Why did the Belgian region Wallonia pass in a veto against the free trade agreement CETA?

Table of Contents

1. Introduction

2. Political and Historical Context
1. CETA - Comprehensive Economic and Trade Agreement
1. Basic Information
2. Advantages and Disadvantages
3. Lisbon Treaty (2009)
2. Wallonia - Core Facts

3. Theoretical Framework and Analysis
1. Variants of Liberal Theory
2. Ideational Liberalism: Identity and Legitimate Social Order
1. National Identity
2. Political Identity
3. Socio-economic Identity
3. Commercial Liberalism: Economic Assets and Cross-Border Transactions
4. Republican Liberalism: Representation and Rent Seeking

4. Conclusion

Bibliography

1 Introduction

With the ongoing protests against CETA the discussion about FTAs is as present as itcan be.¹ Also, the relatively new FTAs TTIP and CETA came with a rather newphenomenon - the concerns of less traditional trade actors. Those being consumer andenvironmental groups' and citizens' concerns about the erosion of valued regulations.² In protest of TTIP and CETA at least 150,000 people came to demonstrate in Berlinon October 2015. It was one of the largest demonstrations of the past years in Germany.The former Federal Minister of Economic Affairs, Sigmar Gabriel (SPD), whosupports CETA, was verbally attacked. "Gabriel, the villain, deceives the citizens."³ It can be concluded that the government's behaviour in the bargaining process of FTAshas gained higher importance regarding the elections and the mobilisation of voters byparties who want to be (re-)elected. A rather shocking event was the veto Walloniasubmitted against CETA. A small region in Belgium caused the fear that seven yearsof negotiation have been done in vain. This event gives rise to many questions. Whywas this small region able to veto in the first place? Is this veto justified? And why didthe Belgian region Wallonia pass in a veto against the FTA CETA? To answer,especially, the last question, the reader will first be introduced to the political andhistorical context concerning this situation. With the higher involvement ofuntraditional trade actors in trade politics mentioned above, a liberal approach is themethod most practical for the analysis. Because of the breadth of Andrew Moravcsik'sVariants of Liberalism Approach, this theory will be used in the analysis. Theconclusion introduces the aftermath of the negotiations, summarises the results andtries to find the answer to the research question.

2 Political and Historical Context

2.1 CETA - Comprehensive Economic and Trade Agreement

2.1.1 Basic Information

CETA is short for Comprehensive Economic and Trade Agreement and is the tradeagreement negotiated between Canada and the EU. On the 30th of October 2016 CETA was signed in Brussels.⁴ Each year Canada and the EU are trading products accounting up to 60 billion Euro, which is making Europe Canada’s second most important tradingpartner. But considering Germany, for example, Canada is only listed 12th on the listof most important trading partners.⁵ Because of its breadth and features that have notbeen part of FTAs before, the CETA trade agreement is important because it is a rolemodel for future trade agreements worldwide. CETA would effectively eliminate 98% of all tariffs between Canada and the EU, increasing trade by over 20 %. Certainclauses outlined in CETA have evidently been points of irritation and disapproval. Thetrade agreement would, for example, eliminate approximately 94 % of EU agriculturaltariffs, which would give Canadian exporters preferential access to European markets.This point will be further discussed later in the assignment. Another controversialfeature of CETA is the introduction of an Investment Court System (ICS). ICS is ajudicial system, separated from domestic law, which allows private corporations to suestates for discriminatory practices. Companies would thus have the opportunity to usea private court system in order to seek compensation for practices that harm theirbusiness.⁶ The most important range of advantages and disadvantages will bejuxtaposed in opposition in the following.

2.1.2 Advantages and Disadvantages

As mentioned above, Canada and the EU are hoping for more trade resulting in aneconomic increase. With an increase in trade, an increase of GDP and the creation ofnew jobs follows. Furthermore, the European citizens will benefit from a bigger rangeof products and lower prices. The abolishment of non-tariff barriers will furtherfacilitate the purchase of Canadian products. The adjustment of seals of quality willscale up transparency. Also, people in favour of CETA argue that investors shouldobtain higher protection, because higher investments will lead to economic growth andtherefore to positive externalities for all economies involved.⁷ On the other hand, theGerman consumer advice centre is concerned about a quality loss of products. Thismeaning, that in general CETA opponents warn about lower costumer andenvironment standards. In the EU the precautionary principle states that every producthas to be controlled proved harmless, before being allowed access to markets. CETA does not mention this principle and CETA opponents fear that it could be disestablished.⁸ However, the German government says that the precautionaryprinciple cannot be disestablished because it is part of our EU primary law.⁹ Anotherimportant part of the discussion has been genetic engineering. The European lawshould stay the same with CETA but opponents fear that genetic-modified productsend up on EU markets by bypassing that. In Germany, for example, there is only aminor amount of 0.1 % of agricultural land used for genetic-modified plants, whereasin Canada it is 25 %. The breadth of CETA, especially the ICS awakes a fear that thiswill lead to a weakening of the democracy. Companies are getting strengthened butthe democracy is suffering, because the citizens will be losing their democratic powerover the big companies¹⁰. The most controversial part, however, is the installation ofan court of arbitration a constant international court should decide on trade problemsbetween companies and governments so the investors enjoy higher protection. If thereare problems the arbitral court should solve them. That is a highly controversial point,because opponents fear that the court of arbitration will be able to decide without thenational court’s agreements.^{11 12}

2.1.3 Lisbon Treaty (2009)

To fully understand the veto Wallonia submitted against CETA it is also important tomake mention of the reason why this small region was able to do so in the first place.The theoretical framework for this is the Lisbon treaty, an institutional reform of theEuropean Union that became law on the 1st of December 2009. The treaty’s aim wasto make the EU more democratic, more transparent, more efficient and morelegitimate. The Lisbon treaty was introduced, because since the last reform of the EU,it got new member states. It introduced mixed agreements on negotiations between theEU and non-EU-member-states. The member states' national governments should bemore included. The political content of the contract decides whether it is a mixed or aEU-only treaty.^{13 14} If the topic of the contract is part of the EU’s field of responsibility, it is an EU-only-treaty, meaning it does not include the member states. When its competence is shared with EU countries, the agreement is concluded both by the EU and by the EU countries. In this case it is a mixed agreement to which EU countries must give their consent.^{15 16} The federal structure of Belgium allows the states Wallonia, Flanders and the Brussel-Capital to intervene in foreign politics and to block international agreements. The origins of these rights have their roots in Belgian history and will be introduced in the following sections.

2.2 Wallonia - Core Facts

To fully understand the analysis following later, it is essential to keep in mindWallonia's historical background. Wallonia is a region of Belgium, is primarilyFrench-speaking, accounts for 55 % of Belgium, and a third of its population. Duringthe industrial revolution, Wallonia was second to the United Kingdom inindustrialization, due to its deposits of coal and iron. This brought the region wealth,and, from the beginning of the 19th to the middle of the 20th century, Wallonia wasthe more prosperous half of Belgium. Since World War II the importance of heavyindustry has greatly diminished, and the Flemish Region surpassed Wallonia in wealthas Wallonia declined economically. Wallonia now suffers from high unemploymentand has a significantly lower GDP per capita than Flanders. The economic inequalitiesand linguistic division between the two are major sources of political conflict.¹⁷ Theparties system of Belgium is characterized by a unique phenomenon in industrializedcountries: party confederation. For more than a quarter of a century there has been nonational party in Belgium who is running in the Dutch-speaking Flemish region, aswell as the French-speaking Wallonian region. Even the three large, once unitaryparties of Belgium¹⁸ have been blown up by the nationality conflict.

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¹ ZDF heute (2016).

² Young, A. R. (2016):1.

³ ZDF heute (2016).

⁴ Tagesschau (2016).

⁵ Bundesminesterium für Wirtschaft und Energie (2016).

⁶ Nato Association of Canada (2016).

⁷ Bundesminesterium für Wirtschaft und Energie (2016).

⁸ Tagesschau (2016).

⁹ Bundesminesterium für Wirtschaft und Energie (2016).

¹⁰ This fear has been especially formulated by the German Cultural Council as well as by the NGOs BUND, Greenpeace and Foodwatch.

¹¹ As it is stated in CETA, the new court is just able to decide over payments of compensation. CETA’sopponents, on the other hand, are talking about an illegal parallel law without independent judges.

¹² Tagesschau (2016).

¹³ Bundeszentrale für Politische Bildung (2009).

¹⁴ BBC (2011).

¹⁵ Shared competence applies in the following principal areas: internal market, social policy, for the aspects defined in this treaty, economic, social and territorial cohesion, agriculture and fisheries, excluding the conservation of marine biological resources, environment, consumer protection, transport, trans-european networks, energy, area of freedom, security and justice, common safety concerns in public health matters, for the aspects defined in this treaty. In the areas of research, technological development and space as well as in the areas of development cooperation and humanitarian aid, the Union has competence to carry out activities.

¹⁶ Official Journal of the European Union (2016):pp. 51-52.

¹⁷ Cook, B. A. (2004):pp. 68.

¹⁸ The former unitary parties were Christian Democrats, Socialists and Liberals.