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Could EU-Singapore ruling mean slow Brexit?

Rebecca Staudenmaier with dpa, Reuters
May 16, 2017

The EU's top court has ruled that national parliaments have the right to veto an EU free trade deal with Singapore. The decision could impact the UK's strategy as it seeks to quickly hammer out a Brexit trade agreement.

Europäischer Gerichtshof in Luxemburg
Image: Reuters/F. Lenoir

ECJ ruling set to complicate Brexit trade deal

The European Court of Justice (ECJ) ruled on Tuesday that free trade deals with the European Union must also be approved by the bloc's 38 national and regional parliaments, in a decision that could significantly slow down the bloc's planned trade teals.

The judges said that a free trade agreement between the European Union and Singapore cannot be enforced until all of the bloc's member states ratify the agreement.

"The free trade agreement can, as it stands, only be concluded by the European Union and the Member States jointly," the court said in a statement on the decision.

The European Commission, which completed trade deal negotiations with Singapore in October 2014, sought an opinion from the court on whether or not it could conclude the Singapore agreement by itself.

The Commission argued that such trade deals are an "exclusive competence" of EU bodies, meaning that it falls exclusively within their jurisdiction.

Although free trade agreements must still be approved by the European Parliament and the EU Council, the Commission was hoping to avoid having such deals bounce back to individual member states for ratification - which could take years if parliaments veto the agreements.

The ECJ said that, although some areas of the Singapore deal fall within the EU's exclusive competence, two areas require member state input: "Non-direct foreign investment" and "dispute settlement between investors and States."

The EU is currently pursing trade deals with Mexico and Japan as well as eyeing a crucial deal with the United Kingdom as it exits the EU.

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Already an arduous process

The EU Commission had hoped to avoid the potentially grueling process of getting ratification from all member states - particularly as the 2-year Brexit negotiation clock is already ticking down.

British Prime Minister Theresa May has said she wants to secure a trade deal with the EU as quickly as possible, and ideally as the UK negotiates the terms of its exit. EU leaders have already ruled out the possibility of parallel negotiations, saying that issues concerning the status of EU and UK nationals need to be clarified first.

The UK may shift its strategy after Tuesday's ruling, knowing that the deal must now pass individual approval from the 38 national and regional parliaments.

Although the ECJ outlined the exclusive competencies of the European Union, it might be hard to broker a trade deal that would only fall within those areas, as the UK will likely also involve areas that require member state approval.

An EU-Canada trade is set to provisionally come into effect in the next few weeks after facing staunch resistance from labor unions and environmental groups. The deal was almost blocked by the Walloon regional parliament in Belgium and still needs to be ratified by national and regional parliaments in the next few years to fully come into force.

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