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Article 21 TEU and the EU’s Common Commercial Policy: A Test of Coherence

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European Yearbook of International Economic Law 2017

Part of the book series: European Yearbook of International Economic Law ((EUROYEAR,volume 8))

Abstract

This contribution investigates the role of Article 21 TEU in the context of the EU’s common commercial policy (CCP), with specific reference to its new investment competence. Article 21, introducing non-commercial objectives in the CCP, has been both hailed for rebalancing and expanding the EU’s foreign policy and criticised for needlessly politicising the external action of the EU. This article is an attempt to assess the true import of the changes introduced by the Lisbon Treaty in this area, for what is possible given the limited temporal extent of their application. Section 2 will briefly review the role of foreign investment in the CCP, while Section 3 will do the same for the non-commercial objectives pursued by the EU in the context of its CCP competences. Section 4 is dedicated to an analysis of Article 21 TEU and its legal value. In doing so, the section will consider issues such as to what extent Article 21 TEU constrains the foreign policy of the EU and its effect with specific reference to the CCP. Further, the article will consider the relationship between Article 21 TEU and other programmatic articles of the TEU, such as Article 3 TEU, and the incorporation of non-commercial objectives in the EU’s Free Trade Agreements (FTAs) and Preferential Trade Arrangements (PTAs). In Section 5, there will be a review and implications of the recent Front Polisario case, in which the General Court determined the EU’s scope of responsibility for what concern non-commercial objectives in a trade agreement, taking also into account the latest developments on the case in the Court of Justice of the EU’s Judgment. Finally, Section 6 will offer some concluding remarks.

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Notes

  1. 1.

    By using the term BITs one more usually refers to the older style treaties, especially of the European model, very streamlined “political” instruments, with few if any references to other regimes of international law. It should also be recognised that at the time of this first generation of BITs, international investment law could hardly be described as a well-developed regime of international law.

  2. 2.

    All IIAs are listed on the UNCTAD’s website; see http://investmentpolicyhub.unctad.org/IIA (last accessed 1 March 2017).

  3. 3.

    Treaty for the Promotion and Protection of Investments (with Protocol and exchange of notes), Germany and Pakistan, 25 November 1959, 457 UNTS 24, BGBl. 1961 II, 793 (entered into force 28 November 1962).

  4. 4.

    1965 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, 575 UNTS 159.

  5. 5.

    For an interesting comparison between the European and the North American approach to investment treaties, see Alschner (2013).

  6. 6.

    See for a useful summary Waibel M, Competence Review: Trade and Investment, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/270992/bis-14-511-trade-and-investment-competence-review-independent-review-legal-research-by-michael-waibel.pdf (last accessed 1 March 2017).

  7. 7.

    CJEU, opinion 2/92, OECD, ECLI:EU:C:1995:83.

  8. 8.

    CJEU, case 22/70, Commission/Council, ECLI:EU:C:1971:32.

  9. 9.

    CJEU, opinion 1/76, Draft Agreement establishing a European laying-up fund for inland waterway vessel, ECLI:EU:C:1977:63, para. 3.

  10. 10.

    Council of the EU, Minimum Platform on Investment for the EU FTAs, 5375/06, 27 November 2006 (unpublished) and revised version of 6 March 2009; for information on the content see especially Maydell (2007); also Bungenberg (2011), p. 29; Burgstaller (2009), p. 204 et seqq.; some background information also in Reinisch (2014), p. 115.

  11. 11.

    OJ 2011 L 127/6.

  12. 12.

    OJ 2008 L 289/1.

  13. 13.

    The original agreement was signed in 2000; the text was revised in 2005 and in 2010 (still to be ratified), http://www.acp.int/content/acp-ec-partnership-agreement-cotonou-agreement-accord-de-partenariat-acp-ce-accord-de-cotono (last accessed 1 March 2017). The first mention of a human rights clause in an EU FTA is Article 5 of the 1989 Lomé IV Convention with African, Caribbean and Pacific (ACP) Countries, http://aei.pitt.edu/56901/1/THIRD.XIV.pdf (last accessed 1 March 2017).

  14. 14.

    European Commission, Towards a comprehensive European international investment policy, COM (2010) 343 final. But on this, see the recent Opinion 2/15 by the CJEU on the Singapore-EU FTA, where the Court established that non-direct foreign investment is not within the exclusive competence of the EU.

  15. 15.

    Bungenberg (2011), p. 35 et seqq. See also, with considerable literature, Reinisch (2014).

  16. 16.

    See European Commission, Towards a comprehensive European international investment policy, COM (2010) 343 final.

  17. 17.

    For a review of the controversy, see Fina and Lentner (2016), p. 432.

  18. 18.

    CJEU, case C-350/92, Kingdom of Spain v Council, ECLI:EU:C:1995:237, paras. 15–19.

  19. 19.

    CJEU, case 182/83, Fearon v Irish Land Commission, ECLI:EU:C:1984:335.

  20. 20.

    The debate on the TTIP centred mostly on the inclusion of the contested dispute settlement system, but also on the restriction of the Member States’ regulatory powers; a lot of the debates took place in public fora, such as newspapers and social media (in itself indicative of the raised awareness about investment issues in the general public); for recent developments, the EU provides up-to-date news and commentary: see http://ec.europa.eu/trade/policy/in-focus/ttip/index_en.htm (last accessed 1 March 2017). The relative novelty of a trade and investment agreement attracting so much attention (for a similar phenomenon, we should probably have to go back to the negotiating history of the North American Free Trade Agreement (NAFTA) is proven by the wealth of literature, including volumes. See for example Morin et al. (2015). On the coherence of the EU’s BITs policy, see also Lenk (2015).

  21. 21.

    See Dimopoulos (2011), Burgstaller (2010), Hindelang (2011), Söderlund (2007) and Wierzbowski and Gubrynowicz (2009).

  22. 22.

    CJEU, case C-118/07, Commission v Finland, ECLI:EU:C:2009:715; CJEU, case C-205/06, Commission v Austria, ECLI:EU:C:2009:118; CJEU, case C-249/06, Commission v Sweden, ECLI:EU:C:2009:119.

  23. 23.

    There are several investment disputes in which the Commission sought to intervene by submitting amicus curiae briefs: amongst them are the following: Eastern Sugar BV (Netherlands) v The Czech Republic, UNCITRAL, SCC Case No 088/2004, Final Award 12 April 2007; Electrabel SA v Republic of Hungary, ICSID Case No ARB/07/19, Award 25 November 2015; AES Summit Generation v Republic of Hungary, ICSID Case No ARB/07/22, Award 23 September 2010; Achmea BV v The Slovak Republic, UNCITRAL, PCA Case No 2008–13 (formerly Eureko BV v The Slovak Republic); European American Investment Bank AG (EURAM) v Slovak Republic, UNCITRAL, Award on Jurisdiction 22 October 2012; US Steel Global Holdings I BV v The Slovak Republic, UNCITRAL, PCA Case No 2013–6 (discontinued—the Commission’s brief was made available through IA Reporter).

  24. 24.

    OJ 2012 L 351/40.

  25. 25.

    On interpretation in international law see the recent Bianchi et al. (2015); on treaty interpretation in the investment regime see Wälde (2009).

  26. 26.

    Council of the European Union, EU Action Plan on Human Rights and Democracy, December 2015, p. 39.

  27. 27.

    Article 19(1) TEU: “The Court of Justice of the European Union […] shall ensure that in the interpretation and application of the Treaties the law is observed.” See also in general Rasmussen (2014).

  28. 28.

    See European Parliament resolution of 6 April 2011 on the future European international investment policy (2010/2203(INI)), paras. 23–30.

  29. 29.

    The literature on the constitutionalization of the EU, both in its internal and external dimensions, is vast and pre-dates the Treaty of Lisbon. See for example Timmermans (2001), Rittberger and Schimmelfenning (2007), Christiansen and Reh (2009) and Habermas (2012).

  30. 30.

    See for example Habermas (2008), Klabbers et al. (2009) and De Wet (2012).

  31. 31.

    The literature on the constitutionalization of the world economy is equally rich; see for example Cass (2005), Cremona et al. (2013), Robé et al. (2016), Thompson (2012) and Schneiderman (2008).

  32. 32.

    Article 3(5) TEU does not provide a legal basis for the EU’s action in pursuance of these objectives, as clarified by Article 3(6): “The Union shall pursue its objectives by appropriate means commensurate with the competences which are conferred upon it in the Treaties.”

  33. 33.

    For a close analysis of Article 21 TEU, see Vedder (2013).

  34. 34.

    For example, in Article 3(5) TEU, the Union “shall uphold, promote and contribute”; in Article 21(1) TEU the Union “shall be guided by the principles”; and in Article 207 TFEU “the CCP shall be based on uniform principles”.

  35. 35.

    European Commission, Trade for All: Towards a More Responsible Trade and Investment Policy, 14 October 2015, p. 7.

  36. 36.

    For the duty to observe international law, see also CJEU, case C-366/10, Air Transport Association of America and others, ECLI:EU:C:2011:864, para. 101 and the case-law cited.

  37. 37.

    On the sometimes problematic relationship between the law of the Charter and EU law, the seminal case is of course Kadi, see CJEU, joined cases C-402/05 P and C-415/05 P, Kadi and Al Barakaat, ECLI:EU:C:2008:461; GC, case T-85/09, Kadi v Commission, ECLI:EU:T:2010:418; CJEU, joined cases C-584/10 P, C-593/10 P and C-595/10 P, European Commission and others v Yassin Abdullah Kadi, ECLI:EU:C:2013:518.

  38. 38.

    Especially the work done by the Special Rapporteur John Ruggie; see Human Rights Council, 17th session, Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises; Ruggie J, Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework, A/HRC/17/31, 21 March 2011.

  39. 39.

    European Commission, A renewed EU strategy 2011–14 for Corporate Social Responsibility, COM (2011) 681 final, 25 October 2011.

  40. 40.

    On the distinction between rules and principles, see mainly Dworkin (1967) and Dworkin (1997).

  41. 41.

    See Hilpold (2015).

  42. 42.

    The attempt to improve the consistency and coherence of the EU actions, both in their internal and external policies, via application of Article 21 TEU is noted by the Commission in its Working document on implementing the UN guiding principles on business and human rights—state of play, SWD(2015)/144 final, p. 17.

  43. 43.

    The English version of the article uses the term “consistency”, while several other versions (e.g. German, French and Italian) use the term for “coherence”. It has been argued that coherence and consistency are not identical, consistency requiring simply the absence of logical contradiction, while coherence demands the higher standard of consistency in principle; alternatively, consistency has to be considered the preliminary and necessary condition of coherence, but not the sufficient one; see Schiavello (2001). It seems that the non-English versions of the article better describe what is required of the EU in ensuring the coherence of its external action.

  44. 44.

    Issues of normative conflicts have been recently discussed widely in the international community; the starting point is surely the Fragmentation Report produced by the International Law Commission (ILC), Fragmentation of International Law: Difficulties Arising from the Diversification and Expansion of International Law, Report of the Study Group of the International Law Commission, finalised by Koskenniemi M, A/CN4/L682, 13 April 2006; recently, a more integrationist approach has developed; see Andenas and Bjorge (2015) and Hindelang and Krajewski (2016).

  45. 45.

    Krajewski (2013). The potential “intergovernmentalisation” of the CCP as a consequence of the mandatory compliance with the principles expressed in Article 21 has been noted as well; see Dederer (2013), p. 98; Bungenberg (2010), p. 99.

  46. 46.

    Dederer (2013), p. 128 et seqq.

  47. 47.

    See also Douma and van der Velde (2016), p. 106; Petersmann (2013). But see against Krajewski (2012), p. 297, on the different grounds that trade policy has never been exclusively about trade, and that trade liberalisation is not an end in itself.

  48. 48.

    Alston and Weiler (1998), with specific reference to human rights objectives: “It is instructive, by way of analogy, to consider some of the areas in which the Community has assumed exclusive competences, such as major aspects of the Common Commercial Policy, of the Common Agricultural Policy (which often implicate rights to property) or of the Single Market concerning the free movement of labour. It seems self-evident that in those areas it is only the Community which could reasonably be considered to be the custodian of human rights – in the same way that the Member States are custodians of human rights in the vast areas of state jurisdiction, like criminal law, which are largely outside Community jurisdiction.”

  49. 49.

    GSP Regulations 980/2005, 732/2008 and 878/2012; and EU Special Incentive Arrangement for Sustainable Development and Good Governance (GSP+) which makes access to the preferential system conditional on compliance with human rights, labour rights, environmental obligations and good governance.

  50. 50.

    Kube (2016). In CJEU, opinion 2/94, Accession to the ECHR, ECLI:EU:C:1996:140, the Court stated that human rights could not provide a sufficient legal basis for external action, but only a constraining influence.

  51. 51.

    See also Krajewski (2013), p. 83; Vedder (2013), p. 115.

  52. 52.

    CJEU, opinion 1/78, International Agreement on Natural Rubber, ECLI:EU:C:1979:224; CJEU, case 45/86, Tariff Preferences, ECLI:EU:C:1987:163; CJEU, case C-70/94, Werner, ECLI:EU:C:1995:328, para. 10 et seqq.; CJEU, case C-83/94, Leifer, ECLI:EU:C:1995:329, para. 9; GC, case T-184/95, Dorsch Consult, ECLI:EU:C:2000:321; CJEU, case C-84/95, Bosphorus, ECLI:EU:C:1996:312; CJEU, opinion 2/00, Cartagena Protocol, ECLI:EU:C:2001:664, para. 23.

  53. 53.

    Vedder (2013), p. 128.

  54. 54.

    CJEU, opinion 1/78, International Agreement on Natural Rubber, ECLI:EU:C:1979:224.

  55. 55.

    CJEU, case 45/86, Tariff Preferences, ECLI:EU:C:1987:163.

  56. 56.

    CJEU, case C-70/94, Werner, ECLI:EU:C:1995:328, para. 10; CJEU, case C-83/94, Leifer, ECLI:EU:C:1995:329, para. 10 et seq.; CJEU, case C-124/95, Centro-Com, ECLI:EU:C:1997:8, para. 26.

  57. 57.

    Article 207(3) enjoins the Commission to report on the progress of negotiations both to the Trade Policy Committee, a special body of the European Council, and to the Parliament, which are therefore put on equal footing for what concerns the reporting obligations—even if not for their capacity to process the information obtained, nor for having the same rights in consultation, see Krajewski (2013), p. 73.

  58. 58.

    Whether transparency is to be interpreted here as a purely procedural right, or if it involves any substantive rights, is an open question.

  59. 59.

    The documents were made available on Greenpeace’s website, see https://ttip-leaks.org/ttip/ (last accessed 1 March 2017); further leaks were made available by a MEP of the German Green Party, http://www.euractiv.com/section/trade-society/news/green-party-leaks-confidential-ttip-paper/ (last accessed 1 March 2017).

  60. 60.

    Negotiations on the TTIP have now stalled, although the 15th round of negotiations is scheduled for October 2016; see http://trade.ec.europa.eu/doclib/events/index.cfm?id=1544 (last accessed 1 March 2017).

  61. 61.

    The complete text, together with annexes and declarations, see http://trade.ec.europa.eu/doclib/press/index.cfm?id=691 (last accessed 1 March 2017).

  62. 62.

    Directorate General for External Policies, EU Trade Relations with Latin America: Results and Challenges in Implementing the EU-Colombia/Peru Trade Agreement, 2016, p. 14.

  63. 63.

    See Hachez (2015) and Bartels (2005). The insertion of these clauses allowed the EU to condition compliance with the agreement on the respect of human rights (therefore providing a legitimate excuse for non-performance in the case of breach). The Commission clarified that the scope of these clauses in its Communication on the inclusion of respect for democratic principles and human rights in agreements between the community and third countries, COM (95) 216 final, 23 May 1995, p. 7 et seq. Amongst the most pointed criticisms of these clauses is of course the fact that both monitoring and enforcement are insufficient and potentially biased.

  64. 64.

    See Hachez (2015), p. 20.

  65. 65.

    COM (95) 216 final, p. 7 et seq.

  66. 66.

    Directorate General for External Policies, EU Trade Relations with Latin America: Results and Challenges in Implementing the EU-Colombia/Peru Trade Agreement, 2016, p. 38. The chapter has its own dispute settlement regime and compliance is monitored by the Sub-Committee on Trade and Sustainable Development.

  67. 67.

    GC, case T-85/09, Kadi, ECLI:EU:T:2010:418, para. 115 (the reference was not relevant to the decision).

  68. 68.

    CJEU, case C-377/12, Commission v Council, ECLI:EU:C:2014:1903. For an analysis of the case, see Broberg and Holdgaard (2015).

  69. 69.

    In addition to those proposed by the Commission, which were Articles 207, 209 and 218(5) TFEU; the Council added Article 79(3) TFEU (on readmission of third-country nationals), Articles 91 TFEU and 100 TFEU (on transport), and Article 191(4) TFEU (on the environment).

  70. 70.

    CJEU, case C-377/12, Commission v Council, ECLI:EU:C:2014:1903, para. 34.

  71. 71.

    CJEU, case C-268/94, Portugal v Council, ECLI:EU:C:1996:461; for an analysis of the case with respect to the EU’s development policy, see Peers (2000).

  72. 72.

    The European Consensus on Development—The Development Challenge, OJ 2006 C 46/1.

  73. 73.

    Broberg and Holdgaard (2015), p. 560.

  74. 74.

    Vedder (2013), p. 138; Dimopoulos (2010).

  75. 75.

    Dimopoulos (2010), p. 165. One should note that the vague and programmatic tone of the fair and equitable standard in BITs has not impeded its strict application by investment tribunals.

  76. 76.

    GC, case T-512/12, Front Polisario v Council, ECLI:EU:T:2015:953.

  77. 77.

    GC, case T-512/12, Front Polisario v Council, ECLI:EU:T:2015:953, para. 159.

  78. 78.

    GC, case T-572/93, Odigitria v Council and Commission, ECLI:EU:T:1995:13, para. 38.

  79. 79.

    GC, case T-572/93, Odigitria v Council and Commission, ECLI:EU:T:1995:13, paras. 226–248. The judgment of the GC was appealed by the Council, see CJEU, case C-104/16 P, Council v Front Polisario, ECLI:EU:C:2016:973.

  80. 80.

    CJEU, case C-414/11, Daiichi Sankyo and Sanofi-Aventis Deutschland, ECLI:EU:C:2013:520, para. 48.

  81. 81.

    CJEU, case C-104/16 P, Council v Front Polisario, ECLI:EU:C:2016:973.

  82. 82.

    See Gehring M, EU Court Sidesteps Human Rights in Western Sahara, 26 December 2016, https://www.cigionline.org/articles/eu-court-sidesteps-human-rights-western-sahara (last accessed 1 March 2017).

  83. 83.

    See Blockmans and Russack (2015), p. 2.

  84. 84.

    The seminar work of Luhmann on social systems is here relevant, and his description of the political system’s binary code power/no power, see Luhmann (1996) and more specifically Luhmann (1990), pp. 167–186.

  85. 85.

    See Hoffmeister (2011).

  86. 86.

    Kube (2016), p. 17.

  87. 87.

    The potential conflict between the protection and promotion of foreign investment (especially in the context of environmental regulation) has generated considerable literature; see Mann H, Investment agreements and the regulatory state: can exception clauses create safe havens for governments? 2007, http://www.iisd.org/pdf/2007/inv_agreements_reg_state.pdf (last accessed 1 March 2017); Orrego Vicuña (2003); OECD, “Indirect expropriation” and the “right to regulate” in international investment law, OECD Working Papers on International Investment 2004/04; Wälde and Kolo (2001). See also Waincymer (2009), Schill (2011), Ortino (2013), Roberts (2013), Subedi (2012) and Sornarajah (2015).

  88. 88.

    Waibel et al. (2010).

  89. 89.

    The obligation to conduct impact assessment for trade and investment deals, more specifically in the area of human rights, has been recognised repeatedly; see for example, European Commission, Towards a comprehensive European international investment policy, COM (2010) 343 final.

  90. 90.

    GC, case T-512/12, Front Polisario v Council, ECLI:EU:T:2015:953, paras. 242–247.

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Asteriti, A. (2017). Article 21 TEU and the EU’s Common Commercial Policy: A Test of Coherence. In: Bungenberg, M., Krajewski, M., Tams, C., Terhechte, J., Ziegler, A. (eds) European Yearbook of International Economic Law 2017. European Yearbook of International Economic Law, vol 8. Springer, Cham. https://doi.org/10.1007/978-3-319-58832-2_5

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