European Court rules that Singapore investment arrangement needs member state authorization

Europe’s Justice Court has stated that EU member states have to sign off on some problems related to investment in a key trade deal with Singapore, in a decision that has the possibility set a dangerous precedent for a post-Brexit trade agreement with the UK.
16 May 2017 – Financial Times

But, in its keenly awaited ruling, the European Court of Justice said that the rest of the EU-Singapore free trade deal was in the exclusive competence of the EU, a move that could make it easier to strike relatively narrow trade deals.

“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 a statement. The ruling means any EU-UK deal with similar provisions will have to be endorsed by the remaining 27 member states.

But the court made clear that a wide range of other areas fell within the EU’s exclusive competence – and so did not need unanimous backing by member states. By contrast, a senior EU judge issued a non-binding opinion on the case in December which held that the EU shared competences with member states on issues such as transport, some intellectual property rights and labour and environmental standards.

If the ECJ had taken a similar view in its final ruling it could have made trade agreements considerably more arduous to agree.

The ratification of trade deals by member states is highly sensitive after political resistance to the EU-Canada deal in a regional Belgian parliament nearly caused its collapse in 2016.

There is concern in official circles in Brussels that the submission of a post-Brexit EU-UK deal for country-by-country approval could run into similar troubles in some of the remaining member states. A spokesman for Jean-Claude Juncker, EU Commission president, tweeted that he “welcomed” the ruling. “We shall carefully analyse with the European Parliament and Member States”, he said.