Member States have say on trade deals
EU top court rules national parliaments could veto accords
19 May, 2017
Member States national parliaments have the right to veto an EU free trade deal with Singapore, according to the EU top court ruling issued last Tuesday. The judges in the European Court of Justice (ECJ) said that the deal cannot be enforced until all of the bloc's Member States ratify the agreement and it must also be approved by the bloc's 38 national and regional parliaments. The decision could significantly slow down the bloc's planned trade deals.
“The free trade agreement can, as it stands, only be concluded by the EU and the Member States jointly,” the court said in a statement on the decision. The Commission, which completed trade deal negotiations with Singapore in October 2014, sought an opinion from the court on whether or not it could conclude the Singapore agreement by itself. However, the Commission argued that such trade deals are an “exclusive competence” of EU bodies, meaning that it falls exclusively within their jurisdiction.
Although free trade agreements must still be approved by the European Parliament and the EU Council, the Commission was hoping to avoid having such deals bounce back to individual Member States for ratification, which could take years. The ECJ said that, although some areas of the Singapore deal fall within the EU's exclusive competence, two areas require Member State input - “non-direct foreign investment” and “dispute settlement between investors and States.” The EU is currently pursuing trade deals with Mexico and Japan as well as eyeing a crucial deal with the UK as it exits the EU.
The ECJ decision would likely impact the UK's strategy as it seeks to quickly hammer out a Brexit trade agreement. British PM Theresa May has said she wants to secure a trade deal with the EU as quickly as possible, and ideally as the UK negotiates the terms of its exit. EU leaders have already ruled out the possibility of parallel negotiations, saying that issues concerning the status of EU and UK nationals need to be clarified first.
The UK may shift its strategy after last Tuesday's ruling, knowing that the deal must now pass individual approval from the 38 national and regional parliaments. Although the ECJ outlined the exclusive competencies of the EU, it might be hard to broker a trade deal that would only fall within those areas, as the UK will likely also involve areas that require Member States approval. The EU-Canada trade deal is also to be affected by the decision as it is set to provisionally come into effect in the next few weeks. The deal still needs to be ratified by national and regional parliaments in the next few years to fully come into force.