Britain may have to wait – and hope – for every single one of its European Union neighbours to give full legislative consent before it can fully benefit from any post-Brexit free trade deal, EU judges ruled.
Tuesday’s verdict may also delay and potentially obstruct a string of other EU trade pacts, notably with Japan and in Latin America, the European Court of Justice (ECJ) said an agreement struck with Singapore in 2014 cannot take full effect until ratified by 33 national and regional parliaments across the 28-nation bloc.
The European Commission, which runs trade policy for the EU, had hoped Brussels – where national governments also have a say – might get more freedom to implement deals without the vagaries that saw an accord with Canada nearly wrecked last year by the Walloon assembly in Belgium.
The Commission sought the ruling and said it clarified divisions between EU and national powers.
London wants a trade agreement to keep much of its current access to Europe’s single market once it quits the EU in March 2019. But Brussels negotiators have warned such deals typically take five or more years to negotiate and longer to ratify, creating pressure to agree transitional arrangements when Brexit negotiations get under way following Britain’s June 8 election.
Verbal skirmishing between the two sides this month over the EU’s refusal to open trade talks until Britain agrees to settle payments to Brussels and guarantee European immigrants’ rights has generated new warnings that negotiations could simply fail.
Any trade pact with Britain would need to be signed off in Brussels by all 27 EU governments after Brexit, but the ECJ ruling implies that national parliaments would also get a veto. So would federal Belgium’s five regional assemblies, among them Wallonia and German-speaking east Belgium.
Among elements of the Singapore deal that the ECJ said fell beyond the centralised powers of the Union and so requires the separate national ratifications, was its creation of a judicial mechanism to settle disputes between businesses and governments.
Such supranational legal powers have been at the heart of opposition in Europe to recent free trade deals – including the last-ditch move by Wallonia’s left-wing leaders to halt the EU’s CETA pact with Canada last year. EU officials want to ease concerns that such powers favour big multinationals by ensuring future deals more clearly protect states’ rights to regulate.
British Prime Minister Theresa May has made rejecting EU regulation and non-British courts, like the ECJ in Luxembourg, priorities for Brexit.
That means negotiations on a UK-EU trade deal could be fraught when it comes to agreeing who supervises and regulates business, including in the complex area of services, which accounts for most of Britain’s economy.