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EU court ruling may not lower Brexit uncertainty

Thursday, May 18, 2017

Significance

The ruling clarifies the scope of the EU’s power to negotiate and conclude international trade agreements: it says the European Commission has the authority to agree on most aspects of international trade deals at the EU level, while only requiring national ratification in all member states for issues relating to non-direct foreign investment and investor-state dispute settlement (ISDS).

Impacts

  • In practice, the EU may continue to seek approval from national parliaments owing to the political sensitivity of trade deals.
  • Concluding a quick and narrow EU-UK post-Brexit trade deal could provide immediate benefits, but would damage trade in the long term.
  • The ruling will affect other trade deals the EU is seeking to secure, in particular with Vietnam.
  • If the EU decides to split the trade deal with Vietnam into goods and services trade and investment, that could be a model for future deals.
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