Thursday, 4 July 2019

Questions (177, 178)

Charlie McConalogue

Question:

177. Deputy Charlie McConalogue asked the Minister for Business, Enterprise and Innovation the likely procedure at EU and member state level for ratification of a final Mercosur trade agreement relating to market access, quotas and the elements that fall under exclusive EU level competence and areas that require national level approval; if she or her ministerial colleagues have carried out assessments to date on the scenario; and if Dáil Éireann will have to ratify elements of a final Mercosur agreement including the provisional application of the agreement. [29031/19]

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Charlie McConalogue

Question:

178. Deputy Charlie McConalogue asked the Minister for Business, Enterprise and Innovation the ratification procedure at EU and member state level for ratification of potential European trade agreements with the Mercosur trading block relating to market access and quotas; the elements that fall under exclusive EU level competence; and the areas that require national level approval. [29032/19]

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Written answers (Question to Business)

I propose to take Questions Nos. 177 and 178 together.

Any international agreement entered into by the European Union with a third country or group of third countries may, depending on its content, be concluded as an EU-only agreement (i.e. without the Member States also being parties to that agreement) or as a "mixed" agreement (i.e. with both the EU and the Member States being parties to the agreement). In this regard, where an agreement covers only areas where the Union has exclusive competence under the EU Treaties, the agreement must be an EU-only agreement. On the other hand, where an agreement covers areas where competence is shared with the Member States (or contains areas of Union competence and exclusive Member State competence), it will be a "mixed" agreement referred to as an Association Agreement, with both the EU and the Member States being parties to it.

In order to determine whether an agreement entered into by the EU should be EU-only or "mixed", it is necessary to examine its contents to see whether it covers areas of EU exclusive competence, or of shared competence, or of Member States’ exclusive competence.

In relation to free trade agreements, EU exclusive competence can arise in two ways. First, the Common Commercial Policy is an exclusive competence of the European Union under the EU Treaties. Thus, any provisions of a free trade agreement covering areas such as trade in goods, or sanitary and phyto-sanitary measures will fall within the EU’s exclusive competence. The Court of Justice of the European Union (CJEU) interprets the scope of the Common Commercial Policy very broadly, and holds that foreign direct investment, most trade in services, and sustainable development provisions all fall within the scope of the Common Commercial Policy and therefore, with the EU’s exclusive competence. EU exclusive competence can also arise where provisions of an international agreement would affect the EU’s internal rules or alter their scope.

On the other hand, a "mixed" agreement contains aspects where the competence is shared between the Union and the Member States. Aspects of "mixed" competence, insofar as trade is concerned, are often provisions concerning Investment Protection and the EU Investment Court System. However, where an agreement also contains provisions which go beyond the broad area of trade and fall within the exclusive competence of the Member States – for instance, provisions concerning political cooperation in foreign policy areas – such an agreement would be considered to be "mixed".

When any Agreement is finalised, such as with Mercosur, the Commission proposes the Agreement to the Council and in doing so, it indicates to the Member States its view on competence and, therefore, ratification. Nationally, Ireland would then confer with the Office of the Attorney General for their views.

Insofar as Mercosur is concerned, it is our current understanding that it will be a "mixed" agreement. While the Trade Agreement elements fall under the exclusive competence of the Commission and are, therefore, ratified by Member States in Council under Qualified Majority voting and by the European Parliament, the EU-Mercosur Agreement is a wider 'mixed' Agreement – including Trade – with areas of “shared competence” (such as political co-operation elements).

However, the text of the EU-Mercosur Agreement will now have to proceed to so-called “legal scrubbing”, and translation, a process which can take between several months and up to two years to complete, before a final text is available.

"Mixed" agreements only enter into force once each individual EU Member State has approved it in line with its own national procedures. As this process may take several years, the Commission could propose that the Agreement be applied provisionally in respect of those aspects of the Agreement for which it has exclusive competence, such as trade.  Such provisional application requires agreement by the Council and ratification by the European Parliament.  It is not possible at this stage to be definitive about what timelines may apply in respect of ratifying the EU-Mercosur Agreement, until a final text is available. However, it is my Department’s understanding that the EU-Mercosur Agreement will be a "mixed" Agreement, ultimately requiring the involvement of Dáil Eireann in its ratification process.

In relation to the Deputy’s question on an assessment, my Department commissioned by open tender, a study of Free Trade Agreements, more than 12 months ago.  Copenhagen Economics were awarded this contract as an internationally renowned trade modelling firm. The study covered a wide range of recent and prospective EU trade agreements, including that with Mercosur. The preliminary findings, which was grounded in the information available at the time, suggest a doubling of annual goods and services exports to Mercosur over the 10 years to 2030.

In light of the conclusion of the negotiations last Friday, my Department, in conjunction with the Department of Agriculture, Food and Marine will now ensure that a comprehensive, independent economic assessment is carried out specifically on the finalised EU-Mercosur Trade Agreement. This assessment will consider the impact the Agreement will have on the Irish economy and on jobs as well as the environmental implications of the deal. It will also consider how the EU-Mercosur Agreement might exacerbate/mitigate the likely impact of Brexit for our economy.  This assessment will help to inform our future actions in relation to EU-Mercosur agreement.