious of free trade, the proposed pact has run into a buzz-saw of unexpected opposition.
And now one small region of one small EU country could derail the entire project.
The region is Wallonia; the country is Belgium. Belgium is an unusually decentralized country, split between rich, Dutch-speaking Flanders in the north and poorer, French-speaking Wallonia in the south.
One of Belgium’s quirks is that regional parliaments must approve all trade deals. On Friday, for the second time in a year, Walloon legislators said no to CETA. On Tuesday, Belgium’s foreign trade minister told his European counterparts that this meant his country can’t sign onto the deal.
Given that CETA requires the unanimous support of all 28 EU governments to come into effect, this is not an insignificant problem.
Wallonia’s specific objections to free trade with Canada should evoke little surprise. The region, formerly home to Belgium’s heavy manufacturing industry, is now a rust belt. At 11 per cent, the unemployment rate is double that of neighbouring Flanders.
Wallonia’s pork and beef industry fears Canadian competition. Its workers and the left-leaning politicians they elect fear foreign firms will use the treaty to lower labour standards.
Like other European critics, Walloons also see CETA as a stalking horse for a proposed free-trade deal with the United States.
And while Europeans may not care that much about Canada, they do care about the U.S.
In particular, many worry a socalled investor-state dispute settlement mechanism in CETA, which would allow foreign firms to challenge domestic European laws, would be replicated in any U.S. deal.
Walloon opposition is not the first problem CETA has run into. Austrian and German politicians also objected to the dispute-settlement clauses, arguing that they gave foreign investors too much power.
To deal with that, Canada quietly agreed to a new arrangement for settling quarrels between governments and business, one that would involve establishing a permanent investment court system. That satisfied the Germans and Austrians. But it didn’t mollify the Walloons.
So Canada bent again, this time by issuing – together with the EU – a joint interpretative declaration on the rights of government to legislate and regulate.
The declaration confirmed that under CETA, governments would still be able to pass environmental and labour laws in order to achieve “legitimate public policy objectives.”
But that non-binding declaration didn’t impress the Walloons either. Nor did lobbying efforts by Canadian trade envoy Pierre Pettigrew.
The last chapter in the CETA saga is far from written. The recalcitrant Walloons may be bribed or bullied into acquiescence. The EU leadership may decide, after sober second thought, that unanimous consent of its 28 member states is not really necessary to approve the deal.
Or maybe no magic saviour will appear and CETA will die a quiet death. In any case, this should be a sobering exercise for the Trudeau Liberals. The prime minister, like Harper before him, has made trade and investment deals a top priority.
His Liberals will almost certainly ratify the Trans-Pacific Partnership linking Canada to Japan and 10 other nations if that pact survives the U.S. presidential election.
He has staked his future on a free trade deal with China.
But Wallonia’s determined stubbornness is a reminder that free trade has its limits. Its benefits are not easily quantifiable. Its costs are.
And after a while, people have had enough. Not because they are racists or fascists or misogynists or somehow unhip. But because they have just had enough.