The ‘sidelining’ of the European Parliament from the EU-US Trade and Technology Council (TTC): TTC(s) as post-Democracy Divas or Disasters?

 

 

Professor Elaine Fahey, Institute for the Study of European Law, City Law School, City, University of London*

Elaine.fahey.1@city.ac.uk

 

* Professor of Law at the City Law School, City, University of London; Jean Monnet Chair in Law and Transatlantic Relations 2019-2022; co-director of the Institute for the Study of European Law (ISEL), City Law School since 2016; in 2023, Visiting Professor at the American University, Washington College of Law (WCL) and Senior Land Steiermark fellow at the University of Graz; Research interests: EU law, global governance, EU external relations and the EU as a global digital actor.

 

 

The EU-US Trade and Technology Council (TTC)

 

A Transatlantic Trade and Technology Council (TTC) has been set up quickly by the European Union (EU) with the US at the outset of the US Biden administration. It is not a trade negotiation and does not adhere to any specific Article 218 TFEU procedure, although it has many signature ‘EU’ characteristics. The TTC has high-minded goals to ‘solve’ global challenges on trade and technology with its most significant third country cooperating partner.  Yet it is notably not the only recent Council proposed by the EU- there is also a new EU-India Trade and Technology Council. These new Councils represent a new modus operandi for the EU to engage with ‘complex’ partners, comprising executive to executive engagement, meeting agency counterparts regularly in close groups in an era of EU trade policy deepening its stakeholder and civil society ambit overall. The TTC has a vast range of policy-making activities, traversing many areas of EU law.  Their precise selection and future is difficult to understand in EU regional trade and data policy, seemingly pivoting, like US trade law, to executive-led soft law.

 

One entity not officially to be found within the TTC is the European Parliament (EP).  The EP is formally not part in any way of the EU-US Trade and Technology Council (EU-US TTC).  The TTC has held three ‘high-level’ political meetings so far escribed as executive to executive ‘ministerial’ meetings steer cooperation within the TTC and guide its 10 working groups on technology standards, secure supply chains, tech regulation, global trade challenges, climate and green technologies, investment screening and export controls. The first two meetings focused on launching the TTC and setting its agenda, while the third – in December 2022 – was described as a ‘shift to deliverables’. The TTC strikingly has a vast range of global law-making goals and has received public critique for either ‘under-performing’ or for its overbroad focus. It comes at the back of significant EU-US collaboration in data privacy.

 

This short blog considers the merits of the placement of the EP. It considers its de facto and de jure ‘sidelining’ from this era of EU-US relations, in an ostensible age of parliamentarisation and widening participation.  

 

EP powers in external relations: increasingly empowered at all stages … to a point

 

The EP is increasingly empowered politically and legally in international relations including important powers of consent to approve international agreements in a wide variety of circumstances, pursuant to the EU treaties in Article 218(6)(a) TFEU, with information and veto rights. The EP is excluded from the critical stage of the opening of negotiations on external relations agreements.  Many of its powers represent a very end-point of diplomacy, politics and technical issues, in reality, temporally earlier issues are increasingly important in a world where soft international economic law prevails and trade agreements are viewed as old-fashioned. As a result, the EP uses many soft law resolutions to advocate legal positions in the shadow of its veto. The EP has, however, also been granted important information rights in Article 218(10) TFEU, which have been given constitutional significance by the CJEU in key caselaw initiated by the EP.

 

However, similar to or mimicking the US the EU increasingly uses ‘soft’ international arrangements rather than formal international agreements in establishing relations with non-EU states.  Yet the use of the many forms of soft law in EU external relations runs the risk that parliamentary influence is by-passed.  

 

 

The EP in EU-US relations: a striking history of litigation and evolving legal powers

 

The EP record on EU-US relations is quite striking, from civil liberties to trade, using its many and evolving legal powers. The EP litigated notoriously the EU-U.S. Passenger Name Records Agreement (PNR) and swiftly rejected the EU-US Transatlantic Terror and Financing Programme (TFTP) (Swift) giving it ever more legal prominence in EU-US relations. The EP did not issue recommendations on the opening of EU-US trade negotiations in 2019 and the EP notably even rejected a draft resolution recommend the opening of Trump-era EU-US trade talks relating to concerns as to the Trump administration, Eastern European country visas for the US, accepting the so-called mini-Lobster trade agreement with difficulty. The EP had a highly prominent role in compelling more transparency to the EU-US Transatlantic Trade and Investment Partnership (TTIP), through illegal leaking negotiation texts in the public interest.

 

The EP in TTC: self-sidelining?

 

However, it can now be said that the EP is not per se helping itself as to TTC. The EP has once received a briefing from the Commission through its INTA Trade committee on the TTC. The EP thus appears to be ‘monitoring’ the TTC through INTA- although this seems very odd as to why EP technology and industry committees might be any less involved than trade in a ‘trade and technology’ venture. One meeting of the INTA committee with two Commissioners held in December 2022 few tech committees MEPs were invited – and appeared to have few critical questions of the TTC. The EP has issued one critical press release via its trade committee publicly, in late 2022 but little else, critical of its lack of trade results. However, democratic scrutiny has been repeatedly mentioned by the EP as to the TTC-  via the European Parliamentary research service ‘EPRS’ briefings - rather than via an EP resolution- arguably downgrading its importance and EP engagement with it.

 

 

Stakeholders and the TTC - civil society, industry and the EP all lumped in together?

 

It is important to say that the TTC has a range of engagement strategies for stakeholders. A TTC Stakeholder Assembly was organised by the Trade and Technology Dialogue (TTD) which adopts the EU international relations lexicon of dialogues with stakeholders, increasingly found in EU trade negotiations and resulting agreements. One may say that it is confusing series of alphabetised meetings called the TTD, meant to support the TTC. The sheer range of issues and topics considered by the TTD by zoom- using breakout rooms- is particularly remarkable and easily accused of being ill-focused. The lack of formal accountability here appears striking also with stakeholder sessions run by thinktanks for the EU. High level US administration, professional lobbyists and/ or thinktanks and EU institutions all appear here to have privileged input and capacity to influence and scrutinise- but less so the EP.

 

 EU in the US:-  increasing EP and EEAS physical site offices

 

The sidelining of the EP in the TTC is notable given the EU’s ratcheting up of institutions and diplomacy in the US recently. In 2010, the EU established a dedicated structure with the explicit task of channelling and deepening ties between the EU and US legislatures - a European Parliament Liaison Office (EPLO) – notably with no US equivalent. The EPLO sits alongside physically the European External Action Service (EEAS) in Washington DC in the same building entitled the ‘The EU and US,’ but notably on the floor below it (metaphorically?). EPLO Washington DC has added a ‘hard’ dimension to institutionalising the EU-US inter-parliamentary relationship. Aside from the EEAS office in Washington DC and the EPLO in Washington DC alongside it, the EU recently opened its new EEAS office in San Francisco, California, as a self-professed global centre for digital technology and innovation. Its mission was said to be to promote EU standards and technologies, digital policies and regulations and governance models, and to strengthen cooperation with US stakeholders, including by advancing the work of the EU-US TTC. The office was said to work under the authority of the EU Delegation in Washington, DC, in close coordination with Headquarters in Brussels and in partnership with EU Member States consulates in the San Francisco Bay Area- but again without any mention of or reference to the EP or EPLO in the US.

 

 

Conclusions: the real harm of soft law councils?

 

The EP is arguably legally excluded from the new era of soft international economic law that the EU is readily subscribing to, to a high degree. The rights of the EP have evolved significantly - even in an age of soft law in international relations.  The TTC is following an EU law blueprint in effect legitimising its executive-led action but it is also acting contrary to the thrust of much EU international relations practice which is about widening and deepening participation.

 

The harm of ‘soft law’ councils remains very real if it becomes mainly executive to executive sidelining of parliaments.

 

Where entities such as the US have declared trade agreements to be old fashioned in favour of soft law framework agreements, the EU had always appeared less so inclined as a rules-based multilateralist.

 

The EP in transatlantic relations has been highly effective, engaged and participating and should not necessarily be formally excluded from this new era of EU-US relations, privileging TTC contacts.

 

 

The ‘centre of gravity’ test and the CFSP: Continuing the saga with Case C‑180/20 Commission v Council (CEPA) on EU/Armenia relations

 

Narine Ghazaryan, Assistant Professor in EU and International Law, Radboud University Nijmegen

Photo credit: Jesper Ahlin Marceta via Wikicommons

 

Introduction

The judgment in Case C-180/20 (the CEPA case) is the next development in the interinstitutional battle over the boundaries of the Common Foreign and Security Policy (CFSP) with no signs of abating in sight. In this case, the Commission challenged the Council’s departure from the latter’s proposal for a Council Decision taken within the Partnership Council under the EU-Armenian Comprehensive and Enhanced Partnership Agreement (CEPA). Keen to follow the CJEU’s judgment in Commission v Council (Agreement with Kazakhstan) (C‑244/17, EU:C:2018:662) (the Kazakhstan judgment), the Commission removed Art 37 TEU (the legal base for treaties with non-EU countries concerning the CFSP) as a substantive legal basis in its amended proposal for a Council decision – only for the latter to opt for a new approach of adopting two separate decisions, one of which was based on Article 37 TEU, in conjunction with the relevant procedural provisions.

The splitting of a decision authorising a signature of an international agreement has happened in the past. For instance, the Council adopted a separate decision authorising the signing of the CFSP-related provisions of the Association Agreement with Ukraine on a provisional basis. This might have been viewed as necessary for the provisional application of the agreement given the political context surrounding the signature of the Agreement. Unlike the latter case, however, in CEPA it is the decision on the institutional framework of the agreement adopted on behalf of the EU within the CEPA Partnership Council that has been split in an apparent attempt to circumvent the Kazakhstan judgment.

The case solidifies the practice of applying the centre of gravity test in competence delimitation cases involving the CFSP as part of the trend ‘towards a consolidation of EU external action’ (Cremona, p 33). Arguably, it also attempts to clarify the application of the test itself.

 

Facts and Legal Background

In November 2017, the Council authorised the signing of the CEPA and the provisional application of some parts of the agreement in a decision based on Article 37 TEU and on Article 91 and Article 100(2) as well as Articles 207 and 209 TFEU, in conjunction with Article 218(5) and (7) and the second subparagraph of Article 218(8) TFEU.

Following the CJEU judgment in the Kazakhstan case, in July 2019, the Commission considered it safe to remove Art 37 TEU from the legal basis for the Council Decision on the position to be taken on behalf of the EU within the CEPA Partnership Council as regards the adoption of the Rules of Procedure of the Partnership Council the Partnership Committee, subcommittees and other bodies set up by the Partnership Council, and the establishment of the list of subcommittees. The Decision was to be based on Article 218(9) TFEU, as a procedural legal basis, and on Article 91 and Article 100(2) as well as Articles 207 and 209 TFEU as substantive legal bases.

Subsequently, Coreper decided to split the decision into two with a separate decision based on Art 37 TFEU alongside the procedural provisions in Article 218(8) and Article 218(9) TFEU for CEPA’s Title II on political dialogue and reform, and cooperation in the field of foreign and security policy. The Commission, supported by the Czech Republic, brought an action for annulment under Article 263 TFEU in April 2020. It challenged the exclusion of Title II of the CEPA from the scope of Decision 2020/245 (the main decision), as well as the choice of Art 37 TEU as the substantive legal basis for Decision 2020/246 (Title II decision), objecting in addition to the addition of the second paragraph of Article 218(8) TFEU as a procedural legal basis for Decision 2020/246. By its second plea, the Commission specifically challenged the artificiality of the Council’s approach creating different centres of gravity in order to manipulate the relevant voting rules. 

 

Opinion of Advocate General Pitruzzella

AG Pitruzzella first of all attempted to clarify the centre of gravity test by rejecting the arguments about a hierarchy existing between the elements of ‘purpose’ and ‘content’ of the measure. Instead, the application of the centre of gravity test depends on the circumstances of each case and is ‘highly pragmatic’ (para 28). While addressing the line of case law where the purpose of the measure appeared to impact the outcome of the test at first sight (Portugal v Council, as well as the Philippines judgment), the AG notes the importance of other factors which affected the findings in the relevant cases, including the context of the measure, the variety of purposes or several components (paras 29-33). He then refers to the Kazakhstan judgment as one which brought significant clarifications to the case law through applying the ‘classic’ centre of gravity test to delimiting the CFSP from TFEU competences for the purpose of the application of Art 218 TFEU (para 35-36). In addition to the ‘classic’ test, the AG notes also the centre of gravity test applied by the Court using the ‘quantitative’ and ‘qualitative’ criteria to analyse the content of the relevant international agreement (para 37).

According to the AG, irrespective of whichever test is applied, within the scheme of the CEPA the CFSP-related component is not ‘distinct from the other components’ which would require the reliance on Art 37 TEU (para 55). He then applied the Philippines judgment to the facts of the case. First of all, he considered whether the CEPA provisions related to policies, other than those identified as predominant (transport, trade and development cooperation), may also fall within that policy or whether they go beyond the framework of that policy. Based on a broad conception of development cooperation in line with CJEU case law, in his view, the agreement is first of all aimed at strengthening economic and trade cooperation aimed at promoting sustainable development (paras 57-62). The development cooperation being multidimensional in nature may be linked to Title II of the CEPA removing the need for a separate decision (para 63).

The AG then considers the second part of the two-step test applied in the Philippines judgment to identify whether the CFSP-related provisions of CEPA contain such extensive obligations that they constitute objectives distinct from those of development cooperation. Given the declaratory nature of Title II provisions, he concluded that they do not set obligations requiring a separate legal basis in Art 37 TEU (para 65-68). Based on the approach in the Philippines judgment, he concludes that Art 37 TEU is superfluous as a legal basis.

For the completeness of his analysis, the AG also addresses the possibility of applying the approach taken in the Kazakhstan judgment – the qualitative and quantitative evaluation of the provisions of the agreement – concluding in one paragraph that the answer would be the same as above (para 70). Given the answer to the first plea, the AG considered it unnecessary to answer the second plea.

 

Judgment

At the outset, the Court clarifies the issue concerning the procedural legal basis, in particular the inclusion of the second subparagraph of Art 218(8) and the relationship between Art 218 and 219 TFEU. As noted in the Kazakhstan judgment, the voting in the Council in relation to a position to be adopted on behalf of the EU in a body set up an international agreement will depend on whether the situation is covered by the first or the second paragraph of Art 218(8) (para 30). This in turn will require an inquiry into the substantive legal basis (para 31). The Court then turns to the centre of gravity test, confirming the AG’s position that there is no hierarchy between the aim and the content of the measure (32-33). Rather, all objective factors related either to the aim or the content of the measure must be considered in each specific case to determine the field covered in the relevant decision, including the identification of predominant purpose or component if the measure pursues a twofold purpose or has more than one component. The CJEU repeats the established position according to which only if the measure ‘simultaneously pursues a number of objectives or has several components that are inextricably linked, without one being incidental in relation to the other’ can such a measure be based on different legal bases, which is not possible if the relevant procedures are incompatible (para 34). The question is therefore whether the areas covered in the agreement which require qualified majority voting can be considered as predominant in terms of the content or the purpose of the agreement taken as a whole. The three main areas covered by the agreement include transport, common commercial policy and the development cooperation based on Articles 91, 207 and 209 TFEU.

As far as the content of the Agreement is concerned, the Court first of all takes a closer look at the provisions contained in Title II, including on the aims of political dialogue, domestic reform, foreign and security policy. It sides with the AG in confirming that these provisions are few in number compared with 386 articles contained in the agreement which mostly relate to trade and development cooperation. As far as the nature of obligations in Title II is concerned, the Court observes that they are programmatic without setting specific programme of actions for the parties (para 46).

As for the aims of the Agreement, Article 1 on the objectives read alongside with the preamble and the majority of the provisions demonstrate that the CEPA is a framework agreement established to advance bilateral cooperation in the fields of transport, trade and development cooperation (para 47-48). The Court adopts a broad reading of development cooperation in line with its pre and post-Lisbon case law (the ECOWAS and the Philippines judgment) which in the case of CEPA is not negated by the CFSP-related specific objectives in Article 1 on the aims of the agreement. Crucial for the Court is the fact that the enumeration of the CFSP-specific objectives in Article 1 is not ‘accompanied by any programme of action or concrete terms governing cooperation’ in the field of CFSP (para 52).

The CJEU also dismissed France’s argument that the presence of the Nagorno-Karabakh conflict should necessarily be seen as part of the context of the agreement placing its security component at the forefront. According to the Court, the CEPA includes no provisions with specific obligations concerning the Nagorno-Karabakh agreement, and the contested decisions concerning the functioning of the CEPA institutional framework do not entail any concrete measures between the parties taken based on the CEPA that might be relevant for the conflict (para 54-55).

Ultimately, the Court finds that the CFSP-related components of the CEPA are not such as to constitute an ‘autonomous’ component of the agreement, and orders the annulment of both decisions which also results in the dismissal of the Commission’s second plea (para 56-59). In line with the established position, the CJEU maintained the effect of the relevant decisions for the sake of legal certainty until the Council rectifies the position by adopting a new decision in compliance with the judgment.

 

Commentary

The main question to ask is whether the judgment merely trails the previous jurisprudence or adds any clarifications to the case law.

Council’s attempt to prevent the ‘absorption’ of the CFSP?

Despite suggestions that splitting the legal basis ‘will ensure the non-affectation between CFSP and non-CFSP procedures and preserve the special status of the CFSP in the EU legal order’ (MIadzvetskaya 2020), with the CEPA judgment the Court has rejected such an approach. Similar to the Kazakhstan judgment, there is no recourse to Article 40 TEU which further indicates that the CFSP does not have an inherently distinct character requiring strict guarding in each and every case where the division of competences alongside TEU and TFEU legal bases is contested. Rather, the CEPA judgment confirms once again that the centre of gravity test applies similar to all other cases of competence delimitation.

The insertion of Article 37 TEU by the Council in this respect comes across as an attempt to bypass the Kazakhstan judgment by artificially splitting the relevant decision. This led to the odd outcome of a joint substantive legal basis for the entire agreement and a split legal basis for a decision within the Partnership Council on the institutional framework of CEPA meant to apply to the entire agreement. The Council’s argument that the lack of objection by the Commission toward the inclusion of Art 37 TEU as a substantive legal basis when authorising the signing of the CEPA justifies its approach was rightly rejected by the AG: on its own, this fact does not justify such an outcome.

The same argument can be said to give away the underlying concern of the Council after the Kazakhstan judgment: if the decision on the adoption of the CEPA institutional framework can exclude Art 37 TFEU as its substantive legal basis alongside the relevant procedural provision requiring unanimity, can that in principle entail that Art 37 TEU can also be omitted as far as the decision on approving the agreement itself is concerned? This concern is not ungrounded since the CJEU’s proclamation in the Kazakhstan judgment that the links between EU-Kazakhstan Partnership Agreement and the CFSP ‘are not sufficient for it to be held that the legal basis of the decision on the signing of that agreement, on behalf of the EU, and its provisional application had to include Article 37 TEU’ (emphasis added, para 43).  

As a result, Art 37 TEU as such is unnecessary as a legal basis for decisions authorising the signature of framework agreements focused predominantly on trade and development cooperation. Indeed, there are already such examples, including the Framework Agreement on Comprehensive Partnership and Cooperation with Vietnam. The CEPA’s CFSP provisions could have similarly have been viewed as insufficient to necessitate a separate legal basis in Art 37 TEU for the decision approving the agreement. One can even claim that the Kazakhstan judgment casts a retrospective shadow on the inclusion of Article 37 TEU as a substantive legal basis for decisions signing trade and cooperation agreements. It is not a surprise therefore that in justifying its position in CEPA the Council raised the fact that the Commission did not challenge the inclusion of Art 37 TEU among the legal basis for the decision authorising the relevant agreement. One can therefore argue that the splitting of the decisions on the part of the Council was a reaction to the Kazakhstan judgment: the Council is keen on preventing the ‘absorption’ of the CFSP. It perhaps anticipates a further challenge to the very practice of including Art 37 TEU as a substantive legal basis for framework agreements focusing predominantly on trade and development cooperation.

What next for the ‘centre of gravity’ test?

The CEPA judgment is worthy of attention in terms of the role of the quantitative and qualitative criteria as far as the centre of gravity test is concerned.

The Court’s approach in this regard can be contrasted with that of the AG Pitruzzella. The latter considered the use of the ‘quantitative’ and ‘qualitative’ tests as second to the ‘classic’ centre of gravity test. He clearly has a preference for the two-step test used in the Philippines judgment, dedicating most of his attention to its application. Only after reaching his conclusion based on the application of the Philippines judgment, does he note that the same conclusion would have been reached if the quantitative/qualitative criterion is applied as seen in the Kazakhstan judgment.

The CJEU, on the other hand, does not make a similar distinction between the ‘classic test’ and the quantitative and qualitative criteria used in Kazakhstan. Unlike in the latter case, however, the CJEU bases its findings on a much more substantive and systematic analysis of the aim and the content of the agreement. The CEPA judgment makes an effort to interlace the quantitative and qualitative criteria with the approach used in the Philippines judgment (para 45). For instance, with reference to the content of the agreement, the Court carries out a quantitative and qualitative analysis of the relevant provisions concluding that they should be viewed with regards to the essential object of the agreement rather than in terms of individual clauses ‘provided that those clauses do not impose such extensive obligations … that those obligations in fact constate objectives distinct from those of development cooperation’(para 45).

Similarly, in relation to the aim of the agreement, the quantitative and qualitative overview of the provisions is linked to the tried and tested approach of Portugal v Council and Philippines judgments (paras 47-53). In looking at the objectives, the Court does not attempt to identify traditional CFSP legal objectives (as was suggested by Advocate General Bot in the Mauritius judgment), and merely refers to objectives which ‘may be linked to CFSP’ (para 52). It finally reaches a conclusion that the CFSP-linked elements ‘cannot be regarded as constituting a distinct component of that agreement but it is, on the contrary, incidental to the principal components’ concerning the development cooperation. As mentioned above, the Court takes a broad view of development cooperation in line with its previous case law, including ECOWAS. In fact, the broad interpretation of the development cooperation should be seen as the ‘lasting effect’ ECOWAS had made on EU external relations law (Hillion and Wessel, 582-583).  

Furthermore, in addition to the content and the aim of the agreement, its context also featured in the judgment. While the CJEU’s approach has been criticized in the past for giving significant weight to the context of the agreement (Sánchez-Tabernero, p 910), CEPA demonstrates that the context does remain one of the objective factors reviewed by the court, particularly if relevant arguments have been raised by the parties. At the same time, the CJEU is wary of artificial context constructs, such as the attempt by France to use the Nagorno-Karabakh conflict to create a security-related context for the agreement, which was rightly rejected by the Court.

 

Conclusion

The CEPA judgment should be seen as another stop in the long saga of the inter-institutional battle for competence delimitation in EU external relations. The Council, ever sensitive to guarding the CFSP, attempted to bypass the outcome of the Kazakhstan judgment only for the Court to cast more shadow on the practice of including Article 37 TEU as a legal basis for decision on signing of trade and cooperation agreements. The CEPA judgment also offers a more substantive and thoughtful application of the centre of gravity test in comparison with the Kazakhstan judgment. Judging by the past experience, CEPA will not be the last call on this matter.

 

References:

M Cremona, ‘The Principle of Conferral and Express and Implied External Competences’ in E Neframi and M Gatti (eds), Constitutional Issues of EU External Relations Law (Nomos 2018)

C Hillion and RA Wessel, ‘Competence Distribution in EU External Relations after ECOWAS: Clarification or Continued Fuzziness?’ (2009) 46 CMLR 551

SR Sánchez-Tabernero, ‘The Choice of Legal Basis and the principle of consistency in the procedure for conclusion of international agreements in CFSP contexts: Parliament v. Council (Pirate-Transfer Agreement with Tanzania)’ (2017) 54 CMLRev 899

 

New Developments in the context of the European Citizens’ Initiative: General Court rules on ‘Stop TTIP’

Anastasia Karatzia, Assistant Professor in EU Law, Erasmus University Rotterdam and currently Visiting Research Fellow at the School of Law and Social Justice, University of Liverpool

Introduction

A few months ago, we saw the first annulment by the EU’s General Court of a Commission Decision refusing registration of a proposed European Citizens’ Initiative (ECI), in the case of Minority SafePack. Last week, there was an even bigger development in the case law of the General Court regarding the interpretation of the ECI’s legal admissibility test: in the Stop TTIP case[1] the Court annulled another Commission’s Decision, this time not on a procedural ground such as the one in Minority SafePack, but on the substantive ground that the Commission breached Article 11(4) TEU (which sets out the power to adopt the ECI law), and Articles 2(1) and 4(2)(b) of the ECI Regulation, which sets out one of the criteria for the legal admissibility test.

In Stop TTIP, the General Court clarified a matter of contention between ECI organisers / stakeholders and the Commission viz. the scope of an ECI and, more specifically, the way in which the Commission had limited the acceptable subject-matters for the purposes of registering an ECI. These limitations were stipulated in the Commission’s letter of response regarding the refusal of registration for the proposed ‘Stop TTIP’ Initiative, which was submitted for registration in July 2014. The Initiative proposed to cease the negotiations for the Transatlantic Trade and Investment Partnership agreement (TTIP) between the EU and US, and to prevent the conclusion of the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada.

In more detail, ‘Stop TTIP’ had invited the Commission to ask the Council to repeal its decision to authorise the opening of the TTIP negotiations under Article 218(2) TFEU (which is the legal rule on the process of the EU negotiating treaties). It also asked the Commission to submit a proposal for a Council decision not to conclude CETA. In September 2014, the Commission replied to the organisers that both their proposals had been rejected on the basis of Article 4(2)(b) in conjunction with Article 2(1) of the ECI Regulation, because they fell outside the framework of the Commission’s powers to submit a proposal for a legal act of the Union for the purpose of implementing the Treaties.

The Commission’s reply revealed two limitations on the scope of the ECI.[2] First, the Commission stipulated that an ECI cannot invite the Commission to adopt preparatory acts. The Commission argued in its reply that its proposals to the Council under Article 218 TFEU to authorise the opening of negotiations for international agreements were not proposals for legal acts. The Council Decisions authorising the opening of negotiations for an international agreement are preparatory acts that produce legal effects only between the EU and its Member States and between the EU institutions. Therefore, the Commission’s relevant proposals to the Council lacked legal effect against third parties. Accordingly, the position of the Commission was that ‘Stop TTIP’ was not proposing any legal acts for the purpose of implementing the Treaties and could not be registered. Second, the Commission declared that an ECI cannot invite the Commission to propose a decision not to adopt a legal act such as a proposal not to conclude CETA, or to refrain from proposing a legal act. Such a proposal ‘would not deploy any autonomous legal effect beyond the fact of the legal act at issue not being adopted.’ The negative nature of the ‘Stop TTIP’ proposals, together with the fact that it arguably did not propose ‘legal acts’ as required by Article 11(4) and Article 2(1) ECI Regulation, led to the refusal by the Commission to register it. Notably, the limitations imposed by the Commission are not clearly indicated in the ECI Regulation. Instead, they resulted from the Commission’s own interpretation of the ECI’s legal framework.

After the Commission’s rejection, the ‘Stop TTIP’ organisers followed a twofold course of action: they brought a case before the EU General Court, which is the first instance part of the Court of Justice of the European Union (CJEU), contesting the Commission’s decision to refuse registration of their Initiative, and they started what they named ‘a self-organised ECI’, which was a campaign to collect signatures outside the contours of the ECI’s legal framework. The campaign went on to collect more than 3 million signatures, which the organisers handed over to the Commission in October 2015.

It becomes apparent from the above overview that the significance of the General Court’s judgment in the Stop TTIP case does not derive only from the question of whether the specific Initiative was wrongly refused registration, but also from the question of whether the ECI’s scope to propose EU action was rightly limited by the Commission beyond what is explicitly written in the ECI Regulation. In this sense, the General Court’s judgment is a milestone both for the ECI organisers themselves and for the functioning of the ECI as a mechanism for citizens’ participation. This short commentary will touch upon the key aspects of the judgment.

The arguments of the parties

The applicants in the case made two main arguments. They claimed that the Commission (i) breached Article 11(4) TEU and Article 4(2)(b) of the ECI Regulation, and (ii) breached the principle of equal treatment (Article 20 of the EU Charter of Fundamental Rights) because it had registered in the past the ‘Swissout’ Initiative which had very similar objectives with ‘Stop TTIP’. The judgment focused on the first ground of review and did not deal at all with the second.

In support of their claim, the applicants brought forward three main arguments. Firstly, they argued that the Council’s Decisions authorising the conclusion of an international agreement under Article Article 218(5) TFEU is not a preparatory act. With regard to the Initiative proposals concerning the CETA negotiations, which were already taking place at the time of the request for registration, a Decision by the Council to the Commission not to conclude CETA would not be a preparatory act but an act with legally binding effects. Regarding the Initiative proposals concerning a proposal by the Commission to the Council to repeal the Decision authorising the negotiations for TTIP, such a Decision would result to the termination of the negotiations, and would have been final and legally binding. In any case, the scope of an ECI should not be limited to proposing legal acts with definitive, legally binding effects vis-à-vis third parties. Neither the background to the ECI Regulation, nor the ECI’s overall regulatory framework call for such a restrictive reading of the term ‘legal acts’ (para 12).

Secondly, the applicants argued against the Commission’s position that an ECI cannot concern acts that deploy legal effects only between the institutions concerned. For the purposes of the ECI, the term ‘legal act’ should be defined broadly in light of Articles 288 – 292 TFEU, and should include Commission’s Decisions that are outside the ordinary legislative process (para 13).

Thirdly, the applicants referred to the potentially ‘destructive effect’ of the proposed Initiative on the negotiations for TTIP and CETA. This alleged ‘destructive effect’ cannot be put forward as a ground for refusal under the rationale that the Initiative’s proposals did not have the purpose of implementing the Treaties. In the view of the applicants, ‘the right of citizens to participate in the democratic life of the Union includes the possibility of citizens acting with the purpose of modifying, reforming, ratifying, or asking for a partial or total annulment of EU law’ (para 14).

The Commission’s main counter-arguments supported the position expressed in its 2014 letter of response to the organisers. The Commission reiterated its position that the Council Decision to approve the opening of negotiations for an international agreement is only preparatory because it only produces legal effects between the two EU institutions. Based on a ‘systematic and teleological interpretation’ of Articles 2(1) and 4(2)(b) of the ECI Regulation, it can be concluded that an act of preparatory character falls outside the definition of a ‘legal act’ for the purposes of registering an ECI (para 19). This argument was further supported by the assertion that the notion of democratic participation in the EU refers to the participation of citizens only in matters which (potentially) fall under their legal sphere. Instead, the Council and the Commission enjoy sufficient democratic legitimacy to be the ones to adopt acts that affect the relationship between the EU institutions (para 20).

In addition, the Commission repeated its argument that an ECI cannot ask it not to propose a particular legal act or to propose a decision for the non-adoption of a legal act. Interestingly, it referred to Article 10(1)(c) of the ECI Regulation which deals with the final stage of the ECI process, whereby the Commission is obliged to issue a Communication setting out ‘the action it intends to take, if any’. From this, the Commission concluded that only ECIs that aim to the adoption of a legal act or to the repeal of an existing legal act can be registered. Otherwise, a declaration by the Commission that, as a response to an ECI, it does not aim to propose the adoption of a legal act would have excessively limited the Commission’s monopoly of legislative initiative. According to this argument, an ECI asking for the Council to repeal a Decision opening the negotiations or asking it not to conclude an agreement, would have been an ‘unacceptable interference’ in an on-going legislative procedure (para 21).

The judgment of the General Court

The General Court began with a reference to the ECI’s legal framework. It mentioned Article 11(4) TEU, and the ECI Regulation, specifically Article 2(1) (definition of the ECI), Article 4(2)(b) (the legal admissibility test), and Article 10(1)(c) (the obligation of the Commission to respond to a successfully submitted ECI) (paras 23-27). It then explained that the ECI organisers had not asked the Commission not to submit a proposal to the Council for the signing and conclusion of TTIP and CETA. Instead, the organisers asked the Commission to submit to the Council two proposals: (a) a proposal to recall the authorisation for the opening of negotiations for TTIP; and (b) a proposal not to authorise the signing of TTIP and CETA and thus not to conclude these agreements (para 28). As such, the Court also clarified that the current case did not contest the competence of the Commission to negotiate TTIP and CETA. Instead, it was a challenge to the reasons given by the Commission for the refusal of the proposal (para 29).

Subsequently, the Court specified that the Commission has the competence to act in the way asked by the applicants, i.e. to submit to the Council the two proposals (paras 30-32), and went on to deal with the question of whether these actions can be excluded from an ECI either because they are preparatory acts, or because they are not necessary for the implementation of the Treaty, as the Commission had argued (para 33).

On the definition of a ‘legal act’ for the purposes of an ECI, the Court sided with the applicants: the notion of ‘legal act’ in Article 11(4) TEU, and Articles 2(1) and 4(2)(b) of the ECI Regulation cannot be interpreted to include only final EU acts with legally binding effects vis-à-vis third parties. The Commission’s position is not justified by the letter of the law or by the overall purpose of these provisions. This was all the more so since the actions in question, which concerned the conclusion of an international agreement, fit squarely into the definition of a ‘Decision’ in accordance with Article 288(4) TFEU, as clarified in Case 114/12 Commission v Council. Besides, a broad interpretation of ‘legal act’ is mandated by the democratic principle on which the EU is founded (Article 2 TEU) (paras 35-37).

In addition, the Court rejected the Commission’s argument that the Initiative could not have been registered because the suggested actions did not aim to the implementation of the Treaties and thus were destructive to the law-making process. According to the Court, there is nothing in Article 11(4) TEU or Article 2(1) ECI Regulation indicating that citizens cannot act through an ECI in order to prevent the adoption of a legal act. Furthermore, the conclusion of TTIP and CETA would have modified the EU legal order. As such, by advocating to stop the two agreements, the ‘Stop TTIP’ organisers were actually acting for the implementation of the current Treaties (para 41). In any case, Initiatives that propose the non-signature and non-conclusion of an international agreement produce legal effects since they may prohibit the modification of EU law intended by the said agreement (para 43).

Lastly, even though the Court did not explicitly address the applicants’ second claim on the unequal treatment of their Initiative in comparison with the Swissout Initiative, it did address the paradoxical situation that resulted from the treatment of the two Initiatives. This paradox resulted from the fact that, according to the Commission’s interpretation, an ECI could propose the termination of an existing international agreement but not the termination of the negotiations towards such agreement. The Court took a citizen-friendly approach in saying that citizens should not be obliged to wait until an agreement is concluded before they can contest the conclusion of the agreement through an ECI (para 44). In this sense, the Court has put proposals asking for the termination of negotiations on a par with those asking for the opening of negotiations, and has interpreted the scope of the ECI as being capable of encompassing both type of proposals.

Commentary

I had commented on an earlier publication that the ‘Stop TTIP’ case was a good opportunity for the CJEU to step in and point out the correct interpretation of Article 4(2)(b) of the ECI Regulation regarding proposals concerning the conclusion of international agreements. It would seem that the General Court has seized that opportunity. The judgment widens the scope of the ECI by completely overruling the Commission’s interpretation of legal admissibility in the particular context. In this sense, the judgment is a positive and constructive development not only for the ECI organisers, who had been waiting for it for almost three years, but also for those interested in starting an ECI campaign on a topic related to an international agreement, as well as for ECI stakeholders who have been calling for a more flexible legal admissibility test.

What makes the case especially interesting is the extensive reliance of the Court on the nature of the ECI as a democratic participation mechanism that intends to foster democratic dialogue and give citizens the opportunity to address the Commission in order to request action. For instance, the Court implicitly rejected the Commission’s first argument that a potential breach of Article 11(4) TEU was irrelevant and that the only relevant legal text should be the ECI Regulation which is based on Article 24 TFEU and stipulates the details of the legal admissibility test. Both the Court’s interpretation of ‘legal acts’ for the purposes of registering an ECI (paras 35-36) and that of ‘implementing the Treaties’ (para 41) relies on a joint reading of Article 11(4) TEU and the relevant provisions of the ECI Regulation. The Court even considered the ECI in light of the fundamental principle of democracy as included in the Preamble of the Treaty and the EU Charter of Fundamental Rights in order to broaden the scope of the right to bring an ECI beyond the Commission’s delineation (para 37).

In addition, the Court has held a more restrictive view than the Commission on what is an ‘unacceptable interference with the adoption of a legal act’ when it comes to an ECI. According to the Court, the very notion of citizens’ participation in the democratic life of the EU - of which the ECI is part - includes the possibility to ask for the modification, as well as the partial or total repeal of legal acts. A true form of citizens’ participation in the democratic life of the EU should give the opportunity to citizens to obstruct, or interfere with, the adoption of a legal act. Since it is entirely up to the Commission to decide the follow-up of a successfully submitted ECI after the public hearing of that ECI (Article 10 ECI Regulation), it could not be said that the registration of ‘Stop TTIP’ would have been an unacceptable interference with the legislative process or that it would have breached the principle of institutional balance (paras 45-46). It would seem, therefore, that the Court has taken into consideration the overall discretion of the Commission at the end of the ECI process when interpreting the legal admissibility test, which takes place at the beginning.

Given that this is only the second time that the General Court annuls a Commission’s decision to reject a proposed ECI, the answer to the question ‘what happens now?’ is not entirely clear. After the Minority SafePack case, the Commission registered the part of the ECI that it considered admissible. As a response to the judgment, the Commission also issued a Decision elaborating on its reasons for only registering part of the ECI. The situation this time around is more complicated. As mentioned above, the ‘Stop TTIP’ organisers went ahead with collecting signatures despite the refusal of their ECI. Impressively, within one year (October 2014 – October 2015) the campaign collected around 3.3 million signatures, more than any of the formally registered ECIs. Subsequently, the organisers stated in their website: ‘we demand that the European Commission treat us like a regular ECI which means we expect an official response from the European Commission and a public hearing in the European Parliament.’ The Commission is now faced with interesting dilemmas: Will it register the ECI or pursue the case further by appealing before the European Court of Justice? If it does register the ECI, will it accept the collected signatures or will it oblige the organisers to start over? In its plans to propose revisions to the ECI in the near future, will the Commission try to overturn the new judgment – or accept and fully incorporate it?

The factor of time also makes the upcoming Commission’s response to this case particularly noteworthy. Between 2014 and 2017 we have seen major developments with regard to TTIP and CETA, including 15 negotiating rounds on TTIP up to October 2016 and a proposal in July 2016 by the Commission to the Council for the signature and conclusion of CETA. More recently, the European Parliament voted in favour of CETA after Wallonia nearly blocked the agreement. All of these developments are in fact the exact opposite of what the ‘Stop TTIP’ organisers were requesting in their proposal, which indicates the importance of momentum to an ECI’s overall success.

On a final note, I wonder what the implications of the General Court’s judgment are with regard to future ECIs relating to Brexit. It would seem that the judgment has opened the door to ECI proposals objecting to a possible future agreement on the UK-EU relationship, assuming that such an agreement will be eventually negotiated on the basis of Article 207 and 218 TFEU. Of course we have a long way to go before this issue even becomes relevant – if it ever becomes relevant at all. However, such a scenario would certainly open a new dimension to citizens’ participation and voice in the Brexit process. Meanwhile, let’s see how the Commission will respond to Stop TTIP and how the organisers will continue their campaign.

Photo credit: Stop TTIP

Barnard & Peers: chapter 24

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[1] The judgment is not available in English yet. This commentary is based on my own translation from the Greek version and any translation errors are mine.

[2] I had elaborated on the Commission’s Decision in an older publication: A.Karatzia “The European Citizens’ Initiative in practice: Legal admissibility concerns” (2015) 40 EL Rev. 509, pp. 516-518

Hard Brexit Benefits? Change Britain’s £24 billion of unicorns

Professor Steve Peers

On Boxing Day, the pro-Leave group ‘Change Britain’ produced a ‘report’ (actually a press release with an annex) claiming £24 billion worth of benefits from a ‘hard Brexit’ – leaving the EU without participating in the single market or customs union. This claim was widely repeated uncritically by the press – although a later critique of the economics by Jonathan Portes was published, and the economic analysis in the report was also fisked by Sam Bowman.

Their comments cover a lot of ground, but it’s worth standing back and looking at the report as a whole – and at how poor the debate over Brexit has become.

The report produces its £24 billion sum from three sources: a) no further contribution from the EU budget; b) future trade deals; and c) cutting back ‘red tape’. Let’s look at each of these in turn, and then note what the report neglected to mention.

EU budget contributions

The report starts with the UK’s contribution to the EU budget: £19 billion if the UK budget rebate is not counted; £14 billion if the rebate is taken off; and £10 billion if the amount spent from the EU budget in the UK (on things like farm subsidies, research and regional development) is deducted. Change Britain accepts that the possible savings are £10-14 billion.

So this necessarily admits that the £19 billion figure – which was the basis for the £350 million/week number ‘on the side of the bus’ during the referendum – was a lie all along. It was a lie because as I point out here, with further details and links, the rebate money is never ‘sent’ to the EU, and the UK has full control over how that rebate money is spent and whether the rebate is retained in future.

Starting by admitting (albeit only indirectly) that they previously told a huge lie is not a good beginning for the report’s authors, since it puts the credibility of anything else they say in question. But let’s give them the benefit of the doubt and examine their other claims separately.

Cutting back ‘red tape’

The report estimates possibly several billion pounds savings from scrapping some EU laws – concerning the issues of air pollution, animal welfare, data protection, GM foods, chemicals regulation, air passenger compensation, battery pollution and company law. These estimates should have been accompanied by numerous health warnings.

First, as Portes points out, these estimates (and the trade estimates), taken with the estimates on contribution savings, mix up several different things: public finances and business costs. Adding the numbers together is economically incoherent.

Secondly, most or all of the ‘red tape’ referred to has a non-economic value: many people prefer cleaner air, more privacy and better treatment of animals, for instance, quite apart from the impact on GDP. There may, in any event, be indirect economic costs from pollution and less secure data, among others.

Thirdly, in some cases there may be savings to business but not the overall economy. Take air passenger compensation: if passengers are not compensated for delayed flights, the airlines save money – but passengers no longer have that compensation money to spend. True, airlines might pass their savings on to passengers in general – but still the passengers who previously received the compensation money will no longer be getting it. Either way, how would the overall economy benefit? The same goes for cuts to workers’ holiday pay and other worker benefits that business groups sometimes campaign for (though not on this occasion): cuts will save businesses money, but how will the corresponding cuts in workers’ spending power make the economy as a whole better off?

Fourthly, some of the laws concerned are related to market access to the EU – most obviously, the biggest proposed saving, data protection law. As I discuss here, EU data protection law limits data transfers from non-EU countries without an ‘adequate’ level of data protection. Scrapping that law (which would be complicated anyway by the right to privacy in the ECHR and the separate Council of Europe data protection Convention) would mean limits on market access to the EU. This would surely have an impact on the economy. 

Future trade deals

The report claims that the UK would generate exports to non-EU countries by signing its own trade deals. It calculates these increased exports by taking EU estimates of the trade effect of new deals with certain countries and assuming that the UK would benefit from 15% of that increase, because the UK has 15% of the EU’s trade with non-EU countries. As Bowman points out, this is nonsense: the percentage of EU trade with non-EU countries which is held by the UK varies widely and depends on many factors.

Moreover, country where the biggest possible trade benefit exists in the ‘asked for a trade deal’ list – Korea – already has a trade deal with the EU, under which UK trade has already increased. (The EU document which the Change Britain report links to even refers to the EU/Korea deal as being in force already. Change Britain either a) did not read this document – which it uses as a key source – and is moreover ignorant of the EU/Korea deal generally; or b) it is simply telling a blatant lie.)

So while it’s theoretically possible that the UK could sign a better trade deal with Korea than the EU did, the benefit of that deal would not be anything like the £25 billion claimed. Certainly, the report provides no evidence of this. Indeed, the UK will be worse off re exports to Korea after Brexit unless it convinces Korea to agree to a UK-only version of the existing deal.

Moreover, several other countries referred to in the report have agreed a trade deal with the EU which is not in force yet: Canada and two ASEAN states (Vietnam and Singapore). Others are negotiating with the EU (USA, India, Japan, Mercosur, several other ASEAN states). The report’s estimates could therefore only be valid if (a) the EU trade deals agreed or under negotiation are respectively either not ratified or not agreed; and (b) the UK is able to negotiate trade deals with those states.

Note that trade deals are not that easy to negotiate or ratify: the US has also had trouble doing a trade deal with the Mercosur states in South America, and the Change Britain report itself notes that the trans-Pacific trade deal might not be ratified. The report also fails to refer to the obvious increase in imports from the countries concerned that would follow from such trade deals. Finally, it one reason there is no EU/India trade deal is a dispute between the UK and India during the talks. Obviously Brexit will not solve that problem.

In any event, if the UK stayed in the single market but fully left the customs union (like Norway), it could still sign its own trade deals with non-EU countries. 

Costs of leaving

The report says nothing about costs of leaving the single market – estimated at 4% of GDP by the IFS, for instance. Maybe those forecasts are incorrect, but the Change Britain report doesn’t even acknowledge their existence, never mind try to rebut them. In practical terms, for instance, how much will it cost to hire extra customs officers after leaving the customs union, or extra border guards and other immigration staff after ending free movement of people? In Change Britain’s fantasy world, these people must be invisible, or work for free.

Conclusion

An interesting coda to the Change Britain report: late last night, Michael Gove, the head of the official Leave campaign, went on Twitter to debate with Jonathan Portes about it. Portes repeatedly asked Gove to confirm if he had read the report, and Gove repeatedly avoided answering. Instead he demanded Portes first tell him how he voted in the referendum. How is that relevant to a debate over the issues?

And how can Gove assert simultaneously that he is certain Brexit will be economically beneficial and sneer that he is tired of ‘expert’ economic forecasting? The Change Britain report – or any other economic assessment of Brexit – necessarily involves making some hypothetical assumptions. The alleged ‘savings’ from red tape reduction and new trade deals both rely on such assumptions. So Gove is in effect taking the effect of Brexit on faith, assuming without evidence (since he won’t debate the issue in detail) that the ‘experts’ he agrees with must be right about the future, and the ‘experts’ he disagrees with are wrong about it. That’s not an argument against experts; it’s just confirmation bias. To be fair, though, the number on the side of the bus wasn’t confirmation bias. Rather, it was a lie.  

Scribbled without numeracy by incompetent interns; published without scrutiny by hungover journalists; cheered without irony by back-stabbing politicians. Six months after the referendum vote, the debate over Brexit deserves better than this report. We can only cross our fingers for 2017.

Barnard & Peers: chapter 27

Photo credit: Imgur