OPINION 1/08

The connection between the two questions raised in the request for an Opinion and the order in which they are to be examined

42The Commission emphasises that the two questions raised in the request for an Opinion are closely linked and that numerous arguments submitted in relation to one are also valid for the other. In its view, if the answer to the first question is that the agreements at issue fall within the sphere of exclusive competence of the Community under the common commercial policy, the additional legal bases proposed by the Council will be automatically eliminated.

43The Council and the Czech, Danish, Portuguese and United Kingdom Governments are of the opinion that the answer to the first question automatically flows from the answer to the second. In their view, the need to have recourse in particular to Articles 133(6) EC, 71 EC and 80(2) EC as legal bases implies ipso facto that conclusion of the agreements at issue falls within the competence shared by the Community and its Member States. According to the Portuguese and United Kingdom Governments, the Commission has thus reversed the natural order between the premiss and the conclusion of its request for an opinion.

The first question

44According to the Commission, the agreements at issue fall within the common commercial policy and, therefore, within a sphere of Community competence which is by definition exclusive.

45That policy, which is open and dynamic, requires constant adjustment to take account of any changes of outlook in international relations, and requires a non-restrictive interpretation so as not to become nugatory in the course of time. That is what would happen if that policy were confined to the traditional aspects of trade without encompassing agreements designed, as in the present case, to modify the terms and conditions under which the Community commits itself to opening access to its market to the services and suppliers of services of other countries which are WTO members. Such agreements have the direct and immediate aim of promoting and governing trade in those services.

46The Commission submits that the dicta in Opinion 1/94 [1994] ECR I‑5267, to the effect that only services provided under mode 1 fell within exclusive Community competence in commercial matters, have now been superseded in view of the changes made by the Treaty of Nice to Article 133 EC. Paragraph 5 of that article now provides that ‘trade in services’ (terminology that was borrowed from the GATS and is distinct from that used in Articles 49 EC to 55 EC which, for their part, refer to the ‘freedom to provide services’ and the ‘liberalisation of services’) falls, in general terms, within the common commercial policy, subject only to the provisions of Article 133(6) EC.

47The aim of those changes was to simplify the situation and to reinforce the role of the Community in the negotiations to be undertaken within the WTO, by ensuring the consistency, effectiveness and credibility of the Community’s action and by enabling it to perform its obligations swiftly and in good faith. Bilateral or multilateral negotiations within the WTO are continuous and the resultant agreements such as the agreements at issue, which simply modify Schedules of commitments under the GATS by means of a flexible and rapid negotiation procedure, need to be concluded and implemented as simply as possible. The interpretation of Article 133 EC proposed by the Commission is thus more consistent with the presumption of compatibility of the Community legal order with rules of public international law.

48According to the Commission, the agreements at issue cannot, moreover, fall within Article 133(6) EC which, inasmuch as it provides for an exception to the principle set out in Article 133(5) EC, must be interpreted narrowly.

49Thus, the second subparagraph of Article 133(6) EC, opening as it does with the words ‘[i]n this regard’, merely draws the necessary inferences from the statement of principle in the first subparagraph of Article 133(6) EC. The exception in the second subparagraph of Article 133(6) EC therefore applies only where the conclusion of an agreement by the Community would involve the latter going beyond its powers because the agreement would lead to harmonisation of internal rules in the Member States in the service sectors referred to in that second subparagraph. That second subparagraph is therefore the corollary of Articles 137(2) EC, 149(4) EC, 151(5) EC and 152(4) EC, which specifically exclude competence to undertake harmonisation in the sectors concerned, namely social services, educational services, cultural and audiovisual services, and human health services.

50According to the Commission, the second subparagraph of Article 133(6) EC cannot in any event be interpreted as meaning that any agreement which has even a limited effect on one of those sectors falls within the shared competence of the Community and the Member States. The fact that that provision refers to agreements ‘relating to’ those sectors leads moreover to the exclusion from its scope of agreements which do not specifically relate to those sectors but cover trade in services as a general category. Any other view would negate the meaning of the third subparagraph of Article 133(5) EC, which provides that the Council is to act unanimously with respect to the conclusion of horizontal agreements including those sectors.

51In the present case, the agreements at issue do not give rise to any harmonisation of the sectors concerned. Moreover, none of the compensatory adjustments provided for in those agreements relates specifically to those sectors and the only withdrawal of a commitment relating thereto, concerning educational services, can in no way encroach on any powers of the Member States since it restores greater freedom to them. The horizontal commitments covered by the agreements at issue concern trade in services in general without being specific to those sectors.

52The Parliament essentially endorses the arguments put forward by the Commission. The exclusive nature of Community competence is justified both by the need for the Community to be able to fulfil its task in the defence of the common interest and by that of preventing distortions of competition and diversion of trade within the Community.

53Article 133(5) EC reflects the wish of the Member States to ensure that the commercial policy should be effective in the context of an enlarged Union by bringing within its scope services which have become one of the major factors in the regulation of international trade.

54To interpret the fourth subparagraph of Article 133(5) EC as meaning that the common commercial policy, when applied in relation to trade in services, would cease to be exclusive in character would have the result of depriving the first subparagraph of Article 133(5) EC and the amendments introduced by the Treaty of Nice of any useful effect. The same would apply if the second and third subparagraphs of Article 133(6) EC were to be interpreted as meaning that all horizontal commercial agreements which might have an impact on the services referred to by those provisions must be mixed agreements.

55All the governments that have submitted observations and the Council consider, on the contrary, that conclusion of the agreements at issue falls within the shared competence of the Community and the Member States. Their views and arguments may be summarised as follows

56First, the Italian Government maintains that, since the GATS was concluded as a mixed agreement, the general principles of international law and legal certainty require that the same apply to the agreements at issue which modify the GATS.

57Second, the Polish Government submits that, since the Community has conferred powers only, shared competence between the Community and the Member States is the rule, whereas exclusive Community competence, which constitutes an exception, requires either an express mention in the Treaty or the fulfilment of the strict conditions for recognition of the existence of implied exclusive competence in accordance with case-law.

58Third, the Council, the Czech, Danish, Greek and Spanish Governments, Ireland, the Italian, Netherlands, Polish, Romanian, Finnish, Swedish and United Kingdom Governments point out that considerations linked with alleged delays or practical difficulties encountered in modifying the schedules of commitments or an alleged risk of loss of credibility and effectiveness of Community action cannot influence the division of competences between the Community and its Member States. The German Government adds that the division of competences within the Community legal order cannot be affected by considerations based on international agreements which enjoy no primacy over the Treaty and of which the lawfulness is, on the contrary, subject to compliance with the Treaty.

59A number of governments also express strong doubts as to whether delays deriving from national approval procedures contribute decisively to delaying the process of modifying schedules of specific commitments. The practice of mixed agreements is in fact well established, the Community and its Member States exercising their competence in a coordinated manner under de facto direction from the Commission. Ireland and the Netherlands and United Kingdom Governments refer, in addition, to the duty of cooperation between the Member States and the Community institutions existing in that context.

60Fourth, the Council maintains that the first subparagraph of Article 133(6) EC, under which the Council may not conclude an agreement containing provisions which go beyond the Community’s internal powers, is applicable to the present case, so that the agreements at issue should also be concluded by the Member States. A number of compensatory commitments contained in the agreements, such as the commitment to withdraw the economic need tests applied by the United Kingdom for engineering services or the commitment to make less restrictive the permanent residency requirement for financial services supplied under mode 3 as regards the Republic of Finland, in fact relate to matters for which there is no legal basis in the Treaty which justifies the Community having internal powers.

61Fifth, most of the governments that have submitted observations in this regard and the Council are of the view, as they explain when examining the second question concerning the choice of legal basis, that the agreements at issue fall within the scope of the second subparagraph of Article 133(6) EC. The very terms of that provision confirm the shared nature of the competence concerned by requiring joint action by the Community and the Member States in concluding agreements in the areas to which it refers.

62As regards, sixth, Articles 71 EC and 80(2) EC which, as they state in connection with examination of the second question, govern the conclusion of the agreements at issue, in accordance with the third subparagraph of Article 133(6) EC, those governments and the Council emphasise that Community competence regarding transport is not by definition exclusive. Moreover, the case-law concerning whether there is implied external competence on account of the exercise of internal powers likewise does not have the effect in this case of bringing the agreements at issue within the scope of such exclusive Community competence, since they do not affect internal Community rules on transport.

63Seventh, the Member States that have submitted observations and the Council indicate, in more general terms, that they do not share the Commission’s interpretation of Article 133 EC as a whole.

64The Czech Government, Ireland, the Italian, Lithuanian, Netherlands, Polish, Romanian, Finnish, Swedish and United Kingdom Governments and the Council are of the opinion that, in contrast to the aspects of the common commercial policy covered by Article 133(1) EC, which encompass in particular trade in goods and supply of services under mode 1 and fall within the exclusive competence of the Community, the fields covered by the first subparagraph of Article 133(5) EC, including services provided under modes 2 to 4 to which the agreements at issue mainly relate, do not fall within such exclusive competence.

65That conclusion is particularly clear and apparent from the actual wording of the fourth subparagraph of Article 133(5) EC, according to which paragraph 5 is not to affect the right of the Member States to maintain and conclude agreements.

66Contrary to what the Commission suggests, the fact of interpreting Article 133(5) EC as not conferring exclusive competence on the Community does not deprive of useful effect the amendments made by the Treaty of Nice. According to the Spanish and Swedish Governments, that provision displays, in particular, the advantage of now making it clear that Community competence of a commercial nature exists in relation to services and of clarifying its limits. According to the Swedish and United Kingdom Governments, Article 133(5) EC, and in particular the second and third subparagraphs thereof, also have the specific purpose of laying down various procedural rules on the matter.

67In contrast to the other governments which have submitted observations and to the Council, the Spanish Government submits that the concept of ‘trade in services’ within the meaning of the first subparagraph of Article 133(5) EC cannot be assimilated to the corresponding concept in the GATS and extends only to services supplied under modes 1 and 2, which are the only ones that essentially correspond to the concept of the provision of services within the meaning of the Treaty.

The second question

68According to the Commission, whatever may be the answer to the question whether the conclusion of the agreements at issue falls within the exclusive competence of the Community or is a competence shared with the Member States, the only legal basis for the Community act adopted for that purpose is Article 133(1) to (5) EC, in conjunction with the first subparagraph of Article 300(2) EC.

69All of the governments that have submitted observations on this point and the Council consider, however, that recourse must also be had to Articles 71 EC and 80(2) EC, on the one hand, and Article 133(6) EC, on the other, in conjunction with the first subparagraph of Article 300(3) EC.

The second subparagraph of Article 133(6) EC

70The Commission reiterates that, for the reasons which it set out when examining the first question, the second subparagraph of Article 133(6) EC cannot, in its view, apply to the agreements at issue.

71The Commission adds, as a subsidiary point, that, even if it were applicable, the second subparagraph of Article 133(6) EC cannot serve as a legal basis for the Community act concluding those agreements. The provision merely lays down an exception to the exclusive competence of the Community in matters of commercial policy by reserving concurrent competence to the Member States.

72The German, Netherlands, Polish, Romanian and United Kingdom Governments and the Council contend, however, that the second subparagraph of Article 133(6) EC is indeed capable of serving as a legal basis for Community action, since it sets out the conditions for the application of Article 133 EC, limits the competence of the Community under paragraph 5 of that article and establishes a specific Community competence on a shared basis.

73Most of the governments that have submitted observations and the Council maintain, moreover, that the second subparagraph of Article 133(6) EC does indeed fall to be applied to this case.

74The agreements at issue modify commitments relating specifically to the services covered by that provision, namely sectoral commitments relating to educational services and horizontal commitments relating to subsidies. Moreover, the horizontal commitments modified by those agreements cover all the sectors appearing in the Schedule of commitments of the Community and its Member States and in particular the sectors of cultural services, educational, human health and social services, under modes 3 and 4.

75The Czech, Danish, German, Greek and Spanish Governments, Ireland, the Lithuanian, Portuguese, Romanian, Finnish and United Kingdom Governments and the Council dispute the validity of the distinction drawn by the Commission between the withdrawing of commitments and the increase of commitments. Any modification of a commitment, whether it limits the freedom of the Member States or reinstates it, is a commitment that can be made only by the person vested with competence in the area concerned.

76Furthermore, the interpretation adopted by the Commission in that regard with respect to the second subparagraph of Article 133(6) EC, as the Commission has explained it in its consideration of the first question, is disputed for various reasons.

77First, the Netherlands, Polish and Swedish Governments argue that that provision must not be interpreted restrictively because, in particular, it does not create an exception to an alleged exclusive Community competence.

78Second, the Czech, Italian, Lithuanian, Netherlands, Polish, Romanian, Finnish and United Kingdom Governments and the Council maintain that the first and second subparagraphs of Article 133(6) EC cannot be merged as suggested by the Commission. Their arguments on that point may be summarised as follows.

79The first subparagraph of Article 133(6) EC is certainly not limited to the services sectors referred to in the second subparagraph of that provision but relates to all cases where there is no internal competence of the Community, and of those cases harmonisation, as is apparent from the use of the phrase ‘in particular’, is moreover only one example. The second subparagraph therefore is certainly not limited to clarifying the first subparagraph of Article 133(6) EC by allegedly setting out the areas of services in which harmonisation of national laws by the Community acting alone would not be possible. The areas referred to by the second subparagraph moreover do not correspond entirely with those in which the Community has no internal competence to undertake harmonisation, since, in particular, no mention is made of the field of employment or that of vocational training, regarding which Articles 129 EC and 150(4) EC nevertheless exclude such harmonisation. Furthermore, the Treaty contains no prohibition of harmonisation regarding audiovisual services even though they are also mentioned in the second subparagraph of Article 133(6) EC.

80Third, the Czech, German, Greek, Polish, Portuguese and Finnish Governments submit that the third subparagraph of Article 133(5) EC is a strictly procedural provision having no bearing whatsoever on the issue of exclusive or shared Community competence.

81Fourth, the agreements at issue do indeed ‘relate’ to the service sectors referred to in the second subparagraph of Article 133(6) EC.

82According to the Czech and German Governments, Ireland and the Italian and Romanian Governments, the expression ‘relating to’ in that provision is not, regardless of the language version considered, at all unambiguous, nor is it conducive to restricting the application of that provision only to agreements which relate ‘exclusively’ or ‘above all’ to such service sectors, as suggested by the Commission on the basis of an interpretation which appears to be purely semantic or literal.

83According to the Lithuanian and United Kingdom Governments, the terms thus used indicate on the contrary that any agreement governing aspects of trade in services within any of the sectors referred to falls within the scope of that provision. The Czech, Romanian and United Kingdom Governments consider that interpretation to be the only one consistent with the manifest intention of the authors of the Treaty of Nice to ensure that the sensitive sectors referred to in the second subparagraph of Article 133(6) EC, in which the Community, internally, has only supporting, coordinating or supplementary competences, cannot fall outside the competence of the Member States.

84In the Netherlands Government’s view, the interpretation advocated by the Commission is also belied by the very terms of the third subparagraph of Article 133(5) EC, since that provision specifies the voting rules applicable in the case of ‘horizontal agreement[s]’ ‘in so far as [they] also [concern] the … second subparagraph of paragraph 6’.

Articles 71 EC and 80(2) EC

85The Commission maintains that, whilst it is apparent from the third subparagraph of Article 133(6) EC that agreements in the field of transport do not fall within the common commercial policy, that is not so in the case of the agreements at issue which relate to trade in services. It is not the aim, object or effect of those agreements to regulate transport services and, moreover, they confine themselves in that regard to making certain withdrawals of commitments concerning maritime or air transport services.

86The Commission submits that any impact on transport services is in any event merely incidental compared with the essentially commercial object of the agreements at issue, so that preference should be accorded to Article 133(1) to (5) EC alone as a legal basis, as is clear both from the case-law of the Court on the choice of an appropriate legal basis and from legislative practice, which provides a number of examples of both internal acts and international agreements which incidentally have direct effects on transport services, although they were adopted without reference to the Treaty provisions on transport.

87The Parliament essentially shares the Commission’s view.

88Most of the governments that have submitted observations and the Council contend, by contrast, that recourse to Articles 71 EC and 80(2) EC is necessary, since some of the sectoral commitments modified and withdrawn by the agreements at issue relate to transport services and since the horizontal commitments that have been withdrawn, modified or given by way of compensation also relate, inter alia, to such services. They dispute the interpretation supported by the Commission, according to which only agreements relating exclusively or predominantly to the transport sector, and not horizontal agreements, are covered by the third subparagraph of Article 133(6) EC.

89First, the Czech and Danish Governments, Ireland, the Italian, Lithuanian, Netherlands, Polish, Portuguese, Finnish and United Kingdom Governments and the Council point out that it is settled case-law that transport, even in the context of a trade agreement such as the GATS, does not fall within the common commercial policy. That tenet is now expressly enshrined in the third subparagraph of Article 133(6) EC, which provides in that regard that the negotiation and conclusion of agreements relating to transport ‘shall continue to be governed’ by the provisions relating to the common transport policy.

90Second, the Danish and United Kingdom Governments draw attention to the terminology used in that provision which, in various language versions, refers broadly to agreements ‘in the field’ of transport.

91Third, the Danish Government maintains that the interpretation supported by the Commission runs counter both to the objective pursued by the third subparagraph of Article 133(6) EC and to the need to endow that provision with useful effect. It would be pointless to specify in connection with Article 133 EC that an agreement falling solely within the field of transport falls within the common transport policy. The object and purport of the clear indications in the text of the third subparagraph of Article 133(6) EC is precisely to remove all possibility of applying the case-law relating to the choice of legal basis by reference to the predominant and incidental elements of a measure.

92Fourth, according to the Czech and United Kingdom Governments, that case-law is applicable, moreover, only where a choice must be made between Treaty provisions conferring competence on the Community for different purposes and not where, quite apart from any conflict of legal bases, there is a conflict of competences as between the Community and the Member States.

93Fifth, the Czech, Netherlands, Romanian, Finnish and United Kingdom Governments and the Council maintain that the provisions of the agreements at issue relating to the transport sector are not in any way ancillary. First of all, there is, in the Council’s view, no criterion that makes it possible to identify service sectors which might be more ancillary than others. The Romanian Government emphasises that the various modifications made by the agreements at issue to the Schedules of commitments are necessary to the same extent in order to attain the objective of those agreements, namely to ensure consolidation of those schedules following the enlargements that have taken place. Finally, the Netherlands, Romanian and Finnish Governments argue that the specific commitments peculiar to the field of transport in the agreements are likewise not ancillary measures needed to guarantee the effectiveness of a principal measure embodied in the agreements at issue.

94According to the Danish and United Kingdom Governments, the transport sector, to which a large number of modifications of specific commitments relate, is in fact the most prevalent. The Danish Government adds that such modifications are also particularly important in that they affect in particular modes 3 and 4, which are particularly important in the field of international maritime passenger transport, characterised by the need to carry out locally certain activities associated with the supply of services in that field.

95As regards, sixth, the legislative practice cited by the Commission, the Czech and Danish Governments, Ireland, the Italian, Lithuanian, Netherlands, Romanian, Finnish and United Kingdom Governments and the Council consider it to be irrelevant.