The world’s latest political battle over free trade did not take place, as usual, at a conference table at a G20 summit or at the popular protest grounds outside the architecturally imposing home of the European Union in Brussels. It occurred, instead, in the Belgian town of Namur, population 110,000 and home to the Parliament of Wallonia, which represents the 3.5 million French-speaking Belgians (or Walloons) in the country’s south. In mid October, it became the first parliament of an EU member state to reject CETA (Comprehensive Economic and Trade Agreement), a free-trade pact between Europe and Canada. CETA, the brainchild of the European Commission, would largely eliminate tariffs and encourage cross-border investment between the EU and Canada. It is worth an estimated 15 billion euros and critical for the credibility of Europe’s future trade policy, its supporters argue.

But Paul Magnette, Wallonia’s Socialist minister-president, inched the trade deal toward the edge of a cliff when he began to openly voice his region’s popular opposition to CETA due to its inadequate environmental protection measures and its shadowy investor-state dispute settlement mechanisms. And, because of a technicality in EU treaty laws, Wallonia’s veto meant that the free trade deal had been legally rejected for all Europeans despite other national parliaments’ unanimous approval of CETA in the previous weeks.

Just as it seemed that CETA would be cast into the dustbin of history, a last-minute deal was struck on October 30. The compromise between Belgium’s regional leaders added four pages of unilateral demands from the Belgian government that exempt the country from CETA’s investor dispute regime for two years and built in backstops for Belgian farmers in the event of an oversupply of goods.

The changes are altogether minor, even if Magnette tried to make them appear like a great moral victory for Europe’s left. But how the passage of CETA played out does leave the world wondering how a region of 3.5 million people could have held hostage a free trade deal approved by the remaining 495 million citizens of the EU.

EUROPE: THE IMPOTENT GLOBAL POWER BLOC?

La débâcle wallonne has set off the usual alarm bells about the European Union’s viability as a global power bloc. Congenial Canadian President Justin Trudeau has even made a harsh example of Wallonian dilemma. “In this post-Brexit situation, where there are a great many questions about Europe's usefulness, if Europe cannot manage to sign this agreement, then that sends a very clear message,” he said. “It shows that Europe is choosing a path that is not productive for its citizens or the world.”

Likewise, Wolfgang Münchau of the Financial Times wrote that Wallonia’s initial rejection of CETA “heralds a period of disintegration for the EU,” and European Commissioner for Trade Cecila Malström, one of CETA’s key authors, warned that if the EU could not easily agree to a trade deal with a highly concessionary partner like Canada, it was unlikely to draft a successful trade agreement with the United Kingdom after Brexit.

What this all means for the European Union is indeed an open question, since the EU’s very raison d’êtreis trade. Beginning as a common European market for coal and steel and payments union in the early 1950s, the institutions of the European Union quickly gained broad competences over international trade and economic policy as it developed and grew over the twentieth century, guided by liberal attitudes toward trade and borders. But given rising euroskepticism within EU nations, the new mystery of European politics is finding a way to reduce the powers of European institutions without destroying the European project altogether. Almost all European politicians in Brussels can agree that Europe needs to change, but very few have any idea how.

But as Wallonia’s peculiar dance with CETA reveals, Belgium could prove a useful model of a federal state with the right amount of decentralized power. Its history is certainly contentious, and the country remains deeply divided between its northern and southern halves, but Belgium has lessons to teach the EU as the sovereign union of 28 countries soon becomes 27.

Canada's Prime Minister Justin Trudeau and European Council President Donald Tusk attend the signing ceremony of the Comprehensive Economic and Trade Agreement (CETA), at the European Council in Brussels, Belgium, October 30, 2016.
Francois Lenoir / Reuters

CENTRIFUGAL SOVEREIGNTY

The Belgian state has been in a protracted process of decentralization over the past half century. Long aggrieved by regional tensions between the Dutch-speaking province of Flanders and the French-speaking province of Wallonia, the Belgian federal government has been slowly vanishing, granting ever greater central powers to its provinces.

“It would not be an overstatement to say that since 1970, Belgium has been in a permanent state of constitutional reform,” Patricia Popelier wrote in her 2015 book The Belgian Constitution: A Contextual Analysis. “The Belgian model is characterized by an essentially centrifugal dynamic. The tendency is to transfer ever more competences to the federated entities.”

From the first state reform of 1970 to the sixth state reform of 2011, the Belgian government has delegated more and more regulatory authority to its constituent regions. Although the reform process initially sought to protect the rights of Belgium’s distinct linguistic communities, decentralization eventually led to the creation of separate governments and parliaments for Flanders, Wallonia, and the bilingual capital-region of Brussels. The first state reform granted Belgium’s three linguistic communities—Dutch, French, and a small German community for territories annexed after World War I—oversight over health and youth policies. In 1980, the federal regions of Flanders and Wallonia were created, with distinct parliaments and legal personalities. By 1993, the regions gained further powers and the Belgian constitution was rewritten once more. It defined Belgium as a federal state, marking an official break with its historic existence since 1830 as a unitary nation-state.

With each successive reform, the Belgian government lost a wide range of powers normally associated with central governments: agricultural policy, employment schemes, family welfare allocations, and, as the notorious case of CETA proved, foreign trade agreements, which were granted as a regional competence in 2001. In this case, every region’s parliament must approve a European treaty before the Belgian federal government can officially sign on behalf of the nation..

Most experts agree that this process of decentralization is likely irreversible and in the best interest of Belgian citizens. “Belgium’s current organization has been a major contributing factor toward the pacification of the relationships between its two ethnic components,” said Phillipe Van Parijs, a Belgian scholar on linguistic justice and national identity at Université Catholique de Louvain.

But if Belgium’s problems are remarkably similar to the European Union’s—both have been accused of a democratic deficit in their federal institutions and are entrenched in the fight against nationalism—does it necessarily mean that Belgium’s decentralized government could serve as a model for Europe?

It is true that Belgium is rarely considered an efficient exemplar for government across the world. Indecisive elections in 2011 prevented the formation of a federal government for more than 500 days. Belgium’s bungled replies to terrorist attacks earlier this spring were met with intense bouts of criticism, including accusations of being “a failed state.” And Wallonia’s rejection of CETA has spurred these critics, who claim that Belgian political life continues to appear like child’s play on a global stage.

But some legal experts see immediate parallels between the predicaments that Belgium has historically faced and which the EU must now combat if it is to stay alive.

“The problems are nearly identical, of course. Belgium has historically struggled to balance its integrative tendencies with popular sovereignty and popular representation, and now the EU struggles to find legitimacy for its own tendencies to integrate,” said Koen Lemmens, a Belgian constitutional lawyer. “But in both Belgium and the EU, we are witnessing a continued shift from the integrated, communitarian method toward a method of intergovernmental decision making.”

A difference, though, is that the European Union is built on loose definitions of shared powers, meaning that any recalibration of EU competences would require legal amendments to the union’s governing Lisbon Treaty. EU treaties have been historically difficult to modify, requiring immense political willpower from European heads of state.

“Belgian legal competences are defined through legal exclusion: if one region holds a competence, then the federal government cannot,” said Stefan Soitteux, a professor of European and international law at KULeuven in Belgium. “This is different with the European Union, whose treaties allow the union to share powers and competences with Member States. Turning back this kind of authority would be a very difficult procedure.”

But that hardly means that the political barometer cannot swing in this direction. In the case of CETA, the European Commission bowed to strong pressure from member states that insisted in July, when the Commission finalized seven years of CETA negotiations and submitted the treaty to the European Council, that the legal scope of the treaty was beyond the competences of EU institutions alone, prompting the need for member states’ parliaments (like Wallonia’s) to ratify the treaty.

This shift in power from the Commission to the Council is a direct result of the shock therapeutics of the past eight years, from the financial crisis all the way to Brexit, which have jeopardized the dream of an “ever closer union.”

Donald Tusk, president of the European Council, said to national leaders before a post-Brexit summit of EU heads of state in September, “Following Brexit, business as usual is not an option. It will be crucial for member states to better cooperate with one another, to bring our forces together in the Union. Giving new powers to European institutions is not the desired recipe.”

Although the devolution of powers to Europe’s member states would prove anathema to some European leaders, the EU is in dire need of new models for its future. And with such few historical examples to work from, Europe stands to learn from Belgium’s solution—delegating powers to its constituent regions without facing internal collapse.

“Today’s Belgium has distanced itself from the mindset of an ever closer union and is kept together for practical reasons,” Soitteux said. “The result is far from perfect, but it has improved long-standing historic notions in both Flanders and Wallonia of democratic deficits.”

The EU, meanwhile, has continued to ignore its own popular shortcomings. So long as the EU fails to amend its fundamentally liberal positions on finance, trade, and the movement of peoples, which continue to meet growing public opposition, only national backstops like the Wallonian veto of CETA seem to be a viable corrective to the perceived democratic deficits in Europe.

The EU may have grown out of a postwar consensus on free trade and open borders, two closely intertwined concepts. But if it is to have a future as a union of democratic states, it must learn to speak the language of its peoples, possibly putting it at odds with its own origins as a liberal project.

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  • ALEXANDER SAEEDY is a public policy researcher living in Brussels, Belgium. His work has appeared in Reuters, Vice News, International Business Times, and elsewhere.
  • More By Alexander Saeedy