Martin Schulz, European Parliament President meets with Chrystia Freeland, Minister of Trade of Canada in a last ditch effort to save the much disputed Comprehensive Economic and Trade Agreement – CETA between the EU and Canada. Event Date: 22/10/2016. City: Brussels. Copyright: © European Union 2016 – Source: EP.
No, it wasn’t just the tiny Wallonia region of Belgium and its 3.6 million French speaking inhabitants who blocked CETA (Comprehensive Economic and Trade Agreement). This is an EU-Canada free trade and investment pact that took eight years to the Brussels Commission and the Canadian authorities to draft. It was also the Brexit and the winds of change that now blow in Europe and the US against globalization that traded this very strong blow to CETA.
The ‘big guys’ are furious with Wallonia
Even if the agreement survives the Wallon blow, a very probable eventuality, nothing will be the same any more for the future of free international trade agreements. The European civil organizations and the thousands of citizens who protested against CETA are the main force against globalization and their ideas are very swiftly gaining grounds. Last minute information though says that the EU authorities do not tolerate Belgium’s government inability to ‘convince’ Wallonia to sign the deal.
According to Brussels sources Donald Tusk, the EU Council President issued an ultimatum to Belgium, asking Prime Minister Charles Michel to come up with a clear answer until this evening. Obviously the EU leadership and the European politico-economic establishment are frantic with tiny Wallonia, daring to block even for a few days the choices of the ‘big guys’. But still the tide against globalization cannot be stopped . Let’s see why more free trade is no longer appealing to citizens in Europe and the US.
Who gains more from free trade?
Citizens in the West now believe that the open borders policies for capital and trade movements have worked only in favor of the multinationals and the banks. Free flows of goods and capital allow big business groups to produce in low cost countries and freely import their goodies to Europe and the US. In this way they export jobs from the EU and the US and increase their profit margins.
At the beginning it was low qualification jobs being exported, not anymore. Despite the strong support from the politico-economic establishment and mainstream media for more ‘free trade’, a growing number of political formations in the West are now following their survival instinct and their rhetoric incorporates voters’ anguish. Everybody is becoming skeptical about more globalization.
The US election is about that
It’s not by chance that the US electoral campaign, despite the fact that the American establishment calls it a ‘circus’, has a lot to teach us about the future of globalization. Both Presidential candidates, the impossible Donald Trump and the Wall Street’s favorite, Hillary Clinton, have turned their back to the Trans-Pacific Partnership. This is a plan for free trade agreement between the US and Canada and a number of Asia – Pacific Realm and South American countries (Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam).
However, it is even more telling that both candidates have questioned the NAFTA. This is the long time cherished, pivotal and already operational for many years North American Free Trade Association between US, Canada and Mexico. His outspoken opposition to NAFTA and the Mexican immigrants has transformed Trump from a second rate TV persona into a strong contester for the American Presidency. To be noted, that US and Canada are involved in all those free trade packs for different reasons. The US because of its many multinationals and Canada since the country can only thrive in a free trade world.
The Wallons are coming
Last Friday afternoon, Chrystia Freeland, the Canadian Trade minister came out of the Wallonia government buildings and, in tears, told the Press, that the CETA after nine years of negotiations and drafting has collapsed. She explained that after the Wallon Parliament and government definitively decided to reject CETA, it’s impossible for the EU to sign an international deal.
According to the Belgian constitution, the three autonomous regions, the Brussels-Capital Region, the Flemish Region (Flanders) and Walloon Region (Wallonia) must all approve trade agreements. With Wallonia rejecting CETA, Belgium cannot concede. On the 28EU level all international trade agreements have to be concluded in unanimity, otherwise the Union cannot undersign them.
However, this is the institutional part of the whole CETA affair. In real political life though, no prime rate European political force can press tiny Wallonia to change attitude towards CETA. This is so simply because the agreement has already triggered strong reactions from civil society bodies, business organizations and widespread street protests all over Europe. Be it the powerful German Chancellor Angela Merkel or the internally beset French President Francois Hollande, none of them now has the political capital to openly press Belgium and Wallonia to accept CETA. They face strong reactions in their own countries on this account.
Can Brussels do it?
The same is true for the conservative center-right tri-partite Belgian alliance government. Prime Minister Charles Michel cannot press Wallonia harder, not only because the regional Parliament and government are overwhelmingly under socialist control, but also because he faces strong reactions against CETA in his own governing coalition. Add to that the Wallon stubbornness and the strong linguistic and otherwise divisions of Belgium between the French speaking Wallonia and the Flemish Flanders, and the deadlock becomes stronger. However the EU leadership can pull many levers and ‘convince’ Belgium and Wallonia to sign the pact, if the stakes prove to be bigger than what a Wallon can imagine.
On the international horizon, the problems of CETA will certainly trigger reactions all over the western world. For one thing, the Canadians have managed to directly confer and secure a very positive attitude for CETA from a number of big EU countries. It is a fact that practically all EU governments including Belgium do not oppose CETA, few leaders though have come in the open supporting it. In the past months, Freeland has convinced practically all the European leaders to decisively back the agreement, but they won’t come in the open about that. In any case, the Canadian fervor for the approval of the deal is a very good indicators about who can gain from this bilateral free trade agreement.
Opening Pandora’s Box
With CETA blocked, at least for the time being, the other colossal Transatlantic free trade agreement (Transatlantic Trade and Investment Partnership – TTIP) between the EU and the US, must be considered closer to oblivion. In the western political scenery it seems that the Brexit has opened a new era of nationalism and xenophobia. In practical terms, this is a political proposal for economic protectionism, opposing free movements of goods, capital and people. This issue was in the heart of the American election campaign, until the moment when the US politico-economic and media establishment chose to diverge the confrontation to non-political issues, like human sexual habits.
In Europe, mainstream media are doing it again. They tend to belittle the 3.6 million Wallons who…dared oppose the will of 508 million Europeans and 36.3 million of Canadians. None dares to ask what all those hundreds of millions of people would be likely to vote in referendums, if given the chance to decide about CETA. Unquestionably, under the currently prevailing political and social climate, rather all country referendums would have turned out a negative result. If it was otherwise, some governments would have already called such referendums, to support free movements of capital, goods and bank ‘investments’.
In conclusion, it’s not tiny Wallonia that opened Pandora’s Box. It’s the European peoples who are now questioning the results of more than forty years of ‘openness’, serving mainly the needs of multinationals. This widespread feeling in the public opinion has also nurtured suspicion vis-à-vis the political elites and an apathy which easily turns into general defiance. Even if in the end Wallonia succumbs to truly global pressures and lifts its veto for CETA, the compass has definitively turned showing now less globalization.
There seems to be a misunderstanding on behalf of people though that the benefits of free trade are spread out throughout society with lower prices. People like to harp on free trade because they don’t understand how it is putting money in their pockets. Of course there are losers and there are winners, but all of the most rigorous economic analyses show that free trade boosts overall aggregate economic growth. The problem is that since the winnings are often diffuse (lower prices for everyone) and the losses are concentrated (a particular type of industry shutting down), we tend to focus on the losses more without keeping in mind that the gains far outweigh the losses. It is incumbent upon governments that engage in trade liberalization to find ways to reorient, support, and train workers that are affected by this dislocations.