On 16 May 2017, the European Court of Justice (ECJ) issued its Opinion on the EU-Singapore Free Trade Agreement (EUSFTA). This case is part of the power struggle between the EU Commission and the EU Member States about the leadership role and division of responsibilities in the EU’s trade policy; the underlying legal question is about the competence to approve a trade agreement once negotiated. The outcome of the case confirms the current approach by restating that the EU-Singapore agreement is a so-called “mixed agreement”. In other words, the EU alone (i.e. the EU Commission, the Council and the European Parliament) does not have the exclusive competence to ratify the entire agreement. Instead, all Member States’ governments (parliaments) must also agree before it can be ratified as a whole.
The ECJ opinion is less restrictive than the earlier AG Opinion of 21 December 2016 – particularly concerning sustainability and transport services. However, it does restrict the EU alone from ratifying agreements that are as ambitious as those currently in force and under negotiation. FTA still believes that it would be in accordance with the Lisbon Treaty for the EU to provisionally ratify the EUSFTA. However, what is not clear is whether this provisional application will cease entirely if the parliament of a Member State opposes the areas where it has competence, or whether it will cease to apply only for those specific areas.
To avoid the potential for national parliaments holding up the ratification of future trade agreements (such as happened with the EU-Canada agreement and the Walloon parliament of Belgium), FTA is recommending the EU to restrict those agreements to only those areas where it has competence, and to negotiate side-agreements in the areas of dispute settlement between investors and State and non-direct foreign investment.
By Stuart Newman, Senior Legal Advisor