EU External Relations Law: Overview - Lecture 18 - EU law

What did the original EEC Treaty outline in relation to the EU being an international actor and international legal personality as per Article 113, Article 238 and Article 228 in detail, and what did the original EEC Treaty not include?

Original EEC Treaty included the following -

• Art 113 on the common commercial policy (i.e. trade with non-EU countries)

This was based on “uniform principles”, It didn't say that that was an exclusive competence, but it did say that it had to be based on uniform principles and the singular trade policy is due to having one singular internal market which you have to have a common external border. The EU had a uniform trade policy, mentioning tariff and trade agreements and this was an area where the EEC had express competence in the treaties to negotiate trade agreements with countries around the world.

• Art 238 on “association agreements” with third states and international organisations (I0s)

This was unclear provision, and EU may decide to associate with itself with other countries, such as having an association agreement with Israel.

• Art 228 on the conclusion of international agreements “where this Treaty provides for” such agreements

The EEC has a provision to negotiate and conclude agreements, providing an institutional procedural provision which sets out how this is done, and the EEC was empowered to negotiate not just on its organisational, institutional relationships with other international organisations (As the UN does with it’s agreements with some shares in international matters), but also policies on trade and empowered to negotiate with any state in the world, this is RARELY what international organisations have as a power, and as with the UN or even the Council of Europe, international organisations are set up by states to cooperate in a particular area across the world, but they don’t acquire any representative role in actual substantive policymaking with other states, therefore the EEC had an element of statehood in being able to conclude treaties. However, this is now different …

NOTHING within the Original EEC Treaty was mentioned in regards to areas focusing on -

• Development aid and cooperation

• External dimension of specific internal policies (e.g. transport, agriculture, later energy, environment, and etc)

• General foreign and security policy

ERTA case addresses the EU’s international legal personality, what is the context, issue, outcome and importance of ERTA?

Context → It was an agreement on road transport in Europe, not just the EEC and it was wider than the EEC at the time. It was within the framework of the Council of Europe and it was a question of whether the EEC should be a member of that party, and it was a case where the parties involved were between the Commission against the Council.

Issue → The ERTA case was on the question whether the (then) EEC’s common transport policy (1) also covered transport to and from third countries, and (2) allowed for the conclusion of international agreements? Whether Member States or the Commission/Council had the authority to negotiate international transport regulations?

Outcome → The Court of Justice concluded that the accept the EEC has a capacity to act in international relations and this capacity to act means they have the capacity to be a treaty maker and an international contracting party. However, no other international entity will recognise the EEC as having capacity other than the ECJ, however overall the EEC has a legal personality that capacity should be recognised.

Importance → This case established that the EU has implied external powers. It determined that when the EU legislates internally, it gains the exclusive power to negotiate international agreements on that topic, creating parallel internal and external competence. The Court established that once the Community (now EU) has adopted common rules internally, Member States lose the right to act individually in international negotiations that could affect those rules.

How is the EU’s international legal personality affirmed in terms of statues, internal organisations and treaties?

The EU’s “legal personality” is confirmed by Art 47 TEU.  Note that this provision does not speak of international legal personality.

At any rate, international legal personality is not a status one can confer on oneself. It depends on international recognition by States and IOs. Today’s EU is generally recognized as evidenced by myriads of treaties and agreements with States and IOs, and by its membership of IOs (e.g. the WTO).  NOTE however that the UN system only accepts States as members.

What is the subtext of the ERTA case which demonstrated the EU’s international legal capacity and it’s broad capacity to act? And how does this relate to the historical progression and developments?

The subtext to all that is that an entity like the EU may proclaim for itself that it has international legal personalities, that is utterly meaningless internationally if the rest of the world doesn't recognise it because there's no one else wants to make a contract with you and therefore, the EU cannot be a legal person.

Historically, the EEC was not always seen as negotiating international agreements such as the Soviet Union and Eastern blocs not recognising the EEC as an organisation, perceiving it as a capitalist group, however this changed gradually after the fall of the Berlin Wall with countries regaining independence.

How the UN complicate the EU’s international legal personality? And how is this relevant to the Kadi case?

The EU had to earn this international legal personality, however some characteristics of the international legal system do not help the EU and its external action, such as the UN system being based on the idea of MS participating and you cannot become a member of the MS unless you are a state and further complexities such as the UN Charter which the EU has not signed, since it cannot join the UN as an international organisation as in the Kadi case. 

What process is undergone amongst the EU, all of it’s institutions and MS when it comes to it’s competences in general?

The European Union does that, together with all its member states, which also become contracting parties.

When the law is clear that there is an exclusive EU competence, the national ministers will go to the Council of Ministers in this field to make decisions, and the Commission makes proposals but the Council takes the decisions and concludes the agreements.

Whilst, the Parliament is less involved in other areas, despite some partial involvement.

What is meant by capacity when discussing ‘capacity versus competence’ in relation to the EU?

The former refers generally to the EU’s legal capability to act internationally (mostly through treaty-making), and the ERTA case accepted a broad notion of legal capacity.

Capacity is a general question of principle, and now resolved in ERTA as the EU having implied external powers. It determined that when the EU legislates internally, it gains the exclusive power to negotiate international agreements on that topic, creating parallel internal and external competence.

It is understood that the EU is able to conclude treaties and agreements, the EU is able to go to international courts and represent the characteristics of what the states can do internationally, the European Union can do as well.

What is meant by competence when discussing ‘capacity versus competence’ in relation to the EU?

The latter concept denotes questions of which policy matters are within EU competence, and what the boundaries of those competences are.

Competence focuses on the substantive scope of the EU external actions, such as areas within environmental policy. Competence focuses on whether the EU can act in certain matters and whether the matter is one related to the EU. The question of competence is whether it is outlined in the Treaty and whether this is something covered within the Treaty.

What is the distinction between express versus implied competences? What relevancy to treaties, and ERTA have on this matter?

Express competences are found set out in the treaties directly and explicitly, such as in the EEC treaty where the EU was able to set out, conclude and negotiate trade agreements and treaties - specifically in two areas, trade policy, commerical policy and association agreements (e.g. Art 207 TFEU on the common commercial policy). Therefore, it is only in these areas that EU can participate in treaty-making.

In regards to implied competences, ERTA defines this and established that the EU can have implied external powers, especially when the EU legislates internally and adopted common law rules, MS lose the right to act individually in international negotiations that affect these rules, therefore the EU gains the exclusive power to negotiate international agreements on that topic, creating parallel internal and external competence. → The CJEU in ERTA concluded that authority doesn’t arise from express ‘confirmance’ such as in trade agreements/association agreements, but flows from other provisions of the treaty even though they do not expressly confer competence, may also give competence, and from measures adopted within the framework of those provisions by the community institutions andfrom measures adopted within the framework of those provisions by the community institutions, so also from EU legislation which was adopted. (ERTA ruling was huge judicial innovation by the courts to distinguish between express and implied competences).

What is the distinction between exclusive versus shared competences within the EU?

Exclusive

Only the EU can act - which is CRUCIAL.

Wherever there is internal legislation within the EU, this means the EU has exclusive competence. Implied exclusive competences can exist, as demonstrated by Article 3(2) TFEU, this is essentially where there is internal legislation. However the MAIN express ones are trade policy/CCP.

All the final decisions are taken by the Council of Ministers, who are an EU institution and the government of the MS, and in external affairs, they are recognise the role for the EU, and the law must tell them that this is done through the EU or otherwise it will not be completed this way.

Shared

There are areas where the EU and the MS share competence, however there is mainly exclusive competence where the EU must be there and there will also be all of the MS individually in this international negotiation.

MERCOSUR is one of the agreements negotiated with South American nations, EU-Israel Association Agreement (where the EU and MS are contracting as contracting parties, and where countries begin to diverge especially in light with current Israeli stance on West Bank and Gaza, increasing unwillingness of free trade agreement, and a push to change trade policies and therefore, the EU doesn’t manage to find a position) and the EU, and one seperate one with India, where the EU concludes the agreement as a legal person but also by each MS. However in effect, this creates an unanimity vote where you cant decide by QMV, where the MS and EU must all collectively agree.

This leads to ‘mixed’ agreements, such as the EU and the MS as parties.

HOWEVER, the main exception to this is the TCA where the Commission managed to persuade the MS on the post-brexit agreement to conclude the agreement only by the Eu and not with each MS.

Why is the initial constitutional setup of the EU’s external policies awkward with the current dichotomy of CFSP and other policies?

Art 24(1) TEU states that the CFSP “shall cover all areas of foreign policy”, but that is a very deceptive statement. The awkwardness resides in the fact that the EU's external action has developed originally from purely economic and external policies, and instead centred around change gradually and the expansion of these external policies, such as foreign affairs - pure foreign policy.

There have been attempts to construct the CFSP by the EU, by a system which is different both legally and institutionally from the what the EU does externally - by working in an intergovernmental way (unanimity, and basically no roles for the Commission, the Parliament and the Court, with limited exceptions). Within the CFSP, everything is decided through unanimity, not by majority voting within the European Council.

How does the EU’s external action interact with the EU institutions? What are the roles of the EU institutions - spanning from European Commission, European Parliament and CJEU INDIVIDUALLY - play in this? And the role of Article 40 TEU in this?

The roles of the supranational institutions of the EU are very different - the European Commission does not have an exclusive right to make policy proposals, but the Commission has the right of initiative in TFEU matters.

The european parliament is kept out of the CFSP, and the Council is unable to prevent this, since when the EU budget is used, the Parliament can get involved, just not in the decision-making.

However, Article 40 TEU ensures the separation of powers between the Common Foreign and Security Policy (CFSP) and other EU policies. It mandates that implementing the CFSP does not affect the procedures or powers of institutions in areas like trade or development (TFEU), maintaining a balance between the two. This article ensures that the Commission and European Parliament retain their institutional powers, preventing foreign policy actions from bypassing normal EU legal processes. It serves as a limit on the European Court of Justice (ECJ) jurisdiction, as the Court cannot review the legality of acts that violate the CFSP's specific framework.

How do sanctions operate within the EU’s external action, and the historical development of sanctions, and the impact of Article 215 TFEU? And how does this generally relate to the Kadi case?

The policy field in which the CFSP most interacts with other EU external policies is international sanctions (such as trade embargos and ‘smart’ sanctions against individuals).

EU sits within foreign policy and external or other policies, as a matter of international sanctions especially during the Yugoslav Wars. The international sanctions have always been an EU competence, but we have moved away from conventional methods of trade, financial and economic embargoes to smart embargoes where we focus on individuals who support or a part of regimes, or a part of terrorist organisations as in the Kadi case, or sanctions against Russia.

We must look at the CFSP, observe the council decisions which lay out the sanctions and these council deciisons dont have direct effect and do not work like regulations, they are not part of the laws of MS, therefore they are then implemented and copied into EU regulations under Article 215 TFEU - these apply throughout the EU as binding restrictive measures. Once applied as a regulation, it acts as supreme law throughout the EU.

In Article 215, relating to smart sanctions, the council may adopt restrictive measures against natural or legal persons and groups or non-state entities. ‘Restrictive measures’ are not defined in any way, and on foreign policy grounds, they mayy adopt restrictive measures against individuals and these individuals can challenge these measures as per fundamental rights and due process being respected.

• This is very open-ended as shown in the Kadi case where individuals can be implicated, lose their assets for years and being incapacitated by sanctions which lasted more than 13 years to then be delisted without any proof with his involvement in Al-Qaida or terrorist associations.

What does Van Gend en Loos tell us about the legal effects of treaties and of international law?

Van Gend en Loos is the original case which constituted the direct effect of the EEC treaty. This was an important case, as it impacts the norms of international law such as mostly in treaties MS conclude, and domestic law of these states. An international treaty or agreement only has domestic legal effect till incorporated by Parliament in the UK and the ECHR was not incorporated into the UK law until the Human Rights Act came along and empowered the courts to apply the convention. Worldwide for all international law and states, the approach is for the states happy to make international law at international level, but the effect at national law is for the domestic nations to decide - such as the US having a supremacy clause where international treaties are the supreme law of the US, however it is not applicated in modern day actuality.

Van Gend en Loos was a revelation of nations creating a court, that the treaty does not function at international law, but MUST have direct effect in the MS in the same way, and if there is conflict with domestic law, it has primacy. Primacy of EU law is the basis of the EU’s existence, the CJEU stated that this is a new legal order, therefore it is not a matter of the domestic legal system to determine the effect of the EEC treaty.

Has the CJEU been willing to extend this approach in Van Gend Loos elsewhere - such as in international law?

This is because the EU is a multi-layered system, with EU MS and EU treaties, and the EU partaking in international treaties and has the CJEU which acquires the position of a domestic supreme court for treaties concluded by the EU. 

In the international law, we have a number of sources of international law, especially those that the EU had concluded, and general international law which is customary international law - such as the Vienna Convention on the law of treaties, and how states conclude treaties and how they terminate them, and particular contract rules which reflect custom which states abide by these norms, and accept these norms as a legal norm.

What does Article 21 TEU outline in relation to EU and international law?

In Article 21, the EU outlines that it supports the international law, and entities such as the UN.

Was the CJEU willing to extend the approach to Van Gend en Loos with treaties and agreements concluded as per the case Kupferberg? What is the context and outcome of Kupferberg?

Yes, in the 1970/80s, the CJEU was willing to extend the approach to Van Gend en Loos with treaties and agreements concluded by Kupferberg.

Context → Kupferberg was about a free trade agreement with Portugal (despite Portugal now being a MS, this was when they were not). It was a simple free trade agreement.

Outcome → The CJEU concluded that the EEC when it concludes the treaty itself in the agreements provide for the domestic legal effect which it will or will not have - In other words, when the countries have a negotiation with the EU, they could agree with the other contracting parties whether it will have direct effect or not. (This does not happen in practise) If this has not been decided by the agreement as to what kind of legal effect it will have on EU law and laws of the MS, then the CJEU will determine this as a matter of interpretation of the agreement, and if the agreement does explicitly state it, they can apply it and if it is not mentioned, the court can look at what is implied in the agreement and there will be a presumption in favour of direct effect.

What are multilateral agreements, and how do they relate to the EU?

Multilateral agreements consist of examples such as the WTO agreement, UN convention on the law of the sea, and ones environment conventions such as Aarhus Convention.

The EU is one actor together with many others (including MS), the CJEU is not willing to accept direct effect of these multilateral agreements and there is a more restrictive approach by the CJEU.

What are bilateral agreements, and how do they relate to the EU?

If it is a bilateral organisation, such as between the EU and Ukraine, the EU determines what goes into the agreement and it is between the EU and the third country.

Here, the direct effect of bilateral agreements are easily recognised as opposed to multilateral agreements where the CJEU is not willing to accept their direct effect and has a more restrictive approach.

What is the WTO - intentions behind the WTO formation, what does the WTO agreement consist of and what is the WTO system? And what is the current US policy relating to the WTO and what impact has this had?

Intention of the WTO, what does the WTO agreement include and what consists of the WTO?

WTO agreement consists of extensive agreements covering many areas of international economic law - relating to trade, intellectual property, procurement, regulatory issues, subsidies.

WTO was formed and served a purpose after WW2, with a general agreement on tariffs and trade, article 1 GATT provision is that no country should, in its external trade relations, discriminate between countries or most favoured nation, and you must give this to all nations.

WTO is a dispute settlement system, with a strong quasi-judicial arm: panels and a standing Appellate Body produce extensive, binding case law (otherwise known as the World Trade Court).

Current US and Trump Presidency Policies and the Influence on WTO

Under Trump’s presidency, he decided that the US would no longer agree to appoint new members of the appellate body, which was supposed to renewed every few years as the WTO operates by consensus, and the US refused, therefore there was no consensus. As a result, there is no appellate body of the WTO, and the WTO had an appeal system where cases go to a panel of experts first and then on appeal on points of law to the appellate body.

The cornerstone of the WTO agreement has now been destroyed by the Trump government, imposing tariffs albeit restrained by the Supreme Court but not on the basis of international law, but US constitutional law. The UK and EU have made deals with America, reaching the most favoured nation of getting reduced tariffs in comparison to other nations. And the basic non-discrimination rule as in Article 1 GATT is completely ignored.

What is the context, issue and context of Portugal v Council and it’s influence relating to the relevance of WTO law?

Context → Following the Uruguay Round, the EU Council passed a decision approving agreements with India and Pakistan regarding market access for textiles. Portugal argued these agreements violated WTO rules (GATT 1994, ATC) because they allowed discriminatory access to the EU market.

Issue → Can WTO agreements be directly invoked in national or EU courts to invalidate EU secondary legislation?

Outcome → The CJEU rejected Portugal's claim and upheld the Council's decision. The court held that the WTO agreement is not among the rules against which EC acts can be reviewed, largely due to the principle of reciprocity and negotiation in WTO dispute resolution. The ECJ stated it would only review the legality of an EU measure against WTO rules if the EU intended to implement a specific obligation or if the measure explicitly refers to them (the Fediol and Nakajima exceptions), neither of which applied here.

Importance → The CJEU argued they are disadvantaging their institutions in their WTO negotiations, as nations like the US denied the direct effect of WTO agreements over their law. They concluded its based on the principle of reciprocity, and these agreements remain at the international level, therefore we cannot enforce them legally in the EU. There is a question as to how international politics feeds legal decisions, or whether WTO negotiations has room within EU institutions?

The EU was created as a customs union, why is the General Agreement on Tariffs and Trade (part of WTO law) important when it comes to the development of the EU’s exclusive competence today?

Point (i) is the basis for the EU internal market, which has taken this provision further than any other customs union: there are no tariffs (duties) in trade between EU Member States, and no other “restrictive regulations of commerce”: see Articles 34 to 36 TFEU on free movement of goods.

Point (ii) is the basis for the uniform common commercial policy: one set of tariffs (the Common Customs Tariff) and one set of “other regulations of commerce”.

What did Opinion 1/75 outline in terms of exlcusive EU competence?

The Court determined that export credits, as part of export policy, fall within the scope of the CCP.

The ruling established that the power to act in international trade matters belongs exclusively to the Community, not individual Member States. Exclusive competence is necessary to defend the Community’s common interests and avoid distorting competition.

Opinion 1/75 established that CCP(common commercial policy) is an exclusive EU competence and that ONLY the EU can legislate and conclude international trade agreements, as fragmented national policies would distort competition, affect internal market unity, and undermine common interests.

What is the context and outcome of Centro-Com, and the influence this has had on the EU’s exclusive competence? (Opinion of Jacobs AG)

Context → When in the 1990s Yugoslavia descended into civil war and war between its republics, the UN adopted an economic embargo, which the EU also applied and implemented.  The embargo provided for exceptions on humanitarian grounds, such as exports of pharmaceuticals.  This worked with an authorization system.  Italy approved an export transaction, after having obtained the go-ahead from the UN.  The parties had arranged payment from a Barclays account in London.  However, the UK refused to release the payment, on grounds of foreign and security policy.  It claimed the sanctions were being circumvented. 

Outcome → The CJEU established that the EU regulations allowed for this exportation, that this was exclusive EU competence, and that the UK had to release payment, which was as much part of the “exportation” as the physical transfer of the goods.  The UK defence that these were matters of high international policy, not within EU trade competence, was not accepted.

What is the scope of EU’s CCP/common commercial policy as per Article 207(1) TFEU?

“The common commercial policy shall be based on uniform principles, particularly with regard to changes in tariff rates, the conclusion of tariff and trade agreements relating to trade in goods and services, and the commercial aspects of intellectual property, foreign direct investment, the achievement of uniformity in measures of liberalisation, export policy and measures to protect trade such as those to be taken in the event of dumping or subsidies(…)”.

This is a non-exhaustive enumeration, and it has been expanded by the Lisbon Treaty.  The CJEU case law originally pushed for a wide interpretation. But that expansion was halted in Opinion 1/94 on the WTO Agreement. That agreement had included trade in services in the scope of the multilateral trade agreements creating the WTO, as well as trade-related intellectual property rights (TRIPs). But the CJEU did not accept that those matters came within exclusive competence.

The CJEU has given effect to this expansion, inter alia in Daiichi Sankyowhere it provided a general “test” for the CCP and indicated that TRIPs is now part of that policy, and where it indicated “a European Union act falls within the common commercial policy if it relates specifically to international trade in that it is essentially intended to promote, facilitate or govern trade and has direct and immediate effects on trade”

In what two categories have EU trade acts and legislation been divided as per CCP?

1. Autonomous (or unilateral) measures consist of EU legislation determining the terms of trade with the rest of the world → This includes tariffs (the Common Customs Tariff), import and export regulations, and trade protection instruments (anti-subsidy and anti-dumping)

2. Conventional acts, i.e. trade agreements→ Most trade agreements aim to establish “free trade” (mostly trade without tariffs) with third countries.  You may have heard about EU-Mercosur and EU-India – there are many other such agreements.  We will look more closely at trade agreements in a couple of weeks, when we study EU-UK trade relations.