The EU’s future trade policy starts to take shape: the Opinion on the EU/Singapore FTA


by Professor Steve Peers

What is the scope of the EU’s powers over trade agreements? The issue has been disputed for decades in the case law of the ECJ, for it has a significant impact on the allocation of powers between the EU and its Member States as regards external economic policies. A number of Treaty amendments over the years – in particular the Treaty of Lisbon – have amended the rules.

The issue has gained added salience given the controversies surrounding some EU trade negotiations (in particular with Canada and the USA), and the trade talks between the UK and EU in light of Brexit. Today’s opinion of an ECJ Advocate-General is not binding, but is very thorough and will likely have a significant impact on the Court’s final judgment, expected in the spring.

This post will summarise the lengthy opinion succinctly and suggest its likely implications for the FTAs with Canada, the USA and the UK in particular. For further reading, see the earlier posts on this blog on the background to the Opinion and on the hearing before the ECJ.


The Court has been asked to rule on whether the various provisions of the EU’s draft trade deal with Singapore fall within the scope of the EU’s exclusive powers, or whether powers are shared with the Member States, or whether only Member States can conclude them. If the EU only can conclude them, there can be no national ratification and also probably (depending on the exact content of the agreement) the EU will approve the deal by qualified majority, ie Member States will not have a veto.

If both the EU and its Member States can conclude the provisions, the agreement is ‘mixed’, but the EU has a choice to conclude the agreement without the Member States, if a qualified majority (assuming, again, that no veto applies due to the subject matter) agree to this.

If an issue is within exclusive Member State competence, then Member States must be parties to the treaty in order to conclude it. National ratification, and a de facto national veto for each Member State, therefore applies.

When is a power exclusive to the EU? Article 3(1) of the Treaty on the Functioning of the European Union (TFEU) lists a number of powers that are inherently exclusive, including the common commercial (ie trade) policy (CCP) and fisheries conservation. The CCP is further defined in Article 207 TFEU: it particularly applies to ‘goods and services’, the commercial aspects of intellectual property’ and ‘foreign direct investment.’ The EU/Singapore case concerns the interpretation of each of these aspects.

Besides Article 3(1), Article 3(2) TFEU goes on to provide that exclusive EU powers over an international treaty can also derive from the exercise of EU internal powers, in three cases: (a) ‘its conclusion is provided for in a legislative act of the Union’ or (b) it ‘is necessary to enable the Union to exercise its internal competence’, or (c) ‘in so far as its conclusion may affect common rules or alter their scope.’ The EU/Singapore case concerns the interpretation of both (a) and (c), which I will refer to as the ‘legislative authorisation’ ground and the ‘affect common rules’ ground.  (Note that ground (b) is rarely applied, as the ECJ case law interprets it very narrowly).

Summary of the opinion

The Commission argues that the EU has exclusive competence to conclude the deal. It’s supported by the European Parliament, which will have the power to consent to the deal as long as part of it relates to the CCP, or indeed to most other EU powers. Member States argue for mixed competence of much of the agreement, and exclusive national competence for some parts of it.

In general, the Advocate-General argues that much of the agreement is solely within the EU’s exclusive powers, mostly (but not entirely) as part of the CCP. A significant part falls within the EU’s mixed competence, while a small part is purely national competence.

First of all, she makes some general points about the scope of the CCP. She restates prior ECJ case law: the CCP applies to a measure which regulates and has direct effect on trade; mere implications for trade are not sufficient. She also interprets the exceptions in Article 207(6) TFEU, which states that the CCP ‘shall not affect the delimitation of competences between the Union and the Member States, and shall not lead to harmonisation of legislative or regulatory provisions of the Member States in so far as the Treaties exclude such harmonisation.’ In her view, this clause must be narrowly interpreted and has limited effect: for instance, it does not restrict the EU from agreeing measures on trade in culture and health services, as long as it does not harmonise the laws on those issues within the EU.

The opinion does not address the potentially important exceptions in Article 207(4) TFEU, which call for unanimous voting where ‘unanimity is required for the adoption of internal rules’ or ‘(a) in the field of trade in cultural and audiovisual services, where these agreements risk prejudicing the Union’s cultural and linguistic diversity’, or ‘(b) in the field of trade in social, education and health services, where these agreements risk seriously disturbing the national organisation of such services and prejudicing the responsibility of Member States to deliver them.’

On the other hand, the opinion does discuss the exception in Article 207(5) TFEU, which states that the CCP does not apply to agreements concerning transport. As a general rule, the Advocate-General argues that this exception applies whenever a treaty has rules ‘specifically concerning transport’. The further implications of this are discussed below.

The Opinion then examines the specific provisions of the EU/Singapore deal. First of all, the opening provisions of the FTA, referring to the creation of a free trade area, fall within the scope of the CCP. Next, following pre-Lisbon case law, the Opinion concludes that the FTA provisions on trade in goods are also within the scope of the CCP (Paras 144-155).

Thirdly, the Opinion examines the FTA provisions on services, establishment and e-commerce (paras 195-269). In general, other than transport issues, these fall within the scope of the CCP powers over services. In particular, immigration of service providers falls within the scope of the services powers, and therefore not under the immigration powers of the EU, where the UK and some other Member States have an opt-out (para 203). Financial services are covered by the CCP (para 204), since its scope is not dependent on prior harmonisation of the relevant law by the EU (unlike Article 3(2) TFEU). Professional qualifications are also covered (para 205).

As for the transport exception from the CCP, it applies not just to the services themselves, but those indissolubly linked to those services – ie cargo handling, transport repair, and computer reservation – but not to customs clearance, since that applies also to trade in goods.  But does the EU have exclusive power over the transport issues, by applying Article 3(2) TFEU instead? As regards aircraft repair, the ‘legislative authorisation’ ground doesn’t apply, since the EU legislation creating an aircraft safety agency doesn’t address this issue in detail. As for the ‘affect common rules’ ground, there is insufficient internal harmonisation as maritime transport, air transport (other than computer reservation systems), and inland waterways – but sufficient internal harmonisation as regards road and rail transport for the powers to become exclusive as regards the EU/Singapore FTA. Other aspects of transport remain a shared competence.

Fourthly, on the issue of investment (paras 305-398), the opinion again examines both the CCP and Article 3(2) TFEU. The opinion offers a definition of the EU’s CCP powers over foreign direct investment: investments ‘which serve to establish or maintain lasting and direct links, in the form of effective participation in the company’s management and control, between the person providing the investment and the company to which that investment is made available in order to carry out an economic activity. In applying that definition, I consider that the fact that the direct investor owns at least 10% of the voting power of the direct investment enterprise may offer evidentiary guidance but is certainly not determinative’. Crucially, the opinion argues (paras 324-342) that the CCP power covers the issue of investor protection.

As for other forms of investment – referred to as ‘portfolio investment’, it was agreed that the CCP didn’t apply. Could Article 3(2) TFEU apply, though? Here, there was no legislation on the issue, but there are EU Treaty provisions on capital movements to non-EU countries, which the Commission believes fall within the scope of the ‘affect common rules’ ground. However, the Opinion argues in principle that this ground for exclusive competence can only apply where the prior EU harmonisation results from legislation, not the Treaty. But the EU and its Member States still shared competence on most investment issues, except for the termination of bilateral investment treaties.

Fifth, on the issue of government procurement, previous prior case law said that the CCP only applied to procurement relating to goods and limited aspects of services. The Opinion concludes that in light of the Lisbon Treaty provisions made to the scope of the CCP, that EU power now fully applies to government procurement issues – other than those within the scope of the transport exception (paras 401-408).

Sixth, the Opinion examines the scope of the CCP power relating to intellectual property (paras 424-456). Although prior case law had concluded that the CCP fully applied to the ‘TRIPS’ (ie the intellectual property deal forming part of the World Trade Organisation system), the Opinion argues that this ruling did not necessarily apply by analogy to intellectual property rules in the EU’s FTAs (IP rules found in FTAs are often called ‘TRIPS+’ clauses).

To determine if a TRIPS+ clause falls within the scope of the CCP, the test (para 435) is not based on the remedy which applies, but rather whether: the substantive obligation governs trade rather than harmonises IP law; there is a direct and immediate effect on trade; and if the measure aims to avoid distortions to trade caused by monopolies. Again, application of the CCP does not depend on whether the EU has harmonised an IP issue internally. The Opinion also argues that rules on court procedures do not necessarily fall outside the scope of the CCP.

Appling this test to the facts: enforcement and plant variety rights are part of the CCP, but some parts of the draft EU/Singapore are not: namely moral rights, which also are not covered by Article 3(2) because the EU has not harmonised them internally. But the EU does have shared competence over this issue, since it could harmonise them on the basis of its internal market powers.

Seventh, the Opinion looks at competition law (paras 459-466). The FTA rules on this issue fall within the scope of the CCP, since they extend EU rules to Singapore and there is a a strong link with trade in goods and services.

Eighth, the Opinion looks at the FTA provisions on environment and sustainable development (from para 478). Here the rules on renewable energy fall within the scope of the CCP, since there is a strong link to trade and investment. However, the rules on labour and environmental standards are not closely linked with trade, so the EU shares competence with its Member States (no one had made an argument that Article 3(2) applied). The rules on fish stocks fell within the scope of another EU exclusive competence: fisheries conservation.

Finally, the rules on transparency and judicial review were ancillary to the substantive provisions of the FTA (paras 508-13). So were the rules on dispute settlement and mediation (paras 523-44); here the Opinion points out that the controversial rules on investor-state dispute settlement were not at issue in this case (para 536). (Note that Belgium has promised to ask the Court about the relevant provisions in the EU/Canada FTA). And the final provisions are either accessory or minor, so change none of the legal assessment (paras 548-553).


The Advocate-General’s analysis as regards goods, services and intellectual property is unsurprising in light of prior case law. However, the analysis as regards the fresh issue of investment is more disputable. Her case that investor protection falls within the scope of the CCP is convincing, on the grounds that people might not invest in the first place without adequate protection (ie, there is a link back to market access). On the other hand, the analysis relating to portfolio investment puts form over substance: why should it matter that ‘common rules’ derive from the Treaties, rather than EU legislation? Also, the termination of bilateral investment treaties should more logically be seen as the corollary of the exercise of the EU’s other (exclusive or shared) competence, rather than a purely national competence. And it is unfortunate that the Commission missed this opportunity to ask the Court to rule already on the controversial investor-state dispute settlement rules.

What are the implications for other FTAs, and for Brexit? That depends in part on the exact commitments in those other treaties, since this Opinion analyses the commitments that would be made under the EU/Singapore FTA, and commitments under other treaties might differ. In particular, it’s conceivable that other FTAs might arguably require unanimity on the basis of Article 207(4) TFEU, discussed above, which was not at issue in this case.

In general, for other FTAs it seems likely that a mixed agreement may be necessary, in light of the interpretation here relating to the transport exception, portfolio investment, and labour and environmental standards. Apart from the question of termination of investment treaties, then, it will be a purely political question whether Member States are content to agree those trade treaties on behalf of the EU alone, or will continue to insist (as they traditionally have done) on Member States being parties as well.

As for a post-Brexit FTA in particular, different issues may arise. The UK and the EU might not have any interest in negotiating measures relating to investment or intellectual property, at least in the form that EU FTAs now address them. So if the UK and EU want to focus on goods and services only, then the EU’s exclusive CCP competence would apply except as regards transport – and the EU often signs separate transport agreements with non-Member States.  It could be argued that a deal might need unanimity on the basis of Article 207(4) TFEU, but the counter-argument is that a post-Brexit trade deal would simply be preserving (some of?) the existing UK market access into the EU, so could not threaten health or audiovisual services.

Even on transport issues, or as regards labour and environmental standards, case law suggests that exclusive competence on the basis of Article 3(2) applies where the EU seeks to extend its own laws to non-EU states. If the UK is willing to sign up to a treaty that preserves market access in return for compliance with EU rules, it would follow that today’s opinion – if followed by the ECJ – has possibly drawn a road map for the negotiation of an agreement based on free trade in goods and services and compliance with selected EU legislation which could avoid national ratification and (depending on the subject matter) national vetoes.


Original published here 


The High Court has today issued its Judgment in the dispute about the UK Parliament’s necessary approval of a Brexit notification–see R (Miller) -V- Secretary of State for Exiting the European Union [2016] EWHC 2768 (Admin). It has ruled that such Parliamentary approval is indeed required as a matter of UK constitutional and public law. The Government has already announced that it will appeal this decision to the UK Supreme Court (UKSC). The implications of such an appeal are important and need to be carefully considered. One such possible consequence is that the appeal (indirectly) brings the case to the docket of the  Court of Justice of the European Union (CJEU).

In my view, an appeal of the High Court’s Judgment before the UKSC will indeed trigger a legal requirement under EU law for the UKSC to send a reference for a preliminary ruling to the CJEU. I have rehearsed most of my arguments on twitter earlier (see here and here) and this posts brings them together.

Basic EU Law Background

Article 267(1)(a) TFEU establishes the monopoly of interpretation of the CJEU and it indicates the Court shall have jurisdiction to give preliminary rulings concerning the interpretation of the Treaties. Article 267(2) then goes on to enable the domestic courts of the Member States to issue request preliminary rulings from the ECJ where questions of interpretation of EU law are raised before them and they consider that a decision on the question is necessary to enable them to give judgment. However, that discretion of domestic courts to request preliminary rulings from the CJEU does not apply to the courts or tribunals of a Member State against whose decisions there is no judicial remedy under national law. In that case, Article 267(3) indicates that where a question on the interpretation of EU law is raised, the highest court  shall bring the matter before the CJEU.

The uncertainties surrounding the interpretation of Art 50 TEU before the High Court

One of the extremely complex issues concerning the UK’s potential withdrawal from the EU following the Brexit vote of 23 June 2016 concerns the interpretation of Article 50 TEU (on this, see here). One of the difficult sub-questions concerns the (ir)reversibility of an Art 50 TEU trigger notification. This is an essential element for an assessment of the UK’s constitutional requirements for the delivery of such notification, as the High Court’s Judgment makes clear.

Indeed, as a preliminary issue, in today’s Judgment, the High Court has addressed the problematic interpretation of Art 50 TEU. Unanimously, the High Court has indicated that “Important matters in respect of Article 50 were common ground between the parties: (1) a notice under Article 50(2) cannot be withdrawn once it is given …” para [10]; and that “Once a notice is given, it will inevitably result in the complete withdrawal of the United Kingdom from membership of the European Union and from the relevant Treaties at the end of the two year period, subject only to agreement on an extension of time …” para [11].

There are two ways of interpreting the High Court’s dealing with the argument on irreversibility of an Art 50 notification. First, that the High Court takes this approach in para [11] because it is common ground between the parties ex para [10]–what I would call the UK procedural approach. Second, that the High Court has of its own interpreted an Art 50 notification to be irreversible ex para [11], which happens to align with the common position of the parties in para [10]–what I would call the EU substantive interpretation approach.

The UK procedural approach is saved by the High Court’s discretion under Art 267(2) TFEU to consider that the interpretation of Art 50 TEU is actually not necessary for it to adjudicate the matter at hand because this is not part of the controversy between the parties. However, the EU substantive interpretation does trigger some issues because, having recognised the interpretation of Art 50 TEU as an important aspect for the adjudication of the case, the High Court should not have taken it upon itself to interpret it and should rather have requested a preliminary ruling from the CJEU. However, unless under a very expansive interpretation of the principle of sincere or loyal cooperation in Art 4(3) TEU, this does not amount to a breach of EU law.

The uncertainties surrounding the interpretation of Art 50 TEU before the UK Supreme Court

Now, in case of an appeal of the High Court’s decision before the UKSC, in my opinion, the referral to the CJEU is legally unavoidable (I will not deal for now with arguments of judicial politics or pragmatic views on the UKSC’s likely course of action). Even if the parties do not challenge or even raise to the UKSC’s consideration the matter of the (ir)reversibility of and Article 50 notification, it is a logical given that the UKSC needs to take a stance (even if implicit) on this point in order to be able to rule on the case. If it quashes the High Court’s decision, it needs to clarify the points of law which the High Court would have gotten wrong–one of which concerns the irrevocability of an Art 50 notification. if it upholds the High Court’s decision, it is (implicitly) accepting the assumption that an Art 50 notification is irrevocable. Either way, the UKSC cannot escape a substantial (implicit) consideration of the interpretation of Article 50.

In my view, this engages the UKSC’s obligation to request a preliminary ruling from the CJEU under Article 267(3) TFEU and not doing so triggers a risk of infringement of EU law by the UK due to the acts (or omission, in this case) of its highest court.

Semi-Advanced EU Law Background

The UKSC’s obligation to request a preliminary reference from the CJEU is controlled by the so-called CILFIT test, which establishes that “a court or tribunal against whose decisions there is no judicial remedy under national law is required, where a question of [EU] law is raised before it, to comply with its obligation to bring the matter before the Court of Justice, unless it has established that the question raised is irrelevant or that the [EU] provision in question has already been interpreted by the Court or that the correct application of [EU] law is so obvious as to leave no scope for any reasonable doubt. The existence of such a possibility must be assessed in the light of the specific characteristics of [EU] law, the particular difficulties to which its interpretation gives rise and the risk of divergences in judicial decisions within the [EU]” (283/81, EU:C:1982:335, para 21).

What does this mean for the UKSC in the Brexit litigation in case of appeal?

In short, my understanding of the CILFIT test is that a highest court of a Member State (the UKSC) must request a preliminary ruling on the interpretation of the Treaties to the CJEU and has no discretion not to do so unless: (a) the question is (objectively) irrelevant for the adjudication of the case, or (b) the provision has already been interpreted by the CJEU, or (c) there is no scope for reasonable doubt in the interpretation of the provision. None of these apply in the specific case of the Article 50 litigation.

First, it is inconceivable to me to argue that the interpretation of Art 50 and the (ir)revocability of a notice under it is irrelevant for the adjudication of this case. A different issue would be whether the UKSC could pragmatically sidestep the need to engage in that interpretation, either by presuming its content (the EU substantive interpretation approach mentioned above), or by insisting on the fact that it is common ground to the parties to the litigation and, therefore, the issue of the (ir)revocability of the notification is not (formally, explicitly) raised before it (the UK procedural approach.

However, in my opinion, neither of these avoidance strategies would meet the basic requirements of good faith in the interpretation of the CILFIT test, coupled with Article 4(3) TEU, which requires the domestic court to assess the need to request a preliminary ruling “in the light of the specific characteristics of [EU] law, the particular difficulties to which its interpretation gives rise and the risk of divergences in judicial decisions within the [EU]“. The interpretation of Article 50 TEU is, to put it simply, the most relevant EU constitutional law issue since the OMT litigation and one of the top, if not the top, EU constitutional law issue since the entry into force of the Lisbon Treaty. Engaging in semantics in the analysis of the first prong of the CILFIT test against this background (ie, stretching the narrow interpretation “irrelevant”) seems to me logically and legally unacceptable.

Second, it is plain that Art 50 has not been interpret by the CJEU yet. And, thirdly, it is also plain that there is scope (massive scope, a gaping hole) for reasonable doubt in the interpretation of Article 50 TEU. Thus, the so-called acte claire doctrine (ie the counterbalance of the CILFIT test) simply does not apply here.

Overall, in my opinion, the UKSC has an absolute and inexcusable obligation to request a preliminary ruling on the interpretation of Article 50 TEU from the CJEU the moment the appeal against the High Court’s Judgment (eventually) reaches its docket. Otherwise, the UKSC risks triggering an infringement of EU law and eventually creating liability in damages under the Kobler / Traghetti del Mediterraneo strand of case law on State liability. Again, I am not dealing with the arguments on the likelihood of an actual infringement case brought forward by the European Commission, or the CJEU’s eventual decision. I am, for now, simply stressing the state of EU law, which the UKSC would be well advised to bear in mind and uphold, unless it aims to contribute to the deterioration of the rule of law in the UK and the EU (which is something that keeps me awake at night).

Brexit: can the ECJ get involved?


by Steve Peers

Today’s ruling by the High Court requires the government to obtain approval from Parliament if it wishes to trigger ‘Article 50’, ie the process of withdrawing from the European Union. This short post won’t focus on the national constitutional law issues, but on the process of possible involvement of the EU courts in Brexit disputes.

The government has announced its intention to appeal today’s ruling to the Supreme Court. Some have suggested that the case might then be ‘appealed’ to the ECJ, but this misunderstands the judicial system of the European Union. There is no ‘appeal’ from national courts to the ECJ. Rather a national court may suspend proceedings and ask the ECJ some questions relating to EU law that the national court believes it needs the answers to. After the ECJ gives the answers to those questions, the national court resumes its proceedings and gives its judgment in light of them. The ECJ normally takes about 16 months to give a ruling, although it could (and probably would) fast-track a case raising fundamental questions about Brexit.

What EU law questions arise in this case? The obvious one is whether a notification to leave the EU under Article 50 of the TEU can be revoked once it is given. This is relevant because at the heart of the UK case is a dispute about the ‘royal prerogative’, ie the underlying powers of the UK executive. The royal prerogative allows the executive to conduct international relations, including decisions relating to international treaties. But prior case law makes clear that the prerogative cannot extend to taking away rights conferred by Parliament. The High Court has ruled today that this is what would happen if the executive invoked Article 50, since rights are conferred by the European Communities Act.

Yet logically if an Article 50 notification is revocable, then the decision would arguably not as such necessarily lead to the removal of rights conferred by Parliament. Only the subsequent failure to revoke it would. The High Court assumed in its judgment that the notification was not revocable, but that’s only because the parties agreed on this. The claimants agreed that an Article 50 notification was irrevocable because otherwise it would have weakened their case. The government agreed, perhaps because it would have been politically awkward to argue the opposite.

But it’s not up to parties in a national proceeding to decide on what the correct interpretation of EU law is. Article 267 TFEU says that final national courts must send questions of EU law to the ECJ if necessary to give judgment. So the Supreme Court may decide that it wants to have this question answered.

The revocability of Article 50 is not just an issue in this litigation. It’s a broader political issue, since some politicians would like there to be another referendum before the UK fully leaves the EU, once the public knows the terms of exit. That’s only a feasible suggestion if it is possible to revoke an Article 50 notification once it’s made, given that the EU refuses to discuss the terms of exit with the UK until that notification is made.

What if the Supreme Court decides not to refer to the ECJ – is that the end of the matter? Not quite. Since the ECJ judgment in Kobler, it’s established that a Member State can be liable in damages if its supreme court gets EU law wrong without asking the ECJ questions about it. So individuals could go to a lower UK court claiming damages on this basis, and the lower court might deem it necessary to clarify the point by asking the ECJ about revocability, perhaps ordering the government not to make the Article 50 notification in the meantime.

There are several other possibilities for Brexit issues to come before the CJEU. It might be disputed what could be included within the scope of an Article 50 withdrawal agreement, and in particular whether this must be separate from a treaty on the post-Brexit EU/UK relationship. There might be other issues about that latter treaty; some say that the EU legally cannot negotiate one until the UK has fully left. Many say that the UK cannot negotiate trade deals with non-EU countries until it has left.

How could such issues reach the Court? Article 218 TFEU allows it to rule on future treaties between the EU and non-EU states, so in principle could be used. Any Member State, or the EU Commission, Council or Parliament, could invoke it. A lot of issues arise here, though. Does Article 218 apply to Article 50 at all – since the UK hasn’t left yet, and Article 50 only refers to some parts of Article 218? Is it too soon (for now) to ask about future treaties between the UK and EU, given that notification and negotiations haven’t happened yet?

Alternatively, Article 273 TFEU allows Member States to bring a dispute with each other about issues related to EU law to the CJEU by special agreement. However, the UK would have to be willing to use this provision, and it would have to find another Member State to agree to do so, in order to bring issues before the ECJ.

Other issues may arise about Brexit, even in other Member States’ national courts. An Irish court has already ruled that European Arrest Warrants issued by the UK are still valid in light of Brexit. But this issue is likely to keep arising. UK citizens living in the EU (and vice versa) might want to litigate the argument that they cannot lose their EU citizenship.

In any event, the status of British goods, services and citizens in the remaining EU will doubtless be raised in the EU courts after Brexit, either by means of interpreting EU/UK treaties and/or autonomous EU laws (governing non-EU migration, for instance).

It’s probably only a matter of time before some aspect of the Brexit issue gets decided by the EU courts; and there’s no small irony in that prospect.

BREXIT : UK High court says parliament must vote on triggering article 50


Summary of the court judgement

A guide to EU procedures for the conclusion of international trade agreements (EP Briefing)


by  Laura Puccio (European Parliament Members’ Research Service)


The European Union (EU) was the world’s biggest exporter and importer of goods and services in 2015, representing 32.51 % of global trade in goods and services. The USA and China, meanwhile, accounted for 12.01 % and 10.68 % respectively. The EU has been negotiating trade agreements since the 1970s, then as the European Communities. Over time it has diversified its trading partners, and is now negotiating trade agreements with partners from every continent. The content of trade agreements has also evolved as EU trade competences have developed. The EU is currently in the process of amending and modernising some of its older trade agreements and is working on some of the most ambitious trade agreements since its inception (such as the Comprehensive Economic and Trade Agreement (CETA) with Canada and the Transatlantic Trade and Investment Partnership (TTIP) with the USA).The Lisbon Treaty modified both the EU’s competences in trade and the procedure for concluding trade agreements, giving a stronger role to the European Parliament. This briefing looks at how trade negotiations are conducted and concluded in the EU, and discusses some of the key issues in the current EU trade policy debate.


In this briefing:

3.EU competences, mixed agreements and the legal basis for Council decisions regarding trade agreements
4. Signature and provisional application
5. Conclusion of trade agreements


In 2015, the EU-28 was the largest global exporter and importer of goods and services, representing 32.51 % of total world trade in goods and services (Source: World Bank data), while the US and China represented 12.01 % and 10.68 % respectively.
The EU has been negotiating trade agreements since the 1970s, back then as the European Communities. Originally focused on European, African, Caribbean and Pacific (ACP) and Mediterranean trade partners, the EU now negotiates with partners on every continent. From the point of view of substance, the content of trade agreements has evolved, from mainly agreements on trade in goods, instituting free trade areas, to agreements including WTO+ commitments1 in a wide range of areas (such as services, intellectual property rights, investment and regulatory cooperation). The EU has started a great number of negotiations in order either to modernise older agreements (such as those with Mediterranean countries and with Mexico and Chile), or to negotiate new bilateral agreements with Asian, Oceanic and North American partners, as well as to advance the multilateral trading system (through the Trade in Services Agreement (TiSA) or the Environmental Goods Agreement (EGA) for instance).
The evolution in the content of trade agreements reflects that of EU competences in trade, but has raised several questions as to whether the more recent agreements fall entirely within EU competence and, consequently, whether ratification at national level is required. Moreover, growing criticism and political debate at national level have raised some procedural issues, such as whether an individual EU Member State can stop EU negotiations, and what happens if one Member State does not ratify a trade agreement.
The procedures for concluding international agreements are mainly set out in Article 218 of the Treaty on the Functioning of the European Union (TFEU). In the case of trade agreements, rules are also to be found in the specific provisions of Article 207 (TFEU) dealing with common commercial policy and any other article mentioned as a legal basis in the Council decisions to sign and to conclude a given trade agreement.

Figure 1: State of play of EU trade relations


Source: European Commission, DG Trade, 2016.

EPRS      EU procedures for conclusion of international trade agreements



 TTIP negotiations: can a single Member State stop the negotiations?

The negotiating directive establishing the Commission negotiating mandate for TTIP was adopted by the Council on 17 June 2013, launching the negotiations. The EU and the USA concluded the 15th round of negotiations in October 2016.

At the end of August 2016, the French minister for foreign trade expressed his government’s wish to request a halt in the TTIP negotiations at the informal Council meeting of 22-23 September. Member States are divided on the issue and 12 Member States clearly expressed their opposition to the French proposal. After the meeting on 23 September, the Slovak Prime Minister declared that the TTIP negotiations would continue but that it was unrealistic to finalise an agreement before the end of US President Barack Obama’s term in office.

The Council can withdraw or suspend the negotiating mandate for a trade negotiation but only on the basis of Article 218 TFEU, which requires a qualified majority (see below for details of the Council’s voting procedure). In general, the Council always tries to take decisions by consensus (i.e. with the agreement of all parties) if the decision concerns shared competences.

Before negotiations begin, the Commission first holds a public consultation and conducts what is known as a scoping exercise. The scoping exercise is a series of informal dialogues with the other country (or countries, if the agreement is inter-regional) on what could be the broad lines of the content of the negotiations between the parties.

If after the scoping exercise the Commission considers it appropriate to open negotiations on a trade agreement with the country/countries, it then makes recommendations to that end to the Council on the basis of Article 207(3) TFEU. The Council must give a green light to the start of the negotiations by adopting a decision on the basis of Articles 207(3) and 218(2) TFEU. The Council also issues a negotiating mandate detailing the area in which the Commission is authorised to negotiate.

Under Article 207(3) TFEU, the Commission is in charge of conducting negotiations, reporting to the Council’s Trade Policy Committee (TPC). The negotiating team is led by a chief negotiator and includes experts covering all the topics of the negotiation. While the Commission’s DG Trade takes the lead, experts may come from other DGs within the Commission. Negotiations are conducted in rounds, but meetings and contacts between lead negotiators and experts continue outside these. In its guide to trade negotiation procedures, the Commission considers the duration of negotiations to be two to three years on average. The negotiations are conducted on the basis of multiple and specific negotiating directives that the Council issues on the basis of Articles 207 and 218 TFEU. These frame the position that the EU must hold during the negotiations.

With TTIP, the Commission began publishing the EU’s text proposals online; these are the EU’s proposals for the drafting of concrete provisions within the various chapters of the agreement. The text proposals that the Commission drafts must be agreed with the Council before they can be tabled for discussions with the other party (parties) to the negotiations.

Often forgotten but fundamental, Article 207(3) makes the Council and Commission jointly responsible for ensuring that the agreement negotiated is compatible with internal EU policies and rules.

The European Parliament’s role in negotiations

While the European Parliament has no formal role in starting and conducting trade negotiations, the TFEU imposes a duty of information: the European Parliament must be informed immediately and fully at all stages of the procedures. Moreover, the fact that the European Parliament has to give its consent at the end of the negotiations, has made it necessary to discuss some EU positions in the negotiations with the European Parliament first, in order for the Commission to verify the existence of political support. The Commission therefore reports regularly to both the European Parliament and the TPC. While it has no legal obligation to do so, Parliament will often signal its political position by issuing a resolution. In the past, the European Parliament has adopted resolutions on the opening of negotiations, either prior to or after the issuing of the negotiating mandate These resolutions give an initial sense of Parliament’s political stance on the negotiations, and set out the main concerns that Parliament wants the Commission to include or exclude from the scope of the negotiations (e.g. the resolution adopted on TTIP in 2013). EP resolutions can be issued during the negotiations in order for Parliament to give the Commission recommendations on the future development of the negotiations (e.g. the resolution adopted on TTIP in 2015). The Commission is not legally bound to follow the EP’s recommendations but given that EP consent is needed to adopt the agreement, it does take them into account when devising the EU positions and discussing them with the Council or the other party.

Ex ante sustainability impact assessments during the negotiations have become the norm for all major multilateral and bilateral EU trade negotiations since 1999, when the EU began incorporating the concept of sustainable development into the definition and planning of its trade policy. Sustainability impact assessments (SIAs) comprise a consultation process and analysis by independent organisations (think-tanks or universities) to assess the potential economic, social, human rights and environmental impacts that a trade agreement could have. SIAs are carried out after the scoping exercise, as the latter defines the scope of the negotiations and will indirectly define the SIA’s coverage.

When negotiations reach the final stage, i.e. parties have agreed in principle on a single text, the European Parliament and Council are informed and legal scrubbing starts to ensure that the text is legally coherent. Some minor changes may still occur at this stage. Once legal scrubbing is complete, the text is initialled, i.e. the chief negotiators from each party place their initials on every page of the agreement to signify that this is the agreed text. Initialling does not amount to the text being legally binding. In order to enter into force an agreement must be signed and ratified. To start such a procedure, the EU needs to define the legal basis for the trade agreement, which determine who has competence in the EU to ratify the treaty.

EU competences, mixed agreements and the legal basis for Council decisions regarding trade agreements

The various types of EU competence and their implications for trade agreements

The EU is based on the principle of conferral; in other words the EU acts within the limits of the competences conferred upon it by the Treaties. There are different types of competence that can influence the way in which procedures for concluding an agreement unfold. These are: exclusive competences,2 shared competences3 and concurrent competences.4 Whenever an international agreement includes shared competences or concurrent competences or Member States’ competences, then the agreement is said to be ‘mixed’. Whenever a trade agreement also contains provisions belonging to shared competences, it is concluded as a mixed agreement. While for agreements falling under exclusive EU competence the EU ratification procedure (explained below) is sufficient to ensure the entry into force of the agreement, mixed agreements must be ratified by EU Member States in accordance with their domestic ratification procedures. Domestic procedures vary from Member State to Member State. In federal Member States, ratification procedures also involve approval by the chamber of the national parliament representing the regions (such as the Bundesrat in Germany) or the approval of the regional and community parliaments (as in the case of Belgium), whenever competences of sub-federal entities are concerned by the agreement. While mixed agreements concluded by the EU and only some EU Member States (called partial or incomplete mixity) do exist, trade agreements concluded as mixed agreements (such as association agreements) require the participation of all Member States.

The evolution of trade competences and recent EU trade agreements

The common commercial policy (CCP), which defines EU trade policy, has always been an exclusive competence of the EU, however the content of the CCP has evolved over time. While services and intellectual property rights were originally considered shared competences, the Lisbon Treaty includes all services and commercial aspects of intellectual property rights within the CCP’s scope (Article 207(1) TFEU).

Article 207(1) TFEU also introduces foreign direct investment to the list of CCP competences. This evolution in the scope of CCP has led the Commission to consider whether it can conclude that some trade agreements focusing on purely commercial matters (including investment provisions) fall under exclusive EU competence. The argument of the Commission is contested by most Member States who consider that those agreements must be concluded as mixed. The main controversy between the Council and the Commission concerns whether investment now falls under exclusive EU competence. On the one hand, Member States consider that CCP covers only foreign direct investment (FDI) and not portfolio investments. However the Commission derives an implicit exclusive competence on portfolio investments from third countries from a rule in the internal market prohibiting the introduction of barriers at Member State level to capital flows and payments from third countries. For that reason the European Commission asked for an opinion of the Court of Justice of the EU (CJEU) to decide on the nature of the EU competence to conclude the EU-Singapore agreement. A hearing has been held and the opinion is expected for either late 2016 or early 2017. The CJEU opinion will formally only affect the EU-Singapore agreement, but could influence the choice of the competence (exclusive or mixed) for other agreements (such as the EU-Vietnam agreement).

The concept of mixity in EU agreements and the choice of legal basis

The decision with respect to the mixed character of an agreement depends on the legal basis given to that agreement, which also defines the main competences involved. When the Commission proposes a Council decision to sign, conclude or provisionally apply a Treaty, it must also propose a legal basis, which will define the nature of the agreement (exclusive or mixed). The legal basis is usually discussed with Member States and it is normally in the Commission’s interests to agree with the Member States on this point.

The Council can always modify the Commission proposal in accordance with Article 293(1) TFEU, which requires unanimity. A proposal can remain blocked if the Council decides not to act. This can happen in situations where the Council is divided on the issue of legal basis (i.e. no unanimity is reached to modify the Commission proposal), and it cannot reach a qualified majority (or unanimity, depending on the procedure required by the legal basis in the original proposal) to pass the act as is. In that case, the Commission can modify its proposal at any time in order to unblock the situation (Article 293(2) TFEU).

 Understanding the political and legal implications of the legal basis: the case of CETA

There were divergent opinions on whether the Comprehensive Economic and Trade Agreement negotiated between the EU and Canada should be concluded as a mixed agreement. The Commission considered that CETA fell under exclusive EU competence as in the case of the EU-Singapore agreement. The Commission was reported therefore to favour the idea of submitting a Council decision on CETA as an EU-only agreement with CCP as the sole legal basis. However, after discussing the matter informally with the Member States, the Commission ultimately decided to submit it as a mixed agreement. (See also: W. Schöllmann, Is CETA a mixed agreement?, EPRS ‘at a glance’ note, July 2016)

Signature and provisional application

Once the Council has adopted the decision to sign the treaty, a date for its signature can be chosen. In practice, for mixed agreements, the EU and the Member States sign the treaty simultaneously. Signature signals the intention to conclude, it does not conclude the agreement as such.

The possibility for an international treaty to apply provisionally under EU law is set out under Article 218(5) TFEU, which provides for the Council decision on provisional application to be taken simultaneously with the Council decision to sign the treaty.

In theory, under Article 218(5) TFEU, the decision on provisional application can take place even before the treaty is concluded at EU level, i.e. before the EP gives its consent and the Council adopts the decision to conclude the treaty in accordance with Article 218(6). However, in practice (since the South Korea FTA),5 provisional application is enforced only after hearing the European Parliament’s position on the agreement or even only after the European Parliament has given its consent to conclusion. Consequently, the Commission normally submits the draft decisions to the Council simultaneously: the draft decision to sign, that to provisionally apply the treaty and one for the conclusion of the treaty.

CETA: provisional application

Provisional application of CETA will be effective from the first day of the month after the parties have notified each other that they have completed the domestic procedures necessary for provisional application. The procedure in the EU is contained in Article 218(5) TFEU. In line with EU practice, the decision on the provisional application of CETA, if adopted by the Council, will be applied only after the EP has taken a position on the agreement.

The main discussions in Council concerning the provisional application of CETA focus on its scope. The draft Council decision on provisional application of CETA, submitted by the Commission, does not refer to any specific provisions, thus provisional application would refer to the whole treaty.

In order to modify the scope of this decision, the Council needs to act by unanimity (pursuant to Article 293(1) TFEU) or has to agree with the Commission that it submit a new proposal for a Council decision. Furthermore, partial provisional application requires the agreement of Canada. Indeed under Article 30(7)(3)(b) CETA, Canada can object to partial provisional application of the treaty and either decide not to allow provisional application of the treaty or to propose unilaterally to exclude equivalent provisions from provisional application.

While a decision on the matter is yet to be reached, a proposal was circulated in the Council on 5 October 2016. This would exclude, inter alia, part of the investment and financial services chapters. It also requires provisional application of sustainable development chapters, as only provisions falling under EU competences, as these do, can be provisionally applied.

The provisional application of mixed agreements negotiated by the EU takes place, however, before the completion of ratification procedures at the Member State level. This makes sense as the entire rationale of provisional application is to allow for application while waiting for the completion of the ratification procedure. However provisional application under Article 218(5) TFEU can only be granted for provisions relating to EU competence and cannot include Member State competences unless all the Member States have agreed to it separately. Decisions on the provisional application of a mixed agreement in its entirety usually include a statement clarifying that Member States have given their agreement with respect to their competences.

Conclusion of trade agreements

For trade agreements, the special procedure under Article 218(6) TFEU is applied. This procedure requires the European Parliament’s consent.6 Once Parliament has given its consent, the Council can then adopt a decision to conclude the agreement following the procedure and voting rules set out in Article 218(6) and Article 218(8) TFEU respectively. As mentioned above, mixed agreements also require the agreement to be ratified at national level by Member States. In the case of mixed agreements, the treaty enters into force only when the non-EU trade partner, the EU and all Member States have exchanged ratification instruments.

Voting procedure in the Council

Voting procedure in Council under Article 218(8) TFEU

EU-Ukraine Association Agreement: provisional application and ratification procedure

The EU-Ukraine Association Agreement, negotiated between 2007 and 2012, has been partly provisionally applied since 2014, while the provisional application of the commercial part of the Association Agreement began on 1 January 2016. The provisional application currently applies only to EU competences. In order to enter fully into force, the EU-Ukraine Association Agreement, being a mixed agreement, requires the ratification procedure to be complete at EU and also at Member State level. At EU level, the EP has given its consent for the Council to conclude the agreement in two different resolutions (one covering treatment of third-country nationals and one covering the other provisions). The Council is waiting for the Member States to finalise the ratification process in order to formally adopt its decision on the conclusion of the agreement. All Member States, with the exception of the Netherlands, have ratified the Treaty.

The Netherlands held an advisory referendum on the EU-Ukraine Association Agreement on 6 April 2016, which yielded a negative result (over 61 % of the voters rejected the ratification of the Association Agreement (AA) between the EU and Ukraine, though turnout was low, at only 32 %). The referendum was an advisory referendum and as such has not put an end to the ratification procedure in the Netherlands. However, should the Netherlands notify its intention not to ratify the agreement, this would then signify that the EU-Ukraine Association Agreement could not enter into force in its present form. Under Article 25 of the Vienna Convention on the Law of Treaties, provisional application can only remain pending the entry into force of a treaty. If ratification fails and entry into force of the treaty becomes impossible, provisional application would also have to be lifted. Suspension of the provisional application would have to be carried out in accordance with Article 218(9) TFEU and the notification procedure under Article 486(7) of the EU-Ukraine Association Agreement. As has been done in the past, the Commission could argue on the basis of the duty of cooperation that the provisional application, which concerns EU competences only, should be maintained in order to allow renegotiation and to find a mutually acceptable solution.

The voting rule for Council decisions is contained in Article 218(8) TFEU. It refers to the Council voting procedure throughout the entire process of negotiating and concluding international agreements under Article 218 TFEU. These voting rules therefore apply equally to Council decisions taken pursuant to Article 218(5) TFEU in order to sign and provisionally apply a treaty, and to Council decisions taken pursuant to Article 218(6) TFEU to conclude an agreement. Although in practice the Council tries to take all decisions regarding shared competences on the basis of the ‘common accord’ of all Member States (i.e. by consensus), the voting procedure under the TFEU does not depend on the nature of the agreement but on the competences and legal basis upon which the agreement is adopted.

Article 218(8) TFEU states that qualified majority must be used throughout international agreement negotiation and conclusion procedures. There are some exceptions to this qualified majority rule; these include the following situations or agreements.

  • Fields for which unanimity is required for the adoption of a Union act: Any measure which requires unanimity for the purpose of EU internal legislation, will also require unanimity for any decisions taken under Article 218 TFEU. In practice, this rule provides for parallel decision-making on external policy and EU internal legislative procedures. This rule on parallelism ensures that the EU internal legislation procedure requiring   unanimity   for   certain   measures   is   not circumvented by the conclusion of similar measures within an international agreement under Article 218 TFEU.
  • Association agreements
  • Agreements referred to in Article 212 TFEU (i.e. economic, financial and technical cooperation arrangements) with states that are candidates for accession
  • Accession of the Union to the European Convention for the Protection of Human Rights and Fundamental Freedoms.7

The parallel internal and external decision-making provided for under Article 218(8) TFEU requires analysis of all fields mentioned in the legal basis chosen for the decisions to sign and conclude the agreement in order to understand which voting rule applies.

The trade legal basis under Article 207 TFEU and its voting procedure

The relevant rules for common commercial policy agreements and measures always include Article 207(4) TFEU (in addition to other legal bases, such as the transport legal basis in CETA). Article 207(4) TFEU normally requires qualified majority but it specifies that the Council must take its decision by unanimity for the following measures.

  • In the field of trade in services and the commercial aspects of intellectual property, as well as foreign direct investment, where such agreements include provisions for which unanimity is required for the adoption of internal rules: this is another formulation of the parallelism between internal and external decision-making procedures in order to avoid circumvention of unanimity in the internal rules via external relations agreements. However, the impact of this provision may be rather limited. There are few internal legal bases requiring unanimity in these fields. Article 118 TFEU requires unanimity only for regulations establishing language arrangements for European intellectual property rights, whereas qualified majority remains the rule under the same Article 118 TFEU for measures establishing the creation of measures for the ‘uniform protection of intellectual property rights throughout the Union and for the setting up of centralised Union-wide authorisation, coordination and supervision arrangements’.8 Other internal market provisions requiring unanimity include: Article 113 TFEU on tax harmonisation, Article 115 TFEU on approximation of laws and Article 64(2) TFEU on the introduction of restrictions to capital movements.9 If the agreement in question incorporates provisions covering one of these types of measure then unanimity will be required.
  • Unanimity is also required for EU actions in the field of trade in cultural and audiovisual services where there is a risk of prejudicing the Union’s cultural diversity. Again this provision has a rather limited impact on the conclusion of trade agreements. Unanimity only applies if there are measures related to trade in cultural and audiovisual services and where there is risk of prejudicing the Union’s cultural The EU has sometimes omitted the field of cultural and audiovisual services from negotiations in its entirety (exception culturelle) as is the case for TTIP (where the audiovisual sector is excluded from the negotiating mandate). Other agreements include a protocol on cultural cooperation aiming for instance to implement, in the context of those agreements, the Unesco Convention on the Protection and Promotion of the Diversity of Cultural Expressions. Still, even in those agreements where provision is made for cultural cooperation, cultural and audiovisual services are carved out from the services commitments or are included in specific reservations so that there can be no risk of prejudicing cultural diversity.
  • Unanimity is also required for EU actions in the field of trade in social, education and health services where there is a serious risk of disturbing the organisation of these services at national level. These social, education and health services are subject to several reservations in the Treaties so as to prevent trade agreement commitments from having any negative impact on them.

Main references

Devuyst, Youri, ‘European Union Law and Practice in the Negotiation and Conclusion of International Trade Agreements’, Journal of International Business and Law, 12: 259 (2013)
Eeckhout, Piet, EU External Relations Law, Oxford University Press, 2011
Hillion, Christophe, Koutrakos, Panos, Mixed Agreements Revisited, Hart Publishing, 2010
Koutrakos, Panos, EU International Relations Law, Hart Publishing, 2015Endnotes
1 WTO+ commitments are commitments in trade agreements that go beyond those made at the WTO. In some literature a distinction is made between commitments in trade agreements that extend liberalisation commitments already existing at WTO level (WTO+) and commitments that deal with issues not covered by WTO law (WTO extra).
See: H. Horn, P. C. Mavroidis and A. Sapir, ‘EU and US Preferential Trade Agreements’, in Preferential Trade Agreements: A Law and Economics Analysis, Kyle W. Bagwell, Petros C. Mavroidis (eds), Cambridge University Press, 2011.
2 Exclusive competences of the EU signify a complete transfer of competences from the Member States to the EU; the existence of an EU exclusive competence means that Member States cannot act on their own unless an EU regulation allows for Member State actions.
3 Shared competences are competences that fall within the remit of both the EU and the Member States. EU action in these competences pre-empts any action on the part of the Member States, in other words, Member States cannot act unilaterally if action is being undertaken at EU level.
4 Concurrent competences are EU competences to support, coordinate or supplement Member States’ action; these EU competences co-exist with Member States’ competences.
5 Youri Devuyst, ‘The European Parliament and International Trade Agreements: Practice after the Lisbon Treaty’, in The European Union in the World: Essays in honour of Marc Maresceau, I. Govaere, E. Lannon, P. Elseweghe and S. Adam (eds), Martinus Nijhoff Publisher, 2014.
6 Parliament gives its consent in accordance with Rules 108 and 99 of its Rules of Procedure.
7 The Court of Justice of the European Union issued an opinion in 2014 on the draft agreement for EU accession to the ECHR, considering it not in line with EU law.
8 On the relevance or not of this provision to the decision-making procedure under Article 218(8) TFEU, see C Pitschas, ‘Economic Partnership Agreement and EU trade policy: objectives, competences, and implementation’, in J. Drexl, EU bilateral trade agreements and intellectual property for the better or worse, H. Grosse, R. Khan, S. Nadde-Phlix (eds)
Springer, 2013, p. 222.
9 See also: Panos Koutrakos, EU International Relations Law, Hart Publishing, 2015, p. 135.

Disclaimer and Copyright The content of this document is the sole responsibility of the author and any opinions expressed therein do not necessarily represent the official position of the European Parliament. It is addressed to the Members and staff of the EP for their parliamentary work. Reproduction and translation for non-commercial purposes are authorised, provided the source is acknowledged and the European Parliament is given prior notice and sent a copy.
© European Union, 2016. Photo credits: © gustavofrazao / Fotolia. (intranet) (internet) (blog)

Worth reading : The text of the CETA Agreement and of the EU-Canada Joint Declaration

NOTA BENE : The Council adopted the Decisions authorising the signature and provisional application of CETA between the European Union and its Member States and Canada and agreed to forward the agreement to the European Parliament for its consent. The Council agreed that, pursuant to Article 1.2 of the Council Decision on provisional application, the date by which the notification referred to in Article 30.7(3) of the Agreement is to be sent to Canada shall be 17 February 2017, provided that the European Parliament has given its consent to the Agreement.

The negotiations on the Strategic Partnership Agreement (SPA) between the European Union and its Member States, of the one part, and Canada, of the other part, were successfully concluded with the initialling of the Agreement on 8 September 2014. On 13 April 2015, the Commission and the High Representative for Foreign Affairs and Security Policy submitted a joint proposal for a Council Decision on the signing, on behalf of the European Union, and provisional application of the Agreement (Doc. 7906/15 + ADD 1) The Transatlantic Relations Working Party (COTRA) discussed the draft Council Decision on numerous occasions in 2015 and 2016, in particular the scope of provisional application of the Strategic Partnership Agreement (SPA). As no consensus could be obtained either on the original proposal or on a proposal for a “category approach”, which aimed at an ambitious and flexible provisional application of the Agreement, the COTRA Working Party agreed to revert to the usual “list approach” for provisional application, whereby those articles to be provisionally applied are expressly listed in the Council Decision.

On 7 September 2016, the Permanent Representatives’ Committee reached an agreement on the text of the draft Council Decision on the signing and provisional application of the Agreement. The text of the Strategic Partnership Agreement (SPA) between the European Union and its Member States, of the one part, and Canada, of the other part, as finalised by the legal-linguistic experts, is set out in doc. 5368/2/16 REV 2  (SEE BELOW)

At the time of the signature the following Joint Decalaration has been adopted

Continue reading

‘I Travel, therefore I Am a Suspect’: an overview of the EU PNR Directive

ORIGINAL PUBLISHED ON  EU Immigration and Asylum Law and Policy BLOG

By Niovi Vavoula, Queen Mary University of London

According to the PNR (Passenger Name Record) Directive 2016/681 of 27 April2016, a series of everyday data of all air passengers (third-country nationals but also EU citizens, including those on intra-Schengen flights) will soon be transferred to specialised units to be analysed in order to identify persons of interest in relation to terrorist offences and other serious crimes. This new instrument raises once again fundamental rights challenges posed by its future operation, particularly in relation to privacy and citizenship rights. Therefore, the story of the PNR Directive, as described below, is probably not finished as such concerns open up the possibility of a future involvement of the Court of Justice.

1. The story behind the EU PNR System

In the aftermath of 9/11 and under the direct influence of how the terrorist attacks took place, the US legislature established inextricable links between the movement of passengers, ‘border security’ and the effective fight against international terrorism. Strong emphasis was placed on prevention through pre-screening of passengers, cross-checking against national databases and identification of suspicious behaviours through dubious profiling techniques. At the heart of this pre-emptive logic has been the adoption of legislation obliging airlines flying into the US to provide their domestic authorities with a wide range of everyday data on their passengers. These so-called PNR data constitute records of each passenger’s travel arrangements and contain the information necessary for air carriers to manage flight reservations and check-in systems. Under this umbrella definition, a broad array of data may be included: from information on name, passport, means of payment, travel arrangements and contact details to dietary requirements and requests for special assistance. Amidst concerns regarding the compliance of such mechanisms with EU privacy and data protection standards, this model was internalized at EU level through the conclusion of three PNR Agreements with the US – one in 2004, which wasstruck down by the CJEU in 2006, and others in 2007 and 2012. In addition, PNR Agreements with Canada (currently awaiting litigation before the CJEU) andAustralia have also been adopted.

The idea of developing a similar system to process EU air travel data had been on the agenda for almost a decade, particularly since the EU-US PNR Agreements contain reciprocity clauses referring to the possibility of the EU developing such systems. The first proposal for a Framework Decision dates back to 2007. However, no agreement was reached until the entry into force of the Lisbon Treaty. A revised proposal was released in 2011, essentially mimicking the EU-US PNR model, at least as regards the types of data to be processed and the focus on assessing the risks attached to passengers as a mean of preventing terrorist attacks or other serious crimes. In comparison to the proposed Framework Decision it constituted an improvement (for instance, it provided for a reduced retention period and prohibited the processing of sensitive data), yet it was met with great scepticism by a number of EU actors, including the European Data Protection Supervisor, the Fundamental Rights Agency and the Article 29 Working Party who argued that it failed to respect the principles of necessity and proportionality. Eventually, the proposal was rejected by the European Parliament on fundamental rights grounds, but the voting was postponed and the proposal was transferred back to the LIBE Committee.

The EU PNR project was brought back to life after the Charlie Hebdo events in January 2015. In the extraordinary JHA Council meeting of 20 November, immediately after the Paris terrorist attacks, the Council reiteratedthe urgency and priority to finalise an ambitious EU PNR before the end of 2015’. Indeed, on 4 December 2015 a compromise text was agreed. A few days later, the Council confirmed the agreement, but the Parliament did not give its blessing until April 2016, presumably in the light of the negotiations on the Data Protection legislative reforms, which were running in parallel. The fact that the legality of the EU-Canada PNR Agreement was disputed did not affect the course of the negotiations.

2. The EU PNR Directive in a nutshell

The EU PNR Directive places a duty on airline carriers operating international flights between the EU and third countries to forward PNR data of all passengers (as set out in Annex 1) to the Passenger Information Unit (PIU) established at domestic level for this purpose (Article 4). According to Article 2 of the Directive, Member States are given the discretion to extend the regime set out in the Directive to intra-EU flights, or to a selection of them (for a discussion see Council Documents 8016/11 and 9103/11, partly accessible). Perhaps unsurprisingly, all participating Member States have declared their intention to make use of their discretion.

Once transmitted, the data will be stored and analysed by the PIU. The purpose of this is to ‘identify persons who were previously unsuspected of involvement in terrorism or serious crime’ and require further examination by the competent authorities in relation to the offences listed in Annex II of the Directive. Contrary to the Commission’s assertions that PNR data will be used in different ways – reactively, pro-actively and in real-time – the focus on prevention is central. The analysis entails a risk assessment of all passengers prior to their travel on the basis of predetermined criteria to be decided by the respective PIU and possibly involving cross-checking with existing blacklists (Article 6(3)).

Furthermore, the PIUs will respond to requests by national authorities to access the data on a case-by-case basis and subject to sufficient indication (Article 6(2(b)). Nevertheless, processing should not take place on the basis of sensitive data revealing race, ethnic origin, religion or belief, political or any other opinion, trade union membership, health or sexual orientation etc. (Recital 20). According to Article 12, the initial retention period is six months, after which PNR data will be depersonalised, meaning that the PIU is entrusted with the task of masking out the names, address and contact information, payment information, frequent flyer information, general remarks and all API data. This process should not be confused with anonymisation, as the data could be re-identifiable and may still be used for criminal law purposes under ‘very strict and limited conditions’ (Recital 25). Therefore, upon expiry of the six-month retention period, disclosure of the full PNR data is permitted if so approved by a judicial authority or another national authority competent to review whether the conditions have been met and subject to information and ex post review by the Data Protection Officer of the PIU (Articles 12(3) and 5).

3. Privacy and surveillance of movement

The challenges that the development of the EU PNR system poses to the protection of privacy and data protection rights are acute. In essence, as with thePNR Agreements, the Directive allows the systematic, blanket and indiscriminate transfer, storage and further processing of a wide range of personal data of millions of travellers from and to the EU. Drawing from Digital Rights Ireland and the recent opinion of AG Mengozzi on the EU-Canada PNR Agreement, the interference with the rights to privacy (Article 7 EUCFR and 8 ECHR) and data protection (Article 8 EUCFR) is particularly serious. On the basis of the data collected, which include biographic information, credit card details and contact information, law enforcement authorities shall be able to compile a rather complete profile of travellers’ private lives.

The involvement of the private sector in the fight against terrorism and serious crime is considerably extended, particularly if one takes into account that the obligations on air carriers are extended to non-carrier economic operators (e.g. travel agencies). In addition, the inclusion of intra-EU flights within the scope of the Directive significantly expands the reach of surveillance. Indeed, back in 2011, it was noted that intra-EU flights represent the majority of EU flights (42%) followed by international flights (36%), and only 22% of flights operate within a single Member State (Council Document 8016/11). In this framework, the movement of the vast majority of travellers, including EU citizens, is placed under constant monitoring, irrespective of the fact that they are a priori innocent and not suspected of any criminal offence. In fact, the operation of the PNR scheme signifies the reversal of the presumption of innocence, whereby everyone is deemed as a potential security risk, thus necessitating their examination in order to confirm or rebut this presumption. Besides, there is no differentiation between flights transporting persons at risk and others.

Furthermore, the risk assessment will take place in a highly obscure manner, particularly since the Directive fails to prescribe comprehensively and in detail how the data will be analysed. The underlying rationale is the profiling of all passengers and the identifying of behavioural patterns in a probabilistic logic, but nowhere in the Directive it is indicated that this is indeed the case. This lack of clarity raises concerns considering that the recently adopted Data Protection Directive includes a definition of profiling (Article 3(4)). Moreover, it is stated that ‘relevant databases’ may be consulted, however, it is not clear which these are. For instance, a possible examination on a routine basis of the databases storing asylum seekers’ fingerprints’ or visa applicants’ data (Eurodac and VIS respectively) will frustrate their legal framework, resulting in a domino effect of multiple function creeps. It may even grow the appetite for Member States to desire the systematic processing of EU nationals’ personal data in centralised databases in the name of a more ‘efficient’ fight against terrorism.

This ambiguous modus operandi of PIUs may even call into question the extent to which the interference with privacy is ‘in accordance with law’ (Article 8(2) ECHR) or in EU terms ‘provided for by law’ (Article 52(1) EU Charter). According to settled case law of the ECtHR, every piece of legislation should meet the requirements of accessibility and foreseeability as to its effects (Rotaru v Romania). The lack of clear rules as to how the processing of data will take place may suggest that travellers cannot foresee the full extent of the legislation.

Another contested issue is the ambiguous definitions of terrorism and serious crimes at EU level. The offences falling under the remits of terrorism are currently revised, which had led to criticism for lack of clarity, whereas the definition of serious offences (acts punishable by a custodial sentence or detention order of a maximum period of three years or longer) constitutes a relatively low threshold, particularly in those Member States where domestic criminal law allows for potentially long custodial sentences for minor crimes. In addition, as regards the conditions of access by national competent authorities, the requirement that the request must be based on ‘sufficient indication’ seems to falls short of the criteria established in Digital Rights Ireland. The threshold is particularly low and may lead to generalised consultation by law enforcement authorities, whereas it is uncertain who will check that there is indeed sufficient indication. As for the offences covered by the scope of the Directive, although Annex II sets out a list in this regard, PNR data could still be used for other offences, including minor ones, when these are detected in the course of enforcement action further to the initial processing.

Moreover, in relation to the period for which the data will be retained, it appears that the EU institutions by no means have a clear understanding of what constitutes a proportionate retention period. For instance, the 2007 proposal envisaged an extensive retention period of five years, after which time the data would be depersonalised and kept for another eight years, whereas the 2011 proposal prescribed a significantly reduced initial retention period of 30 days, after which the data would be anonymised and kept for a further period of five years. In its General Approach (Council Document 14740/15), the Council called for an extension of the initial retention period to two years, followed by another three years of storage for depersonalised data. A more privacy-friendly approach can be found in an Opinion of the Council Legal Service dating from 2011, according to which the data of passengers in risky flights would be initially retained for 30 days and then be held for an overall period of six months (Council Document 8850/11in German). Some Member States supported a retention period of less than 30 days (Council Document 11392/11). Although it is welcomed that there are two sets of deadlines and, more importantly, that re-personalisation may take place only under limited circumstances. However, there is no indication of why the chosen retention periods are proportionate. Furthermore, an approach suggesting a differentiation between flights at risk or not at risk, with different retention periods, seems more balanced.

4. Free movement and citizenship concerns

In addition to the privacy challenges highlighted above, another point of concern is whether the processing of PNR data, including on intra-EU flights, could infringe free movement enjoyed by EU citizens. In this respect, the Commission Legal Service found that the EU PNR does not obstruct free movement (see Council Document 8230/11, which is partially available to the public, although the outcome of the opinion is attested in Council Document 8016/11). Nonetheless, the Parliament managed to include a reference that any assessments on the basis of PNR data shall not jeopardise the right of entry to the territory of the Member States concerned (in Article 4). The extent to which this reference is sufficient is doubtful.

According to Article 21 of the Schengen Borders Code, police controls performed in the territory of a Member State are allowed insofar as they do not have the equivalent effect of border control. Such an effect is precluded when, inter alia, the checks are carried out on the basis of spot-checks. In Melki, the CJEU found that ‘controls on board an international train or on a toll motorway’ limiting their application to the border region ‘might (…) constitute evidence of the existence of such an equivalent effect’ (para 72). By analogy, the focus on controls at the border area to the systematic manner set out in the directive, could have the equivalent effect of a border check. The lack of any differentiation between flights at risk or not at risk (an approach that was also favoured by the Council Legal Service, Council Document 8850/11) and the fact that member States are left entirely free to determine the extent to which they monitor flights to and from other Member States could enhance the risk of falling into the category of controls with an equivalent effect to border control.

5. Conclusion

The EU PNR Directive is yet another example of how the counter-terrorism rhetoric outweighs serious fundamental rights concerns in the name of ensuring security. The storyline is well-known: after a terrorist attack, numerous ideas – either incorporated in legislative proposals that have stalled or which were ultimately too ambitious and controversial to be presented in the first place – feature on the EU agenda. The EU PNR initiative was buried due to privacy concerns and was brought back from the dead when the circumstances matured. Soon national law enforcement authorities will put their hand into the passengers’ data jar and will deploy their surveillance techniques on an unprecedented and unpredictable scale.

By internalising US standards, the EU puts the privacy of individuals under threat. The new instrument does no longer target third-country nationals only, but also EU citizens, thus marking the end of an era where instruments were used ‘solely’ on foreigners. Undoubtedly, there is a strong ‘momentum’ for justifying mass surveillance practices. In waiting for the ruling on the EU-Canada PNR Agreement, as well as the ruling on Tele2 Sverige (following up on Digital Rights Ireland), one can only hope that the CJEU will uphold its inspiring reasoning and reiterate the important limits placed on deploying surveillance practices, by giving proper weight to the fundamental right to the protection of personal data.