ECJ Rules: European Union Powers to Negotiate Deals for Member Countries Limited

The European Court of Justice (ECJ) issued its final opinion on Tuesday 16 May regarding the EU-Singapore trade agreement, deeming that while some aspects of the deal’s current version fall within the bloc’s “exclusive competence,” others will require additional approval from national and regional legislatures.

The EU and Singapore concluded negotiations for a free trade agreement (EUSFTA) in December 2012, with related talks on investment being finalised in October 2014.

In particular, the European Commission asked the ECJ to issue an opinion on the trade pact, asking that the EU’s highest court determine which areas of the planned accord fell under the EU’s exclusive or shared competence, along with whether any terms lie solely within member states’ remit.

Should the ECJ deem that this is not the case, the agreement can only move ahead if changed or if revisions are made to those EU treaties?

Singapore Agreement went beyond Trade Links

Opinion Outcomes – Transport in EU Competence but Portfolio Investment is “No”

The opinion released on Tuesday outlines which areas of the EU-Singapore trade deal fall within the EU’s exclusive or shared competence.

Regarding these issues, the ECJ opinion shows some notable differences from an earlier non-binding opinion by Eleanor Sharpston, an advocate general for the court, who had suggested that transport services did not fall under the EU’s exclusive competence, but was rather shared with member states. She similarly said that this also applied to topics such as the “non-commercial aspects of intellectual property rights,” along with the transport services-related aspects of government procurement.

The ECJ’s opinion this week deemed that transport services and all aspects of intellectual property rights and sustainable development provisions fall under the EU’s exclusive competence.

The court did find two areas of the EU-Singapore pact that would require ratification at the national level. These involve “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 opinion also makes specific findings related to the hot-button topic of investor-state dispute settlement, which has drawn scrutiny both from the general public as well as politicians and trade watchers. The EU has sought in recent years to revise its approach to the issue, with more recent trade deals now including an “investment court system.”

“The regime governing dispute settlement between investors and states also falls within a competence shared between the European Union and the member states. Such a regime, which removes disputes from the jurisdiction of the courts of the member states, cannot be established without the member states’ consent,” the ECJ media statement said.

Meanwhile, Singaporean trade officials have pledged to collaborate with the EU as it proceeds with its ratification efforts.