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Shaping EU Trade Policy post-Lisbon: Opinion 2/15 of 16 May 2017: ECJ, 16 May 2017, Opinion 2/15 Free Trade Agreement with Singapore

  • Marise Cremona

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Emeritus Professor, European University Institute.

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1 Opinion 2/15 of 16 May 2017, ECLI:EU:C:2017:376; Opinion of AG Sharpston delivered on 21 December 2016, ECLI:EU:C:2016:992.

2 The Association of South East Asian Nations (Brunei Darussalam, Myanmar/Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam).

3 Negotiations were also opened with Vietnam (the text of a free trade agreement was finalised in February 2016) and Malaysia, Thailand, Philippines and Indonesia.

4 The text to the Singapore Agreement agreed in 2015 was stated to be simply between the EU and the Republic of Singapore, i.e. a non-mixed agreement. Were a bilateral agreement of this type to be mixed it would be concluded by the EU and its member states ‘of the First Part’ and by the third country ‘of the Second Part’.

5 European Commission, ‘Global Europe: Competing in the World’, COM(2006) 567, 4 October 2006.

6 Since 2006 free trade agreements have been negotiated with South Korea, Singapore, Colombia, Peru and Ecuador, Ukraine, Georgia, Moldova and Vietnam, as well as Canada (the Comprehensive Trade and Economic Agreement) and Japan. Other ongoing negotiations include the currently stalled Transatlantic Trade and Investment Partnership Agreement with the USA.

7 See European Commission, ‘Trade for all - Towards a more responsible trade and investment policy’, 14 October 2015.

8 See, for example, the European Citizens Initiative ‘Stop TTIP’, at issue in GC 10 May 2017, Case T-754/14, Michael Efler v European Commission, EU:T:2017:323.

9 For example, the difficulty over the signature of the EU-Canada Comprehensive Economic and Trade Agreement following the initial refusal of assent by the Regional Parliament of Wallonia in Belgium.

10 Art. 3(1) TFEU provides that ‘The Union shall have exclusive competence in the following areas: … (e) common commercial policy’.

11 Although Art. 218(11) TFEU refers to the compatibility of an envisaged agreement with the Treaties it has been recognised since the first such Opinion that this determination may also cover issues of competence: Opinion 1/75, EU:C:1975:145.

12 Opinion 2/15, para. 1.

13 Only Estonia, Croatia and Sweden did not submit observations.

14 In French, avis is used for the Court’s Opinion and conclusions for that of the Advocate General. It is somewhat confusing that in English the term ‘opinion’ is used for both; at times ‘view’ has been used to describe the Advocate General’s opinion (see e.g. the view of AG Kokott in Opinion procedure 2/13, ECLI:EU:C:2014:2475), but the official Court reports now use ‘opinion’. In what follows Opinion (capitalised) will refer to that of the Court of Justice and opinion (lower case) will refer to that of the Advocate General.

15 Opinion 2/15, paras. 30, 290, 300.

16 Opinion 2/15, para. 290.

17 Opinion 1/17, pending, request filed 7 September 2017.

18 Much has been written on this issue; see e.g. Bermann, G., ‘Navigating EU Law and the Law of International Arbitration’, 28 Arbitration International (2012) p. 397 ; Burgstaller, M., ‘Investor-State Arbitration in EU International Investment Agreements with Third States’, 39 Legal Issues of Economic Integration (2012) p. 207 ; Hindelang, S., ‘The Autonomy of the European Legal Order – EU Constitutional Limits to Investor-State Arbitration on the Basis of Future EU Investment-related Agreements’, in M. Bungenberg and C. Herrmann (eds.), Common Commercial Policy after Lisbon, Special Issue to the European Yearbook of International Economic Law (Springer, 2013) p. 187 ; Herrmann, C., ‘The role of the Court of Justice of the EU in the emerging EU Investment Policy’, 15 Journal of World Investment & Trade (2014) p. 570 .

19 See in particular Opinion 1/94, EU:C:1994:384, where the Court, in response to a Commission argument that ‘The Community’s unity of action vis-à-vis the rest of the world will thus be undermined and its negotiating power greatly weakened’ if the World Trade Organisation agreements were concluded as mixed agreements, said at para. 107, ‘In response to that concern, which is quite legitimate, it must be stressed, first, that any problems which may arise in implementation of the World Trade Organisation Agreement and its annexes as regards the coordination necessary to ensure unity of action where the Community and the Member States participate jointly cannot modify the answer to the question of competence, that being a prior issue. … [R]esolution of the issue of the allocation of competence cannot depend on problems which may possibly arise in administration of the agreements.’

20 See n. 28.

21 On the legal issues surrounding the ratification of mixed agreements, see further Van der Loo, G. and Wessel, R.A., ‘The non-ratification of mixed agreements: Legal consequences and solutions’, 54 Common Market Law Review (2017) p. 735 .

22 See for example Case C-600/14, Germany v Council, EU:C:2017:935; see further below.

23 See in particular paras. 54-81, 90-94 and 117-131.

24 ECJ 18 July 2013, Case C-414/11, Daiichi Sankyo Co Ltd, EU:C:2013:520; ECJ 22 October 2013, Case C-137/12, Commission v Council, EU:C:2013:675.

25 See e.g. D. Kleimann and G. Kübek, ‘The Singapore Opinion or the End of Mixity as We Know It’, VerfBlog, 23 May 2017, <verfassungsblog.de/the-singapore-opinion-or-the-end-of-mixity-as-we-know-it/>, visited 27 December 2017; A. Roberts, ‘A Turning of the Tide against ISDS?’, EJIL: Talk!, 19 May 2017, <www.ejiltalk.org/a-turning-of-the-tide-against-isds/>, visited 27 December 2017.

26 Cf n. 19.

27 Kleimann and Kübek, supra n. 25.

28 All the member states submitting observations argued that the EU should not conclude the Singapore Agreement alone and this was also clear from discussions in Coreper (AG’s opinion, para. 7). In fact, the original negotiating directives had specified a mixed agreement (AG’s opinion, para. 83). In addition, the Council had insisted on the EU-Canada Comprehensive Economic and Trade Agreement, similar in terms of scope to the Singapore Agreement, being signed and concluded as a mixed agreement.

29 AG’s opinion, paras. 76-77 and paras. 565-569, where she mentions the potential risk of a Member State failing to ratify a mixed agreement, warning that were the reasons for such a refusal to relate to aspects of the agreement falling within exclusive EU competence, the Member State would be in breach of its Treaty obligations.

30 For general comment on the CCP as revised by the Lisbon Treaty, see Krajewski, M., ‘The Reform of the Common Commercial Policy’, in A. Biondi et al. (eds.), EU Law After Lisbon (Oxford University Press 2011); M. Cremona, ‘A Quiet Revolution: The Common Commercial Policy Six Years after the Treaty of Lisbon’, Swedish Institute for European Policy Studies, Working Paper 2017:2.

31 Although trade in services and the commercial aspects of intellectual property have formed part of the CCP since the Nice Treaty, they were largely excluded from exclusive competence.

32 Commission v Council, supra n. 24.

33 Daiichi Sankyo Co Ltd, supra n. 24; Opinion 3/15, EU:C:2017:114.

34 Daiichi Sankyo Co Ltd, supra n. 24, paras. 50-52; Commission v Council, supra n. 24, paras. 56-58.

35 Daiichi Sankyo Co Ltd, supra n. 24, paras. 59-60; Commission v Council, supra n. 24, paras. 64-67.

36 Opinion 2/15, para. 36.

37 With the exception of those aspects of chapter 10 which concern procurement in relation to transport services.

38 Opinion 2/15, para. 54. The Court referred to the earlier (pre-Lisbon) Opinion 1/08, EU:C:2009:739, concluding that although the Treaty terminology in French has altered from ‘commerce des services’ to ‘échanges de services’ (the English in both cases being ‘trade in services’) the meaning of these terms is ‘essentially identical’ and no distinction is made between different modes of supply. The distinction made in Opinion 1/94, EU:C:1994:384, between mode 1 – cross-border supply – and other forms of trade in services, is no longer relevant as far as the scope of the CCP is concerned.

39 Opinion 2/15, paras. 56-68. This includes all four modes of supply of transport services, as well as services ‘inherently linked’ to transport services. However the Court held that aircraft repair and maintenance services and the sale or reservation of air transport services are included within the CCP since they are not ‘inherently linked’ to air transport; the AG, in contrast, had taken the view that these services were ‘indissociably linked to transport’: opinion of AG Sharpston, paras. 191 and 218.

40 Opinion 2/15, para. 121.

41 Opinion 2/15, paras. 122-124.

42 Opinion 2/15, para. 125.

43 Opinion 2/15, para. 126.

44 Opinion 2/15, para. 80.

45 Ibid.

46 Opinion 2/15, para. 84.

47 As they had been in relation to goods in Opinion 1/94, EU:C:1994:384, and in relation to services in Commission v Council, supra n. 24.

48 Opinion 2/15, para. 95.

49 Opinion 2/15, para. 94; for para. 36 see supra n. 36.

50 Opinion 2/15, para. 103.

51 Opinion 2/15, para. 107.

52 D. Kleimann, ‘Reading Opinion 2/15: Standards of Analysis, the Court’s Discretion, and the Legal View of the Advocate General’ (2017) EUI RSCAS Working Paper 2017/23.

53 For example, see Case C-389/15, Commission v Council, EU:C:2017:798, on the Lisbon Agreement on Appellations of Origin and Geographical Indications.

54 See e.g. Commission v Council, supra n. 24, paras. 71-72, and (in the context of development cooperation) ECJ 11 June 2014, C-377/12, Commission v Council, EU:C:2014:1903, para. 39. For discussion in the context of Opinion 2/15, see Kleimann, supra n. 52, at pp. 11-20.

55 Art. 207(1) TFEU.

56 Opinion 2/15, para. 147.

57 J. Larik, ‘Trade and Sustainable Development: Opinion 2/15 and the EU’s Foreign Policy Objectives’, BlogActiv, 8 June 2017, <acelg.blogactiv.eu/2017/06/08/trade-and-sustainable-development-opinion-215-and-the-eus-foreign-policy-objectives/>, visited 27 December 2017.

58 Opinion 2/15, opinion of AG Sharpston, para. 495. Note that at the start of her opinion the AG emphasised the agreement’s multiple objectives: ‘The agreement is not a “homogeneous agreement”: it does not cover one particular area or subject matter nor does it pursue a single objective. It seeks to achieve, in particular, liberalisation of trade and investment and guarantees certain standards of protection in a manner that reconciles economic and non-economic objectives’ (opinion of AG Sharpston, para. 3). The Court, in contrast, defined the agreement from the start as essentially concerned with trade (Opinion 2/15, para. 32) and then, as we have seen, interpreted trade objectives broadly to cover sustainable development.

59 Opinion 2/15, opinion of AG Sharpston, para. 491, emphasis in original.

60 Opinion 2/15, para. 162.

61 Opinion 2/15, para. 152.

62 Opinion 2/15, para. 155. Contrast here AG Sharpston: ‘I cannot accept the Commission’s argument that Article 13.6.2 of the EUSFTA (which requires effective implementation of the multilateral environmental agreements to which the European Union and Singapore are party) involves no new international obligation for the Parties. It is true that that provision merely refers to pre-existing multilateral commitments of the Parties concerning environmental protection. However, its effect is to incorporate those commitments into the EUSFTA and therefore make them applicable between the European Union and Singapore on the basis of the EUSFTA. Article 13.6.2 thus clearly results in a new obligation for the Parties, enforceable in accordance with the EUSFTA’ (opinion of AG Sharpston, para. 498, emphasis in original).

63 Opinion 2/15, para. 161; the Court here refers to general treaty law, citing Art. 60(1) of the Vienna Convention, rather than any explicit provision to this effect in the Singapore Agreement.

64 The AG took the view that there was no labour or environmental standards-based conditionality in chapter 13: opinion of AG Sharpston, para. 491.

65 Opinion 2/15, para. 166.

66 See e.g. the Namur Declaration of 5 December 2016, <declarationdenamur.eu/en/>, visited 27 December 2017.

67 Art. 13.16(1) EUSFTA.

68 L. Ankersmit, ‘Opinion 2/15: Adding Some Spice to the Trade & Environment Debate’, European Law Blog, 15 June 2017, <europeanlawblog.eu/2017/06/15/opinion-215-adding-some-spice-to-the-trade-environment-debate/>, visited 27 December 2017.

69 Cf opinion of AG Sharpston, para. 498, supra n. 62.

70 Opinion 2/15, para. 165; Daiichi Sankyo Co Ltd, supra n. 24, paras. 59-60.

71 Opinion 2/15, para. 164. According to Art. 207(6) TFEU, cited here by the Court, ‘[t]he exercise of the competences conferred by this Article in the field of the common commercial policy shall not affect the delimitation of competences between the Union and the Member States’.

72 For more detail, see Cremona, M., ‘EU External Competence – Rationales for Exclusivity’, in I. Govaere and S. Garben (eds.), The Division of Competences between the European Union and its Member States: Reflections on the Past, Present and Future (Hart Publishing 2017).

73 ECJ 31 March 1971, Case 22/70, Commission v Council, EU:C:1971:32 (AETR), paras. 17-18.

74 Cf Opinion 1/03, EU:C:2006:81, paras. 114-116.

75 In particular, Commission v Council, supra n. 73, and ECJ 5 November 2002, Case C-467/98, Commission v Denmark, EU:C:2002:625.

76 In particular, ECJ 4 September 2014, Case C-114/12, Commission v Council, EU:C:2014:2151; Opinion 1/13, EU:C:2014:2303; Opinion 3/15, EU:C:2017:114.

77 Opinion 1/03, supra n. 74, para. 133.

78 Opinion 2/15, paras. 189-190.

79 Opinion 2/15, para. 201. This approach was applied to both rail and road transport services. For another example of this reasoning see Commission v Council, supra, n. 76, paras. 85-102.

80 Opinion 2/15, paras. 216-217.

81 For its use in a legal basis context, see Case C-137/12, Commission v Council, EU:C:2013:675, paras. 70-71, supra n. 24.

82 Somewhat ironically, this provision was itself derived from secondary legislation: Directive 88/361, no longer in force.

83 Opinion 2/15, paras. 231-234; see also opinion of AG Sharpston, para. 353.

84 Cf opinion of AG Sharpston, para. 358.

85 Opinion 2/15, para. 235; see also opinion of AG Sharpston, para. 354.

86 Art. 3(2) TFEU.

87 Opinion 1/03, supra n. 74, para. 115, referring to Opinion 1/76, EU:C:1977:63, from which this test derives.

88 Opinion 1/76, supra n. 87.

89 Art. 216(1) TFEU provides that the EU has competence to conclude an international agreement (inter alia) ‘where the conclusion of an agreement is necessary in order to achieve, within the framework of the Union’s policies, one of the objectives referred to in the Treaties’.

90 Opinion 2/15, paras. 239-242.

91 Art. 216(1) TFEU does not establish an independent treaty-making power for the EU; it must be combined with the relevant substantive Treaty provision (such as, in this case, Art. 63 TFEU).

92 In a later judgment the court has held that an explicit reference to Art. 216(1) TFEU as a legal basis is not necessary as long as the substantive and procedural legal bases can be clearly determined: ECJ 5 December 2017, Case C-600/14, Germany v Council, EU:C:2017:935, at paras. 79-92.

93 Opinion 2/15, para. 244.

94 L. Ankersmit, ‘Opinion 2/15 and the Future of Mixity and ISDS’, European Law Blog, 18 May 2017, <europeanlawblog.eu/2017/05/18/opinion-215-and-the-future-of-mixity-and-isds/>, visited 27 December 2017; Kleimann and Kübek, supra n. 25; D. Thym, ‘Mixity after Opinion 2/15: Judicial Confusion over Shared Competences’, Verfblog, 31 May 2017, <verfassungsblog.de/mixity-after-opinion-215-judicial-confusion-over-shared-competences/>, visited 27 December 2017.

95 In AG Sharpston’s view this was the case for the Singapore Agreement since she held that the provision concerning member states’ prior investment treaties with Singapore fell outside EU competence: see further below.

96 ‘At the hearing, the Council emphasised that whether the European Union or the member states exercise external competence to conclude a particular international agreement in an area of shared competence is “a political choice”.’ The AG goes on to say that in a case of shared competence, the Council will decide according to the procedure laid down in Art. 218 TFEU whether the EU should conclude the agreement alone or with the member states (opinion of AG Sharpston, paras. 74-75).

97 Opinion of AG Sharpston, para. 7.

98 Opinion of AG Sharpston, para. 556 (emphasis added).

99 See Opinion 2/15, paras. 282 and 304 referring respectively to transparency and dispute settlement in the context of non-direct foreign investment.

100 See Opinion 2/15, para. 305.

101 Case C-600/14, Germany v Council, supra, n. 92.

102 Ibid., at para. 68.

103 Shared competence over non-direct investment was specifically relied on in Case C-600/14, since it does not depend on the existence of Union legislation.

104 Art. 9.10 EUSFTA; Art. 9.10 refers in a footnote to Art. 59 subpara. 1(a) of the Vienna Convention on the Law of Treaties. There are 12 such agreements.

105 Cf ECJ 4 July 2000, Case C-84/98, Commission v Portuguese Republic, EU:C:2000:359; ECJ 3 March 2009, Case C-249/06, Commission v Sweden, EU:C:2009:119.

106 Opinion of AG Sharpston, para. 396.

107 ECJ 12 December 1972, Cases 21/72 to 24/72, International Fruit Company, EU:C:1972:115, paras. 10-18.

108 Opinion 2/15, para. 255.

109 Note that AG Sharpston’s argument was not that the content of the bilateral investment treaties, but rather that the competence to terminate them, fell within exclusive Member State competence.

110 If only because the EU has already partially regulated the continuation of these bilateral investment treaties, in Regulation 1219/2012, OJ 2012 L 351, p. 40, albeit with the proviso that the Regulation is ‘without prejudice to the division of competences established by the TFEU’ (Art. 1(1)).

111 Earlier case law on functional succession required the EU to possess exclusive competence over the whole agreement: see e.g. ECJ 3 June 2008, Case C-308/06, Intertanko, EU:C:2008:312, paras. 47-52.

112 Supra n. 106.

113 International Fruit Company and Others, supra n. 107, paras. 10-18.

114 Opinion 2/15, para. 254.

115 Commission v Sweden, supra n. 105, para. 44.

116 Note that the exclusivity in question here is the a priori exclusivity of the CCP, based on Art. 3(1) TFEU: it does not depend on any exercise of competence by the EU.

117 Either on the basis of Art. 351 TFEU in the case of agreements concluded prior to EU accession, or on the basis of the general duty of sincere cooperation found in Art. 4(3) TEU, in the case of later agreements.

118 Cf the agreements on air services negotiated by the Community with a number of third countries aimed at replacing some provisions of bilateral member state agreements to bring them into line with EU law; for one example among many, see Agreement between the European Community and the Government of the Republic of Singapore on certain aspects of air services, OJ 2006 L 243/21.

119 And which is the subject of Opinion 1/17, pending, supra n. 17.

120 See e.g. Opinion 2/15, paras. 275-276.

121 Opinion of AG Sharpston, paras. 525-526.

122 Opinion 2/15, para. 292.

123 Opinion 2/15, para. 293.

124 A point made by Kleimann and Kübek, supra n. 25.

125 Note that the Court does not address the question of competence as regards ISDS vis-à-vis the EU; competence in relation to ISDS claims against the EU must fall within EU competence, and the issue is compatibility not competence; as already mentioned, the Court discusses only competence, and not compatibility: see Opinion 2/15, para. 290.

126 See text supra n. 95.

127 See text supra n. 102.

128 ECJ 28 July 2016, Case C-660/13, Council v European Commission, EU:C:2016:616, para. 39; ECJ 19 July 2016, Case C-455/14P, H v Council of the European Union, EU:C:2016:569, para. 41.

129 Case C-377/12, European Commission v Council, supra n. 54, para. 18; ECJ 19 October 2017, Case C-598/16 P, Viktor Fedorovych Yanukovych v Council, EU:C:2017:786, para. 61.

130 ECJ 14 June 2016, Case C-263/14, European Parliament v Council, EU:C:2016:435, para. 47.

131 See e.g. the Commission’s most recent trade strategy paper, ‘Trade for all - Towards a more responsible trade and investment policy’, 14 October 2015.

132 See also Decision of the European Ombudsman in Case 1409/2014/MHZ on the European Commission’s failure to carry out a prior human rights impact assessment of the EU-Vietnam free trade agreement.

* Emeritus Professor, European University Institute.

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