EU’s top court: Trade deals must be ratified at national level

Ruling sets precedent for similar agreements Brussels aims to conclude with Japan, Mexico, Australia — and UK.

Brussels must involve national and regional parliaments in the ratification of trade agreements that include investment protection, the EU’s highest court ruled today.

In a long-awaited decision, the European Court of Justice ruled that EU’s trade deal with Singapore could not be ratified by EU governments meeting at Council-level in Brussels and the European Parliament, but needed the approval of 38 national and regional assemblies across the EU as well.

The ruling sets a precedent for similar trade deals the EU aims to conclude with Japan, Mexico, Australia and, most importantly, the “bold and ambitious” post-Brexit agreement that U.K. Prime Minister Theresa May hopes to strike with Brussels.

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Trade provisions relating to non-direct foreign investment and investor-state dispute settlement fall under national competences, judges at the Luxembourg-based court said. However, the judges ruled that the scope of exclusive EU competences is much bigger than a previous non-binding opinion by the court’s advocate-general suggested in December.

Notably, disputed sectors such as transport services and sustainable development are exclusive EU competences, the court said.

Involving national and regional parliaments in the ratification process sparked a diplomatic crisis last year. The European Commission — following intense pressure from EU governments — decided to throw the EU-Canada agreement to national authorities, a decision that almost capsized the EU’s trade policy when the Belgian region of Wallonia threatened not to sign off on the deal.