Competence of the EU to conclude Free Trade Agreements: AG’s opinion in Case 2/15 on the EU-Singapore Free Trade Agreement

By Gabriel M. Lentner

On 21 December 2016, Advocate General Sharpston issued her opinion in Case 2/15 based on a request for a ruling pursuant to Article 218(11) TFEU to determine the allocation of competences between the EU and its Member States in case of the EU-Singapore Free Trade Agreement (EUSFTA).

 

Facts/Background


As requested by the European Commission, the Court of Justice of the European Union (CJEU) was asked to clarify the following questions:

  1. Does the EU have the requisite competence to sign and conclude the EUSFTA alone, i.e. without the involvement of the Member States?
  2. Which provisions of the EUSFTA fall within the EU’s exclusive competence, the Union’s shared competence, and the exclusive competence of the Member States?

 

Before the CJEU delivers its judgment on the issue, the Advocate General issued her opinion on the matter to assist the court. Generally, the CJEU follows the AG’s opinion, so it is appropriate to look at the conclusions of the AG in this case.

 

The Advocate General’s opinion

As to the first question, the AG finds that the Singapore Free Trade Agreement may only be concluded by both the European Union and the Member States, as certain parts of the agreement do not fall within the exclusive competence of the EU.

On the second question, the AG determines the following division of competences.

The EU has exclusive competence of, inter alia, the following elements of the EUSFTA:

  • trade in goods;
  • trade in services  and  government  procurement (excluding those  parts  applying to transport services and services inherently linked to transport services);
  • foreign direct investment (excluding portfolio investments);
  • the commercial aspects of intellectual property rights;
  • competition and related matters;
  • and dispute settlement, mediation, and transparency mechanisms in so far as they relate to the parts of  the agreement for which the EU enjoys  exclusive external competence.

 

The EU shares competences with the Member States inter alia in the following matters:

  • portfolio investments;
  • provisions relating to the non-commercial aspects of intellectual property rights;
  • and dispute settlement, mediation, and transparency mechanisms relating to the parts of  the  agreement for which  the EU enjoys shared external competence.

The AG also concluded that it is within the exclusive competence of the Member States to terminate bilateral agreements concluded by some Member States and Singapore.

 

Conclusions

There has been extensive scholarly debate on the scope of the EU’s competence in this area, particularly with regards to investment policy. The findings of the AG are in line with what was generally expected, and it is therefore very probable that the CJEU will arrive at similar conclusions. The judgment will be welcomed for providing legal certainty on these issues. However, from a practical perspective, the outcome (should the CJEU follow the AG on this) is of course lamentable because it will leave the conclusion of such agreements vulnerable to obstructions on the domestic level, and in any case a long ratification process will follow involving not just the EU, but all its Member States.

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