Opinion procedure 2/15

Arguments

505.The Commission submits that Chapter Fourteen falls within the European Union’s exclusive competence over the common commercial policy because: (i) the objective of that chapter is to facilitate trade and investment; (ii) the provisions apply only with respect to measures relating to matters that are covered by other chapters of the EUSFTA; and (iii) the provisions seek to clarify and improve existing provisions in the WTO agreements, in particular Article X of the GATT 1994. Furthermore, those provisions also reflect basic due process considerations that are part of the general principles of EU law.

506.Neither the Parliament nor the Council has made specific arguments in relation to Chapter Fourteen.

507.Few Member States have taken a position on Chapter Fourteen. The arguments put forward are that, on the one hand, Chapter Fourteen concerns the exercise of national administration, recourse to administrative procedures and judicial protection as regards administrative measures and, on the other hand, that the Commission’s argument presupposes that the European Union enjoys exclusive competence as regards all other parts of the EUSFTA. In so far as Chapter Fourteen is aimed at giving effect to other parts of the EUSFTA for which the European Union’s competence is not exclusive, however, it cannot fall within the European Union’s exclusive competence. Nor do the provisions of Chapter Fourteen themselves specifically relate to international trade. Finally, matters related to justice in Articles 14.5 and 14.6 of the EUSFTA do not fall within either the exclusive or the shared competences of the European Union: they fall outside the scope of Article 81(2) TFEU (concerning judicial cooperation in civil matters).

Analysis

508.Chapter Fourteen sets out transparency, consultation and better administration obligations that apply to laws, regulations, judicial decisions, procedures and administrative rulings that may have an impact on any matter covered by the EUSFTA (so-called ‘measures of general application’).(394) That chapter is included in particular because of the impact of regulatory environments on trade and investment between the Parties.(395) The obligations in Chapter Fourteen apply together with similar obligations, having similar objectives, found in other chapters of the EUSFTA.(396)

509.Thus, Chapter Fourteen applies horizontally to all chapters of the EUSFTA and only as regards matters covered by those chapters. I therefore consider that the main thrust of Chapter Fourteen is not to regulate administrative procedures and judicial protection as such. The obligations in that chapter are triggered solely where measures of general application have an impact on matters covered by the EUSFTA. Their objective and function are to render the regulation of the substantive matters covered by the EUSFTA effective, operational and enforceable.(397) The provisions of Chapter Fourteen (and more specific provisions regarding the same subject matter in other chapters) do not apply independently. They are by their nature ancillary; at the same time, however, they are essential to the smooth functioning of the EUSFTA.

510.Furthermore, transparency, consultation and administration of measures of general application regarding matters falling within the common commercial policy are essential to reduce or avoid obstacles to trade. Indeed, a lack of transparency, fairness and legal certainty can in itself constitute an obstacle to trade.(398) If due process is not accorded to traders and investors and no guarantees are in place to ensure that those traders and investors, as well as governments become acquainted with and adapt to measures of general application relating to trade and investment, the benefits of trade liberalisation obtained from the substantive rules in the EUSFTA might be lost. In addition, conditions of competition may be affected if those measures are not in fact applied or, in the absence of sufficient safeguards, when specific transactions cannot in practice be given effect to. Traders might abandon trading or investing or their transactions might be delayed or rendered more expensive.

511.Against that background, it seems to me that the common commercial policy covers rules and decisions on publication, administration and administrative and judicial review of measures of general application that have an impact on matters covered by the EUSFTA that are specifically connected to international trade or investment. Whilst obligations in that regard do not apply to the substantive content of those measures, they are, in the same way as substantive obligations, essential to achieving the objective of promoting and facilitating trade and investment and they have direct and immediate effects on trade.

512.In my opinion, those obligations perform a similar function in the context of external policies other than the common commercial policy that are relevant to the matters covered by the EUSFTA. In concluding agreements with third States as regards other matters falling within the shared or exclusive competence of the European Union (such as transport, environmental protection or the promotion of portfolio investment), the European Union’s competence must include power to decide on provisions that are aimed at ensuring the effectiveness of the commitments to which the European Union agrees. Thus, for example, substantive commitments regarding environmental protection might be undermined if a third country were to deny EU nationals access to judicial review as regards environmental measures of general application where such judicial review is available to its own nationals in comparable circumstances.

513.I therefore consider that the allocation of competences over provisions regarding transparency and administrative and judicial review of measures of general application (in Chapter Fourteen or in other chapters) must follow the allocation of substantive competences.