Brexit negotiations just got more complex

16 May 2017

 

After Theresa May accused European leaders of interfering with the UK election you may have thought Brexit negotiations could not get much harder but news today may have achieved that. The European Court of Justice ruled on Tuesday that ruled that trade agreements, in particular a deal with Singapore that the EU is conducting currently, must be ratified by national and regional parliaments.

 

Prior to this ruling trade deals could be, and in the Singapore case was due to be, ratified by council level officials in Brussels and those in the European Parliament. Instead trade deals must now go out to, and be approved by, 38 national and regional parliaments before coming in to force.

 

The decision was made because the ECJ ruled that wide ranging trade deals, such as the EU-Singapore deal that this ruling will effect immediately, would affect powers that national governments and parliaments control and therefore deserve a say in any deal.

 

Requiring Regional Ratification

 

Although this particular ruling relates most closely to the trade deal between the EU and Singapore which was agreed in 2014 but must now be voted through by regional parliaments. This is not the first trade deal which regional parliaments will have their say on as famously the EU-Canada deal was almost derailed by the Belgian region of Wallonia who threatened to vote it down until an amendment was added. Any EU deal with the UK is likely to be on a similar, if not larger, scale to the Canada trade deal which puts in to context the amount of time and complexity any trade talks face which is before taking in to account today's ruling. 

Source: BBC/Reuters

 

This new ruling will mean that it is highly likely that any future UK-EU trade deal would face the same sizable task of being voted on by parliaments in all EU member states. This could mean having to compromise or add amendments on to the deal to suit local regions or areas of Europe which will not only slow the deal but has the potential to even derail it, in a similar manner to the CETA deal in Wallonia.

 

Whether this plays in to the narrative that Theresa May it attempting to utilise in that she requires a big mandate to enter in to the negotiations is debatable. It could potentially downplay that narrative given that the deal now rides on 38 parliaments as above to just the UK or European houses although any obstacles so far in relation to Brexit has only seemed to improve Theresa May’s standing.

 

Silver Lining

 

The silver lining to this ruling by the ECJ is that they also declared the EU has “exclusive competence” to ratify trade deals in a number of specific areas including transport, labour and environmental standards. The Singapore deal needs EU-wide approval in only two areas, non-direct foreign investment and dispute settlements, although disagreements on these areas could still potentially hold up a deal of any size.

 

The positives from this deal were jumped upon by some observers. The head of EU and trade policy at the Institute of Directors, Allie Renison, told City AM; ““This ruling will likely make it easier for the EU to conclude trade deals without fear of as many hold-ups from national and sub-national legislatures.”

 

Theresa May and Brexit officials had been on record in hoping for a ‘bold and ambitious’ trade deal for the UK within the two years of negotiations. The precedent that this ruling sets makes that hope even more unlikely, especially if the CETA deal is used an example which took seven years to agree only for the Wallonia region to almost derailed it. If officials and politicians were in any doubt over the difficulty of Brexit negotiations this ruling should be a timely reminder before talks officially begin.

 

 

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