Background: On 21 December 2016, the Advocate General of the Court of Justice of the European Union, issued an opinion that the EU-Singapore Free Trade Agreement (EUSFTA), is a so-called “mixed agreement”. In other words, the EU alone (i.e. the EU Commission, the Council and the European Parliament) does not have the competence to ratify the entire agreement. Instead, the parliaments within each Member State must also agree before it can be ratified as a whole.
Advocate General’s Opinion: The Advocate General specifies a number of areas (such as trade in goods and foreign and direct investment) that make up the majority of the EUSFTA which can be ratified solely by the EU. In those areas, FTA believes that the EU can provisionally ratify the EUSFTA so that the benefits (such as reduced duties) apply, and that this is in accordance with the Lisbon Treaty. It would also allow the EU to become a more credible partner in trade negotiations, a reputation that has been dented recently by the unfortunate example of the Walloon veto on the EU-Canada trade deal. However, this provisional application will cease if a parliament of a Member State decides to oppose the ratification of the areas within EUSFTA for which it does have competence.
Potential Impact: It is important to stress that this is only an opinion, not a judgment. However, it is likely that the European Court of Justice’s judgment – which is expected in the next few months – will concur. If this indeed is the case, it is likely that the principle of the judgment will apply to all future EU trade agreements.
That would be a disappointing result since it lays the ground for more “Walloon” scenarios with EU trade agreements being tied up in protracted negotiations. However, if the EU were to restrict itself to agreements that included only those areas where it has competence, it would facilitate greatly the entry into force of agreements, which currently can take five years or more to apply.
By Stuart Newman, Senior Legal Adviser