Wallonia sends EU trade policy back to the drawing board
The European Commission needs a new trade policy — and fast.
A veto from Belgium’s French-speaking region of Wallonia has struck a potentially fatal blow to the EU’s trade deal with Canada and exposed a devastating structural threat to any future deals, with countries such as Japan and the U.S.
EU officials are now scrambling for ways to regain control over one of the few portfolios in which they ever wielded genuine power. Cecilia Malmström, the EU’s trade commissioner, conceded last week that the bloc needed to reappraise how “trade policy should be made in the future” and stressed that Europe needed to seal trade agreements “in a way that they are not taking years to be ratified, because things happen so quickly in a globalized world.”
Some German politicians in the European Parliament are proposing a way for Brussels to reassert its authority. They argue that the Commission needs to roll out a new kind of two-track trade agreement that denies national and regional assemblies such as Wallonia the ability to veto the key elements of trade accords that fall under the remit of EU-wide law, such as tariffs and shared regulations.
National parliaments should only be allowed a say in the second-tier issues — such as investment protection — that cross over with national law, they argue.
“What we don’t need is 28 states or even regions negotiating alone for the whole bloc. That has nothing to do with democracy.” — Daniel Caspary, coordinator of the European Parliament’s Committee on International Trade
EU trade policy has fallen into an unexpectedly precipitous death spiral over the past four months after European Commission President Jean-Claude Juncker made the fateful decision to pass the Comprehensive Economic and Trade Agreement with Ottawa to 38 national and regional parliaments for ratification. The danger of that strategy — treating CETA as a so-called “mixed” agreement — became clear when Wallonia vetoed.
“What we have seen in past months is the EU’s common commercial policy being massively undermined,” said Daniel Caspary, coordinator of the European Parliament’s Committee on International Trade and a member of the German center-right delegation.
“We need to ensure that the Commission can again make trade deals, which are democratically approved by the EU’s own institutions,” he said. “What we don’t need is 28 states or even regions negotiating alone for the whole bloc. That has nothing to do with democracy.”
Slicing deals in two
Caspary is one of the leading proponents of slicing trade deals in two. “Wallonia would no longer be able to take the rest of the agreement hostage,” he said.
His suggestions have attracted support from across the political spectrum.
German MEP Sven Giegold, a fierce critic of EU trade policy | European Parliament
Manfred Weber, the chief of the center-right European People’s Party group, is throwing his weight behind the two-track approach. “We should have two mandates and finally two agreements on the table, one for the parts under sole EU competence and one for the member states,” he said.
Even Green lawmaker Sven Giegold, one of the staunchest critics of the EU’s trade agenda, called the Walloon CETA drama “an unpleasant hurdle for Europe’s ability to act,” noting that “regional parliaments must not block the Council” on trade deals.
By contrast, Hélène Ryckmans, a member of the Ecolo political group in the Walloon parliament, insisted that the EU’s trade policy needed to be reformed in a way that included regional powers, no matter how small.
“The question is how do we define the mandate of the European Commission in a democracy. Do we give them exclusive powers or do we come back to national parliaments, which are democratically elected? Only then will we have something better,” she said. “We need to reconnect in Europe with our citizens, producers and agricultural workers.”
“We need to take another look at trade negotiations, but not necessarily in the direction of the German proposition,” she added, referring to the positions of Caspary and Weber.
Revamping EU trade policy will, however, trigger a host of legal problems.
Last week, Germany’s Constitutional Court decided that it would be illegal if a country was unable to pull out of a provisional trade deal at any time. Even if the EU does ultimately sign up to CETA, it can still be unwound if a national parliament votes against it.
“Even if the focus is on the political decision of the Walloons, the most serious legal challenge comes from the decision of the German Constitutional Court,” said André Sapir, a senior fellow at the Bruegel think tank in Brussels.
“This case is of immense importance for the signing, provisional application and conclusion of EU trade agreements” — David Kleimann, trade lawyer from the European University Institute
He explained that the court decision effectively allows Germany to sign CETA in the European Council but does not answer the overarching issue of whether or not the Bundestag, or any other parliament in Europe for that matter, could prevent the deal by choosing not to ratify the text.
Hosuk Lee-Makiyama, director of the European Centre for International Political Economy, said the idea of splitting trade competencies between the EU and member countries was unfeasible as carving out a part of the agreement would give the European Commission less leverage in trade talks.
“Who would offer concessions to us [in a trade negotiation] with the risk of only one part passing ratification,” Lee-Makiyama said.
In determining which parts of the EU’s trade talks fall under member-country competency and which fall under the EU’s competence, all eyes are currently fixed on a decision — due shortly — from the European Court of Justice on which parts of the EU’s free trade deal with Singapore should be seen as a mixed agreement.
Manfred Weber is a proponent of a two-track | Gerard Julien/AFP via Getty images
In September, the court held a public hearing on the case. In the coming weeks, an opinion by ECJ advocate-general Eleanor Sharpston is expected, which should shed light on the court’s thinking ahead of a ruling next spring.
“This case is of immense importance for the signing, provisional application and conclusion of EU trade agreements,” said David Kleimann, a trade lawyer from the European University Institute.
“The Singapore deal is very similar to the Canada agreement, and the ruling will be a precedent for all other EU trade deals, too,” he said.
Guillaume Van der Loo from the Centre for European Policy Studies agreed that the court case on the Singapore free trade deal would be decisive in shaping the future of EU trade policy.
“The common commercial policy was, since the beginning, designed as an exclusive competency,” he said, adding that the EU treaties were designed to avoid the problem that one single player could block agreements “for domestic reasons unrelated to trade, or to use its veto as a bargaining chip in other negotiations.”
In recent years, however, Van der Loo said EU countries were trying “to get their foot in the door and have an increased say on trade competencies.”
Additional reporting by Florian Eder