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Will a future EU-UK trade agreement need ratification by all Member States?

Monday, 10 December 2018
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Wednesday, 17 May 2017

Will a future EU-UK trade agreement need ratification by all Member States?

The Court of Justice of the European Union (CJEU) has recently ruled that the EU's trade agreement with Singapore must be ratified by the national Parliaments of all EU Member States.  Such ratification is likely to be a time-consuming process.  How significant is this ruling for the Brexit negotiations?

Impact on timing of a future UK-EU trade deal

The most obvious concern is that if a UK-EU trade deal has to be ratified by all 27 remaining Member States, this is very unlikely to be achievable by "Brexit day" (29 March 2019), but the need for ratification may not prevent a trade agreement being implemented.  For example, the European Commission gave in to political pressure for the EU-Canada trade agreement to be ratified by Member State Parliaments but most of the agreement has been applied on a provisional basis, pending full ratification.  So provisional application could provide a way around the timing problem presented by ratification.

The majority of commentators take the view that negotiations on a future UK-EU trade deal are very unlikely to be concluded by March 2019 in any event.   This is partly because the EU and the UK have numerous other complex and difficult issues which they need to settle between now and 2019 (such as transitional arrangements, the amount of the UK's "divorce settlement", the status of EU citizens in the UK (and vice versa), the border between Northern Ireland and the Republic of Ireland and so on).  But it is also because modern trade agreements tend to be highly complex and time-consuming to negotiate – particularly if they are wide-ranging and ambitious (as the UK government wants its trade agreement with the EU to be).  See for example the figures in this blog (from think tank Open Europe) on how long the EU and other major economies typically take to negotiate trade deals:  http://openeurope.org.uk/today/blog/would-brexit-lead-to-decade-or-more-of-uncertainty/

The UK will therefore almost certainly be looking for transitional arrangements with the EU to cover the period between Brexit and the conclusion of a future EU-UK trade deal.

Could the CJEU ruling apply to any transitional deal?

Probably not. It could be argued that the CJEU's ruling means that any transitional arrangement with the UK would also need to be ratified.  However, the view being taken by the European Council is that Article 50 gives it the exclusive competence to conclude at least a transitional deal with the UK – and it is only where competence is shared with the Member States (known as "mixed competence") that ratification is required.  So far as we are aware, this position has not been challenged.

So what is the significance of the CJEU ruling?

EU Member States may become concerned about the prospect of their own national Parliaments exercising an effective veto;  this in turn may make them less inclined to compromise on issues which are likely to be politically sensitive for them domestically.  But even here the picture is not entirely negative.  The CJEU's ruling found that the only aspects of the Singapore FTA which involved mixed competence were those concerning indirect foreign investment and investor-state dispute resolution procedures.  It is not unheard of for trade agreements to be concluded without such provisions (although most recent EU trade agreements, particularly those with more developed economies, have included them).  If the EU and the UK wanted to avoid a protracted ratification process, they could choose to omit such provisions or deal with them in a separate agreement. 

That said, many Member States are likely to want to exert influence on the Brexit negotiations and may therefore bring political pressure to bear on the Commission to agree to ratification, as occurred with the Canada-EU trade deal.  Much could therefore  depend on how far the European Commission is prepared to resist such pressure - but if nothing else, the CJEU ruling is likely to strengthen its bargaining position.

The ruling can be accessed here:  http://curia.europa.eu/juris/document/document.jsf?docid=190727&mode=req&pageIndex=1&dir=&occ=first&part=1&text=&doclang=EN&cid=472934


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