BRUSSELS — Europe’s top court on Tuesday (May 16) ruled that a free trade agreement between the European Union (EU) and Singapore needs the approval of all EU members’ national parliaments before it can become legal.
This is because the bloc lacks exclusive rights to sign off on a deal covering non-direct foreign investment and provisions for dispute settlement between investors and governments, said the European Court of Justice (ECJ).
“The free trade agreement with Singapore cannot, in its current form, be concluded by the EU alone,” the Luxembourg-based ECJ said in a closely watched decision that is binding and cannot be appealed.
The European Commission and Singapore completed negotiations on a trade deal in October 2014.
The commission, which negotiates trade deals on behalf of the EU’s 28 members, had maintained that a 2009 EU treaty gave it full responsibility for trade agreements, arguing 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 in Belgium held up a deal between over 500 million EU citizens and 35 million Canadians.
It was the commission which asked the ECJ to clarify if it alone can conclude the Singapore agreement, which was chosen because of how similar it is in structure to a whole host of other agreements the EU has in the pipeline.
“It is in respect of only two aspects of the agreement that, according to the Court, the EU is not endowed with exclusive competence, namely the field of non-direct foreign investment (‘portfolio’ investments made without any intention to influence the management and control of an undertaking) and the regime governing dispute settlement between investors and states,” the court said.
In December, a senior EU judge had issued a non-binding opinion on the case, which held that the EU shared competences with member states on issues such as transport, some intellectual property rights and labour and environmental standards. But the ECJ on Tuesday made clear that these areas fell within the EU’s exclusive competence — and so did not need unanimous backing by member states.
In response to the ECJ ruling, a Ministry of Trade and Industry spokesman said that Singapore is committed to working with the commission to ratify the trade agreement expeditiously, and have it provisionally applied so that businesses can utilise the parts of the agreement that are under the EU’s exclusive competence.
“Singapore respects the internal processes of the European Union and looks forward to the formal entry-into-force of the EUSFTA as soon as all EU member states have ratified provisions under their competence,” the spokesman added, using the acronym for the deal. AGENCIES