EU court rules member states must ratify Singapore FTA

In a ruling that could affect future trade negotiations, the Court of Justice of the European Union made a binding determination that the EU does not have the ability to act unilaterally to conclude a free trade agreement with Singapore.    The Court of Justice of the European Union, the highest court in the EU, on Tuesday provided its binding determination regarding the European Commission’s submitted request for an opinion on whether the union has “exclusive competence enabling it to sign and conclude” agreements.
   This determination results from differences in opinions between the European Commission, EU Parliament, and member states as it relates to the union’s ability to conclude a free trade agreement with Singapore. The text of the agreement was written nearly four years ago.
   The Free Trade Agreement with Singapore, concluded in 2014, “is one of the first ‘new generation’ bilateral free trade agreements which containers reduction of customs duties and of non-tariff barriers as well as intellectual property protection, investment, public procurement, competition and sustainable development,” said the court.
   The court made clear, however, that it did not make a determination on the agreement’s compatibility with EU law. It simply provided its determination on whether the free trade agreement could be concluded by the EU alone.
   The court determined that the EU does not have the ability to act unilaterally to conclude the free trade agreement as the European Union is “not endowed with exclusive competence,” particularly as it relates to certain chapters of the agreement including non-direct foreign investment and the governance of dispute settlement between investors and member states.
   In attempting to conclude the FTA, the court found that the EU has a “shared competence” with member states with respect to some aspects of the agreement, and therefore will require the agreement to be ratified by each individual member state. If each state ratifies the agreement, the EU and its individual members can jointly conclude the agreement.
   The relative powers of member states to act individually has been mired in confusion since the union’s rulebook was modified following the Lisbon Treaty in 2009.
   The court’s decision helps to provide clarity in the ratification of trade agreements. However, it also reinforces the challenges associated with the EU’s ability to herd the politicians of 38 parliaments.
   Further, within the context of Brexit, the determination provides additional challenges associated with future agreements regarding the trading relationship between the United Kingdom and the European Union. Similarly, it poses challenges in reviving – or completely restarting – a comprehensive trade agreement between the U.S. and the EU. Previous work on the Transatlantic Trade and Investment Partnership (T-TIP) was essentially abandoned at the end of the Obama administration’s tenure.
   The full text of the court’s determination can be found here.