The Lisbon Treaty broadens European commercial policy in what marks the latest milestone in a long (and unfinished) journey in which the EC/EU has sought to extend its exclusive competence over the entire area of external economic relations.
Towards this goal, the European Commission has always led the course, albeit with limited success. It failed in the 1992 Maastricht Treaty to explicitly broaden the scope of article 113 on commercial policy. Later, it attempted to achieve a somewhat similar result by referring to the “trade-relatedness” of all economic phenomena and urging the European Court of Justice (ECJ) to recognize that all WTO agreements were covered by the EC’s exclusive competence. However, this ended in failure when the ECJ, in its Opinion 1/94, rejected the Commission’s thesis and judged that Member States remained competent for many topics embraced by GATS and TRIPS. After another failure in the 1997 Amsterdam Treaty (similar to that in the Maastricht Treaty), the Commission was partially successful in 2001 when it achieved a significant extension of article 133 (former article 113) of the ECT to “trade in services” in the Treaty of Nice. However, it paid a high price for this success, in part because the drafting of article 133 became a mess, impossible to interpret and to apply.
But this is a “Brussels story” about the hardware of the European integration process: that is, the division of competences between the EC/EU and its Member States. But what really matters in political and economic terms is the software to be processed by this hardware. And the fact is that at no point in this 20 year journey has a new software been envisaged—i.e., a new “European policy” on external economic relations, or on FDI in particular, different from that already followed by individual Member States. And this remains the case with the European Commission’s July Communication and Proposal for a Regulation . The Commission offers no hint of a new policy on FDI, besides the commonplace idea that a priority should be given to relations with the more important partners or with those with which the EU is already negotiating. The main objective is the exercise of the new EU competence (“to mark the territory”) without touching the existing Member States policies and international agreements.
Therefore, as very often happens with “Brussels literature”, it seems more illustrative to briefly analyze what the Communication and the Proposal do not say than what they do say. I will concentrate on two significant points that are notably absent from the discussion on the EU’s future international investment policy.
First, the Commission does not address the issue of how to have an external EU policy (an “ambitious” one, furthermore) without having internal EU legislation in the area covered by that external policy. Indeed, the EU does not have an EU-wide regime for FDI—a legal regime that is broad and complex, because the apparently simple notion of “treatment to enterprises”, which is essential to the definition of this regime at the international level, has a sort of “double universality” at the domestic level: it covers not only all economic sectors but also all aspects of the legal regime applicable to firms. For example, what kind of policy will the EU have on protection of investments when there is not a single word in EU law (primary or secondary) on this issue? This is a problem that cannot be dismissed with a generic reference to the “progressive building up” of such a regime.
Second, the Commission does not address the blatant contradiction between existing Member States’ BITs (with their horizontal obligation on National Treatment not accompanied by a list of exceptions, as it is the case in US-led BITs) and the EU’s internal pieces of legislation that explicitly reserve to EU firms owned or controlled by EU nationals/capitals a treatment more favourable than that granted to EU firms owned and controlled by non-EU nationals/capitals (two notable examples being the audiovisuals MEDIA programme and the airlines licensing regulation). This fact—that EU Member States systematically violate the BITs to which they are a Party—is, in my opinion, one of the more outrageous in international economic relations and in EU law (all the more outrageous because of the complicity of experts in hiding it). Shouldn’t the entry into force of the Lisbon Treaty have been the best opportunity to address it?
Author: Ramon Torrent is the Director of the International Chair WTO/Regional Integration of the University of Barcelona. He is the former Director of External Economic Relations in the Legal Service of the EU Council
Technically speaking, the Treaty of Lisbon, which entered into force on 1 December 2009, amends the two treaties which form the constitutional basis of European Union (EU): the Treaty on European Union and the Treaty establishing the European Community (the Treaty of Rome), which is renamed as the Treaty on the Functioning of the European Union (TFEU). These are the two treaties that govern the Union. The Common Commercial policy can be found under Title II of Part Five (External Action) of the TFEU.
Communication from the Commission to the Council, the European Parliament, the European Economic and Committee, and the Committee of the Regions: Towards a comprehensive European international investment policy, http://trade.ec.europa.eu/doclib/docs/2010/july/tradoc_146307.pdf
Proposal for a regulation of the European Parliament and of the Council: Establishing transitional arrangements for bilateral investment agreements between
Member States and third countries, http://trade.ec.europa.eu/doclib/docs/2010/july/tradoc_146308.pdf