This is supposed to be the week that Canada and the EU ink their landmark Comprehensive Economic and Trade Agreement (CETA) after seven years of painstaking negotiations. Hopes are fading, however, due to last-minute objections from Belgium's Wallonia region.
The French-speaking area's 3.6 million people represent less than 1% of the EU's total population. Yet Wallonia's opposition alone is enough to sidetrack the whole process. Why? Because without Wallonia on board, Belgium as a whole cannot support the massive trade deal. And without Belgium, the CETA, which requires backing from all of the EU's 28 member states, cannot proceed.
Is Wallonia about to cost the EU a golden opportunity to boost trade and demonstrate its continued relevance after the stunning Brexit blow it suffered earlier this year? Perhaps. But while many observers lament the Belgian region's obstinance, others say there are good reasons to be wary of CETA.
Chief among Wallonia's objections is that the deal favors corporate power over local legislation by allowing companies to seek arbitration in cases where their profit-making abilities are limited by host-country regulations. In other words, CETA — like most trade deals of its kind — allows foreign corporations to sue individual countries via outside tribunals.
This is no idle threat, as the tiny Central American nation of El Salvador can attest. In 2009, a Canadian mining company called Pacific Rim, frustrated by El Salvador's refusal to grant it an operating license, used a World Bank tribunal in Washington, D.C. to file a $100 million suit. The claim was later increased to $250 million.
Earlier this month, the tribunal finally reached a decision: It dismissed the suit — but only after seven years of deliberations that cost the cash-strapped Salvadoran government an estimated $13 million in legal expenses. It is another reminder that globalization, for better or worse, is a game best played with deep pockets.