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16 May 2017

EU court rules Singapore FTA ‘cannot be concluded without the participation of the Member States.’

ECJ ruling on Singapore FTA will have significant impact on existing and future trade deals

Simon McKeagney, Editor

The fight over whether the EU has exclusive competence to conclude free trade agreements took a decisive turn today when the European Court of Justice ruled on case A-2/15 regarding the Singapore FTA with the EU. The long-awaited ruling states that Singapore ‘cannot be concluded without the participation of the Member States.’ 

However, the ECJ was clear in stating that a number of disputed areas are in fact of EU exclusive competence, including transport services, intellectual property rights, sustainable development and others. The ruling has restricted shared competence with Member States to the field of portfolio investments and the regime governing dispute settlement between investors and States. This would mean that any agreement that includes the controversial investor protection mechanisms would need to be ratified by national parliaments across Europe before it becomes fully operational.  

The move will have significant implications for trade agreements negotiated by the EU. Greens/EFA trade spokesperson Heidi Hautala said today that “it is now clear that Member States must be involved in the approval of any free trade deal” and warned that the European Commission had been overstepping its competence by “using these deals to sneak through changes to the single market that would never have gained support were they presented via EU regulations.”  

She went on to say that the confidence in the EU’s ability to conduct trade negotiations in the public interest has been “severely damaged by recent experiences” and that “the European Commission must welcome greater scrutiny of trade deals." 

Wider issues with EU Trade Policy remain 

The ruling is a welcome clarification, as it both defends the broad competence of the EU in conducting trade agreements, while also recognising that Member State competences cannot be ignored by the Commission. More can still be done to ensure Member States take responsibly for what they agree on at EU level and to ensure parliaments are consulted and involved throughout the whole negotiation process.  

At the same time, the ruling throws an even bigger spotlight on the Commission’s Investment Court System (ICS), which many lawyers believe is incompatible with EU law. Member States should not agree to ratifying trade deals until this is clarified. Some countries, including Belgium, have said they will take a case to the ECJ, which is the natural next step and a welcome move. 

The concerns around trade policy have by no means drawn to a close. The Wallonia debacle from October 2016, where the Belgian region almost vetoed Belgium’s ability to agree to the conclusion of the EU-Canada deal CETA, may be unavoidable in the future if the Commission does not move to change more than just procedural aspects and toxic acronyms

“Instead of prioritising the demands of a small number of multinational corporations, the litmus test of any trade deal should be whether it will improve social and working standards, protect our environment, and create quality and sustainable jobs" Green/EFA trade spokesperson Yannick Jadot said today. 

With over 30 trade agreements in the pipeline, and difficult negotiations ahead with the UK, this should be the priority for the Commission. Although the Commission last week published it’s reflection paper on “harnessing globalisation”, in which it admits globalisation has not worked for everyone, it has not produced any answers to address the glaring problems that remain with trade policy overall. 

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