EU Commission says welcomes court ruling on trade deals

Thursday, 18 May, 2017

Getting a deal approved in national parliaments could add five years to the process, leaving the risk that one single national or regional body could block full agreement - a difficulty hinted at last year when the Walloon regional parliament threatened to veto an EU-Canada trade deal that had been seven years in the making.

The Singapore ruling is seen as a precedent for how an Anglo-EU Brexit trade deal will be agreed, sparking fears it could be blocked by some obscure regional parliament.

The Luxembourg-based court ruled that a trade agreement struck with Singapore in 2013 must be ratified by all 28 member states - some of which require parliamentary approval - and not just a majority.

The court said that, by removing disputes from the jurisdiction of domestic courts, this required national consent.

But EU judges yesterday stated that unanimity is needed in just two niche areas, which experts said the United Kingdom could circumnavigate.

As trade deals have become more complex, national parliaments have become increasingly concerned the European Union has been encroaching into areas of national law.

The surprising element of the Opinion is the finding that Investor-State Dispute Settlement provisions can not be agreed by the Union alone, apparently because they are "liable to remove disputes from the jurisdiction of the courts of the Member States or of the European Union".

"[The] EU institutions must now respond swiftly to ensure that the EU's credibility and strength in trade policy and negotiations are not hampered", he said.

Verbal skirmishing between the two sides this month over the EU's refusal to open trade talks until Britain agrees to settle payments to Brussels and guarantee European immigrants' rights has generated new warnings that negotiations could simply fail.

Having lost its effort to sideline national capitals from signing off on trade accords, Brussels now has to convince as many as 38 national and regional parliaments to ratify the Singapore trade pact.

Any deals still need clearance by the EU Council, which groups all the EU governments, and the European Parliament.

The key point of the Singapore ruling is that the parliaments will lose their say if the deal does not include these clauses on investment.

The EU Court of Justice said Tuesday that approval from national legislatures was needed in addition to support from top European bodies to enact the pact with the Southeast Asian city-state. "Singapore has already called for consideration of splitting the FTA to take the investment provisions out into a separate agreement and proceed with ratification of the rest of the agreement.‎ I don't think it will be so easy to do that but it is bound to be an attractive idea".

The ruling could also have an impact on any future post-Brexit deal.

The court ruling significantly narrows the range of topics which will be subject to national ratification. "The free trade agreement with Singapore can not, in its current form, be concluded by the European Union alone", the court said.

The court said the European Union has exclusive competence on access to the European Union single market for goods and services, including all transport services, public procurement, protection of direct foreign investments, provisions concerning intellectual property rights and sustainable development, anti-dumping rules, and dispute settlements (except for investments).

"We now need separate agreements for all the policies which fall under European Union competence and all those under the responsibility of the member states", said MEP Daniel Caspary of the EPP Christian Democrat group.