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EU court ruling could complicate new trade deals

Published:Tuesday | May 16, 2017 | 12:00 AM

In a case that could affect future relations between the European Union (EU) and the United Kingdom (UK), the EU's highest court said Tuesday that key parts of a trade deal with Singapore must be approved by each member state, which would further complicate the bloc's decision-making.

The court said on Tuesday that the international trade deal agreed on in 2013 with Singapore needs the approval of both the EU institutions and the member states' parliaments.

If all parliaments in member states have to approve trade deals, future agreements may take even longer than they already do to get passed, as it would open them up to the political processes of 28 different states. Such agreements require unanimity.

"The free trade agreement with Singapore cannot, in its current form, be concluded by the EU alone," meaning that member-state parliaments will have to get a say, with a power to veto, the court said in a statement.

Currently, international deals negotiated by the EU executive can be ratified either by member state governments, which merely sign off, or by votes in each of the national parliaments, a more complicated process.

A wide-ranging free trade deal with Canada was long held up last year because a regional parliament of member state Belgium decided it needed further assurances. After holding out for weeks, the Belgian region eventually gave its consent.

The EU is currently negotiating free trade deals with nations such as the United States and Japan, and would need a free trade deal with Britain once the divorce proceedings with the current member state are done.

Alice Darling, a member of the trade team at London law firm Clifford Chance, said the judgment could make securing a UK-EU trade deal after Brexit a lengthy process.


"The (UK) government's objective to agree a comprehensive UK-EU trade deal within the next two years will be challenging if the deal needs to be approved by 38 national and regional parliaments."

In Tuesday's ruling, the court said that most elements could be negotiated and approved by the EU itself, but said that member states need to be involved when it comes to some rules on foreign investment and provisions for dispute settlement between investors and nations.

It could mean that trade deals are split up between policies that the EU institutions can approve on its own and those that the national parliaments also have to agree to.

"We now need separate agreements for all the policies which fall under EU competence and all those under the responsibility of the member states," said MEP Daniel Caspary of the EPP Christian Democrat group.

With globalisation not always benefiting all parts of society evenly, opposition to international trade deals has risen in recent years. More European citizens are demanding that trade deals be made closer to home with the involvement of their elected lawmakers.

The EU's executive commission says that a 2009 EU treaty gave it full responsibility for trade agreements, and argues that it would become nearly impossible to clinch major trade deals if every single parliament needs to give its blessing. That became clear in the case of the EU-Canada deal, when opposition from a region of 3.5 million people was holding up a deal between over 500 million EU citizens and 35 million Canadians.

It is something that the EU institutions want to avoid. Others say it increases democratic accountability.

"This is a landmark decision that will shape the way that future EU free trade agreements are negotiated," said MEP Heidi Hautala of the European Greens party. "The European Commission has been overstepping its competence when it comes to free trade, using these deals to sneak through changes."

- AP