This week’s decision by the European Court of Justice on a free-trade deal with Singapore could complicate UK Prime Minister Theresa May’s hopes of securing a post-Brexit trade deal with the EU. Singapore says it remains hopeful that the deal will open the door on trade ties with the whole of Asean.
The court in Luxembourg has ruled that a free-trade deal reached with Singapore in 2013 must be ratified by member states and several regional parliaments.
Singapore’s Ministry of Trade and Industry has said that the city-state is committed to working with the European Commission to ratify the EU-Singapore Free Trade Agreement.
It was intended to firms to use parts of the agreement that were under the EU’s exclusive competence, said the ministry.
“Singapore respects the internal processes of the European Union and looks forward to the formal entry-into-force of the [agreement] as soon as all EU member states have ratified provisions under their competence,” the ministry added.
The proposed deal was a “pathfinder agreement” to an eventual EU-Asean free-trade arrangement, said a Singaporean spokesperson, adding that signing the agreement would “signal the EU’s interest and commitment to engage a dynamic and fast-growing region”.
But observers say the court’s ruling is likely to set a precedent for any deal with the UK after Brexit, handing a veto over the deal to 38 national and regional parliaments within the EU.
The Singapore deal could now unravel like Canada’s Comprehensive Economic and Trade Agreement (Ceta) with the EU, which floundered after seven years of negotiation last year because it failed to pass the Walloon regional parliament in southern Belgium.
The court ruled: “The free-trade agreement with Singapore cannot, in its current form, be concluded by the European Union alone.
“The provisions of the agreement relating to non-direct foreign investment and those relating to dispute settlement between investors and states do not fall within the exclusive competence of the European Union, so that the agreement cannot, as it stands, be concluded without the participation of the member states.”
Several members require the approval of regional assemblies.
The Singapore ruling could act as a model for EU deals with any UK trade deal although the court’s ruling significantly narrows the range of topics which will be subject to national ratification.
The only aspects of the deal which must go out to the 28 member states for approval are non-direct foreign investment and the regime governing dispute settlement between investors and states.
All other parts of the agreement can be agreed by the EU acting as a single organisation.
Rotterdam. Picture credit: Flickr