EU ruling could complicate new trade deals – including UK’s

BRUSSELS — In a landmark case that could shape future relations between the European Union and Britain, the EU’s highest court said Tuesday that key parts of a trade deal with Singapore must be approved by each member state, a precedent that would further complicate the bloc’s decision-making.

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

If all parliaments in member states have to approve international trade deals, future trade deals may take even longer than they already do to come to fruition, as it would open them up to the political processes of the 28 member states. Such agreements need 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 involved with a power to veto.

The EU can now approve international deals either through its institutions, with member state governments signing off, or through all the national legislatures.

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. Eventually, after holding out for weeks, the Belgian region gave its consent.

The EU is currently negotiating free trade deals with nations like 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 U.K.-EU trade deal after Brexit a lengthy process.

“The (U.K.) government’s objective to agree a comprehensive U.K.-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 even though many elements could be negotiated and approved by the EU itself, member states need to be involved when it comes to some rules on foreign investment and provisions for dispute settlement between investors and nations.

With globalization not always evenly benefited all parts of society, opposition to international trade deals has soared in recent years. More European citizens are demanding that free trade deals be made closer to home with the involvement of their legislators.

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 legislature 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 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 over-stepping its competence when it comes to free trade, using these deals to sneak through changes.”

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