Bruegel’s Sapir: Wallonia’s rejection of EU’s CETA ultimatum could be blow to EU’s credibility

The negative reply to the EU’s trade deal with Canada (CETA) by Belgium’s Wallonia region could be a blow to the European Union’s credibility, André Sapir, Senior Fellow at Bruegel think tank and Professor of Economics at Université Libre de Bruxelles (ULB), told Athens-Macedonian News Agency on Monday.

“There are two problems resulting from a possible negative development; a political and an economic,” Sapir said. The political problem has to do with the procedure followed by the EU for the ratification of such deals.

“The EU was negotiating a trade deal with Canada for seven years and just when it finally completed it, it is now in danger of being cancelled by the small region of a small state in the Union,” he told ANA, adding this raises the issue of the EU’s credibility.

“Politically, this could weaken the EU, which otherwise is the biggest trading partner worldwide.

Concerning the economic side of the problem, Sapir said the EU has made a strategic choice by signing ten trade deals with ten different countries in the last decade. On this basis, the EU believes trade deals with third countries have overall positive results, although it is a given that there are “winners” and “losers”, he said.

“The losers are much more worried in the last few years because of the weak growth and the increased unemployment which bolster reaction to such deals,” he added.

The thorny issues that led to Wallonia’s reaction concern a matter of principle and a practical problem, Sapir said: Firstly, Walloons are against having Canadian investors resort to courts outside of Belgium, for their differences with regions and states, where the Belgium law will not apply. Secondly, Wallonia – unlike the Dutch-speaking region of Flanders – is not an export-oriented region, which would benefit from such a deal. Its economy is instead based on livestock farming and agriculture and fears the agreement could allow Canada to export to Belgium products such as like milk and meat, which will compete with its own, he explained.