Advocate General Sharpston: Free trade agreement between EU and Singapore requires member states’ consent

A free trade agreement between the EU and Singapore can only be concluded by the EU and the member states acting jointly, according to the Opinion of Advocate General Eleanor Sharpston, contrary to the position of the Commission and European Parliament – both of whom had argued the EU has exclusive competence.

On 20 September 2013, the EU and Singapore initialled the text of a Free Trade Agreement (the “EUSFTA”). The EUSFTA provides that it is to be concluded as an agreement between the EU and the Republic of Singapore, without participation of the member states.

The Commission sought an Opinion from the court under Article 218(11) TFEU on the allocation of competence between the EU and the member states as regards the EUSFTA. This procedure allows a member state, the European Parliament, the Council or the Commission to ask the court to give its view on whether an agreement between the EU and a third country is compatible with the Treaties. Where the Opinion is adverse, the agreement must be amended (or the Treaties revised) before it can enter into force.

The Commission argued that the EU has exclusive competence to conclude the agreement. The European Parliament generally agreed with the Commission. The Council and the governments of all member states that submitted written observations contend that the EU cannot conclude the agreement on its own because certain parts of the EUSFTA fall within the shared competence of the EU and the member states, and even the exclusive competence of the member states.

In her Opinion, Advocate General Eleanor Sharpston considered that the EUSFTA can only be concluded by the EU and the member states acting jointly.

The Advocate General began by setting out the principles established in the court’s case-law and partially codified by the Treaty of Lisbon in relation to EU exclusive competences and the competences that the EU shares with the member states, both internally within the territory of the EU and externally in its relations with third States. She then applied these principles to analyse the EUSFTA, Chapter by Chapter.

She concluded that the EU enjoys exclusive external competence as regards the parts of the EUSFTA which cover the following matters:

- objectives and general definitions;

- trade in goods;

- trade and investment in renewable energy generation;

- trade in services and government procurement, under exclusion of those parts of the EUSFTA

applying to transport services and services inherently linked to transport services;

- foreign direct investment;

- the commercial aspects of intellectual property rights;

- competition and related matters;

- trade and sustainable development in so far as the provisions in question primarily relate to

commercial policy instruments;

- the conservation of marine and biological resources;

- trade in rail and road transport services; and

- dispute settlement, mediation and transparency mechanisms in so far as those provisions apply

to (and are therefore ancillary to) the parts of the agreement for which the EU enjoys exclusive

external competence.

She concluded that the EU’s external competence is shared with the member states with respect to the following matters:

- provisions on trade in air transport services, maritime transport services and transport by inland

waterway, including services inherently linked to those transport services; - types of investment

other than foreign direct investment;

- provisions on government procurement in so far as they apply to transport services and services

inherently linked to transport services;

- provisions relating to the non-commercial aspects of intellectual property rights;

- provisions laying down fundamental labour and environmental standards and falling within the

scope of either social policy or environmental policy; and

- dispute settlement, mediation and transparency mechanisms in so far as those provisions apply

to (and are therefore ancillary to) the parts of the agreement for which the EU enjoys shared

external competence.

The Advocate General added that, in her view, the EU has no external competence to agree to be bound by that part of the EUSFTA which terminates bilateral agreements concluded between certain member states and Singapore. In her view, that competence belongs exclusively to the member states concerned.

While the Advocate General noted that difficulties may arise from a ratification process involving all of the member states alongside the EU, she considered that that cannot affect the question of who has competence to conclude the agreement.