Monday, June 19, 2006

The Catalan Autonomy Statute and Economic Globalization

After a long and often tedious multi-year effort, combining the sometimes Byzantine politics of Catalonia and the increasingly bitter national politics of Spain, the deal cut by mainstream political leaders and presented to voters in the form of the new Catalan Autonomy Statute has been approved (“El ‘Guanya,” Qué, June 19, 2006 at 1). All 107 pages of the new Autonomy Statute may be viewed at

I have written a little about the campaign in support of the Statute, on at least one negative perspective, and the attempts by outsiders to some outsiders, like Jerry Adams from the North of Ireland, to influence the outcome (). Not that the vote presented Catalan leaders with any sort of mandate—one way or another. Fewer than one half of the electorate even bothered to participate in the referendum; according to a local newspaper, only 49.42% of registered voters participated (“ al l’Estatut, pero la majoria de votants es queda a casa,” Qué, June 19, 2006 at 2). On the other hand, 73.9% of those who voted approved the revision (id.). Yet, this is hardly a mandate, and is barely legitimate, even by the measure of extreme devotees of formalist “winner-take-all” democratic theory, except perhaps by American standards. In any case, the Spanish central government has accepted the result, even as the opposition party (the Partido Popular) prepares to fight the new Statute.

But my purpose today is not to analyze the vote for the new Statute. I will assume that that Statute is not only legitimate but will be implemented successfully in full—no necessarily easy task. Instead I want to suggest some consequences that follow on the adoption of this new Autonomy Statute from the perspective of EU and international business. The short answer is that the Autonomy Statute changes little for the business community. The longer answer is that, to the extent that the Autonomy Statute reconstitutes Catalonia as a solo national player, it will make it easier for large and wealthy multi-nationals to deal successfully with the new government with little fear that the central government of Spain will interfere in defense of Catalonia. Catalonia will join the ranks of smallish states at the mercy of much more powerful economic collectives against which it must bargain for its share of the global economic pie with much less to offer as a small quasi-state.

What will change for global business in Catalonia with the adoption of this new Autonomy Statute? Very little. To a great (and increasing) extent, Catalan economic regulation is controlled from Brussels and not necessarily from Madrid. It is true that Barcelona will have a little more leeway perhaps in the extent to which it might transpose EU framework legislation that will have very little effect on the objectives or focus of such legislation. Business will continue to look increasingly to Brussels rather than to the capitals of the Member States. To the extent that Member State economic legislation is important it is with respect to the usually marginal advantage that one form of transposition offers over others.

Two issues might be of more interest to business—the elevation of language issues and the greater judicial autonomy granted Catalan courts. But these changes have more theoretical than practical effect for business. With respect to language, it is true that Catalan now becomes a more officially important language, but that is of little moment to business. First, Catalan has served a one of the two lingua franca of the Catalan provinces for years. Businesses with interests in serving that language community have already invested in the appropriate language advertising. The market has long dictated the appropriate language of consumer products (at least) in the region. Second, language may not matter. The EU has recognized, in a series of decisions of the European Court of Justice, that business is required only to convey information in a form which can be understood, even if it is not in the national or regional language of a place. Thus, even if it wanted to, it is unclear at best whether the Catalan authorities could force business to label in Catalan. Certainly they would be unable to mandate Catalan only communication (since Castilian and Catalan are now formally equivalent official languages of these provinces).

With respect to judicial autonomy, again, Catalan independence, or autonomy, is trumped, on the one hand by the powers retained by the Spanish central government, and more importantly, by the power of the European Court of Justice with respect to the competences of the EU. While there may be room for some changes at the margin, in the long run, that margin will prove far less important for business than for politics in Catalonia. Catalan courts remain bound at the outer boundaries by the Spanish Constitution, the European Human Rights Convention and the EU Treaties. The move to independence does little to provide Catalonia with much legislative leeway.

On the other hand, autonomy may advantage business. To the extent that Catalonia now stands alone, its power, relative to that of global businesses, will have been reduced. Catalonia now more directly must compete for global capital and investment with a host of other states. This alone will reduce the possible freedom Catalan political officials may be able to assert. Especially within the EU, any move toward increasing the transaction costs of operating within Catalonia will only have the effect of moving business either to other parts of Spain or to other parts of the EU. Other than transportation costs, companies can operate anywhere within the EU and retain the same rights to free movement of goods, workers and services. To the extent that Catalonia attempts to increase the transaction costs of foreign business, they also can move to other parts of the EU and then freely move their goods into Catalonia. The result could well be a surfeit of goods in Catalonia and an absence of job creation. Independence appears to vest Catalonia with power it cannot use effectively, except at the margin.

Perversely, the separation of Catalonia makes it a more interesting target for large global corporations in search of willing states in which to settle. A Catalonia fearful of losing jobs may be more willing to deal with companies seeking advantageous treatment—the principal complaint of developing countries in their relations with large multi-nationals. As a small state, Catalonia may to agree to terms that might otherwise be unpalatable to retain work. The recent difficulties of keeping the local Braun plant open in Catalonia is a case in point and perhaps a harbinger of future problems ("The German multinational Braun, which is owned by Gillette, which, in turn, is owned by Procter & Gamble, has announced the closure at the end of 2008 of its only manufacturing plant in Spain -in Esplugues de Llobregat (Barcelona)." "700 to Lose Jobs at Braun Plant,", May 19, 2006, available at

The reality of self-determination in a world dominated by the realities of economic globalization is that it provides a great symbolic value but fairly small practical value, especially for states closely tied into networks of supra-national regulation. Catalonia has been able, at last, to overcome the ghosts of its tragic past. Perhaps this movement toward autonomy was necessary to extirpate the ghost of Franco. But a move to more independence in fact will yield Catalonia little in practical terms, much more in symbolic terms (ambassadors, acceptance of the Catalan language as an official form of expression within Europe, etc.), and open the possibility for greater exploitation by business that are consolidating even as Catalonia fractures itself from Spain. The future of this region will prove instructive indeed.

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