Published: Wed, May 17, 2017
Economy | By Melissa Porter

EU court deals blow to quick trade deals

EU court deals blow to quick trade deals

The EU's executive Commission says that a 2009 EU treaty gave it full responsibility for trade agreements, and argues that it would become almost impossible to clinch major trade deals if every single parliament needs to give its blessing.

The Commission, which negotiates trade deals on behalf of the EU's 28 members, has previously argued that trade is an exclusive European Union competence, meaning an agreement would not have to wait for years and risk being blocked during ratification by all the members.

The Luxembourg-based court said Tuesday that the worldwide trade deal signed in 2013 could only be concluded by the European Union institutions together with the member states, and as such could not be ratified.

Today's decision follows a December opinion issued by the Court's Advocate-General, Eleanor Sharpston, who also decided that the agreement covered a number of issues that are shared competence between the member states and the EU.

"The government's objective to agree [to] a comprehensive U.K. -EU trade deal within the next two years will be challenging if the deal needs to be approved by ... national and regional parliaments", said Alice Darling, a lawyer in the trade team at Clifford Chance.

The EU-Canada accord took seven years to negotiate and has only begun the long approval process by national parliaments.

Last year the tiny region of Wallonia nearly killed off a huge EU-Canada trade deal after years of talks, because of its opposition to this system.

It has been seen as one of the EU's most wide-ranging trade deals which covers mutual recognition of environmental standards and labour law.

"But we still wish that it would not need to go through the national parliaments because we've completed the negotiations". Deals in the pipeline that could be affected include those with Japan and Mexico.

The UK is seeking a trade agreement which would allow it to keep much of its current access to Europe's single market once it quits the European Union in March 2019.

Despite the perils of a what is known as a "mixed agreement", however, the outlook may not be as gloomy as it first appears for the United Kingdom, as the Singapore ruling also offers a relatively easy way for Europe to strike trade deals more quickly and avoid getting bogged down in parliamentary debates across Europe. The Commission has the power to negotiate everything else - the movement of goods and services, transportation, direct investment, intellectual property, antitrust rules.

But the ECJ says the EU-Singapore deal, concluded in 2014, has parts that affect powers enjoyed by member states. "The European Commission has been over-stepping its competence when it comes to free trade, using these deals to sneak through changes".

The ECJ ruling stems from a request by the European commission to rule on its authority over a trade deal between the EU and Singapore, but the case took on much wider importance following the Brexit vote. "All future agreements that include investment tribunals will need to be ratified by national parliaments and we call on parliamentarians to reject all deals that include unfair VIP rights for foreign investors". That means that Wallonia, France, Italy, Spain (think Gibraltar) and any other EU-27 member can veto the UK's future trade arrangements.

Greenpeace trade policy campaigner Kees Kodde said: "This verdict is a victory for democracy".

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