Abstract
This chapter examines the evolution of the law and practice governing the signature and conclusion of trade and investment agreements in the EU. It argues that the 2001 Laeken Council objective to enhance the legitimacy of the European Union (EU) through “more democracy, transparency, and efficiency” can only be achieved by changing the modus operandi for EU economic treaty making from “mixed” to “EU-only” governance. The formal reform of EU exclusive competence for common commercial policy (CCP) through the 2009 Lisbon Treaty and the recent clarification of the material scope of the CCP by the Court of Justice of the European Union (CJEU) in Opinion 2/15 only make for one of the necessary conditions to this end. Abandoning the traditional Council practice of unanimous decision-making and member states” ratification in their own right in favor of qualified majority voting (QMV) in the Council is incentivized by the coincidence of a powerful commercial and political demand for the success of the Union’s external economic agenda, on the one hand, and the existence of a credible threat thereto, on the other hand. The threat to progress in the agenda for EU economic treaty making is epitomized by member states’ frequent exercise of “vetocracy” in the Lisbon era. The subordination of member states’ legislatures to EU exclusive governance of economic treaty making is, finally, rendered possible through democratic input legitimation at the EU level, which is now provided by the European Parliament in an increasingly effective manner. The chapter advances a normative claim for the accomplishment—and gives empirical evidence for the existence—of a new “legal-political equilibrium” in EU external economic governance, which develops as a result of the coincidence of the before-mentioned factors. In this new legal-political equilibrium, political transactions are shifted to a treaty-making modus operandi, which minimizes transaction costs of CCP governance, alters the configuration of institutionalized sources of democratic legitimacy, and enhances democratic representation at the same time.
David Kleimann (PhD, MILE, LL.M) is a Consultant in the field of International and European Economic Law. The author is infinitely grateful for comments received from the editor of this volume. Remaining errors are the author’s alone.
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Notes
- 1.
European Council (2001).
- 2.
In 2011, Markus Krajewski noted that “the results of the EU reform process reached by the Lisbon Treaty, must be primarily assessed according to whether they have contributed towards an improvement in the transparency, efficiency and democratic legitimation of the Union. These aims which were set down by the European Council in the Laeken Declaration are the ‘raison être’ of the Lisbon Treaty.” Krajewski (2013), pp. 67–68.
- 3.
Weiler (1991), p. 2416.
- 4.
Weiler (1991), p. 2429.
- 5.
Most importantly: Case C-414/11, Daiichi Sankyo Co. Ltd and Sanofi-Aventis Deutschland GmbH v DEMO Anonimos Viomikhaniki kai Emporiki Etairia Farmakon, EU:C:2013:520 (2013). Case C-137/12, Commission v. Council (Conditional Access Convention), EU:C:2013:675 (2013). Opinion 2/15, FTA with Singapore, ECLI:EU:C:2017:376 (2017). Opinion 3/15, The Marrakesh Treaty EU:C:2017:114 (2017).
- 6.
Dür presents empirical evidence on the coincidence between societal demands and the EU’s position in trade negotiations, which is explained through “first rate access to decision-makers on trade policy issues”. Dür (2008), pp. 27–45. Moreover, Dür et al. show that both business and citizen groups enjoy considerable influence in EU legislative politics. Dür et al. (2013), pp. 951–983.
- 7.
European Commission (2006).
- 8.
European Commission (2010).
- 9.
European Commission (2015).
- 10.
For a transposition of the transaction cost theory of economic markets onto political markets, see North (1990), pp. 355–367. The “transaction cost approach to politics offers the promise both of better analytical understanding of the political choices made at an instant of time and an explanation for the differential performance of polities and economies over time. It does so, because the level of transaction costs is a function of the institutions employed. And not only do institutions define the incentive structure at a moment of time; their evolution shapes the long run path of political/economic change.” North (1990), p. 362.
- 11.
Kleimann (2017b).
- 12.
Komesar (1994).
- 13.
Tsebelis (1995), p. 313.
- 14.
Mansfield et al. (2008), pp. 67–96.
- 15.
Mansfield et al. (2007), pp. 403–432.
- 16.
O’Reilly (2005), pp. 652–675.
- 17.
Mansfield et al. (2007), p. 432.
- 18.
Weiler (1991), p. 2461.
- 19.
As of March 29, 2019, presumably: 27.
- 20.
Kleimann (2011), pp. 243–244.
- 21.
Kleimann and Kübek (2016).
- 22.
In his submission in the Opinion 3/15 proceedings, Advocate General Wahl recalled that “the choice between a mixed agreement or an EU-only agreement, when the subject matter of the agreement falls within an area of shared competence (or of parallel competence), is generally a matter for the discretion of the EU legislature. That decision, as it is predominantly political in nature, may be subject to only limited judicial review.” (Opinion 3/15: Opinion of the Advocate General Wahl. para 119, 120) Such discretion, however, is subject to procedural rules laid down in Article 218 TFEU: The Commission may propose the signing and conclusion of an external agreement as ‘EU-only’. Member states represented in the Council can then decide to authorize the signature and conclude the treaty as an EU-only agreement by qualified majority voting (QMV), if TFEU-based unanimity requirements do not apply. Alternatively, the Council may adopt a unanimous decision to amend the Commission proposal for an ‘EU-only’ agreement and mandate the independent ratification by each and every member state—in addition to the Council decision on treaty signature and conclusion (Article 293(1) TFEU). The Court’s wording in Opinion 2/15 (paras 244, 292) cast doubts over the prevalence of the theory of ‘facultative mixity’. See, for instance: Ankersmit (2017). The Court, however, re-affirmed the political discretion of the Council to adopt facultative ‘EU-only’/‘mixed’ agreements in C-600-14, Germany v. Council (ECLI:EU:C:2017:935), para 68.
- 23.
Baldwin (2011), p. 3.
- 24.
The original version of CCP Article 113(1) of the 1957 Treaty Establishing the European Community reads: “The common commercial policy shall be based on uniform principles, particularly in regard to changes in tariff rates, the conclusion of tariff and trade agreements, the achievement of uniformity in measures of liberalisation, export policy and measures to protect trade such as those to be taken in the event of dumping or subsidies.”
- 25.
For a contextualization of Amsterdam Treaty amendments in ECJ jurisprudence and treaty negotiation see: Cremona (2001).
- 26.
For a comprehensive discussion of the Nice treaty amendments, see Herrmann (2002), pp. 7–29.
- 27.
Krajewski (2012).
- 28.
Opinion 1/78, International Agreement on Natural Rubber, ECLI:EU:C:1979:224 (1979). para 44.
- 29.
The impracticality of joint EC and member state negotiation and conclusion of services and intellectual property agreements with third parties prompted member states’ governments to insert, as part of the reforms mandated by the 1997 Treaty of Amsterdam, paragraph 5 into Article 113 EC Treaty. The provision enabled the Council, acting by unanimity, to mandate the Commission to negotiate services and intellectual property agreements on behalf of the Community on an ad hoc basis.
- 30.
The 2001 Treaty of Nice substantially redrafted paragraph 5 of Article 113 in the succeeding Article 133 and listed, in a new paragraph 6, certain services sectors, in which the EC and member states explicitly shared competences—notably audiovisual, cultural, social, education and health services. ECJ Opinion 1/08 affirmed member states’ rights of participation and external representation with regard to agreements with third countries that contain provisions governing these services. Opinion 1/08, GATS Schedules, ECLI:EU:C:2009:739 (2009).
- 31.
The transfer of external competence for foreign direct investment jeopardized the TFEU compatibility of more than 1000 member states’ bilateral investment treaties (BITs) and hence resulted in considerable legal uncertainty for both member states and their external BIT partner countries. In July 2010, the Commission tabled a legislative proposal that provided for a transitional solution to problems associated with the transfer of FDI competence. European Commission (7 July 2010): Proposal for a Regulation of the European Parliament and the Council establishing transitional arrangements for bilateral investment agreements between member states and third countries (COD 2010/0197). In 2012, the Council and the Parliament adopted the proposal. The regulation grandfathers existing BITs by authorizing member states to leave national agreements in force in order to guarantee legal certainty, while obliging member states to bring these treaties into conformity with the regulation where necessary. The regulation also authorizes member states, subject to Commission approval, to negotiate individual BITs and envisages the formulation of a comprehensive EU investment policy at a later stage. Regulation of the European Parliament and of the Council of 12 December 2012 establishing transitional arrangements for bilateral investment agreements between Member States and third countries (L 351/40).
- 32.
Cremona (2001), p. 6.
- 33.
Request for an opinion submitted by the European Commission pursuant to Article 218(11) TFEU (Opinion 2/15) (2015/C 363/22), November 3, 2015.
- 34.
- 35.
Opinion 1/94, WTO Agreement, EU:C:1994:384 (1994).
- 36.
Cremona (2001), pp. 6, 20.
- 37.
Article 3(2) TFEU.
- 38.
Opinion of Advocate General Sharpston delivered on 21 December 2016; Opinion Procedure 2/15 initiated following a request made by the European Commission. para 566. This view mirrors the general stance of the ECJ, as expressed elsewhere, such as Opinion 1/94: para 107 and Opinion 2/00: para 41.
- 39.
It is far beyond the scope of this chapter to discuss this matter here. It may suffice to refer to Koskenniemi (1999).
- 40.
Further argued in detail here: Kleimann (2017a).
- 41.
Ibid.
- 42.
Opinion of AG Sharpston: para. 268.
- 43.
Ibid.: para 370.
- 44.
Ibid.: para 502.
- 45.
The AG opined that “the European Union has no competence to agree to Article 9.10(1) of the EUSFTA”, which provides that existing EU Member States’ bilateral investment treaties with Singapore “cease to have effect and shall be replaced and superseded” by the EUSFTA. Opinion of AG Sharpston. para 396.
- 46.
For a first analysis of Opinion 2/15 see: Kleimann and Kübek (2017).
- 47.
By inference, in conclusion, Opinion 2/15: para 305.
- 48.
“[A] European Union act falls within the common commercial policy if it relates specifically to international trade in that it is essentially intended to promote, facilitate or govern trade and has direct and immediate effects on trade.” Case C-414/ 11 (Daiichi Sankyo v DEMO) para 51; C-411/06 (Commission vs Parliament and Council) para 71; C-347/03 (Regione autonoma Friuli-Venezia Giulia and ERSA) para 75.
- 49.
The (added) final sentence of Article 207(1) TFEU reads: “The common commercial policy shall be conducted in the context of the principles and objectives of the Union’s external action.”
- 50.
Opinion 2/15: paras 147, 157.
- 51.
For instance, Case C-377/12 (Commission vs. Council) para 34.
- 52.
Opinion of AG Sharpston: para 456.
- 53.
Ibid.: paras 244–246.
- 54.
Opinion 2/15: paras 129; 216–217.
- 55.
C-22/70 (Commission vs Council) para 17.
- 56.
Opinion 2/15: para 192.
- 57.
Ibid.: para 235.
- 58.
Ibid.: para 239.
- 59.
Ibid.: para 292.
- 60.
Kleimann and Kübek (2016).
- 61.
Financial Times (2016).
- 62.
- 63.
EU External Trade Commissioner Cecilia Malmström confirmed respective reports with regard to the EU-Japan Economic Partnership Agreement (JEEPA) in her presentation to the INTA Committee on January 23, 2018.
- 64.
[Unofficial] European Council (2018), para 5.
- 65.
Ibid.: para 5.
- 66.
Ibid.: para 6.
- 67.
Ibid.: para 7.
- 68.
Krajewski (2013), pp. 81–82.
- 69.
Woolcock (2008), p. 5.
- 70.
Krajewski (2013), p. 69.
- 71.
Ibid., p. 69.
- 72.
Jancic (2017), p. 209.
- 73.
Mayer (2016).
- 74.
Kleimann and Kübek (2016), pp. 25–26.
- 75.
Ibid., pp. 22–24; Cf. van der Loo and Wessel (2017), pp. 735–770.
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Kleimann, D. (2018). Beyond the Shadow of the Veto: Economic Treaty Making in the European Union After Opinion 2/15. In: Fahey, E. (eds) Institutionalisation beyond the Nation State. Studies in European Economic Law and Regulation, vol 10. Springer, Cham. https://doi.org/10.1007/978-3-319-50221-2_11
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