Walloon Nightmare Teaches Trudeau Art of European Surrealism

(Bloomberg) -- Even for a country that gave the world surrealism, Belgium is outdoing itself.

Empowered by the European Union’s byzantine rules, the tiny region of Wallonia has managed to hold up one of the bloc’s most ambitious trade deals. Positioning themselves as champions of those forgotten by globalization, its leaders brought a Canadian minister to the brink of tears, frustrated an agreement seven years in the making and prompted Prime Minister Justin Trudeau to question whether the EU is fit for purpose anymore.

“I’m rather proud of what’s happened,” Christophe Collignon, leader of the governing Socialist group in the regional parliament, said in an interview. “This is a form of reaction against globalization. Wallonia is in favor of free trade but certain values mean free trade must be regulated.”

Collignon is the third generation from his family to serve as a lawmaker in Wallonia, a region that typifies the sort of place that feels like it’s been left behind by the global free-trade agenda pursued by the EU elites. Belgium’s Dutch-speaking northern region which has prospered under that approach had no such objections.

‘Dantesque Nightmare’

Once, Wallonia was all about trade. Running past its parliament and the regional capital Namur’s imposing 800-year-old stone citadel is the Meuse River, an ancient route for commerce that connects France to Belgium and the Netherlands before flowing into the Atlantic.

For over a century, the region’s coal and steel production enabled its French-speaking elite to dominate Belgium but deindustrialization since World War II meant the tables have turned. Economic output per person in Wallonia is 11 percent below the euro-area average. In the north of Belgium, it’s 24 percent above.

“Go to places in Wallonia like Charleroi and Mons and you’re truly in a Dantesque deindustrialized nightmare -- there’s a lot of poverty and very little in terms of structural solutions to it,” said Robert Hancke, a Dutch-speaking Belgian who is associate professor of European Political Economy at the London School of Economics. “Wallonia stuck for a long time to its old industries, steel-mining and shipbuilding, and eventually they all went belly up and the past 30-odd years haven’t really been used very well.”

Nowadays, the Walloon region, which hosts almost 32 percent of the Belgian population, accounts for only 18 percent of the nation’s trade in goods and services abroad, and only 9 percent of Belgium’s exports to Canada, according to data from the National Bank of Belgium. So while Belgium is the 13th largest trading nation on the planet, according to the World Trade Organization, those statistics disguise a vast regional discrepancy.

The Walloons’ list of concerns about the deal with Canada, known as CETA, range from the possible impact on employment to its affect on regional values. They fear large multinational companies will have greater powers to sue EU governments in investment disputes, and that a deal could lead to a decline in labor rights and undermine standards in environmental protections and agriculture.

That’s tapped into a deeper wave of populism.

Losing Voters

“People are against the treaty and politicians have to convince them that it is a positive thing,” Alessandro Zunino, 31, the president of the youth committee of the Christian Democrat party in Wallonia, said in an interview close to the parliament building in Namur. “The reaction is very negative if they feel that CETA is imposed on them against their will.”

Wallonia’s mainstream political parties and the Socialists in particular are losing ground to populist fringe groups standing on an anti-free trade platform. Peoria, Illinois-based Caterpillar Inc., the biggest maker of construction and mining equipment, said in September that it may close its Gosselies factory in Wallonia, which would result in about 2,000 lost jobs.

“The Socialists are losing voters on a daily basis and they’re trying to get them back by saying ‘We’re the ones who will defend your interests, you workers, you unemployed, you middle class, against the EU and globalization,”’ said Regis Dandoy, a political scientist at Wallonia’s University of Louvain. “For the people in Wallonia, the EU and Canada is far away and they don’t understand the long-term impact -- they see only the symbolic gesture.”

And while it’s normal for complex trade negotiations to stumble and for both sides to posture, the fact that tiny Wallonia surprised everyone at the 11th hour and caused such consternation reflects poorly on Europe, leaders say.

Brexit Omens

With his paintings of hovering apples, tobacco pipes and skies raining bowler-hatted men, Wallonia’s most famous son, Rene Magritte, made this part of the world a focus for the surrealist art movement in the first half of the 20th century.

Many say surrealism hasn’t stopped. It’s Belgium’s own constitutional arrangement that obliges the federal government to get regional support at this stage. Further down the line, when the deal has taken provisional effect, EU law demands national ratification and Wallonia will have the power of veto again. Those working toward trade deals with the U.S. and Japan -- not to mention the U.K. officials preparing to negotiate Brexit -- will be looking on with concern.

“Truly speaking the problem goes beyond CETA,” EU President Donald Tusk said after a summit of European leaders in Brussels last week. “I’m afraid that it means that CETA could be our last free-trade agreement.”

Belgian territory has frequently been the scene of confrontations between foreign powers, from Napoleon’s defeat at Waterloo in 1815 to decisive battles of both world wars. This time, while the enemy is less defined and less pernicious, it’s again brought out the native stubbornness.

“Wallonia symbolizes the will to retake control and to regulate what multinationals are doing,” said Collignon. “The world can’t go on like this.”

To contact the reporters on this story: Ian Wishart in Brussels at iwishart@bloomberg.net, Marine Strauss in Brussels at mstrauss30@bloomberg.net, John Martens in Brussels at jmartens1@bloomberg.net.

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Richard Bravo, Ben Sills