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The EU Just Hit a Roadblock That Could Stall Future Trade Agreements

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If the European Union wants to sign off on any trade agreements, it’s going to need backing from all of its members, which could put pending and future pacts—including with a post-Brexit Britain—at risk.

Responding to a request to determine whether the EU has exclusive power to sign and conclude trade agreements, judges at a top court in Luxembourg said that the free trade agreement between the EU and Singapore, which wrapped negotiations in 2014, can’t take effect with the EU’s approval alone. The individual members of the bloc have to agree to it too.

The exact words as the Court of Justice of the European Union put it in an opinion released Wednesday, were: “…the free trade agreement with Singapore can, as it stands, be concluded only by the EU and the Member States acting together.”

The court’s conclusion is a landmark one, as before it, the European Commission had the power to act on the bloc’s behalf when it came to trade deals. Now, those deals—which are often already drawn out into long-going negotiations—could be further tied up in needing each EU member’s approval.

As White & Case LLP explained, the court’s opinion “would drastically change the EU FTA ratification procedure, most likely resulting in delays of several years before negotiated FTAs could enter into force.”

What’s more, White & Case attorneys continued in a piece on Lexology, “This would make the approval procedures for any pending EU FTAs more lengthy and complex, and would be especially difficult in the context of debates around CETA [the trade deal between the EU and Canada that still hasn’t taken full effect], where it is important for the EU to show that it is a unified and reliable trade partner. It could also complicate Brexit by delaying any EU-UK FTA.”

The U.K. had been hoping to settle a quick trade deal with the EU once its bloc divorce proceedings are completed, but this new decision might make that process trickier and lengthier than Brexit itself.

That remains to be seen, but for now, leaders in the EU appear OK with the decision.

On her Twitter account, EU Trade Commissioner Cecilia Malmstrom said over two posts, “About the ECJ opinion on the Singapore trade agreement: This gives us very welcome & much-needed clarity about how to interpret EU Treaties…Opinion should put us on solid footing for the future. I look forward to working w governments & European Parliament to define way forward.”

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