Europe's Top Court Says Trade Pacts Need Consent From All EU Countries

By Emre Peker Features Dow Jones Newswires

The European Union's top court on Tuesday curbed the bloc's power to sign off trade pacts without explicit backing from EU members in a decision that poses risks for future deals, including with Britain.

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Judges in the Luxembourg-based court said a free-trade agreement between the EU and Singapore concluded in 2014 would have to be ratified by the bloc's members to take effect.

That comes as a blow to the EU's executive arm, the European Commission, which has the sole power to negotiate trade accords on behalf of the bloc. While the commission in reality needs broad support among EU members to ink a trade deal, it had claimed the legal remit to adopt some pacts without formal backing from each state.

"The EU is not endowed with exclusive competence," the European Court of Justice said, citing shared authority over some portfolio investments and dispute settlement between investors and countries. "The free-trade agreement with Singapore can, as it stands, be concluded only by the EU and the member states acting together."

The ruling complicates Brussels' push to position itself as the world's free-trade champion at a time the U.S. sends protectionist signals, and could expose its wide-ranging pacts to populist backlash across Europe. The EU is currently pursuing trade deals with Japan and Mexico, among others.

It also casts a shadow over upcoming divorce talks with the U.K., introducing uncertainty over the EU's ability to deliver a future trade deal once Brexit is done. The bloc, however, has signaled that any future EU-U.K. trade agreement would need the backing of all its 27 remaining members.

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Having lost its effort to sideline national capitals from signing off on trade accords, Brussels now has to convince as many as 38 national and regional parliaments to ratify the Singapore trade pact.

That sets the scene for another potentially bruising battle, just months after Belgium's Wallonia region--home to less than 1% of the EU's population-- almost derailed a landmark agreement with Canada.

Write to Emre Peker at emre.peker@wsj.com

(END) Dow Jones Newswires

May 16, 2017 04:29 ET (08:29 GMT)