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October 28, 2016


Belgium says "Yes, but..."

The deal is done, and most of the media this morning failed to look at the actual content of the agreement, which contains quite a lot of qualifiers including the advance notification that Belgium will not ratify Ceta unless there is an actual change in the treaty itself - in respect of the investor state dispute settlement procedures. This is, to us, the most important part of the agreement. This is a huge victory by Belgium's Ceta opponents. In return, they ceded the go-ahead for the provisional application of the parts of Ceta that are largely uncontroversial. The agreement sets out very clear guidelines that point to a final failure of the ratification process.

Before we discuss the further implications, it is really worthwhile looking at what has actually been agreed. We have transcribed and summarised the main points from the original French and Flamish documents:

  1. Belgium reserves the right not to ratify Ceta. Ratification will require the consent of the federal and the regional parliaments. 
  2. If one of the federated entities informs the federal government of its final and permanent decision not to ratify CETA, the Federal Government shall notify the Council at the latest within one year after that notice that Belgium has not ratified.
  3. Belgium opts out of various Ceta provisions during the provisional phase, most importantly the controversial investor-state dispute settlement (ISDS) procedure.
  4. Belgium will ask the ECJ for a final decision on whether ISDS is compatible with European law. 
  5. The regions are already giving notice to the federal government that they will not ratify Ceta on the basis of the current chapter 8 of the treaty, specifically the dispute settlement procedures. In other words, there will be no ratification of the treaty unless the treaty is changed.
  6. The regions of Flanders, Brussels, and the flemish language community (which is separate from the region of Flanders) welcome the assurance they received by the Commission and the Council in respect of the courts to adjudicate investment disputes.
  7. Decisions of the Ceta joint committee can only be implemented with the usual procedures by the institutions of the EU and member states. It has no executive powers of its own.
  8. On Ceta-related matters that are exclusively or partially the responsibility of the federal state, the federal government guarantees the involvement of the regional parliaments;
  9. Federal or regional governments have the right to suspend the agricultural section of Ceta in case of a negative economic impact; the economic impact shall be investigated from time to time;
  10. A specific guarantee that the Ceta agreement does not lead to the import, directly or indirectly, of genetically modified organisms into the EU.

So when Belgium's prime minister Charles Michel walks out of these meetings declaring that he hasn't conceded an iota, as reported by Le Soir, this is more than disingenuous. And this is not a done deal yet. The regional parliaments have yet to approve it. This is expected to happen today and tomorrow at the latest. 

The most appropriate comment comes from Hendrick Kafsack in Frankfurter Allgemeine, who noted that final ratification requires the consent of 40 parliaments - EP, national parliaments, and regional parliaments. The Walloon parliament will have another vote. The failure of Ceta may just have been postponed. The only logical consequence one can draw from this debacle is that the EU will have to transfer the power over trade where it belongs - to the EU level only. The other political mistake that was made was to ignore the protests, which has strengthened them. The problem cannot be solved by nationalising trade policy, though. 

Ceta itself is an economically insignificant deal. If you do a ranking of Europe's top companies, the revenue of the 50th of them is about the size of the expected GDP increase through Ceta. This is not a number of any macroeconomic relevance. Ceta has become symbolic of the fight between the establishment and anti-globalisation campaigners. Spiegel Online has a good comment on how both sides are massively exaggerating the impact of either success or failure of Ceta, and that the Ceta opponents are winning this battle because they are much more assertive, while Ceta proponents are more defensive.

Our other stories

We also have stories on the Netherlands about to sink the EU-Ukraine association agreement; on the new Spanish political landscape; on Padoan's response to the European Commission; on German rhetoric against Portugal; on the lack of a Brexit effect in the UK; on Syriza showing contempt for the court ruling on TV licences; on protests by French police against the government; and on Papadia's proposal to include equity purchases in the QE programme.

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