Opinion procedure 2/15

117.Where the European Union does not have express exclusive competence pursuant to Article 3(1) TFEU to conclude an international agreement, it may nonetheless enjoy implied external exclusive competence on the basis of Article 3(2) TFEU. Both paragraphs of Article 3 TFEU specifically concern the allocation of competences between the European Union and the Member States. However, unlike Article 3(1) TFEU, Article 3(2) TFEU concerns external competence alone. The various grounds that it lays down all necessarily imply, however, some exercise of internal competence.

118.The Commission relies on two grounds under Article 3(2) TFEU to establish the European Union’s exclusive external competence.

119.For one part of Chapter Eight regarding services, establishment and electronic commerce,(73) the Commission relies on the first ground under Article 3(2) TFEU according to which the European Union shall have exclusive competence ‘… when its conclusion is provided for in a legislative act of the Union’. According to the Court’s case-law, the underlying rationale of that provision is that there may be situations where, although the Treaties themselves do not establish an external competence of the European Union, common rules laid down by the institutions establish such competence by providing for the conclusion of international agreements.(74) In such situations, the European Union acquires exclusive competence as a result of common rules,(75) because enabling the Member States to conclude their own international agreements would be liable to jeopardise concerted external action in the spheres covered by those EU rules.(76)

120.For certain other parts of the EUSFTA,(77) the Commission relies on the third ground under Article 3(2) TFEU. According to that ground, the European Union enjoys exclusive competence to conclude an international agreement ‘… in so far as its conclusion may affect common rules or alter their scope’. That ground corresponds with the test laid down by the Court in the judgment in ERTA for defining ‘… the nature of the international commitments which Member States cannot enter into outside the framework of the EU institutions, where common EU rules have been promulgated for the attainment of the objectives of the Treaty’.(78)

121.The so-called ‘ERTA principle’ offers a basis for the European Union to enjoy implied exclusive competence to conclude an international agreement. It was originally developed taking into account, on the one hand, the primary law requirement that the Member States take all appropriate measures to ensure fulfilment of their obligations arising out of the Treaties or resulting from action taken by the institutions and, on the other hand, the Member States’ duty to abstain from any measure capable of jeopardising the attainment of the objectives of the Treaties.(79) Thus, the European Union has exclusive external competence where there is a risk that the Member States, acting outside the framework of the EU institutions, might assume international obligations affecting common rules or altering their scope. That would circumvent the rules set out in the Treaties for implementing EU policies and would therefore be liable to call into question the very essence of the EU integration process.

122.The Court’s case-law offers some guidance on how to verify whether the conditions for applying the third ground are satisfied. There must be a specific analysis of the relationship between the proposed international agreement and EU law as it is in force at the material time. For the purposes of that analysis, and taking into account the principle of conferral, it is for the party asserting exclusive external competence to demonstrate it.(80)

123.The first step of that analysis involves defining the area concerned by the international agreement so as to identify what common rules are relevant. The subject matter of the agreement may be determined by taking into account the content and purpose of the agreement. In that regard, whilst it might be possible, when analysing so-called homogenous agreements, to describe the entire agreement as covering ‘an area’ and then verify whether common rules fully harmonise that area or whether that area is largely covered by such common rules,(81) that approach cannot be transposed so easily to an agreement such as the EUSFTA, which regulates different ‘areas’ in different chapters or parts thereof.

124.The Commission’s arguments in the present proceedings raise a novel question. Does the third ground under Article 3(2) TFEU apply only where ‘common rules’ have already been adopted by the EU institutions in the exercise of the European Union’s legislative competences, or can Treaty provisions themselves also constitute, under certain conditions, ‘common rules’? The Commission argues that the European Union’s exclusive competence as regards provisions of the EUSFTA concerning types of investment other than foreign direct investment results from the ‘common rules’ contained in Article 63 TFEU itself. I shall address that question when analysing Section A of Chapter Nine of the EUSFTA.(82)

125.The second step is to identify what common rules exist in the area. However, the scope of the international agreement and the common rules need not coincide fully.(83) It might be sufficient that the area within which the international agreement falls is largely covered by those common rules.(84) Relevant common rules may include not only legislation applicable to the specific area covered by the agreement but also legislation that has a broader scope of application.(85) Nor does it matter that such common rules are (not) found in one and the same EU legal instrument.(86)

126.Common rules are not only those rules that regulate situations involving a non-EU element and thus having an external dimension.(87) In identifying the common rules, it is necessary to consider both EU law as currently in force and the future development of those rules in so far as that development is foreseeable at the time of the analysis.(88)

127.The parties’ arguments regarding what common rules are relevant to the application of the ERTA principle to the areas of transport services and types of investment other than foreign direct investment suggest that there are various misunderstandings about ‘common rules’. The present proceedings offer an opportunity for the Court to provide the necessary clarification.(89)

128.The third step involves examining the (possible) impact of the conclusion of the international agreement on the relevant common rules. It is not necessary to show that there is such an impact: the risk that common rules may be affected or that their scope may be altered is sufficient.(90) Such a risk exists where the commitments under the international agreement fall within the scope of the common rules.(91) It is not necessary to show a possible contradiction, that is to say, a conflict, between the international agreement and the common rules.(92)

129.Where common rules fully harmonise the area governed by the international agreement,(93) exclusive competence to conclude that agreement is easy to establish. The harmonised rules are presumed to be affected by the international commitments resulting from concluding that agreement.

130.Where harmonisation is only partial, the fact that an international agreement (or part(s) thereof) concerns an area that is ‘largely covered’ by EU rules does not of itself automatically lead to the conclusion that the European Union has exclusive competence to negotiate that entire international agreement (or the relevant part) without examining whether the ERTA principle applies. Everything depends on the content of the commitments entered into and their possible connection with EU rules.(94)

131.Protocol No25 on the exercise of shared competence does not undermine the principles I have just set out. That protocol only concerns Article 2(2) TFEU. Its sole purpose is to define the scope of the European Union’s exercise of a competence that is shared with the Member States. It makes it clear that the scope of the exercise of that competence ‘only covers those elements governed by the ?European? Union act in question and therefore does not cover the whole area’. Protocol No25 therefore cannot be construed as limiting the scope of the European Union’s exclusive external competence in the cases referred to in Article 3(2) TFEU, as clarified by the case-law.(95)

132.Against that background, I now turn to examine the allocation of competences as between the European Union and the Member States as regards the EUSFTA.