The European Union will have to make sure that national parliaments will have their say on a free trade deal with Singapore. The European Court of Justice (ECJ) ruled that the deal in its current format couldn’t be handled by the Commission alone. The EU’s top court said that the EU executive could not finalize the agreement by itself after the Commission asked to clarify whether it had exclusive competences to handle the talks.
The Commission chose the Singapore deal due to its similarities to many other deals that the EU is working on. The ECJ indeed confirmed that large parts of the agreements could be under exclusive EU competence, yet it also highlighted that portfolio investment and dispute settlement between investors and the state must be established with member state approval. The Commission will now have to turn to member states to process the decision, thus opening the door to the possibility that the deal will be delayed just like in the case of Canada’s FTA (CETA).
The CETA was ultimately salvaged when Wallonia withdrew its opposition but the EU faced a major embarrassment. A similar setback could have also happened during the final stages of the EU’s Korea FTA when Italy considered blocking the deal due to concerns about its car industry. Brussels will now therefore have to decide whether it wants to risk a similar scenario or go with another option that would entail splitting the deal into two halves – one with all those areas over which the Commission has competence and the other with all the grey areas that need to be approved nationally.