By PATRICK LUCIANI (Research Fellow)
• Financial Post, 01 Nov 2016
It looks as if the Belgians are waking to the reality of the mess they’ve made in opposing the Comprehensive Economic Trade Agreement, or CETA. But don’t think the problems created by little Wallonia are going away. The Walloons are pointing to how things will be done in the future.
The obstreperous Walloons are only the symptom of a bigger problem created by a progressive, liberal philosophy that has captured the political environment in most developed nations. That philosophy has encouraged a hyper-democratic approach to public policy. All special interest groups and stakeholders now get to sit at the table. The most common result is paralysis.
In Canada we no longer make national decisions between levels of government; we insist that all affected players, all stakeholders, regardless of how minor, be in on the action.
Now move that philosophy to Europe where the EU’s 38 parliaments have to agree on every international trade agreement. Throughout all of the EU’s 28 countries, any single country or region within a country can deny the will of the majority when it comes to international agreements.
We hear that the objections of the Walloons include that CETA doesn’t allow for enough protection for the environment or their small farmers or businesses. But when 27 other European countries can live with provisions on the environment and farming — to say nothing of the Trudeau government’s posturing on the environment and supply management programs — it is hard to imagine that Walloons can’t live with them as well.
Something else is driving the animus against the deal, and the answer is the concept of free trade itself. The focus of widespread European (and some minor Canadian) opposition to CETA centres on the investor-state dispute-settlement provisions. We have similar provisions under NAFTA, where a company can ask an independent panel to rule if the government of one country is treating a company or industry unfairly under the terms of the deal.
Unique to CETA is that disputes will be heard by an independent court, not arbitrators appointed by the disputing parties. But opponents to CETA want none of this. They insist that it is illegitimate for private businesses to challenge any national government provision. In other words, private business should have no recourse to challenge state laws, period.
Why? Because if allowed, corporations and private businesses will have the same status as elected governments and, to opponents, that is fundamentally wrong and undemocratic.
Professor Jan Blommaert, who teaches language and globalization in the Netherlands, argues that private multinational corporations would have the power to “challenge and overrule democratically constituted regulations.” This argument is absurd. It assumes that governments can never be wrong if they pass regulatory laws democratically. But people and businesses are always challenging laws through the courts. The opponents argue this is different because it involves profits. And since big corporations have more resources they can overwhelm the interests of the state — which denies the fact the businesses are also part of the state. And there you have the real motive for attacking the deal, the fear that companies might make money.
The opponents of CETA, who seem closely allied to the Occupy Wall Street movement, attack the very idea of free trade — to say nothing of capitalism itself — if corporations benefit with higher profits despite the benefits to society in providing consumers with better products at lower costs. By their very nature, trade deals have both costs and benefits, with the assumption that the benefits far outweigh the costs. If one party breaks a provision of the contract, there must be some recourse if governments act to favour domestic businesses.
The late economist Mancur Olson, in his influential book The Logic of Collective Action, wrote that motivated and well-organized minorities are more likely to assert their will on the majority than the other way around and, in the process, distort the political process. Political thinkers have always worried about the tyranny of the majority in any democracy (see: John Stuart Mill). Now we have come full circle where the minority, and in some cases the extreme minority, can thwart the will of the vast majority. This is why the prospects for grand trade deals will diminish in the future.