EU External Relations Law: Shared Competences and Shared Values in Agreements Between the EU and Its Eastern Neighbourhood 3030628582, 9783030628581

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Stefan Lorenzmeier Roman Petrov Christoph Vedder   Editors

EU External Relations Law

Shared Competences and Shared Values in Agreements Between the EU and Its Eastern Neighbourhood

EU External Relations Law

Stefan Lorenzmeier  •  Roman Petrov Christoph Vedder Editors

EU External Relations Law Shared Competences and Shared Values in Agreements Between the EU and Its Eastern Neighbourhood

Editors Stefan Lorenzmeier Faculty of Law University of Augsburg Augsburg, Germany

Roman Petrov Faculty of Law National University of Kyiv-Mohyla Academy Kyiv, Ukraine

Christoph Vedder Faculty of Law University of Augsburg Augsburg, Germany

ISBN 978-3-030-62858-1    ISBN 978-3-030-62859-8 (eBook) https://doi.org/10.1007/978-3-030-62859-8 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Foreword

In 2010, Christophe Hillion and Panos Koutrakos published their impressive edited volume Mixed Agreements Revisited.1 The preparation of this book, which had in itself been a long and complicated matter, had taken place during and in the aftermath of the Lisbon Process. No doubt, the objective of the initiators of the project was a noble one, namely to bring clarity in the utterly complex labyrinth of EU external competences. But nothing in this world is easy, certainly not when it deals with mixed agreements. In his disconcerting conclusions on the future of mixed agreements, Allan Rosas observed that mixity was ‘here to stay’ and that, after all, we had to learn ‘to live with mixity’ while leaving, where possible, the door open for pragmatic approaches.2 Ten years have passed since the publication of Mixed Agreements Revisited and this creates a momentum for renewed stocktaking, evaluation and reassessment of the practice of mixity. Certainly, during the last decade, a number of scholarly academic contributions, often in the form of in-depth case-law annotations, have been published, but only occasionally have a more comprehensive format for publication on this fascinating topic been chosen.3 Contemporary Issues of EU External Relations Law: From Shared Competences to Shared Values, the volume edited by Stefan Lorenzmeier, Roman Petrov and Christoph Vedder provides a welcome opportunity to contribute to achieve this goal. It must be stressed that the book we have today in front of us is considerably broader in scope than being exclusively dedicated to the question of mixity. Already the first contribution goes far beyond this question and deals with the place and role

1  C. Hillion and P. Koutrakos (eds), Mixed Agreements Revisited. The EU and its Member States in the World, Hart Publishing, Oxford and Portland, Oregon, 2010. Further to note is the 2014 conference “Internationale Handlungsfähigkeit der EU durch gemischte Abkommen”, organised by Christoph Vedder. 2  See A. Rosas, The Future of Mixity, in C. Hillion and Koutrakos (eds), mentioned previous note, pp. 367–374. 3  For another recent project on mixity, see M. Chamon and I. Govaere (eds), EU External Relations Post-Lisbon. The Law and Practice of Facultative Mixity, Brill, Studies in EU External Relations, vol. 16, 2020.

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of ‘common values’ and general principles in EU external relations. This, in itself, is of course a good thing and explains why the concept ‘common values’ (Müller-­ Graff) or ‘shared values’ (title of the book) runs like a thread through the various contributions. It is not made totally clear in the book whether these concepts are identical. Be it as it may, the ‘values dimension’ is indeed of crucial importance in a volume which also aims to explore the state of bilateral relations between the EU and the Eastern neighbourhood. That said, the question of the place of law and practice of mixed agreements cannot be swept under the carpet. This explains why Opinion 2/15 receives such a royal treatment in the series of essays and why it is analysed in not less than three different contributions. They offer historical insight, draw attention to the practical impact of the so-called EU-only agreements and add relevant reflections from a German constitutional law perspective. At the end of the day, almost everybody seems to plead for pragmatism and a degree of flexibility, but the well-known tribulations with regard to the Dutch ratification saga concerning the Association Agreement with Ukraine are there to remind us of the possibilities but also of the limits of what is feasible in a given historical context. Switzerland, which at first sight, is not directly concerned with the ongoing debate on mixity in the EU and which is not part of the EU’s Eastern neighbourhood, has a somewhat unexpected presence in this book. Switzerland is often perceived as an attractive bilateral neighbourhood model, certainly from a comparative perspective. But, also warnings from Switzerland should not be ignored: the Swiss model cannot easily be transposed or used as a source of inspiration for other neighbours of the EU. The second part of this book has a variety of most interesting contributions. First, the position of the Association Agreement with Ukraine is examined. However, since the 2014 crisis in Ukraine, there is, unfortunately, little or no evolution towards a solution in the relations with Russia and there is probably little scope for improvement in the near future is to be expected. Of course, this should not prevent Ukraine to concentrate on the effective operation of the Association Agreement and that is what it does. But everybody knows that the concrete outcome of this exercise is not something which is exclusively in the hands neither of the EU nor Ukraine. The approximation methodology followed for the Georgian legal system is to a large extent comparable to that followed in the other associated countries of the Eastern Partnership. The specificity of the Georgian model is, on the whole, less detailed and precise compared to the Ukrainian one; the same impression prevails regarding the application of the competition rules in the Association Agreements. Finally, the three last essays in this book focus on the absence of contractual relations with the Eurasian Economic Union, Russia and Belarus. It is easy to summarise the present state of affairs. The prospect of quick developments in these relationships is, under the present circumstances, practically non-existent. While the various contributions, also in this part of the book, remain very useful, the interested reader cannot do much more than take note of the dire state of these relations and hope that all the sides concerned will be able to change the turn of events. Ghent University Ghent, Belgium  July 2020

Marc Maresceau

Acknowledgements

This book is the result of a joint academic cooperation funded by the Alexander von Humboldt Foundation’s Research Group Linkage Programme between the Jean Monnet Centres of Excellence of the National University of ‘Kyiv-Mohyla Academy’ (Prof. Roman Petrov) and Augsburg University (Prof. Christoph Vedder and Dr. Stefan Lorenzmeier). As a follow-up to joint research stays, workshops, guest lectures and courses, the editors organised a series of international conferences in Augsburg and Kyiv in 2017 and 2018 bringing together a number of leading scholars working on the domain of EU External Relations Law. The present volume is the result of in-depth discussions on draft papers presented during those events. The organisers of the international conferences, also being the editors of this book, would like to express their deep appreciation to all the contributors for their cooperation and commitment. This project would not have been possible without the support of the Alexander von Humboldt Foundation and Jean Monnet Programme of the European Commission. The idea to work together on the topic of EU shared competence and EU common values bore fruit in the wake of the annual Jean Monnet conferences in Brussels and the Alexander von Humboldt research linkage programme between the University of Augsburg and the National University of ‘Kyiv-Mohyla Academy’ in the period of 2016–2019. Finally, the support from Jana Etzold in proofreading and editing cannot be overestimated. A special word of thanks goes to Dr. Brigitte Reschke from Springer, who guided us through the publication process. Last but not least, we would like to thank our families for kindly allowing us to concentrate our efforts on this publication. Augsburg, Germany  Stefan Lorenzmeier Kyiv, Ukraine  Roman Petrov Augsburg, Germany  Christoph Vedder December 2020

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Contents

 Introduction: EU External Relations Law—Shared Competences and Shared Values in Agreements with the EU and Its Eastern Neighbourhood������������������������������������������������������������������������������������������������    1 Stefan Lorenzmeier, Roman Petrov, and Christoph Vedder Part I Evolution and Current Challenges of the External Action of the Union: From Shared Competences to Shared Values and the Special Case of Switzerland  New Challenges for the Union’s Treaty-­Making Powers and Common Values in Implementing Its Agreements��������������������������������������������������������   11 Peter-Christian Müller-Graff  Exclusive and Shared External Competences After the Singapore Opinion of the European Court of Justice: 2/15 Revisited��������������������������   33 Stefan Lorenzmeier From ERTA to Singapore��������������������������������������������������������������������������������   49 Christoph Vedder  Mixed Agreements After ECJ Opinion 2/15 on the EU-Singapore Free Trade Agreement ������������������������������������������������������������������������������������   79 Andreas J. Kumin  The Ratification Saga of the EU-Ukraine Association Agreement: Some Lessons for the Practice of Mixed Agreements ����������������������������������   95 Peter Van Elsuwege  The EU-Swiss Sectoral Approach Under Pressure: Not Least Because of Brexit������������������������������������������������������������������������������������������������������������  107 Christa Tobler

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Part II EU Cooperation with its Eastern Neighbourhood: Shared Values v. Closer/Remote Integration  Challenges of the EU-Ukraine AA’s Effective Implementation into the Legal Order of Ukraine����������������������������������������������������������������������������  129 Roman Petrov  National and Bilateral Normative Framework for Legislative Impact of the EU Law on the Georgian Legal System��������������������������������������������������  147 Gaga Gabrichidze  Europeanization of Competition Law: Principles and Values of Fair Competition in Free Market Economy in the EU and Association Agreements with Ukraine, Moldova, and Georgia ��������������������������������������  163 Kseniia Smyrnova  The EU-Kazakhstan Enhanced Partnership: An Overview and Evaluation��������������������������������������������������������������������������������������������������������  177 Zhenis Kembayev  The EU-Armenia Comprehensive and Enhanced Partnership Agreement: A New Instrument of Promoting EU’s Values and the General Principles of EU Law ��������������������������������������������������������������������������������������������������������  193 Anna Khvorostiankina Part III Current and Future Contractual Relations with Eurasian Economic Union and its Member States: Shared Values as a Pillar of Remote Integration  Pork, Peace and Principles: The Relations Between the EU and the Eurasian Economic Union������������������������������������������������������������������������  229 Rilka Dragneva  The EU and Russia: Old Legal Grounds for New “Selected Engagement” Relations������������������������������������������������������������������������������������������������������������  253 Paul Kalinichenko  The EU and Belarus. Current and Future Contractual Relations��������������  273 Maksim Karliuk

List of Contributors

Rilka Dragneva  University of Birmingham, Birmingham, UK Gaga Gabrichidze  New Vision University, Tbilisi, Georgia Paul Kalinichenko  Kutafin Moscow State Law University, Moscow, Russia Maksim  Karliuk  National Research University Higher School of Economics, Moscow, Russia Zhenis Kembayev  KIMEP University, Almaty, Kazakhstan Anna Khvorostiankina  Brusov State University, Yerevan, Armenia Andreas  J.  Kumin  Court of Justice of the European Union, Luxemburg, Luxembourg Stefan Lorenzmeier  University of Augsburg, Augsburg, Germany Peter-Christian Müller-Graff  University of Heidelberg, Heidelberg, Germany Roman Petrov  National University ‘Kyiv-Mohyla Academy”, Kyiv, Ukraine Kseniia Smyrnova  Taras Shevchenko National University of Kyiv, Kyiv, Ukraine Christa Tobler  University of Basel, Basel, Switzerland Leiden University, Leiden, The Netherlands Peter Van Elsuwege  Ghent University, Ghent, Belgium Christoph Vedder  University of Augsburg, Augsburg, Germany

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1  New Horizons or Old Shores? The Treaty of Lisbon1 not only codified to a large extent the evolutionary and pre-­ existing case law of the European Court of Justice2 regarding the Union’s external competences in its art. 3 and 216 Treaty on the Functioning of the European Union (TFEU). It also added new layers to its external action by referring to the Union’s common values in art. 21 Treaty on European Union (TEU), art. 206 TFEU which the EU shall upheld in its dealing with third countries and international organizations. Thus, external and internal issues are determining the Union’s external action, and the question arises whether these additions are enabling the Union to set sail for expanding to new horizons in its external actions or whether it is bound by the old, already known shores for its international activities. This volume tries to explore some of the remaining legal and practical challenges for the EU of these two additions to the text of the EU founding treaties. First, the Union’s external treaty-making power will be analysed. According to the principle of conferral as embodied in art. 4 (1), 5 (1) TEU, the EU is only entitled to act if the Member States have entrusted it with a competence to do so. If not, the Member States remain competent to act internationally. Over the years and with the aim to 1  Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing the European Community, signed at Lisbon, 13 December 2007, O.J. C 306, 17.12.2007, pp. 1–271. 2  Throughout the volume the abbreviation “ECJ” is used for the Court of Justice of the European Union.

S. Lorenzmeier (*) · C. Vedder Faculty of Law, University of Augsburg, Augsburg, Germany e-mail: [email protected]; [email protected] R. Petrov Faculty of Law, National University of Kyiv-Mohyla Academy, Kyiv, Ukraine © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 S. Lorenzmeier et al. (eds.), EU External Relations Law, https://doi.org/10.1007/978-3-030-62859-8_1

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avoid conflicts of competence between the Union and its Member States, this led to the conclusion of mixed agreements which became the foremost legal tool for the EU’s exercise of its external trade power. In its already famous Opinion 2/15,3 the Court of Justice of the EU (CJEU) examined the external competences of the Union post-Lisbon but was unable to solve all open matters. A side look will be given to the very special relations of the EU with Switzerland which deserve further scrutiny. Secondly, a closer look will be given to the EU’s actions in regard to its Eastern Neighbourhood, because the relations to the countries of the Eastern Partnership are largely drawn after the entry into force of the Treaty of Lisbon and are driven by the EU’s new legal portfolio and serve as a perfect example for the exercise of its newly acquired powers in the domain of external relations. The post-Soviet states of the Eastern Neighbourhood are culturally deeply linked to the EU but face peculiar difficulties in transforming their societies. The third chapter of the book is devoted to the Union’s far lesser relations with the countries of the Eurasian Economic Union, the second block of post-Soviet countries.

2  E  volution and Current Challenges of the Union’s External Action Therefore, the first part of this volume is devoted to the evolution and current challenges of the EU external actions by scrutinizing the issues associated with shared competences and shared values. The chapter is opened by Peter-Christian Müller-­ Graff’s contribution on “New Challenges for the Union’s Treaty Making Powers and Common Values in Implementing its Agreements”.4 He deals with the political and legal issues stemming from the role of the EU in the world as laid down in the 2017 Rome Declaration of the Union. There, the leaders of 27 Member States pledged to work towards “a stronger Europe on the global scene: a Union further developing existing partnerships, building new ones and promoting stability and prosperity in its immediate neighbourhood to the east and south but also in the Middle East and across Africa and globally”. The underlining politically relevant question is whether the Union has the clout for fulfilling this pledge, whereas the legally relevant question is how far the Union’s competences match this intention. One of the analysed overarching questions is directed to exploring how far the Union’s treaty-making powers carry in the new challenges of international relations. The following works by Lorenzmeier, Vedder, Kumin and van Elsuwege are shedding light on the Union’s external powers and mixed agreements, one of the main legal tools for solving the allocation of competence between the EU and its Member States. Christoph Vedder explores the Union’s implied competences in his contribution “From ERTA to Singapore – Two Landmark Decisions on the Road to

 ECJ, Opinion 2/15, Singapore, ECLI:EU:C:2017:376.  Müller-Graff, Chap. 2.

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the Union’s Powerful Foreign Policy”.5 By providing an overview about the historical evolution of the Union’s external powers, he is putting the 2017 Singapore Opinion 2/15 of the CJEU6 in context. In particular, Christoph Vedder delineates the evolution of the treaty-making powers with special emphasis on the exclusivity of the common commercial policy and, in a broad range of situations, the implied powers after their codification through the Treaty of Lisbon. The strive of the European Commission for the conclusion of “EU-only” instead of mixed agreement with the participation of the Member States led, in 2017, to the Singapore opinion of the CJEU, another landmark in the row CJEU judgments which elucidated the scope of the external powers of the Union. This opinion and some of its implications are also analysed by Stefan Lorenzmeier. In “Exclusive and Shared Competences After the Singapore Opinion of the CJEU: 2/15 revisited”,7 he scrutinizes the landmark decision of the CJEU in respect of the already established case law of the CJEU and the EU treaties. Therein, especially in light on new-generation EU trade agreements, it shows the impact of the decision on these agreements and how they have to be shaped after the decision, especially for avoiding the rather burdensome process of concluding mixed agreements. Additionally, by turning to the German national legal order, a further layer, the impact of the decision for the principle of democracy will be shown as well. Andreas J.  Kumin is taking a closer look at mixed agreements after Opinion 2/15  in his contribution “Mixed Agreements After ECJ Opinion 2/15 on the EU-Singapore Free Trade Agreement”.8 The questions addressed by the CJEU in this Opinion have implications on the appropriate handling of concrete present and future comprehensive free trade agreements of the EU including provisions on trade in services, transport services, establishment, investment protection and investment dispute resolution, such as CETA with Canada, the EU-Japan Economic Partnership Agreement or TTIP with the United States, which are looked at by the author. A final layer of mixed agreements is their ratification in the Member States. By using the problematic ratification of the association agreement between the EU and Ukraine in the Netherlands, Peter Van Elsuwege is elaborating on the lack of or delayed ratification in an EU Member State and the provisional entry into force of an agreement in his work entitled “The Ratification Saga of the EU-Ukraine Association Agreement: Some Lessons for the Practice of Mixed Agreements”.9 In particular, the author emphasizes how domestic political agenda in one of the EU Member States may jeopardize the complicated process of the ratification of the EU framework agreement with a third country. The first part of the volume concludes with Christa Tobler’s elaboration of the very peculiar EU-Swiss relationship. Her contribution “The EU-Swiss Sectoral

 Vedder, Chap. 4.  Opinion 2/15, Singapore, ECLI:EU:C:2017:376. 7  Lorenzmeier, Chap. 3. 8  Kumin, Chap. 5. 9  Van Elsuwege, Chap. 6.  5 6

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Approach Under Pressure – Not Least Because of Brexit”10 states that Switzerland’s unique legal relationship with the European Union experiences constant political pressure, both from the inside and the outside. This concerns notably the debate in Switzerland around the issue of migration from the EU to Switzerland and the demand of the EU for a renewed institutional framework for certain market agreements with the EU that has led to negotiations on this matter. Whilst Switzerland is seeking special solutions in both respects, the EU’s rhetoric is increasingly emphasizing the need for homogeneity in the internal market. Brexit has not made matters simpler and is itself influenced by the situation in relation to Switzerland.

3  The EU and Its Eastern Neighbourhood The second part aims at having a closer look on the EU’s cooperation with its Eastern Neighbourhood as a case study that illuminates the impact of the EU’s regional policies on its external bilateral relations with third countries that pursue different geopolitical objectives. An emphasis of the second part is different assessments of debate between shared values on the one hand and the type of integration of the states of the Eastern Neighbourhood into the EU system. First, the association agreements with Ukraine, Georgia and Moldova will be looked at. This group of association agreements is distinguished by deep level of political and economic cooperation and profound desire of close integration with the EU of Ukraine, Georgia and Moldova. The second group of the enhanced partnership agreements with Armenia and Kazakhstan will be scrutinized. These agreements mirror the association agreements with Ukraine, Georgia and Moldova but lack deep trade cooperation and comprehensive legislative approximation due to participation of Armenia and Kazakhstan in the Eurasian Economic Union. Roman Petrov analyzes  the challenges of the effective implementation of the EU-Ukrainian Association Agreement in his work.11 He looks at the progress of the implementation and application of the EU-Ukraine Association Agreement (AA) which triggered unprecedented political, economic and legal reforms in Ukraine. In particular, the paper focuses on the constitutional challenges that have aroused before Ukraine in the course of implementation of the AA into its legal system. There are two issues which found consideration in the chapter. The first issue is effective implementation and application of the AA within the Ukrainian legal order. The second issue is compatibility between the AA and the Constitution of Ukraine. Latest political and legal developments in Ukraine are being looked at  through the prism of effective implementation of the EU-Ukraine Association Agreement and promotion of EU common values. In conclusion, it is argued that the EU-Ukraine AA enhanced the adaptability of the national constitutional order to the European integration project and EU common values.

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 Tobler, Chap. 7.  Petrov, Chap. 8.

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This is followed by Gaga Gabrichidze’s work on “National and Bilateral Normative Framework for Legislative Impact of the EU Law on the Georgian Legal System”.12 He explores the Association Agreement concluded between Georgia and the European Union in 2014 which raised the relevance of the EU law for Georgian legislation to a new level. However, long before the conclusion of the AA, the Georgian legislator has expressed its fascination for the EU law in the form of many self-imposed commitments. Gabrichidze’s chapter deals with those obligations that Georgia has put on itself, whether on the basis of unilateral actions or under an international arrangement, which form a normative framework for legislative impact of the EU law on the Georgian legal system. A third strain concerning the EU’s association agreements with its Eastern Neighbourhood is looked at by Kseniia Smyrnova. Her contribution “Principles and Values of Fair Competition in the EU and Its Association Agreements with Ukraine, Moldova and Georgia”13 is dealing with the EU’s sharing principles and values of fair competition included in the AAs with these countries. The preferential trade relations established by the AAs include rules on fair competition. However, the competition chapters are very diverse, and the provisions on competition rules include some important differences as the Moldovan and Georgian DCFTAs are less ambitious than the Ukrainian DCFTA. The chapter delves into these differences by analysing the legislative enforcement and judicial practice within the implementation of the AAs’ competition rules in Moldova, Georgia and Ukraine. The EU’s Enhanced Partnership Agreements (EPAs) with Armenia and Kazakhstan do not establish as close political and economic cooperation with the EU regulatory space as in the AAs with Ukraine, Georgia and Moldova. Nevertheless, the EPAs play a role of almost equivalent “substitution” of the AAs for those post-­ Soviet countries that opted out to transfer part of their sovereignty to the Russia-led Eurasian Economic Union (EAEU). The EU-Kazakhstan Enhanced Partnership is depicted by Zhenis Kembayev in his contribution “The EU-Kazakhstan Enhanced Partnership: An Overview and Evaluation”.14 The author examines the development of the EU-Kazakhstan partnership, states its major problems and identifies the prospects of its future progress by discussing the applicable provisions of the EPA and comparing them with the PCA and the AAs, in particular the one concluded between the EU and Ukraine. Anna Khvorostiankina looks into the EPA with Armenia, another post-Soviet state and its partnership with the EU.  Her contribution is entitled “EU-Armenia Comprehensive and Enhanced Partnership Agreement: A New Instrument of Promoting EU’s Values and General Principles of EU Law”.15 It deals with the EU-Armenia Comprehensive and Enhanced Partnership Agreement (CEPA) as an instrument of promoting EU common values and general principles of EU Law. The

 Gabrichidze, Chap. 9.  Smyrnova, Chap. 10.  14  Kembayev, Chap. 11. 15  Khvorostiankina, Chap. 12. 12 13

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contribution stresses that Armenia is a unique case of a state which is a member of the EAEU and, at the same time, is eager to strengthen its ties with the EU in frames of Eastern Partnership and to implement the required reforms. The author analyses the objectives and legal basis of the Agreement and assesses the potential influence of CEPA on Armenian legal order.

4  The EU and the Eurasian Economic Union Thereby, we are turning to the third strain of the volume, the relationship of the EU with the EAEU and its Member States. The EAEU is partly replicating the EU legal order by establishing a common customs zone but is also very different from it. For instance, it is not build on shared values and stresses the untouchability of the sovereignty of its Member States.16 Rilka Dragneva-Lewers explores the said relations in her chapter called “Pork, Peace and Principles: the Relations Between the EU and the Eurasian Economic Union”17 by assessing the Eurasian integration against the dimensions of EU’s external policy. The analysis starts with a discussion of the status quo of EU’s relations with the Eurasian region and the tensions already observed before exploring the institutional nature and practice of the EAEU. Paul Kalinichenko focuses on the interesting but challenging relationship between Russia and the EU. His contribution on “The EU and Russia: Old Legal Grounds for New ‘Selected Engagement’ Relations”18 analyses the modern legal aspects and political and legal circumstances surrounding the EU-Russia relations in the light of recent events and the deterioration of relations between Russia and the EU in general. In 2019, the EU and Russia celebrated the 25th anniversary of the EU-Russia Partnership and Cooperation Agreement (PCA), but most of the agreement’s provisions are not in force anymore, and most of them became mostly obsolete. Unfortunately, the negotiations on a new basic agreement between the EU and Russia have stagnated. In best-case scenarios, this situation has led to the increase of soft law instruments of the mutual cooperation. Interestingly, on another strain a certain Europeanization of Russian law can be detected. Finally, the challenges of the Belarus-EU relations are explored by Maksym Karliuk. His chapter on “The EU and Belarus  – Current and Future Contractual Relations”19 scrutinizes the contractual relations between the EU and Belarus as they stand today and the future possibilities given the rocky history of the bilateral relations. The main international agreement between the parties still comes from the Soviet era. Nevertheless, more engagement between parties has been happening, which has already led to new frameworks being established and interest in some

 See http://www.eaeunion.org/?lang=en.  Dragneva-Lewers, Chap. 13. 18  Kalinichenko, Chap. 14. 19  Karliuk, Chap. 15. 16 17

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continuation seems to be present. The author analyses the effect of international contractual obligations in Belarus, the peculiar case of WTO law being applicable in the country without membership thereof in the organization, the way the EAEU constrains possible deeper engagement of the country with the EU and the role of values.

5  New Shores? The analyses collected in this volume have shown that the EU will remain a very active player at the international stage. Externally, its relations with the countries of the Eastern Partnership are structured differently, depending on the intention of the other party to integrate in or to accept parts of the Union’s acquis in its domestic legal order. The range is from a rather deep approximation of laws as achieved by the AAs with Ukraine, Georgia and Moldova to rather loose contacts with Belarus and even more limited and strained relations with Russia. However, countries willing to establish closer relations with the EU have to agree to a shared set of values determined by the Union followed by close monitoring and conditionality by the EU institutions. Internally, the EU’s relation with its Member States is determined by the allocation and nature of powers enshrined in the founding treaties. These powers are a common battleground because questions of competence are barometers of power.20 Thus, special attention has to be carried out by the EU institutions and its Member States. Issues of exclusive or shared competence and the challenge of mixity in all its forms will remain problematic and can only be solved in the course of time by the acting persons, if not the “society” of the Union and its Member States and the judiciary. The judicial organs of the Union and the Member States should use their entrusted internal powers carefully and in the spirit of cooperation because unresolvable conflicts and unexpected natural and health emergencies (COVID-19) would hamper the concept of European integration and its promotion externally,21 maybe even permanently. Thus, and all in all, the “post-Treaty of Lisbon” EU may have not been put in a position to explore new horizons of its internal and external competences, but it still may explore new shores and develop its policies gradually and not evolutionary.

 See Opinion of Advocate General Kokott in joined cases C-626/15 and C-659/15, AMP Antartique, ECLI:EU:C:2018:362, para. 2. 21  In this context see the rather problematic decision of the German Federal Constitutional Court of 5 May 2020, BVerfG, Judgment of the Second Senate of 05 May 2020 - 2 BvR 859/15 -, http://www.bverfg.de/e/rs20200505_2bvr085915en.html. 20

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6  Post Scriptum In the course of working on and editing this volume, we learned about sudden departure of our friend and colleague Prof. Zhenis Kembayev in early 2019. This is a sad and irrevocable loss for international and Kazakh academic legal community. Professor Kembayev was one of pioneers of promotion of EU Law and EU Studies in the entire post-Soviet area. He was the first Kazakh academic to be awarded prestigious Jean Monnet Chair in EU Law to be published in leading international books and journals. Zhenis will be remembered as a competent and prolific contributor on various issues of legal reform in Kazakhstan, Europeanization of post-Soviet countries, evolution of the EAEU and future of the Silk Road. This volume is designated to Prof. Zhenis Kembayev’s memory. Stefan  Lorenzmeier  is working at the University of Augsburg’s (Germany) Law Faculty and researches and teaches in the areas of Public International Law and European Law. He is a lecturer at various universities and authored numerous works on European Union law. Roman Petrov  is a Jean Monnet Chair in EU Law and the Head of the Jean Monnet Centre of Excellence at the National University “Kyiv-Mohyla Academy” in Ukraine. Areas of Prof. Dr. Petrov’s research and teaching include: EU Law, EU External Relations Law; Approximation and Harmonization of Legislation in the EU; Rights of Third Country Nationals in the EU, Legal Aspects of Regional Integration in the Post-Soviet Area. Christoph Vedder  is a professor emeritus who previously held the Chair of Public Law, Public International Law and European Law as well as Sports Law, a Jean Monnet Chair of European Law ad personam at the University of Augsburg, Germany. He studied law and history in Göttingen, Geneva, and Nice, graduated and earned his doctoral degree from the University of Göttingen. He has been appointed as an assistant professor at the Institute for Public International Law of the University of Munich where he also received his habilitation. He has been a visiting scholar at several universities and is a member of the conference of the State Parties of the OPCW and the author of numerous works on European Union law and its external relations.

Part I

Evolution and Current Challenges of the External Action of the Union: From Shared Competences to Shared Values and the Special Case of Switzerland

New Challenges for the Union’s Treaty-­ Making Powers and Common Values in Implementing Its Agreements Peter-Christian Müller-Graff

“New challenges and options for the Union’s treaty-making powers” is a topic which relates to the pledge of the Rome Declaration of March 25, 2017, given by the leaders of 27 Member States of the European Union and the European Council, the European Parliament and the European Commission (“Rome Declaration”) to work towards “a stronger Europe on the global scene: a Union further developing existing partnerships, building new ones and promoting stability and prosperity in its immediate neighbourhood to the east and south, but also in the Middle East and across Africa and globally”.1 The politically relevant question is whether the Union has the clout for fulfilling this pledge. The legally relevant question is how far the Union’s competences match this intention. This aim is, in its content, in line with the fourth operative objective the Union is mandated by Article 3 TEU,2 namely, with the external action which is described by the words “In its relations with the wider world, the Union shall uphold and promote its values and interests and contribute to the protection of its citizens. It shall contribute to peace, security, the sustainable development of the Earth, solidarity and mutual respect among peoples, free and fair trade, eradication of poverty and the protection of human rights of the child, as well as to the strict observance and the development of international law, including respect for the principles of the United Nations Charter”. One of the overarching questions is directed to exploring how far the Union’s treaty-making powers carry in the new challenges of international relations. Introducing into this question, a quartered conceptional systematisation of the subject area might be helpful: first, reminding the general legal principle of the

 See Council of the EU, Statements and Remarks 149/17, 25/03/2017.  Müller-Graff (2017) Artikel 3 par. 43.

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Union’s treaty-making power in external action (Sect. 1); second, assembling the legally stipulated tasks, competences and restrictions of the Union’s treaty-making policy (Sect. 2); third, assessing the state of competences in view of the new challenges and options of association agreements and commercial treaties (Sect. 3); and, forth, evaluating the role of common values and general principles of Union law in effective implementation and application of the Union’s external agreements (Sect. 4).

1  T  he General Legal Principle of the Union’s Treaty-Making Power Concerning the general legal principle of the Union’s treaty-making power,3 it is evident that such action is governed by the same basic principle as any action of the Union, viz. the principle of conferral laid down in Article 5 (2) TEU. Under this principle the Union shall act only within the limits of the competences conferred upon it by the Member States in the treaties to attain the objectives set out therein. In addition, this Article explicitly states that competences not conferred upon the Union in the treaty remain with the Member States. This statement is of particular importance for the Union’s external action, since its realm (which is not perfectly structured by primary law) stretches from the exclusive competence for the common commercial policy (Article 3 (1) lit. e TFEU) and for the agreements in the sense of Article 3 (2) TFEU with its threefold interpretation given by the ECJ: the application of a “risk” criterion,4 the inclusion of “not fully coincide” commitments5 and the exclusion of “extremely limited in scope” commitments6 through the shared competences of Article 216 TFEU (with the “necessity” criterion7) in conjunction with Article 4 (2) TFEU (as far as Article 3 (2) TFEU is not applicable) and the category under the shared competences misplaced, in fact parallel competences in development cooperation (Article 4 (4) TFEU), other economic, financial and social cooperation (Article 212 TFEU) and humanitarian aid (Article 4 (4) TFEU) to the categorically undefined, but arguably (due to Declaration 13) also parallel competence for agreements under Article 37 TEU in the area of the common foreign

3  Parts 1 to 3 of this text are based on the author’s introduction into the Conference on “New Challenges and Options for the Union’s Treaty Making Powers” at Augsburg University at the occasion of Christoph Vedder’s 70th birthday on 26 June 2017. 4  ECJ, Case 22/70, ERTA, ECLI:EU:C:1971:32 para. 30; ECJ, Opinion 1/13, Hague Convention, ECLI:EU:C:2014:2303 para. 71; ECJ, Opinion 3/15, Marrakesh Treaty, ECLI:EU:C:2017:114 para. 105; ECJ, Opinion 2/15, Singapore, ECLI:EU:C:2017:376 para. 180. 5  ECJ, Opinion 1/03, Lugano Convention, ECLI:EU:C:2006:81 para.126; ECJ, Opinion 1/13, Hague Convention, ECLI:EU:C:2014:2303 para. 72; ECJ, Opinion 2/15, Singapore, ECLI:EU:C:2017:376 para. 181. 6  ECJ, Opinion 1/08, GATS, ECLI:EU:C:2009:739 para. 166; ECJ, Opinion 2/15, Singapore, ECLI:EU:C:2017:376 para. 217. 7  ECJ, Opinion 2/15, Singapore, ECLI:EU:C:2017:376 para. 242.

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and security policy and, eventually, the implied competences for coupling international agreements with ancillary institutional provisions.8 This complexity contrasts to the laconic wording of Article 32 (1) Grundgesetz which reads (in translation) “Relations with foreign states shall be conducted by the Federation” and to its Article 73 par. 1 number 1 which declares “foreign relations” as a matter under exclusive legislative power of the Federation. In the absence of such a general competence of the Union in foreign relations, the state of the Union’s treaty-making power mirrors, in principle, the internal distribution of subject area competences (with the important exception of the transformative Article 3 (2) TFEU). The general linking of the external competences to the internal distribution of competences9 may be understood as a functional federative approach10 which is not totally alien to a certain feature inherent in the German type of Federation, where we find the competence of the Länder to conclude treaties with foreign states, insofar as they have power to legislate though only with the consent of the Federal Government (Article 32 (3) Grundgesetz11 (e.g. the Agreement of the Länder and France on the TV channel ARTE12)). The internal power partition also pops up in the constitutional rules on the exercise of rights of the Federal Republic in the Union’s Council, when legislative powers exclusive to the Länder concerning school education, culture and broadcasting are primarily affected by projects of the Union; in such a case, the exercise of the rights shall be delegated by the Federation to a representative of the Länder designated by the Bundesrat (Article 23 (6) Grundgesetz).13 Hence the recognition of the internal distribution of powers in external action is not even alien to a state federal community of law. It depends on the positive constitutional shape.

2  T  he Legally Stipulated Tasks, Competences and Restrictions of the Union’s Treaty-Making Policies In the case of the Union, the constitutional context (in the sense of primary Union law14) provides a multiform differentiation of tasks and competences and, so far not deepened, a potentially limiting principle for the content of free trade association agreements with countries in the sense of “any European State” of Article 49 TFEU. 8  ECJ, Opinion 1/76, Inland Waterway Vessels, ECLI:EU:C:1977:63 para. 5; ECJ, Opinion 1/78, National Rubber, ECLI:EU:C:1979:224 para. 56; Opinion 2/15, Singapore, ECLI:EU:C:2017:376 par. 276. 9  Müller-Graff (2006), pp. 11ff, 24. 10  For the functional federative approach, see Müller-Graff (2005), pp. 103, 105 et seq. 11  Müller-Graff (2007c), pp. 387 f. 12  ARTE-Staatsvertrag (Vertrag zum Europäischen Fernsehkulturkanal) v. 2.10.1990. 13  Müller-Graff (2007b), pp. 705 ff., 716ff. 14  See, for primary law as a constitution in a functional sense, e.g. Bundesverfassungsgericht vol. 123, 267 para. 231; Müller-Graff (2007a), pp. 223, 235 ff.; Müller-Graff (2003), pp. 11 ff.

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2.1  Tasks Concerning the Union’s tasks in external action, the overarching Article 3 (5) TEU only condenses the more detailed, partially repetitive objectives attached to the different, partially overlapping parts of the Union’s external action. Article 21 TEU, the general provision for any external activity, unfolds a panoply of abstract guiding principles and an extensive catalogue of more concrete objectives such as safeguarding its values, fundamental interests, security, independence and integrity; fostering the sustainable economic, social and environmental development of developing countries; encouraging the integration of all countries into the world economy, including through the progressive abolition of restrictions of international trade; and helping international measures to preserve and improve the quality of the environment and the sustainable management of global natural resources. The concretising objectives of all the diverse external policies neatly fit into this web of aims: the common foreign and security policy with its prime target to develop mutual political solidarity among Member States in all areas of foreign policy and all questions relating to the Union’s security, to identify the questions of general interest and to achieve an ever-increasing degree of convergence of the Member States’ actions;15 the common security and defence policy with its mandate to provide the Union with an operational capacity drawing on civilian and military assets;16 and the common commercial policy with its mission to contribute to the harmonious development of world trade, the progressive abolition of restrictions on international trade and on foreign direct investment and the lowering of customs and other barriers.17 This is also true for the development cooperation;18 the economic, financial and social cooperation with other countries;19 and the humanitarian aid activities.20 The specifically regulated neighbourhood policy contains no exception to the general purposes but intensifies them for a certain group of third countries with the aim to establish an area of prosperity and good neighbourliness.21 Different from these policy descriptions, an association agreement in the sense of Article 217 TFEU is not fixed to a specific subject area but a specifically labelled instrument for realising the general objectives.

 Article 24 TEU.  Article 42 TEU. 17  Article 206 TFEU. 18  Article 208 TFEU. 19  Article 212 TFEU. 20  Article 214 TFEU. 21  Article 8 TEU. 15 16

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2.2  Competences Objectives are not yet competences. The coherent weave of the Union’s external actions’ mission is, as outlined, not paralleled nor accompanied by a comprehensive treaty-making power covering all the mentioned objectives alike. Rather the Union’s competence depends on the concrete subject matter and its respective categorical attribution in the sense of Article 2 TFEU: exclusive, shared, parallel or supportive. Outside the exclusive competence of the Union, a coordinated policy of the Union and its Member States towards third countries is not rendered impossible but requires the consent and ratification of the respective part of an agreement with a third country by the Union and the Member States. Whether such necessity of mixity exists depends upon the precise delineation of the Union’s competence. In this respect, the ECJ has delivered its Opinion 2/15 on the free trade agreement between the European Union and the Republic of Singapore.22 It contains carefully detailed deliberations on four Regulations and three Directives which relate to different services in the field of transport. The ECJ’s opinion is scrupulously assessed in several contributions to this book.

2.3  Restrictions The existence of competences is not yet the full story for the Union’s capacity to act. The exertion of competences is bound to respect the objectives and principles of primary law. This is well known for the exertion principles of subsidiarity and proportionality (Articles 5 (3) and (4) TEU). In view of the content of treaties with third states, I submit that still another potentially limiting principle has to be taken into consideration. It derives from the very first objective listed in Article 21 (2) TEU, namely, safeguarding the Union’s fundamental interests and integrity. This mission, in light of the Union’s destiny, as expressed in Article 1 (2) TEU, “of creating an ever closer union among the peoples of Europe” can well be understood as excluding contents in international agreements of the Union which counteract this purpose, be it in association agreements, neighbourhood agreements or even trade agreements, if they are susceptible to loosen the cohesion of the Union. The integrity principle sets a primary law warning against weakening the inner dynamics of European cohesion.

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 ECJ, Opinion 2/15, Singapore, ECLI:EU:C:2017:376.

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3  T  he State of Competences in View of New Challenges of Association Agreements and Commercial Treaties Four observations may frame this question: the present tendencies of the Union’s treaty-making policy (1), the issue of a “new generation” of association agreements (2), the topic of comprehensive trade agreements (3) and the speculations on a deep and comprehensive free trade area between the Union and Britain (4).

3.1  Present Tendencies The first observation applies to the present tendencies of the Union’s treaty-making policy. It seems that the times of pure free trade agreements are over. This is due to a fundamental change in the relevant primary law since the Lisbon amendment of 2009. Still one decade ago, the idea, originally shaped by the Constitutional Convention and then realised by Article 21 (3) TEU and Article 205 TFEU, that the common commercial policy should be made part of a coherent foreign policy encountered scepticism and opposition by those who feared impediments to the conclusion and content of free trade agreements23—despite the fact that already the three-pillar construction of the Maastricht Union of 1993 had been overarched by the obligation that “the Union shall in particular ensure the consistency of its external activities as a whole in the context of its external relations, security, economic and development policies”.24 Consistency means the absence of contradictions in pursuing different parts of the Union’s external action.25 It took some time to translate the consistency idea into practice. This context is not neatly suited by the Agreement on the European Economic Area (EEA)26 and the somewhat bizarre and problematic bilateral agreements’ construction with Switzerland.27 They are specific insofar as they establish a functionally full (EEA)28 or a (so-called) sectoral participation29 in the internal market with its respective necessary regulatory ramifications. The former enhanced free trade Europe Agreements with East Central European states, which were concluded in the 1990s,30 may be understood as early birds of a new generation, though they were considered—according to their preamble—from the side of the respective East European country and (since the Summit of Copenhagen) also from the side of the  See, for this discussion, e.g. Vedder (2011), pp. 121 ff.  Article G TEU (Maastricht). 25  Müller-Graff (1993), pp. 147 ff. 26  Müller-Graff and Selvig (1997). 27  Breuss et al. (2008). 28  See supra note 26. 29  Müller-Graff (2014a), pp. 283 ff. 30  See, e.g. Müller-Graff (1997), pp. 9, 15 ff.; Maresceau (1997), pp. 3, 6 ff. 23 24

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Union as a preparatory step towards full membership in the Union.31 The seven Stabilisation and Association Agreements concluded between 2004 and 2016 with the Balkans32 develop this line of pre-accession agreements. In recent years the seed of the Treaty of Lisbon’s comprehensive approach to external relations rises in all forms of agreements: in particular the EU Association Agreement with Ukraine,33 Moldova34 and Georgia;35 the Comprehensive Economic and Trade Agreement with Canada;36 and the Trade Agreements with Columbia and Peru,37 Singapore,38 Vietnam39 and Japan.40 While the substantive subject basis of all these agreements is trade, the scope of the additional matters varies but is usually inspired by elements which proved to be necessary or helpful for the functioning of the Union’s internal market: among them in particular competition relevant aspects of social and environmental policy41 and the competition relevant protection of intellectual property.42 With the extension of the Union’s exclusive competence to foreign direct investment (Article 207 (1) TEU), also this subject matter has become part of the Union’s treaty policy and concern.

3.2  New Generation of Association Agreements As an offspring of this development, a so-called new type (or generation) of Association Agreements has emerged within the Eastern Partnership of the Neighbourhood Policy. Its features are outlined in detail in other contributions to this book. To introduce it can be recalled that the term “association” is not alien to the terminology of primary law. However, its substantive content is rather abstract

 Maresceau and Montaguti (1995); Müller-Graff (2002), pp. 21, 26.  See Rodin (2014), pp. 985 ff. 33  O.J. EU 2014 L 161/3; see Petrov and Braun (2014), pp. 1001 ff. 34  O.J. EU 2014 L 260/4. 35  O.J. EU 2014 L 261/4. 36  See European Commission (2018a) http://ec.europa.eu/trade/policy/in-focus/ceta/ceta-chapterby-chapter/ (24 August 2018). 37  O.J. EU 2012  L 354/3; European Parliament EPRS, Trade agreement between the European Union and Colombia and Peru – European Implementation Assessment, July 2018. 38   European Commission (2018d) Singapore http://trade.ec.europa.eu/doclib/press/index.cfm? id=961 (18 April 2018). 39   European Commission (2018b) Vietnam http://trade.ec.europa.eu/doclib/press/index.cfm? id=1921 (17 October 2018). 40  European Commission (2018c) Japan http://trade.ec.europa.eu/doclib/press/index.cfm?id=1684 (18 April 2018). 41  Well observed by ECJ, Opinion 2/15, Singapore, ECLI:EU:C:2017:376 para. 159. 42  Well observed by the ECJ, Opinion 2/15, Singapore, ECLI:EU:C:2017:376 paras. 125, 130. 31 32

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and hence open for different types of political arrangement.43 Article 217 TFEU leaves the label “association” available to political discretion as long as such an agreement “involve(s) reciprocal rights and obligations, common action and special procedure”. In fact, this qualification has been flexibly used in the wide range of different purposes once described by Walter Hallstein as a vehicle between trade agreements plus 1 and membership minus 1:44 in particular for pre-accession (Greece, Turkey, East Central European States, Balkans) and for development (Yaoundé, Lomé, Cotonou). Since the substance of such reciprocal rights and obligations, common action and special procedure is left undefined, it is far from clear why enhanced trade agreements, e.g. the CETA or a potential TTIP, would not fulfil these requirements. Therefore, the label “new type” or “new generation” inside or outside the Eastern Partnership or the Neighbourhood Policy is subject to political preference and gets its meaning only in comparison with older agreements which had been baptised as an association such as the EEC-Turkey Association Agreement of 1963.45 Compared to that rather short accession association text of 33 Articles, the 1,200 pages of the EU-Ukraine Association Agreement contain a very distinct richness of additional elements which thematise all main matters of Union law: trade and trade-related matters in the sense of a Deep and Comprehensive Free Trade Area which mirror competition relevant elements and regulatory ramifications of the internal market (in particular harmonisation of laws in trade-related sectors); additionally economic and sector cooperation in more than 30 areas (such as energy, transport, industry, consumer, social and environmental protection); further “justice, freedom and security” as well as financial cooperation with anti-fraud provisions; furthermore political cooperation in foreign and security policy and also general principles (such as the respect for democratic principles, human rights, fundamental freedoms and the rule of law as well as the principles of a free market economy and good governance) and eventually institutional provisions. Its content amounts to a special relationship in form of a specific status of the associated country Ukraine—not the least being the ECJ’s power of binding interpretation of certain provisions of the Agreement in the arbitration panel procedure46 and the role of common values and general principles of EU law in effective implementation and application of these agreements (which is looked at infra IV). An association agreement of this type in the light of the Union’s general treaty-­ making power has the potential to transgress the area of the Union’s exclusive competences for common commercial policy with its requirement of a specific link to

 See for the three types (accession associations, free trade associations, development associations) Bungenberg (2015) Artikel 217 AEUV para. 90 et seq.; Boysen (2017) Artikel 217 para. 25 et seq.; Mögele (2018) Artikel 217 para. 4 et seq. 44  Schweitzer et al. (2007), para. 1049. 45  Güney (2014), pp. 1029 ff. 46  Article 322 par. 2 EU-Ukraine Association Agreement. 43

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trade having direct and immediate effect on it47 and for agreements in the sense of Article 3 (2) TFEU, as far as the agreement encompasses areas of shared, parallel or supportive competences of the Union or even exclusive competences of the Member States. Article 207 (6) TFEU explicitly prohibits effects of the exercise of competences of Article 207 TFEU on the delimitation of competences between the Union and the Member States. Hence, such an agreement requires the consent and ratification of the Member States. As far as it is feasible and/or desirable to precisely delineate the matters of exclusive and non-exclusive competences and bring them neatly split into separate treaties, the need for a mixed agreement ceases.

3.3  Comprehensive Commercial Agreements This is also true for the “new” type (or generation) of comprehensive commercial agreements, which are not named “association agreement” (such as the  (former)  Singapore Agreement). This distinction is blurred as a consequence of the abstract modesty of Article 217 TFEU. That new generation can be generally understood as a trade agreement including elements in addition to the classical elements of free trade agreements. The most far-reaching example of this gradually developing treaty policy of the Union is the CETA with its 1589 pages.48 It draws inspiration for its topics both from the WTO and the Union’s own development in line with the mandate of Article 21 (1) TEU. CETA establishes a free trade area in accordance with Article XXIV GATT and Article V GATS and comprises mutual obligations and rights. It thereby lays open the pattern of the demanding requirements for free and fair trade and competition and for more intense economic interweaving in the twenty-first century.49 In detail it stipulates national treatment and market access for goods (ch. 2) and deals with trade remedies such as anti-dumping and countervailing measures and global safeguard measures (ch. 3), technical barriers to trade (ch. 4), sanitary and phytosanitary measures (ch. 5), customs and trade facilitation (ch. 6), subsidies (ch. 7) and investment (without distinction of direct or portfolio)—including rules on compensation for expropriation (ch. 8) and on the resolution of investment disputes between investors and states by a specific tribunal (ch. 8.18 and 8.27) and appellate tribunal (ch. 8.28). The CETA goes on providing rules on cross-border trade in services (ch. 9); temporary entry and stay of persons for business purposes (ch. 10); mutual recognition of professional qualifications (ch. 11); domestic regulation (ch. 12); financial services (ch. 13); international maritime transport services (ch. 14); telecommunications (ch. 15); electronic commerce (ch. 16); competition policy (ch.  ECJ, Case C-414/11, Daiichi Sankyo, ECLI:EU:C:2013:520 para. 51; ECJ, Case C-137/12, Commission/Council, ECLI:EU:C:2013:675, para. 57; ECJ, Opinion 3/15, Marrakesh Treaty, ECLI:EU:C:2017:114 para. 61. 48  See supra note 36. 49  See for this necessity Müller-Graff (2015), pp. 21 ff. 47

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17); state enterprises, monopolies and privileged enterprises (ch. 18); government procurement (ch. 19); intellectual property (ch. 20); regulatory cooperation (ch. 21) as well as trade and sustainable development (ch. 22); labour (ch. 23) and environment (ch. 24). In addition CETA contains provisions on bilateral dialogue and cooperation (ch. 25), administrative and institutional issues (ch. 26—CETA Joint Committee) and dispute settlement (ch. 29: with arbitration panel). A comprehensive commercial agreement of this type in the light of the Union’s general treaty-making power falls under the exclusive power of the Union as far as the substance of its provisions is identical to those in the Singapore Agreement which the ECJ acknowledged in its Singapore opinion.50 However, it transcends the Union’s exclusive competences in particular, if it contains provisions on investment protection in so far as they relate to non-direct investment, to provisions on investor-­ state dispute settlement and to provisions which relate to the investment provisions and to the extent that the latter fall within a shared competence.

3.4  Limits to a Future Agreement with the United Kingdom A possible future agreement for the relations between the Union and the United Kingdom will be subject to the same rules on the Union’s treaty-making power. However, in the case of Britain, a specific question of the exertion of the Union’s competences may gain importance in identifying the scope and content of such an agreement if it is going to head for a deep and comprehensive free trade area. The mentioned principle of safeguarding the Union’s fundamental interests and integrity (Article 21 (2) lit. a TEU) and the objective of creating an ever-closer union among the peoples of Europe (Article 1 (2) TFEU) may unfold limits to the content of such an agreement. These normative orientations exclude contents of an international agreement which counteract the cited provisions. They set at least a warning against weakening the inner cohesion and dynamics of the Union’s acquis by offering “cherry conditions” for a state that has withdrawn from the Union. This is not an issue of punishment but one of self-assertiveness of the Union in its conceptional and supranational achievements. This requirement is met by the “Political Declaration Setting out the Framework for the Future Relationship between the European Union and the United Kingdom”51 with its emphasis that the future relationship “must ensure the autonomy of the Union’s decision making and be consistent with the Union’s principles, in particular with respect to the integrity of the Single Market and the Customs Union and the indivisibility of the four freedoms”.52 While the integrity principle is of specific importance for agreements with states in the sense of Articles 49 and 50 TEU, it also presents a guideline for shaping

 ECJ, Opinion 2/15, Singapore, ECLI:EU:C:2017:316.  See: European Commission, 22 November 2018. 52  Recital 4 of the Political Declaration. 50 51

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new-generation treaties with other actors on the globe in the future, as long as the globe is not organised in the form of a single collective community.

4  T  he Role of Common Values and General Principles in Effective Implementation and Application of the Union’s External Agreements A specific feature of the Union’s external agreements is the inclusion of general principles and/or values. The question of their role in effective implementation of the agreements is not identical with the issue to which extent the Union effectively complies with its own values as laid down in Article 2 TEU and reaffirmed for the Union’s external action in Article 3 (5) TEU and Article 21 (1) TEU in its conduct in external relations or, perhaps, sometimes fails—in these days some thematise the cooperation in migration policy with Libya. In the specific context of effective implementation and application of the Union’s agreements, the present question relates to the role of their head provisions such as the commitment to the respect for democratic principles, human rights and fundamental freedoms and the principle of the rule of law as contained, e.g. under the heading “General Principles” in Article 2 of the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, on the other part.53 This provision declares that this respect “shall form the basis of the domestic and external policies of the Parties and constitute essential elements of this Agreement”. Such “general principles” can be found in several new external agreements of the Union in varying formulations of the respective Article 2 (e.g. with Moldova,54 Georgia,55 Bosnia-Herzegovina,56 Armenia57) and already earlier with Macedonia,58 Albania,59 Montenegro60 and Serbia.61 When looked upon the general principles and/or values under the specific aspect of their role in effective implementation and application, the question is at hand whether they are more than symbolic invocations for the polity and governance of the parties. And if this commitment is to be understood as a mutual one, then its enforcement is not a one-way road. Then both sides are not only internally bound by it for internal policies but can also insist on its implementation by the other side: the  See supra note 33.  See supra note 34. 55  See supra note 35. 56  O.J. EU 2015 L 164/2. 57  JOIN/2017/037 final (NLE). 58  O.J. EU 2008 L 99/2. 59  O.J. EU 2009 L 107/16. 60  O.J. EU 2010 L 108/1. 61  O.J. EU 2013 L 278/14. 53 54

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Union, e.g. towards the Ukraine or, concerning the respect for the rule of law, e.g. the Ukraine towards, e.g. Romania as a party to the Association Agreement. While the activation of the latter direction seems to be hypothetical in the time being, the former direction enjoys considerable attention by the Union. In order to measure the role of such general principles and/or common values in effective implementation and application, three aspects are in particular worth to be considered: first, the content of the general principles and/or common values (1); second, their legal and judicial enforceability (2); and, third, their political implementation (3).

4.1  T  he Content of Common Values or General Principles of EU Law in External Agreements This issue of the content of general principles and/or common values62 generates two subquestions: first, in regard to the rules of their interpretation (4.1.1) and, second, in regard to their core understanding (4.1.2). 4.1.1  As far as the content of common values or general principles in an international agreement is concerned, the general rule of interpretation as contained in the Vienna Convention on the Law of Treaties of 1969 is not different from the general rules of interpretation of private contracts. Its Article 31 provides that a treaty “shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose”. Since the context is one of the decisive elements for interpretation, it is, if seen from a strict viewpoint of legal nature and the methods of interpretation, doubtful to classify the general principles and/or common values which are contained in the Union’s external agreements per se as those of Union law, irrespective of the qualification of an international treaty of the Union as an integral part of Union law.63 This is even more true since most of the mentioned head provisions refer to other international documents (such as the Helsinki Final Act of 1975 of the Conference on Security and Cooperation in Europe, the Charter of Paris for a New Europe of 1990, the UN Universal Declaration of Human Rights). Thus, the general principles have to be interpreted in the context of the individual agreement with the other party. However, in an international agreement of the Union, its specific internal feature of the principle of conferral (Article 5 (2) TEU) and its external task to promote its values (Article 3 (5) TEU and Article 21 (1) TEU) have also to be taken into consideration in this context. While the Union, even if it would act beyond its competences, would be bound by the “pacta sunt servanda” principle (Article 26 of the Vienna  This part of the text is based on the author’s opening lecture at the International Alexander von Humboldt Conference on “EU’s common values and general principles of EU law in EU external agreements” at the National University of Kyiv-Mohyla Academy on 16 April 2018. 63  For this quality see ECJ, Case 181/73, Haegeman, ECLI:EU:C:1974:71 para. 5. 62

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Convention), the presumption seems reasonable that the Union, when agreeing on values with another party, those, if worded similar to Article 2 TEU, are not supposed to deviate from the core meaning of the parallelly worded values on which the Union is founded. This presumption is strengthened, if an agreement contains a declaration, as, e.g. in the case of the EU-Ukraine Agreement, that the respect for those values “shall form the basis of the domestic and external policies of the parties”. The Union would certainly not agree to deviate from the values on which it is founded. This question needs no deepening, since it is common understanding that the values formulated in Article 2 TEU, on which the Union is based and which also are obliged by the Member States, partially contain a margin of interpretation in view of their concrete realisation within the Member States. Hence, their content in external agreements may also be understood to contain such a margin. However, this does not discard the hypothesis of a basic core understanding. 4.1.2  Turning to this basic core understanding, in particular the respect for democratic principles, human rights and fundamental freedoms and the principle of the rule of law form the essential triumvirate. The absence of the explicit mention of the respect for human dignity might be surprising, but this is implicit in the respect for human rights, which have also a prerequisite, the respect for human dignity. 4.1.2.1  Democracy, in its core meaning, is a system of governance, which is based on participation rights of the individuals in shaping their polity. It contrasts with governance systems which are not legitimised by the people and not underpinned by the principle of equal participation rights of any citizen and by the majority principle.64 This right, in its expression as voting right, can be understood as a polity-­ related form of respect for human dignity as outlined by the jurisprudence of the German Federal Constitutional Court in its Lisbon ruling.65 The concrete implementation of this principle can vary in its form: direct, representative, presidential and mixed—but its core feature should be beyond doubt. 4.1.2.2  Human rights and fundamental freedoms, in their core meaning, also anchor in the respect for human dignity as the fundamental basis of any living together. This comprises the basic respect of each public organisation for each individual. It contrasts with the contempt of individuals by public organisations66 and obliges the entire public sector to protect the individual from being treated as an object.67 The respect for fundamental freedoms is the absence from being determined by public authorities. As a matter of course, this does not mean that any restriction of the conduct of an individual by a public authority is illegal. This would

 Müller-Graff (2017) Artikel 3 par. 12.  Bundesverfassungsgericht vol. 123, 267 para. 211. 66  Müller-Graff (2017) Artikel 3 par. 10. 67  In this sense for the respect of human dignity in Article 1 of the Grundgesetz (Constitution of Germany) Bundesverfassungsgericht vol. 30, 1 (26). 64 65

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render impossible a peaceful living together. However, any restriction has to be justified by a public interest and meet the requirements of suitability, necessity and proportionality without violating the essence of those rights and freedoms.68 4.1.2.3  The rule of law also has many facets69 but, in its core meaning, lends the enforcing protection of an independent third power to the respect for human rights and fundamental freedoms as well as to the respect for democracy.70 Its control function can already preemptively guide the design of political, administrative and even legislative measures. It is the expression of the principle of the separation of powers71 and realises the enlightened postulate that political governance is accountable not only to the sovereign but, in conflicts, also to an independent authority of practical reason. In this way it can tame political arbitrariness. This aspect directly leads to the second main question of the role of the general principles and/or common values in the Union’s external agreements.

4.2  T  he Judicial Enforceability of Common Values and General Principles in the Effective Implementation and Application of EU External Agreements This question is directed to exploring the role of the judiciary in this specific part of an international agreement of the Union. It raises two subquestions: first, in relation to the involvement of the ECJ (4.2.1) and, second, in regard to the specific features of the role of the judiciary in external agreements in comparison to its role in internal Union law (4.2.2). 4.2.1.  The role of the judiciary under the aspect of transnational judicial enforcement in this specific part of an international agreement, if measured by the enforcement standards of internal Union law, is, first of all, asymmetric. On the side of the Union, any external agreement is an integral part of Union law and hence subject to the jurisdiction of the ECJ.72 However, this jurisdiction does not bind the other party, if no specific devices are provided in this respect such as the preliminary question mechanism of the negotiated Withdrawal Agreement between the Union and

 In this sense see, e.g. Article 52 EU Charter of Fundamental Rights.  Müller-Graff (2004), p. 1 ff. It is settled case law of the ECJ that the “rule of law” as enshrined in Article 2 TEU comprises “the requirement that courts be independent” (ECJ, Case C-619/18, ECLI:EU:C:2019:531 at 58 (Commission/Poland)) and that the guarantees of independence and impartiality “require rules…that are such as to dispel any reasonable doubt in the minds of individuals as to the imperviousness of that body to external factors and its neutrality with respect to the interests before it” (ECJ, Case 619/18, ECLI:EU:C:2019:531 at 74 (Commission/Poland)). 70  Müller-Graff (2017) Artikel 3 para. 16. 71  Id., para. 16. 72  ECJ, Case 181/73, Haegeman, ECLI:EU:C:1974:41. 68 69

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the United Kingdom73 concerning the part of the citizens’ rights. It opens the possibility that after the withdrawal of the United Kingdom its courts or tribunals can involve the ECJ for a limited period of time. Its Article 158 (1)  provides that “where, in a case which commenced at first instance within 8 years from the end of the transition period before a court or a tribunal in the United Kingdom, a question is raised concerning the interpretation of Part Two of this Agreement, and where that court or tribunal considers that a decision is necessary to enable it to give judgment in that case, that court or tribunal may request the Court of Justice of the European Union to give a preliminary ruling on that question”. Its Article 161 (2) states that the legal effects of such preliminary rulings shall be the same as the legal effects of the preliminary rulings given pursuant to Article 267 TFEU in the Union and the Member States, viz. binding on the respective court or tribunal of the United Kingdom. The EU-Ukraine Agreement (as well as the Association Agreements with Moldova and Georgia) goes even farther in the involvement of the ECJ for certain questions of interpretation and application of certain trade- and competition-related provisions which involve the interpretation of Union law.74 There, an arbitration panel, which has to be established on the unilateral request of the complaining party,75 shall request the ECJ to give ruling on the question, and this ruling shall bind on the panel (Article 322 par. 2). This procedure applies only to disputes concerning the interpretation and application of a provision of this Agreement relating to regulatory approximation contained in certain chapters of a rather concrete nature, namely, technical barriers to trade, sanitary and phytosanitary measures, customs and trade facilitation, establishment, trade in services and electronic commerce, public procurement and competition, or which otherwise imposes upon a party an obligation defined by reference to a provision of EU law. The “general principles” in the EU-Ukraine Agreement do not explicitly refer to a provision of EU law. One could argue that they implicitly refer to the essential core of Articles 2 and 21 TEU due to the mentioned presumption that the Union could and would not agree to general principles alien to its task. However, Article 303 restricts the applicability of Art. 322 (2) to disputes on the provisions of Title IV of the Agreement, hence on defined trade and trade-related matters.76 4.2.2  Concerning the judicial enforcement devices and procedures of provisions in external agreements, the comparison with the role of the judiciary in internal Union law reveals the differences.

 Draft Agreement on the withdrawal of the United Kingdom and Northern Ireland from the European Union and the European Atomic Energy Community, as endorsed by leaders at a special meeting of the European Council on 25 November 2018. 74  Müller-Graff (2018), pp. 223, 233. 75  Article 306 para. 1 EU-Ukraine Association Agreement. 76  See Articles 25 et seq. of the EU-Ukraine Association Agreement. 73

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4.2.2.1  First, it is rather doubtful to attribute the quality of direct applicability to the general principles in the Union’s external agreements, although directly ­applicable provisions can also be part of external agreements (according to the Demirel jurisprudence,77 the criteria of the Van Gend en Loos jurisprudence78 have to be met by a concrete provision). According to it a provision has to be “clear and unconditional” and, in particular, “not qualified by any reservation on the part of the states which would make its implementation conditional upon a positive legislative measure enacted under national law”.79 While these requirements are met, e.g. by the fundamental freedoms of the internal market in Union law,80 it is far from clear whether or to which extent this quality also applies to a general principle of Union law. The jurisprudence of the ECJ on the general principle of non-discrimination on grounds of age, as started within the Mangold judgment81 and developed in the Kücükdeveci decision,82 points in this direction, when it says that “it is for the national court…to ensure that the principle of non-discrimination on grounds of age…is complied with, disapplying, if need be, any contrary provision of national legislation”.83 However, the general principles in the external agreements seem to be too vague to match this jurisprudence. Nevertheless it should not be generally excluded that in a given case the core element of such a principle can be considered to be sufficiently clear and unconditional, e.g. in the case of abolishing a cornerstone of the independence of judges or courts. Nonetheless such a direct applicability could only affect the Union and its Member States, while such an effect in the other party would depend on the status of the agreement with the Union in its domestic legal order. 4.2.2.2  Second, in external agreements no enforcement procedure of the kind of Articles 258 and 259 TFEU is available, which gives the Commission or the Member States the procedural possibility to bring the assertion that a state has failed to fulfil an obligation under the treaties before the ECJ. Rather, the Union’s external agreements open the road to the dispute settlement methods of consultation and general international law. For example, when a dispute arises between the parties concerning the interpretation, implementation or good faith application of the EU-Ukraine Agreement, its Article 477 provides that “any Party shall submit to the other Party and the Association Council a formal request that the matter in dispute be resolved”. If the matter at hand is not resolved within 3 months of the date of notification of such a formal request for dispute settlement and the complaining party continues to consider that the other party has failed to fulfil an obligation under the Agreement,

 ECJ, Case 12/86, Demirel, ECLI:EU:C:1987:400 para. 14.  ECJ, Case 26/62, Van Gend en Loos, ECLI:EU:C:1963:1, p. 24. 79  Id, p. 25. 80  See as references for the settled case law of the ECJ Müller-Graff (2014b), pp. 491 f. 81  ECJ, Case C-144/04, Mangold, ECLI:EU:C:2005:709 para. 75. 82  ECJ, Case C-555/07, Kücükdeveci, ECLI:EU:C:2010:21 para. 44 et seq. 83  ECJ, Case C-555/07, Kücükdeveci, ECLI:EU:C:2010:21 para. 56. 77 78

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then a party may take “appropriate measures” (Article 478 (1)), but the requirement for a 3-month consultation shall not apply to cases of the “violation by the other Party of any of the essential elements of this Agreement”, referred to in Article 2— hence the general principles and/or common values. Article 478 (2) provides that “in the selection of appropriate measures, priority shall be given to those which least disturb the functioning of this Agreement”. But in cases of violation of the general principles, such measures can also include the suspension of rights or obligations provided under provisions of the Agreement, mentioned in the Title on Trade and Trade-Related Matters. This device alludes to the possibilities in the Article 7 TEU procedure, in which, in case of the determination of a serious and persistent breach by a Member State of the values of the TEU, the Council, acting by qualified majority, may decide to suspend certain rights deriving from the application of the treaties to the Member State in question. 4.2.2.3  Third, national courts can foster the implementation of an external agreement of the Union by complying with the principle of international law-friendly interpretation of national law. Insofar a considerable potential can be attributed to the judicial realization of general principles, in particular the respect for human rights and the rule of law by way of the mere application of the principle of proportionality. The judicial potential can be deduced from the findings of Roman Petrov’s study “Exporting the Acquis Communautaire through European Union External Agreements”,84 in which he demonstrates the impact which already the former Partnership and Cooperation Agreement exerted on the Ukrainian judiciary as a source of (in his words) “pro-European” inspiration in their judgments.85 Nevertheless, in case of limited means for the judicial enforceability of the general principles in the partner country of an external agreement of the Union, their effective implementation and application largely depends on political devices and measures. This leads to the political dimension.

4.3  T  he Political Implementation of the General Principles of EU External Agreements Three forms of political implementation are conceivable and partially applied: orientation (4.3.1), conditionality (4.3.2) and overall strategy (4.3.3). 4.3.1  First, the general principles can and should serve as a point of orientation and a source of inspiration for the national legislation, administration and practice of the parties as a desirable form of permanent self-evaluation. In this way, as practiced in most Member States of the Union in relation to Union law, their legislative 84 85

 Heidelberger Schriften zum Wirtschaftsrecht und Europarecht, Band 64, 2011.  Ibid., p. 248.

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and administrative acts can be screened under the aspect of their promotion of and compliance with the general principles. Concerning the respect for human rights and fundamental freedoms, the Charter of Fundamental Rights of the European Union as well as the European Convention for the Protection of Human Rights and Fundamental Freedoms in the respective interpretation by the respective competent courts can serve as a benchmark for any legislative and administrative measure. This is true both in terms of substantive positions and of requirements for their limitation as laid down in Article 52 (1) CFR which requires in particular that any limitation must be provided for by law, respect the essence of those rights and freedoms and be necessary and genuinely meet objectives of general interest or the need to protect the rights and freedoms of others. As regards the respect for the rule of law, several substantiations can be drawn from its interpretation by the ECJ, in particular the so-called principle of “institutional balance”86 which is the expression of the separation of powers and its inherent checks and balances as well as the general principles of administrative law such as the principles of proportionality (in the sense of the aptitude, necessity and proportional balance of a measure), of the protection of legitimate expectations and of the prohibition of retroactivity. In regard to the respect for democratic principles, some concretisations can be found in the provisions on democratic principles as laid down in Articles 9 et seq. TEU such as the principle of the equality of the citizens (which is the basis for the legitimacy of majority decisions and realized in the Union’s specific structure in the form of demographic factor in legislative decisions taken by qualified majority in the Council87 as a compensation for the principle of degressive proportionality in the composition of the European Parliament88), their right to participate in shaping their polity89 and their representation in a Parliament composed by members who are elected for a limited term by direct universal suffrage in a free and secret ballot (as in case of the European Parliament,90 Article 14 (3) TEU). Summarized, many reference points can be found in Union law for guiding the political implementation of the general principles. 4.3.2  Second, while such permanent self-evaluation is a pure internal device of a contracting party and depends on its unilateral political willingness, a second form of political implementation of the general principles is the method of conditionality (even in form of clauses) as a technical lever for promoting the general principles. In international relations the technique of attaching conditions to the provision of benefits is a well-known device, e.g. in the context of financial aid of the International

 For example, ECJ, Case C-425/13, Commission/Council, ECLI:EU:C:2015:483 para. 62.  Article 16 par. 3 TEU. 88  Article 14 par. 2 TEU. 89  Article 10 par. 3 TEU. 90  Article 14 par. 3 TEU. 86 87

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Monetary Fund and the World Bank. But it is more difficult to be employed for the use in enforcing abstract general principles. The European Union began to apply this technique at a large scale in the Eastern enlargement process in the 1990s making membership conditional on fulfilling the Copenhagen criteria and adopting the legal acquis communautaire.91 And with the launch of the European Neighbourhood Policy (ENP) in 2004, the Union started (in the words of Ghia Nodia, Tbilisi) “a specific and steady process of monitoring and evaluating the countries’ performance in the area of democratic and good governance reforms and introduced the ‘more for more’ approach, promising to award best performers with greater benefits of participations in the ‘four liberties’”.92 The usefulness of this approach can be presumed as long as the benefits of complying with the conditions are important enough for the respective individual country. The results of the existing research of political science on the external democracy promotion by the EU seem to confirm this hypothesis when comparing the instruments and effects of this promotion in the former East Central European candidate states, the East European neighbourhood states, the South Caucasus states and the Central Asian states. Sigita Urdze and Michèle Knodt (Darmstadt), in their publication on measuring the external democracy promotion of the EU in Central Asia, hold that the EU can offer concrete incentives and threats in its conditionality policy, while this possibility is largely absent in further away located states.93 Vladimir Paramonov (Moscow), in his most recent study, submits that “based on the analysis of the EU’s impact on Central Asia, it can be safely concluded that the impact of various policy instruments of the European Union to promote democracy in Central Asia is largely irrelevant”94 but adds, in a general way, that “in the political sphere, the EU’s impact is most evident in the Kyrgyz Republic”.95 Probably, these findings can also be extended to the Union’s impact on the respect for human rights and the rule of law. For the nearer located South Caucasus states, Ghia Nodia concludes his study on the Union’s effectiveness as a democracy promotion actor with the assessment that “the importance of the European Union as a democracy-promoting actor in the South Caucasus should be neither over- nor underestimated”.96 He confirms the assumption that, besides the relation between the degree of the Union’s political commitment and the degree of leverage, “it matters much how receptive each regional country is towards signals and incentives coming from the EU”97 and sees as decisive factors “whether they see their identity as European and how the prospect of European integration (in this case its reduced version such as the Association Agreement) fits into their understanding of their security and economic interests”.  See supra note 30 and 31.  Nodia (2018), pp. 89, 188. 93  Urdze and Knodt (2013) under 2. 94  Paramonov (2018), pp. 203, 315. 95  Id., p. 311. 96  See supra note 92, p. 187. 97  See supra note 92, p. 187. 91 92

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He judges that the three South Caucasus states “vary widely in this account” and hence the EU’s capacity to influence their democratic developments varies as well. Nodia links the “much greater leverage” of the Union over Georgia than over Armenia and Azerbaijan to the willingness of Georgia to enter an Association Agreement in the context of the EU’s Eastern Partnership Policy (EaP) and, very significant, the Union’s decision to become an important security player in Georgia.98 As far as the relationship between security interests of third countries and the Union’s measures for external democracy promotion are concerned, the analysis of Sigita Urdze and Michèle Knodt results in the impression that the EU is “muddling through”.99 And this seems also to apply to the influence of economic interests of the Union on the character of measures applied.100 4.3.3  The third form of political implementation of the general principles in the Union’s external agreements is already indicated by the latter observation. It also basically rests with the policy of the Union. It is the overall strategy of its external policy towards regions and, most important, as Ghia Nodia rightly points out, individual countries. He suggests that, “if the EU takes a regional approach anyway, it may have become more rational to talk of an AA-DCFTA area comprising Moldova, Ukraine and Georgia”, since these three countries “have a great commonality of identity, values, interests, challenges and prospects”.101 But he also remarks that the EU’s “leverage is greatly curtailed by its propensity not to extend the European perspective to this region(s)” and asks “what is there to energise EU relations with its ENP and EaP partners in the future?” The answer, in my view, is that even without the prospect of full membership, the stable respect for human rights, democracy and the rule of law in the European Union can serve as energising model for the well-being of a society and polity.

4.4  Conclusion Hence it seems safe to conclude that the definition of the respective overall external policy of the European Union towards a region or an individual country on the one side and the receptiveness of such countries on the other side are the most decisive factors for the role of the general principles and/or common values in the effective implementation and application of the Union’s external agreement in a partner country. But for a valid and substantive evaluation of the effectiveness of the implementation and application of an external agreement of the Union in a concrete partner country in respect to the different general principles, the Herculean task of criteria-guided empirical studies has to be tackled.  See supra note 92, p. 189.  Urdze and Knodt (2018), p. 79. 100  Id., p. 80. 101  See supra note 92, p. 190. 98 99

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Müller-Graff P (2014a) Die Schweiz und der EU-Binnenmarkt – drinnen, draußen oder am liebsten beides?. In: Kellerhals A (Hrsg.) Bilateralismus im multilateralen Europa. Schulthess, Zürich, p 283 ff Müller-Graff P (2014b) Grundfreiheiten und Wettbewerbsordnung. In: Hatje A, Müller-Graff P (Hrsg.) Europäisches Organisations- und Verfassungsrecht, Enzyklopädie Europarecht Band 1. Nomos, Baden-Baden, p 491 ff Müller-Graff P (2015) Handelsabkommen  – “frei” und “fair”? Der Erfahrungsbeitrag des Binnenmarktrechts der EU. ifo Schnelldienst 68(7):21–24 Müller-Graff P (2017) Artikel 3. In: Pechstein M, Nowak C, Häde U (Hrsg.) Frankfurter Kommentar EUV-GRC-AEUV. Mohr Siebeck, Frankfurt Müller-Graff P (2018) Die Rolle des EuGH bei der Streitbeilegung in internationalen Abkommen der EU. In: Notter M, Weber RH, Heinemann A, Baumgartner T (Hrsg.) Europäische Idee und Integration – mittendrin und nicht dabei?, Liber amicorum für Andreas Kellerhals. Schulthess Verlag, Zürich, pp 223, 233 Müller-Graff P, Selvig E (Hrsg.) (1997) The European Economic Area Nodia G (2018) The EU’s effectiveness as a democracy promotion actor: three divergent cases in South Caucasus. In: Knodt M, Urdze S, Nodia G, Paramonov V (eds) EU’s policy of democracy promotion. Nomos, Baden-Baden, pp 89, 188 Paramonov V (2018) European Union activities and the impact of its policy of democratization in Central Asia. In: Knodt M, Urdze S, Nodia G, Paramonov V (eds) EU’s policy of democracy promotion. Nomos, Baden-Baden, pp 203, 315 Petrov R, Braun D (2014) Die Östliche Partnerschaft als besondere Ausprägung der Europäischen Nachbarschaftspolitik. In: Hatje A, Müller-Graff P (Hrsg.) Europäisches Organisations- und Verfassungsrecht, Enzyklopädie Europarecht, Band 1. Nomos, Baden-Baden, p 1001ff Rodin S (2014) Stabilisierungs- und Assoziierungsabkommen Südosteuropa. In: Hatje A, Müller-­ Graff P (Hrsg.) Europäisches Organisations- und Verfassungsrecht, Enzyklopädie Europarecht, Band 1. Nomos, Baden-Baden, p 985 ff Schweitzer M, Hummer W, Obwexer W (2007) Europarecht: Das Recht der europäischen Union. Manz, Wien Urdze S, Knodt M (2013) Jenseits von Zuckerbrot und Peitsche: Zur Messung der externen Demokratieförderung der Europäischen Union am Beispiel Zentralasiens. ZVglPolitWiss 7(1):49–74 Urdze S, Knodt M (2018) Muddling through: the European Union’s external democracy promotion in the Southern Caucasus and Central Asia. In: Knodt M, Urdze S, Nodia G, Paramonov V (eds) EU’s policy of democracy promotion. Nomos, Baden-Baden, p 79 Vedder C (2011) Die außenpolitische Zielbindung der gemeinsamen Handelspolitik. In: Bungenberg M/Herrmann C (eds) Die gemeinsame Handelspolitik der Europäischen Union nach Lissabon, Nomos, Baden-Baden, pp. 121 ff Peter-Christian Müller-Graff  is a Senior Professor for Private Law, Business Law, European Law, and Comparative Law at the Law Faculty of Heidelberg University. He has extensively published on these subjects and is a Co-Editor of the Enzyklopädie Europarecht. He is a Member of the Board of Trustees of the Academy of European Law and a Member of the Academia Europaea and was awarded the “Mérite Européen en or” and several honorary doctorates. He is a President of Arbeitskreis Europäische Union Deutschland (European Communities Studies Association of Germany), a Managing Board Member of Wissenschaftliche Gesellschaft für Europarecht, and an Honorary Chair of the Association of German Law Faculties. He served as a counsellor to the European Convention on a Constitutional Treaty for Europe and represented Germany before the Court of Justice of the European Union.

Exclusive and Shared External Competences After the Singapore Opinion of the European Court of Justice: 2/15 Revisited Stefan Lorenzmeier

1  Introduction Vertical and horizontal disagreements over whether and which organ of the European Union (EU) can conclude international agreements on its own or act alone in international bodies arise quite frequently before the European Court of Justice (ECJ).1 These issues are either a matter of the vertical allocation of competences between the European Union and its Member States or of the horizontal allocation between the organs of the Union, namely, Commission and Council which in this instance is acting as the representative of the Member States as well. Thus, the latter disputes can be properly described as “disguised vertical conflicts”. Moreover, the division of powers between the European Union and its Member States seems to be rather tricky because questions of competence are questions of power2 and as such a perfect breeding ground for disputes. Since its inception, the then European (Economic) Community concluded international agreements, mostly free trade and association agreements in accordance with Art. 207 and 217 TFEU, respectively, jointly with its Member States as so-­ called mixed agreements, meaning the agreements had been concluded by the EC and its Member States on the one side of an agreement and a third party on the other.3 This unique system of bilateral agreements is special to the EU legal order4  See, e.g. the different contributions in Cremona and Thies (2013).  Opinion of Advocate General Kokott in joined cases C-626/15 and C-659/15, AMP Antartique, ECLI:EU:C:2018:362, para. 2. 3  Mixity can arise in a number of contexts; for an overview see Eeckhout (2011), p. 215 et seq. 4  For analyses see, e.g. O’Keefe and Schermers (1983) and Hillion and Koutrakos (2010). 1 2

S. Lorenzmeier (*) Faculty of Law, University of Augsburg, Augsburg, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 S. Lorenzmeier et al. (eds.), EU External Relations Law, https://doi.org/10.1007/978-3-030-62859-8_3

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and a result of the EU principle of conferral.5 The advantages of this procedure were and still are rather obvious. On the one hand, the EC had been put in a position to conclude international agreements which went even further than its own areas of competence, because the Member States filled the competence gap with their own all-encompassing external competence as states.6 The Member States on the other hand were still part of an agreement which fell at least partly in the EC competence, and they were in a position to show externally that they are still full and competent international actors. Thus, they hold on to a strong political say and remain visible at the international stage.7 Moreover, mixed agreements had advantages for the other party, too. Besides the sometimes difficult to entangle mix of competences between the EC and its Member States, it always can hold a state accountable for the non-fulfilment of the agreement due to the jurisprudence of the European Court of Justice in respect of mixed agreements. The ECJ stated that the EU and its Member States are responsible for the fulfilment of the full agreement despite the Union’s internal allocation of competences.8 These advantages stood in stark contrast with the Union’s growing powers over the last decades. Over the years and finally with the entry into force of the Treaty of Lisbon, the EU gained more competences from the Member States and became a more and more confident international actor. Politically, the EU chose to use its new competences and to conclude comprehensive free trade agreements going beyond the traditional WTO set of rules by also including provisions on competition, public procurement and investment protection. The Union’s Member States assembled in the Council of the European Union saw this development with some hesitation increased by the additional political trend of concluding “EU-only” agreements without their participation and, most importantly, their ratification. Thereby, the national procedure of ratification had been put aside. The political trend to EU-only agreements had also been fostered by the political debate in the Member States on some proposed agreements. Especially, the political discussion about the negotiation and conclusion of the TTIP agreement with the USA, the CETA agreement with Canada9 and the Association Agreement with Ukraine10 caused concern in the EU Commission, an organ of the EU, about the future of mixed agreements. It was against this background that the Commission decided to bring the draft of the comprehensive free trade agreement with Singapore (EUSFTA) to the European Court of Justice for an assessment of its legality. It was originally planned to  Eeckhout (2011), p. 214.  See, e.g. Heliskoski (2001), p. 6 et seq. 7  See, e.g. Schütze (2014), p. 203; Chamon (2018), p. 147. 8  ECJ, C-53/96, Hermès [1998] ECR 3603, para. 24. This is convincing unless the agreement points to a different conclusion; see AG Jacobs, opinion C-316/91, Parliament/Council, [1994] ECR I-625, para. 69. 9  O.J. 2017 L 11, 1. In the beginning, the Commission planned to conclude CETA as an EU-only agreement, which had been stopped by some Member States. See Vedder, 3.2., in this volume. 10  O.J. 2014 L 161/1. On Ukraine see also the contribtions by van Elsuwege and Petrov in this volume. 5 6

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conclude the agreement as an EU-only agreement, and the Commission asked the ECJ to determine whether “the Union ha(s) the requisite competence to sign and conclude alone the Free Trade Agreement with Singapore”. More specifically, the Commission inquired from the Court (1) which provisions of the agreement are falling within the Union’s exclusive competence, (2) which provisions of the agreement are falling within the Union’s shared competence and (3) whether there is any provision of the agreement that falls within the exclusive competence of the Member States.11 Unfortunately, these issues could not finally be settled by the ECJ in its Opinion 2/1512 on the EUSFTA and require further analysis.13 This contribution will analyse the reasoning of the ECJ in respect of the Union’s external competences in the area of the Common Commercial Policy, Art. 207 (1) TFEU. Further, it will try to show whether the Opinion 2/15 is apt in solving or at least easing the Union’s power struggle with its Member States by looking at the opinion’s political impact, and the question whether a stronger political participation of the Member States in the conclusion of Union agreements could lead to an easing of the tensions will be explored.

2  The Opinion 2/15 of the European Court of Justice ECJ’s Opinion 2/15 was meant to address the mentioned issues in an all-­ encompassing way, but, unfortunately, it fell in some instances slightly short of this aim. In the following the background and the holding of the European Court of Justice will be shown.

2.1  EU-Singapore Free Trade Agreement (EUSFTA) The envisaged free trade agreement with Singapore was meant to be one of the first “new-generation” bilateral free trade agreements, that is to say, a trade agreement which contains, in addition to the classical provisions on the reduction of customs duties and of non-tariff barriers to trade in goods and services, provisions on various  In its request to Opinion 1/19, Singapore Convention, the European Parliament chose a similar strain. On 22 November 2019 it asked the Court to clarify the proper legal bases for the conclusion of the Convention. Rather interestingly, it also inquired whether it is “necessary or possible to separate the decisions concerning the signature and the conclusion of the convention as a consequence of that choice of legal basis” and, if “the conclusion by the European Union of the Istanbul Convention, in accordance with Article 218(6) TFEU, is compatible with the Treaties in the absence of mutual agreement between all the Member States concerning their consent to be bound by that convention”. 12  ECJ, Opinion 2/15, Singapore, 16 May 2017, ECLI:EU:C:2017:376. 13  In respect of mixity after 2/15, see the contribution by Kumin in this volume. On issues of competence after ECJ’s Opinion 2/15, see also Vedder in this volume. 11

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matters related to trade, such as intellectual property protection, investment, public procurement, competition and sustainable development.14 Thus, the EUSFTA was meant to go beyond the mere array of WTO issues by including other trade-related aspects as well as envisaged by the EU Commission’s “Europe 2020 strategy”.15 The comprehensive agreement had been initialled on 26 June 2015 and contained 17 chapters which can be generally grouped into 4:16 Chapters 2 to 7 are devoted to trade in goods regulating market access for goods, trade remedies, technical barriers to trade, sanitary and phytosanitary measures, custom and trade facilitation and non-tariff barriers to trade and investment in renewable energy generation. The second bloc consists of the chapters 7 and 8 and is dedicated to services, electronic commerce and investment protection. The chapters 10 to 14 form the third group and deal with rules associated with trade like government procurement, intellectual property, competition, trade and sustainable development and transparency. The final chapters 15 to 17 are devoted to dispute settlement and mediation mechanisms and the usual general and final provisions. The first chapter of the EUSFTA sets out the subject matter and objectives of the agreement and includes a set of generally applicable definitions. Originally, it was planned that the Union concludes the whole agreement exclusively, either under its exclusive competence given in Art. 3 (1) (e) TFEU or the one laid down in Art. 3 (2) TFEU,17 thereby limiting the participation of the Member States to their vote in the EU Council.

2.2  Common Commercial Policy, Art. 207 TFEU The Common Commercial Policy is one of the core elements of the Union’s treaty system and was elementary in developing an EU external relations system. It can be rightly regarded as the heart of the integration project.18 Art. 207 (1) (1) TFEU states that “the common commercial policy shall be based on uniform principles with regard to […] the conclusion of tariff and trade agreements relating to goods and services, and the commercial aspects of intellectual property, foreign direct investment, the achievement of uniformity in measures of liberalization, export policy and measures to protect trade […]”. This provision had been regularly interpreted extensively by the ECJ.19 Despite some discussion about the scope of the trade policy in  ECJ Opinion 2/15, Singapore, ECLI:EU:C:2017:376, para. 17.  European Commission, Europe 2020 – A strategy for smart, sustainable and inclusive growth, COM(2010) 612 final. 16  See also Segura Serrano (2016), p. 492. 17  See infra 2.4.2. 18  van Vooren and Wessel (2014), p. 276. 19  Especially since Opinion 1/78, International Agreement on Rubber [1979] ECR 2875, paras. 43–45. An analysis can be found in Eeckhout (2011), p. 18 et seq. See also Müller-Graff (2008), p. 188 et seq. 14 15

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the EU organs,20 the Court relied upon the text of the current Art. 207 (1) TFEU by stressing that the (then) EC is empowered to formulate a commercial “policy”, encompassing all aspects of trade. Thus, a Union action will be covered by the provision if it is linked to trade issues.21 The Treaty of Lisbon expanded the Union’s external competence to, inter alia, foreign direct investments.22 “Foreign” is aimed at trans-border investments either from a third state into the EU or from the EU to a third state. “Direct investment” is used in Art. 64 TFEU as well. In the context of Art. 64 TFEU, the ECJ defined “direct investments” as meaning investments of any kind undertaken by natural or legal persons and which serve to establish or maintain lasting and direct links between the persons providing the capital and the undertakings to which that capital is made available in order to carry out an economic activity.23 Therefore, the Court distinguishes between direct investments and portfolio investments; the latter involve “investments in the form of acquisition of shares on the capital market solely with the intention of making a financial investment without any intention the influence and control of the undertaking”.24 Whether Art. 207 (1) TFEU also covers portfolio investments was a matter for debate and not clear from the norm’s wording.25 If so, the scope of Art. 207 (1) TFEU would come close to the scope of classic bilateral investment treaties; if not, the Union competence for these investments is questionable.26 Additionally, in Opinion 1/75, the ECJ regarded the external trade competence of the Union as an exclusive competence towards its Member States, because it is, inter alia, based on uniform principles.27 This had been codified by the Treaty of Lisbon in Art. 3 (1) (e) TFEU and bears the effect that the Member States are only entitled to act if the EU so permits. Yet, even if one of the subject matters of a free trade agreement is not covered by the Common Commercial Policy, the Union may enjoy an implied competence to conclude international agreements. The notion of “implied Union powers” had been accepted by the ECJ in its ERTA judgment and since then developed in its case

 For the differing views of the Commission and Council, see Opinion 1/78, International Agreement on Rubber [1979] ECR 2883 et seq and 2887 et seq. respectively. 21  See the overview by Eeckhout (2011), p. 23 et seq. In any case, the center of gravity test has to be applied (see van Vooren and Wessel 2014, p. 142 et seq.); the theory of absorption of other EU competences does not seem to be applicable in our context. For this see Chamon (2018), p. 142 et seq. 22  For further changes see Cremona (2017), p. 19 et seq. 23  ECJ, C-446/04, Test Claimants, [2006] ECR-I 11753 para. 181. 24  See Ceyssens (2005), pp.  259, 274; Commission Communication, Towards a comprehensive European international investment policy, COM(2010)343 final, 4, https://eur-lex.europa.eu/ LexUriServ/LexUriServ.do?uri=COM:2010:0343:FIN:EN:PDF. 25  See Hoffmeister (2017), p. 428 and Cremona (2017), p. 23 et seq. with further references. 26  Arguing in favour of a distinction: Eeckhout (2011), p. 64; van Vooren and Wessel (2014), p. 279. 27  ECJ, Opinion 1/75, Local Cost [1975] ECR 1355; Eeckhout (2011), p. 16. 20

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law.28 The Treaty of Lisbon codified the jurisprudence of the Court in Art. 216 (1) 2nd part and Art. 3 (2) TFEU. Unfortunately, the wording of the two provisions is not identical, and Art. 3 (2) TFEU seems to be slightly narrower than Art. 216 (1) 2nd part TFEU, thereby leaving room for shared competences between the Union and its Member States in the realm of implied powers.

2.3  The Case Before the European Court of Justice In the view of the Commission, the EU had the exclusive competence to conclude the whole FTA with Singapore, because the named 17 areas of the agreement are either part of the Common Commercial Policy laid down in Art. 207 (1) TFEU and exclusive according to Art. 3 (1) lit. e) TFEU or do fall within the exclusive competence under Art. 216 (1), 3 (2) TFEU.29 This view was shared by the European Parliament.30 In essence, this view would, for instance, include portfolio investments in Art. 207 (1) TFEU. The Council and the Member States making observations to the Court were of a different view. According to their assessment, not all matters fell within the exclusive competence of the EU, most prominently the part on “other investments than direct investments”. Thus, according to their opinion, the agreement shows all features of a mandatory mixed agreement which has to be concluded by the Union and its Member States.31 Stemming from the foregoing, the Court scrutinized whether the different subject matters of the agreement do fall within the exclusive competences of the Union laid down in Art. 3 (1) (e) and Art. 3 (2) TFEU. After an extensive analysis, the ECJ answered the request by stating that the vast majority of the envisaged agreement with Singapore falls within the exclusive competence of the European Union.32 However, some provisions of the draft Singapore agreement fell within a competence shared between the European Union and the Member States. These were, namely, the provisions of Section A (Investment Protection) of Chapter 9 (Investment) of the draft agreement, in so far as they relate to non-direct investment between the European Union and the Republic of Singapore; the provisions of Section B (Investor-State Dispute Settlement) of Chapter 9; and the provisions of  22/70, ERTA [1971] ECR 263. On the ERTA judgment, see Vedder in this volume. On the development see, e.g. Koutrakos (2015), p. 75 et seq.; Eeckhout (2011), p. 70; van Vooren and Wessel (2014), p. 80 et seq. 29  ECJ, Opinion 2/15, Singapore, ECLI:EU:C:2017:376, paras. 12  ff. For foreign direct investments, this was in line with the Commission’s previous statements, see European Commission, Towards a comprehensive European international investment policy, COM (2010), p. 8. 30  Ibid, para. 18. 31  Ibid, paras. 19 ff., 24 on non-direct investments. 32  Ibid, para. 305. See also Vedder, 3.3.2, in this volume. On the judgment see also Svoboda (2019) with further references. 28

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Chapters 1 (Objectives and General Definitions), 14 (Transparency), 15 (Dispute Settlement between the Parties), 16 (Mediation Mechanism) and 17 (Institutional, General and Final Provisions) of that agreement, in so far as those provisions relate to the provisions of Chapter 9 and to the extent that the latter fall within a competence shared between the European Union and the Member States.33 Thus, the vast majority of the EUSFTA provisions were covered by the Union’s exclusive external competence, and only a minority was part of the competence shared between the EU and its Member States. Without mentioning it explicitly, the EUSFTA could have only be concluded as a mixed agreement in the opinion of the ECJ.

2.4  Flaws of the Court’s Reasoning Yet, the reasoning of the Full Court was not always fully comprehensive, and, therefore, it had been and has to be criticized. The two most crucial issues for the EU’s external competences will be shortly scrutinized. 2.4.1  Mixed Agreements First, it did not openly address the issue of mixity,34 a pity given the real implications of the case for the future drafting of Union agreements. In this context, and more importantly, the ECJ’s understanding of shared competences laid down in Art. 2 (2) TFEU seemed to be misleading. Regarding portfolio investments the Court noted that these do not fall within the exclusive competence of the Union but the shared one. As such, and this seems to be rather unconvincing in light of Art. 2 (2) TFEU, they cannot be approved by the European Union alone.35 However, they cannot be concluded by the Member States on their own as well.36 As a result, these parts must fall within the shared competence of the Union and the Member States. The finding of the Court seems to be problematic because it could be understood to contradict the wording of Art. 2 (2) TFEU. The provision states: When the Treaties confer on the Union a competence shared with the Member States in a specific area, the Union and the Member States may legislate and adopt legally binding acts in that area. The Member States shall exercise their competence to the extent that the Union has not exercised its competence. The Member States shall again exercise their competence to the extent that the Union has decided to cease exercising its competence.

 Ibid.  On mixity see the contribution by Kumin in this volume. 35  ECJ, Opinion 2/15, Singapore, ECLI:EU:C:2017:376, para. 244. 36  Ibid, para. 256. 33 34

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This means, in essence, that the Member States are only competent to legislate on areas of shared competence if and as long as the Union itself has not exercised its competence. Furthermore, an exercised shared competence can be used by the EU alone; any kind of approval by the Member States is not required and vice versa if the Union has not used it. Stemming from this, a different reading of the Court’s argument is needed. The ECJ was concerned as well and sheds some light on its statement in subsequent judgments. Most prominently, the Court reasoned in its OTIF/COTIF judgment37 regarding the issue of shared competence and participation of the Member States that “the Union has to take internal action by adopting a rule of secondary law in the field at issue” for exercising its external competence.38 This was not the case for the rules on non-direct investment mentioned in para. 243 of its Singapore opinion, and, as such, the Union is not competent to act without the Member States. Moreover, the statement in para. 244 of the Singapore opinion was only aimed at the missing Council decision and the lack of will thereto in the Council to adopt an act of secondary Union legislation on non-direct investments.39 In conclusion, the Court held that there was no possibility for the EU to exercise alone its external competence that it shares with the Member States in the area of non-direct investments.40 The OTIF/COTIF reasoning, which had been referred to by the ECJ in its Antarctic Treaty decision,41 sheds some light on the interplay of internal and external competences of the Union. A shared internal competence has to be used in the meaning of Art. 3 (2) TFEU for changing its legal nature into an exclusive competence.42 If this had not happened, the approval of the Member States is still mandatory if the Union intents to conclude the respective agreement. In its Singapore opinion, the Court did not intent to deviate from Art. 2(2) TFEU and the allocation of competences laid down in this provision. In any case, political (or facultative) mixed agreements remain possible.43

 ECJ, C-600/14, OTIF/COTIF, ECLI:EU:C:2017:935. See also Lenk and Gáspár-Szilágyi (2017) and Neframi (2019). 38  Ibid, para. 67. 39  Ibid, para. 68. 40  Ibid. 41  ECJ, joined cases C-626/15 and C-629/16, AMP Antarctique, ECLI:EU:C:2018:925, para. 126. 42  Whether the ECJ rejected Germany’s argument that the EU has only an external competence if it is exclusive (so Chamon 2018, p.  140) is not fully clear because a “used” shared competence becomes an exclusive external competence under Art. 3 (2) TFEU. 43  See especially Kumin in this volume and Govaere (2019). For the critique on facultative mixity, see the overview by Chamon (2018), p. 147 et seq. 37

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2.4.2  Exclusive or Shared Implied Treaty-Making Powers Yet, secondly, the Court’s line of reasoning in the Opinion 2/15 in respect of exclusive or shared implied treaty-making powers may also be seen critical after some stricter examination. The Court opines concerning non-direct investments that the EU lacks exclusive competence in the meaning of Art. 3 (2) TFEU, because the conclusion of the agreement is not “necessary” for the Union to exercise its internal competence for non-direct investments, which is required by Art. 3 (2) TFEU.44 Interestingly, by relying on Art. 216 (1) second part TFEU, whose wording states that the Union can conclude agreements, which are “necessary to achieve one of the objectives referred to in the treaties”, the ECJ accepted on the basis of Art. 63, 4 (2) (a) TFEU the shared competence between the EU and its Member States.45 The Court does not provide reasons for interpreting the term “necessary” different in Art. 3 (2) and Art. 216 (1) second part TFEU, which is unfortunate given the term’s vagueness.46 Although the aim of the provisions is not identical, Art. 216 (1) second part TFEU is providing the EU with a competence to conclude agreements, while Art. 3 (2) TFEU states the nature of the competence in respect to the Member States; both provisions apply in the same systematic context. Additionally, the wording of the two provisions is only similar, but not identical. However, the deviation is surprising given the historical background of the norms and their systematic tie. Historically, the term “necessary” stems from the ECJ’s Laying-up fund decision,47 which had been codified in Art. 3 (2) and Art. 216 (1) second part TFEU, respectively, but without the Court’s strict construction of the term.48 In this respect it seems to be of special relevance that despite its heritage the treaty text stands independently from the previous case law of the ECJ and has its own meaning which has to be carved out by interpretation. The relevance of the pre-­ Lisbon case law for this mechanism has to be seen on a case-by-case basis but should not be overstressed given the separate legal texts which have been or had to be interpreted by the Court. The European treaties are understood dynamically; otherwise the process of integration could be halted easily.49 All in all, the historical evolution of the provisions should not overshadow their independent legal being. This leads to the systematic interpretation’s relevance. Systematically, both provisions are concerned with the Union’s external treaty-­ making power on a vertical level towards the Member States, and identical terms should be interpreted parallel, which would avoid opposing results. Further, by following the Court’s view, Art. 3 (2) TFEU would not encompass all external  This seems to differ from the Commission’s opinion on foreign direct investments; see note 28.  ECJ, Opinion 2/15, Singapore, ECLI:EU:C:2017:376, paras. 239 ff. 46  On this see Koutrakos (2015), p. 76, according to whom the Court has to define “necessary” in its (future) case law. 47  ECJ Opinion 1/76, Inland Waterways, [1977] ECR 741. See also Vedder 3.4.2 in this volume. 48  Koutrakos (2015), p. 128. 49  This does not seem to be the prevalent view among European legal scholars; see, e.g. Koutrakos (2015), p. 129; Eeckhout (2011), p. 113; Neframi (2019), p. 508 et seq. 44 45

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agreements of the Union concluded under Art. 216 (1) second part TFEU, which would, logically, lead to the Court’s assumption that these powers are shared under Art. 4 (2) TFEU, although the latter provision is only aimed at internal and not external competences. This is a rather surprising result which does not seem to be fully conclusive.50 The different wording of the two norms seems to be irrelevant in the scrutinized context, because Art. 216 (1) TFEU refers to the objectives which have to be achieved within the Union’s policies and is therefore pointing to the Union’s internal policies. Art. 3 (2) TFEU refers to the exercise of the Union’s internal powers, thus, in essence, also the Union’s policies. Furthermore, it has to be borne in mind that also used shared competences are becoming virtual exclusive competences and that the Member States’ powers are not hampered by any of the two opinions; they do not enjoy a competence anyhow. In any case and despite the rather dogmatic criticism, the Court’s Opinion 2/15 is conclusive because the conclusion of the EUSFTA was not necessary for achieving an internal policy on external non-direct investments.

2.5  Separation of Agreements The political effect of the Court’s ruling in Opinion 2/15 was the separation of future free trade agreements with third states in an EU-only and a mixed agreement. Thereby, the idea of strengthening the Union’s standing as an international actor towards third states and its Member States could be achieved best, but not without compromises. The Member States were and still are very concerned about their own and independent international standing, too, and could block the decision on the conclusion of every international agreement in the Council. Logically, the Council has to be closely informed by the Commission about ongoing negotiations for free trade agreements as provided for in Art. 218 TFEU. 2.5.1  C  ouncil Conclusions on the Negotiation and Conclusion of EU Trade Agreements In its Council Conclusions on the Negotiation and Conclusion of EU Trade Agreements,51 the EU Council strongly supports the negotiation of ambitious, balanced and mutually beneficial free trade agreements that ensure a level playing field between the EU and a third state.52 The EU Council takes note in its Conclusions of  Different: Vedder, 3.4.3, in this volume.  The draft can be found at Draft Council Conclusions on the negotiation and conclusion of EU trade agreements, 8 May 2018, 8622/18, http://data.consilium.europa.eu/doc/document/ ST-8622-2018-INIT/en/pdf. 52  Council Conclusions para. 1. 50 51

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the new policy of the EU Commission to split free trade agreements in an trade and investment agreement, thereby strengthening the EU’s position as a negotiating partner.53 However, the EU Council also stresses that it is still for the Council to decide whether to open negotiations on this basis and, following from this, the Council can decide, on a case-by-case basis, on the splitting of trade agreements.54 Insofar, the EU Council stresses its internal horizontal position towards another EU organ, here the EU Commission. The EU Council also emphases that, depending on their content, association agreements should be mixed, especially pointing to the ones Mexico, Mercosur and Chile. Given the fact that association agreements are the closest form of cooperation with the EU bar membership, the approach of the EU Council is convincing. By their very nature, association agreements have to be supported by the Member States, which can also be seen by the requirement of unanimity for the Council decision on the conclusion of an association agreement. Another strain of criticism to the new approach by the EU Commission was the limited inclusion of the Member States into the ratification process. Therefore the EU Council continued its Conclusions by stressing that it should be kept fully informed by the Commission and be duly consulted throughout all the stages of the negotiating process of free trade agreements.55 Thereby, the Member States’ governments are put in a position to consult their national parliaments and other stakeholders56 and are, at least to a limited extent, included in the ratification process of the agreement. Yet, it seems rather unlikely that a national parliament would issue a vote of non-confidence or other binding decisions for the government regarding its voting behaviour in the Council concerning the conclusion of international agreements.57 Thus, this seems to be a more theoretical possibility, but there is some measurable participation of the national levels. This weakness could also not be fully solved by applying the subsidiarity principle, which only concerns cases of shared competences, Art. 5 (3) TEU. This is, in our context and even if the approach of the Court in the Singapore opinion is followed, only in exceptional circumstances the case due to the almost exclusive nature of external competences. As a result from the foregoing, it is the role of the Council and the European Parliament to approve free trade agreements falling entirely within the EU’s competence and, as a side effect, to ensure legitimacy and inclusiveness of the adoption process.58 Mixed agreements, most notably the separate investment agreements, which include areas of shared competence, will continue to require approval at the EU level, as well as ratification at national level.59  Council Conclusions para. 3.  Ibid. 55  Council Conclusions para. 7. 56  Ibid. 57   However, in accordance with the jurisprudence of the German Constitutional Court (Bundesverfassungsgericht), the representative of the German government in the Council might be forced to a “no” vote. For details see infra 3. 58  Council Conclusions, para. 7. 59  Ibid. 53 54

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Finally, the EU Council turned to stakeholders, the interested public and national parliaments in its Conclusions. It states that these actors should be kept duly informed from the beginning of the process of preparation for negotiating free trade agreements.60 This is the task of the Member States, who should continue to involve their parliaments and interested stakeholders appropriately and, of course, in line with their respective national procedures.61 The involvement is aimed at to address citizens’ concerns and expectations,62 especially if the comprehensive new free trade agreements concern more areas of the daily life of the citizens than the previous trade agreements. A hoped-for effect is strengthening the legitimacy and inclusiveness of EU trade policy. For supporting the general acceptance of the negotiation process, the EU Council plans, on a case-by-case basis, to make public a number of negotiating directives.63 However, there is no right for the public or the general public to achieve the publication of negotiating directives, and this is a rather limited tool for increasing the public knowledge and awareness of ongoing trade negotiations. 2.5.2  Practice of the EU Organs After 2/15 The negotiation and conclusion practice of the EU organs since Opinion 2/15 is largely following this path. CETA, still a mixed agreement, has provisionally entered into force on 21 September 2017, yet it still lacks some Member States’ ratifications.64 The agreement with Japan had been split up: the EU-Japan Economic Partnership Agreement came into force on 1 February 2019, while separate negotiations continue for an investment protection agreement (IPA). The agreement with Singapore had been renegotiated into two agreements after the Court had issued its Opinion 2/15. The free trade agreement entered into force on 21 November 2019; the IPA has still to be ratified by the Member States. Similarly, the agreement with Vietnam had been changed subsequent to the ECJ’s opinion. The free trade part is in the process of being concluded by the Union; the ratification process for the IPA has just been started. The association agreement with the Mercosur had been agreed upon, and it is still a mixed agreement, as well as the proposed agreements with Mexico and Chile.65

 Council Conclusions para. 8.  Ibid. 62  Ibid. 63  Council Conclusions para. 8. 64  For Germany, the final decision of the Bundesverfassungsgericht has not been issued yet; see infra 3. On the Dutch pragmatic approach, see Campo et al. (2020). 65  For information on all named agreements, see European Commission, Overview of FTA and Other Trade Negotiations, February 2020. 60 61

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3  Political Issues in the Member States One of the main Member States’ concerns regarding the negotiation and conclusion of EU-only agreements is the (lack of) participation of national parliaments in the process.66 As had been seen, the political Council Conclusions are expressly addressing this, but the hesitations in some Member States are going further. For this, the situation in Germany will be used as an example and described shortly. For instance, in Germany and some other Member States67 the debate about the then ongoing free trade negotiations with the USA and Canada was lively and burdensome. The intention of the Commission to conduct the negotiations as usual without public participation was at odds with growing concerns in the Member States’ public. This led to the partial opening up of a draft version of a negotiated text and finally, after increasing pressure, to a change of the Commission’s approach from EU-only to mixed agreements. Additionally, CETA also led to a number of legal claims in Germany. Most notably, a vast number of people brought an action before the German Constitutional Court,  the Bundesverfassungsgericht.68 They argued that the conclusion of the CETA agreement would violate their human rights because the European Union is lacking the necessary competence for concluding the agreement. This is in line with the jurisprudence of the Bundesverfassungsgericht that acts of the European Union which are either ultra vires or go beyond the “identity” of the German state are unconstitutional and do not bear legal effect in Germany.69 These concerns could be eased by the conclusion of mixed agreements because for the conclusion of international agreements a decision of the Bundestag, the German federal parliament, is required.70 However, their room for action is limited if the Union is interpreting their exclusive external competences broadly, as is usually the case.71 To make matters worse, in many cases the decision of the EU Council on the issue of exclusivity is held by qualified majority, and Germany’s vote may not be relevant for the decision. This is hardly in compliance with the Bundesverfassungsgericht’s construction of the basic legitimacy of the European Union. According to the Bundesverfassungsgericht, the Union’s lawmaking is pivotally fed by domestic

 On this issue see generally the volume by Vara and Sánchez-Tabernero (2018). For an overview of the applicable procedure and associated issues, see the analysis by Kleimann and Kübek (2018), p. 21 et seq. 67  For example, Austria, Belgium, the Netherlands. 68  Federal Constitutional Court. See BVerfG, 2 BvR 1368/16 et al. See also Weiß (2020). 69  The BVerfG just accepted the ultra vires character of a preliminary ruling of the ECJ; see BVerfG, 2 BvR 1368/16 et al. 70  On the procedure see Weiß (2020). 71  See supra on the definition of “Common Commercial Policy”. 66

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parliaments which are granting it democratic legitimacy.72 This legitimacy is hampered by the limited influence of the national parliaments in EU-only agreements, because they are not in position to block the conclusion of these agreements.73 Moreover, the ultra vires/integrity jurisprudence of the Bundesverfassungsgericht74 applies also in situations of the conclusion of EU-only agreements and may, in exceptional circumstances, lead to the non-application of international agreements of the EU in Germany. This is a rather unhappy case for the homogeneity of the Union and its legal order. Therefore, the conclusion of mixed agreements bears advantages in light of the established case law of the German Bundesverfassungs­ gericht, and the possibility should not be limited to facultative mixity.75

4  Conclusion The Opinion 2/15 of the European Court of Justice on the EUSFTA addressed some pivotal issues of the European Union’s external competences. By relying on its broad interpretation of the elements of the Union’s Common Commercial Policy, the ECJ did not attempt to rescind its established case law. Yet, it caused some confusion on the use of shared competences and, at least implicitly, on the application of mixed agreements. The Court addressed these problems in its later case law in a convincing manner. On the political stage, the Opinion 2/15 showed consequences, too. Following the approach by the Commission, the Council stated that trade agreements of the Union shall be split up in an EU-only agreement and a mixed agreement, which is in line with the practice of the organs since 2/15. However, the new approach does not come without problems. The international “visibility” of the Member States will be hampered, and, from a dogmatic point of view, the democratic legitimation of the newly concluded agreements will be shifted from the national parliaments to the EU parliament. This might pose problems for some Member States, especially the German Bundesverfassungsgericht that seems to defend the rights of the Bundestag as enshrined in the German constitution relentlessly. Thus, the allocation of competences between the Union and its Member States should be clarified de lege ferenda, and the issue of political (facultative) mixed agreements may face strong headwind in the future, because it does not fit seamlessly into the European legal order.

 Weiß (2020), forthcoming. Thereby, the German Constitutional court neglects the democratic participation on EU level; see Wendel (2017), p. 63 et seq. 73  For the differences between mixed and EU-only agreements, see Weiß (2020). 74  See supra n. 69. 75  See also Weiß (2020) with further examples. 72

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References Campo LA, Ott A, Wessel RA (2020) The Netherlands and (facultative) mixity, pragmatism over principles? In: Chamon M, Govaere I (eds) EU external relations post Lisbon: the law and practice of facultative mixity. Brill-Nijhoff, Leiden Ceyssens J (2005) Towards a common foreign investment policy? Foreign investment in the European constitution. Leg Issues Econ Integr 32(3) Chamon M (2018) Constitutional limits to the political choice for mixity. In: Neframi E, Gatti M (eds) Constitutional issues of EU external relations law. Nomos, Baden-Baden Cremona M (2017) Distinguished essay: a quiet revolution  – the changing nature of the EU’s Common Commercial Policy. In: Bungenberg M, Krajewski M, Tams C, Terhechte JP, Ziegler AR (eds) European yearbook of international economic law. Springer, Heidelberg Cremona M, Thies A (eds) (2013) The European Court of Justice and external relations law. Constitutional challenges. Hart, Oxford Eeckhout P (2011) EU external relations law. Oxford EU Law Library, Oxford Govaere I (2019) Facultative and functional mixity in light of the principle of partial and imperfect conferral, College of Europe, Research Paper, European Legal Studies, Brugge Heliskoski J (2001) Mixed agreements as a technique for organizing the external relations of the European Community and its Member States. Kluwer, The Hague Hillion C, Koutrakos P (2010) Mixed agreements revisited: the EU and its Member States in the World. Hart, Oxford Hoffmeister F (2017) Bilateral developments in EU trade policy seven years after Lisbon. In: Bungenberg M, Krajewski M, Tams C, Terhechte JP, Ziegler AR (eds) European yearbook of international economic law. Springer, Heidelberg Kleimann D, Kübek G (2018) The signing, provisional application, and conclusion of trade and investment agreements in the EU: the case of CETA and Opinion 2/15. Leg Issues Econ Integr 45(1):13–46 Koutrakos P (2015) EU international relations law. Bloomsbury, Oxford Kumin A (2020) Mixed agreements after ECJ-Opinion 2/15 on the EU-Singapore Free Trade Agreement. In this volume (Chapter 5) Lenk H, Gáspár-Szilágyi (2017) Case C-600/14, Germany v Council (OTIF). More Clarity over Facultative ‘Mixity’?, https://europeanlawblog.eu/2017/12/11/ case-c-60014-germany-v-council-otif-more-clarity-over-facultative-mixity/ Müller-Graff PC (2008) The Common Commercial Policy enhanced by the Treaty of Lisbon? In: Dashwood A, Maresceau M (eds) Law and practice of EU external relations. Salient features of a changing landscape. Cambridge University Press, Cambridge Neframi E (2019) Article 216(1) TFEU and the Union’s shared external competence in the light of mixity: Germany v. Council (COTIF). Common Mark Law Rev 56:489–520 O’Keefe D, Schermers H (eds) (1983) Mixed agreements. Deventer Schütze R (2014) Foreign affairs and the EU constitution: selected essays. Cambridge University Press, Cambridge Segura Serrano A (2016) From external policy to free trade: the EU-Singapore Free Trade Agreement. In: Eeckhout P, Lopez-Escudero M (eds) The European Union’s external action in times of crisis. Hart, Oxford Svoboda O (2019) The Common Commercial Policy after Opinion 2/15: no simple way to make life easier for free trade agreements in the EU. CYELP 15:189–214 Van Elsuwege P (2020) The ratification saga of the EU-Ukraine Association Agreement: some lessons for the practice of mixed agreements. In this volume (Chapter 6) Van Vooren B, Wessel R (2014) EU external relations law. Cambridge University Press, Cambridge Vara S, Sánchez-Tabernero R (eds) (2018) The democratisation of EU international relations through EU law. Routledge, London Vedder C (2020) From ERTA to Singapore. Two landmark decisions on the road to the Union’s Powerful Foreign Policy. In this volume (Chapter 4)

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Weiß W (2020) The reception of EU facultative fixity in Germany’s constitutional order In: Chamon M, Govaere I (eds) EU external relations post Lisbon: the law and practice of facultative mixity. Brill-Nijhoff, Leiden Wendel M (2017) International trade agreements and democratic participation. In: Bungenberg M, Krajewski M, Tams C, Terhechte JP, Ziegler AR (eds) European yearbook of international economic law. Springer, Heidelberg Stefan  Lorenzmeier  is working at the University of Augsburg’s (Germany) Law Faculty and researches and teaches in the areas of Public International Law and European Law. He is a lecturer at various universities and authored numerous works on European Union law.

From ERTA to Singapore Two Landmark Decisions on the Road to the Union’s Powerful Foreign Policy Christoph Vedder

Almost 50 years ago, on 21 March 1971, the European Court of Justice rendered the ERTA judgment.1 On that very day, a freshly appointed assistant at the Institute for Public International Law at the Göttingen University which roots back to Georg Friedrich Martens’ chair for Natural Law and the Law of Nations of 1784 was skiing in the Harz Mountains. The Brocken Peak was inaccessible due to the existence of two German states, and climate change was not yet visible. At that time, only 13 years after the foundation of what tellingly was called European Economic Community, decisions of the ECJ did not find much public attention as the Singapore Opinion of 2017 does today. The ERTA judgment was negatively received in some leading newspapers:2 judges cannot create law. However, Judge Pierre Pescatore who, in the then six-judge court, was pivotal not only in the ERTA judgment wrote an essay3 explaining the reasoning of that decision and turned the page in the public perception. After some reluctance, the ERTA ruling was overwhelmingly accepted in legal writing and acknowledged as a landmark judgment. The ERTA case was the first occasion for the Court, by way of a preliminary ruling, to issue a decision in the area of the external relations of the EEC, and the Court came to the conclusion that, under the general principle of conferred competences, the EEC Treaty grants not only powers to the EEC which are explicitly provided for in the text of the Treaty but also powers that, though not expressly drafted, derive from the system of the Treaty as a whole by implication. The ERTA judgment was and still is the foundation stone of what eventually was called ERTA doctrine and  ECJ, C-22/70, Commission v Council, ERTA, of 31 March 1971, ECLI:EU:C:1971:32.  Anonymous, Le Monde of 27 April 1971, p. 19. 3  Pescatore. Les Nouvelles no. 327, p. 344. 1 2

C. Vedder (*) Faculty of Law, University of Augsburg, Augsburg, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 S. Lorenzmeier et al. (eds.), EU External Relations Law, https://doi.org/10.1007/978-3-030-62859-8_4

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became a cornerstone in the meanwhile long row of seminal judgments related to the EU’s external relations. In disputes related to external powers, the ERTA decision permanently was referred to but seldom the ECJ came back to the true reasoning of the ERTA decision. In the Wood Pulp case of 1988, in its opinion, Advocate General Darmon rhetorically asked the question “is ‘Lotus’ is still sailing?”.4 While the “Lotus” actually was a ship5 and ERTA is about truck-driving, I raise the question: is ERTA still sailing? 46 years after the rendering of the ERTA decision, the Court, in its Singapore opinion of 16 May 2017, thoroughly took the reasoning of the ERTA decision into account.6 ERTA never ceased to sail but, now, got a fresh breeze in her sails. In the summer of 1971, the assistant mentioned above launched a doctoral project with the primary aim to discover and develop the general rationale of implied treaty-making powers behind the case-related line of reasoning of the ERTA decision.7 The title “Die auswärtige Gewalt des Europa der Neun” was deliberately borrowed from German constitutional law, meaning that there was a comprehensive set of powers enabling the EEC to conduct foreign policy.

1  The State of External Relations Law at the Time of ERTA With today’s rules on the EU’s external relations which were re-drafted and re-­ labelled by the Lisbon Treaty as “external action” in mind, it seems useful to recall the reasoning of the ERTA judgment in the context of the legal and political situation related to external relations at the time of ERTA. That is the point of departure for the long trip to Singapore. Only a few rules scattered within the European Economic Community Treaty (EECT), the European Coal and Steel Community Treaty8 and the European Atomic Energy Treaty9 dealt with external aspects of the three European Communities. These were merely accidental provisions on treaty-making powers and treaty-­ making procedures which by no means intended the conduct of foreign relations in a more general way. That an international organization was able to conduct foreign relations, though limited, at that time would have been unusual, in general, and also for the young EEC and its sister communities.

4  Opinion GA Darmon, ECJ, C-89/85 et al., Wood Pulp, ECLI:EU:C:1988:258, par. 27 et seq.; that question seems to have become a commonly used rhetorical tool: Opinion GA Jääskinen of 20 November 2014, ECJ, C-507/3 par. 37, ECLI:EU:C:2014:2394. 5  PCIJ, Dec. of 7 September 1927, PCIJ Series A No. 10, p. 25. 6  ECJ, Opinion 2/15, Singapore, of 16 May 2017, ECLI:EU:C:2017:376. 7  Vedder (1980). 8  Article 71 par. 2 ECSCT. 9  Articles 101, 206 EAECT.

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1.1  T  hree Necessary Provisions on External Relations in the EEC Treaty In 1971, the EECT stood unchanged as it entered into force in 1958. Only two competences of the EEC to conclude international agreements and the procedure of concluding such agreements were expressly provided for in the Treaty. 1.1.1  Art. 113 EECT on Common Commercial Policy The EEC’s power to conclude trade agreements, provided for in Article 113 EECT, now Article 207 TFEU, was ancillary to the EEC being a customs union under Art. XXIV GATT. According to the GATT, a customs union is based on a single common customs territory with a common customs tariff. That prerequisite required by the GATT made a single customs territory and a common customs tariff of the EEC compulsory and called for a common and exclusive foreign trade policy of the EEC towards third countries. A common commercial policy is the other side of the coin of the free movement of goods and, under Article 3 par. 1 lit. e TFEU, eventually was acknowledged as an exclusive Union power. 1.1.2  Art. 238 EECT on Association Agreements The introduction of Article 238 EECT, now Article 217 TFEU, into the Treaty providing for the conclusion of association agreements with other international organizations and third states had a particular aim. Article 238 was designed to enable the UK, which refused to become a member of the EEC, to enter into close, but non-­ membership, relations with the EEC—the concept of an “associated membership” like in other international organizations. As part of the General and Final Provisions and in the immediate context of Article 236 on Treaty amendments and Article 237 on the accession of new member states, the language of Article 238 EECT did not allocate a specific treaty-making power related to a defined policy area rather than offer a particular type of relationship close to membership. So did the early “association agreements” concluded with Greece, Turkey, Cyprus and Malta envisage future membership. The objective of association agreements to create close-to-membership relations was underlined by Article 238 par. 3 EECT which envisaged that an association agreement may entail amendments to the Treaty. As late as with the Demirel judgment of 1987, the ECJ established the substantial scope of that treaty-making power as encompassing all policy areas covered by the European Treaties.10  ECJ, 12/86, Demirel, of 30 September 1987, par. 9, ECLI:EU:C:1987:400: “Since the agreement in question is an association agreement creating special, privileged links with a non-member coun-

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Though, by their very nature as an “association” relation with the EU in policy fields regulated by the Treaty, such agreements can exclusively be entered into by the EU and not by the member states, the power to conclude agreements under the new Article 217 TFEU was not listed as an exclusive Union power in Article 3 par. 1 TFEU. 1.1.3  Art. 228 EECT on the Treaty-Making Procedure As part of the General and Final Provisions, and even though Article 113 and Article 238 EECT themselves included procedural provisions on the conclusion of such agreements, Article 228 EECT provided for the procedure of concluding international agreements by the EEC, in general. That free-standing clause on the EEC’s treaty-making procedure potentially would apply to treaty-making powers beyond Articles 113 and 238 EECT. This state of Treaty law shows that, at that time, neither an intent nor an idea of a comprehensive foreign action of the EEC was present. That primary law framework, in principle, continued to exist until the Lisbon Treaty.

1.2  Early International Agreements Concluded by the EEC At the time of the ERTA judgment, on the basis of the then existing treaty-making powers, the EEC had concluded or was negotiating a limited number of international agreements with neighbouring countries. 1.2.1  Association Agreements The EEC of six member states looked southwards and entered into association agreements which openly or implicitly aimed at future membership, with Greece 1961,11 Turkey 1963,12 Malta 197013 and Cyprus 1972.14 Eventually, except for Turkey, these countries joined the EC. In the form of association agreements, too, agreements were concluded with Tunisia and Morocco in 1969.15 They were try which must, at least to a certain extent, take part in the Community system, Article 238 must necessarily empower the Community to guarantee commitments towards non-member countries in all the fields covered by the Treaty”. 11  Greece, Agreement of 9 July 1961, O.J. 1963, p. 294. 12  Turkey, Agreement of 22 September 1963, O.J. 1964, p. 3687. 13  Malta. Agreement of 5 December 1970, O.J. 1971 L 61/2. 14  Cyprus, Agreement of 19 December 1972, O.J. 1973 L 133/2. 15  Tunisia, Agreement of 28 March 1969, O.J. 1969 L 198/3; Morocco, Agreement of 31 March 1969, O.J. 1969 L 187/3.

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renegotiated in the framework of a first Mediterranean strategy together with association agreements concluded with Algeria, Libya, Egypt, Syria and Lebanon in 1976 and 197716 covering the southern and eastern rim of the Mediterranean Sea. With several previous colonies of the member states, as early as in 1963, the Agreement of Yaoundé17 was concluded, the first edition of the now Cotonou Agreement. 1.2.2  Free Trade Agreements With the completion of the EEC’s transitory period of 12 years which was perceived for January 1970 but, in fact, achieved already in 1968, the EEC became a fully operational customs union under the GATT and was recognized a de facto member of the GATT.18 Thus, the EEC started to conclude non-preferential trade-related agreements of minor significance with some countries in Europe, Latin America and Asia based on Article 113 EECT. The accession of the UK, Ireland and Denmark as new member states per 1 January 1972 made it necessary—for the first time—to enter into full-fledged free trade agreements with the remaining EFTA member states Switzerland, Austria, Norway, Sweden, Finland, Portugal and Spain.19 Those agreements designed to become effective by 1 January 1972 were under negotiations when the ERTA judgment came out. With these agreements, free trade areas were established with equal-minded neighbouring European countries that were not yet willing to join the EEC. 1.2.3  Mixed Agreements One of the crucial matters in the Union’s foreign relations law still today, which gave rise to the Singapore opinion of 2017, roots back to the early practice of concluding international agreements. As a matter of political circumstances, all of the major international agreements concluded by the EEC, the EC and the EU were concluded as “mixed agreements”, i.e. ratified by the EEC and its Member States, on the one side, and by a third state, on the other side.

 Tunisia, Agreement of 25 April 1976, O.J. 1978 L 265/2; Morocco, Agreement of 27 April 1976, O.J. 1978 L 263/2; Egypt, Agreement of 18 January 1977, O.J. 1978 L266/2; Syria, Agreement of 18 January 1977, O.J. 1978 L 269/2; Jordan, Agreement of 18 January 1977, O.J. 1978 L 268/2; Lebanon, Agreement of 3 May 1977, O.J. 1978 L267/2. 17  Yaoundé, Agreement of 20 July 1963, O.J. 1964, p. 1431. 18  ECJ, C-21-24/72, International Fruit Company, of 12 December 1972, ECLI:EU:C:1972:115. 19  Sweden, Agreement of 22 June 1972, O.J. 1072 L 300/97; Switzerland, Agreement of 22 July 1972, O.J. 1972  L 300/189: Austria, Agreement of 22 July 1972, O.J. 1972  L 300/1; Portugal, Agreement of 22 July 1972, O.J. 1972 L 301/165; Iceland, Agreement of 22 July 1972, O.J. 1972 L 301/2; Norway. Agreement of 14 May, 1973, O.J. 1973 L 171/2; Finland, Agreement of 5 October 1973 O.J. 1973 L 328/2. 16

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Concerning association agreements, the Member States argued that Article 238 EECT allowed to conclude agreements exclusively on trade issues as provided for under Article 113 EECT, accompanied by some institutional machinery. Only in 1987, such understanding was clearly rejected by the ECJ in its Demirel judgment. Regarding free trade agreements, the Member States claimed that those agreements partly extended to matters beyond the scope of common commercial policy under Article 113 EECT. Obviously, they were, and still are, not willing to let the EEC or the Union act in the international arena as a distinct legal actor in the realm of its powers, thereby replacing and excluding the Member States from acting internationally. Moreover, in the early phase of the EEC negotiating international agreements, third countries approached the EEC as a player in international relations with some distrust and were happy to have the Member States as state parties to the agreement. 1.2.4  The Hague Summit of 1969 Politically, a turning point towards a more active appearance of the EEC on the international stage was the Summit Conference of the head of states or governments of the Member States together with the foreign ministers in December 1969 in The Hague. The external relations were identified as a field of action, and, henceforth, the EEC should “speak with one voice”.20

1.3  The ERTA Judgment of 31 March 1971: ERTA Revisited The Commission and the Council disagreed whether or not the EEC was competent to sign and conclude the European Road Transport Agreement (ERTA) which, amongst other matters, included a limitation of the truck-driving hours. In an action for annulment according to Article 173 EECT, now Article 263 TFEU, the Commission requested the ECJ to review the legality of a Council decision related to the conclusion of the said agreement by the Member States. In its ruling of 31 March 1971,21 by a way of far-reaching systematic interpretation of the system of the Treaty as a whole, the ECJ found that the EECT not only expressly provided for treaty-making powers but also, by implication within the system of the Treaty, included non-written, implicit powers—later generally called “implied powers”. Such finding, criticized though it was at the beginning, was overwhelmingly

20 21

 Communiqué of 2 December 1969, O.J.1970 C 94/9.  ECJ, 22/70, ERTA, ECLI:EU:C:1971:32 (in the following: ECJ, ERTA).

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welcomed in legal writing and confirmed and partly further expanded by subsequent case law of the Court.22 In the course of the negotiations leading to the European Constitutional Treaty of 2004 and the Lisbon Treaty of 2009, it was the aim of the amended Articles 216 par. 1 and 3 par. 2 TFEU to codify the jurisprudence of the Court related to implied powers. Therefore and to no surprise, after the entry into force of the Lisbon Treaty, the ECJ continued and still continues to further develop its case law rather than embarking on an interpretation of the language of the new Articles 216 par. 1 and 3 par. 2 TFEU: “ERTA” is still sailing. For the understanding of the Union’s implied treaty-making powers codified by the Lisbon Treaty in Articles 216 par. 1 and 3 par. 2 TFEU, it is essential to re-­ consider the reasoning of the ERTA judgment in the context of today’s Union law, with a particular emphasis on the categorization of exclusive and shared powers which was not yet recognized in the Treaties in 1971. In the light of the present state of legal doctrine, three issues must be distinguished, namely, first, the existence of a given implied power and, second, the nature of the power as exclusive or shared one, as well as, third, the material scope of the powers. The Court spent 18 short paragraphs to straightforwardly and laconically unfold its reasoning on implied treaty-making powers but confined itself to what was necessary to decide the dispute. While the Council insisted that the Community only had treaty-making powers which were expressly vested into it by the provisions of the Treaty, the Commission contended that the Community’s competences to adopt domestic measures “must apply to external relations”,23 as well. 1.3.1  The Foundation of Implied Treaty-Making Powers by the Court Very generally, the ECJ embarks on an interpretation of the system of the EECT as a whole. That is a common topic of interpretation in European law and represents a particular, however far-reaching, kind of systematic interpretation. In the absence of a specific Treaty provision pertaining to the conclusion of international agreements in the area of transport policy—the ERTA agreement fell within that policy field… one must turn to the general system of Community law in the sphere of relations with third countries.24

In doing so, the Court, first, had regard to Article 210 EECT, now Article 47 TFEU, providing that the Community had legal personality. Therefrom, the Court concluded that

 ECJ, 3, 4, 6/76, Cornelis Kramer, of 14 July 1976, ECLI:EU:C:1976:114; ECJ, Opinion 1/76, Laying-up Fund, of 26 April 1977, ECLI:EU:C:1977:63; see below under 2.1.3. 23  ECJ, ERTA par. 6. 24  ECJ, ERTA par. 12. 22

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That statement obviously refers to the Community’s legal capacity under public international law, i.e. the capacity to generally act in the international arena. Then, in order to determine “the Community’s authority to enter into international agreements” in a given case, the Court turns to the core of its reasoning and finds that … regard must be had to the whole scheme of the Treaty no less than to its substantive provisions.26

and goes on to state that the treaty-making powers do no only arise from an express conferment by the Treaty” [the Court refers to the Community’s powers to conclude trade agreements and association agreements] “but may equally flow from other provisions of the Treaty and from measures adopted, within the framework of those provisions, by the Community institutions.27

Here, the Court identifies not only the Treaty provision as the legal basis of non-­ express treaty-making powers but also—“and”—“measures”, i.e. legislatives acts, adopted by virtue of treaty provisions. After such general conclusion concerning the conferral of powers to the Community, the Court turns to the specific circumstances of the dispute: In particular, each time the Community, with a view to implementing a common policy envisaged by the Treaty, adopts provisions laying down common rules, whatever form these make, the Member States no longer have the right, acting individually or even collectively, to undertake obligations with third countries which affect those rules.28

1.3.2  Exclusive Treaty-Making Powers With such finding, the reasoning of the Court goes beyond the mere existence of treaty-making powers and determines circumstances where the Member States are precluded from concluding international agreements. The inescapable consequence of preventing the Member States from acting is that, under these circumstances, the treaty-making powers shift to the Community and become exclusive ones: As and when such common rules come into being, the Community alone is in a position to assume and carry out contractual relations towards third countries affecting the whole sphere of application of the Community legal system.29

 ECJ, ERTA par. 14.  ECJ, ERTA par. 15. 27  ECJ, ERTA par. 16. 28  ECJ, ERTA par. 17. 29  ECJ, ERTA par. 18. 25 26

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The pivotal point is the mere existence of “common rules” which means secondary law.30 As a supporting argument, the Court, with reference to the then Article 3 lit. c EECT, recognizes the transport policy as one of the “objectives of the Community”31 and refers to Article 5 EECT, now Article 4 par. 3 subsec. 3 TEU, according to which the member states must abstain from any measure which might jeopardize the attainment of the objectives of the Treaty32

and concludes that it follows that to the extent to which the Community rules are promulgated … the Member States cannot, outside the framework of the Community institutions, assume legal obligations which might affect these rules or alter their scope.33

That particular ruling reappears in the language of Article 216 par. 1 last limb TFEU as one of the situations where implied treaty-making powers exist - “… likely to affect common rules or alter their scope” - as well as in Article 3 par. 2 third limb TFEU which defines the exclusive implied treaty-making powers - “… may affect common rules or alter their scope”. Based on such finding, in the case at hand, the Court confines itself to the fact that a regulation, earlier adopted in the field of transport policy under Article 75 EECT, now Article 91 par. 1 TFEU, covers the subject matters of the ERTA agreement: Although … Articles 74 and 75 [now Articles 90 and 91 TFEU] do not expressly confer on the Community authority to enter into international agreements, nevertheless the bringing into force, on 25 March 1969, of Regulation No 543/69 … necessarily vested in the Community the power to enter into any agreement with third countries relating to the subject-­matter governed by that regulation.34

Additionally but ambiguously, the Court also relies on an express authorization to conclude international agreements provided for in that regulation: This grant of power [i.e. after the adoption of the regulation] is moreover expressly recognized by Article 3 of the said regulation which prescribes that: “The Community shall enter into any negotiations with third countries which may prove necessary for the purpose of implementing this regulation”.35

Such finding seems superfluous, if not contradictory, because, according to the Court’s earlier conclusions, the mere existence of the regulation is sufficient to establish an, even exclusive, implied treaty-making power and does not need a further authorization expressly provided for by the said regulation. The Court seems to  See infra under 1.3.5.  ECJ, ERTA par. 20. 32  ECJ, ERTA par. 21. 33  ECJ, ERTA par. 22. 34  ECJ, ERTA par. 28. 35  ECJ, ERTA par. 29. 30 31

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take such argument as supportive only (“recognized”) and, in the following and concluding paragraph, exclusively founds its ruling on the existence of the regulation: Since the subject-matter of the [ERTA] falls within the scope of Regulation no 543/69, the Community has been empowered to negotiate and conclude the agreement in question since the entry of the said regulation.36

Therefore, the drafters of the Lisbon Treaty, in Article 216 par. 1 third limb and Article 3 par. 2 first limb TFEU, correctly listed the authorization by secondary law as a separate and independent source of implied treaty-making powers.37 1.3.3  Substantial Scope of Implied Treaty-Making Powers With regard to the substantial scope of implied treaty-making powers, the Court, in its general considerations, makes reference to the “substantive provisions” of the Treaty or “other provisions of the Treaty”38—“other” meaning other than Treaty provisions which expressly provide for treaty-making powers—as the legal basis of implied treaty-making powers. After having found the existence of implied treaty-making powers in general, the Court examines the substantial scope of application of Articles 74 and 75 EECT, now Articles 90 and 91 par. 1 TFEU, which enable the Community to adopt internal legislation related to transport. As a result, the Court finds that any appropriate provisions [applicable] to international transport to or from the territory of a Member State or passing across the territory of one or more Member States39

can be adopted. Therefrom, the Court concludes that the powers under Article 75 EECT cover the subject matter of the ERTA agreement.40 That line of reasoning is to be understood to the effect that the substantive scope of implied treaty-making powers is defined by the relevant legal basis for internal legislation, i.e. identical or parallel in substance.

 ECJ, ERTA par. 30.  Article 216 par. 1 TFEU: “… is provided for in a legally binding Union act …”; Article 3 par. 2 TFEU: “…is provided for in a legislative act of the Union…”. 38  ECJ, ERTA par. 15, 16. 39  Article 91 par. 1 lit a TEFU. 40  ECJ, ERTA par. 27, 30. 36 37

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1.3.4  General Understanding of the ERTA Judgment In its ERTA judgment, the Court, on the one hand, relies on a broad systematic interpretation of the Treaty as a whole and, on the other hand, restricts itself to what is necessary to settle the dispute before it. However, there is a general determination enshrined in the sparse statements of the 18-paragraph-short reasoning. Dispute About Exclusive Treaty-Making Powers In the ERTA case, as in many other cases before the Court, the dispute between Commission and Council was about the authority to negotiate and conclude a given international agreement by either the Community or the Member States. As the latter, sitting in Council, refused the conclusion by the Commission on behalf of the Community, the legal issue was whether or not the Community had exclusive power. Thus, the reasoning of the Court centred on the exclusivity of the Community’s competence—and that is the issue in the great number of following Court decisions on the Union’s treaty-making powers. In such political circumstances, a shared Community power—“concurrent power” in the contemporaneous language—was not sufficient because, according to the then Article 228 EECT, now Article 218 TFEU, the Council would have had to conclude the agreement. At the end of its reasoning on the treaty-making powers, the Court, in ERTA, finds: These Community powers [i.e. exclusive implied treaty-making powers] exclude the possibility of concurrent powers on the part of the Member States, since any steps taken outside the framework of the Community institutions would be incompatible with the unity of the Common Market and uniform application of Community law.41

The exclusivity of Union treaty-making powers, either express or implied, was and still is the common battleground in the relevant disputes before the Court: the Member States deny that the Union has—enough—competences to conclude a given international agreement. The member states are not willing to let the Union internationally act in the area of shared competences and to accept to be substituted by the Union. Nevertheless, the finding of exclusive Union powers depends, as a first step of reasoning, on the mere existence of Union competences including shared ones. In the ERTA judgment, such determination can be found as an introductory statement to the consideration of exclusive treaty-making powers: Such authority [i.e. treaty-making power] … may equally flow from other provisions of the treaty…42

41 42

 ECJ, ERTA par. 31.  ECJ, ERTA par. 16; see supra under 1.3.1.

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Anticipatory Primacy of Union Law Although the Court did not openly refer to the primacy of European law, the safeguarding of that primacy is the legal core of the Court’s ruling. Only in the last paragraph of the relevant statement of reasons, the Court refers to the “unity” and “uniform application” of European law: the conclusion of the agreement by the Member States would be incompatible with the unity of the Common Market and the uniform application of Community law.43

These two topics constitute the main reason for the primacy of European law over the domestic law of the member states.44 Tellingly, in the core of its reasoning, the Court, first, finds that the Member States are prevented from acting individually or collectively and only then, second, concludes that “the Community alone” has the power to act.45 The Community power is the only option and, thus, consequence in a situation where the member states, by virtue of European law, are prevented from acting. The conclusion of an international agreement by the Member States in areas where the Union had no express treaty-making powers but can exercise internal legislative competences based on the various Treaty provisions would interfere with European law. In case such agreement would not comply with present or future internal European legislation, the provisions of that agreement, which would have become domestic law of each of the Member States, would not apply in the domestic legal orders of the Member States because of the prevailing effect of the pertaining European law. However, the primacy of European law over domestic law of the Member States would not extend to the member states’ commitments under public international law, entered into by international agreements. Therefore, in case of a conflict of law, such agreement would “jeopardize”—in the meaning of the loyalty rule—the validity, uniformity and functioning of Union law. Article 234 EECT, now Article 351 TFEU, demonstrates that international commitments entered into by Member States are not invalidated by European law. In order to avoid such interference with European law, the Court, according to the system of the Treaty as a whole, reaches a twofold conclusion: first, the Member States are not allowed to conclude international agreements and as a mere consequence thereof, second, exclusively the EEC was entitled to conclude agreements in the fields of its internal legislative competences as far as internal legal acts exist and may be affected. That kind of reasoning can be labelled “anticipatory primacy” or “preemptive application” of the fundamental rule of the primacy of European law.46 The implied  ECJ, ERTA par. 31; see supra under 1.3.4.  ECJ, C-6/64, Costa/ENEL, ECLI:EU:C:1964:51. 45  ECJ, ERTA par. 17, 18; see supra under 1.3.2. 46  Vedder (1980), p. 124 et seq. 43 44

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treaty-making powers deducted by the Court from the overall system of the Treaty arise, in essence, from the anticipated effect of the primacy or European law. The internal legislative competences implicitly also provide for the conclusion of international agreements by the Union, and such powers become exclusive when and as far as internal legislation may be affected. That construction established by the Court is specific to European law and completely independent of and distinct from the implied powers of international organizations in general.47 The term implied powers which was not used in the ERTA judgment nevertheless became common language at a later stage. 1.3.5  The ERTA Doctrine What in the course of later case law was labelled ERTA doctrine already is present in the ERTA judgment understood in the context of the Treaty law then and now. The Court ruled about the dispute, i.e. whether or not the Community had exclusive treaty-making powers, but its ruling is embedded in more general findings. Existence of Implied Treaty-Making Powers The Court was not called to make a ruling on the existence of implied treaty-making powers in general. However, as a first step on the way to the finding of exclusive treaty-making powers, the Court identified the “other” Treaty provisions, i.e. those which do not expressly confer treaty-making powers to the Community, as legal bases for non-express treaty-making powers. Thereby, the Court found that implied treaty-making powers root in the competences for internal legislation. In the case at hand, it was Article 75 EECT, now Article 91 TFEU, for transport policy. As a result, the Union is entitled to enter into international agreements in all fields of internal competences. Consequently, it goes without saying and the Court did not need to make such statement that treaty-making powers which are implied in an exclusive internal legislative competence are exclusive ones, too. All of the other internal competences, though that distinction did not openly exist at the time of ERTA, are shared implied treaty-making powers. That was the case of transport policy. As the dispute was about an exclusive power to conclude the ERTA agreement, the Court only made an almost hidden ruling on the mere existence of implied treaty-making powers and directly turned to the issue of exclusive powers.

47

 PCIJ, Reparation for Injuries, Opinion of 11 April 1949, Rep. 1949, p. 174.

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Exclusive Implied Treaty-Making Powers Implied treaty-making powers based upon exclusive internal competences are exclusive ones by definition. In the area of non-exclusive internal competences, the implied treaty-making powers become exclusive ones, when and in so far as internal legislation—“common rules” in the language of the Court—have been adopted and may be affected by a given agreement. In such situation, we see an “occupied field”, occupied and thus made exclusive by internal legislation. To the extent the internal legislation of the Union expands the area of exclusive implied treaty-making powers becomes larger and larger. Substantive Scope of Implied Treaty-Making Powers The Court identified the relevant provisions of the Treaty as the legal basis of implied treaty-making powers, in general, and, in the particular dispute, examined Article 75 EECT, now Article 91 par. 1 TFEU, as to whether the substance matter of the ERTA agreement was covered by the competence for transport policy. That was the case. That means that the scope of implied treaty-making powers is the one applicable to internal legislation. Hence, implied treaty-making powers have exactly the same substantive scope as the internal competences. The internal and external competences are parallel in substance. That applies to both shared and exclusive implied treaty-making-powers. The Union can regulate all substance matters which are covered by internal competences to the same extent by way of concluding an international agreement. The internal competences conferred to the Union, in addition to the adoption of internal measures, implicitly allow the Union to regulate the same subject matters through an international agreement. All Treaty provisions providing for the adoption of internal measures implicitly authorize the Union to conclude international agreements in the same area of application. Agreements are just another legal instrument available to the Union. Treaty-Making Powers by Authorization Through Secondary Legal Acts In the ERTA judgment, at a first reading, the Court seems to found implied treaty-­ making powers not only on Treaty provisions, namely, Article 75 EECT, now Article 91 TFEU, but also upon an express authorization to conclude international agreements enshrined in a regulation.48 However, at a closer look, the Court finds that the implied treaty-making power already based on Article 75 EECT and the mere existence of the regulation “is moreover expressly recognized” by the authorization to

48

 ECJ, ERTA par. 29; see supra under 1.3.2.

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enter into implementing international agreements. For the Court, it is a supporting argument and the Court does no draw any consequences of that authorization. Nonetheless, the authorization by secondary legal acts to conclude international agreements reappears in Article 216 par. 1 and Article 3 par. 2 TFEU which aim at codifying the ERTA doctrine as a source of treaty-making powers in a row with undoubtedly implied powers. Whatever the concept of the drafters of the Lisbon Treaty may have been, treaty-making powers by express authorization in secondary Union legal acts do not constitute implied powers rather than powers expressly conferred to the Union. Moreover, they are limited in scope to implementing the given legal act or framed by the constituent elements of the relevant provision. In that, they are delegated treaty-making powers similar to the delegated legislation by virtue of Article 290 TFEU or implementing legislation under Article 291 TFEU.

2  The ERTA Doctrine Codified by the Lisbon Treaty 2.1  S  ources of Implied Treaty-Making Powers, Article 216 Par. 1 TFEU In the course of rearranging the existing provisions on external relations in a single Part V of the TFEU on “External Action”, in addition to the express treaty-making powers (“where the Treaties so provide”), the implied treaty-making powers framed by the case law of the ECJ were codified in the second, third and fourth limbs of Article 216 par. 1 TFEU. 2.1.1  Implied Treaty-Making Powers by Internal Legislation In the fourth limb, the fundamental ruling of the EFTA judgment has been drafted: where the conclusion of an agreement … is likely to affect common rules or alter their scope.

In the light of the ERTA judgment, that language is to be understood as meaning that the conclusion of an agreement by the Member States is likely to affect common rules. 2.1.2  Delegated Implied Treaty-Making Powers Also the delegated treaty-making powers, though not relevant in the ERTA judgment, have been introduced to Article 216 par. 1 TFEU as the third limb: where the conclusion of an agreement … is provided for in a legally binding Union act…

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2.1.3  Implied Treaty-Making Powers by Necessity In addition, in the second limb of Article 216 par. 1 TFEU, the necessary implied treaty-making powers are provided for where the conclusion of an agreement is necessary in order to achieve, within the framework of the Union’s policies, one of the objectives referred to in the Treaties …

The necessity to achieve one of the objectives of the Treaties, however, was not pivotal in the ERTA ruling. The objectives of the Treaty were mentioned by the Court by reference to the loyalty principle according to Article 5 EECT, now Article 4 par. 3 subsec. 3 TFEU, which calls the member states to refrain from any measure which could jeopardize the attainment of the Union’s objectives

and, thereof, the Court concludes that to the extent to which secondary rules are adopted for the attainment of the objectives of the Treaty [the member states are prevented from assuming] obligations which might affect those rules or alter their scope.49

According to the reasons set out in the ERTA judgment, there is no ground to assume the necessity to achieve one of the objectives of the Treaties as an independent source of implied treaty-making powers. Such type of implied powers, however, roots back to the next two decisions of the Court on implied powers following the ERTA judgment: Cornelis Kramer of 197650 and the Laying-up Fund opinion of 1977.51

2.2  E  xclusive Implied Treaty-Making Powers, Article 3 Par. 2 TFEU By virtue of Article 3 par. 2 TFEU, the three types of implied powers delineated in Article 216 par. 1 TFEU are listed as exclusive treaty-making powers: besides the core implied powers arising when common rules may be affected also delegated treaty-making powers and necessary treaty-making powers: The Union also shall have exclusive competence for the conclusion of an international agreement when –– its conclusion is provided for in a legislative act of the Union or –– is necessary to enable the Union to exercise its internal competences or –– in so far as its conclusion may affect common rules or alter their scope.

 ECJ, ERTA par. 22.  ECJ, 3, 4, 6/76, Cornelis Kramer, 14 April 1976, par. 30–33, ECLI:EU:C:1976:114, see infra under 3.3.3. 51   ECJ, Opinion 1/76, Laying-up Fund, 26 April 1977, par. 4, ECLI:EU:C:1977:63; see infra under 3.3.3 49 50

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Though the wording in both Articles are not fully identical, the first and the third kind of implied powers listed in Article 3 par. 2 TFEU declare their corresponding sorts of treaty-making powers as exclusive ones, at least in general. Even more regrettably, in Article 3 par. 2 TFEU, the implied powers by necessity are drafted in a language quite different from their definition in Article 216 par. 1 TFEU. The different wording induced the Court, in Singapore, to a different construction of the treaty-making powers by necessity in Article 216 and Article 3 par. 2 TFEU.52 Of course, such poor drafting may give rise to identify inconsistencies between Article 3 par. 2 and Article 216 par. 1 TFEU. However, as no implied treaty-making power which is not provided for in Article 216 par. 1 TFEU as existing can be listed as an exclusive one, the mentioning of implied powers by necessity in Article 216 par. 1 TFEU must be interpreted in that it encompasses the implied powers by necessity as defined in Article 3 par. 2 TFEU. This is all the more so as the second limb of Article 3 par. 2 TFEU can be understood as a shortened version of its homologue in Article 216 par. 1 TFEU because the Union’s “internal competences” within the meaning of Article 3 par. 2 TFEU are to be exercised “within the framework of the Union’s policies” and envisage to attain “one of the objectives referred to in the Treaties” as Article 216 par. 1 second limb TFEU put it.

2.3  S  hared Implied Treaty-Making Powers: Insufficient Codification According to the above understanding, all of the treaty-making powers provided for in Article 216 par. 1 second to fourth limb TFEU are exclusive powers pursuant to Article 3 par. 2 TFEU. That is politically in line with the ambition to codify the ERTA doctrine. Due to the fundamental opposition of the member states sitting in Council, the disputes in ERTA and the following decisions of the ECJ were about exclusive rather than shared treaty-making powers and the Court centred on that issue. It is true that the Court, in its flow of case law, did not devote appropriate emphasis to the existence of shared or—in the pre-Lisbon language—concurrent Union competences. Nevertheless, as a logically necessary transitory reasoning on the way to the exclusivity of implied powers, the Court stated that, so in the ERTA judgment, treaty-making powers may equally flow from other provisions of the Treaty…53

52 53

 See infra under 3.3.4.  ECJ, ERTA par. 16.

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with no further preconditions. At that juncture, depending on the nature of the competences provided for by the Treaty provisions, the implied treaty-making powers are either excusive or—mostly—shared ones. However, the very existence of shared implied treaty-making powers based on the Treaty provisions, which allocate internal legislative competences to the Union, was neglected when Article 216 par. 1 TFEU was drafted. That omission may be understandable given the fact that the ECJ, in the landmark ERTA judgment and many other decisions, did not make a clear determination that shared implied powers existed because the disputes were about whether or not the Union had exclusive powers to conclude the agreement under consideration. As late as in its Singapore opinion of 2017, the Court openly determined that a shared implied treaty-making power by necessity was conferred to the Union by virtue of Article 216 par. 1 second limb TFEU but, however, not sufficient in its substance under the circumstances.

3  T  he Singapore Opinion of 2017: ERTA Overhauled and Sails Set for New Shores The Singapore opinion rendered by the ECJ on 16 May 2017,54 in various regards, constitutes a recent landmark judgment of the Court which not only keeps ERTA sailing but also sets course for new shores.

3.1  Continued Case Law Approach The analysis of the relevant Court decisions rendered in disputes which arose after the entry into force of the Lisbon Treaty shows that the ECJ does not essentially rely on the Treaty provisions rather than further developing its jurisprudence. Abundantly, the Court makes reference to its previous judgments. By such approach, the Court continues and further develops its line of reasoning on a case-by-case basis, however within the frame set by Articles 216 and 3 TFEU but not exploring the interpretation of the provisions as such.

 ECJ, Opinion 2/15, Singapore Agreement, ECLI:EU:C:2017:376 (in the following: ECJ, Singapore).

54

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3.2  The Commission’s Struggle for EU-Only Agreements From the early days onwards, according to established practice, all major agreements of the Union, either free trade agreements under Article 207 TFEU or association agreements under Article 217 TFEU and other kinds of international agreements, were concluded as mixed agreements. In the field of external relations, the Member States were not willing to let the Union exercise their competences— even its exclusive power for common commercial policy but not to speak about its shared treaty-making powers—without the custody of the member states. As mixed agreements, in addition to the conclusion by the Union under Article 218 TFEU, require the ratification by all of the Member States, through the back door, the conclusion of such agreements was not only placed under the condition of unanimity amongst the Member States  but also made subject to constitutional requirements in each of the Member States, such as parliamentary consent or a public vote in a referendum.55 The major reason for mixed agreements put forward by the Member States was that the disputed internal delimitation of competences between the Union and its Member States could be left open. This, however, was and still is a life lie. Already in its Demirel decision of 1987, the ECJ had demonstrated that, as matter of the Court’s jurisdiction, the internal delimitation of competences cannot be left undecided. Moreover, in relation to the third countries parties to mixed agreements, the responsibility for the fulfillment and application of mixed agreements under public international law follows the internal allocation of competences according to European law. High on its agenda, as of 2014, the Juncker Commission strived to bring to an end or at least reduce the recourse to mixed agreements. One of the first steps, on 10 July 2015, was to request the ECJ for an opinion under Article 218 par. 11 TFEU. The Commission claimed exclusive power of the Union to negotiate and conclude the free trade agreement with Singapore which, amongst others, was a free trade agreement of “the new generation”. The Comprehensive Economic and Trade Agreement with Canada (CETA), also a free trade agreement of the new generation under Article 207 TFEU, in the view of the Commission, should be concluded as an EU-only agreement. However, shocked by the Brexit vote of 23 June 2016, under pressure of the member states, President Juncker gave in and accepted CETA to be concluded under the mixed formula. In order to accommodate the strong opposition in public against CETA which was triggered by the envisaged dispute settlement by arbitration provided for in the agreement and the allegation that the agreement was negotiated behind closed

 By the referendum of 6 April 2016, a majority of 61% of the votes cast, but accounting for only 19% of the legible voters, the Dutch people rejected the EU-Ukraine Association Agreement. Only after an additional understanding attached to the agreement, the Netherlands was able to conclude the agreement.

55

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doors, the German government, in particular, took the position that the agreement should concluded as mixed agreement and, thus, adopted by the national parliaments. With that move, one tried to overcome the opinion that “Brussels” wanted to push the agreement through without asking the Member States and their parliaments. So, an alleged lack of democracy was used in the service of political pressure groups to bring the conclusion of CETA to fall. These views deeply disregarded the responsibility of the EP in the conclusion of agreements on behalf of the Union and the nature of the Union’s exclusive powers. At the very end of the ratifying procedures within the Member States, the conclusion of CETA depended on the consent of the Regional Parliament of the Wallonia in Belgium.

3.3  A  Big Step in the Evolution of the Union’s Treaty-Making Powers Against that background, the Singapore opinion delivered by the Court displays its full significance with regard to the further evolution of the Union’s treaty-­ making powers. The Commission generally asked the Court whether the Union had “the requisite competence to sign and conclude alone” the agreement, but different from earlier major judgments on the Union’s treaty-making powers, the Commission asked “more specifically” which provisions of the agreement fell either within the Union’s exclusive competence or within shared competence or whether there were provisions falling within the exclusive competence of the member states. Thus, the Court could not remain silent on the mere existence of shared treaty-making powers. Nevertheless, the Court directly approached to examine the Union’s exclusive treaty-making powers according to Article 3 par. 1 lit e TFEU56 and Article 3 par. 2 TFEU.57 3.3.1  T  reaty-Making Power in the Field of the Common Commercial Policy As in its WTO opinion of 1994, the Court defines the substantive and instrumental scope of the common commercial policy after Lisbon in a broad sense. According to settled case law, Article 207 TFEU covers any commitment that relates specifically to such [i.e. trade with one or more third countries] trade in that it is essentially intended to promote, facilitate or govern such trade and has direct an immediate effects on it.58

 ECJ, Singapore, par. 33 et seq.  ECJ, Singapore, par. 168 et seq. 58  ECJ, Singapore, par. 36. 56 57

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Based on that criterion, the Court examines the provisions of the agreement against the constituent elements of Article 207 par. 1 TFEU and concludes that, except for the provisions on non-direct investments and some aspects of transportation, all commitments of the envisaged agreement are covered by common commercial policy. The agreement of the “new generation” was negotiated after the entry into force of the Lisbon Treaty which, in Article 21 TEU, set out a comprehensive catalogue of aims and objectives for the conduct of the Union’s external action, including, according to Article 21 par. 2 lit d TEU, “sustainable economic, social and environmental development”. Taking into consideration Article 21 TEU in conjunction with Articles 207 par. 1 second sentence and 205 TFEU, the Court qualifies these objectives “obligations”: The obligation … to integrate those objectives and principles into the conduct of its common commercial policy is apparent from the second sentence of Article 207(1 TFEU read in conjunction with Article 21(3) TEU and Article 205 TFEU.59

and concludes: It follows that the objective of sustainable development henceforth forms an integral part of the common commercial policy.60

Therefore, the Court rules, the various commitments to foster sustainable development fall within the Union’s exclusive power to enter into trade agreements under its common commercial policy. 3.3.2  Exclusive Implied Treaty-Making Powers Second, the Court goes on to consider whether there are exclusive implied treaty-­ making powers under Article 3 par. 2 TFEU regarding the provisions concerning transport services which are not covered by Article 207 TFEU, on the one hand, and commitments on non-direct investments, on the other hand. So the Court scrutinizes implied treaty-making powers which would complement the Union’s exclusive power for common commercial policy beyond the scope of Article 207 read in conjunction with Article 3 par. 1 lit e TFEU. Immediately the Court refers to the ERTA judgment resuming it to the effect that the Court stated that, when the European Union adopts provisions laying down common rules, whatever from they may take, the Member States no longer have the right, acting individually or collectively, to undertake obligations with third States which affect those rules.61

Only after that statement, the Court refers to the Treaty provisions on implied treaty-­ making powers:  ECJ, Singapore, par. 143.  ECJ, Singapore, par. 147. 61  ECJ, Singapore, par. 170. 59 60

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C. Vedder In line with that case-law, Article 216 TFEU grants to the EU the competence to conclude, inter alia, any international agreement which “is likely to affect common rules or alter their scope”.62

Without taking the provision of Article 216 par. 1 TFEU into further consideration, the Court, “in accordance with the case law”, finds that the commitments related to maritime, rail and road transport, including internal waterways and public procurement related to transport, fall under exclusive Union powers pursuant to Article 3 par. 2 TFEU.63 Also when examining whether or not the Union is granted with an exclusive implied treaty-making power for non-direct investments under Article 3 par. 2 TFEU64, the Court directly refers back to the roots established in the ERTA judgment. The Court has to consider what is meant by the term “common rules” employed in its case law: First, that case-law, the substance of which is expressed in the final limb of Article 3(2) TFEU, has its origin in the judgment of 31 March 1971, Commission v Council, …65

Then, the Court replicates paragraphs 17 through 19 of the ERTA judgment66 where the Court had ruled that the member states are excluded from acting when “common rules” had been adopted “which affect those rules”. The Court concludes in the Singapore opinion: It is clear from this passage of the judgment of 31 March 1971 …. that provisions of secondary law which the Community, now the European Union, has progressively laid down are “common rules” and that, when the European Union has thus exercised its internal competences, it must, in parallel, have exclusive external competence in order to prevent the Member States from entering into international commitments that could affect those common rules or alter their scope.67

Thereof, the Court concludes, first, that “common rules” do not include Treaty provisions which, second, cannot be “affected” by agreements. Therefore, the Union has no exclusive implied treaty-making competence for commitments related to non-direct investments based on Article 63 TFEU which provides for the free movement of capital. However, the Court recognized that the implied treaty-making powers and the internal legislative competences are “in parallel”. Finally, in one sentence each, the Court rejects that there are other treaty-making competence within the meaning of Article 3 par. 2 TFEU available for commitments related to non-direct investments. Such competence is neither “provided for in a

 ECJ, Singapore, par. 171.  ECJ, Singapore, par. 193, 202, 211, 217, 224. 64  ECJ, Singapore, par. 226 et seq. 65  ECJ, Singapore, par. 231. 66  See supra under 1.3.1 and 1.3.2. 67  ECJ, Singapore, par. 233. 62 63

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legislative act of the Union” nor “necessary to enable the Union to exercise its internal competences”.68 3.3.3  Recognition of Shared Implied Treaty-Making Powers In the absence of an exclusive competence pursuant to Article 3 par. 2 TFEU, surprisingly and without compelling reasoning, the Court finds that the commitments related to non-direct investments are “necessary in order to achieve, within the framework of the Union’s policies, one of the objectives referred to in the Treaties” within the meaning of the second limb of Article 216 par. 1 TFEU: … in the light of the fact that the free movement of capital and payment between Member States and third States, laid down in Article 63 TFEU, is not formally binding on third States, the conclusion of international agreements which contribute to the establishment of such free movement on a reciprocal basis may be classified as necessary in order to achieve fully such free movement, which is one of the objectives of the of Title IV … of the FEU Treaty.69

As Title IV on free movement of persons, services and capital falls within the shared competence for the internal market pursuant to Article 4 (2)(a) TFEU, the Court concludes, in general: The competence conferred on the European Union by Article 216 (1) TFEU in respect of the conclusion of an agreement which is “necessary in order to achieve, within the framework of the Union’s policies, one of the objectives referred to in the Treaties” is also shared [as provided for in Article 4(1) TFEU].70

and, in particular, finds that the commitments related to non-direct investments are covered by a competence shared between the European Union and the Member States.71

As a consequence, according to the Court, the relevant section of the agreement cannot be approved by the European Union alone.72

Taken for itself, such short statement is misleading. Of course, in the given situation, the Union would have had the power to enter into contractual commitments related to non-direct investments. Pursuant to Article 2 par. 2 TFEU, in the area of shared competences, the Union is free to exercise such competences under the sole condition of the subsidiarity rule. Therefore, in the area of shared implied treaty-­ making powers for non-direct investments, the Union actually has the power to enter into commitments related to that matter. However, according to Article 218

 ECJ, Singapore, par. 236, 237.  ECJ, Singapore, par. 240. 70  ECJ, Singapore, par. 242. 71  ECJ, Singapore, par. 243. 72  ECJ, Singapore, par. 244. 68 69

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TFEU, the conclusion of an agreement is the prerogative of the Council and thus, politically, entails the participation of the governments of the member states. With the above finding, the Court answered the request for an opinion which included the question which provisions of the agreement fell within the Union’s shared powers extremely briefly. However, it is striking that the Court did not make any statement on what shared competences actually would enable the Union to do. 3.3.4  Shared Treaty-Making Powers Pursuant to Article 216 Par. 1 TFEU As the Court stated in its Singapore opinion, according to the general rule of Article 4 par. 1 TFEU, the treaty-making powers provided for in Article 216 par. 1 TFEU are shared ones by definition. However, two of the three kinds of treaty-making powers codified in Article 216 par. 1 TFEU have been established by the ERTA judgment as exclusive ones and, thus, are also listed in Article 3 par. 2 TFEU. Shared Treaty-Making Powers by Necessity With regard to the third kind of implied powers, namely, the treaty-making powers by necessity, the Court, with reference to the Commission’s view but without any reasoning, does not qualify an agreement related to non-direct investments as necessary to enable the Union to exercise its internal competence

within the meaning or Article 3 par. 2 TFEU.73 Nor are treaty-making powers provided for in a legislative act of the Union.74

Then, surprisingly and obviously inspired from the different wordings employed by the second limb of Article 216 par. 1 TFEU, on the one hand, and the second limb of Article 3 par. 2 TFEU, on the other hand, the Court draws the conclusion that an agreement which contributes to the establishment of the free movement of capital may be classified as necessary in order to achieve fully such free movement, which is one of the objectives of Title IV … of the FEU Treaty.75

and qualifies the commitments related to non-direct investments as an agreement the conclusion of which is “necessary in order to achieve, within the framework of the Union’s policies, one of the objectives referred to in the Treaties” within the meaning of Article 216 par. 1 TFEU76 and, therefore, a shared one. Interestingly, in that instance that Court simply relied on the language of the provisions without having recourse to its case law.  ECJ. Singapore, par. 237.  ECJ, Singapore, par. 236. 75  ECJ, Singapore, par. 240. 76  ECJ, Singapore, par. 242. 73 74

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However, the Court’s understanding of the language in itself is hardly comprehensible. In both Article 3 par. 2 and Article 216 par. 1 TFEU, the necessity to conclude an agreement is linked to a Union “competence” or the “Union’s policies”. In both situations, the “competence” can be and mostly will be a shared one, and the “policies” include shared competences. Hence, the exclusivity of the treaty-making power pursuant to Article 3 par. 2 second limb TFEU only can flow from the necessity to conclude an agreement. But there is no reason to explain why such necessity in Article 3 par. 2 would lead to an exclusive treaty-making power and in Article 216 par. 1 TFEU only would trigger a shared treaty-making power. It is the necessity to conclude an international agreement in the fields of Union “competences” or “policies” which creates, by implication, a corresponding treaty-­ making power and, at the same time, makes it exclusive. The conclusion of an international agreement by the Union which will be binding upon the Union as such, by definition, leads to Union-wide uniform law. It would be contradictory in itself to establish a treaty-making power by necessity, on the one hand, but, on the other hand, to qualify such power as shared, i.e. to leave it to the prerogative of the member states whether or not the Union may exercise such treaty-making power. The necessity to conclude an international agreement by the Union entails that the corresponding internal competences of the Union, which are the very basis of all kinds of implied treaty-making powers, must be used by the Union alone but not shared with the Member States. Foundation of Implied Treaty-Making Powers by Necessity As Articles 216 par. 1 and 3 par. 2 TFEU were intended to codify the case law of the Court leading to the ERTA doctrine, regard must be had to the relevant judgments which established the implied treaty-making power by necessity. The language of Article 216 par. 1 second limb TFEU takes up the Court’s finding in the Laying-up Fund decision of 1977.77 The “objectives referred to in the Treaties” in the meaning of Article 216 Par. 1 TFEU do not play any crucial role in the ERTA reasoning78 as well as in the Kramer decision.79 While, in ERTA, the Court based the exclusive treaty-making power on the fact that common rules on the relevant subject matter already had been adopted, common rules which might be affected did not exist in the circumstances of the Laying-up Fund case, yet. In the particular situation a Laying-up Fund for motor vessels was intended to be created in order to cope with the surplus of transport capabilities available in the inland navigation on the Rhine River. For that purpose, an internal law-making competence was available under Article 75 EECT, now Article 91 TFEU.  However, a regulation applicable within the then Community

 ECJ, Opinion. 1/76, Laying-up Fund, ECLI:EU:C:1977:63.  See supra under 1.3.2. 79  ECJ, 3, 4, 6/76, Cornelis Kramer, ECLI:E:C:1976:114, par. 21/25. 77 78

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would be pointless because Switzerland as an important actor in Rhine navigation and party to the Mannheim Treaty on the Navigation on the Rhine River was to be involved in that regulation. In these circumstances, the exercise of the internal competences in the field of transport was dependent on the participation of a non-member state. Therefore, the internal competence could only be exercised by way of concluding an international agreement between the Community and Switzerland and, thereby, creating common rules. By reference to its case law, “most recently” the Kramer decision, the Court reiterated in the laying-up Fund opinion that the authority to enter into international commitments may not only arise from an express attribution by the Treaty, but equally may flow implicitly from its provisions. … [W]henever Community law has created for the institutions of the Community powers within its internal system for the purpose of attaining a specific objective, the Community has authority to enter into the international commitments necessary for the attainment of that objective …80

In that context, the mentioning of the objectives of the Treaty just describes that all action of the Community is bound to achieve its objectives. This becomes evident when the Court goes on to argue and repeats what was found in ERTA: This is particularly so in all cases in which internal power has already been used in order to adopt measures which come within the attainment of common policies.81

In the following sentence, beyond the ERTA situation, the Court finds implied treaty-making powers in the circumstances of the case: It is, however, not limited to that eventuality. …The power to bind the Community vis-à-­vis third countries nevertheless flows by implication from the provisions of the Treaty creating the internal power and in so far as the participation of the Community in the international agreements, as here, necessary to the attainment of one of the objectives of the Community.82

In that reasoning, the Court combines two rulings: first, implied treaty-making powers flow from the Treaty provisions providing for internal competences “and”, second, when common rules do not yet exist, treaty-making powers, nevertheless, exist when an international agreement is necessary for “the attainment of one of the objectives”—so the language of Article 216 par. 1 TFEU—or, in the concrete circumstances of the case, “necessary to enable the Union to exercise its internal competence”, so the language of Article 3 par. 2 TFEU. It is true, however, that the Court did not make a statement on exclusive treaty-­ making powers in the Laying-up Fund opinion. Nevertheless, the context of the decision shows that the conclusion of the agreement in question by the Community is the only option and was not challenged by the member states.

 ECJ, Opinion 1/76, Laying-up Fund, par. 3.  ECJ, Opinion 1/76, Laying-up Fund, par. 4. 82  ECJ, Opinion 1/76, Laying-up Fund, par. 4. 80 81

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The implied treaty-making powers by necessity as drafted in both Article 216 par. 1 and Article 3 par. 2 TFEU cannot be interpreted in isolation from the underlying case law of the Court. The treaty-making power by necessity roots back in the Laying-up Fund opinion and the legal language of both provisions must be understood in the light of what was decided in that judgment. The language in both Article 216 par. 1 and Article 3 par. 2 TFEU reflect the rationale of the Laying-up Fund decision which is that, in a situation where use of internal competences of the Union only can be made by way of concluding an international agreement by the Union and, thereby, creating common rules, a treaty-making power is granted. That is what the term “necessary” describes. In contrast to those circumstances, the commitments relating to non-direct investments in the free trade agreement with Singapore were not necessary in order to regulate the free movement of capital under Article 63 TFEU internally. General Shared Implied Treaty-Making Powers: Uncodified Nevertheless, the Court was right in coming to the result that the Union had shared powers in that respect. The correct reason, however, would have been to rely on the implied treaty-making powers which, in the language of the laying-up Fund opinion and, earlier, in the ERTA as well as the Kramer judgments, equally may flow implicitly from its [i.e. the Treaty’s] provisions

or flow by implication from the provisions of the Treaty creating the internal power …83

However, that source of implied powers, according to case law from ERTA over Kramer to Laying-up Fund which laid the foundation of the implied treaty-making powers, leads to shared implied treaty-making powers. Though such kinds of powers, unfortunately, were neglected when the Lisbon Treaty was drafted, they have been established by the settled case law of the Court. There was no need to have recourse to treaty-making powers by necessity in the Singapore opinion. According to the scheme of the Treaties as a whole, so the common rationale of the case law, implied treaty-making powers—exclusive ones and shared ones—are vested within the internal law-making competences of the Union without further requisites. Only the exclusivity of those powers depends on further conditions developed by the Court. In this respect, Article 216 par. 1 second, third and fourth limb TFEU represent an insufficient codification of the ERTA doctrine.

83

 ECJ, Opinion 1/76, Laying-up Fund, par. 3, 4.

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4  Sailing Bound to New Shores The Singapore opinion rendered on 16 May 2017 had immediate repercussions on the Union’s treaty-making. One aspect of the Singapore opinion was confirmed by the Court in its judgment of 5 December 201784 related to the common position to be taken within the framework of an international convention on international carriage by rail. With reference to Singapore and ERTA was well as other case law, the Court determined that Article 216 par. 1 TFEU provided for shared implied treaty-­ making powers in areas where internal competences were granted to the Union but legislative acts not have been adopted, yet. However, as in its Singapore opinion, the Court relies on the different wording used in Article 216 par. 1 and Article 3 par. TFEU and establishes the relevant treaty-making power on the second limb of Article 216 par. 1 TFEU as a competence by necessity.85 The conclusion of the CETA, however, continues to be conducted under the mixed formula. After its signing, on 30 October 2016,86 by the EU and its Member States as well as Canada, it was approved by the EP on behalf of the Union on 15 February 2017, and further to that, the agreement needs to be ratified by the 27 Member States, 16 of them having done so by December 2020. As usual, with respect to mixed agreements, the undisputedly trade-related parts of CETA were put into effect per 21 September 2017 by a Council decision. Expectedly the CETA will be the last major trade agreement of the Union concluded as a mixed agreement. As a consequence and in line with the Court’s reasoning in its opinion 2/15, the EU-Singapore Free Trade Agreement was split up into two different agreements. While opinion 2/15 exclusively dealt with the Union’s treaty-making powers, the Court was requested by the Belgian government to rule on the compatibility of the investor-state dispute settlement machinery provided for by the agreement with the substantive law of the Union including fundamental rights and the autonomy the EU legal order. On 30 April 2019, the Court found that the relevant chapter of the agreement is compatible with EU primary law.87 After that clarification, the EU-Singapore Free Trade Agreement (EUSFTA) covering the commitments under the Union’s exclusive powers was concluded by the EU exclusively on 8 November 201988 and entered into force on 21 November

 ECJ, C-600/14, COTIF, of 5 December 2017, ECLI:EU:C:2017:935, par. 43 et seq.  See supra under 3.3.4; in the circumstances of the case before the Court, a necessity to act in common can be found because of the international framework of a conference on the revision of an agreement, but then the competence is no longer a shared one. 86  In a preliminary injunction proceedings requested against a decision of the Council on the signing of the CETA, on 13 October 2016, the German Constitutional Court had dismissed that application, BVerfG, 2 BvR 1368/16 et al. of 13 October 2016, BVerfGE 143, p. 65, ECLI:DE:BVerf G:2016;rs20161013.2bvr136816. 87  ECJ, Opinion 1/17, CETA ISDS, of 30 April 2019, ECLI:EU:C:2019:341. 88  Council Decision 2019/1875, 8 November 2019. O.J. 2019 L294/1; signed on 19 October 2018 by virtue of Council decision of 15 October 2018. 84 85

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201989, while the EU-Singapore Investment Protection Agreement (EUSIPA) is a mixed agreement and needs to be ratified be the Member States, as well. On 28 October 2019, the German Constitutional Court had rejected a constitutional complaint, combined with an application for preliminary injunction against the approval to the conclusion of the Free Trade Agreement with Singapore by the German government within the Council.90 The same modus operandi applies to the agreement with Japan-EU Free Trade Agreement (JEFTA) which was under negotiation parallel in time with CETA and the Singapore Agreement. The EU-Japan Economic Partnership Agreement (JEPA) was concluded by a Council decision of 20 December 201891 and became effective on 1 February 2019. The EU-Japan Strategic Partnership Agreement (JSPA) which covers matters beyond the Union’s exclusive powers was signed as mixed agreement on 17 July 2018 and needs to be ratified accordingly.

Reference Vedder C (1980) Die auswärtige Gewalt des Europa der Neun. Schwartz Göttingen Christoph Vedder  is a professor emeritus who previously held the Chair of Public Law, Public International Law and European Law as well as Sports Law, a Jean Monnet Chair of European Law ad personam at the University of Augsburg, Germany. He studied law and history in Göttingen, Geneva, and Nice, graduated and earned his doctoral degree from the University of Göttingen. He has been appointed as an assistant professor at the Institute for Public International Law of the University of Munich where he also received his habilitation. He has been a visiting scholar at several universities and is a member of the conference of the State Parties of the OPCW and the author of numerous works on European Union law and its external relations.

 EU O.J. 2019 L 294/3.   BVerfG, 2 BvR 966/19, of 28 October 2019, ECLI:EU:DE:BVerfG:2019:rk20191028.2 bvr096619.  However, further proceedings against the conclusion of both the EUSFTA and the CETA are still pending before the German Constítutional Court. 91  EU O.J. 2018 L 330/1. 89 90

Mixed Agreements After ECJ Opinion 2/15 on the EU-Singapore Free Trade Agreement Andreas J. Kumin

1  Triggers of Mixity 1.1  Historical Development Before turning to some of the concrete findings of the ECJ in its Opinion 2/15, we will briefly recall the history of the main reasons for the conclusion of agreements with third countries or international organisations as mixed agreements. A first type of triggers is based on political reasons. These relate mainly to the demonstration of political unity in the external representation of the EU and its Member States towards third states, especially with regard to association agreements as well as partnership and cooperation agreements. Such agreements are usually concluded with countries geographically situated in the near neighbourhood of the EU or politically considered as strategic partners. Sometimes these agreements are even placed in an enlargement context and used as typical pre-accession instruments. The importance and the strength as well as the depth of the intended cooperation with the third country or countries in question are being demonstrated by the joint undertaking of the EU and all of its Member States, a later accession to the EU eventually depending on the unanimous agreement amongst all of the latter. A second type of reasons is of legal nature. Depending on the subject matters covered by the envisaged agreement, some of them fall within the remit of Union

This article expresses only the personal opinion of its author. The author wishes to thank Alexander Simon Lerche for his thorough review of the manuscript and useful indications concerning pertinent recent jurisprudence. A. J. Kumin (*) Court of Justice of the European Union, Luxembourg, Luxembourg e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 S. Lorenzmeier et al. (eds.), EU External Relations Law, https://doi.org/10.1007/978-3-030-62859-8_5

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policies which are characterised by a weaker state of integration and lesser degree of unionisation1 than, for example, the common commercial policy or the four fundamental freedoms of the internal market. Sometimes, even in the case of supranational policies, regulatory powers with a reduced scope only have been granted internally to the EU, e.g. through specific purpose limitation,2 carve-out3 or non-­ harmonisation clauses,4 clauses reserving the regulatory power or ultimate responsibility for some aspects for the Member States,5 or allowing only the establishment of minimum harmonisation at EU level.6 As a consequence, the degree of regulatory density and the scope of some agreements would also have to be limited externally if they were to be based solely on EU competences. In these cases, a satisfactory and comprehensive content of the agreement can only be achieved with the assistance and contribution of the Member States. One of the constellations in which the EU has exclusive external competence concerns the affectation of internal rules of the EU in accordance with the ERTA doctrine7 of the ECJ. This is now explicitly stipulated by Art. 3(2) TFEU. In the past, the internal rules were quantitatively much less important and also less dense, thus leaving more space for concurring competences and for the choice of their exercise either by the EU or its Member States. Only during the last couple of decades have we been observing successive treaty revisions transferring new competences, a steep development of the EU secondary law acquis in terms of quantity and density as well as an increase in ECJ jurisdiction clarifying the exact delimitation of competences, not seldom in favour of the EU. All of these factors have brought about an incremental development of explicit and “implicit” external competences of the EU, often even of an exclusive nature. Since this type of external competence has now been explicitly enshrined in the competence catalogue 1  We propose henceforth to apply this term to the situation after the entry into force of the Lisbon Treaty instead of “communitarisation”, the one commonly used before. 2  Cf. Art. 114 TFEU concerning the achievement of the purposes of the internal market allowing only for Union measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market. 3  Cf. Art. 153(5) TFEU excluding pay, the right of association, the right to strike or the right to impose lock-outs from the scope of application of that article on social policy. 4  Cf. Art. 149(2) TFEU in the field of employment policy. 5  Cf. Art. 72 TFEU stating that the measures taken by the EU in the area for freedom, security and justice shall not affect the exercise of the responsibilities incumbent upon Member States with regard to the maintenance of law and order and the safeguarding of internal security. Further examples in the same policy field: Art. 77(4) TFEU on the competence of the Member States concerning the geographical demarcation of their borders, in accordance with international law. Art. 79(5) TFEU as regards the right of Member States to determine volumes of admission of third-country nationals coming from third countries to their territory in order to seek work, whether employed or self-employed. 6  Cf. Art. 83(1) TFEU with regard to the definition of criminal offences and sanctions in the areas of particularly serious crime with a cross-border dimension resulting from the nature or impact of such offences or from a special need to combat them on a common basis. 7  ECJ, 22/70, Commission v Council, EU:C:1971:32, paras. 15 and 16.

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in Art. 216 TFEU8 and Art. 3(2) TFEU, we should better call it “reflexive” (or “reflective” of internal competences) instead of “implicit”. Another cause for a mixed conclusion of agreements in the past was the inclusion of Common Foreign and Security Policy (CFSP) matters or of aspects pertaining to the old third pillar, police and judicial cooperation in criminal matters (PJCCM). Since those non-supranational matters were regarded as mainly parallel competences internally, allowing for action of the Member States even in case the EU took action at the same time, it was regularly decided that in the context of agreements they were not exercised by the EU but by the Member States. This was at least the case before a certain practice of “cross-pillar mixity”9 started, where the EU representing the second and/or third pillars joined the European Communities (the first pillar) in one and the same agreement.10 Amongst components of agreements that regularly triggered the participation of the Member States in a third-country agreement, we could quote the setting up of a human rights dialogue, ICC co-operation, fostering disarmament and fighting the proliferation of weapons of mass destruction, fighting international terrorism and organised crime.

1.2  Status Quo We would now like to turn to the current state of affairs in the post-Lisbon legal environment and give some examples for situations or provisions still leading to the necessity of a mixed conclusion of agreements. Amongst the general causes for mixity, we would like to distinguish two sets of cases. The first one refers to situations where, with regard to the subjects covered by the agreement, the competence of the EU is either non-existent altogether or has not been activated by the institutions in accordance with the applicable procedures. The second one refers to situations where the scope of the competences that have been transferred to the EU with regard to the elements in question is limited. As regards the first set, we have to recognise that, despite the current breadth and the depth of Union regulatory powers after decades of continuous development, situations of non-conferral still exist. In other words, provisions of international agreements may concern issues for which the Union has not been explicitly given a mandate to act, in particular not by means of legislative or regulatory action. At first sight, those parts of the agreement would then have to be covered by Member State action, unless—as would have to be examined as a second step—some traditionally so-called implicit EU competence could be established. An even stricter barrier to 8  Cf. Opinion of Advocate General Saugmandsgaard Øe in Commission v Council, C-687/15, EU:C:2017:645, paras. 37 et 44. 9  Wessel (2010) and Samoilova (2016). 10  One example is the association agreement of Switzerland to the Schengen System, which was authorised by the EU Council with two parallel decisions referring, respectively, to the old first and third pillars.

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the EU taking over the international contractual responsibility is constituted by the so-called carve-out clauses, a couple of provisions of primary law which reserve the competence to act in certain fields exclusively for the Member States. This is true, e.g. for the “geographical demarcation” of borders [Art. 77(4) TFEU], the content of teaching and the organisation of education systems and their cultural and linguistic diversity [Art. 165(1) TFEU] or the right of Member States to define the fundamental principles of their social security systems and the financial equilibrium thereof [Art. 153(4) TFEU]. Moreover, the scope of certain Union policies is determined by non-affectation clauses limiting the impact of Union measures and leaving the Member States sufficient margin of manoeuvre in sensitive matters of public policy. By way of example, see Art. 72 TFEU stating that the Title on the area of freedom, security and justice “shall not affect the exercise of the responsibilities incumbent upon Member States with regard to the maintenance of law and order and the safeguarding of internal security”. Here again, a parallel respect for these limitations in the external action of the EU imposes itself. Apart from non-conferral or limitation of scope of EU competences, the participation of Member States in international agreements alongside the EU is required— or at least legally possible without contravention of treaty obligations—in cases where, and to the extent to which, the shared competences are not exercised by the EU since the Council so decides. This conclusion of agreements with the formula of “facultative mixity”11 may happen on the basis of a proposal by the Commission to limit EU action to exclusive competences12—or even despite a proposal of the Commission to exercise the full range of EU competences, including the shared ones.13 A case in point for a situation where the shared competences were not  Lenk and Gáspár-Szilágyi (2017).  The EU has, for example, been participating only with regard to its exclusive competences (“as regards matters falling within the Union’s competence and in respect of which the Union has adopted rules”) alongside the Member States in the preparatory phase of the negotiations on the conservation and sustainable use of marine biodiversity of areas beyond national jurisdiction— BBNJ: Council Decision (EU) 2016/455 of 22 March 2016 authorising the opening of negotiations on behalf of the European Union on the elements of a draft text of an international legally binding instrument under the United Nations Convention on the Law of the Sea on the conservation and sustainable use of marine biodiversity of areas beyond national jurisdiction. 13  Cf. with regard to the “Istanbul Convention” the Council Decisions (EU) 2017/865 of 11 May 2017 on the signing, on behalf of the European Union, of the Council of Europe Convention on preventing and combating violence against women and domestic violence with regard to matters related to judicial cooperation in criminal matters and (EU) 2017/866 of 11 May 2017 on the signing, on behalf of the European Union, of the Council of Europe Convention on preventing and combating violence against women and domestic violence with regard to asylum and non-refoulement which restrict the EU participation to matters related to judicial cooperation in criminal matters as well as asylum and non-refoulement falling within the competence of the Union insofar as the Convention may affect common rules or alter their scope. The Member States retain their competence insofar as the Convention does not affect common rules or alter the scope thereof. The decisions deviate, in that respect, from the initial Commission proposal COM/2016/0111 final for a Council decision on the signing, on behalf of the European Union, of the Council of Europe Convention on preventing and combating violence against women and domestic violence which parts from the general assumption that “while the Member States remain competent for the crimi11 12

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activated by a Council decision is provided for by the OTIF14 and the establishment of the Union position on the amendment of the Convention concerning International Carriage by Rail (COTIF) and the appendices thereto, which gave rise to the judgment of the ECJ in case C-600/14 Germany v Council.15 In paragraph 68 of this judgment, we find useful explanations by the ECJ clarifying the Court’s own interpretation of the somehow confusing use of the term “shared” competence that it had made in paragraphs 243 and 244 of Opinion 2/15 on the division of competences with regard to the EU-Singapore Free Trade Agreement (see below). See on the same issue also paragraph 107 of the Opinion of Advocate General Kokott16 and paragraph 126 of the Court’s judgment in the joined cases C-626/15 and C-659/16 Commission v Council (AMP Antarctique).17 It is, however, indicated to distinguish these cases of overt non-activation of shared competences and conclusion of mixed agreements from constellations in which—in accordance with the “centre of gravity test”18—some elements of the international agreement do not trigger additional legal bases corresponding to different policy areas for the EU action in a particular case since they are considered ancillary to exclusive or shared competences that have been activated. Such covert non-activation of shared competences might happen, namely, also in the context of “EU-only” agreements. The second set of general causes for mixity is constituted by a number of EU competences which foresee certain material or typological limitations for the Union to act all on its own at the expense of the Member States. It goes without saying that these limitations of a constitutional nature also extend to the external exercise of these competences by the Union. Amongst those categories of competences, we will first mention the parallel competences where the exercise by the EU of its powers does not stand in the way of an action by the Member States even in the very same field [cf. Art. 4(3) and (4) TFEU]. Secondly, the EU has been given certain ­competences where it is authorised only to carry out actions to support, coordinate or supplement the action of the Member States (Art. 6 TFEU). All of these three types of activity of the EU thus presuppose a previous or at least concurrent ­involvement of the Member States also in the context of agreements of public

nalisation of a number of violent forms of behaviour against women in their national substantive criminal law as required by the Convention, the Union has competence covering most of the provisions of the Convention and has adopted an extensive set of rules in these areas.” Consequently, the Union has exclusive competence to the extent that the Convention may affect common rules or alter their scope. 14  Revision Committee of the Intergovernmental Organisation for International Carriage by Rail. 15  Judgment of 5 December 2017, Germany v Council, C-600/14, EU:C:2017:935. 16   Opinion of Advocate General Kokott in Commission v Council (AMP Antarctique), EU:C:2018:362. 17  ECJ, Commission v Council (Antarctic MPAs), C-626/15 and C-659/15, EU:C:2018:925. 18  Cf. ECJ, Opinion 2/15, para. 276 and ECJ, C-244/17, Commission v Council (Agreement with Kazakhstan), EU:C:2018:662, para. 40.

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i­nternational law. Thirdly, there may be cases where an agreement includes provisions leading to a harmonisation of legislative or regulatory provisions of the Member States in areas where the treaties exclude such harmonisation already for the internal or autonomous actions of the EU (cf. Art. 207(6) TFEU which addresses this problem specifically in the context of international trade agreements). Apart from these general causes, there exist also specific causes for mixity which are only valid for certain situations and which may even depend on factors external to the division of competences between the EU and its Member States. A recent example has been given by the ECJ in its judgment in the joined cases C-626/15 and C-659/16 Commission v Council (Antarctic MPAs). In this case, the decisive element for the determination of the EU-only or mixed character of the international action was not the nature of the policies potentially relevant, namely fisheries and protection of the environment. The determinant factor was rather the specific responsibility incumbent upon those Member States of the EU that have a special status in the system of the Antarctic agreements and the Canberra Convention. The obligation of the EU not to interfere with these responsibilities of some of its Member States speaks in favour of the compulsory mixity of the submission of proposals to an international body. Although this very reason sounds pretty unique, the more general feature of some Member States taking on specific international responsibilities that deserve special protection and thus are immune to transfer of competences from the Member States to the EU might be present in other public international law contexts. This constellation could thus be added as another item to the above list of general causes for mixity.

2  M  ixity with Regard to Trade and Investment Protection Post Opinion 2/15 Focussing now on the situation as it presents itself after the Opinion of the ECJ on the EUSFTA with regard to the joint conclusion by the EU and its Member States of agreements in the specific fields of trade and investment, the first observation has to be to stress the exclusive nature of the common commercial policy [CCP - Art. 3(1) (e) TFEU].19 This exclusiveness, however, only extends so far as does the scope of this policy in accordance with Art. 207(1) TFEU in pursuit of its specific trade ­policy goals in Art. 206 TFEU.  Matters not mentioned there, or those which are explicitly excluded therefrom, do not fall under the CCP and have to be subsumed under other EU policies with different characteristics as regards the competence question. Amongst such issues we most prominently find trade in transport

19

 Cf. Opinion of Advocate General Sharpston in FENS, C-305/17, EU:C:2018:536, para. 48.

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services,20 which is excluded from the CCP by virtue of Art. 207(5) TFEU and which falls under the external aspects of the EU transport policy. Moreover, with regard to investments, the Opinion on the EUSFTA clarified the long disputed question of whether the protection of non-direct foreign investments, the so-called portfolio investments, goes alongside foreign direct investments as part of trade policy or not. The Court not only confirmed the view held by the Council and the Member States that this type of investments falls under the rules concerning the free movement of capital (Art. 63 TFEU),21 typologically a shared competence,22 but went even one step further in its examination, leading to one of several unexpected statements of the ECJ in Opinion 2/15. Rightfully rejecting the Commission’s view that the provisions in the EUSFTA on non-direct investment could be of a nature to affect common rules, in this case the provisions of primary law themselves, in the sense of the ERTA doctrine (see below),23 the Court went on to explore the possible subsumption of non-direct investment protection under the shared competence regarding free movement of capital. This could have allowed for the conclusion as a “facultative” EU-only agreement24 (see below). Yet in para. 244 of its Opinion, the Court stated that the conclusion by the EU alone was not possible, without however giving more detailed explanations.25 It was not until para. 68 of the judgment in case C-600/14 (Germany v Council) that the Court clarified this in the sense that the requirement for the conclusion by the EU alone, based on the exercise of a shared competence, would have been a decision by the Council in accordance with the applicable majority (see above). Finally, we would like to mention, just for the sake of completeness, another fascinating aspect that would deserve further analysis, namely, the question of transparency with regard to the rules on investment protection. While the ECJ has clarified the distribution of competences between the EU and its Member States for these provisions enshrined in the EUSFTA or similar agreements with third countries, some further question marks arise on whether the EU has exclusive competence or not to conclude the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration, under the auspices of UNCITRAL, with regard to disputes in which only the EU is the respondent and which originate from investment protection treaties concluded by the EU itself (in fact: the Energy Charter Treaty).  In their narrow interpretation by the ECJ in excluding therefrom conversely non-related technical services, ECJ, Opinion 2/15, para. 66. Cf. ECJ, C-16/18, Dobersberger, EU:C:2019:1110, para. 25; Opinion of Advocate General Wahl in Austria v Germany, C-591/17, EU:C:2019:99, para. 144; ECJ. C-263/18, Schenker v Commission, C-263/16 P, not published, EU:C:2018:58, para. 23. 21  ECJ, Opinion 2/15, para. 227; Cf. ECJ, C-135/17, X (Controlled companies established in third countries), EU:C:2019:136, para. 26. 22  ECJ, Opinion 2/15, paras. 239 to 242. 23  ECJ, Opinion 2/15, para. 235. 24  Lenk and Gáspár-Szilágyi (2017). 25  D. Thym, Mixity after Opinion 2/15: Judicial Confusion over Shared Competences; https://verfassungsblog.de/mixity-after-opinion-215-judicial-confusion-over-shared-competences/ 20

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The subsumption of, e.g. the two matters—transport services and portfolio investments—mentioned above under another EU policy falling into the category of only shared competence in the sense of Art. 4(1) together with Art. 216(1) TFEU (or another of the non-exclusive types mentioned in Articles 5 and 6 TFEU) still does not, however, automatically discard the possibility of the EU having, for other reasons, exclusive competence in respect thereof. The shared nature of the competence is only maintained to the extent that the matters contained in an international agreement are not covered by rules of EU secondary law: if it were otherwise, with other parts of the agreement being covered to a large extent by such internal rules, the well-known ERTA effect would cut in, as codified in the third variant enumerated in Art. 3(2) TFEU.26 The first two variants mentioned in Art. 3(2) TFEU as triggers of an exclusive competence of the EU for the conclusion of an international agreement, too, would have to be checked first: if the conclusion is provided for in a legislative act of the Union or if it is necessary to enable the Union to exercise its internal competence. Moreover, even in the absence of one of the cases of Art. 3(2) TFEU, the conclusion by the EU alone, without participation of the Member States, becomes possible if the EU decided to exercise its shared competence for the entirety of the agreement in question (“facultative” EU-only agreement).27 The conclusion by the EU, on its own, also of those parts of the agreement not falling under exclusive EU competence in the sense of Art. 3 TFEU is possible in accordance with Art. 216(1) second variant TFEU if this “is necessary in order to achieve, within the framework of the Union’s policies, one of the objectives referred to in the Treaties”. If, on the contrary and in accordance with the proposal by the EU negotiator— mainly the Commission—or in deviation thereof, the Council decides not to activate this facultative or concurrent shared competence of the EU, then we are faced with a case of facultative mixity. Further cases of mixity could also occur with regard to other matters contained in international agreements, falling, e.g. into the scope of the environmental or social policies, like sustainable development, if the agreement contains concrete obligations, such as described by paras. 164 to 166 of Opinion 2/15, for the contracting parties, intended to regulate their levels of social and environmental protection, and thus going beyond those contained in the EUSFTA, and if with respect thereto the EU cannot or does not exercise its competences. Last but not least, dealing with the rules in the EUSFTA on investor-state dispute settlement (ISDS), we encounter a constitutional reason for compulsory participation of the Member States in a mixed agreement. The Court holds in paras. 292 and 293 of Opinion 2/15 that a system providing for the submission of disputes to international arbitration tribunals cannot be of a purely ancillary nature within the meaning of its case law concerning the competence of the EU to couple substantial

 This is, indeed, the case with the provisions in the EUSFTA related to trade in transport services; see ECJ, Opinion 2/15, para. 217. 27  Lenk and Gáspár-Szilágyi (2017). 26

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commitments with institutional provisions28 and that it removes disputes from the jurisdiction of the courts of the Member States. Such a system cannot, therefore, be established without the Member States’ consent. This reasoning resembles the figure of the closed system of EU courts comprising national courts and the Court of Justice of the European Union that the ECJ had already used in Opinion 1/09 on the draft agreement Unitary Patent Court.29 We would be amiss if we did not offer a short but critical side remark on another issue in the context of the investment protection chapter of Opinion 2/15. The Court states in para. 252 of this Opinion that the EU has full competence to cover the provisions contained in the EUSFTA concerning the commitments on foreign direct investment contained in the bilateral investment agreements concluded between Member States and Singapore. The consequential effect of negation of the Member States’ role in the termination of bilateral investment agreements goes against Art. 30(3) and Art. 59(1) of the Vienna Convention on the Law of Treaties (VCLT). As AG Sharpston indicated in paras. 303 and 389 et seq. of her Opinion in Opinion procedure 2/15, there exists no “identity” between EU and Member States in the formal sense of the word. The above interpretation given by the Court is therefore only understandable if the EU legal order is conceived as a closed and communicating system of different regulatory levels (in German: Mehrebenensystem), where the higher level, the EU, functionally and comprehensively replaces the lower level, the Member States, in the exercise of regulatory powers, starting from the moment of conferral of the respective exclusive competences upon the EU. Furthermore, the perceptible tension between Union law and public international law indicated above could best be reconciled through a limitation of the Court’s interpretation to its material aspects, to the effect that the EU investment agreement provisions supersede the old bilateral agreements of the Member States.30 The latter provisions thus become obsolete, inoperative, but are not formally rescinded, something that could only be done, in conformity with public international law, by the initial contracting parties, i.e. the EU Member State and the third country in question. In response to the problems related to the distribution of competence between the EU and its Member States identified by Opinion 2/15, the Council has, in the meantime, adopted a different policy with regard to trade agreements.31 The effect of the ECJ jurisprudence has thus been to overturn the new approach that the EU initially wanted to take after the entry into force of the Lisbon Treaty by pursuing comprehensive and combined trade and investment agreements. Concerning the EUSFTA,  With regard to the essential character of an ISDS mechanism within a BIT, see also Opinion of Advocate General Wathelet in Achmea, C-284/16, EU:C:2017:699, para. 77. 29  Opinion 1/09 (Agreement creating a Unified Patent Litigation System), EU:C:2011:123. 30  Article 9.10 of the EUSFTA, entitled “Relationship with other Agreements”, is the final provision of Section A of Chapter 9 and states in paragraph 1 the following: “Upon the entry into force of this Agreement, the [bilateral investment] agreements between Member States of the Union and Singapore…including the rights and obligations derived therefrom, shall cease to have effect and shall be replaced and superseded by this Agreement’. 31  European Council (2018b). 28

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it has then logically also been split again into an EU-only trade agreement and a mixed investment agreement. The signing of both was authorised by the Council on 15 October 2018.32

3  Persisting Complications We would now like to take a short look at a couple of specific problems caused or legal questions raised by the fact that the EU has to conclude international agreements together with its Member States. In the phase of the authorisation for and the conduct of the negotiations, the expected mixed nature of the envisaged agreement has led, in the past, to combined decisions of the Council and of the Representatives of the Governments of the Member States meeting within the Council authorising the Commission to negotiate the totality of the matters to be included in that agreement. In its judgment in the case C-28/12 (concerning the Air Transport Agreement), however, the ECJ found—in respect of a decision on the signing and provisional application of an agreement—that such a merging of the decision-making of an intergovernmental nature with the one of the EU institutions in the form of “hybrid” decisions is not legally possible since it infringes the autonomy of the EU institutions and undermines the general rule of decision-taking in the Council with qualified majority.33 As a consequence, the institutional practice has changed. Currently, in comparable situations, a separate intergovernmental decision in the form of an “act of the representatives” is adopted by the Member States in the exercise of their national competences, and as a separate legal act formally different from the decision of the Council as a Union institution, in order to give “full powers” for the Commission or the High Representative to negotiate on their behalf. As stated above, the authorisation of negotiations by a Union institution on behalf of a Member State does not entail permanent legal effects—other than the power and the obligation for the institution entrusted to exercise the powers granted. We even suppose that, as it is the case in Austrian constitutional law, the national law of the Member States generally does not provide for entrusting external authorities with such actions, but only national institutions and office holders. An intergovernmental decision by the collective of the Member States on the authorisation for the Commission or the High Representative to conduct agreement negotiations on their behalf is therefore not completely devoid of possible legal complications. The situation, however, is still very different with regard to decisions on the signature and conclusion of an agreement in the exercise of national competences. The respective actions related to the Member States’ parts of a mixed agreement are already regulated by national constitutional provisions (such as the requirements for decisions by the government, the

32 33

 European Council (2018a).  ECJ, Commission v Council, C-28/12, EU:C:2015:282, para. 52.

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head of state and the parliament, respectively).34 We therefore see, strictly speaking, no room for further action, even of an intergovernmental nature, of the Member States within the EU. This would point towards the advisability, in future similar cases, of refraining from having recourse to such procedures, in order to avoid duplication or at least a parallelism that might be particularly problematic from the point of view of national constitutional law. One possible interpretation compatible with public international law and with national constitutional law of the Member States that we could come up with for such intergovernmental decisions on the negotiation, signature (including possibly the provisional application) and conclusion of mixed agreements is that they serve the purpose of recording the existence of the “common accord” amongst the Member States (see below) and of testifying their political commitment to deliver on their own signature and conclusion. In the light of the considerations above, we personally have a certain preference for the pragmatic solution to such mixed competence situations, regularly applied under the pre-Lisbon setting in the context of the negotiation of mixed agreements. It consisted in a “mandate”,35 given by the Council to the Commission as the Union negotiator, that covered not only matters falling under the competence of the European Communities but also those falling under Member States’ competence while at the same time explicitly stating that the negotiation of these matters occurs “without prejudice to the division of competences” between the two. At least in our view, the same way to proceed could be chosen also under the current primary law, since entrusting a Union institution with the negotiation of an international agreement, in consultation with the special committee that accompanies the Union negotiator during the negotiations [Art. 207(3), third subpara., and Art. 218(4) TFEU], does not affect the vertical distribution of competences. Such a decision would only entail a temporary trusteeship for national competences of the Member States by a Union institution and not transferring them for good. The decision on the effective division of competences between the Community or else the Union on the one hand and the Member States on the other will—with a legally binding effect—namely, only be taken with the decisions authorising the signature and the conclusion of the agreement. There, the Union institutions will only be able to act within the scope of the Union competences, in accordance with the principle of conferral. This should make the Member States sufficiently confident in their capacities to safeguard their own national prerogatives during the whole process, independently of the fact that some aspects of the agreement are being negotiated by the Commission on their behalf. A different set of considerations needs to be made with reference to the legal figure of “common accord”. The term “common accord” cannot be found in the treaties anymore, in contrast to the previous Art. 133(6) ECT (Treaty establishing

 ECJ, Commission v Council, C-28/12, para. 50.  Decision by the Council to authorise the conduct of negotiations including directives for the negotiations.

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the European Community). This provision first used a somehow awkward formula to indicate an absolute trigger for mixity, stating that under certain conditions an agreement “may not be concluded by the Council if it includes provisions which would go beyond the Community’s internal powers”. The meaning thereof was that depending on certain elements being present in the agreement in question, it could not be concluded by the Community alone. The examples given in that very provision of the previous ECT do not exist anymore as triggers of mixity in the current primary law, but—in a substantially even more limited way—they could only entail compulsory unanimity decision-making in the Council in deviation from the qualified majority, which is the general rule for common commercial policy. What remains, however, is the fact that the EU institutions, and in particular the Council, continue to rely on the necessity for confirmation by all Member States that they envisage to sign and ratify the agreement in question also in their own capacity as contracting parties, before the Council can proceed to taking the respective decisions for authorisation on behalf of the EU. While the general rule for the Council decisions authorising the signing and the conclusion of agreements also concerning other Union policies is the qualified majority [Art. 218(8) TFEU], the requirement of the “common accord” virtually replaces it with unanimity. In light of the explicit prohibition established by the EJC of “hybrid” decisions mentioned above and the underlying reasons therefore, we are facing a parallel situation here. The “common accord” requirement could be perceived to have quite similar legal effects on the possibility of the EU to freely exercise its supranational powers based on majority decisions unhindered by the Member States.36 It is, for the time being, merely an issue of speculation whether, in application of the principle of loyal cooperation,37 the ECJ would furthermore construe an obligation for the Member States to sign or ratify a mixed agreement even against their national political interest, only in order to allow the EU to exercise its competences externally, if the required majority has been reached in the Council. Problems of a different kind pose themselves in the post-negotiation phases. It would overstretch the framework of this short study to go into the details of the different complications in the autumn of 2016 that accompanied the decisions of the Council to authorise the signature and the provisional application of the Comprehensive Economic and Trade Agreement (CETA) of the EU and its Member States with Canada. It suffices to mention that even national constitutional courts and regional parliaments of certain Member States played a specific role in this process due to the sensitivities attached to the division of competences between the

 The ECJ will have the opportunity to address also this question in its opinion that it will give upon request by the European Parliament, being the second of two questions, in the ongoing case Opinion 1/19 on the Istanbul Convention (mentioned in footnote 13 above). The Parliament has phrased the issue in the following way: “Is the conclusion by the European Union of the Istanbul Convention, in accordance with Article 218(6) TFEU, compatible with the Treaties in the absence of mutual agreement between all the Member States concerning their consent to be bound by that convention?” 37  See Opinion of Advocate General Szpunar in Commission v Germany, C-620/16, EU:C:2019:3, paras. 93 to 95. 36

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EU and its Member States. With regard to the questions of material law, the Singapore Opinion has certainly helped to clarify a couple of issues. The Opinion 1/17 of the ECJ of 30 April 201938 on the compatibility with the Treaties of the newly designed investment court system enshrined in the CETA EU-Canada has further contributed to solving this legal puzzle. But with the spectre of “ultra vires” action at the back of our minds, in particular from the perspective of the Member States, it has been a standing concern also with regard to past free trade agreements (like with the Republic of Korea39) to strictly limit the provisional application of the agreement to those parts that undoubtedly fall under EU competences. One of the additional questions raised by the figure of common accord above is whether provisional application by the EU could continue for an unlimited period of time even if one of the Member States notified of its own impossibility to ratify the agreement in question and thus to contribute to its entry into force. On the one hand, giving full effect to the figure of common accord would speak in favour of drawing the logical consequences of such a ratification accident not only for the Member State concerned but for the EU and all of its Member States together. The provisional application being only the foreshadowing of the later expected definitive entry into force, a continuation of the provisional application does not make sense if it only covers the Union competences and not the Member States’ part of the rights and obligations. The situation would, in that regard, be the same as with a definitive refusal by the European Parliament to give its consent required by Art. 218(6) TFEU40 also permanently blocking the conclusion by the EU. An obstacle under the law of the treaties regularly encountered for the definitive entry into force of the agreement in question would, namely, be the fact that its final clauses require the notification of the conclusion of the internal procedures by the third country as well as by the EU and all of its Member States. On the other hand, the legal situation of an agreement, of which only those parts falling into Union competence are being provisionally applied, can be assimilated to an “EU-only” agreement that has definitely entered into force. We could, in this respect, think of the previous EU practice to conclude “interim agreements” on the trade matters contained in horizontal mixed agreements in order to bridge the time between the signature and the entry into force only after ratification by all Member States and the EU. In terms of distribution of competences and respect of the sovereignty of the Member States, a permanent provisional application of the EU parts of a mixed agreement does not meet with concerns. The only institution that could make such a way of action dependent on its own prior approval of the agreement would be the European Parliament, since otherwise the provisional application, which does not require its approval (Art. 218(5) TFEU), could undermine its usual prerogatives for the conclusion of agreements (Art. 218(6) TFEU). Another  ECJ, Opinion 1/17 of 30 April 2019, EU:C:2019:341.  Free Trade Agreement between the European Union and its Member States, of the one part, and the Republic of Korea, of the other part, O.J. L 127, 14.5.2011, p.6. 40  This happened in February 2010 to the EU-US SWIFT Agreement (Agreement on the transfer of financial messaging data for the purpose of combating terrorism); see Cremona (2011). 38 39

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political disadvantage for the EU and its Member States of permanent provisional application of only the EU parts of an agreement could lie in the reciprocity of action by the third contracting partner. It would have the effect of excluding all rights and obligations that the Member States would have covered from the mutual relations, thus possibly leading to an imbalance of the benefits to be gained out of the agreement to the detriment of the interests pursued by the EU side. The overall balance and added value by the mutual do ut des by the EU and its Member States on the one hand and by the third party on the other could be seen as defeated by such an imbalance. Whenever we are referring to the distribution of competences between the EU and its Member States, we are ourselves well aware of its highly complicated system and interpretation, even for insiders and Member States, as well as of the politically and legally sensitive question of who has the power to exactly define it. So the EU should always strive for internally fixing as precisely as possible, in the respective Council decisions authorising the signature and the conclusion of a mixed agreement, the extent to which the EU is allowed to exercise its external competences therein. Those parts not covered by the EU would then fall under the responsibility of its Member States. Furthermore, the EU should not expect external actors such as the contracting partners of the EU and its Member States in the context of mixed bilateral or multilateral agreements to be able to understand the intricacies of the competence question and its legal implications. Therefore, the EU should make the internal state of competence division in a certain agreement transparent and communicate the precise delimitation of competences between the EU and the Member States in a declaration addressed to the depositary and to the other contracting parties. A declaration of that kind would facilitate an effective action and interaction of the EU and its Member States with the other partners in the context of the agreement and is actually foreseen in quite a number of agreements. Experience shows, however, that the degree of detail provided for by the EU and its Member States in these declarations leaves a lot to be desired. Very often, only the principles guiding the distribution of competences are enumerated or the main objectives pursued by the Union policy in question. Sometimes a vague mention of the fact that several legal acts have already been adopted by the EU in the respective policy field is added, very rarely accompanied by a concrete list of acts of secondary law adopted so far. Here once again, we would need to take into account the dynamic element of the distribution of competences which makes a precise delimitation virtually impossible. With the built-in automaticity of Art. 3(2) third variant TFEU, some initially “shared” competences are transformed into reflexive exclusive EU competences with the progressive regulatory scope and density of secondary EU law. We could, therefore, hereby solemnly proclaim the (Augsburg) “law of gradually diminishing external competences” of the Member States. Consequently, the abovementioned transparency declarations would almost constantly be subject to revision and renewal. We are here confronted with a very important aspect of the “competence creep” exercised by the EU that the Member States experience on the international plane at their own expense.

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4  Conclusions In summing up some of the more salient aspects dealt with above in this study undertaken from the point of view of a practitioner, mixed agreements have been and will continue to be a widespread and common phenomenon in the world of EU external relations even after Opinion 2/15. In consequence of successive jurisprudence of the ECJ over the last 20 odd years and the latest treaty revisions, however, mixed agreements have lost scope for the benefit of EU-only agreements. The external competences of Member States will continue to diminish in favour of the EU with the increasing ERTA effect of progressing secondary legislation. Mixed agreements cause certain legal and practical complications with regard to their negotiation, conclusion and implementation that should be approached and solved in a spirit of loyalty and cooperation by the Union and the Member States in order to maximise the effective pursuit of common objectives on the international plane. In particular in recent years and in the field of international trade and investment protection, these complications have become the subject of serious political controversies between the Member States and the EU institutions but also in the national and regional parliaments of Member States. The legal and practical problems may be handled with the existing instrumentation in EU and national constitutional law, although it might seem advisable to provide for explicit legal solutions thereon at the appropriate place. One possible avenue to clarify at least some of the problems discussed in this contribution would consist in their constitutionalisation, following a very useful suggestion made by Schwichtenberg:41 adding a couple of provisions to the Art. 216 et seq. TFEU on the occasion of the next treaty revision exercise, laying out the procedures to be followed with regard to the negotiation and conclusion of mixed agreements, while striking the right balance between interests of the EU as a whole and safeguarding the Member States’ competences and interests. With the assumption of the continued existence of mixed agreements underlying our discussion here, this solution would have the prospect of a reasonable period of time of applicability in the future.

References Ankersmit L (2017) Opinion 2/15 and the future of mixity and ISDS. http://europeanlawblog. eu/2017/05/18/opinion-215-and-the-future-of-mixity-and-isds/. Accessed 26 Feb 2020 Bittner P, Fuith J, Hauser A, Kraschowetz D, Meisel M, Prummer J, Waibel V (2019) Recent Austrian practice in the field of European Union law. Report for 2018. ZöR/Zeitschrift für öffentliches Recht/Austrian J Public Law 74(3):553–590 Cremona M (2011) Justice and home affairs in a globalised world: ambitions and reality in the tale of the EU-US SWIFT agreement. Institute for European Integration Research Working Paper No. 4/2011, p 17

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Erlbacher F (2017) Recent case law on external competences of the European Union: how Member States can embrace their own treaty. EPIN Paper No. 43, January 2017/CLEER Paper Series 2017-02 European Commission (2016) EU negotiating texts in TTIP. https://trade.ec.europa.eu/doclib/ press/index.cfm?id=1230&serie=866&langId=en. Accessed 26 Feb 2020 European Commission (2017) EU-Japan Economic Partnership Agreement: texts of the agreement. https://trade.ec.europa.eu/doclib/press/index.cfm?id=1684. Accessed 26 Feb 2020 European Council (2018a) EU-Singapore: Council adopts decisions to sign trade and investment agreement. https://www.consilium.europa.eu/en/press/press-releases/2018/10/15/eusingapore-council-adopts-decisions-to-sign-trade-and-investment-agreements/. Accessed 26 Feb 2020 European Council (2018b) New approach on negotiating and concluding EU trade agreements adopted by Council. https://www.consilium.europa.eu/en/press/press-releases/2018/05/22/ new-approach-on-negotiating-and-concluding-eu-trade-agreements-adopted-by-council/. Accessed 26 Feb 2020 Heliskoski J (2019) The exercise of non-exclusive competence of the EU and the conclusion of international agreements. In: Lenaerts K, Bonichot J-C, Kanninen H, Naômé C, Pohjankoski P (eds) An ever-changing union? Perspectives on the future of EU law in honour of Allan Rosas. p 293 Kleimann D, Kübek G (2017) The Singapore opinion or the end of mixity as we know it. https:// verfassungsblog.de/the-singapore-opinion-or-the-end-of-mixity-as-we-know-it/. Accessed 26 Feb 2020 Lenk H, Gáspár-Szilágyi S (2017) Case C-600/14, Germany v Council (OTIF). More clarity over facultative ‘mixity’?  https://europeanlawblog.eu/2017/12/11/case-c-60014-germany-v-council-otif-more-clarity-over-facultative-mixity/. Accessed 26 Feb 2020 Montanaro F, Paulini S (2018) United in mixity? The future of the EU Common Commercial Policy in light of the CJEU’s recent case law. https://www.ejiltalk.org/united-in-mixity-thefuture-of-the-eu-common-commercial-policy-in-light-of-the-cjeus-recent-case-law/. Accessed 26 Feb 2020 Samoilova E (2016) Vertragsübergreifende Abkommen. Die GASP in internationalen Übereinkünften der EU. Nomos, Baden-Baden Schwichtenberg K (2014) Die Kooperationsverpflichtung der Mitgliedstaaten der Europäischen Union bei Abschluss und Anwendung gemischter Verträge. Verlag Peter Lang, Frankfurt a.M. Wessel R (2010) Cross-pillar mixity: combining competences in the conclusion of the EU international agreements. In: Hillion C, Koutrakos P (eds) Mixed agreements in EU law revisited. Oxford, pp 30–54 Andreas J. Kumin  is a judge at the Court of Justice of the European Union and lecturer at various universities. He graduated in law and is a Doctor of Laws at the University of Graz, Austria. He achieved a diploma in translation at the University of Graz and a diploma in public administration at the École nationale d’administration, France. He worked as an official of the Austrian Ministry of Foreign Affairs until 2019 and was a member and head of its European Law Department. He is the author of numerous works on European Union law.

The Ratification Saga of the EU-Ukraine Association Agreement: Some Lessons for the Practice of Mixed Agreements Peter Van Elsuwege

1  Introduction On 6 April 2016, a referendum on the approval of the Association Agreement (AA) between the European Union (EU), its Member States and Ukraine1 was organised in the Netherlands. This was the direct result of the Dutch Advisory Referendum Act (DAR), which existed between 1 July 2015 and 10 July 2018.2 According to this Act, a minimum of 300,000 citizens could initiate an advisory referendum on most laws and treaties after these had been approved by both chambers of parliament. To be valid, at least 30% of the electorate had to participate. This threshold was just met (32% of participants) in the so-called ‘Ukraine referendum’ with over 61% of the voters indicating that they rejected the approval of the AA in the Netherlands. Despite its non-binding nature, the outcome of the referendum created significant political and legal problems. Politically speaking, Dutch governmental and parliamentary representatives had committed themselves to take the result of the referendum seriously, implying that the mere continuation of the internal ratification process was not an option. Consequently, several legal problems emerged since the EU-Ukraine AA could only enter into force upon the approval of all parties.3 Although it already happened in the past that a third country failed to ratify a mixed agreement with the EU, leading to the addition of an adjustment protocol clarifying 1  Association Agreement between the European Union and its Member States, of the one part, and Ukraine, of the other part, O.J. (2014) L 161/3. 2  For more information concerning the key features and repeal of the DAR, see: https://www.parlement.com/id/vh8lnhrsk1yq/raadgevend_referendum (last consultation on 26 February 2019). 3  Art. 486 of the EU-Ukraine AA.

P. Van Elsuwege (*) Ghent University, Ghent, Belgium e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 S. Lorenzmeier et al. (eds.), EU External Relations Law, https://doi.org/10.1007/978-3-030-62859-8_6

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that this country would not become a party to the agreement,4 the situation after the Dutch referendum was significantly more complicated. For the first time, an EU Member State was on the verge of not ratifying a mixed agreement. Without a solution for the Dutch situation, the Council could not adopt the final Decision regarding the conclusion of the agreement. At the same time, however, a significant part of the agreement had already provisionally entered into force raising questions about the limits of this practice. Hence, the Dutch ratification saga opened the gates to a more broader discussion about the consequences of the non-ratification of mixed agreements concluded between the EU, its Member States and one or more third countries. This contribution will not comprehensively deal with this issue,5 but will only reflect upon the EU’s response to the legal and political challenges related to the entry into force of the EU-Ukraine AA. After a brief contextual explanation of the political and legal background of the referendum, specific attention is devoted to the ‘Decision of the EU Heads of State or Government, meeting within the European Council’, adopted as an annex to the 15 December 2016 European Council conclusions, which opened the gates to the ratification of the EU-Ukraine AA in the Netherlands and at the level of the EU.6 To conclude, some general reflections are made on the broader implications of the Dutch referendum saga for the practice of mixed agreements.

2  Political and Legal Background of the Referendum An EU-critical foundation (Burgercomité EU) and a popular anti-establishment blog (GeenStijl) joined forces—under the name GeenPeil—and gathered the necessary 300,000 signatures to call for a referendum on the approval of the EU-Ukraine Association Agreement in April 2016. That precisely this agreement became the subject of a public debate was a mere coincidence and can only be explained based on timing. It was simply the first legal text approved in the Dutch parliament after the DAR entered into force and, therefore, the first occasion to test its implications in practice. It is striking that none of the official bodies gave a clear-cut answer to the question about what would happen in case the Dutch citizens would reject the Approval Act of the EU-Ukraine AA. Prime Minister Rutte communicated that the government would simply wait for the outcome of the referendum before deciding on its

4  See, for instance, the Protocol Adjusting the Agreement on the European Economic Area (O.J. (1994) L 1/572), which was adopted following the rejection of this agreement in a Swiss referendum. The protocol provided that all references to the Swiss Confederation in the preamble and several provisions of this agreement shall be deleted. 5  For a more detailed discussion on this issue, see Van der Loo and Wessel (2017). 6  European Council Conclusions, Brussels, 15 December 2016, EUCO 34/16.

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implications.7 The European Parliament simply took note of the upcoming referendum and trusted that “the decision of the Dutch people will be taken on the basis of the merits of the agreement, recognising its tangible effects on the EU and the Netherlands in particular.”8 European Commission President Juncker, for his part, warned the Dutch population that a no vote could “open the door to a large continental crisis” without however clarifying why this would be the case.9 In other words, neither the Dutch government nor the EU institutions had a clear plan on how to deal with a potential ‘no’ vote in the referendum. Immediately after the referendum, Dutch Prime Minister Rutte announced a “reflection period” to study the different options to address the main concerns of the Dutch electorate while still enabling the Netherlands to ratify the agreement.10 In principle, the legal implications of a Dutch ‘no’ vote could have been rather limited. The referendum was non-binding and, therefore, did not preclude the continuation of the ratification from a legal point of view. However, from a political perspective, the political leaders could not simply ignore the outcome. This also happened after the consultative referendum on the Treaty establishing a Constitution for Europe back in 2005. Despite its consultative nature, the ‘no’ vote in that referendum implied that the Netherlands was unable to ratify the constitutional treaty. Considering the requirements of the EU Treaty amendment procedure (Article 48 TEU), this treaty could therefore simply not enter into force. One may argue that also the EU-Ukraine AA, as a so-called mixed agreement signed by the EU and its (at that time) 28 Member States, potentially faced a similar fate. However, there are significant differences between the amendment of EU primary law and the ratification of a mixed agreement. Most importantly, a large part of the EU-Ukraine AA falls within the scope of the EU (exclusive and shared) competences and already provisionally entered into force upon signature of the agreement.11   ‘Kabinet geeft vooraf geen duidelijkheid over gevolgen referendum’, at: https://nos.nl/ artikel/2063440-kabinet-geeft-vooraf-geen-duidelijkheid-over-gevolgen-referendum.html (last consultation on 3 April 2019). 8  Press release of European Parliament plenary session of 21 January 2016, at: http://www.europarl. europa.eu/news/en/press-room/20160114IPR09906/meps-urge-moldova-georgia-ukraine-to-pursue-reform-and-russia-to-leave (last consultation on 3 April 2019). 9  ‘Juncker: Dutch ‘no’ on Ukraine would lead to ‘constitutional crisis’, available at: https://euobserver.com/tickers/131760. 10  Van den Dool (2016). 11  Council Decision 2014/295/EU of 17 March 2014 on the signing, on behalf of the European Union, and provisional application of the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part, as regards the Preamble, Article 1, and Title I, II and VII thereof (O.J., 2014, L 161/1) and Council Decision 2014/668/EU of 23 June 2014 on the signing, on behalf of the European Union, and provisional application of the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part, as regards Title III (with the exception of the provisions relating to the treatment of third-country nationals legally employed as workers in the territory of the other Party) and Titles IV, V, VI and VII of the Agreement, as well as the related Annexes and Protocols (O.J., 2014, L 278/1). 7

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3  The Issue of Provisional Application The provisional application of mixed agreements is a common technique to overcome the long ratification procedure in all EU Member States.12 This was also explicitly foreseen in Article 486 of the EU-Ukraine AA, according to which the parties agreed to provisionally apply specific parts of the agreement under their respective internal procedure and legislation. Within the EU legal order, this is subject to the adoption of an EU Council decision under Article 218 (5) TFEU.13 Given the political significance of the EU-Ukraine AA, the Council agreed on an exceptional wide scope for provisional application, including, inter alia, the entire title on General Principles (Title I) and Financial Cooperation (Title VI), almost the entire DCFTA (Title IV), Institutional, General and Final Provisions (Title VII) and several provisions on political dialogue (Arts. 4–6), Justice, Freedom and Security (Arts. 14 and 19) and economic and sectoral cooperation.14 The Council decisions further clarified that the listed provisions shall be applied on a provisional basis “only to the extent that they cover matters falling within the Union’s competence” without however specifying the precise division between the EU and Member State competences. This constructive ambiguity is not very problematic when the Member States approve the agreement without any further considerations. In the case of the Dutch referendum, however, it resulted in a rather complex legal and political reality. Formally speaking, the Dutch referendum only concerned the Approval Act of the EU-Ukraine AA as adopted in the Dutch Parliament. It, therefore, only dealt with the participation of the Netherlands to the agreement. As far as the EU’s participation is concerned, a separate ratification procedure under Article 218 TFEU implies a proposal of the Commission, the consent of the European Parliament and the adoption of a Council decision concluding the agreement. However, this legal logic of mixity is difficult to respect in the absence of a clear separation between the provisions falling under the EU and Member State competences. The Dutch Approval Act did not specify which parts of the AA it covered and, therefore,  For a detailed analysis of the provisional application of international agreements concluded by the EU, Flaesch-Mougin and Bosse-Platière (2014). 13  Article 218 (5) TFEU provides that the Council ‘shall adopt a decision authorising the signing of the agreement and, if necessary, its provisional application before entry into force’. 14  Combined reading of Council Decision 2014/295/EU of 17 March 2014 on the signing, on behalf of the European Union, and provisional application of the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part, as regards the Preamble, Article 1, and Title I, II and VII thereof (O.J., 2014, L 161/1) and Council Decision 2014/668/EU of 23 June 2014 on the signing, on behalf of the European Union, and provisional application of the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part, as regards Title III (with the exception of the provisions relating to the treatment of third-country nationals legally employed as workers in the territory of the other Party) and Titles IV, V, VI and VII of the Agreement, as well as the related Annexes and Protocols (O.J., 2014, L 278/1). 12

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implied that the precise scope of the actual referendum was not clearly defined.15 In any event, the referendum campaign was not limited to issues of Member State competence but concerned the approval of the AA as a whole. Although this may not be entirely correct from a legal point of view, it seems politically speaking very difficult to make a neat distinction between the EU and Member State level of ratification. Without the internal approval of the Netherlands, the Council could not adopt its final decision regarding the conclusion of the agreement. Significantly, the negative outcome of the Dutch referendum did not affect the provisional application of the AA. This is logical since the latter only concerned those matters falling within the Union’s competence. However, in the absence of a deadline for the finalisation of the ratification process, the question emerged whether the provisional application could continue infinitely if one of the Member States failed to finalise the ratification process. In this respect, it appears that the duty of sincere cooperation, laid down in Article 4(3) TEU, plays a significant role. It follows from the established case law of the Court of Justice that Member States and EU institutions are bound to cooperate closely in the process of negotiation and conclusion of mixed agreements, including at the stage of ratification.16 Of course, this duty cannot imply that Member States are obliged to ratify the agreement in the end. As observed by Van der Loo and Wessel, this would not only undermine the meaning of national ratifications but it would also violate the fundamental international law principle that a consent to be bound can only be expressed voluntarily.17 However, it may well be argued that the duty of sincere cooperation requires the Members States to take action to define a final position on their approval or disapproval of the agreement. In other words, a deliberate obstruction or indefinite postponement of the internal ratification procedure would contradict the Member States’ duties under Article 4 (3) TEU. In the hypothesis that a Member State finally rejects the internal ratification of a mixed agreement, a new problem emerges in the sense that this does not automatically terminate its provisional application. The latter is a matter of EU competence and is based upon a Council decision adopted on the legal basis of Article 218 (5) TFEU. It is, therefore, logical that a termination of the provisional application follows the same procedure.18 However, mixed agreements often only generally  As observed by Van der Loo and Wessel, “the Dutch citizens could not know what they were voting for”. See: Van der Loo and Wessel (2017), p. 758. As suggested by Kuijper, it is therefore recommendable that the national approval acts of mixed agreements should contain a proviso clarifying that they only concern the approval of those elements falling within Member State competences. See: Kuijper (2016). 16  See, inter alia, Opinion of 15 November 1994, WTO, 1/94, EU:C:1994:384, para. 108, and Opinion of 6 December 2001, Protocole de Cartagena sur la prévention des risques biotechnologiques, 2/00, EU:C:2001:664, para. 18; and Judgment of 20 April 2010, Commission v. Sweden, C-246/07, EU:C:2010:203, para. 73, and Judgment of 28 April 2015, Commission v Council, C-28/12, EU:C:2015:282, para. 54; Opinion of 19 March 1993, ILO Convention, 2/91, EU:C:1993:106, para. 38. 17  Van der Loo and Wessel (2017), p. 744. 18  Ibid., p. 761. 15

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provide that “either party may give written notification to the Depository of its intention to terminate the provisional application of this agreement.”19 This has been interpreted, amongst others by the German Constitutional Court in relation to the EU-Canada Comprehensive Economic Trade Agreement (CETA), as a right for EU Member States to unilaterally terminate the provisional application.20 Nevertheless, to put such a Member State decision into effect, an EU Council decision would still be needed. This can also be derived from the proviso “in accordance with EU procedures” in a statement from the Council on the termination of provisional application of CETA: If the ratification of CETA fails permanently and definitively because of a ruling of a constitutional court, or following the completion of other constitutional processes and formal notification by the government of the concerned state, provisional application must be and will be terminated. The necessary steps will be taken in accordance with EU procedures.21

The only remaining issue is then whether the EU is under a legal obligation, as a matter of EU law, to effectively terminate the provisional application of the agreement once it has become clear that a Member State has permanently and definitely failed to ratify a mixed agreement. There are certain arguments for such a conclusion. First, the EU institutions are also bound by the duty of sincere cooperation and must, therefore, respect the decision of EU Member States not to become party to a mixed agreement. Second, the practice of provisional application can only be tolerated in anticipation of the agreement’s entry into force. When it is clear that an agreement will not fully enter into force because of the decision of non-ratification in one or more Member States, the legal basis for provisionally applying the EU’s international agreements no longer exists.22 The main difficulty, of course, concerns the determination of a Member State’s permanent and definitive inability of ratification. Arguably, a ruling of a Constitutional Court that an agreement is inconsistent with the national constitutional order may constitute such a situation but even then the option of a national constitutional amendment should not be excluded. Moreover, it appears that also the reason for non-ratification is to be considered. For instance, withholding ratification to obtain additional commercial concessions from a third country seems unacceptable in light of the Member States’ duty of sincere cooperation and the exclusive nature of the EU’s competence in this respect.23 Finally, even in the hypothesis that EU institutions adopt the necessary instruments to terminate the provisional application of a mixed agreement because of internal ratification obstruction in one of the EU Member States, the question  E.g. Art. 486 of the EU-Ukraine AA.  Bundesverfassungsgericht, 2 BvR 1368/16. Applications for a Preliminary Injunction in the “CETA” Proceedings Unsuccessful. Press Release No. 71/2016 of 13 October 2016. Retrieved from https://www.bundesverfassungsgericht.de/SharedDocs/Pressemitteilungen/EN/2016/ bvg16-071.html (last consultation on 3 April 2019). 21  Statement from the Council regarding the termination of provisional application of CETA, O.J. (2017) L 11/15. 22  See: Suse and Wouters (2018), p. 199. 23  Ibid. 19 20

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remains whether a so-called ‘incomplete’ mixed agreement can be concluded instead. The notion of incomplete mixity implies that the EU and the remaining Member States that have ratified the agreement can go ahead.24 Although there are several examples of ‘incomplete’ multilateral mixed agreements, significant legal hurdles need to be overcome to apply this mechanism in relation to bilateral mixed agreements. This essentially concerns the procedural requirement that the latter agreements can only enter into force upon ratification by all the parties and the already explained ambiguity surrounding the precise delimitation of the EU and Member State competences.25 Hence, considering the numerous legal and political uncertainties and complexities, it is obvious that the decision to terminate the provisional application of a mixed agreement due to ratification problems in an EU Member State is only to be considered as a last resort. The outcome of the Dutch referendum provided a good opportunity to reflect upon the various options to reconcile the concern of the Dutch voters, on the one hand, and the general interest in proceeding with the ratification process of the AA, on the other hand. From a legal perspective, the easiest solution would have been the addition of a unilateral declaration on behalf of the Netherlands. Such a declaration could clarify the Dutch views on the interpretation of certain provisions but, given its unilateral and non-binding nature, its legal implications would be rather limited. It was, therefore, quickly ruled out as a potential solution within the domestic debate. The other alternative of an opt-out for the Netherlands in the form of a binding protocol sounded more attractive from a Dutch perspective but appeared much more difficult to achieve in the sense that it required the approval of all other parties to the agreement. Ultimately, a rather creative solution was found in the form of a Decision of the EU Heads of State or Government, adopted as an annex to the 15 December 2016 European Council conclusions.26 As will be explained in detail in the following section, this option reconciled the Dutch call for a binding solution with the other parties’ interest in a finalisation of the ratification procedure without any amendments to the text of the AA.

 Van der Loo and Wessel (2017), p. 740.  Ibid., pp. 746–758. 26  Decision of the Heads of State or Government of the 28 Member States of the European Union, meeting within the European Council, on the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part, Annex to the European Council Conclusions on Ukraine (15 December 2016), available at: https://www.consilium.europa.eu/nl/press/press-releases/2016/12/15/eucoconclusions-ukraine/ (last consultation on 8 April 2019). 24 25

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4  A Creative Solution to the Conundrum The formula of a ‘Decision of the EU Heads of State or Government, meeting within the European Council’ is not new in the EU’s legal practice. It has been used in the past to agree on certain guarantees for Denmark and Ireland in the wake of the negative referenda on the Treaty of Maastricht (December 1992) and the Treaty of Nice (June 2009) respectively and to decide on the location of the seats of a number of EU institutions and bodies. More recently, the “new settlement for the United Kingdom within the European Union”, adopted before the Brexit referendum in response to David Cameron’s request for a binding and irreversible new deal, also followed the same logic. In that context, an opinion of the Council’s legal service already observed that this is “a Decision of the Member States of the European Union, of an intergovernmental nature, not a Decision of the European Council as an institution of the European Union”.27 In other words, the Decision is an instrument of international law by which the Member States agree on how they understand the EU-Ukraine AA. The European Council conclusions and an opinion of the European Council’s legal counsel explicitly note that the Decision is legally binding on the Member States and can only be amended or repealed by common accord of their Heads of State or Government.28 Both the title and the content of the instrument point in that direction. Yet, the legal implications are limited to the EU Member States alone: its provisions cannot create any legal obligations for Ukraine (unless Ukraine would formally declare its acceptance of the Decision). In that sense, it differs from the Joint Interpretative Instrument on the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU and its Member States.29 The latter is a binding source of interpretation in the sense of Article 31 of the Vienna Convention on the Law of Treaties (VCLT). A similar solution was used in relation to the Withdrawal Agreement between the EU and the UK. To provide the UK with additional legal guarantees on the interpretation of certain provisions of this agreement, most notably on the future border between Ireland and Northern Ireland, an additional ‘Instrument’ was agreed between the parties on 11 March 2019. The latter expressly refers to Article 31 VCLT to underline that it is a legally binding clarification of what the parties agreed

 Opinion of the Legal Counsel regarding the Draft Decision of the Heads of State or Government, meeting within the European Council, concerning a new settlement for the United Kingdom within the European Union, Brussels, 8 February 2016, EUCO 15/16. 28  Opinion of the Legal Counsel regarding the Draft Decision of the Heads of State or Government, meeting within the European Council, on the association agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part, Brussels, 12 December 2016, EUCO 37/16. 29  Joint Interpretative Statement on the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union and its Member States, O.J. (2017) L 11/3. 27

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in a number of provisions of the Withdrawal Agreement, which can be used as a document of reference if issues arise on the implementation of this agreement.30 The Decision on the EU-Ukraine AA, on the other hand, is of a different nature. It is a unilateral interpretation which can only be used to assess the intentions of the EU Member States when becoming parties to the agreement. It does not prejudice the interpretative position of Ukraine and cannot affect the content of the rights and obligations contained in the agreement itself. The Decision also does not entail a formal reservation or opt-out from specific provisions of the agreement. Hence, upon finalisation of the ratification requirements, the EU-Ukraine AA fully entered into force as a mixed agreement binding upon the EU and all its Member States. As such, its legal status is similar to that of the largely comparable AAs with Moldova and Georgia, which were not subject to a popular referendum and already entered into force without major discussions. The Decision identifies six issues representing the main concerns that were raised during the referendum, i.e. the link between the agreement and Ukraine’s membership perspectives, the consequences of cooperation in the field of security, access to the national labour market, the financial implications of the agreement and, finally, problems of corruption and the state of the rule of law and democracy in Ukraine. Hence, the Decision must be regarded as an answer to the often false information that was spread during the referendum campaign. For instance, the ‘no-­ camp’ proclaimed that the AA is an entry ticket towards Ukraine’s future EU membership, potentially leading to the involvement of Dutch soldiers in the Donbas region and a significant increase of financial support to a largely corrupt political system. In essence, the Decision only confirms the text of the AA. This is particularly clear on the importance of the fight against corruption and respect for democratic principles, human rights and fundamental freedoms and the rule of law as ‘essential elements’ of the association and the possibility to adopt appropriate measures in case of non-fulfilment of obligations. This can with so many words be derived from Articles 2, 3, 14, 22, 459 and 478 of the AA. Moreover, on other issues, the Decision merely states the obvious. The AA does not provide for free movement of persons and only includes a modest section on mobility of workers (Article 18), which is nothing more than a stand-still provision. In the field of security cooperation, Articles 7 and 10 of the Agreement refer to the aim of gradual convergence in the area of foreign and security policy but this clearly falls short of providing for collective security guarantees. Finally, also on the membership issue, it is plainly evident that nothing in the AA leads to the conclusion that Ukraine is granted the status of a candidate country. Nevertheless, the agreement neither excludes Ukraine’s right to apply for membership under Article 49 TEU nor does it predetermine the EU’s position if such a hypothetical scenario would materialise. The Decision does not and  Instrument relating to the agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, TF50 (2019) 61, 11 March 2019, available at: https://ec.europa.eu/commission/sites/beta-political/ files/instrument.pdf (last consultation on 8 April 2019).

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cannot affect this reality; it simply observes that there is no direct or automatic connection between the AA and Ukraine’s membership perspectives.

5  Concluding Remarks The Decision of the EU Heads of State or Government proved to be a legally creative solution, which allowed to overcome the deadlock in the ratification process of the EU-Ukraine AA. It allowed the Dutch parliament and the Council to finalise all remaining ratification procedures so that the agreement could fully enter into force on 1 September 2017. From a legal point of view, the implications of this solution are limited. It neither changed a letter to the text of the agreement nor did it impose any additional legal commitments on the parties. However, from a political point of view, it signals the Member States’ cautious approach on the grant of potential membership perspectives to Ukraine in the future. Moreover, the adoption of a decision on the interpretation of key provisions of the agreement after most parties and their parliaments already approved this agreement can hardly be regarded as a good practice.31 Instead of constructing ex post solutions to unexpected problems in the ratification process, a more proactive approach in the practice of concluding mixed agreements seems recommendable. In the first place, the question arises whether the option for mixity is always required. It is well known that the choice for mixity is not necessarily a result of legal orthodoxy but frequently the consequence of crude political interests on behalf of the Member States.32 Second, in cases where the mixed formula is deemed appropriate, the early involvement of national parliaments may prevent the emergence of ratification problems at a later stage. In practice, the role of national parliaments in the conclusion of mixed agreements is often disregarded. However, as illustrated with the Dutch referendum saga as well as the discussion relating to CETA,33 their role cannot be underestimated. In addition to the European Parliament, which has the right to be directly informed about all stages of the negotiating procedure under Article 218 (10) TFEU, national parliaments are expected to monitor and control the actions of their national governments in the Council and to stimulate a domestic debate concerning the content and significance of international agreements before their actual conclusion.34 Third, the Dutch referendum saga revealed the importance of the duty of sincere cooperation in managing the ratification process of mixed agreements. Considering that EU Member States cannot unilaterally terminate the provisional application of mixed agreements, which only concerns the areas falling under the EU competence, the involvement of

 Wessel (2016), p. 1308.  Rosas (2010), p. 367. 33  On CETA, see e.g. Dolle and Simoes (2016) and Kleimann and Kübek (2018). 34  Van der Loo (2018). 31 32

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the EU institutions is indispensable to deal with a potential non-ratification at the national level. At the same time, the duty of sincere cooperation requires the EU institutions to respect the outcome of the Member States’ internal ratification process. Consequently, a system of ‘checks and balances’ may be observed where all parties involved are required to work together to ensure the smooth entry into force of mixed agreements.

References Dolle T, Simoes BG (2016) Mixed feelings about “mixed agreements” and CETA’s provisional application. Eur J Risk Reg 3:617–622 Flaesch-Mougin C, Bosse-Platière I (2014) L’application provisoire des accords de L’Union Européenne. In: Govaere I, Lannon E, Van Elsuwege P, Adam S (eds) The European Union in the World. Essays in Honour of Marc Maresceau. Martinus Nijhoff Publishers, Boston-Leiden, pp 293–323 Kleimann D, Kübek G (2018) The signing, provisional application and conclusion of Trade and Investment Agreements in the EU: the case of CETA and Opinion 2/15. LIEI 1:13–46 Kuijper P-J (2016) Post-CETA: how we got there and how to go on. ACELG Blog, 28 Oct. 2016, at: https://acelg.blogactiv.eu/2016/10/28/ post-ceta-how-we-got-there-and-how-to-go-on-by-pieter-jan-kuijper/ Rosas A (2010) The future of mixity. In: Hillion C, Koutrakos P (eds) Mixed agreements revisited. The EU and its Member States in the World. Hart Publishing, Oxford, pp 367–374 Suse A, Wouters J (2018) The provisional application of the EU’s Mixed Trade and Investment Agreements. In: Bosse-Platière I, Rapoport C (eds) The conclusion and implementation of EU Free Trade Agreements. Constitutional challenges. Edward Elgar, Cheltenham, pp 176–202 Van den Dool (2016) Rutte: Resultaat Oekraïne referendum desastreus. NRC Handelsblad, 13 June 2016 Van der Loo G (2018) Less is more? The role of national parliaments in the conclusion of (mixed) trade agreements. CLEER Working Papers 2018/1, available at: https://www.asser.nl/cleer/ publications/cleer-papers/cleer-paper-20181-van-der-loo/ (last consultation on 8 April 2019) Van der Loo G, Wessel R (2017) The non-ratification of mixed agreements: legal consequences and solutions. Common Mark Law Rev 3:735–770 Wessel R (2016) The EU solution to deal with the Dutch referendum result on the EU-Ukraine Association Agreement. Eur Pap 3:1305–1309 Peter  Van Elsuwege  is a professor of EU law and a Jean Monnet Chair at Ghent University, where he is a co-director of the Ghent European Law Institute (GELI). He is also a visiting professor at the College of Europe (Natolin Campus) and a board member of the Centre for the Law of EU External Relations (CLEER) at the Asser Institute in The Hague. His research activities essentially focus on the law of EU external relations. Specific attention is devoted to the legal framework of the relations between the European Union and its East European neighbours.

The EU-Swiss Sectoral Approach Under Pressure: Not Least Because of Brexit Christa Tobler

1  Introduction: The EU-Swiss Agreements Situated in the Western part of Europe, Switzerland is fully surrounded by states belonging to the European Economic Area (EEA), more specifically the EEA/EFTA State Liechtenstein and the EU Member States Austria, France, Germany and Italy. Almost 30 years ago, the Swiss Federal Government favoured an association of Switzerland to the then European Communities through EEA membership, intended by it as a stepping stone towards Community membership. In 1992, the Federal Government sent a letter to Brussels requesting talks about a possible accession. At that time, Switzerland was instrumental in negotiating the EEA Agreement (Nell 2012). However, following the signing of the EEA Agreement by the Federal Government, a negative popular vote ended the plans for EEA membership (Freiburghaus 2015) and thereby also the government’s plans for Switzerland to eventually join these Communities. Indeed, the letter of 1992 was formally withdrawn in 2016. Following the negative vote on EEA membership, Switzerland continued on the path, commenced in the 1950s, of negotiating sectoral or bilateral agreements, first with the European Communities and subsequently with the EU. Today, there is a large number of EU-Swiss agreements covering many diverse issues, both economic and non-economic, and making up what in Switzerland is commonly referred to as the “bilateral law”.1 In terms of the EU’s internal legal basis for this system, 1  For brief introductions to the EU–Swiss bilateral law in the English language, see Pirker (2017) and Oesch (2018). A fact sheet of the Swiss Federal Government providing an overview on the

C. Tobler (*) Basel University, Basel, Switzerland Leiden University, Leiden, The Netherlands e-mail: [email protected]; [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 S. Lorenzmeier et al. (eds.), EU External Relations Law, https://doi.org/10.1007/978-3-030-62859-8_7

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only one particular package of (mostly) economic agreements—namely the so-­ called “Bilaterals I” of 1999, including notably the Agreement on the Free Movement of Persons (FMPA)2—is formally based on the association provision of Art. 217 TFEU. Two additional agreements in the fields of asylum and border law, namely the Schengen3 and Dublin4 Agreements of 2004, represent associations of a different kind and so does the Research Agreement of 2014,5 which is a successor to a number of previous agreements linking Switzerland to the EU’s research framework programmes. In the economic context, it is important to understand that, different from EEA law which fully extends the EU’s internal market law to the EEA/EFTA States, the EU-Swiss bilateral law only leads to a partial association of Switzerland to the EU’s internal market. Further, the institutional framework is distinctly different from that of the EEA, namely considerably less developed. Overall, the Swiss-EU bilateral agreements represent a unique type of legal relationship of the EU with its largest European neighbour, namely the EU, resulting in a distinct legal system that has been called “complex, almost beyond comprehension” (Ott 2017, p. 170). It is also a model that, before the advisory vote of 26 June Swiss foreign European policy is available in English, see https://www.eda.admin.ch/dam/dea/en/ documents/fs/00-FS-Europapol-lang_en.pdf (accessed 9 March 2020), as well as another fact sheet on the development of the legal relationship with the Union, see https://www.eda.admin.ch/ dam/dea/en/documents/fs/FS-Entwicklung-Beziehungen-CH-EU_en.pdf (accessed 9 March 2020). General information provided by the European Commission’ External Action Service (EEAS) is also available in English, see http://eeas.europa.eu/switzerland/index_en.htm (accessed 9 March 2020). Textbooks providing a more detailed overview on the EU–Swiss Agreements tend to be written in the German language; see e.g. Oesch (2019), with further references. 2  Agreement of 21 June 1999 between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other, on the free movement of persons, [2002] O.J. L 114/6 (for Switzerland: SR 0.142.112.681; note: different from the O.J., the SR provides for consolidated versions of the agreements in the country’s three official languages German, French and Italian). With the following enlargement protocols: extension to the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and the Slovak Republic (Enlargement Protocol 1): [2006] O.J. L 89/30, AS 2006 995; extension to Bulgaria and Romania (Enlargement Protocol 2): [2009] O.J. L 124/53, AS 2009 2491; extension to Croatia (Enlargement Protocol 3): [2017] O.J. L 31/3, AS 2016 5261. 3  Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederation’s association with the implementation, application and development of the Schengen acquis; [2008] O.J. L 53/52 (for Switzerland: SR 0.362.31); as extended to Liechtenstein, [2011] O.J. L 160/3 (for Switzerland: SR 0.362.311). 4  Agreement between the European Community and the Swiss Confederation concerning the criteria and mechanisms for establishing the State responsible for examining a request for asylum lodged in a Member State or in Switzerland, [2008] O.J. L 53/5 (for Switzerland: SR 0.142.392.68); as extended to Liechtenstein, [2011] O.J. L 160/139 (for Switzerland: SR 0.142.395.141). 5  Agreement for scientific and technological cooperation between the European Union and European Atomic Energy Community and the Swiss Confederation associating the Swiss Confederation to Horizon 2020—the Framework Programme for Research and Innovation and the Research and Training Programme of the European Atomic Energy Community complementing Horizon 2020, and regulating the Swiss Confederation’s participation in the ITER activities carried out by Fusion for Energy, for the EU O.J. 2014 L 370/3, (for Switzerland SR 0.424.11).

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2016  in the United Kingdom of Great Britain and Northern Ireland (UK) on the issue of leaving the Union (“Brexit”), was studied by the then UK Government in view of a potential alternative relationship with the EU after withdrawal from the Union.6 However, the new government established after the vote stated that it was aiming neither at this nor at any other pre-existing model (but rather at “a new, comprehensive, bold and ambitious free trade agreement”).7 In fact, it should be noted that the “Switzerland model” as it exists at present has never been on offer from the EU side. In the present writer’s estimation, this concerns both the substantive extent (or rather: limits) and the present institutional framework of that system. Indeed, in both respects the “Switzerland” model has come under political pressure. In spring 2014, Switzerland and the EU began negotiating a renewed institutional framework for a limited number of existing as well as for future market access agreements. The pressure resulting from that development is one of two major topics of the present contribution. The second topic concerns the developments within Switzerland on limiting migration from the EU with the potential of endangering the very existence of a key part of the bilateral system. In both respects, the political developments around Brexit—where the same issues also play an important role—have had the effect of increasing the pressure on the EU-Swiss system. As will be seen below, both pressure points relate to Switzerland’s access to the EU’s internal market and to the EU’s insistence on homogeneity in this respect. Whilst there may be a marked trend towards more flexibility inside the EU in various policy fields, to the point of making differentiated integration a structural characteristic that is necessary to help prevent a breakdown of the EU integration project (De Witte et  al. 2017, p.  6), vis-à-vis closely related neighbouring states like Switzerland, the EU’s rhetoric has increasingly emphasised the need for homogeneity when it comes to its traditional core project, namely the internal market. The discussion begins with the negotiations on the institutional issues (below Sect. 2) and then moves on to migration and free movement (below Sect. 3). The following account essentially consists of a description of the legal and political context, in line with the modest aim to provide information that enables a comparative discussion in a situation where the model of the Swiss-EU relationship is much cited but often little known in the political and legal discourse. 6  UK Government, Cabinet Office, Alternatives to Membership: possible models for the United Kingdom outside the European Union (March 2016), https://www.gov.uk/government/publications/alternatives-to-membership-possible-models-for-the-united-kingdom-outside-the-europeanunion (accessed 9 March 2020); before that e.g. Dhingra and Sampson (2016) and Piris (2016). 7  Prime Minister Theresa May in her “Lancaster House speech” of 17 January 2017: “We are leaving the European Union, but we are not leaving Europe. And that is why we seek a new and equal partnership – between an independent, self-governing, Global Britain and our friends and allies in the EU. Not partial membership of the European Union, associate membership of the European Union, or anything that leaves us half-in, half-out. We do not seek to adopt a model already enjoyed by other countries.”; The government’s negotiating objectives for exiting the EU: PM speech, https://www.gov.uk/government/speeches/the-governments-negotiating-objectives-for-exitingthe-eu-pm-speech (accessed 9 March 2020).

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2  A  First Pressure Point: The Institutional Framework of Certain Market Access Agreements 2.1  The Emergence of the “Institutional Issues” The first pressure point discussed in the present contribution concerns the institutional framework of the EU-Swiss legal relationship, that is, the rules relating to the interpretation, supervision and enforcement of the agreements as well as their revision and, more specifically, their adaptation to new EU law in the relevant field. Compared to the EU and EEA law, the institutional framework of the present EU-Swiss agreements is modest, notably on the Swiss side (on the EU side, the usual EU procedures apply, including in particular the preliminary ruling procedure under Art. 267 TFEU and the infringement procedure under Art. 258 TFEU et seq.). In addition, the system lacks homogeneity as different agreements contain different rules. There are various Joint Committees that oversee the administration of the different agreements. In the beginning of the twenty-first century, the Swiss think tank, “Groupe de réflexion Suisse-Europe”, proposed an administrative simplification through the creation of a single framework for all existing agreements, with one single Joint Committee.8 However, this led nowhere. Subsequently the EU, having in mind increased homogeneity of Switzerland’s market access agreements with the EU law from which these agreements are derived in terms of their substance, suggested a revision of the institutional framework of certain bilateral agreements. The EU’s wish for more homogeneity has to be seen against the background of the view, developed over time within the political institutions of the EU and apparently becoming ever stronger, that today the Union’s internal market exists in an enlarged or extended form, and as such represents not just an internal EU project but rather a multilateral project with an external dimension through the participation— although to different degrees—of Switzerland and of the EEA/EFTA states Iceland, Liechtenstein and Norway (e.g. Tobler et al. 2010; Tobler and Baur 2015).9 8  Documents on file with the author. The think tank’s website is www.groupe-suisse-europe.ch (accessed 9 March 2020). See now also Müller (2020), p. 36. 9  For completeness, it should be added that the European Parliament has demanded a renegotiation of several EU-Swiss agreements in a wholly different context, namely that of money laundering, tax avoidance and tax evasion. Para. 150 of the Parliament’s Recommendation following the inquiry on money laundering, tax avoidance and tax evasion of 13 December 2017 reads: “Stresses that the EU should renegotiate its trade, economic and other relevant bilateral agreements with Switzerland to bring them into line with EU anti-tax fraud policy, anti-money laundering legislation and legislation on the financing of terrorism, so as to eliminate serious flaws in the Swiss supervisory system which enable a policy of internal banking secrecy to continue, the creation of offshore structures worldwide, tax fraud, tax evasion not constituting a criminal offence, weak supervision, the inadequate self-regulation of obliged entities, and aggressive prosecution and intimidation of whistle-blowers[.]”; http://www.europarl.europa.eu/sides/getDoc.do?pubRef=%2f%2fEP%2f%2fTEXT%2bTA%2bP8-TA-2017-0491%2b0%2bDOC%2bXML%2bV0%2f%2 fEN&language=EN (accessed 9 March 2020).

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The Swiss Federal Government agreed to open negotiations on the institutional issues, estimating that in this manner a higher degree of legal certainty can be achieved than under the present system. The negotiations commenced in spring 2014, relating to the agreements on the free movement of persons,10 air transport,11 land transport,12 conformity assessments13 and agricultural goods,14 plus ideas on a subsequent overhauling of the bilateral regime in the field of the free movement of goods.15 In December 2018, the Swiss Federal Government published a draft text as it resulted from the negotiations up to that time16 (see in the English language notably Kaddous 2019; in German e.g. Epiney 2018; Ambühl and Scherer 2019; Baldi 2019; Cottier 2019; Tobler and Beglinger 2020). Following a consultation process it organised, the Swiss Federal Government, in summer 2019, wrote a letter to the European Commission stating that certain points still need clarification.17 By the time of updating the present contribution (mid-March 2020), the government has not yet been able to define suggestions as to how these issues should be addressed. The present writer has suggested the negotiation of common declarations addressing these points (Tobler 2020a, b). The government wanted to await the outcome of a popular vote—set originally for 17 May 2020 but was subsequently postponed because of the Coronavirus pandemic to 27 September 2020—on migration (on this issue, see below Sect. 3.2). Since the beginning of the above process, the EU has raised the political stakes at issue. First, the EU stated that it would not be prepared to conclude new market access agreements with Switzerland without a renewed institutional framework being in place.18 This is aimed particularly at an agreement in the field of electricity,  See above, footnote 2.  Agreement between the European Community and the Swiss Confederation on air transport, [2002] O.J. L 114/73 (for Switzerland: SR 0.748.127.192.68). 12  Agreement between the European Community and the Swiss Confederation on the Carriage of Goods and Passengers by Rail and Road, [2002] O.J. L 114/91 (for Switzerland: SR 0.740.72). 13  Agreement between the European Community and the Swiss Confederation on mutual recognition in relation to conformity assessment [2002] L 114/369 (for Switzerland: SR 0.946.526.81). 14  Agreement between the European Community and the Swiss Confederation Agreement between the European Community and the Swiss Confederation on trade in agricultural products, [2002] O.J. L 114/132 (for Switzerland SR 0.916.026.81). 15  Including notably the Agreement between the European Economic Community and the Swiss Confederation [1972] O.J. English Special Edition Series I Volume 1972 (31.12) L 300/191. 16  Official French version of the draft text: https://www.eda.admin.ch/dam/dea/fr/documents/ abkommen/Acccord-inst-Projet-de-texte_fr.pdf (accessed 9 March 2020). 17  Official French version of the letter: https://www.eda.admin.ch/dam/dea/fr/documents/bericht_ konsultationen_insta/20190607_Lettre-CF-President-Commission-europeenne_fr.pdf (accessed 9 March 2020). 18  European Council conclusions on a homogeneous extended single market and EU relations with Non-EU Western European countries of 16 December 2014, https://www.consilium.europa.eu/ uedocs/cms_data/docs/pressdata/en/er/146315.pdf (accessed 9 March 2020), para. 44: “A precondition for further developing a bilateral approach remains the establishment of a common institutional framework for existing and future agreements through which Switzerland participates in the EU’s internal market, in order to ensure homogeneity and legal certainty […].” This was confirmed 10 11

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which has been under negotiation for many years and has become stuck because of the institutional questions.19 More recently, the EU added more generally that “the conclusion of the Institutional Framework Agreement on the basis of the present text is […] an essential element for deciding upon further progress towards mutually beneficial market access”20 (see also below Sect. 2.4).

2.2  S  ubjects of Negotiations and Swiss Concerns: The Examples of Supranational Supervision and Dispute Settlement When asking Switzerland to enter into institutional negotiations, the EU defined as its desiderata the four elements of (1) dynamic adaptation of the agreements in question to the evolving EU law, (2) interpretation of these agreements in line with the EU law from which they are derived, (3) a supranational supervision mechanism and (4) the inclusion of a judicial element in the mechanism for the settlement of disputes between the parties to the agreements, in the shape of the CJEU21 (this choice being due to the doctrine of the autonomy of the EU legal system, which is part of the Union’s constitutional law).22 The EU’s original idea in this respect was a system like that of the EEA. However, when it emerged in pre-negotiation talks between the EU and Switzerland that the Swiss Government rejected any formal type of supranational supervision, this particular element (above, number 3) was dropped. Instead, the outline of the dispute settlement mechanism (above, number 4) was adjusted in two steps. In a first step, the parties agreed to negotiate on a system where, if a dispute cannot be resolved in the relevant Joint Committee, one party alone can turn to the

in the Council conclusions on EU relations with the Swiss Confederation of 28 February 2017, http://www.consilium.europa.eu/en/press/press-releases/2017/02/28/conclusions-eu-swiss-confederation (accessed 9 March 2020), para. 5: “[T]he Council recalls that a precondition for further developing the sectoral approach remains the establishment of a common institutional framework for existing and future agreements through which Switzerland participates in the EU’s Single Market, in order to ensure homogeneity and legal certainty for citizens and businesses.” 19  See the information by the Swiss Federal Government at https://www.eda.admin.ch/dea/en/ home/verhandlungen-offene-themen/verhandlungen/strom-energie.html (accessed 9 March 2020). 20  See European Council, Council conclusions on EU relations with the Swiss Confederation, 19 February 2019, point 9, https://www.consilium.europa.eu/en/press/press-releases/2019/02/19/ council-conclusions-on-eu-relations-with-the-swiss-confederation/ (accessed 9 March 2020). 21  See e.g. European Council conclusions on EU relations with EFTA countries of Brussels, 14 December 2010, https://eeas.europa.eu/sites/eeas/files/council_iceland.pdf (accessed 9 March 2020), para. 42 et seq., and notably para. 48. 22  Doctrine beginning notably on the CJEU’s EEA Opinions, i.e. Opinion 1/91 (EEA I), ECLI:EU:C:1991:490, and Opinion 1/92 (EEA II), ECLI:EU:C:1992:189. See e.g. Barents (1994) and De Witte (2013).

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CJEU for a decision on the interpretation of the agreement in question. In a subsequent step in the EU-Swiss negotiations, the model was modified to add an arbitration panel that can be called upon if the Joint Committee is unable to find a solution. In this model, now included in the draft text of the Institutional Agreement, the Arbitration Panel has to turn to CJEU for help with the interpretation of bilateral law that, in terms of its content, derives from the EU law. The Court’s ruling on this interpretation binds the Arbitration Panel. Both systems are markedly different from the system under EEA law, where both parties must agree if the CJEU is to have a say in the framework of the dispute settlement mechanism under Art. 111 EEA (Tobler 2015a; Fredriksen 2017). Obviously, from the point of view of sovereignty such a system makes it easier for a non-EU Member State to agree to a decisive role of the CJEU, as the court of the other party, since it is in its power to prevent it from being called upon. On the side of the EU, it would seem that the EEA system is acceptable because under EEA law there are other procedural means to promote homogeneity with the EU law, including notably the preliminary ruling system and the infringement procedure. According to the Swiss Federal Government, the system now included in the draft Swiss-EU Institutional Agreement is acceptable from the perspective of Switzerland’s sovereignty as it is not the CJEU that decides on the dispute but rather the Arbitration Panel (if in the light of the Court’s interpretation), i.e. there is no direct, but at the most indirect, jurisdiction of the CJEU over Switzerland. The views of academics in Switzerland on this matter differ. On the one hand, Epiney has lauded the Federal Government for succeeding in “squaring the circle” by avoiding a supranational supervision mechanism and finding an approach to dispute settlement that avoids (direct) jurisdiction of the CJEU over Switzerland (Epiney 2013). Similarly, Oesch and Speck (2017, p. 263) considered the approach chosen by the Federal Government the best available option, although giving a decisive role to the CJEU is “not ideal from the point of view of court psychology”. In the present writer’s view, overall a system based on the EEA approach, comprising all of the four institutional elements, would have been a very valuable option. Although here a supranational supervision mechanism is part and parcel of the system, it would not have to involve the European Commission and the CJEU but could, instead, allow Switzerland to “dock on” to other, pre-existing bodies such as the EFTA Surveillance Authority (which, under EEA law, takes the role of the Commission for EEA matters arising in the EEA/EFTA states) and the EFTA Court (which, under EEA law, takes the role of the CJEU for EEA matters arising in the EEA/EFTA states), provided that these bodies were prepared to take on this extra role. Incidentally, this is a solution much advertised by the former president of the EFTA Court, Carl Baudenbacher (see in particular Baudenbacher 2019). At the same time, there is, unfortunately, a tendency in broad circles in Switzerland to think negatively of the EEA.23 This might make it difficult to win the public opinion

 For a, in the present writer’s view, timely warning against reviling the EEA see the former Swiss diplomat von Tscharner (2017).

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for an EEA approach—a task that is particularly important in a political system where national laws as well as international agreements can be felled through referenda and new rules can be introduced through constitutional initiatives even if they contradict the bilateral agreements. In fact, it has proven to be difficult in the political reality to communicate the difference between direct and indirect jurisdiction of the CJEU to the public and even to many members of the Federal Parliament.24 There is in Switzerland a lively public debate in which notably nationalist organisations lambast the institutional negotiations as a further proof of the EU’s attempts to “colonialise” Switzerland and to foist “foreign judges” on the country (e.g. Blocher 2017). The latter particularly has the force of a rallying cry in broad circles in Switzerland because the national founding myth includes the solemn promise never to tolerate foreign judges—an issue that, however, is often misunderstood according to historians (Kreis 2018).25 Overall, the approach now envisaged in the draft Institutional Agreement on the dispute settlement mechanism reflects the outcome of a complex negotiation process that is unlikely to be reversable, especially given that other external EU agreements—among them the Brexit Withdrawal Agreement—provide for the same model.

2.3  The Link with Brexit Institutional issues also play a role in the context of the UK’s withdrawal from the EU, both in the context of the Withdrawal Agreement26 and in the framework of a post-membership agreement with the EU. As the present writer noted elsewhere, the negotiations with Switzerland have influenced the negotiations between the EU and the Andorra, Monaco and San Marino (AMS) states on their association to the Union’s internal market, and she argued that the UK would find that the situation relating to Switzerland would also influence the Brexit negotiations (Tobler 2016). Statements by then Prime Minister May and official UK documents showed that also in the context of Brexit there is the worry about any direct jurisdiction of the CJEU.  Thus, according to the Prime Minister it is “vital that any agreement(s) reached […] are interpreted in the same way by the European Union and the United Kingdom […]. This could not mean the European Court of Justice – or indeed UK courts – being the arbiter of disputes about the implementation of the agreement  As expressed in many media reports and political debates. Quite often the debate is based on at least partially wrong assumptions, see e.g. Wengle (2017). 25  This relates to the so-called Rütlischwur, an oath allegedly sworn in the thirteenth century on a meadow called Rütli in central Switzerland, by which three territories promised to support each other against the occupying forces (i.e. the Habsburgs, who—by the way—originally came from Switzerland). 26  Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, O.J. 2020 L 29/7. 24

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between the UK and the EU however. It wouldn’t be right for one party’s court to have jurisdiction over the other.”27 Against that background, it is telling that a UK Government Policy Paper on enforcement and dispute resolution stated that “we will bring about an end to the direct jurisdiction of the Court of Justice of the European Union (CJEU)” and that it referred to examples of “agreements with third countries that provide for close cooperative relationship without the CJEU having direct jurisdiction over those countries”.28 Following the conclusion of the Withdrawal Agreement, this aim can only refer to any future UK-EU Agreement. The negotiation mandates of the parties show that their aims in this respect differ fundamentally.29 As for the Withdrawal Agreement, not only does it provide for an important role of the CJEU during the transition period, but it also establishes a dispute settlement mechanism with an arbitration panel and an interpretative role of the CJEU in relation to provisions of Union law referred to in the Withdrawal Agreement—i.e. in essence the same model as that in the Swiss-EU draft Institutional Agreement (see already Tobler 2018). Even so, in Switzerland certain circles put their hopes on Brexit and suggest that Switzerland should stop the institutional negotiations and wait for the regime that the UK and the EU will agree on for their future relationship (Neue Zürcher Zeitung 22 June 2017, Der Bund 8 March 2020). However, it may well be that a legal framework for the post-withdrawal relationship between the UK and the EU, if it can be agreed on, will be framed rather differently than the present Swiss-EU law and may, therefore, not be comparable. If so, this will have consequences for the institutional framework that the EU is willing to agree to. More specifically: the less an external regime in terms of its content is based on the EU law, the more the EU may be willing to depart from an EEA style institutional framework (Tobler 2016). However, if there is EU law-derived content, be it on free movement or on any other issues, the EU, based on the doctrine of the autonomy of its legal system, will have to insist on a role of the Court of Justice in its interpretation.

 Florence speech of Prime Minister May of 22 September 2017, https://www.gov.uk/government/ speeches/pms-florence-speech-a-new-era-of-cooperation-and-partnership-between-the-uk-andthe-eu (accessed 9 March 2020). 28  Enforcement and dispute resolution—a future partnership paper”, 23 August 2017, https://www. gov.uk/government/publications/enforcement-and-dispute-resolution-a-future-partnership-paper (accessed 9 March 2020), p. 2 (executive summary). 29  Compare UK Government, The Future Relationship with the EU.  The UK’s Approach to Negotiations, 27.2.2020, https://assets.publishing.service.gov.uk/government/uploads/system/ uploads/attachment_data/file/868874/The_Future_Relationship_with_the_EU.pdf (accessed 9 March 2020), with European Council, Directives for the negotiation of a new partnership with the UK, 25.2.2020, https://www.consilium.europa.eu/media/42736/st05870-ad01re03-en20.pdf (accessed 9 March 2020). 27

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2.4  F  urther Challenges in Switzerland: Financial Market Matters, Data Protection and Medical Devices Additional political complications have arisen because of the number of links that the EU has created with the institutional issues, links more of a political than a legal nature (Tobler 2020a, b; Tobler and Beglinger 2020, as of question 139). First, stock exchange equivalence. During his visit to Switzerland in November 2017, Commission President Juncker had promised that the European Commission would decide on the issue of the recognition of the Swiss stock exchange in the context of the new MiFIR/MiFID 2 legislation.30 For non-Member States trading with the EU, this legislation leads to the need of the unilateral recognition of equivalence of the systems of those states by the EU. In November 2017, the news agency Reuters reported that all looked set for positive decisions on the equivalence of the Swiss and USA stock exchanges.31 However, when the Commission issued equivalence decision relating to Hongkong, the USA and Australia but not to Switzerland, this raised eyebrows in Switzerland. When the decision on Switzerland was taken on 21 December 2017, it was limited to a duration of one year and its renewal made conditional particularly on progress of the Institutional Agreement. Consideration 30 in the preamble to the Implementing Decision stated: To ensure the integrity of financial markets in the Union, this Decision should expire on 31 December 2018, unless extended by the Commission before that date. When deciding on whether to extend the applicability of this decision, the Commission should in particular consider progress made towards the signature of an Agreement establishing that common institutional framework.32

The above-mentioned temporal limitation did not reflect any regulatory discrepancies between the Swiss and EU systems but rather appeared to be politically motivated (Hungerbühler 2017). In 2018, the Commission issued another equivalence decision, this time limited to a duration of half a year and again linked to the Institutional Agreement.33 After this period, the Commission did not renew its

 Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012, [2014] O.J. L 173/84, and Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/ EU, [2014] O.J. L 173/349. 31  EU moves to recognise equivalence of US, Swiss stock exchanges before MIFID 2, https://www. reuters.com/article/eu-mifid-usa-swiss/eu-moves-to-recognise-equivalence-of-us-swiss-stock-exchanges-before-mifid-2-idUSL8N1NM2RV (accessed 9 March 2020). 32  Commission Implementing Decision 2017/241 of 21 December 2017 on the equivalence of the legal and supervisory framework applicable to stock exchanges in Switzerland in accordance with Directive 2014/65/EU of the European Parliament and of the Council, [2017] O.J. L 344/52. 33  Commission Implementing Decision (EU) 2018/2047 of 20 December 2018 on the equivalence of the legal and supervisory framework applicable to stock exchanges in Switzerland in accordance with Directive 2014/65/EU of the European Parliament and of the Council, [2018] O.J. L 327/77. 30

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equivalence decision. So far, Switzerland has been able to avoid negative consequences of this move by the EU through unilateral measures. The Swiss Government reacted harshly, accusing the EU of blatant discrimination and of making a political link between two wholly unrelated matters. The views expressed by experts in public on whether there is a breach of WTO law differed.34 Whatever the correct analysis, it is in any event safe to say that the course of action chosen by the EU is not helpful in winning the public opinion in Switzerland as far as the Institutional Agreement is concerned. It must be added that stock exchange equivalence is not the only challenge that Switzerland is facing in terms of equivalence decisions. More specifically, there are more equivalence issues in the field of financial markets. Further, there is also the issue of data protection (Tobler and Beglinger 2020, as of question 147). At the time of updating the present contribution (mid-March 2020), Switzerland is working to complete the revision of its data protection law. Here, again, the current EU legislation, namely the General Data Protection Regulation,35 requires a new so-called adequacy decision. Under this Regulation, the EU Commission has to report to the European Parliament and the Commission about, among others, the transfer of personal data to third countries or international organisations, with particular regard to adequacy decisions (Art. 97(2) GDRP). It remains to be seen how Switzerland will proceed with the revision procedure and what the Commission will state in its report in this respect. A further challenge that needs to be mentioned is related to the announcement of the EU that the conclusion of the Institutional Framework Agreement based on the draft text is “an essential element for deciding upon further progress towards mutually beneficial market access” (see above Sect. 2.1). In practice, this appears to mean that absent progress on the institutional issues, the EU may not be willing to update existing market access agreements. At the moment, this raises serious concerns on the mutual recognition of conformity assessments in the field of medical devices, as covered by the bilateral agreement on conformity assessments. The background to this issue is the current EU legislation on medical devices, Regulation 2017/745.36 Whilst part of this Regulation has already been incorporated into the EU-Swiss Mutual Recognition Agreement (MRA), a large part is still missing. In 34  See Thomas Cottier in the Swiss TV news show “10vor10” (21 December 2017). https://www. srf.ch/sendungen/10vor10/katalonien-knatsch-mit-der-eu-schoggi-goes-china (accessed 21 December 2017), who stated unequivocally that there is no breach, vs. Lorand Bartels and Christian Häberli, who think otherwise, as reported by the daily Tages-Anzeiger (28 December 2017) (accessed 9 March 2020). 35  Regulation (EU) No 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) [2016] O.J. L 119/1. 36  Regulation (EU) No 2017/745 the European Parliament and of the Council of 5 April 2014 on medical devices, amending Directive 2001/83/EC, Regulation (EC) No 178/2002 and Regulation (EC) No 1223/2009 and repealing Council Directives 90/385/EEC and 93/42/EEC [2017] O.J. L 117/1.

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the EU, this part should have been applied as of 26 May 2020, but this date has been postponed by one year because of the Coronavirus pandemic.37 The EU has stated that it is not willing to agree to an updating decision in the Joint Committee. At the same time, it argues that, absent this update, the entire chapter on the mutual recognition of conformity assessments in the Agreement can no longer be applied. It remains to be seen what will happen next. In the present writer’s opinion, should the EU act as announced, this would amount to a breach of Art. 27 of the Vienna Convention on the Law of Treaties, according to which a party may not invoke the provisions of its internal law as justification for its failure to perform a treaty.

3  A Second Pressure Point: Migration 3.1  A Swiss Vote and Its Link with Brexit A link with Brexit also exists on the second pressure point discussed in the present contribution, namely migration into Switzerland, notably migration occurring under the present free movement regime with the EU. On 9 February 2014, the Swiss voting population accepted the constitutional initiative “Against Mass Immigration” launched by the Swiss Peoples Party (SPP), a nationalist party in Switzerland with a large following. In its campaign, the SPP argued notably that net immigration into Switzerland is too high and puts an unsustainable pressure on the country’s infrastructure such as streets, hospitals, power plants and the like.38 This argument is remarkably similar to that used in 2015 by the then Prime Minister David Cameron in the UK, with the aim of limiting the legal free movement regime between the UK and the other EU Member States through changes in the EU law.39 He did, however, not succeed. Conversely, in Switzerland the SPP did succeed, at least at first sight. Its initiative was accepted in the vote of 9 February 2014, leading to changes in the Swiss Federal Constitution (FC) on the very day of the vote. These changes include in particular the introduction of a new Art. 121a FC, which not only establishes an explicit principle of autonomous control of immigration in the Federal Constitution (“Switzerland shall control the immigration of foreign nationals autonomously.”) but also mentions specific means to be used to that end. These means include notably quantitative limits and quotas for all sorts of residence permits and national  Regulation (EU) 2020/561 of the European Parliament and of the Council of 23 April 2020 amending Regulation (EU) 2017/745 on medical devices, as regards the dates of application of certain of its provisions [2020] O.J. L 130/18. 38  See the initiative’s website (in the German, French and Italian languages), under “Argumente”, including an illustrative picture; http://www.masseneinwanderung.ch/ (accessed 9 March 2020). 39  “[C]ountries have got to be able to cope with all the pressures that can bring – on our schools, our hospitals and other public services. […] Net migration in the UK is running at well over 300,000 a year and that is not sustainable.”, BBC (9 December 2015). 37

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preference in the field of employment. On international agreements, Art. 121a FC states that no new international agreements must be concluded whose content is not in line with this provision. Further, a new transitional provision resulting from the vote of 9 February 2014, namely Art. 197(11) FC, states that existing agreements that are contrary to Art. 121a FC must be renegotiated and amended within three years. More generally, a period of three years from the adoption of the new rules was set through the vote for implementation through federal law.

3.2  Implementation of the Vote and Remaining Challenges The implementation of the result of the vote was challenging as it was clear from the outset that Art. 121a FC is in direct contradiction to the principles underlying a number of agreements concluded by Switzerland, among them most notably the FMPA with the EU (Hänni and Heselhaus 2013; Kaddous 2013),40 but also the EFTA Convention with Iceland, Liechtenstein and Norway,41 and further an encompassing customs agreement with neighbouring Liechtenstein.42 Following the vote, the Swiss Federal Government initially considered itself unable to sign the Protocol intended to extend the FMPA to the EU’s most recent Member State, Croatia, because it saw the Protocol as a new agreement contrary to Art. 121a FC. It was only after unwelcome political reactions on the side of the EU—including notably the refusal to renew the cooperation with Switzerland in the fields of research, culture and education—that the Government eventually came to the conclusion that in light of new developments it was after all able to sign the Protocol. In the field of research, this made it possible for Switzerland to move from a provisional arrangement agreed on with the EU in 2014 to full participation in the Horizon 2020 programme (see Art. 13(6) of the Research Agreement). Conversely, the cooperation in the other two fields (culture and education) has not been renewed at the time of updating the present contribution (mid-March 2020).43 On the issue of renegotiating existing agreements, on the EU side, the idea of homogeneity in the internal market again played an essential role. Following the vote, the Financial Times quoted Viviane Reding, then Vice President of the

 Although creative suggestions for an implementation in line with both the Federal Constitution and the PMPA were made by Epiney (2014). 41  Übereinkommen zur Errichtung der Europäischen Freihandelsassoziation (EFTA), SR 0.632.31. Switzerland’s official languages are German, French and Italian (a fourth language, Romantsch, is a national language but not an official language). In this contribution, the German language version is used, in line with the present writer’s (Swiss) German native tongue, for official Swiss documents for which there is no English version. 42   Vertrag zwischen der Schweiz und Liechtenstein über den Anschluss des Fürstentums Liechtenstein an das schweizerische Zollgebiet, SR 0.631.112.514. 43  There are negotiations in the field of culture, see https://www.eda.admin.ch/dea/en/home/verhandlungen-offene-themen/verhandlungen/creative-europe.html (accessed 9 March 2020). 40

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European Commission, as saying that “[t]he single market is not a Swiss cheese. You cannot have a single market with holes in it.”44 When the Swiss Federal Government addressed to the EU a request for negotiations in view of revising the FMPA under the principles laid down in Art. 121a FC, the EU responded (unsurprisingly) that it was not interested in a revision aiming at the introduction of quotas and national preference. Within Switzerland, it was then suggested that one ought to attempt to make the EU agree to the introduction into the FMPA of a new clause which would allow Switzerland to limit migration from the EU once the extent of that migration passes a certain level45 or, alternatively, to request a creative solution from the Joint Committee in charge of the agreement based on the existing safeguard clause of Art. 14(2) FMPA.46 However, informal talks with the EU (which never reached the level of formal negotiations) on such matters did not yield any tangible result. As far as the internal Swiss law is concerned, the vote of 2014 was followed by a lively (and lengthy) debate about possible unilateral approaches for its implementation. Eventually, the Swiss Federal Parliament in December 2016 decided in favour of an implementation through federal legislation based on a system of domestic preference on the employment market (in German called Inländervorrang light) which it considered compatible with the FMPA. Essentially, the new provisions require that, in case of a certain level of unemployment in particular sectors, employers are obliged to report vacancies to the regional employment offices, which are then given a certain time to find suitable candidates from its database. Informed about these persons, the employers are obliged to invite them for an interview (Bahadir 2016). An attempt to launch a popular referendum against this approach did not succeed, i.e. the necessary number of 50,000 signatures was not reached. In December 2017, the Federal Government adopted further implementing legislation concerning the details of the new rules, providing for a step by step introduction of the preference system. The Federal Minister in charge spoke of “a typical Swiss compromise” (Neue Zürcher Zeitung 8 December 2017). In its conclusions on the relations with Switzerland of 28 February 201747 (i.e. before the last legislative step on the Swiss federal level as mentioned in the previous paragraph), the EU  Financial Times (9 February 2014) Swiss clash with EU foreshadows tensions if UK votes to leave. 45  In academia, such an approach was proposed by Ambühl and Zürcher (2015). For a comparative approach, see Tobler (2015b, Jusletter). 46  Art. 14(2) FMPA provides: “In the event of serious economic or social difficulties, the Joint Committee shall meet, at the request of either Contracting Party, to examine appropriate measures to remedy the situation. The Joint Committee may decide what measures to take within 60 days of the date of the request. This period may be extended by the Joint Committee. The scope and duration of such measures shall not exceed that which is strictly necessary to remedy the situation. Preference shall be given to measures that least disrupt the working of this Agreement.” 47  European Council conclusions on EU relations with the Swiss Confederation of 28 February 2017, http://www.consilium.europa.eu/en/press/press-releases/2017/02/28/conclusions-eu-swissconfederation/?+conclusions+on+EU+relations+with+the+Swiss+Confederation (accessed 9 March 2020), para. 3. 44

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Council of Ministers cautiously welcomed the approach chosen by Switzerland, stating that the text adopted “by the Swiss Federal Assembly can be implemented in a manner compatible with the rights of EU citizens under the Free Movement of Persons Agreement (FMPA) if the necessary implementing ordinance clarifies outstanding open issues, such as the right to information as regards vacancies, and the procedure for the adoption of further measures, in particular with a view to guaranteeing respect for frontier workers’ rights.” One may therefore conclude that with the implementation approach chosen, Switzerland was able to solve its “external” problem with the EU (and, implicitly, also with the other EFTA states), at least on the federal level and for the time being. However, it remains that there are certain problems on the cantonal level, including in particular a far-reaching preference system for residents applying for public jobs in the Canton of Geneva48 and a new provision in the constitution of the Canton of Ticino that, in case of equal qualifications, provides for a preference system for residents (according to the text, possibly even Swiss nationals) in the employment market.49 This has led to a parliamentary question in the European Parliament.50 In addition to these cantonal issues, which have external effects vis-à-vis the EU and the other EFTA states, an “internal” problem remains: As a result of the federal implementation of Art. 121a FC, quotas for residence permits and national preference in the employment market are in place for non-EU and non-EFTA states only (as indeed was already the case before the vote of 2014). Conversely, the approach prescribed in Art. 121a FC to reach the goal of autonomous steering of migration is not applied on migration from the EU and EFTA states, where the free movement regimes under the relevant agreements continue to be applied by Switzerland. Attempts to remedy the tension between the Federal Constitution and the federal legislation implementing the vote of 9 February 2014 have led to diametrically  This is based on Cantonal guidelines relating to the cooperation of employers with the Cantonal Employment Office, see https://www.ge.ch/document/procedure-recrutement-au-sein-etat-geneve and https://www.ge.ch/document/procedure-recrutement-au-sein-institutions-droit-public-entitessubventionnees (both accessed 9 March 2020). 49  The text of the new provision results from a popular initiative on the Cantonal level with the title “Prima i nostri” (“Ours First”). According to the new Art. 4(1) of the Cantonal Constitution: “Il Cantone provvede affinché […] sul mercato del lavoro venga privilegiato a pari qualifiche professionali chi vive sul suo territorio per rapporto a chi proviene dall’estero (attuazione del principio di preferenza agli Svizzeri).” Based on the political debate, it seems that what is meant is a preference system for residents, rather than Swiss nationals; see e.g. Botschaft über die Gewährleistung der geänderten Verfassungen der Kantone Thurgau, Tessin, Wallis und Genf, BBl 2017 5849, p. 5854. The Swiss Federal Parliament has found that it is possible to implement the new rules without infringing the FMPA (i.e. presumably, by refraining to give preference to Swiss citizens), see media report ‘Parlament sagt ja zu Inländervorrang in Tessiner Verfassung’, 4 December 2017, https://www.parlament.ch/de/services/news/Seiten/2017/20171204192527946194158159041_ bsd200.aspx. 50  Parliamentary question in the European Parliament by MEP Mara Bizotto, ‘Referendum in the Canton of Ticino to restrict cross-border worker numbers: urgent request for a Commission opinion’, 17 October 2017, see http://www.europarl.europa.eu/sides/getDoc.do?type=WQ&reference= E-2016-007792&language=EN (accessed 9 March 2020). 48

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opposed demands on the political level in Switzerland, namely on the one hand a constitutional initiative aimed at abolishing Arts. 121a and Art. 197(11) FC altogether—the so-called RASA initiative51—and, on the other hand, plans for a constitutional initiative aimed at enforcing Art. 121a FC, if necessary by cancelling the FMPA and other free movement agreements—the so-called limitation initiative (Be grenzungsinitiative/limitation initiative or Kündigungsiniatitive/cancellation initiative.52 In December 2017, the RASA initiative was withdrawn in a surprise move by the initiators. As for the limitation initiative, the SPP succeeded in collecting sufficient signatures. As already noted, the vote was originally set for 17 May 2020 but was then postponed to 27 September 2020 because of the Coronavirus pandemic. In the vote, the initiative was rejected. It should be noted that in the case of the FMPA, a cancellation would have had  far-reaching legal consequences because the agreements of the Bilaterals I package are linked to each other through a so-called “guillotine clause”, i.e. a clause at the end of each agreement in this package according to which the cancellation of one of them automatically ends the others after six months’ time. In addition, a cancellation would also have endangered the Schengen Agreement, since the EU perceives the free movement of persons as a political prerequisite for the abolition of border controls. This in turn would have affected the Dublin Agreement, since the two Agreements can only be applied together (Art. 14(2) of the Dublin Agreement; Art. 15(4) of the Schengen Agreement). Other agreements might have been affected as well, notably if the EU, again, had made a political link between the cooperation in the fields of research, culture and education and the free movement of persons.

3.3  Migration and the Draft Institutional Agreement It should be added that there is also an issue relating to immigration linked to the draft Institutional Agreement. More specifically, one of the three points which needs clarifications, according to the Swiss Federal Government, relates to the updating of the legal acquis of the FMPA with respect to EU Directive 2004/38.53 It has long been the wish of the EU to incorporate the rules of this Directive into the FMPA. However, the Swiss Federal Government did not agree to this. The parties to the negotiations so far have not been able to agree notably on the extent to which the Directive is relevant in the framework of the FMPA. Again, one of the suggestions  RASA stands for “Raus aus der Sackgasse” or “Out of the dead end”.  See for the text of the initiative https://www.svp.ch/news/artikel/medienmitteilungen/schlussmit-der-personenfreizuegigkeit/ (accessed 9 March 2020). 53  Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States amending Regulation (EEC) No 1612/68 and repealing Directives 64/221/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC [2004] O.J. L 158/77. 51 52

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made by the present writer for a common declaration addresses this point (see above Sect. 2.1).

3.4  Putting One’s Hope on Brexit? Overall, it can be concluded that in spite of the “mild” implementation of Art. 121a FC the pressure on the EU-Swiss relationship in the context of migration continues, not least as a consequence of political developments and democratic mechanisms within Switzerland. In this situation, again, certain circles in Switzerland put their hopes on Brexit, suggesting that Switzerland might benefit from a deal eventually reached by the UK and the EU for their relations following the UK’s withdrawal from the EU. In 2017, these hopes were further fuelled when the Swiss academic, Michael Ambühl, was asked to advise the UK Government about his and his collaborator’s idea of a safeguard clause that, based on the FMPA, would allow Switzerland to limit migration (Wright and Waterfield 2017). It was hoped that if such a rule were given to the UK, Switzerland could expect the EU to yet agree to a change of the FMPA along the same lines. However, again there is the time issue and the uncertainty on the content of any future arrangement as already mentioned in the context of the institutional issues— if such an agreement can be concluded at all. In addition, it has been the Swiss experience that the looming of Brexit limited the EU’s willingness to make concessions to Switzerland, even in the context of the interpretation of the existing safeguard clause in the FMPA. Conversely, what happens in Switzerland may influence the Brexit negotiations. According to the Financial Times (18 September 2016), the Alpine state of Switzerland, “surrounded by the EU but not part of it, had inadvertently become a test bed for how the bloc stands up to demands for special treatment from immigration-wary neighbours.”

4  Conclusion The present contribution started by stating that Switzerland’s legal relationship with the EU represents a unique and complex model. Attractive as it may seem to certain other states, it is also a model under political pressure, both from inside and outside of Switzerland. It was seen that Brexit has not made matters simpler and neither do the democratic mechanisms in Switzerland. Indeed, it was seen that these mechanisms represent a considerable challenge, both in the context of migration based on free movement rules and on a renewed institutional framework for a number of EU-Swiss market access agreements. Ultimately, these issues touch on the very nature of the legal relationship between the EU and Switzerland, seen notably against the background of the EU’s increasing concern for a homogeneous internal market in its relations with close neighbouring states. In this context, it is not

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surprising that the EU also in the Brexit negotiations has stressed the integrity of the internal market and stated that “preserving the integrity of the Single Market excludes participation based on a sector-by-sector approach”.54 It remains to be seen whether, indirectly, this is also a message directed at Switzerland.

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Tobler C (2015a) Dispute Resolution under the EEA Agreement. In: Baudenbacher C (ed) The handbook of EEA law. Springer, Cham, pp 195–207 Tobler C (2015b) Schutzklauseln in der Personenfreizügigkeit mit der EU.  Jusletter (16 February 2015) Tobler C (2016) One of many challenges after ‘Brexit’. The institutional framework of an alternative agreement – lessons from Switzerland and elsewhere? Maastricht J Eur Comp Law:575–594 Tobler C (2018) Streitbeilegung im Entwurf für den Brexit-Austrittsvertrag. Ein Schiedsgerichtsmodell ähnlich wie für das institutionelle Rahmenabkommen Schweiz-EU. Jusletter (17 December 2018) Tobler C (2020a) Wie weiter mit dem Institutionellen Abkommen? Varianten zum Umgang mit den drei heiklen Punkten. Jusletter (20 January 2020) Tobler C (2020b) Switzerland-EU: Whereto with the draft institutional agreement?. EFTA Studies Blog 19 February 2020, https://www.efta-studies.org/post/whereto-with-the-draft-institutional-agreement. Accessed 9 March 2020 Tobler C, Baur GS (2015) Der Binnenmarkt ist (k)ein Schweizer Käse. Zum Assoziationsstatus der Türkei, der EWR/EFTA-Staaten und der Schweiz, insb. mit Bezug auf den EU-Binnenmarkt. In: Epiney A, Kern M, Hehemann L (eds) Schweizerisches Jahrbuch für Europarecht 2014/2015. Stämpfli, Berne & Schulthess, Zurich/Basel/Geneva: Schulthess, pp 331–345 Tobler C, Beglinger J (2020) Tobler/Beglinger-Brevier zum institutionellen Abkommen Schweiz-EU, online publication 2020. http://www.brevier.eur-charts.eu. Accessed 9 March 2020 Tobler C, Hardenbol J, Mellár B (2010) Internal market beyond the EU: EEA and Switzerland. Briefing Paper. European Parliament, Strasbourg/Brussels von Tscharner B (2017) EWR – der Mittelweg existiert. Neue Zürcher Zeitung (11 December 2017) Wengle R (2017) Schweiz-EU. Das Rahmenabkommen als Stolperstein auf dem bilateralen Weg. Stämpfli, Berne Wright O, Waterfield B (2017) Brexit team asks Swiss deal-maker how to negotiate with the EU. The Times (3 July 2017) Christa Tobler  is a Professor of European Law at the Universities of Basel (Switzerland) and Leiden (the Netherlands). She has two research specializations, namely (1) legal equality and discrimination, both in economic and in social law and (2) the complex legal relationship between Switzerland and the European Union, seen against the background of other external relation regimes of the European Union with non-member states, in particular in the form of association regimes. Professor Tobler is a member of the editorial board of the Swiss Review of International and European Law (http://www.sriel.ch) and a member of the executive committee of senior experts of the “European Equality Law Network. European network of legal experts in gender equality and non-discrimination” (http://www.equalitylaw.eu/). She is also an enthusiastic Moot Court judge (regional level) for the European Law Moot Court Competition (http://www.europeanlawmotcourt.eu/) and a co-founder of “The EU Law in Charts Project” (http://www.eurcharts.eu). The project aims at using visualization in legal teaching.

Part II

EU Cooperation with its Eastern Neighbourhood: Shared Values v. Closer/ Remote Integration

Challenges of the EU-Ukraine AA’s Effective Implementation into the Legal Order of Ukraine Roman Petrov

1  Introduction Ukraine’s road towards the signature and entry into force of the EU-Ukraine Association Agreement (the Association Agreement) was highly dramatic.1 Following the unprecedented economic and political pressure from Russia, on 21 November 2013, the Government of Ukraine decided to suspend the process of preparation for signature of the Association Agreement.2 Further events led to the ‘Maidan’ revolution, which claimed more than 100 victims and led to the dismissal of President Victor Yanukovich on 22 February 2014, the annexation of Crimea by Russia in March 2014, and bloody military conflict in the Donbas area. However, the Association Agreement instigated far-reaching economic, political and profound constitutional reforms in Ukraine which will determine its future geopolitical orientation and economic stability. The above as a starting point, this chapter aims to highlight the constitutional challenges that have arisen in Ukraine on the road to the implementation of the Association Agreement into its legal system. The paper focuses on two major features of this intricate process. The first feature is the effective implementation and application of the Association Agreement within the Ukrainian legal order. The second feature is the compatibility between the Association Agreement and the Ukrainian Constitution.

 Van Elsuwege et al. (2015), pp. 1–19.  Decision of the Ukrainian Cabinet of Ministers No 905-p of 21 November 2013. Available at . 1 2

R. Petrov (*) Faculty of Law, National University of Kyiv-Mohyla Academy, Kyiv, Ukraine © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 S. Lorenzmeier et al. (eds.), EU External Relations Law, https://doi.org/10.1007/978-3-030-62859-8_8

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2  I mpact of the EU-Ukraine Association Agreement on the Ukrainian Legal System The Association Agreement is destined to have a profound effect on the Ukrainian legal system for several reasons. First, it has already triggered and is likely to trigger further constitutional amendments aimed at ensuring that Ukraine effectively shares common EU democratic values and implements the Association Agreement. Second, the provisions of the Association Agreement and the relevant EU acquis must be effectively applied by the Ukrainian judiciary, raising the issue of direct effect within the Ukrainian legal system. Third, decisions of the common institutions established under the Association Agreement will become part of the national legal system and find effective application by the national executive and judiciary branches of the Ukrainian government.

2.1  O  bjectives and Specific Features of the Association Agreement with Ukraine In the opinion of Van Elsuwege, the EU-Ukraine Association Agreement (AA) is characterised by three specific features: comprehensiveness, complexity and conditionality. The AA is a comprehensive framework agreement which embraces the whole spectrum of EU activities from setting up deep and comprehensive free trade areas (DCFTA) to cooperation and convergence in the field of foreign and security policy as well as cooperation in the area of freedom, security and justice (AFSJ).3 The complexity of the AA reflects a high level of ambition of Ukraine to achieve economic integration into the EU Internal Market through the establishment of the DCFTAs and to share principles of the EU’s common policies. This objective requires comprehensive legislative and regulatory approximation including advanced mechanisms to secure the uniform interpretation and effective implementation of relevant EU legislation into the national legal order of Ukraine. To achieve this objective, the AA is equipped with multiple specific provisions on legislative and regulatory approximation including detailed annexes specifying the procedure and pace of the approximation process for different policy areas in more than 40 annexes and based on specific commitments and mechanisms identified in both the annexes and specific titles to the agreement. Furthermore, the AA is founded on a strict conditionality approach which links the third country’s performance and the deepening of its integration with the EU. In addition to the standard reference to democratic principles, human rights and fundamental freedoms as defined by international legal instruments (Helsinki Final Act, the Charter of Paris for a New Europe, the UN Universal Declaration on Human

 Van Elsuwege (2014).

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Rights and the European Convention on Human Rights and Fundamental Freedoms) (Art. 2 EU-Ukraine AA), the AA contains common values that go beyond classical human rights and also includes very strong security elements such as the “promotion of respect for the principles of sovereignty and territorial integrity, inviolability of borders and independence, as well as countering the proliferation of weapons of mass destruction, related materials and their means of delivery” (Art. 2 EU-Ukraine AA). Apart from the more general ‘common values’ conditionality, the AA contains a specific form of ‘market access’ conditionality, which is explicitly linked to the process of legislative approximation. Hence, it is one of the specific mechanisms introduced to tackle the challenges of integration without membership. Of significance is a far-reaching monitoring of Ukraine’s efforts to approximate national legislation to the EU law, including aspects of implementation and enforcement (Art. 475 (2) EU-Ukraine AA). To facilitate the assessment process, the government of Ukraine is obliged to provide reports to the EU in line with approximation deadlines specified in the Agreements. In addition to the drafting of progress reports, which is a common practice within the EU’s pre-accession strategy and the European Neighbourhood Policy (ENP) and the Eastern Partnership (EaP), the monitoring procedure may include “on-the-spot missions, with the participation of EU institutions, bodies and agencies, non-governmental bodies, supervisory authorities, independent experts and others as needed.” (Art. 475 (3) EU-Ukraine AA). The AA is the most voluminous and ambitious among all EU association agreements with third countries (7 titles, 28 chapters, 486 articles, 44 annexes on about 2,000 pages). This is comprehensive mixed agreement based on Article 217 TFEU (Association Agreements) and Articles 31(1) and 37 TEU (EU action in Common Foreign and Security Policy). There are many novelties introduced to these agreements. Most prominent of them are strong emphasis on comprehensive regulatory convergence between the parties and possibility for the application of the vast scope of the EU acquis within the Ukrainian, Moldovan and Georgian legal orders. Significantly, the AA ambitions to set up a DCFTA, leading to gradual and partial integration of Ukraine into the EU Internal Market. Accordingly, the AA belongs to the selected group of ‘integration-oriented agreements’, i.e. agreement including principles, concepts and provisions, which must be interpreted and applied as if the third country is part of the EU. It is argued that the AA is unique in many respects and, therefore, provides a new model of integration without membership. 2.1.1  E  nhanced Conditionality in the Association Agreement with Ukraine Conditionality is one of the key strategic tools of the ENP and the EaP and it is, therefore, no surprise that this instrument also occupies a prominent place in the AA. Two different forms of conditionality can be distinguished in these agreements. On the one hand, the AA includes several related provisions on Ukraine’s commitment to the common European values of democracy, rule of law and respect for

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human rights and fundamental freedoms (‘common values’ conditionality). On the other hand, the EU-Ukraine DCFTA is based on an explicit ‘market access’ conditionality implying that Ukraine will only be granted additional access to a section of the EU Internal Market if the EU decides, after a strict monitoring procedure, that these countries successfully implemented its legislative approximation commitments. Both forms of conditionality bear some revolutionary features in comparison to other external agreements concluded between the EU and third countries.4 2.1.2  ‘Common Values’ Conditionality International agreements concluded on behalf of the EU include standard conditionality clauses. In general, an ‘essential element clause’ defining the core common values of the relationship is combined with a ‘suspension’ clause including a procedure to suspend the agreement in case of violation of those essential elements. Such a mechanism is also included in the AA (Art.  2  in conjunction with Art. 478 EU-Ukraine AA). First, in addition to the standard reference to democratic principles, human rights and fundamental freedoms as defined by international legal instruments (Helsinki Final Act, the Charter of Paris for a New Europe, the UN Universal Declaration on Human Rights and the European Convention on Human Rights and Fundamental Freedoms), a specific reference to human rights and fundamental freedoms is included in the AA’s provisions on “dialogue and cooperation on domestic reform” and in the AA’s provisions dealing with the EU cooperation with Ukraine on justice, freedom and security (Art. 7 EU-Ukraine AA). Second, the essential elements of the AA contain common values that go beyond classical human rights and also include very strong security elements such as the “promotion of respect for the principles of sovereignty and territorial integrity, inviolability of borders and independence, as well as countering the proliferation of weapons of mass destruction, related materials and their means of delivery”. Third, “the principles of free market economy” as well as a list of other issues such as “rule of law, the fight against corruption, the fight against the different forms of transnational organised crime and terrorism, the promotion of sustainable development and effective multilateralism” are not included in the definition of essential elements. Instead, they are considered to “underpin” the relationship between the parties and are “central to enhancing” this relationship. In other words, a distinction is made between hard core common values related to fundamental rights and security and a range of other general principles that are deemed crucial for developing closer relations, but which cannot trigger the suspension of the entire agreement (Art. 478 EU-Ukraine AA).

 Petrov (2016), pp. 153–165.

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2.1.3  ‘Market Access’ Conditionality Apart from the more general ‘common values’ conditionality, the AA entails a specific form of ‘market access’ conditionality, which is explicitly linked to the process of legislative approximation in Ukraine. The key element of the conditionality criteria is a far-reaching monitoring of these countries’ efforts to approximate national legislation to the EU law, including aspects of implementation and enforcement (Art. 475 (2) EU-Ukraine AA). To facilitate the assessment process, the Ukrainian government is obliged to provide reports to the EU in line with approximation deadlines specified in the Agreement (Art. 475 (3) EU-Ukraine AA). In addition to the drafting of progress reports, which is a common practice within the EU’s pre-­ accession strategy and the ENP, the monitoring procedure may include “on-the-spot missions, with the participation of EU institutions, bodies and agencies, non-­ governmental bodies, supervisory authorities, independent experts and others as needed.” Arguably, the latter option is a new and far-reaching instrument introduced precisely to guarantee that legislative approximation goes beyond a formal adaptation of national legislation.5 2.1.4  P  rotection of the EU Values in the Association Agreement with Ukraine via EU’s Sanctions Towards Third Countries Principles of sovereignty and territorial integrity, inviolability of borders and independence are considered core values of the AA and must be shared and respected by the EU and Ukraine. Furthermore, in case of the EU-Ukraine AA, these principles constitute essential elements of the agreement. The overall security situation in the EU’s neighbouring countries for the last decade has gradually deteriorated. Moldova experiences prolonged conflict with its breakaway part Transnistria (so-called Pridenstrovian Moldovan Republic). This territory is not recognised by any of the UN members and formally constitutes part of the Republic of Moldova (Transnistria autonomous territorial unit with special legal status). However, de facto, Transnistria is an independent state with strong presence of Russian military troops. The EU is engaged in solving the Transnistrian conflict via the European Border Assistance Mission to Moldova and Ukraine (EUBAM). This structure as part of the EU Common Security and Defence Policy helps to control traffic on borders between Moldova and Ukraine around Transnistria to prevent illegal movements of people and goods from and to Transnistria.6 Georgia went through a military conflict with Russia over the breakaway areas of Abkhasia and South Ossetia. The conflict took place in August 2008 and led to many casualties and loss of control of Georgia over Abkhasia and South Ossetia.

 Van der Loo (2015).  Kurowska and Tallis (2009), pp. 47–64.

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Currently, Russian military troops are stationed in Abkhasia and South Ossetia and de facto control their territories. The EU played quite modest role in settling the conflict in the Caucasus allowing some EU Member States to lead the peace process in the region.7 No sanctions were applied by the EU in the aftermath of the Georgian-Russian conflict. However, the next security challenge faced Ukraine and compelled the EU to apply the full arsenal of its sanctions against the Russian Federation. It happened after self-proclaimed authorities of the Autonomous Republic of Crimea hold unrecognised referendum under Russian military presence in March 2014. Consequently, the integral parts of Ukraine—the Autonomous Republic of Crimea and the city of Sevastopol—were annexed and incorporated by the Russian Federation as its own federal subjects on 21 March 2014. The fact of annexation is not recognised by Ukraine and the United Nations (UN General Assembly Resolution 68/262 (2014)) and is universally considered as blatant violation of international public law by the Russian Federation.8 Following the turbulent events in Crimea, the EU decided to apply wide scale sanctions against Russia. The EU sanctions led to a complete halt in the EU-Russia relations (suspension of bilateral talks on visa matters and on new EU-Russia agreement, cancellation of the EU-Russia summit) and to the imposition of measures against ‘certain persons responsible for actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine’ (travel bans and asset freezes). The list of these persons is constantly increasing and covers leading Ukrainian, Russian and Crimean politicians related to the fact of the Crimea’s annexation. The EU had to extend the scope of sanctions against Russia after the security situation in Ukraine has drastically deteriorated by the end of the summer 2014. The world was shocked when Malaysia Airline flight MH17 was shot down above the part of Eastern Ukraine controlled by pro-Russian separatists. This incident caused the loss of 298 lives and drastically deteriorated security situation in the region and in the EU.  Bloodshed conflict between Ukraine and armies of self-­ proclaimed ‘peoples republics’ of Donetsk and Lugansk led to several thousand casualties and about a million refugees from the East of Ukraine (UN Report on the human rights situation in Ukraine in 2019). The EU Member States had to speak with one voice to show their solidarity against direct Russian involvement into civil conflict in Ukraine. Consequently, the EU Member States agreed on new level of sanctions against Russian and Ukrainian officials and nationals involved in supporting the separatists’ movement in the Donbas region of Ukraine. Hitherto, the EU’s sanctions against Russia concerned the following issues: diplomatic measures (cancellation of the EU-Russia political dialogue and dismantling of G8); restrictive measures (asset freezes and visa bans of persons and entities responsible for actions against Ukraine’s territorial integrity); restrictions for Crimea and Sevastopol;

 Vasilyan (2011), pp. 341–357.  Marxsen (2014), pp. 367–391.

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“economic” sanctions against Russia (prohibition of exports of arms, energy and military related technologies and dual use goods, freezing economic cooperation). The EU sanctions were issued upon unanimous decision of all the EU Member States based on Article  215  TFEU as part of the Common Foreign and Security Policy (CFSP). This fact represents evident solidarity of all EU Member States facing a violation of territorial integrity of one of its nearest neighbours which is about to enter into association relations with the EU. It is hoped that the procedure of political dialogue and institutional framework of the AA will be effectively used to protect the principles of sovereignty and territorial integrity, inviolability of borders and independence considered as core values of the AA.

3  C  onstitutional Amendments Caused by the Implementation of the EU-Ukraine Association Agreement One of the first ‘post-Maidan’ constitutional amendments took place in June 2016 when the Verkhovna Rada adopted the ‘Law on amending the Ukrainian Constitution (as to justice)’.9 These constitutional amendments were proposed by President Poroshenko in light of the fight against corruption and the independence of the judiciary in Ukraine. The constitutional amendments sparked considerable public debate in Ukraine and beyond. Externally, the European Commission for Democracy through Law (Venice Commission) twice scrutinised the draft amendments for their compliance with European standards and issued several important reservations.10 Internally, on the one hand, the draft amendments were criticised for giving extended powers to the President of Ukraine to influence the appointment of judges, narrowing the scope of judges’ immunity, and for keeping a complicated system of specialised courts in Ukraine. On the other hand, the position of the Office of the President of Ukraine was that the constitutional amendments were crucial to achieve the objectives of the Association Agreement in terms of sharing common values, fighting corruption and improving access to the judiciary. Particularly, the constitutional amendments ensure that Ukraine observes the essential elements of the Association

9  Ukrainian Law ‘On amending the Constitution of Ukraine (as to justice)’ Zakon Ukrainy “Pro Vnessennia Zmin do Konstitutsii Ukrainy (shodo pravosuddia)” (02 June 2016) No 1401-VIII, VVR (2016) No 28. 10  The reservations mainly concerned the scope of judges’ immunity and preserving the balance of power in the procedure for appointing judges and prosecutors (election of the Supreme Law Council, which is responsible for appointing judges (qualified majority voting) and the right of the Ukrainian Parliament to veto the appointment and removal of Ukraine’s General Prosecutor). European Commission for Democracy through Law (Venice Commission), Opinion №803/2015 of 26 October and 3 December 2015.

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Agreement, such as respect for the principle of the rule of law,11 and meets the objectives of Title III of the Association Agreement on justice, freedom and security, which call on Ukraine to consolidate the rule of law, improve the efficiency of the judiciary, safeguard the independence and impartiality of the judiciary, and combat corruption.12 The official position of the EU institutions on constitutional reform in Ukraine was rather supportive. The annual report on progress in implementing the Association Agreement hailed the constitutional amendments of 2016 as legislation that “strengthens judicial independence and [reorganizes] the court system, by streamlining the judicial instances (from four to three) and by subjecting the sitting judges to examinations and mandatory electronic asset declarations”.13 Furthermore, it should be acknowledged that the most recognised impact of the Association Agreement14 on constitutional reform in Ukraine can be seen in revised Article 124 of the Constitution, wherein it is stated that “Ukraine may recognize the jurisdiction of the International Criminal Court (ICC) as provided for by the Rome Statute of the International Criminal Court”. This amendment overrules a decision of the Ukrainian Constitutional Court in 2001 which explicitly considered recognition of the jurisdiction of the ICC as incompatible with the national Constitution, thus ruling out ratification of the former by the Ukrainian Parliament.15 The wording of revised Article  124 of the Ukrainian Constitution opens a possibility for the Ukrainian Parliament to ratify the Rome Statute in the near future. However, the ratification of the Rome Statute is likely to be postponed until eventual implementation of the ‘Minsk II Agreement’ on the military conflict in Eastern Ukraine (Donbas area) which directly or indirectly involves multiple actors. Particularly, those involved in the conflict must ensure an effective ceasefire, effective control by Ukraine of its eastern border with Russia and guarantee an amnesty for illegally armed belligerents. These actions must take place before ratification of the Rome Statute to avoid entrenching a legal war between the government of Ukraine and the Russian government and the governments of the self-proclaimed separatist republics in Eastern Ukraine.16

 Preamble, Art. 1(2)(e) and Art. 2 Association Agreement, O.J., 2014, L 161/1.  Art. 14 Association Agreement, O.J., 2014, L 161/1. 13  Joint Staff Working Document ‘Association Implementation Report on Ukraine’ (SWD(2016) 446 final). 14  Art. 8 Association Agreement, O.J., 2014, L 161/1. 15  Vysnovok Constitutsiynoho Sudu Ukrainy shodo Vidpovidnosty Constitutsii Ukrainy Rymskomu Statutu Mizhnarodnogo criminalnogo sudu (Decision of the Ukrainian Constitutional Court on the Statute of the International Criminal Court) (July 11, 2001), Case No 1-35/2001, where the Ukrainian Constitutional Court stated that in accordance with the Rome Statute the International Criminal Court complements the system of national judiciaries. For example, the International Criminal Court may exercise its jurisdiction on the territory of States Parties to the Rome Statute. This contradicts Title VIII “Judiciary” of the Ukrainian Constitution, under which (Art. 124) “delegation of the competences of the national judiciary is not permitted”. 16  Briefing of the European Parliament “Ukraine and the Minsk II agreement: On a frozen path to peace?”, available at . 11 12

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Another test of Ukraine’s devotion to the common EU values as enshrined in the Association Agreement took place in September 2017 when the Verkhovna Rada adopted a new education law. This immediately sparked a controversial reception and protests by representatives of national minorities (mainly the Hungarian minority) in Ukraine.17 This law foresees a reduction in the scope of instruction in the native language of a national minority at secondary education level. According to the new education law, only primary school education can be given in the native language of a national minority in Ukraine. Secondary and higher education must be offered only in the official language (Ukrainian) with the possibility to study the native language as one of the courses. The Hungarian government fiercely protested against the new educational law because it violates the rights of the Hungarian minority in Ukraine.18 Furthermore, the Hungarian government asserted that the Ukrainian education law is in conflict with the objectives and human rights commitments of Ukraine in the Association Agreement.19 To prevent the escalation of tension with some EU Member States, the Ukrainian authorities submitted Article 7 of the education law for assessment by the Venice Commission. In its assessment issued on 11 December 2017, the Venice Commission noted the vague nature of the relevant provisions of the national education law and recognised the narrowing of access for national minorities in obtaining secondary education in their native language. The Venice Commission recommended adopting further implementing legislation to ensure a sufficient level of teaching in languages of the EU Member States in Ukraine. However, the Venice Commission recognised discrimination against the languages of national minorities that are not official languages of the EU (Russian) and called on Ukraine not to endanger “the preservation of the minorities’ cultural heritage and the continuity of minority language education in traditional schools”.20 Ukrainian Law on State Language of 2019 sparked further protests from the Hungarian and Russian minorities that expressed concerns on the impact of this law on language rights of the respective national minorities. Again, the Venice Commission was asked to issue an opinion on this law in 2019. At this occasion, the Venice Commission considered that the State Language Law of Ukraine ‘fails to strike balance between strengthening Ukrainian and safeguarding minorities’ linguistic rights’ and, therefore, recommended to postpone the application of the State

 Law of Ukraine “On Education”, Zakon Ukrainy “Pro Osvity” (05 September 2017) No 2145VIII, VVR (2017) No 38-39. 18  “Hungary Threatens to Block Ukraine’s EU Approach”, EU Observer (27 September 2017), available at . Hrynevych (2017). 19  “Hungary seeks to recognize Ukraine violator of Association Agreement over educational law”, available at . 20  Opinion of the European Commission for Democracy Through Law (Venice Commission) ‘On the Provisions of the Law of Education of 5 September 2017’, 11 December 2017, Opinion No 902/2017. 17

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Language Law until the adoption of the National Minorities Law.21 The Ukrainian government welcomed the findings of the Venice Commission and agreed to follow most of them in the course of drafting and adopting further education and national minorities legislation and to ensure a transitional period for implementation of the education law until 2023.22 Meanwhile, the EU’s reaction to the language issue in the education and state language laws and their compatibility with the objectives of the Association Agreement remains neutral.23 However, it is possible that the Venice Commission’s recommendations may be taken on board further by EU institutions and become part of the EU conditionality requirements towards Ukraine in the process of further implementation and application of the Association Agreement in the area of protection of human rights. One of the most significant constitutional developments caused by the implementation of the EU-Ukraine Association Agreement is the introduction of the so-­ called “European integration clauses” in February 2019.24 These clauses were amended to the preamble and provisions of the Ukrainian Constitution on the competences of the President of Ukraine, the Verkhovna Rada and Cabinet of Ministers of Ukraine. The aim of the “European integration clauses” is twofold. On the one hand, these clauses formalise the irrevocability of the strategic course of Ukraine and its legislature, executive and judiciary towards the full membership in the EU and NATO.  Furthermore, these clauses may encourage and legitimise the pro-­ European activism of the Ukrainian judiciary that implies application of the relevant CJEU’s case law. On the other hand, the “European integration clauses” were adopted on the eve of the presidential and parliamentary elections in Ukraine in March 2019 that led to the arrival into the office of a new President of Ukraine, political newcomer, former comedian Volodymyr Zelenskiy. Therefore, these clauses were introduced as a constitutional guarantee to prevent possible change of course of the Ukrainian foreign and domestic policies caused by potential change of the ruling political power and elite in Ukraine as a result of the presidential and parliamentary elections in 2019. However, there was as yet not a need to trigger the “European integration clauses” in the Constitution of Ukraine as the government of President Zelenskiy, dominated by his party “Servant of People” Verkhovna Rada of Ukraine, continued democratic reforms envisaged in the EU-Ukraine AA.  For instance, further legislative and executive measures were taken to reinvigorate the Public Administration Reform including the promotion of e-governance and

 See .  Joint Staff Working Document, Association Implementation Report on Ukraine, (12 December 2019), SWD(2019) 433 final. 23  Ibid. 24  Law of Ukraine “On Amendment to the Constitution of Ukraine (regarding strategic course of the state towards the acquisition of the full membership in the EU and NATO)”, (07 February 2019), No 2680-VIII.  The amended relevant provision of the preamble of the Constitution of Ukraine reads as “strengthening civil accord on the Ukrainian soil and confirming the European identity of the Ukrainian peoples and irrevocability of the European and Euroatlantic course of Ukraine”. 21 22

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administrative services delivery in line with the best EU standards.25 The promotion of the EU common values in the field of justice, freedom and security in Ukraine was accelerated through the long-awaited launch of the High Anti-Corruption Court of Ukraine in 2019 and National Anti-Corruption Bureau of Ukraine, although many legislative and procedural impediments of these reforms are still in place.26

4  A  pplication and Direct Effect of the EU-Ukraine Association Agreement in the Ukrainian Legal Order The Ukrainian judiciary already occasionally referred to the fundamental principles of the EU law and some elements of the EU acquis as well as to CJEU case law before signature of the Association Agreement.27 A combination of external and internal factors may explain this observation. First, since 2004 the Ukraine’s pro-­ European foreign policy has been underpinned by a national program for approximating Ukrainian legislation to the EU law. This has served as vital encouragement for the few Ukrainian judges with expertise in the EU law to refer to the relevant EU acquis in their decisions. Second, the EU has been offering result-oriented, technical and financial support to the Ukrainian judiciary. This support has resulted in significant internal institutional reforms within the Ukrainian judiciary, such as the establishment of a system of administrative courts. From the case law of the Ukrainian courts, mostly administrative judges have been inclined to pioneer application of the EU acquis within the Ukrainian judiciary.28 A third factor is the increased transparency of the Ukrainian judiciary. A national registry of Ukrainian case law was launched in 2006 and drew positive feedback from among the Ukrainian legal community. Judges and lawyers are regularly informed about developments in the EU law via workshops and courses in Ukrainian higher legal education institutions. The law ‘On the All State Program on the adaptation of Ukrainian legislation to EU laws’ of 2004 encouraged the Ukrainian judiciary to use the EU acquis as an important source of reference.29 This law, which is already outdated

 Law of Ukraine “On Civil Service”, (10 December 2015) VVR (2016) No 889-VIII.  Law of Ukraine “On High Anti-Corruption Court”, (07 June 2018) VVR (2018) No 2447-VIII and Law of Ukraine “On National Anti-Corruption Agency”, (14 October 2014) VVR (2014) No 1698-VII. 27  Petrov (2014), pp. 137–158. 28  Petrov and Kalinichenko (2011), pp. 325–353. 29  Law of the Verkhovna Rada of Ukraine ‘About the All State Programme of adaptation of Ukrainian legislation to that of the EU’ (official translation), Zakon Ukrainy “Pro Zagalnoderzhavnu Programu Adaptatsii Zakonodavstva Ukrainy do Zakonodavstva Evropeyskogo Soyuzu” (18 March 2004) No 1629-IV, VVR (2004) No 29. 25 26

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today, envisages export of the whole ‘accession acquis’ into the Ukraine’s legal system.30 There is a long track of the Ukrainian judiciary (including the Ukrainian Constitutional Court) applying the EU acquis as a persuasive source of law even before the signature of the Agreement. For example, the Ukrainian courts recognised the priority of the Association Agreement’s predecessor (the EU-Ukraine PCA) over conflicting provisions of the national law.31 Furthermore, in cases related to state liability, the Ukrainian administrative courts imported from the EU legal system the concept of legal certainty, previously unknown to the Ukrainian legal system. For example, in the Person v Kiev City Centre for Social Assistance case,32 the Kiev District Administrative Court held that the rights of the disabled to claim social and financial assistance from the state flow from the principle of legal certainty. This means that a state cannot justify its failure to guarantee constitutional rights by the absence of a specific national law. For this purpose, the Kiev District Administrative Court referred to the CJEU judgment in van Duyn v the Home Office,33 wherein it was held that nationals may rely on the state’s obligations, even in cases when those obligations are contained in a law without direct effect. Furthermore, the Ukrainian courts developed the principle of legitimate expectations in the case of Person v Darnitsa District of Kiev Center for Social Assistance,34 concerning the right to benefits of those who took part in the liquidation operation during the Chernobyl catastrophe. The Kiev District Administrative Court held that the principle of state liability to offer compensation to those involved in the liquidation of the Chernobyl disaster also flows from the same CJEU case van Duyn v Home Office. Therein, the Kiev District Administrative Court found that if the state formally acknowledged its commitment to offer compensation to those involved in the Chernobyl disaster, it could not refer to its own failure to fulfil its commitments to avoid liability, which would also violate the legitimate expectations of Ukrainian nationals. Such bold judicial activism of administrative judges, previously unknown for a post-Soviet legal system, was not welcomed by all representatives of the Ukrainian  The main objective of this law is the ‘alignment of the Ukrainian legislation with the acquis communautaire, taking into consideration criteria specified by the EU towards countries willing to join the EU’. 31  Ukrainian High Commercial Court judgment of 2 February 2005, No. 12/267. Also Ukrainian High Commercial Court judgment of 25 March 2005 (Closed Stock Company ‘Chumak’ v Kherson Custom Office), No. 7/299. Also Ukrainian High Commercial Court judgment of 22 February 2005 (‘Odek’ LTD v Ryvne Custom Office) No. 18/303. 32  Kiev District Administrative Court judgment of 25 November 2008, No. 2/416. Apparently, this judgment became a pattern for subsequent decisions of Ukrainian administrative judges, see: Kiev District Administrative Court judgment of 24 November 2008, No. 5/503. Kiev District Administrative Court judgment of 1 December 2008, No. 5/451. Kiev District Administrative Court judgment of 10 November 2008, No. 5/435. 33  Case 41/74 van Duyn v Home Office, EU:C:1974:133 (on free movement of workers between EU Member States and direct effect of EU Directives). 34  Kiev District Administrative Court judgment of 26 June 2008, No. 4/337. 30

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establishment. In response to a growing number of similar decisions by the administrative courts, the Ukrainian government under President Yanukovich went to the Ukrainian Constitutional Court to question the compensation-related case law of the administrative courts concerning those involved in the liquidation of the Chernobyl disaster. In its judgment of 25 January 2012, the Constitutional Court overruled the established case law of the administrative courts on the ground that social support for Ukrainian nationals guaranteed by the Ukrainian Constitution must be provided in line with the financial capacities of the state in accordance with the principles of proportionality and justice.35 The Constitutional Court did not consider the relevance of the principle of legal certainty at all but referred to selected decisions of the ECtHR in justifying its own position. This controversial decision of the Constitutional Court was widely criticised—by the expert community in Ukraine and even by some Constitutional Court judges in their special opinions—for lack of reasoning, a pro-governmental position and misleading references to ECtHR case law.36 The situation became even worse when the Supreme Disciplinary Body for judges in Ukraine opened a disciplinary procedure against those administrative judges who referred to CJEU case law in their compensation-related decisions concerning those involved in the Chernobyl disaster. Further dramatic political events in Ukraine and the Maidan Revolution in 2013–2014—which led to the signature of the Association Agreement in June 2014—reinvigorated the debate on the application of the CJEU case law by the Ukrainian judiciary. At the end of 2014, the Ukrainian High Administrative Court decided to intervene and fill this gap in a traditional way for post-Soviet courts—to issue an announcement (information letter), to all administrative judges in Ukraine,37 in which the Ukrainian High Administrative Court stated that the EU founding treaties do not bind Ukraine and, therefore, the EU law and the case law of the CJEU cannot be considered as part of the Ukrainian legal system. Additionally, the Ukrainian High Administrative Court confirmed that ‘legal positions as they are formalized in decisions of the CJEU can be taken into consideration by administrative courts as argumentation, reflection regarding harmonious interpretation of Ukrainian legislation in line with established standards of the EU legal system, but not as a legal foundation (source of law) of a situation that caused a legal dispute’. This statement of the Ukrainian High Administrative Court played a dubious role. On the one hand, it repudiated any formal grounds for Ukrainian judges to apply various sources of the EU acquis in their decisions. On the other hand, it gave a green light for Ukrainian judges to refer to general principles, doctrines and case law of the CJEU as a persuasive source of interpretation in their decisions. Unfortunately, the Ukrainian High Administrative Court did not go far and kept silent on the issues of application of the EU acquis referred to in the text of the  Ukrainian Constitutional Court decision of 23 January 2012, Case No 1-11/2012.  For example, see Special Opinion of Constitutional Court Judge Viktor Shyshkin in Ukrainian Constitutional Court decision of 23 January 2012, Case No 1-11/2012. 37   Announcement of the Ukrainian High Administrative Court on 18 November 2014, No 1601/11/10/14-14. 35 36

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Agreement and of binding decisions of the EU-Ukraine Association Council. Ironically, new constitutional amendments of 2016 envisage the abolition of the system of high specialised courts in Ukraine, thereby undermining the value of the announcement of the Ukrainian High Administrative Court to the Ukrainian judiciary. Beyond any expectation, this clarification of the Ukrainian High Administrative Court on applying CJEU case law found wide support among judges of common and administrative courts in Ukraine. In the period 2015–2016, Ukrainian general, specialised and high courts referred to the Agreement and case law of the CJEU in dozens of decisions.38 In most cases, Ukrainian judges who already possess considerable experience and knowledge in applying the ECHR and ECtHR case law strengthened their argumentation with frequent references to the EU acquis and the Association Agreement, particularly in decisions concerning protection of fundamental human rights in Ukraine. For instance, since 2015, most decisions of administrative courts on rights of pensioners provide a standard statement that the court applies the principle of rule of law in line with the ECtHR and CJEU case law. In these cases, Ukrainian judges cite the announcement of the Ukrainian High Administrative Court on considering CJEU case law as a source of argumentation concerning harmonious interpretation of Ukrainian law with the EU acquis.39 Some judges went even further and considered the entry into force of the Association Agreement in Ukraine as an obligation to apply the EU common values in Ukraine.40 References to the Association Agreement and relevant EU acquis found application in cases of Ukrainian natural persons and companies that claimed direct effect of these provisions in cases concerning paying customs duties when crossing the Ukrainian border;41 supply and trade of natural gas;42 defining the origin of goods (honey);43 or the legality of legislative drafts by the Ukrainian president.44 The Ukrainian courts have recognised the direct effect of provisions of the Association Agreement in their decisions.  For instance, in the case of Zentiva  (2018) the Supreme Court of Ukraine confirmed the priority of Article 198 of the EU-Ukraine  Detailed information on the case law of the Ukrainian judiciary is available at . For example, analysis of decisions of the Ukrainian courts issued in 2014 and 2016 indicates a significant rise in references to the Association Agreement and various sources of the EU acquis (e.g., fundamental principles, secondary acts, case law of the CJEU). 39  For example, Chernigyv District Court judgment of 26 June 2016, No. 750/5197/16-a. 40  For example, the Kolomya City Court judgment of 07 July 2016, No. 346/3499/16-c contains a rather emotional passage ‘The Court notes that after the signing of the Association Agreement with the European Union by the President of our country, and after the ratification by the supreme legislative body (the Verkhovna Rada Ukraine, author), Ukraine, as a state aspiring for full membership into the EU, must respect the private property rights of every person as a basic tenet and cornerstone of European values and inviolable foundation of the EU, which must be complied with by all Member States and by associated countries.’ (Translation by the author.) 41  Lviv Regional Appellate Court judgment of 06 April 2016, No. 33/783/241/16. 42  Kiev District Administrative Court judgment of 13 April 2016, No. 826/594/16. 43  Tsyrypinsk District Court judgment of 29 April 2016, No. 664/906/16-c. 44  Ukrainian High Administrative Court judgment of 26 April 2016, No. 800/251/16. 38

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Association Agreement over the conflicting national legislation.45 Particularly, the issue of direct effect of the Association Agreement finds relevance in the case of possible litigation on the correspondence of Ukrainian laws and other legal acts with the objectives, principles and ‘essential elements’ of the Association Agreement before the Constitutional Court and general courts. Among the examples are the Executive Order of the President of Ukraine on banning Russian social networks (in the matter of national security and sanctions against the Russian Federation caused by the annexation of Crimea in 2014 and military intervention in eastern Ukraine)46 and the Law of Ukraine on banning the St. George (Guards’) Ribbon. The ribbon was widely used by paramilitary separatist groups and Russian army units in the Donbas area and during the annexation of Crimea, and thus may be considered as propaganda for Russian military intervention in Ukraine.47 However, these legislative acts raise some concerns regarding their compliance with the objectives of the Association Agreement in general, and freedom of expression and the principle of proportionality (as applied and interpreted within the ECHR and the EU Charter of Fundamental Rights) in particular.48 During the implementation of the EU-Ukraine AA, the Ukrainian judiciary increased references to the relevant CJEU decisions within the scope of the EU-Ukraine sectoral cooperation. Most of such references are in the field of competition law. For instance, the Supreme Commercial Court of Ukraine and Appellate Commercial Courts referred to the Case C-8/08 (T-Mobile Netherlands BV and Others v Raad)49 in applying the concept of ‘concerted practice’ which means a causal connection between concerted action and the market conduct of undertakings in competition law. Furthermore, Ukrainian administrative courts (regional appellate level) made numerous references to the CJEU case C-255/02 Halifax plc and Others v. Commissioners of Customs & Excise.50 These references concerned the application of the doctrine of ‘business purpose’ in the exemption from paying the VAT.

 Ukrainian Supreme Court judgment of 17 July 2018, No. 910/14972/17.  Executive Order (Ukaz) of the President of Ukraine of 15 May 2017, No. 133/2017. 47  Law of Ukraine ‘Amending the Administrative Code regarding the ban on production and propaganda of the St. George (Guards’) Ribbon’ Zakon Ukrainy “Shodo Zaborony Vygotovlenya i Propagandy Georgievskoy (gvardiyskoy) Strychky” (16 May 2017) No 2031-VIII, VVR (2017) No 26. 48  Van Elsuwege (2017). 49  Case C-8/08, T-Mobile Netherlands BV and Others v Raad, ECR 2009 I-4529. 50  Case C-255/02, Halifax plc and Others v. Commissioners of Customs & Excise, ECR 2006 I-1609. 45 46

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5  A  pplication of Decisions of the EU-Ukraine Common Institutions The Association Agreement established a specific institutional framework (the Association Council, the Association Committee and the Parliamentary Assembly), characterised by the competence to issue decisions and legal acts of a binding nature. The prime objective of the Association Council is to supervise and monitor the Association Agreement within the “framework of regular meetings between the representatives of the Parties.”51 For this purpose, the Association Council has the power to take decisions which are binding upon the parties. This power can be delegated to the Association Committee which helps Ukraine in achieving the results of the association.52 The binding force of decisions and acts of the joint EU-Ukraine institutions is new for the Ukrainian legal system, so that their legal effect is not yet clarified. Hitherto, neither the EU-Ukraine Association Council nor other common institutions have so far issued any decisions of a binding nature. Therefore, there has been no reason for the Ukrainian judiciary to clarify their position on this complicated issue. In the meantime, the Ukrainian Parliament and the government are working on a draft law to regulate all legal issues related to the implementation and application of the Association Agreement. Unfortunately, this draft law has not yet been proposed even for a first reading in the Ukrainian Parliament. According to the draft law, decisions of common EU-Ukraine institutions will not be directly applicable but will be enforced like international agreements. Particularly, the draft law considers binding decisions of common EU-Ukraine institutions either as international agreements,53 or as national laws, or as secondary acts—depending on their content. In the former two cases, binding decisions of common EU-Ukraine institutions must be regarded as part of the national legal system, which takes precedence over conflicting national legislation but not over the Constitution. In the latter case, it will be regarded as a secondary legal source for the Ukrainian legal system. The draft law obliges the Ukrainian judiciary to apply these decisions as sources of law. Non-­ binding recommendations of common EU-Ukraine institutions can be used as a source in interpreting Ukrainian legislation and Ukraine’s international obligations.

 Art. 463(1) Association Agreement, O.J. 2014, L 161/1.  Art. 465(2) Association Agreement, O.J. 2014, L 161/1. 53  Within the issues related to political, territorial, human rights, participation in international unions and organizations, collective security, usage of Ukrainian territory and natural resources, military assistance and deployment of Ukrainian troops abroad (Art. 3(2) of the Ukrainian Law on International Treaties). 51 52

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6  Conclusion The objective of effective implementation of the Association Agreement was to enhance the adaptability of the national constitutional order to the European integration project and the European common values. Internally, Ukraine went through a dramatic transformation from a country that pursued a multi-vector foreign policy aimed at appeasing two conflicting integration projects (European and Eurasian) to a country with a firm pro-European policy as cemented in the Association Agreement. Externally, Ukraine committed itself to the demanding conditionality and monitoring processes envisaged in the Association Agreement in return for a better access to the EU internal market, establishing a Deep and Comprehensive Free Trade Area and abolishing the visa regime with the EU. The Association Agreement established a sustainable institutional and legal framework for application of the EU acquis including CJEU case law and comprehensive legislative approximation between Ukrainian and the EU law. However, the institutional reforms that have already taken place cannot be regarded as sufficient. The Ukrainian Parliament has failed to establish substantive and procedural foundations for applying and implementing the Association Agreement in the Ukrainian legal order. However, this gap is being partially filled by a surprising judicial activism in Ukraine. The Ukrainian judiciary has already started referring to the Association Agreement and relevant parts of the EU acquis, thereby laying a foundation for regular application of the general principles of the EU law in applying the provisions of the Association Agreement. Undoubtedly, this is a great challenge for the Ukrainian legal system. A significant role in this process is expected from the Ukrainian judiciary, particularly from the Constitutional Court and the Supreme Court, which must eventually clarify the status of the Association Agreement within the Ukrainian legal order, and the newly formed Ukrainian Supreme Court, which has recruited EU-minded judges and academics. Furthermore, the Ukrainian Constitution has already been amended to encompass specific requirements of the Association Agreement (such as the ratification of the Rome Statute and access to the judiciary). Besides, further amendments related to the implementation of the Association Agreement may be expected, such as strengthening the role of international law within the Ukrainian legal system, reference to the common EU values—languages of national minorities in the new education law—along with acknowledging and formalising the potential transfer of some of Ukraine’s sovereign powers to supranational international organisations. Moreover, pressure by some EU Member States with reference to the Association Agreement may persuade Ukraine to amend the education law related to minority languages. Looking more widely at the pattern of adaptability of the Ukrainian constitutional order to the European integration project, we may conclude that external factors—such as the aims of EU-Ukraine relations, including potential membership in the EU, and introduction of a visa-free regime—play a catalytic role for constitutional change.

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References Hrynevych L (2017) Ukraine education law does not harm minorities. EU Observer, 20 October 2017. https://euobserver.com/opinion/139550 Kurowska X, Tallis B (2009) Border assistance mission: beyond border monitoring? EFARev 14(1):47–64 Marxsen C (2014) The Crimea crisis  – an international law perspective. Zeitschrift für ausländisches öffentliches Recht und Völkerrecht 74(2):367–391 Petrov R (2014) Regulatory convergence and application of EU law in Ukraine. In: Van Elsuwege P, Petrov R (eds) Legislative approximation and application of EU law in the Eastern Neighbourhood of the European Union: towards a common regulatory space? Routledge Press, Oxford, pp 137–158 Petrov R (2016) Implementation of association agreements between the EU and Ukraine, Moldova and Georgia: legal and constitutional challenges. In: Kerikmäe T, Chochia A (eds) Political and legal perspectives of the EU Eastern Partnership Policy. Springer, Cham, pp 153–165 Petrov R, Kalinichenko P (2011) The Europeanization of third country judiciaries through the application of the EU Acquis: the cases of Russia and Ukraine. Int Comp Law Q 60(2):325–353 (Cambridge University Press) Van der Loo G (2015) The EU-Ukraine Association Agreement and deep and comprehensive free trade area. Brill/Nijhoff, Leiden, Boston Van Elsuwege P (2014) In: Van der Loo G, Van Elsuwege P, Petrov R (eds) The EU-Ukraine Association Agreement: assessment of an innovative legal instrument. EUI Working Papers (Law) 2014/09 Van Elsuwege P (2017) Ukraine’s ban on Russian social media: on the edge between national security and freedom of expression. VerfBlog, 6 February 2017. http://verfassungsblog.de/ ukraines-ban-on-russian-social-media-on-the-edge-between-national-security-and-freedomof-expression Van Elsuwege P, Van der Loo G, Petrov R (2015) The EU-Ukraine Association Agreement: a new legal instrument of integration without membership? Kyiv-Mohyla Law Polit J (1):1–19 Vasilyan S (2011) The external legitimacy of the EU in the South Caucasus. EFARev 16(3):341–357 Roman Petrov  is a Jean Monnet Chair in EU Law and the Head of the Jean Monnet Centre of Excellence at the National University “Kyiv-Mohyla Academy” in Ukraine. Areas of Prof. Dr. Petrov’s research and teaching include: EU Law, EU External Relations Law; Approximation and Harmonization of Legislation in the EU; Rights of Third Country Nationals in the EU, Legal Aspects of Regional Integration in the Post-Soviet Area.

National and Bilateral Normative Framework for Legislative Impact of the EU Law on the Georgian Legal System Gaga Gabrichidze

1  Introduction When Georgia and the EU entered into negotiations to conclude an association agreement in 2010, both parties were aware that the new legal framework of relations between Georgia and the European Union would have a significant influence on the future development of the Georgian legal order. On 27 June 2014, the EU-Georgia Association Agreement1 (EU-Georgia AA) was signed. It fully entered into force on 1 July 2016, but the provisional application of its substantial parts started already on 1 September 2014. Since then, Georgia has amended many legislative acts within the framework of legal approximation or adopted the new acts to this end.2 While understanding that the precise extent of the EU-Georgia AA’s influence on Georgia’s legal order can only be measured by analysing all those normative acts which are already amended or adopted in the course of approximation but also those ones which will be amended or adopted during the entire implementation process of the EU-Georgia AA, this paper only addresses those framework conditions which define the scope of effects on the Georgian legal system. It aims at exploring the current normative structure on both—unilateral and bilateral—level as the determining factor for the legislative impact of the EU law on the Georgian legal order. 1   Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Georgia, of the other part, O.J., 2014, L 261. 2  Reports of the Action Plans for 2015, 2016, 2017, 2018 and 2019 for the Implementation of the Association Agreement and the Association Agenda.

Accessed 11 April 2020. G. Gabrichidze (*) New Vision University, Tbilisi, Georgia e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 S. Lorenzmeier et al. (eds.), EU External Relations Law, https://doi.org/10.1007/978-3-030-62859-8_9

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For this purpose, national legal norms defining the attitude of the Georgian legislation toward the EU law will be discussed and the role of common values in the EU-Georgia AA as well as the content of contractual obligations to approximate legislation will be examined.

2  Normative Attitude Toward the EU Law Long before the conclusion of the EU-Georgia AA, the Georgian Parliament has expressed its fascination for the EU law. A Resolution of the Parliament of Georgia adopted on 2 September 1997 was the very first act expressing the normative attitude toward the EU law. Chronologically, it even preceded the entry onto force of the EU-Georgia Partnership and Cooperation Agreement3 (EU-Georgia PCA)—the first bilateral4 legal framework for the EU-Georgia relations which was signed in 1996 and entered into force in 1999. According to this resolution, “with a view to ensuring the enhancement of the process of Georgia’s integration into the European international institutions, approximation and harmonisation of legal systems, compliance of Georgian law with the EU principles, all the laws and other normative acts adopted by the Parliament of Georgia starting from 1 September 1998, should be compatible with the standards and norms of the EU.”5 In other words, the Parliament undertook to pursue dynamic approximation of its acts to the EU law. This self-imposed commitment neither considered the constitutional and political preconditions nor the complexity of such approximation process and can only be explained by political and/or legal naivety. Therefore, it is not surprising that this resolution did not play a decisive role in the further legislative process. Politically less ambitious, legally more effective but practically not substantially more efficient have been further actions taken by the Georgian Parliament with a view to voicing a specific stance towards EU legislation. Particularly, under Article 17.1 of the Law of Georgia on Normative Acts of 22 October 2009, the explanatory note of a draft law submitted to the Parliament of Georgia should indicate, among others, the relation of the draft law concerned to the EU directives. The same requirement was included into the Rules of Procedure of the Parliament of Georgia on 17 February 2004 then in force and into the Rules of Procedure of the Parliament of Georgia which was adopted on 22 June 2012.6 Compared with the Parliamentary Resolution of 1997, which was demanding the compliance of Georgian laws with the norms of the EU law, the abovementioned acts set only the requirement to provide information concerning the compliance. On the other hand, strangely the  O.J., 1999, L 205.  Technically speaking, the PCA as well as the AA are as all other “mixed agreements” multilateral ones. 5  Resolution of the Parliament of Georgia on the Harmonisation of Georgian Legislation with that of the EU, 2 September 1997, N828-Is. 6  Article 145.2 c.a) of the Rules of Procedure of the Parliament of Georgia (as of 22 May 2012). 3 4

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Georgian lawmaker was interested in information about compliance of the draft concerned with the EU directives only. One can only speculate on the reasons for such a limited view of the acquis. The most reasonable explanation is that the EU directives were perceived by the authors as the synonym for the rules of the EU. Nevertheless, even the limited scope of the requirement set by these provisions could not make them efficient. Although the provisions do not say anything about implications in case of a negative answer, in practice, they only led authors of the draft laws to include formulaic statements into explanatory notes claiming compliance of the draft law with the EU directives. It has been obvious that the requirements set by the Law on Normative Acts and the Rules of Procedure of the Parliament of Georgia needed to be changed in such a way that not only information on compliance of the draft law with EU directives should be requested but also information on compliance with the whole acquis. Furthermore, it would be reasonable to provide not only the general information on compliance but also more details on concrete EU legal acts concerned. In 2018, the Parliament of Georgia addressed the above-mentioned issues and on 13 June adopted changes and amendments to the Law on Normative Acts and the Rules of Procedure of the Parliament of Georgia, according to which drafters have now to provide the information on compliance of the draft law with the “EU law”.7 Furthermore, the explanatory note shall include information on those relevant EU legal acts (if any) to which the Georgian legislation shall be approximated according to the EU-Georgia AA or other agreements concluded between Georgia and the EU.8 This splitting of EU-related information into, on the one hand, compliance with the EU law and, on the other hand, listing the relevant EU legal acts, does not seem necessary as the former cannot be complete without the inclusion of the latter. Nevertheless, informativeness of the explanatory note is further supported with another new requirement, according to which draft laws shall be accompanied with the table of correspondence between the draft law concerned and the relevant EU legal acts.9

3  Commitments Undertaken on the Bilateral Level The EU-Georgia AA, the current legal framework of the EU-Georgia relations, is one of the new generation of Association Agreements concluded by the European Union with the aim to establish a unique model of political and economic 7  Article 17.1 c.a) of the Law on Normative acts (as amended on 13 June 2018); Article 145.2 c.a) of the Rules of Procedure of the Parliament of Georgia (as amended on 13 June 2018). 8  Article 17.1 c.d) of the Law on Normative acts (as amended on 13 June 2018); Article 145.2 c.d) of the Rules of Procedure of the Parliament of Georgia (as amended on 13 June 2018). Article 17.5 a.b) of the Law on Normative acts sets the same requirement for the explanatory note of a by-law. 9  Article 17.2 a of the Law on Normative acts (as amended on 13 June 2018); Article 145.3 b of the Rules of Procedure of the Parliament of Georgia (as amended on 13 June 2018).

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integration.10 Under Article 1 of the EU-Georgia AA, the aims of the association are: to promote political association and economic integration between the Parties based on common values and close links; to provide a strengthened framework for enhanced political dialogue; to contribute to the strengthening of democracy and to political, economic and institutional stability in Georgia; to promote, preserve and strengthen peace and stability regionally and internationally; to promote cooperation aimed at peaceful conflict resolution; to enhance cooperation in the area of freedom, security and justice with the aim of reinforcing the rule of law and the respect for human rights and fundamental freedoms; to support the efforts of Georgia to develop its economic potential through international cooperation, including through the approximation of its legislation to that of the EU; to achieve Georgia's gradual economic integration into the EU Internal Market; to establish conditions for an increasingly close cooperation in other areas of mutual interest.

3.1  Institutional Framework Under the EU-Georgia AA For monitoring and enforcement of implementation process of the EU-Georgia AA, the Agreement itself establishes a multilevel institutional system.11 First, regular meetings at ministerial level should be mentioned, which are to be held based on mutual agreement.12 However, it is the Association Council13 that have a special place within the institutional system created by the Association Agreement. This body which shall meet at ministerial level and consist of members of the Council of the European Union and members of the European Commission, on the one hand, and of members of the Government of Georgia, on the other, is responsible for supervising and monitoring the application and implementation of the Association Agreement. It may also examine any major issues related to the Association Agreement and any other issues of mutual interest. On the one hand, in the context of gradual approximation of Georgia’s legislation to that of the EU, the Association Council is a forum for exchange of information on selected European Union and Georgia legislative acts and on implementation, enforcement and compliance measures. On the other hand, what makes it very important is that the Association Council has, in contrast to the Cooperation Council created under the EU-Georgia PCA, the power to take decisions which are binding upon the parties. Amongst other things, it has a power to update or amend the annexes of the Association Agreement to reflect the evolution of the EU law and to ensure the dynamic approximation of the Georgian law to that of the EU.

 Lazowski (2008), pp. 1433 et seq.; Van der Loo (2014), pp. 63 at seq.  Provisions on the institutional framework is provided for in Title VIII, Chapter 1 of the EU-Georgia AA. 12  Article 403 of the EU-Georgia AA. 13  Articles 404–406 of the EU-Georgia AA. 10 11

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The Association Council is assisted by the Association Committee,14 which is composed of representatives of the parties of the Association Agreement at senior civil servant level. The assistance function of the Association Committee is not limited only to the preparation of meetings of the Association Council. It has the power to adopt decisions in cases provided for by the Association Agreement and, more importantly, the Association Council may delegate to the Association Committee any of its powers, including the power to take binding decisions. Sub-committees, which may be set up by the Association Council or the Association Committee, have assisting function to the Association Committee.15 At the parliamentary level, a Parliamentary Association Committee16 created under the Association Agreement shall serve as a forum for Members of the European Parliament and of the Parliament of Georgia to exchange views. It has the power to request any information on the implementation of the Association Agreement from the Association Council and to make recommendations to the Association Council. Furthermore, an instrument of bilateral cooperation between the EU and civil society in Georgia in the form of the Civil Society Platform has been established.17 It consists of representatives of civil society on the side of the EU, including Members of the European Economic and Social Committee, and representatives of civil society on the side of Georgia. The creation of the Civil Society Platform shall facilitate the implementation of the Association Agreement as its main function is to monitor the implementation process and provide recommendations to bilateral bodies established under the Association Agreement.

3.2  Common Values Conditionality Like international agreements concluded by the EU after early 90s,18 the EU-Georgia AA builds, inter alia, on the ‘common values’ conditionality. The importance of the values is already reflected in the preamble, where there are several references to them. Particularly, it is recalled that the EU is built on the following common values: democracy, respect for human rights and fundamental freedoms, and the rule of law. However, it is also underlined that these values also lie at the heart of political association and economic integration as envisaged in the Association Agreement.19 Besides, the parties declare that they are committed to further strengthen the respect  Articles 407–409 of the EU-Georgia AA.  Article 409 of the EU-Georgia AA. 16  Articles 410–411 of the EU-Georgia AA. 17  Articles 412–413 of the EU-Georgia AA. 18  On the role of values in the EU’s foreign policy see: Cremona (2011), pp. 275–315. In the context of the ENP see: Ghazaryan (2014). Regarding the Association Agreements with Georgia, Moldova and Ukraine more particularly see: Petrov (2016), pp. 99–112. 19  Paragraph 3 of the Preamble of the EU-Georgia AA. 14 15

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for fundamental freedoms, human rights, including the rights of persons belonging to minorities, democratic principles, the rule of law, and good governance.20 Further, the parties confirm that they are committed to all the principles and provisions of the Charter of the United Nations, the Organisation for Security and Cooperation in Europe, particularly the Helsinki Final Act of 1975 of the Conference on Security and Cooperation in Europe, the concluding documents of the Madrid, Istanbul and Vienna Conferences of 1991 and 1992 respectively, and the Charter of Paris for a New Europe of 1990, as well as the United Nations Universal Declaration of Human Rights of 1948 and the European Convention for the Protection of Human Rights and Fundamental Freedoms of 1950.21 However, more importantly, the EU-Georgia AA designates respect for the democratic principles, human rights and fundamental freedoms, as well as the fight against the proliferation of weapons of mass destruction and their delivery systems as essential elements of the agreement and, herewith, makes them the primary manifestation of values conditionality.22 Although free market economy, sustainable development, effective multilateralism, good governance, respect to international obligations, the fight against corruption, the fight against the various forms of transnational organised crime and terrorism and effective multilateralism do not enjoy the status of the essential elements, all of them are declared to be the general principles of the Association Agreement,23 and with this status they shall have significant influence in the development of the relations between Georgia and the EU. A thought-out and values-based policy towards Georgia finds its expression in several articles which are devoted to political dialogue, reform and cooperation in the field of foreign and security policy, as well as to the issues of freedom, security and justice. Strengthening respect for human rights and fundamental freedoms,24 promoting the rule of law,25 including the independence of the judiciary, access to justice, and the right to a fair trial are designated as aims and guide of political cooperation. It is only logical that the essential elements of the agreement enjoy a special status compared to other provisions. This is reflected particularly in rules concerning non-fulfilment of obligations. As a general rule, in case of a dispute, a party may take appropriate measures if the matter is not resolved within three months of the  Paragraph 7 of the Preamble of the EU-Georgia AA.  Paragraph 10 of the Preamble of the EU-Georgia AA. 22  Articles 2.1 and 10 of the EU-Georgia AA. As for the meaning of these values, the same provision refers to the United Nations Universal Declaration of Human Rights of 1948, the European Convention for the Protection of Human Rights and Fundamental Freedoms of 1950, the Helsinki Final Act of 1975 of the Conference on Security and Cooperation in Europe and the Charter of Paris for a New Europe of 1990. 23  Article 2.2-4 of the EU-Georgia AA. 24  Article 3.2 h) of the EU-Georgia AA; Article 4 of the EU-Georgia AA; Article 13.1 of the EU-Georgia AA; Article 13.3 of the EU-Georgia AA. 25  Article 4 of the EU-Georgia AA; Article 13.1 of the EU-Georgia AA. 20 21

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date of notification of a formal request for dispute settlement and if the complaining party continues to consider that the other party has failed to fulfil an obligation under the Association Agreement.26 However, in case of violation of essential elements by one of the parties the other party is not under the obligation to follow the procedure of a three month consultation period before reacting and taking appropriate measures.27

3.3  Approximation Provisions in the EU-Georgia AA The impact of the EU law on the Georgian legal order is boosted with market access conditionality provided for in the EU-Georgia AA. It allows Georgia to integrate into the EU internal market subject to the condition that Georgia successfully implements its legislative approximation commitments.28 The EU-Georgia AA is a voluminous document with about 1,000 pages. However, it is, of course, not the size but the nature and scope of commitments that makes this international treaty very influential in the development of the Georgian law. To express it in figures, the EU-Georgia AA provides for the approximation of Georgian laws with nearly 300 acts of the EU law. Nevertheless, it was not first with the entry into force of the Association Agreement that the process of impacting the Georgian Legislation has started. The EU-Georgia PCA also provided for an approximation clause according to which Georgia committed to “endeavour[ing] to ensure that its legislation will be gradually made compatible with that of the Community”.29 The use of this wording and the absence of specific deadlines for the fulfilment of approximation commitment underlined the “soft” nature of the commitment to approximate Georgian legislation to that of the EU. The Georgia’s participation in the European Neighbourhood Policy30 (ENP) gave new impetus to the process of rapprochement with the EU. The EU-Georgia ENP action plan, the basic tool for the implementation of the ENP’s objectives by Georgia, which was adopted on 14 November 2006, expanded the scope of fields to be covered by the legal approximation in Georgia and introduced monitoring instruments in the form of regular progress reports by the European Commission.

 Article 422.1 of the EU-Georgia AA.  Article 422.3 of the EU-Georgia AA. 28  For the role of market conditionality in the Association Agreements, see: Petrov (2016), pp. 99–112. 29  Article 43 (2) of the EU–Georgia PCA. 30  Communication from the Commission to the Council and the European Parliament ‘Wider Europe  – Neighbourhood: A New Framework for Relations with our Eastern and Southern Neighbours’. COM (2003) 104 final). 26 27

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However, precise scope and indicators as well as deadlines for approximation were still at large missing.31 The first statement of the EU-Georgia AA about the importance of approximation can be found already in the preamble according to which the parties are “committed to achieve economic integration in particular through a Deep and Comprehensive Free Trade Area (DCFTA), as an integral part of this Agreement including regulatory approximation and in compliance with the rights and obligations arising out of the membership of the Parties in the World Trade Organisation (WTO)”.32 Therefore, the economic integration is declared as the goal of the cooperation and approximation is considered as a key instrument to achieve it. For this purpose, the EU-Georgia AA provides for various legislative approximation mechanisms. They are placed in different parts of the agreement. Particularly, approximation provisions can be found in Title IV (DCFTA),33 Title V (Economic cooperation),34 Title VI (Other cooperation policies)35 and Title VIII (Institutional, general and final provisions).36 This as well as the existing differences in scope or procedure of these mechanisms can be explained with different objectives of the above-mentioned chapter. Based on these differences, approximation provisions of the EU-Georgia AA can be classified into three categories. Under Article 417, which is titled “Gradual approximation”, Georgia “shall carry out gradual approximation of its legislation to EU law as referred to in the Annexes to this Agreement, based on commitments identified in this Agreement, and in accordance with the provisions of those Annexes. This provision shall be without prejudice to any specific principles and obligations on approximation under Title IV (Trade and Trade-related Matters) of this Agreement”. This provision can be regarded as the general approximation clause. Further, each sectoral chapter of the agreement has special approximation clauses, which can be classified as the second category of approximation provisions. The important feature of these provisions is that they provide for the material scope of approximation by referring to relevant annexes to the EU-Georgia AA, where specific EU legal acts are listed, to which Georgian legislation shall be  Concerning approximation process which took place in Georgia before the entry into force of the EU-Georgia Association Agreement see: Gabrichidze (2014), pp. 179–191. 32  Preamble of the EU-Georgia AA. 33  Approximation provisions contained in the DCFTA part of the EU-Georgia AA will be discussed below. 34  Taxation (Article 285 of the EU-Georgia AA); statistics (Article 291 of the EU-Georgia AA). 35  Transport (Article 296 of the EU-Georgia AA); energy cooperation (Article 300 of the EU-Georgia AA); environment (Article 306 of the EU-Georgia AA); climate action (Article 312 of the EU-Georgia AA); company law, accounting, auditing and corporate governance (Article 319 of the EU-Georgia AA); financial services (Article 323 of the EU-Georgia AA); cooperation in the field of informational society (Article 327 of the EU-Georgia AA); consumer policy (Article 347 of the EU-Georgia AA); employment, social policy and equal opportunities (Article 354 of the EU-Georgia AA); public health (Article 357 of the EU-Georgia AA); cooperation in audio-visual and media fields (Article 367 of the EU-Georgia AA). 36  Chapter 2 (General and final provisions). 31

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approximated. To the third category of approximation provisions belong approximation clauses of supportive nature, which, on the one hand, refer to the DCFTA part of the EU-Georgia AA, but, on the other hand, they are not sector-specific. Thus, these clauses can be classified as general provisions on approximation under DCFTA.37 3.3.1  Special Approximation Provisions Special approximation provisions can be found in the DCFTA part of the EU-Georgia AA, which is, as mentioned above, provided for in Title IV of the EU-Georgia AA (trade and trade-related matters) and in the parts entitled “Economic cooperation” (Title V) and “Other cooperation policies” (Title VI). Title IV comprises 15 Chapters. While Chapters 1 to 13 concern specific sectors of trade, Chapter 14 provides for provisions on dispute settlement and mediation and Chapter 15 on general provisions on approximation related to the DCFTA. The following chapters include special approximation clauses: technical barriers to trade, standardisation, metrology, accreditation and conformity assessment;38 sanitary and phytosanitary and animal welfare legislation;39 customs legislation;40 establishment, trade in services and electronic commerce;41 transport services42 and public procurement.43 For example, Chapter 3 of the Title IV (“Technical barriers to trade, standardisation, metrology, accreditation and conformity assessment”) concerns preparation, adoption and application of standards, technical regulations, and conformity assessment procedures as defined in the WTO Agreement on Technical Barriers to Trade that may affect trade in goods between the EU and Georgia.44 Georgia commits itself to take the measures necessary to gradually achieve approximation with the EU’s technical regulations, standards, metrology, accreditation, conformity assessment, corresponding systems and market surveillance system. Furthermore, it shall follow the principles and the practice laid down in the relevant Union acquis.45 To achieve these goals, Georgia shall progressively approximate its legislation to the relevant acquis and achieve and maintain the level of administrative and institutional effectiveness necessary to provide an effective and transparent system that is  Articles 271–276 of the EU-Georgia AA. Chapter 15, which contains these provisions, is a part of the DCFTA part of the Association Agreement (Title IV) and entitled ‘General provisions on approximation under Title IV’. 38  Article 47 (2) of the EU-Georgia AA. 39  Article 55 of the EU-Georgia AA. 40  Article 75 of the EU-Georgia AA. 41  Articles 103, 113 and 122 of the EU-Georgia AA. 42  Article 126 of the EU-Georgia AA. 43  Article 146 of the EU-Georgia AA. 44  Article 44 (1) of the EU-Georgia AA. 45  Article 47 (1) of the EU-Georgia AA. 37

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required for the implementation of the above-mentioned chapter.46 Besides, Georgia expressly commits itself to refrain from making changes in its horizontal and sectoral legislation in the priority areas for approximation, except when the amendments have been made for the purposes of progressive approximation to the corresponding EU acquis and for maintaining such approximation.47 Annex III-A to the EU-Georgia AA refers to specific EU acts and timetable for approximation. This list may be amended by a decision of the Association Committee in Trade configuration.48 As another example, Chapter 6 of the Title IV (“Establishment, trade in services and electronic commerce”) determines the necessary arrangements for the progressive reciprocal liberalisation of establishment and trade in services and for cooperation on electronic commerce.49 The Chapter comprises the following sections: General provisions; establishment; cross-border supply of services; temporary presence of natural persons for business purposes; regulatory framework; electronic commerce; exceptions. However, only the following sub-sections provide for approximation clauses: Postal and currier services;50 electronic communication network and services;51 financial services;52 transport services.53 However, the wording of these clauses is the same. Namely, “with a view to considering further liberalisation of trade in services, the Parties recognise the importance of the gradual approximation of the existing and future legislation of Georgia to the list of the Union acquis included in the [relevant annex] to this Agreement”.54 On the one hand, it is noteworthy that this clause refers not only to legislation existing before the entry into force of the Association Agreement but also to future laws. On the other hand, it is a rather soft approximation commitment, as the parties just “recognise the importance” of approximation and Georgia is not directly obliged to approximate its laws to that of the EU. Like the above-mentioned sub-sectors of Chapter 6 of Title IV, almost all approximation clauses included in the Chapters of Title on Economic cooperation and Title on other cooperation policies have the same wording. According to them, “Georgia will carry out approximation of its legislation to the EU acts and international instruments referred to in [relevant annex] to this Agreement in accordance with the provisions of that Annex”.55 Compared to the approximation clause of Chapter on “Technical barriers to trade, standardisation, metrology, accreditation and

 Article 47 (2) of the EU-Georgia AA.  Article 47 (3) of the EU-Georgia AA. 48  Article 47 (1) of the EU-Georgia AA. 49  Article 76 (1) of the EU-Georgia AA. 50  Articles 99–103 of the EU-Georgia AA. 51  Articles 104–113 of the EU-Georgia AA. 52  Articles 114–122 of the EU-Georgia AA. 53  Articles 123–126 of the EU-Georgia AA. 54  Articles 103, 11, 122, 126 of the EU-Georgia AA. 55  Articles 285, 296, 300, 306, 312, 319, 323, 327, 347, 354, 357, 367 of the EU-Georgia AA. 46 47

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conformity assessment” (“Georgia shall…”), this provision looks vague (“Georgia will carry”). However, it is still stronger than the approximation clause contained in sub-­sectors of Chapter 6 of Title IV (“recognise the importance”). Furthermore, it is strengthened with the general approximation clause of Article 417 of the Association Agreement56 and the content of relevant Annexes57 where the concrete scope and timetable for approximation are determined. 3.3.2  General Approximation Provisions for the DCFTA General approximation provisions for the DCFTA part of the EU-Georgia AA provided for in Chapter 15 of Title IV cover the following issues: Progress in approximation in trade-related areas;58 repeal of inconsistent domestic law;59 assessment of approximation in trade-related areas;60 developments relevant to approximation;61 exchange of information62 and general provision.63 However, in case of conflict with sector-specific (special) approximation provisions which also regulate the same area, it is those sector-specific provisions that apply. The general approximation provisions stipulate that in facilitating the assessment of the approximation of Georgian legislation to the EU law in the trade-related areas of Title IV of the EU-Georgia AA, the parties shall regularly, and at least once a year, discuss the progress in approximation according to the agreed timeframes provided for in Chapters dealing with technical barriers to trade, standardisation, metrology, accreditation and conformity assessment,64 sanitary and phytosanitary measures,65 customs and trade facilitation,66 establishment, trade in services and electronic commerce67 and public procurement.68 The discussions shall be held in

 See below.  Annexes XV-A (Rules applicable to financial services), XV-B (Rules applicable to communication services), XV-D (Rules applicable to maritime transport), XXII (Taxation), XXV (Energy), XXVI (Environment), XXVII (Climate action), XXVIII (Company law, accounting and auditing and corporate governance), XXIX (Consumer policy), XXX (Employment, social policy and equal opportunities), XXXI (Public health), XXXIII (Cooperation in audio-visual and media fields). 58  Article 271 of the EU-Georgia AA. 59  Article 272 of the EU-Georgia AA. 60  Article 273 of the EU-Georgia AA. 61  Article 274 of the EU-Georgia AA. 62  Article 275 of the EU-Georgia AA. 63  Article 276 of the EU-Georgia AA. 64  Chapter 3 of Title IV of the EU-Georgia AA. 65  Chapter 4 of Title IV of the EU-Georgia AA. 66  Chapter 5 of Title IV of the EU-Georgia AA. 67  Chapter 6 of Title IV of the EU-Georgia AA. 68  Chapter 8 of Title IV of the EU-Georgia AA. 56 57

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the Association Committee in Trade configuration, or one of its Sub-Committees established under the EU-Georgia AA.69 Article 272 of the EU-Georgia AA provides for an obligation for Georgia which seems to be a very logical demand in the context of approximation. Particularly, Georgia has to repeal provisions of national law and remove administrative practices which are inconsistent with the EU law that is the object of approximation provisions or with its national law approximated to the EU law accordingly. With this provision it should be ensured that the approximated legislation would not become an isolated part of the national law. Specific attention is given to assessment of approximation in trade-related areas. The assessment of approximation by the EU starts when Georgia informs the EU that it has completed the approximation provided for in any of the Chapters of the DCFTA part of the Association Agreement.70 However, it should be assessed whether the law of Georgia has been approximated to the EU law and whether it is implemented and enforced effectively.71 The outcome of the assessment may have far-reaching consequences on benefits deriving from the Association Agreement. Particular benefits accorded by the EU based on an assessment that the law of Georgia had been approximated to the EU law and was implemented and enforced effectively may be temporarily suspended if Georgia does not approximate its national law to take account of changes to Title IV concerning approximation, or if the assessment shows that the law of Georgia is no longer approximated to the EU law, or if the Association Council fails to take a decision to update Title IV in line with developments in the EU law.72 On the other hand, the suspension of benefits may only be implemented if the matter is not referred by Georgia to the Association Committee in Trade configuration, or if it cannot be resolved by this Committee within three months from the referral.73 3.3.3  General Approximation Provisions Specific approximation provisions which can be found in the DCFTA part and other parts of the Association Agreement are supplemented by general approximation clauses. To these provisions belong the general approximation clause of Article 417, which, as mentioned above, imposes upon Georgia an obligation to carry out gradual approximation of its legislation to the EU law as referred to in the Annexes to the Association Agreement. However, the indication that this provision shall not affect specific principles and obligations on approximation provided for in the

 Article 271 of the EU-Georgia AA.  Unless otherwise provided for in Chapters 4 and 8 of Title IV of the EU-Georgia AA. 71  Article 273 (2) of the EU-Georgia AA. 72  Article 274 (6) of the EU-Georgia AA. 73  Article 274 (7) of the EU-Georgia AA. 69 70

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DCFTA part of the Association Agreement reveals the general nature of this approximation provision. Another example of a general provision, Article 418, stipulates that “in line with the goal of gradual approximation by Georgia to EU law, the Association Council shall periodically revise and update Annexes to this Agreement, including in order to reflect the evolution of EU law and applicable standards set out in international instruments deemed relevant by the Parties, and following the completion of the respective internal procedures of the Parties, as appropriate”. Here also is the same reflection of the general nature of this norm in mentioning that this clause shall not affect any specific provisions under Title IV of the Association Agreement.74

4  Constitutional Context for Dynamic Approximation As we have seen with the conclusion of the Association Agreement with the EU, Georgia has committed to dynamically approximate large parts of its legislation to the EU law, which practically means subordinating the Georgian law to that of the EU. This raises the question of national positioning to the issue of national sovereignty. On the one hand, there is no express provision in the Constitution of Georgia allowing the transfer of sovereignty to international bodies. However, on the other hand, the Constitution does not establish substantive barriers on constitutional amendments.75 Therefore, the Parliament of Georgia does have an unlimited power for establishing any kind of specific constitutional provisions, including a constitutional basis for European integration. Although the recently adopted constitutional amendment, according to which ‘the constitutional bodies shall take all available measures within their competence to ensure Georgia’s full integration into the European Union and the North-Atlantic Treaty Organisation’76 may be regarded as a very significant political pledge elevated to the rank of a constitutional norm, it cannot serve as a basis for national legal acts which would subordinate the Georgian law to that of the EU. This is not problematic on the bilateral level because there is no constitutional norm prohibiting the transfer of sovereignty to international bodies. Thus, such transfer may be carried out through international agreements

 In context of horizontality of these provisions, it is also worth mentioning that Articles 417 and 418 are part of Title VIII of the Association Agreement which is entitled “Institutional, general and final provisions”. 75  Title VIII of the Constitution only defines the procedural requirements for a full or partial change of the Constitution. 76  Article 78 of the Constitution of Georgia. The amendment is a part of the constitutional amendments package adopted by the Parliament of Georgia on 13 October 2017. The constitutional changes will take effect immediately after a President of Georgia elected in the next presidential election, which will be held in 2018, take the oath of office. For the English version of Article 78 of the Constitution see: European Commission for Democracy through Law (Venice Commission), ‘Georgia. Draft Revised Constitution’, CDL-REF(2017)027, Strasbourg, 17 May 2017. 74

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concluded with an international organisation and it is only subject to formal procedural rules.77

5  Conclusion Georgia's desire to establish special ties with the EU, including the long-term objective of becoming a member of the EU, has been expressed not only in political statements but also in a number of legal actions introduced with the intention of promoting approximation of the Georgian legislation to the EU law. However, the first examples of the latter category of acts went beyond the scope of commitments undertaken under international agreements concluded with the EU. In practice, the efficiency of such unilateral engagements has been very limited and in effect, they did not differ much from political statements. With the entry into force of the EU-Georgia AA, the impact of the EU law is grounded in a very strong basis of international commitments. “Common values” conditionality is reflected in the fact that they are designated as “essential elements” of the agreement and, for cases of their breaches, the suspension mechanism is provided for. “Market access” conditionality is supported by several approximation provisions according to which Georgia shall approximate its national law to that of the EU.  These provisions, which in contrast to the approximation clause of the EU-Georgia PCA, are binding and more concentrated in the DCFTA part of the EU-Georgia AA. That is only logical as opening market access is directly connected with the implementation of the DCFTA and the acquis transfer is the mean to achieve it. All these obligations together with very sophisticated assessment procedures will substantially increase the impact of the EU law on the Georgian legal order and, in view of dynamic approximation, this will be a regular process making the EU-Georgia AA an efficient integration mechanism.

 Under Article 65 of the Constitution of Georgia, the Parliament of Georgia, acting by a majority of its members, shall ratify, denounce, and annul treaties and international agreements. It is obligatory to ratify a treaty which (a) envisage Georgia’s accession of an international organisation or interstate alliance; (b) are of a military nature; (c) concern the territorial integrity or change of the state borders; (d) concern the borrowing or lending of money by the State; (e) require change of domestic legislation or adoption of laws and statutory acts necessary for the fulfilment of international obligations undertaken. Concerning constitutional challenges related to the EU-Georgia AA see: Gabrichidze (2018), pp. 105–117.

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References Cremona M (2011) Values in EU foreign policy. In: Evans M, Koutrakos P (eds) Beyond the established orders: policy interconnections between the EU and the rest of the world. Hart, Oxford, pp 275–315 Gabrichidze G (2014) Legislative approximation and application of EU law in Georgia. In: Van Elsuwege P, Petrov R (eds) Legislative approximation and application of EU law in the Eastern neighbourhood of the European Union  – towards a common regulatory space? Routledge, London, pp 179–191 Gabrichidze G (2018) The constitutional order of Georgia and its adaptability to the EU-Georgia association agreement. In: Petrov R, Van Elsuwege P (eds) Post-soviet constitutions and challenges of regional integration adapting to European and Eurasian integration projects. Routledge, London, pp 105–117 Ghazaryan N (2014) The European neighbourhood policy and the democratic values of the EU: a legal analysis. Hart, Oxford Lazowski A (2008) Enhanced multilateralism and enhanced bilateralism: integration without membership in the European Union. Common Mark Law Rev 45(2):1433–1458 Petrov R (2016) EU values in integration-oriented agreements with Ukraine, Moldova and Georgia. In: Poli S (ed) The European neighbourhood policy – values and principles. Routledge, London, pp 99–112 Van der Loo G (2014) The EU-Ukraine deep and comprehensive free trade area: a coherent mechanism for legislative approximation? In: Van Elsuwege P, Petrov R (eds) Legislative approximation and application of EU law in the Eastern neighbourhood of the European Union. Towards a common regulatory space? Routledge, London, pp 63–88 Gaga  Gabrichidze  is a Professor of Public International Law and EU Law and holds a Jean Monnet Chair in European Law at the New Vision University (Tbilisi, Georgia). Prof. Dr. Gabrichidze has been teaching courses in the EU law and public international law since 1999. Much of his research focuses on issues of constitutional nature in the field of the EU law, as well as law approximation and migration law. He is a co-founder and the President of European Union Studies Association (ECSA Georgia) and a co-founder and member of the management board of the Association of European Studies for the Caucasus.

Europeanization of Competition Law: Principles and Values of Fair Competition in Free Market Economy in the EU and Association Agreements with Ukraine, Moldova, and Georgia Kseniia Smyrnova

1  Introduction We can look at the politics of competition enforcement from three angles, starting from whether competition policy is based on political values and principles. Keeping markets fair, level, and open is good for our economies and societies. It establishes a good environment for business in Europe where companies can generate wealth, create jobs, and invest in the future. Here we can focus on the principles of fairness, good administration, transparency, and due process. As Johannes Laitenberger, Director-General for Competition, European Commission, stressed, it is very important that market players see competition enforcers as independent, even-handed, and predictable public authorities. When our action is consistent and our priorities clear, companies find it easier to comply with the law.1 A level, open, and well-functioning single market is hugely important in sustaining Europe’s current recovery, also because it can attract businesses from outside Europe. Competition agreements may have a significant effect on the particular application of national competition rules. On the other hand, due to the economic globalization the number of multinational undertakings has increased, and this in turn has increased the number of anticompetitive practices and the need for various agreements on competition. Hence, it is impossible to create a united agreement because of different legislations in states. So, the main purpose is to cooperate

1  Press release ‘Enforcing EU competition law: Principles, strategy and objectives’ dated 15 September 2017 http://ec.europa.eu/competition/speeches/text/sp2017_11_en.pdf.

K. Smyrnova (*) Taras Shevchenko National University of Kyiv, Kyiv, Ukraine e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 S. Lorenzmeier et al. (eds.), EU External Relations Law, https://doi.org/10.1007/978-3-030-62859-8_10

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effectively and efficiently. It is imperative that the cooperating parties have a good knowledge of their respective substantive and procedural rules, and understand the differences in their legal systems and any existing limitations or constraints, and the agreements on competition is one of the means of reaching it. The EU-Ukraine, EU-Georgia, and EU-Moldova FTAs were announced as the first in a series of the so-called Deep and Comprehensive Free Trade Agreements (DCFTAs).2 Within this category, the competition chapters are nevertheless very diverse.3 Comparing the current Association Agreements with Ukraine, Georgia, and Moldova with analogue acts signed by the EU with other countries, it can be said that these are a ‘fourth generation agreements’. It is the first of a new generation of Association Agreements between the EU and countries of the Eastern Partnership that covers a deep and comprehensive free trade area (DCFTA). Considering further on the ‘deep’ and ‘comprehensive’ character of the FTA, it can be concluded that the EU-Ukraine DCFTA is the first of a new generation of FTAs concluded by the EU which will, once in force, gradually and partially integrate the economy of Ukraine into the EU Internal Market.4 Its integration into the Internal Market will take place, however, only under the condition that Ukraine approximates its legislation to the EU acquis. On the other hand, the ‘deep’ character of the DCFTA also refers to Ukraine’s commitment to approximate its legislation to the acquis to achieve its economic integration with the EU Internal Market. The DCFTA contains numerous legislative approximation clauses according to which Ukraine must approximate its domestic legislation or standards to the EU acquis. Trade chapters of the EU AAs show that they cover not only traditional FTA areas, such as market access for goods, but also include public procurement, IPR, competition, energy, etc.

2  T  he EU Principle of an Open Market Economy with Free Competition and ‘Europeanization’ of Competition Law While globalization of competition law is a relatively new phenomenon in the international legal practice, the creation of traditional diplomatic platform for the establishment of an international framework for competition is a much longer story. So, today more than 120 countries (from more than 100 jurisdictions) worldwide antitrust agencies are now taking part in the International Competition Network (ICN), an organization that was founded in 2001 as a result of compromise between the states on the establishment of international coordination mechanism and to

2  See in details: European Commission, The EU’s Association Agreements with Georgia, the Republic of Moldova and Ukraine, Brussels, 23 Jun. 2014, MEMO/14/430. 3  Demedts (2015). 4  Van der Loo (2016).

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encourage dissemination of antitrust experience and best practices on topical issues to promote convergence toward sound competition policies and practices, especially in cross-border cases. Antitrust policy is also an important element of the major international economic organizations (UNCTAD, OECD, EFTA, etc.). The activities of many of these organizations focus on providing solutions and recommendations used by national competition authorities voluntarily. It may be noted that such cooperation within the framework of “soft” law is more realistic and promising. At the end of the 1990s, competition policy became part of international economic relations, de facto, as evidenced by the appearance of bilateral agreements (mainly inter) on cooperation for the protection of competition. These agreements not only capture the general principles, but also address the practical issues. We can stress the lack of uniform standards for the competition as seen in the regulation of different aspects. If within the sphere of prohibition of anticompetitive agreements and concerted practices, there is a consensus in the legal regulation that insists “hard core” restrictions. On the other hand, such a consensus at the level of unification of national regulation is absent. Competition policy is subject to legal multilateral and bilateral cooperation. It is worth stressing that OECD has made Reviews on Competition Law and Policy that get to the heart of ways in which each country deals with competition and regulatory issues, from the soundness of its competition laws to the structure and effectiveness of its competition institutions. The level of public and private enforcement of competition rules can be examined from these reviews. It is quite curios that these reviews have been made on Ukraine twice in 2008 and 2016,5 but there were no such reviews (reports) on Moldova and Georgia. Particularly, the EU has concluded several agreements on bilateral cooperation with some third countries (which, in particular, the USA, Canada, Japan, Korea, and Brazil) to optimize the information and concrete evidence of cartels, which are located outside the EU, however, causing loss of the EU anti-competitive activities. For example, by virtue of the provisions of the agreements between the EU and the USA to cooperate in matters of cartels disclosure in 1991 and 1998 agreements (first generation), the European Commission and antitrust US agencies such as the Ministry of Justice and the Federal Trade Commission exchanged between them any significant information on the cartel agreement, which they learned, and which may affect the interests of either the USA or the EU, and help each other enforcement activity. Competition authorities face an increasing number of cases with an international dimension where they need to access information or evidences located outside their jurisdiction. In these circumstances, enforcement cooperation can contribute to efficient competition law enforcement. Thus, cooperation agreements often include a provision allowing a competition authority in one jurisdiction to take an enforcement action in another jurisdiction. Fourteen out of the fifteen

5  See https://www.oecd.org/daf/competition/UKRAINE-OECD-Reviews-of-Competition-Lawand-Policy_WEBENG.pdf.

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cooperation agreements have sections related on enforcement cooperation (including information exchange). Some cooperation agreements include information exchange in the enforcement cooperation section, while others have a separate section dedicated to information exchange as it is particularly important among various enforcement cooperation activities. Despite extensive international practice, attempts to harmonize antitrust policy consensus on unifying the world did not come. Only the competition policy of the European Union today serves as a model for supranational regulation of competition, which has not reached the level of any other international organization.6 The EU competition policy plays the usual inherent role of competition law—the protection of fair competition from illegal restrictions and distortions is an important factor in building an integrated and effective functioning of the internal market of the EU. Competition policy is seen as a means to achieve higher economic development, improve the competitiveness of Union producers not only in the EU but also in the world.7 Competition policy plays a key role in the establishment and functioning of the internal market following the principle of an open market economy with free competition, as reflected in Art. 119 TFEU. The Treaty of Rome establishing the EEC Section contains Articles 85–99, which remained nearly unchanged until today.8 As in the Treaty on European Union (TEU), one of the main principles of internal market is the value of fair competition. Especially, Art. 3 TEU stressed the fact that the internal market is based on highly competitive social market economy. In the EU, competition law started to develop almost since its foundation. Based on analysis of the founding treaties of the EU, its institutions, regulations, and litigation can be generalized to introduce a system of principles of legal regulation of relations of competition in the European Union: –– The principle of the prohibition of anti-competitive behavior of both private and public undertakings, i.e., prohibition of concerted practices in the form of concluding anticompetitive agreements and decisions by associations of undertakings which may affect trade between Member States that have their object or effect the restriction or distortion of competition within the internal market. This principle (Art. (1) 101 TFEU) may be declared inapplicable where the conditions of reasonable exceptions are satisfied (Article 101 paragraph 3 TFEU). Thus, the EU competition law is designed by the combination of the principle of prohibition and exceptions. –– The principle of prohibition of abuse of a dominant position within the internal market of the EU, as it may affect trade between Member States (Article 102 TFEU). –– The principle of control, supervision, and monitoring of the state aid provided by Member States or through state resources in any form and at any time, which  See, Blazo (2010).  See in details: Jain (2012). 8  Now Articles 101–109 TFEU; Protocol 27 on the internal market and competition. 6 7

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threatens to distort competition, favoring certain undertakings or the production of certain goods (Article 107 TFEU). –– The principle of the control of concentrations in the European Union, which is a fundamental conflict in jurisdiction in cross-border transactions. It is characterized by the elaboration of EU-level unified criterion, which prevents conflict of jurisdiction with respect to transactions on the concentration (mergers and acquisitions). –– The principle of extraterritorial application of the EU competition rules. This principle derives from Art. 101 TFEU, which provides for the main purpose and consequences of a ban, which “can affect trade between Member States” and create “barriers to competition within the internal market.” –– An application of the doctrine of a single economic entity in the EU. This doctrine becomes the initial legal basis for the determination of violators of antitrust laws. Defining the group of companies as a single entity, the Commission covers the real power structure of the subject violation, not just defining it formally from a legal point of view. In other words, branch, agency or department, or other affiliates from this point of view does not represent the company as they do not have the freedom to determine the behavior of the market (the doctrine of a single economic entity).9 It should be stressed another trend in the development of competition regulation—international legal regulation of competition between the EU and third countries. The trend towards the conclusion of special international agreements causes the harmonization of conflict of jurisdiction in the exercise of transnational transactions. From the point of view of harmonization of law, agreements that spread European competition “spirit” to other states are much more interesting. Because of the inclusion of very strict specific competition rules within Association Agreements, we can assume the tendency of “Europeanization” of competition law while spreading commitments on the implementation of competition acquis in third countries legal orders.

3  The EU-Georgia Association Agreement’s Competition Rules The parties agree to maintain effective anti-trust and merger laws and an effectively functioning competition authority, and to uphold procedural fairness and firms’ rights of defense. Competition law will apply to state-controlled enterprises provided this does not impede them in performing the particular tasks of public interest assigned to them. The parties commit to ensure that companies on both sides will have fair and equal access to each other’s markets, unhampered by discrimination  For detailed summary, see Smyrnova (2013).

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resulting from monopolistic practices. The chapter sets out the main principles for consultation and cooperation between the EU and Georgia. The competition chapter in the DCFTA with Georgia is very superficial.10 Cooperation provisions are not foreseen. Principles governing anti-competitive business practices and state interventions as well as subsidies provide that parties should maintain comprehensive and effective competition laws, and implement such legislation via a functioning authority, respecting the principles of transparency, non-discrimination, procedural fairness, and respect for the rights of defense. Some provisions deal with the regulation of state monopolies, state enterprises, and enterprises entrusted with special or exclusive rights, mainly requiring transparency. One provision regulates subsidies, which is not excluded from the DSM, in contrast to the rest of the competition chapter. There is no prejudice to the rights and obligations in the WTO agreement, and parties should ‘take into account the limitations imposed by the requirements of professional and business secrecy in their respective jurisdictions’.11 The EU-Georgia AA does not contain provision on state aid. However, Article 206 describes the relationships according to the subsidies. The EU and Georgia also agree to be transparent on subsidies for goods and services. They will report every two years on the total amount, types, and sectoral distribution of subsidies on goods and, on request, provide each other with further information on subsidies on services.

4  T  he EU-Moldova Association Agreement’s Competition Chapter and Its National Enforcement The main objectives of the Agreement are to promote political association and economic integration, to strengthen the political dialogue, to contribute to the strengthening of democracy and to political, economic, and institutional stability in the Republic of Moldova. More can be added: to support and enhance cooperation in the areas of justice, freedom, and security, to support Moldova’s approximation of its legislation to that of the European Union, to establish conditions for enhanced economic and trade relations leading towards the Republic of Moldova’s gradual integration into the EU Internal Market. The EU-Moldova DCFTA’s competition chapter is comprised of two sections, one dealing with antitrust and mergers, and one revolving around state aid.12 Again, the obligation of maintaining competition laws and operational authorities is included. The provision on the implementation of competition laws emphasizes the independence of the competition authorities, a feature that is not present in any of  Art. 203–209 EU-Georgia DCFTA.  Art. 209 EU-Georgia DCFTA. 12  Art. 333–344 EU-Moldova DCFTA. 10 11

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the other DCFTAs. Again, state monopolies, public undertakings, and undertakings entrusted with special or exclusive rights are regulated, in the sense that they should be subject to competition laws. Under Article 336, the parties are entitled to maintain or designate state monopolies and public undertakings or to entrust undertakings with special or exclusive rights under their respective laws, as long as these entities are subject to competition laws. Furthermore, Article 337 establishes a platform for cooperation, coordination, and the exchange of information between the competition authorities of the EU and Moldova to improve the implementation of competition law and the provisions of the Association Agreement and to hinder anti-competitive conduct or transactions. Furthermore, cooperation and exchange of information is foreseen. However, the relevant provision is rather weak, merely stating that ‘each competition authority may inform the other competition authority of its willingness to cooperate with respect to the enforcement activity of any of the Parties’.13 Exchange of non-confidential information is allowed, subject to the confidentiality laws of each party and limited by the national requirements of professional and business secrecy. The entire section is excluded from dispute settlement. The supervision and monitoring of the application and implementation of the agreement shall be delegated to an Association Council consisting of the members of the Council of the European Union, the European Commission, and the Government of the Republic of Moldova. Both the EU-Moldova AA and EU-Ukraine AA contain the provision on state aid. Each country shall adopt national state aid legislation and establish an operationally independent authority entrusted with the powers necessary for the control of state aid. For performance of such obligation, Ukraine has three  years, while Moldova—two from the date of entry into force of this Agreement. It should be mentioned that while generally the provisions of these two agreements (Ukraine and Moldova) seem similar, the scope of state aid clauses in the EU-Ukraine AA is wider and more detailed. For example, it provides the exceptions to the state aid that shall or may be considered to be capable with the proper function of the agreement. The section on state aid does not apply to fisheries and agriculture. The assessment of state aid is regulated, referring back to Article 107 TFEU, and the parties are to establish and maintain state aid legislation and an authority, thereby adhering to the transparency principle. Again, parties should ‘take into account’ limitations following from professional and business secrecy obligations, and a rather unique review clause is included. It is worth stressing that the national legislation on competition and on state aid as well in Moldova was elaborated in 2012 even before the EU-Moldova AA. Public (legislative) enforcement on national level quite visually illustrated the ‘EU competition law spirit’ in national acts of Competition Council of Moldova (national competition authority of Moldova), which consist direct reference to the EU acts. Especially, it applies in the sphere of state aid regulation. For example, the

13

 Art. 337 EU-Moldova DCFTA.

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preamble of national regulations refers to the partial transposition of EU regulations.14

5  T  he EU-Ukraine Association Agreement’s Competition Chapter and Its National Implementation and Enforcement Comparing with other countries with competition protection systems, UNCTAD noted that Ukraine has begun the process of competition law adoption and the formation of its implementation policy in very difficult initial conditions. The economic and political circumstances in Ukraine, as well as in other former Soviet republics, have been particularly tough. At the same time, Ukraine adopted its competition law system at the beginning of a period of rapid growth in many jurisdictions with competition laws throughout the world. As UNCTAD experts stressed, the journey towards an effective competition policy system in Ukraine has been arduous.15 In the early 2000s, various market reforms and de-monopolization measures were taken. Despite various market reforms and de-monopolization measures, Ukraine’s economy still features exceptionally high levels of concentration unrelated to superior economic performance. Nevertheless, the process of harmonization of national legislation with the EU law was and remains one of the key areas of cooperation between Ukraine and the EU.16 Harmonization defines the conditions for further deepening of economic and sectorial cooperation and creates legal preconditions for the next stage of European economic integration. Nevertheless, the rules contained in the Partnership and Cooperation Agreement17 (PCA) signed in 1994 has ‘soft law’ character—the PCA did not place Ukraine under a strict obligation to harmonize its legislation. At the same time, however, the special Article 51 PCA stressed that competition was one of the priorities of harmonization. The EU-Ukraine Association Agreement (AA)18 ratified in September 2014 replaces the PCA as the basic legal framework of  See, for example, Regulation on de minimis aid Approved by the Decision of the Plenum of the Competition Council of Moldova No 2 of August 30, 2013 https://competition.md/public/files/ uploads/files/Regulamente/Ajutor_de_stat/eng/REGULATION%20on%20de%20minimis%20 aid.pdf. 15  See, Voluntary Peer Review of Competition Law and Policy: Ukraine Overview, UNCTAD, 2013 // http://unctad.org/en/PublicationsLibrary/ditcclp2013d3_overview_en.pdf. 16  Smyrnova (2014). 17  The Partnership and Cooperation Agreement between the EU and its Member States and Ukraine was concluded in 1994 and entered into force in March 1998. The PCA formed the legal basis of EU-Ukraine relations, providing for cooperation in a wide range of areas. It was concluded for a term of ten years, but Art. 101 PCA provided the process of its automatic prolongation in case of denunciation notice absence. 18  Association Agreement between the European Union and its Member States, of the one part, and Ukraine of the other part (O.J., 2014, L 161). 14

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EU-Ukraine relations (Art.  479  EU-Ukraine AA). The EU-Ukraine AA creates a practical framework for achieving political association and economic integration between the EU and Ukraine. Upon its entry into force, the Association Agreement is considered as a part of national legislation (ch. 1, Art. 9 of the Constitution of Ukraine19) and subject to priority application (ch. 2, Art. 19 of the Law of Ukraine “On international agreements of Ukraine”) in case of conflict with the norms of current legislation. Because of Ukraine’s integration policy, its accession to the WTO in 2008,20 entering into force of the Free Trade Agreement with EFTA countries in 2012,21 signing and ratification of the Association Agreement22 with the EU, the open free trade areas opened their doors for Ukraine. Due to this fact, the most important issue related to liberalized trade is competition rules which become increasingly crucial for Ukraine. The DCFTA with Ukraine is somewhat particular. The competition chapter is much longer and is again divided in two sections:23 antitrust and mergers; and state aid. The first section on antitrust and mergers traditionally elaborates the importance of regulating anti-competitive behavior and indicates the practices that are considered inconsistent with the agreement. The AA focuses on the main principles of an undertaking’s conduct on the market that can impede, restrict, or distort competition (including conduct prohibited under Article  101  (1)  TFEU, abuse of a dominant position and certain concentrations that result in monopolization or a substantial restriction of competition in the market in the territory of either Party). The AA identifies the key practices and economic transactions that could potentially adversely affect the functioning of markets and undermine the benefits of trade liberalization established between the parties. These anti-competitive practices include: (a) agreements and concerted practices between undertakings, which have the purpose or effect of impeding, restricting, distorting, or substantially lessening competition in the territory of either Party; (b) the abuse by one or more undertakings of a dominant position in the territory of either Party; (c) concentrations between undertakings, which result in monopolization or a substantial restriction of competition in the market in the territory of either Party.24 Moreover, Article 256 of the EU-Ukraine  Article 9 of the Ukrainian Constitution of 1996 provides that: “International treaties in force, consented by the Verkhovna Rada of Ukraine [Ukrainian Parliament] as binding, shall be an integral part of the national legislation of Ukraine. Conclusion of international treaties, contravening the Constitution of Ukraine, shall be possible only after introducing relevant amendments to the Constitution of Ukraine”. 20  Law of Ukraine “On ratification of Protocol of Ukraine’s accession to the WTO” dated 10.04.2008 No 250-VI (Verhovna Rada Bulletin, 2008, № 23, P. 213). 21  Law of Ukraine “On ratification of Free Trade Agreement between Ukraine and Member States of EFTA” dated 07.12.2011 No 4091-VI (Official Journal of Ukraine, 13.01.2012, № 1, P. 9). 22  Association Agreement between the European Union and its Member States, of the one part, and Ukraine, of the other part (O.J. L 161 29.5.2014. P.3-213). 23  Art. 253–267 EU-Ukraine DCFTA. 24  Article 254 AA. 19

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AA requires Ukraine to “approximate its competition law and enforcement practice to the part of the EU acquis….” With very strictly reference to the list of regulations that should be implemented (for example: Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles  81  and 82 of the Treaty; Council Regulation (EC) No  139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EU Merger Regulation); Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article  101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices; and Commission Regulation (EC) No 772/2004 of 27 April 2004 on the application of Article 81 (3) of the Treaty to categories of technology transfer agreements). What is characteristic of the EU-Ukraine DCFTA is the provision on approximation of law and enforcement practice, with strict deadlines and hard obligations. Parties should exchange information and cooperate on enforcement matters, although the obligations are again particularly weak, stating that ‘the competition authority of a Party may inform the competition authority of the other Party of its willingness to cooperate with respect to enforcement activity. This cooperation shall not prevent the Parties from taking independent decisions’.25 The agreement foresees that the parties should consult each other, but this is neither regulated in detail nor mandatory. Specifically, Article 260 of the EU-Ukraine AA is of exceptional interest. It provides the possibility of consultation at the request of a party on questions arising from the interpretation or application of the agreement in section of competition. Such provision shows the particular interest of EU in the implementation of competition laws and practice from Ukraine. The EU-Ukraine AA pays special attention to state aid. The principle of transparency is again central, and this time is made tangible via concrete obligations. The obligation to introduce state aid rules aligning Ukrainian law with the EU law is a tangible and concrete obligation. Articles 106, 107, and 93 of TFEU serve as sources of interpretation for the domestic law of Ukraine, alongside the relevant jurisprudence of the Court of Justice of the European Union as well as relevant European secondary legislation, communications, guidelines, and other administrative acts.26 Finally, concrete changes to the domestic system of state aid control are required and listed in the agreement. What sets the EU-Ukraine DCFTA apart from the other DCFTAs is that Ukraine will align its competition law and enforcement practice to that of the EU acquis in several fields. Consequently, there are actual substantive requirements for the domestic regime. This type of commitment cannot be found in other post-Global-­ Europe FTAs. What is remarkable is that the scope of the EU acquis to which Ukraine should approximate its laws is not included in an annex but in the main text of the agreement. This of course has consequences for the procedure to change this content. A formal treaty change will be required, which is rigid and burdensome. Furthermore, Ukraine commits itself to adopting a system of control of state aid like

25 26

 Art. 259(2) EU-Ukraine DCFTA.  See Smyrnova (2014), pp. 263–278.

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that in the EU and inspired by TFEU articles, including an independent authority. The level of detail in these provisions can also be considered quite novel. The DCFTA is one of the most ambitious bilateral agreements that the EU has ever negotiated with a trading partner and should offer Ukraine a framework for modernization of bilateral trade and investment relations and a model for economic development. On the level of public (legislative enforcement) by Antimonopoly Committee of Ukraine (national competition authority of Ukraine), all recent acts are adopted within the implementation of AA commitments, e.g., national financial criteria on merger authorization, block exemptions for vertical agreements, improvement of fairness procedures in competition cases and investigations. The sphere of state aid regulation in Ukrainian legislation is directly tied with the EU-Ukraine AA commitments. The special law and by-laws were adopted with the aim of transposing EU state aid rules into domestic legislation. It is worth stressing that each decision of AMCU as well as guideline (and interpretations) on state aid is based on step-by-­ step argumentation of national acts and EU regulations and ECJ cases in relevant sphere.27 It is a rather vague characteristic of national body’s decision-making process to apply direct reference even to CJEU practice in their own domestic decisions.28 The administrative courts are the main forum for state aid issues. The AMCU may refer a case to the Administrative Court of Kiev. The administrative courts also handle the review of AMCU decisions. The Supreme Court has already rendered a decision as part of the panel of judges of the Administrative Court of Cassation.29 The Supreme Court upheld the previous court’s rulings and did not support the plaintiff’s position. The courts of preliminary instance concluded that the plaintiff’s assertion that the AMCU had misused the sources of European Union law when adopting the Decision was false, groundless, unsubstantiated, and contrary to the law and case file. The Supreme Court finally upheld the complainant’s contention that the AMCU was wrong to use European Union law sources when adopting Decision No. 652-p, since the latter contradicts the current law and the facts established by the courts. Consequently, the practice clearly shows that the EU-Ukraine AA is part of the national legislation of Ukraine. Its provisions are imperative and binding on the whole territory of Ukraine, and the practice of the national courts of Ukraine testifies to the beginning of the process of applying not only the provisions of the Association Agreement, but also the practice of the ECJ.

  For more information http://www.amc.gov.ua/amku/control/main/uk/publish/article/120893 (only in Ukrainian). 28  For more current information of state aid rules enforcement in Ukraine, see Smyrnova and Szyszczak (2020). Specifically, the article identifies the challenges already faced by the AMCU and the potential for improving the system of state aid control in Ukraine. 29  Case No. 640/65/19 Administrative Procedure No. K/9901/30620/19 of 31 March 2020 (www. court.gov.ua—only in Ukrainian). 27

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6  Conclusions The Association Agreements between the European Union and its Member States, of the one part, and Ukraine, Moldova, and Georgia, of the other parts, were signed on the same date—27 June 2014, but each agreement is unique. We cannot say that these agreements are entirely different, but still each of them has its own features. By reviewing the provisions on competition in the agreements, we can say that the competition clauses in the EU-Ukraine AA is the most detailed and wider. The competition provisions in the EU-Georgia AA is the less detailed. All three agreements contain the principles that prohibit and sanction certain practices and transactions that could distort competition and trade, e.g., cartels, abuse of dominant position, and anti-competitive mergers, which will be subject to effective enforcement action. Ukraine, Georgia, Moldova, and Member States of EU agree under the provisions of the relevant Association Agreement to maintain effective anti-trust and merger laws and an effectively functioning competition authority, to respect procedural fairness and firm’s right of defense. Competition law will apply to state-controlled enterprises. They also commit to ensure that companies on both sides will have fair and equal access to each other’s markets, unhampered by discrimination resulting from monopolistic practice. The Ukrainian AA and Georgian AA refer to the obligations of the parties under WTO agreements. The competition provisions in the EU-Moldova AA also introduce a general obligation to maintain comprehensive competition laws and to establish an independent competition authority. However, without building upon TFEU provisions. It also lacks an obligation to approximate to the EU competition legislation. Although the TFEU provisions on state aid are not taken over in the EU-Moldova AA relevant chapter as in the case of EU-Ukraine AA. The EU-Georgia AA is less specific on this point and only includes an obligation to maintain antitrust and merger legislation and to enforce these rules through an independent authority. Contrary to the two other agreements, the EU-Georgia AA refers to WTO SCM, however, without introducing specific commitments that prohibit types of subsidies. However, these general similar provisions have the list of differences. First, while the Georgian AA and Moldavian AA only contain general provision on the necessity of implementation in its territory comprehensive competition laws, Article 256 of the EU-Ukraine AA requires Ukraine to approximate its competition law to the strictly referred list of EU Regulations specified in this article. The timetable for this approximation is three years. The EU-Ukraine AA and EU-Moldova AA contain the provisions on cooperation and exchange of information (Articles 337 and 259, respectively). The EU-Georgia AA provides the exchange of information pertaining to subsidies relating to the supply of services. The mechanism of exchange of information requires the provision on confidentiality that oblige the parties to consider the limitation imposed by the requirements on professional and business secrecy and essential interest of the parties. Article 260 EU-Ukraine AA is of exceptional interest. It provides the possibility of consultation at the request of a party on questions arising from the interpretation or application of the agreement in section of competition. Such provision shows the

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particular interest of EU in the implementation of competition laws and practice from Ukraine. As said above, both the Ukrainian and Moldovian AAs contain the provision on state aid. Each country shall adopt national state aid legislation and establish an operationally independent authority entrusted with the powers necessary for the control of state aid. For performance of such obligation Ukraine has three years, while Moldova—two from the date of entry into force of the Agreement. The state aid clauses do not apply to state aid related to fisheries and some agriculture products (Article 266 of Ukraine AA, Article 339 para 2 of Moldova AA). It should be mentioned that while generally the provisions of these two agreements (Ukraine and Moldova) seem similar, the scope of state aid clauses in the EU-Ukraine AA is wider and more detailed. The Ukrainian FTA is the closest one to EU norms and to a larger extent coincides with TFEU articles. In the EU-Ukraine DCFTA, it is mentioned that state aid norms have to be interpreted in accordance with the EU law and case law of the Court of Justice, which indicates the greater level of harmonization of Ukrainian law with the EU law. For example, it provides the exceptions to the state aid that shall or may be considered to be capable with the proper function of the agreement. Finally, a special provision on dispute settlement should be noted. All of the analyzed agreements have such provision. Under these articles, the parties exclude some competition provision from the mechanism of dispute settlement. Article 261 of the EU-Ukraine AA forsees the exemption to recourse to dispute settlement provisions on competition rules except  provision that regulates an approximation of law and enforcement practice. The EU-Georgia AA excludes from such jurisdiction the provisions on principles, implementation of antitrust and mergers legislation, state monopolies, state enterprises and entrusted with special or exclusive rights. The EU-Moldova AA excludes the provisions of antitrust and mergers. Such pecularity could be described by the absence in EU-Moldova AA strict provisions on approximation of law in the contrast to EU-Ukraine AA.   Hence, we can note that the competition chapters in Moldova and Georgia AAs are less detailed than in Ukraine AA. The competition provisions in the EU-Moldova AA also introduce a general obligation to maintain a comprehensive competition laws and to establish an independent competition authority, however, without building upon TFEU provisions. It also lacks an obligation to approximate to EU competition legislation. The EU-Georgia AA is less specific on this point and only includes an obligation to maintain an antitrust and merger legislation and to enforce these rules through an independent authority. Contrary to the two other agreements, the EU-Georgia AA refers to WTO SCM, however, without introducing specific commitments that prohibit types of subsidies. The chapters on competition include some important differences as the Moldova and Georgia DCFTAs are less ambitious than the Ukraine DCFTA. On antitrust and mergers, all three agreements introduce an obligation to maintain comprehensive competition laws and to establish an independent competition authority. However, only the Ukraine DCFTA takes over the TFEU provisions on cartels, abuse of a dominant position and concentrations (i.e., Arts. 101 and 102 TFEU) and includes some broad guidelines on legal protections against decisions of such competition

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authorities. Moreover, only Ukraine must approximate to a limited number of provisions of the EU competition legislation (Article 256). Also on state aid, only the Ukraine DCFTA has almost copy-pasted the relevant TFEU provisions, including the types of state aid that shall or may be considered to be compatible with the EU law (Art. 107 TFEU). The Ukraine and Moldova DCFTAs (but not the Georgian) mention that its state aid rules must be interpreted in conformity with the case law of the CJEU and relevant EU acquis. The Ukraine DCFTA also includes specific provisions on a domestic system of state aid control. Such provisions are less detailed in the Moldova DCFTA or are, in the case of the Georgia DCFTA, absent. The Georgia DCFTA refers instead just to the WTO SCM Agreement. From the point of view of public (legislative) enforcement, the example of Ukrainian competition authority (AMCU) is rather unique in sharing the “EU spirit” especially in the sphere of state aid. National decisions on compatibility of state aid are based not only on national acts but consisted direct references to the EU regulations and CJEU practice. Acknowledgements  This chapter was prepared with the support of the Erasmus+ Programme in the framework of the Jean Monnet Centre of Excellence Project № 611625-EPP-1-2019-1-UAEPPJMO-CoE “Advancing European Studies in Ukraine: Interdisciplinary Approach”. The European Commission’s support for the production of this publication does not constitute an endorsement of the contents, which reflect the views only of the author, and the Commission cannot be held responsible for any use that may be made of the information contained therein.

References Blazo O (2010) Harmonization of competition law in globalized economy and European law, 6 December 2010. https://ssrn.com/abstract=1720819 or https://doi.org/10.2139/ssrn.1720819 Demedts V (2015) Which future for competition in the global trade system: competition chapters in FTAs. J World Trade 49(3):407–436 Jain J (2012) Harmonization of international competition laws: pros & cons. Diplomica Verlag GmbH, Hamburg Smyrnova K (2013) EU competition law: textbook with schemes & case studies. Feniks, Odesa Smyrnova K (2014) Enforcement of competition rules in the association agreement between EU & Ukraine. Yearb Antitrust Regul Stud 7(10):263–278 Smyrnova K, Szyszczak E (2020) Modern approaches to state aid: Ukraine. Eur State Aid Law Q 19(1):8–18. https://doi.org/10.21552/estal/2020/1/5 Van der Loo G (2016) The EU-Ukraine Association Agreement and deep and comprehensive free trade area: a new legal instrument for EU integration without membership, vol 10. Brill/ Nijhoff, Leiden/Boston, p 434 Kseniia Smyrnova  is a Professor of Taras Shevchenko National University of Kyiv (Institute of International Relations), a Member of Scientific Expert Council of Antimonopoly Committee of Ukraine, and a Member of Jean Monnet Centre of Excellence at the Taras Shevchenko National University of Kyiv. Prof. Dr. Smyrnova has published on various issues of EU Competition Law, international economic organizations, Comparative Law, International Dimension of Competition Law, Legal Regulation of State Aid in the EU, EU–Ukraine Association Agreement, EU acquis transposition.

The EU-Kazakhstan Enhanced Partnership: An Overview and Evaluation Zhenis Kembayev

1  Introduction From the very beginning of its independence, Kazakhstan has considered cooperation with the European Union (EU) as one of the most important factors ensuring both its independence and sustainable economic development.1 The EU has also been interested in developing relations with Kazakhstan, a country that lies at a strategic intersection between Europe and Asia and possesses plentiful supplies of natural resources, and regarded Kazakhstan as an important partner, not only on trade exchanges, but also for promoting peace and security in the wider region.2 Proceeding from mutual interest and wishing to establish close links, on 23 January 1995, the European Communities and their Member States, of the one part, and the Republic of Kazakhstan, of the other part, signed the Partnership and Cooperation Agreement (PCA), a comprehensive legal instrument that entered into force on 1 July 1999.3

In early 2019, while this volume was being compiled and edited, the editors and the academic community at large suffered the untimely loss of our friend and colleague Prof. Zhenis Kembayev. His contribution to this volume remains timely and relevant and is published in honor of his great scholarly work. 1  See e.g. Foreign Policy Concept of Kazakhstan for 2020–2030 approved by the Decree of the President of Kazakhstan of 06 March 2020, No. 280, http://www.akorda.kz/en/legal_acts/decrees/ on-the-concept-of-the-foreign-policy-of-the-republic-of-kazakhstan-for-2020-2030 (accessed 25 May 2020). 2  See e.g. European Commission (2014). 3  See [1999] O.J. L196/3, http://eeas.europa.eu/delegations/kazakhstan/documents/eu_kazakhstan/ pca_kazakhstan_en.pdf (accessed 15 March 2018).

Z. Kembayev (*) KIMEP University, Kazakhstan, Almaty, Kazakhstan © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 S. Lorenzmeier et al. (eds.), EU External Relations Law, https://doi.org/10.1007/978-3-030-62859-8_11

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In November 2009, the EU and Kazakhstan adopted a joint statement marking the tenth anniversary of the PCA’s entry into force. Observing the successful implementation of the PCA in the past decade, the parties recognized, however, the emergence of new challenges (such as the fight against international crimes, terrorism, and religious radicalism as well as the establishment of transnational transport corridors) that could only be effectively tackled through stepping up bilateral cooperation. Therefore, the EU and Kazakhstan shared the view that the PCA in its present form did not fully reflect the “mature partnership” which had developed over the years, nor Kazakhstan’s growing relevance as a political and economic actor.4 On 13 April 2011, the Council of the EU adopted a Decision authorizing the European Commission to negotiate the Enhanced Partnership and Cooperation Agreement (EPCA) between the EU and Kazakhstan and, on 27 June 2011, the parties started the negotiations on the new Agreement. Those negotiations largely coincided with the discussion sessions between the EU and Russia as well as between the EU and a number of other post-Soviet countries (particularly Armenia, Azerbaijan, Georgia, Moldova, and Ukraine) involved in the EU’s European Neighborhood Policy (ENP). Similarly, the aim of these discussions was to deepen political and economic relationships between the parties and to elaborate successor agreements to the respective PCAs. While the EU and Russia planned to conclude a so-called New Agreement,5 the replacement legal instruments between the EU and the post-Soviet ENP countries received the title of Association Agreements (AAs).6 After eight rounds of intensive discussion, on 9 October 2014, in Brussels the President of the European Commission José Manuel Barroso and the President of Kazakhstan Nursultan Nazarbayev announced the conclusion of negotiations. On 20 January 2015, also in Brussels, the text of the EPCA, including 287 articles (divided into nine titles) and seven annexes, and thus almost three times more extensive than the PCA, was initialed and on 21 December 2015 in Astana, the EPCA was signed by Federica Mogherini, High Representative for Foreign Affairs and Security Policy/Vice-President of the European Commission, and by Erlan Idrissov, Minister of Foreign Affairs of the Republic of Kazakhstan.7

 See Council of the European Union (2009).  Negotiations on the EU-Russia New Agreement were launched in 2008 with the purpose of providing an upgraded legal framework for EU-Russia relations. However, Russia’s role in the Ukraine conflict has seriously affected EU-Russia relations with the consequence that the negotiation process on the New Agreement is currently at a halt. 6  The EU-Georgia and the EU-Moldova AAs, including their Deep and Comprehensive Free Trade Area (DCFTA) parts, came into force on 1 July 2016, while the EU-Ukraine AA/DCFTA on 1 September 2017. However, Azerbaijan suspended negotiations on the AA/DCFTA expressing concerns that a partnership agreement would more adequately reflect the level of Azerbaijan-EU cooperation rather than an AA. Finally, Armenia decided not to initial the negotiated AA/DCFTA with the EU in September 2013 as the country decided to join the EAEU; instead, Armenia and the EU the Comprehensive and Enhanced Partnership Agreement on 24 November 2017. 7  See [2016] O.J. L29/3, http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:2201 6A0204(01)&from=EN (accessed 15 March 2018). 4 5

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The EPCA was negotiated and initialed by the European Union as an “EU-only agreement” in the sense of Art. 217 TFEU implying that the EPCA may be concluded only by the EU as opposed to the category of “mixed” agreements, which require to be signed and ratified both by the EU and its Member States. Although the European Commission argued that a “mixed” agreement is legally unnecessary in the case of the EPCA and that all matters covered by the agreement fall within the EU’s competence, the EU Member States insisted on signing and ratifying the EPCA with Kazakhstan as a “mixed” agreement.8 Kazakhstan ratified the EPCA on 14 April 2016 and the European Parliament gave its consent to the conclusion of the EPCA on 12 December 2017;9 however, as of 15 February 2018, nine EU Member States did not yet ratify the Agreement.10 Still, the EPCA foresaw the possibility of the provisional application of most of its parts before the Agreement’s entry into force11 provided that those parts cover matters falling within the EU’s competence.12 Thus, the EPCA has been applied provisionally since 1 May 2016. Once ratified by the remaining EU Member States, the EPCA will fully replace the PCA. This chapter aims to examine the development of the EU-Kazakhstan partnership, analyze its major problems, and identify the prospects of its future progress by discussing the applicable provisions of the EPCA and comparing them with the PCA and the AAs, particularly the one concluded between the EU and Ukraine (EU-UA AA).13 This chapter will first touch upon the principles and aims of the EPCA. Next, it will engage in a study of the institutional framework established by the EPCA. Then, it will look at the major provisions governing the EU-Kazakhstan trade and investment relations, with a separate emphasis on energy and transport. Finally, it will draw some conclusive remarks summarizing major problems of the EU-Kazakhstan partnership and dealing with the issue of whether its further advancement is possible.

 See European Parliament/Legislative Observatory (2016).  See European Parliament legislative resolution of 12 December 2017 on the draft Council decision on the conclusion, on behalf of the Union, of the Enhanced Partnership and Cooperation Agreement between the European Union and its Member States, of the one part, and the Republic of Kazakhstan, of the other part (12409/2016  – C8-0469/2016  – 2016/0166(NLE)) (Consent), h t t p : / / w w w. e u r o p a r l . e u r o p a . e u / s i d e s / g e t D o c . d o ? p u b R e f = - / / E P / / T E X T + TA + P 8 TA-2017-0484+0+DOC+XML+V0//EN (accessed 15 March 2018). 10  See European Council (2015). 11  EPCA, Art. 281. 12  See Council Decision (EU) 2016/123 of 26 October 2015, Art. 3(1), [2016] O.J. L29/1, http:// eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32016D0123 (accessed 15 March 2018). 13  See the text in [2014] O.J. L161/3, http://trade.ec.europa.eu/doclib/docs/2016/november/tradoc_155103.pdf (accessed 15 March 2018). 8 9

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2  Principles, Aims, and Potential Legal Impact Like the PCA (and also to the EU-UA AA), the EPCA is based on respect for democracy and human rights, as defined particularly in the Helsinki Final Act of 1975 and the Charter of Paris for a New Europe of 1990, and the rule of law, which are supposed to underpin the internal and international policies of both the EU and Kazakhstan and to constitute an essential element of their partnership.14 Moreover, the EU-Kazakhstan partnership will continue to be founded on the commitment to a free market economy and the principles of public international law enshrined in the UN Charter.15 Yet, while the PCA recognized economic and social disparities between Kazakhstan and the EU and aimed at eliminating them through EU assistance to the development and restructuring of the Kazakh economy,16 the EPCA provides that it is based on the principle of equal partnership, mutual trust, respect, and benefit.17 In fact, in 2017, Kazakhstan’s per capita income at purchasing power parity was USD 26,071, surpassing EU countries such as Croatia, Romania, and Bulgaria.18 Since 1 January 2014, Kazakhstan has no longer benefitted from the EU Generalized System of Preferences. As to the aims of the EU-Kazakhstan partnership, the PCA strived for providing a framework for the political dialogue between the EU and Kazakhstan, promoting trade and investment, and thus supporting Kazakh efforts to consolidate its democracy and to complete the transition into a market economy,19 the EPCA seeks to deepen the EU-Kazakhstan cooperation and describes it as “a process that contributes to international and regional peace and stability and to economic development”.20 However, in difference to the EU-UA AA, which pursues the objective of “Ukraine’s gradual integration in the EU Internal Market”,21 and even to the PCA, which aspired for a “gradual rapprochement between Kazakhstan and a wider area of cooperation in Europe”,22 the EPCA does not indicate any direction of the EU-Kazakhstan cooperation process. In addition, the EPCA is more realistic than the PCA on its expected legal effect. The PCA ambitiously provided that the approximation of Kazakhstan’s “existing and future legislation” to the acquis communautaire is an “important condition” for strengthening EU-Kazakhstan economic links and that Kazakhstan “shall endeavor

 EPCA, Art. 1.  Ibid. 16  PCA, at Preamble. 17  EPCA, Art. 1. 18  See International Monetary Fund (2015). 19  PCA, Art. 1. 20  EPCA, Art. 2. 21  EU-UA AA, Art. 1(2d). 22  PCA, at Preamble. 14 15

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to ensure that its legislation will be gradually made compatible with [the EU law]”.23 In contrast to the PCA, the EPCA merely commits the parties to “promote mutual understanding and convergence of their legislation and regulatory framework”.24 Specifically, Kazakhstan agreed to promote regulatory convergence with good practices of the EU merely in the areas of public finance management;25 company law;26 and education and training.27 Thus, unlike the EU-UA AA, which contains binding provisions on gradual approximation with EU norms and standards in trade and trade-related areas, the EPCA includes no mandatory clauses on harmonization of legislation and its potential impact on the legal system of Kazakhstan will remain rather limited.

3  Institutions For the purpose of achieving the aims of the EU-Kazakhstan partnership, the EPCA foresees the operation of an institutional framework, which is identical to the one established by the PCA and consists of a Cooperation Council, a Cooperation Committee, various specialized subcommittees/bodies and a Parliamentary Cooperation Committee. The Cooperation Council meets at ministerial level once a year with the purpose of supervising and regularly reviewing the implementation of the EPCA.  It may examine any major issue arising within the framework of the EPCA or any other bilateral or international issue of mutual interest for the purpose of attaining the objectives of the EPCA. In performance of its duties, the Cooperation Council is assisted by a Cooperation Committee. The Cooperation Committee is composed of representatives of the parties at senior civil servant level and is supposed to ensure continuity between meetings of the Cooperation Council. Further, the Cooperation Council may decide to set up specialized subcommittees or bodies that can assist it in carrying out its duties. Both the Cooperation Council and the Cooperation Committee are chaired alternately by representatives of the EU and Kazakhstan. The institutional framework also includes a Parliamentary Cooperation Committee, which is a forum for members of the Kazakhstan Parliament and the  Ibid, Art. 43 (1). In particular, the approximation of laws was supposed to extend to the following areas: customs law, company law, banking law, company accounts and taxes, intellectual property, protection of workers at the workplace, financial services, rules on competition including any related issues and practices affecting trade, public procurement, protection of health and life of humans, animals and plants, the environment, consumer protection, indirect taxation, technical rules and standards, nuclear laws and regulations, transport. Ibid, Art. 43 (2). 24  EPCA, at Preamble. 25  Art. 201. 26  220. 27  244. 23

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European Parliament to meet and exchange their views. It may request relevant information on the implementation of the PCA and make recommendations to the Cooperation Council. Yet, in contrast to the PCA, the EPCA allows the Cooperation Council not only to make recommendations but also to take binding decisions.28 Moreover, the Cooperation Council may delegate any of its powers to the Cooperation Committee, including the power to take binding decisions. In addition, the Cooperation Council may update or amend the annexes to the EPCA, based on consensus between the parties and without prejudice to any specific provisions governing trade and business issues of the EPCA.29 Although the EPCA’s provisions fall short of the clauses stipulated by the EU-UA AA that establishes a top-level Summit as the highest level of political dialogue and a Civil Society Platform, the modifications introduced by the EPCA are certainly of great importance as they potentially allow generating internal dynamics for the development of the EU-Kazakhstan partnership.

4  Political Dialogue By concluding the PCA, Kazakhstan and the EU have established a regular political dialogue between one another with the purpose of increasing the convergence of their positions on international issues of mutual concern.30 The EPCA commits the parties to further develop and strengthen political dialogue in areas of mutual interest based on international law, effective cooperation within multilateral institutions, and shared values.31 In doing so, the EPCA (the same as the PCA) clearly distinguishes two priority areas of the EU-Kazakhstan political partnership: (1) cooperation in the matters related to peace and security; and (2) promotion of shared values of democracy, human rights, and the rule of law.

4.1  Cooperation on Peace and Security The EU-Kazakhstan cooperation in matters related to peace and security may be characterized as effective and fruitful. Kazakhstan emphasizes political stability in its domestic affairs and is crucially interested in promoting and maintaining international peace and security in Kazakhstan’s neighborhood and in the wider region. Conducting for this purpose a multi-vector foreign policy, Kazakhstan seeks peaceful and mutually beneficial relations with all major international actors, two of

 EPCA, Art. 268(2).  Ibid, Art. 268 (4). 30  PCA, Art. 4. 31  EPCA, Art. 4. 28 29

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which, Russia and China, are its immediate neighbors. Being a member of the Russia-led Collective Security Treaty Organization and the Shanghai Cooperation Organization (SCO) dominated by China, Kazakhstan is also a member of the North Atlantic Cooperation Council and an active participant in the Partnership for Peace program that allows it to build up an individual relationship with NATO. Kazakhstan also plays an important role in the Organization for Security and Cooperation in Europe (OSCE), held its chairmanship and organized an Astana summit in 2010. Moreover, Kazakhstan is a major driving force behind the Conference on Interaction and Confidence Building Measures in Asia. The EU supports Kazakhstan’s efforts to promote international peace and security in the Eurasian continent32 and the EPCA commits both parties to deepen their cooperation in foreign and security policy with the purpose of addressing issues of conflict prevention and crisis management, regional stability, non-proliferation, disarmament and arms control, nuclear security, and export control of arms and dual-­ use goods.33 Particularly, much as AAs, the EPCA foresees the intensification of the parties’ interaction in areas such as the enhancement of safety, security, and sustainability of all space-related activities,34 struggling serious crimes of international concern (including through the International Criminal Court),35 promoting stability and security in Central Asia and improving the conditions for further regional cooperation,36 countering the proliferation of weapons of mass destruction,37 fighting against the illicit trade in small arms and light weapons,38 and combating all forms of terrorism.39

4.2  Impact of EU Values The promotion of democracy, human rights, and the rule of law is one of the main objectives of the EU as a value-driven international actor.40 Logically, the PCA stipulated that the EU and Kazakhstan share common values and those values underpin the internal and external policies of the parties and constitute an essential element of their partnership.41  EPCA, Art. 4.  Ibid, Arts. 4, 6. 34  Ibid, Art. 7. 35  Ibid, Art. 8. 36  Ibid, Art. 10. 37  Ibid, Art. 11. 38  Ibid, Art. 12. 39  Ibid, Art. 13. 40  See Consolidated Version of the Treaty on the European Union, Arts. 2, 3(5), [2012] O.J. C 326/17, https://eur-lex.europa.eu/resource.html?uri=cellar:2bf140bf-a3f8-4ab2-b506fd71826e6da6.0023.02/DOC_1&format=PDF (accessed 15 March 2018). 41  PCA, at Preamble, Art. 2. 32 33

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Yet, the EU-Kazakhstan dialogue in the promotion of democracy, human rights, and the rule of law has never been harmonious, and the impact of EU values on Kazakhstan has never been strong. Although Kazakhstan became a member of the European Commission for Democracy through Law (Venice Commission) in March 2012, the EU has continuously raised concerns on many human rights issues in Kazakhstan, including excessive restrictions on the press, political opponents, religious groups, and civil society organizations.42 Further, the EU has frequently criticized elections in Kazakhstan for falling short of being genuinely pluralistic and for not meeting key democratic principles.43 Furthermore, it underlined that closer and stronger bilateral ties must go hand in hand with adherence to the common values and urged the Kazakh authorities to make every effort to improve the human rights situation in their country by implementing the recommendations of the Venice Commission.44 At the same time, however, some scholars argue that the human rights dimension “was left at the margins of the EU-Kazakhstani relationship”,45 and the EU in its relations with Kazakhstan (and other Central Asian countries) “is driven more by its self-interest than by the norms and principles of democratic governance”46 concentrating “largely on issues of state-building rather than on democracy-building”.47 In this context, of particular note is that the EPCA’s wording on the promotion of EU values was watered down substantially. Although the EPCA provides that the EU and Kazakhstan share common values48 and they will cooperate in their promotion49 (particularly by supporting and increasing the role of civil society50), it does not stipulate anymore that those values lie beneath the internal and external policies of the parties and comprise a fundamental component of their partnership. Therefore, there is every reason to suppose that the impact of EU values on Kazakhstan will remain weak.

 See e.g. Statement by High Representative Catherine Ashton (2 February 2012), http://www. consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/127813.pdf (accessed 15 March 2018). 43  See e.g. European Commission (2011). 44   See European Parliament Resolution of 22 November 2012 on EU-Kazakhstan EPCA (2012/2153(INI)), http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&refe rence=P7-TA-2012-459 (accessed 15 March 2018). 45  Anceschi (2014). 46  Warkotsch (2006). 47  Ibid, 523. 48  EPCA, at Preamble. 49  Ibid, Art. 5. 50  Ibid, Art. 251. 42

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5  Trade and Investment Despite a significant decline of trade volume due to falling energy prices, the EU remains Kazakhstan’s first trading partner ahead of Russia and China, accounting for 39.2% of the total trade of Kazakhstan (EUR 22 billion), 50.9% of its exports (EUR 16.9 billion), and 22.4% of its imports (EUR 5.1 billion) in 2016.51 Moreover, the EU is the largest investor in Kazakhstan with a gross investment of around USD 106 billion from 2000 to 2014.52 In 2014, the EU invested USD 10.7 billion and accounted for 45% of the total foreign direct investment inflow to Kazakhstan.53 The conclusion of the EPCA almost coincided with the accession of Kazakhstan to the WTO, which took place on 30 November 2015. Thus, the EPCA contains a modernized trade and investment section that brings the EU-Kazakhstan economic partnership in compliance with the WTO rules. Particularly, the parties agreed to govern their relations based on most favored nation (MFN) and national treatment principles;54 to prohibit import and export restrictions;55 to set up free transit of goods through their territories;56 and to apply import and export customs duties in accordance with their WTO tariff commitments.57 Furthermore, the EPCA requires the parties not to restrict and authorize, in freely convertible currency and in accordance with the provisions of the IMF Statute, any payments and transfers between the EU and Kazakhstan58 and to ensure free movement of capital.59 Further, the EPCA aims to enhance the protection of intellectual property rights and requires the parties to provide for due and efficient implementation of the WTO Agreement on Trade-Related Aspects of Intellectual Property and other international treaties in this field.60 It provides for reciprocal access to public procurement markets at the national, regional, and local levels based on the principle of national treatment61 and requires the parties to uphold comprehensive competition laws.62 It requires the parties to publish all laws and other regulatory acts pertaining to or affecting any trade-­ related matters before their adoption and provide not less than 30 calendar days for interested persons to comment to the responsible authorities before the relevant

 See Kazakhstan – Trade Statistics, https://wits.worldbank.org/CountryProfile/en/KAZ (accessed 25 May 2020). 52  See European External Action Services (2016). 53  Ibid. 54  EPCA, Arts. 14,15. 55  Ibid, Art. 17. 56  Ibid, Art. 19. 57  Ibid, Art. 16. 58  Ibid, Art. 57. 59  Ibid, Art. 58(1). 60  Ibid, Arts. 62(1), 65, 84. 61  Ibid, Art. 122(1). 62  Ibid, Art. 157(1). 51

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measure is finalized and adopted.63 In addition, the EPCA establishes an “effective and efficient mechanism for avoiding and settling any dispute between the parties” concerning the interpretation and application of the EPCA; particularly, it contains provisions for bona fide dispute resolution and mediation, defines arbitration procedure and enforcement of arbitral awards.64 In line with WTO standards, the EPCA also provides that the MFN clause does not apply to treatment accorded by parties pursuant to free trade agreements and “economic integration agreements”.65 With respect to Kazakhstan, this rule is of particular importance, as Kazakhstan is a member of the Eurasian Economic Union (EAEU), a regional integration agreement that became operative on 1 January 2015, unites four other post-Soviet countries (Armenia, Belarus, Kyrgyzstan, and Russia), and aims at establishing a Eurasian Common Market, in which the free movement of goods, services, capital, and labor is ensured.66 The EAEU is endowed with international legal personality67 and may conclude international treaties “third states, their integration associations, and international organizations” on any matters within its jurisdiction independently or jointly with the Member States.68 Thus, on 29 May 2015, the EAEU and its Member States, on the one part, and Vietnam, on the other part, signed a free trade agreement (FTA) that entered into force on 5 October 2016.69 In 2017, the main directions of the EAEU’s international activities, which are annually approved by the EAEU supreme body, the Supreme Eurasian Economic Council, foresaw inter alia elaborating an Agreement on Trade and Economic Cooperation with China and interlinking the EAEU with the China-led Silk Road Economic Belt (SREB) project; and examining practicability of concluding FTAs with India, Iran, Israel, and Singapore.70 Another important direction of the EAEU’s international activities included “continuing working on establishing directs contacts between the Eurasian Economic Commission and the European Commission”,71 which clearly shows the EAEU’s willingness to set up formal relations with the EU. In fact, one of the major reasons underlying the establishment of the EAEU is the eagerness of its Member States to enter into an equal and productive relationship with the EU. As already put  Ibid, Art. 171(3).  Ibid, Arts. 172–198. 65  Ibid, Art. 45(4). 66  See Treaty on the Eurasian Economic Union (signed 29 May 2014, entered into force 1 January 2015, TEAEU), http://www.un.org/en/ga/sixth/70/docs/treaty_on_eeu.pdf, (accessed 15 March 2018), Art. 4. 67  TEAEU, Art. 1(2). 68  TEAEU, Art. 7(1). 69   The text of the Agreement is available at https://docs.eaeunion.org/docs/ru-ru/0147849/ itot_02062015 (accessed 15 March 2018). 70  See Reshenie Vysshego Evraziiskogo ekonomicheskogo soveta No.18 Ob Osnovnykh napravleniyakh mezhdunarodnoi deiatel’nosti Evraziiskogo ekonomicheskogo soiuza na 2017 god (26 December 2016), Section II, https://www.alta.ru/tamdoc/18vr0018/ (accessed 25 May 2020). 71  Ibid. 63 64

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by the Belarusian President Lukashenko in 2011: “[T]he Eurasian Union is an integral part of pan-European integration. It should become a key regional player that will help build relations with the world’s leading economic structures… [in particular with] the European Union, thus ultimately creating a single economic space from Lisbon to Vladivostok… [and] merging the two integration projects”.72 An additional major reason that facilitated the emergence of the EAEU was the desire of the Eurasian countries to collectively balance the increasing power of China with the purpose of preventing its domination in the region.73 Yet, despite fears of Chinese hegemony, Russia and Central Asian countries have been actively supporting the merits of the SREB project and welcome establishing a meaningful partnership between the EAEU and China (or the SCO) to avoid a potential clash between these two integration projects and to make them complementary and mutually reinforcing in connecting the Asian and European markets.74 In this regard, of particular note are the following words of the Kazakh President Nazarbayev: “The Eurasian Union should emerge as a link connecting the Euro-Atlantic and Asian development areas… and serve as a bridge between the dynamic economies of the European Union and East, South-East and South Asia”.75 Although some scholars argue that Kazakhstan is “undeniably a European state”,76 Kazakhstan does not fall into the group of post-Soviet states whose self-­ identification with Europe is coupled with their rejection of Russia and Russia-led integration groupings.77 Instead, Kazakhstan pragmatically positions itself a Eurasian state willing to become a connection link between the West and the East. In doing so, Kazakhstan treats Eurasian integration as a purely economic project and rejects any attempts to transform it into a political union.78 Yet, it is Kazakhstan’s membership in the EAEU that is the major reason why the EPCA does not contain (unlike AAs) any clauses on free trade and remains (the same as the PCA) merely a preparatory step towards launching an FTA in the future. Due to Kazakhstan’s trade policy obligations in the EAEU, the EU and Kazakhstan are currently unable to move their trade relations beyond the WTO regulatory framework, as launching free trade between them requires the establishment of an FTA between the EU and the EAEU.

 Lukashenko (2011).  See Kembayev (2018). 74  Ibid, 49. 75  See Nazarbaev (2011). 76  Cornell and Engvall (2017). 77  See Patalakh (2018). 78  It is noteworthy that in 2017 Kazakhstan unilaterally launched a visa-free regime with 21 EU Member States that are key investors in Kazakhstan irrespective of the reciprocal EU-Russia sanctions. See Agnieszka Konopelko, ‘Eurasian Economic Union: A Challenge for EU Policy towards Kazakhstan’ 16 Asia Europe Journal 13 (2018). 72 73

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6  Energy and Transport Cooperation in the energy sector occupies a special place in the EU-Kazakhstan partnership, as both parties are strongly interested in the stability of energy supplies. The EU’s economy demands a steady flow of energy,79 while the energy that the EU imports from Kazakhstan contributes significantly to Kazakhstan’s development.80 Already the PCA proclaimed commitment by the parties to the European Energy Charter81 and “the progressive integration of the energy markets in Europe”.82 Both the EU and Kazakhstan are strongly interested in full implementation of the provisions of the Energy Charter Treaty and especially on the free transit of hydrocarbons and the diversification of transportation routes. Therefore, they actively cooperate in the framework of TRACECA (Transport Corridor Europe-Caucasus-Asia) and INOGATE programs. Kazakhstan is also a participant in the “Baku Initiative” launched on 13 November 2004, whose aim is to facilitate the gradual integration of the energy markets of the littoral states of the Black and Caspian Seas into the EU market, as well as the transportation of the extensive Caspian energy resources towards Europe, be it transiting through Russia or via other routes such as Iran and Turkey. In addition, the EU and Kazakhstan adopted a Memorandum of Understanding on Cooperation in the Field of Energy (4 December 2006)83 and a Memorandum of Understanding on Cooperation in the Field of Transport (12 June 2009).84 Furthermore, the EU Strategy for a New Partnership with Central Asia (2007) reaffirmed the EU’s willingness to conduct an enhanced regular energy dialogue with

 See EU Delegation to Kazakhstan, Remarks of European Commissioner for Energy Günther H. Oettinger, https://eeas.europa.eu/delegations/kazakhstan/area/press_en (accessed 25 May 2020). 80  In Mazneva et  al. (2018). EU imports from Kazakhstan are dominated by energy (minerals, fuels) products (87.7% in 2015). See European Union External Action Services (2016). 81  PCA, at Preamble. Kazakhstan signed the Energy Charter Treaty and the Protocol on Energy Efficiency and Related Environmental Aspects on 17 December 1994 and ratified these instruments on 18 October 1995. 82  Ibid, Art. 53. Moreover, the PCA provides that “insofar as matters covered by the PCA are covered by the Energy Charter Treaty and Protocols thereto, such Treaty and Protocols shall … apply to such matters to the extent that such application is provided for therein”. PCA, Art. 91. 83  See the text at https://eeas.europa.eu/sites/eeas/files/memorandum_of_understanding_on_cooperation_in_the_field_of_energy_between_the_european_union_and_the_republic_of_kazakhstan_en.pdf (accessed 15 March 2018). In this document, the parties agreed to promote the enhancement of energy security through regular consultations and information exchange related to the production, processing, and transportation of energy resources. 84   See the text in Russian at https://online.zakon.kz/Document/?doc_id=31348558# pos=0;267.20001220703125 (accessed 15 March 2018). The document expressed the willingness of the parties to exchange experience and best practices in the development of a sustainable national transport policy covering all modes of transport, and to start exploratory discussions to identify the most efficient way to connect Kazakhstan with the European Transport Networks, taking into account the TRACECA corridors, Eurasian routes as well as connectivity between Western China and the EU. 79

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Central Asian states in the framework of the Baku Initiative and based on the Energy Charter Treaty.85 To be also noted is that in August 2008, Kazakhstan adopted the “Path to Europe” state program, which aimed at “establishing strategic partnership with the EU and the leading European countries” and reiterated Kazakhstan’s commitment and alacrity to pursue cooperation with the EU, striving for the free transit of hydrocarbons and diversification of transportation routes.86 The desire to intensify cooperation on energy matters is also clearly reflected in the EPCA.  Foremost, the parties pledged to enhance energy security, efficiency, sustainability, and competitiveness,87 and recognized that ensuring transparency and non-discrimination is the best way to create an environment favorable to foreign direct investment in the energy sphere.88 They agreed to take all measures to facilitate the transit of energy goods, consistent with the principle of freedom of transit and in accordance with the Energy Charter Treaty.89 Moreover, they reached a decision to conduct ad hoc sessions on energy matters during the Cooperation Committee meetings upon request of any party90 and establish an early warning mechanism at the level of the Kazakh ministry and a member of the European Commission to prevent and rapidly react to emergency situations.91 Furthermore, they decided to cooperate in the fields of renewable energy development and the promotion of energy efficiency.92 Despite strong mutual interest in deepening their cooperation in the spheres of energy and transport, the EU and Kazakhstan are currently not able to fully link up their energy and transport markets, and therefore their partnership cannot yet reach its full scope. The EU and Kazakhstan do not share a common border and their cooperation crucially depends on Russia (the most important transit country for Kazakh oil exports to Europe), which, however, in October 2009 withdrew from the provisional application of the Energy Charter Treaty and notified of its intention not to become a contracting party to the Treaty. Another major factor that may strongly influence the EU-Kazakhstan energy partnership is yet again Kazakhstan’s membership in the Eurasian integration grouping. The EAEU aims to pursue a

 See Council of the European Union (2007). Particularly, the strategy aims at facilitating: (a) development and expansion of the regional infrastructure in the fields of transport, energy, and trade, and making better use of Central Asia’s economic potential; (b) exploration of new oil, gas, and hydro-power resources, and the upgrading of the existing energy infrastructure; and (c) development of additional pipeline routes and energy transportation networks (particularly, a Caspian Sea-Black Sea-EU energy transport corridor). 86  See Kazakhstan’s “Path to Europe” State Program approved by the Decree of the President of RK, No. 653 of 29 August 2008, see the text in Russian at https://tengrinews.kz/zakon/prezident_ respubliki_kazahstan/hozyaystvennaya_deyatelnost/id-U080000653_/ (accessed 15 March 2018). 87  EPCA, Arts. 148(2), 204. 88  Ibid, Art. 148(2). 89  Ibid, Art. 143(1). 90  Ibid, Art. 148(4). 91  Ibid, Art. 149. 92  Ibid, Art. 208. 85

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coordinated energy policy of its Member States93 and to gradually create (as an integral part of the emerging Eurasian Common Market) a Eurasian Common Energy Market (ECEM), which will include a Common Electric Power Market (to be established by 1 July 2019), a Common Gas Market, and a Common Market of Oil and Petroleum Products (both to be established by 1 January 2025).94 The ECEM’s emerging regulatory framework aims at the liberalization of energy and transport markets of EAEU Member States by decreasing government regulations and restrictions, ensuring greater participation of private entities, bringing greater competition and abolishing barriers to trade in energy and related equipment, technology, and services,95 which may potentially allow the EU-Kazakhstan energy partnership to develop to its full potential provided that the EU will enter into an agreement with the EAEU.

7  Conclusion The EU and Kazakhstan are profoundly interested in strengthening their political and economic relationship, which is clearly confirmed by the adoption of the EPCA. However, the further advancement of the EU-Kazakhstan partnership will be very difficult due to the following reasons. Kazakhstan’s insufficient human rights record and obvious shortcomings in upholding the rule of law remains an impediment to intensifying the EU-Kazakhstan partnership. Achieving a deeper degree of relationship will necessarily require, on the one hand, Kazakhstan’s adherence to promoting democratic values and conducting gradual political reforms towards good governance, respect for human rights, and the establishment of a multiparty system with truly free elections. On the other hand, it will also require the EU’s commitment to actively support the protection and implementation of fundamental freedoms in Kazakhstan and to facilitate open and constructive political dialogue, transparency, and respect for the rule of law. Yet, the most important obstacles towards further strengthening the EU-Kazakhstan partnership are constituted by the absence of common borders (and thus direct access to the each other’s markets) and the membership of Kazakhstan in the EAEU.  Particularly, these obstacles prevent launching a bilateral FTA and ensuring the stability of energy supplies. Overcoming these obstacles requires an entirely new foundation as the mutual interaction is impossible within the EU-Kazakhstan bilateral cooperation format and requires an entirely new foundation for the mutual interaction. Specifically, these problems can be surmounted by establishing a strategic partnership between the European and the Eurasian Economic Unions (possibly also in the framework of the SREB). Yet, forging such

 See Treaty on the Eurasian Economic Union (n 2), Art. 79(1).  Ibid, Arts. 81, 82, 83. 95  See more on the ECEM in Kembayev (2019). 93 94

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a partnership presupposes setting up not only a new economic but also peace and security architecture in the space between Lisbon and Vladivostok (or Lisbon and Shanghai), which, however, in the view of the current Ukrainian crisis will be a very challenging (if not unachievable at least in the foreseeable future) undertaking.

References Anceschi L (2014) The tyranny of pragmatism: EU–Kazakhstani relations. Europe-Asia Stud 66:21 Cornell S, Engvall J (2017) Kazakhstan in Europe: why not?. Silk Road Paper. http://isdp.eu/ content/uploads/2017/10/2017-cornell-engvall-kazakhstan-in-europe-why-not.pdf. Accessed 15 March 2018 Council of the European Union (2007) The EU and Central Asia: Strategy for a New Partnership. https://eeas.europa.eu/sites/eeas/files/st_10113_2007_init_en.pdf. Accessed 15 March 2018 Council of the European Union (2009) 11th Cooperation Council EU-Kazakhstan 17 November 2009 Joint Statement. https://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ er/111290.pdf. Accessed 15 March 2018 Decision of Supreme Eurasian Economic Council on 06 December 2018 “On Common Market of Gas of the Eurasian Economic Union” European Commission (2011) Declaration by the High Representative Catherine Ashton (21 January 2011). http://europa.eu/rapid/press-release_PESC-11-9_en.htm. Accessed 15 March 2018 European Commission (2014) Statement by President Barroso following his meeting with Mr Nursultan Nazarbayev, President of Kazakhstan (9 October 2014). http://europa.eu/rapid/ press-release_SPEECH-14-675_en.htm. Accessed 15 March 2018 European Council (2015) Enhanced Partnership and Cooperation Agreement between the European Union and its Member States, of the one part, and the Republic of Kazakhstan, of the other part. http://www.consilium.europa.eu/en/documents-publications/treaties-agreements/ agreement/?id=2015045. Accessed 15 March 2018 European Parliament/Legislative Observatory (2016) Preparatory document 2016/0166(NLE). https://oeil.secure.europarl.europa.eu/oeil/popups/summary.do?id=1464246&t=e&l=en. Accessed 15 March 2018 European Union External Action Services (2016) Kazakhstan and the EU. https://eeas.europa.eu/ headquarters/headquarters-homepage/1367/kazakhstan-and-eu_en. Accessed 15 March 2018 International Monetary Fund (2015) World Economic Outlook Database. https://www.imf.org/ external/pubs/ft/weo/2015/01/weodata/index.aspx. Accessed 15 March 2018 Kazakhstan’s “Path to Europe” State Program approved by the Decree of the President of RK, No. 653 of 29 August 2008 Kembayev Z (2018) Implementing the silk road economic belt: from the Shanghai cooperation organization to the silk road union? Asia Europe J 16:39 Kembayev Z (2019) The emerging Eurasian internal energy market: what is its potential impact on China’s one belt one road project? J World Invest Trade 20(2–3):401–424 Lukashenko A (2011) O sud’bakh nashei integratsii. Izvestiia (17 October 2011). https://iz.ru/ news/504081. Accessed 15 March 2018 Mazneva E, Farchy J, Gizitdinov N (2018) Kazakhstan Overtakes Iraq as OPEC Pact’s Biggest Over-Producer. Bloomberg. https://www.bloomberg.com/news/articles/2018-01-11/kazakhstan-overtakes-iraq-as-opec-pact-s-biggest-over-producer. Accessed 15 March 2018 Memorandum of Understanding on Cooperation in the Field of Transport between the European Commission and Ministry of Transport and Communications of Kazakhstan (12 June 2009) Nazarbaev N (2011) Evraziiskii soiuz: ot idei k istorii budushchego. Izvestiia (25 October 2011). https://iz.ru/news/504908. Accessed 15 March 2018

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Patalakh A (2018) Kazakhstan’s EU policies: a critical review of underlying motives and enabling factors. Asian J German Eur Stud 3:15 Warkotsch A (2006) The European Union and democracy promotion in bad neighbourhoods: the case of Central Asia. Eur Foreign Aff Rev 11:510 Zhenis  Kembayev  (1975–2019) was a professor of law at the KIMEP University in Almaty, Kazakhstan. He was a Fulbright scholar at the Southwestern Law School (Los Angeles, USA) in 2003–2004 and an Alexander von Humboldt fellow at the Saarland University and the Max Planck Institute for Comparative Public Law and International Law (Heidelberg, Germany) in 2007–2008. In 2015, Prof. Dr. Kembayev was selected as a Jean Monnet Chair in European and International Law and in 2016 a Weiser Fellow at the Center for Europe and Eurasia of the University of Michigan. Prof. Dr. Kembayev’s research addressed various legal issues related to the regional integration processes in Eurasia within the Eurasian Economic Union and the Collective Security Treaty, the development of constitutionalism in Kazakhstan, the evolution of European integration and the EU external relations law, as well as the Shanghai Cooperation Organization.

The EU-Armenia Comprehensive and Enhanced Partnership Agreement: A New Instrument of Promoting EU’s Values and the General Principles of EU Law Anna Khvorostiankina

1  Introduction The EU-Armenia Comprehensive and Enhanced Partnership Agreement (CEPA) was signed on 24 November 2017.1 After the failure of the EU-Armenia Association Agreement because of Armenia’s ‘U-turn’ towards membership in the Russia-led Eurasian Economic Union (EAEU) (then Eurasian Customs Union) in September 2013, CEPA marked the beginning of the new stage in the bilateral relations between the EU and Armenia and established the legal basis of the new format of partnership. The new instrument clearly demonstrated that, regardless of its participation in the EAEU, Armenia, as one of the Eastern Partnership (EaP) countries, still aims to develop an active political dialogue and deepen economic cooperation with the EU. Moreover, the commitments undertaken by Armenia show its eagerness to further Europeanise the domestic legal system. The Agreement particularly aims “to enhance the comprehensive political and economic partnership and cooperation between the Parties, based on common This chapter is partly based on the revised and extended version of the paper published as: A.  Khvorostiankina, Europeanization Through EU External Agreements and the Issue of ‘Constitutional Identity’: The Case of the EU-Armenia CEPA, Kyiv-Mohyla Law and Politics Journal, 4 (2018), pp. 15–52. The final version of this chapter was prepared with the support of the Erasmus+ Programme in the framework of the Jean Monnet Module “Laboratory of Approximation of Armenian Legislation with the EU acquis/Legal Approximation Laboratory” 610880-EPP-1-2019-1-AM-EPPJMO-MODULE (2019–2022). The European Commission’s support for the production of this publication does not constitute an endorsement of the contents, which reflect the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.  The Agreement is not yet in force but applied provisionally.

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values and close links, including by increasing the participation of the Republic of Armenia in policies, programmes and agencies of the European Union”2 and replaces the outdated EU-Armenia Partnership and Cooperation Agreement (PCA) signed in 1996.3 It is expected that CEPA “will strengthen [EU-Armenia] cooperation in many different fields such as energy, transport and environment, and lead to increased mobility” and will “lead to an improved business environment and to new opportunities in trade and investments”.4 In the words of then High Representative of the European Union for Foreign Affairs and Security Policy/Vice President F. Mogherini, the newly signed agreement is “the first of its kind, as it is concluded with a partner country which is at the same time a member of Eurasian Economic Union and in the Eastern Partnership”.5 Indeed, CEPA is a unique legal instrument: within the EaP region, it significantly differs from both PCAs concluded with the post-Soviet countries in 90s and Association Agreements (AAs) of new generation signed with Georgia, Moldova and Ukraine. These particularities make the newly signed Agreement extremely interesting for scholarly examination. The comprehensive analysis of CEPA and its transformative potential requires considering the social and political context in which the Agreement is now provisionally applied and will fully operate upon its entering into force. The ratification of CEPA by the National Assembly (Armenian Parliament) on 11 April 2018 coincided with the beginning of peaceful protests and acts of civil disobedience against oligarchy, monopolisation and concentration of power, violations of fundamental rights, disrespect to the rule of law, corruption and other negative phenomena associated with the ruling of the Armenian Republican Party and its leader Serzh Sargsyan. Having served two terms as the President of Armenia (2008–2018), on 17 April 2018 Sargsyan was elected as the Prime Minister by the Parliament. After the controversial constitutional reform of 2015 that introduced the parliamentary system of government and significantly strengthened the authority of Prime Minister having made the position of the President a symbolic one, this election meant, in fact, the third presidential term for Sargsyan. As a result of the protests, on 23 April 2018, he resigned. The opposition leader Nikol Pashinyan was elected as the Prime Minister of Armenia and formed the new Government. The Government immediately started implementing the anti-corruption measures and introducing reforms directed to the establishment of good governance and the rule of law. The National Assembly, however, remained dominated by the Republican Party hindering the effective functioning of the new Government, particularly by blocking its legislative proposals. One of the most illustrative examples was the rejection of the bill introducing the electoral reform initiated by Pashinyan.6

 Art. 1(a) EU-Armenia CEPA.  Art. 380 EU-Armenia CEPA. 4  Delegation of the European Union to Armenia (2017). 5  Ibid. 6  Radio Free Europe/Radio Liberty’s Armenian Service (29 October 2018a). 2 3

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To initiate the dissolution of the Parliament, in October 2018 Pashinyan resigned. After the failure of the National Assembly to elect a Prime Minister by supporting the only candidate (Pashinyan), it was dissolved by virtue of law7 and the snap elections were held on 9 December 2018. According to the elections results, My Step Alliance led by Nikol Pashinyan won 70.42% of votes while the Republican Party did not get enough voters’ support to clear the 5% threshold.8 The process of peaceful transition of power in April-May 2018 did not have any geopolitical connotations and the regional integration vectors were not under the question. As a Member of Parliament, in 2014, Pashinyan voted against Armenia’s joining the Eurasian Economic Union as a project threatening Armenia’s independence and sovereignty and deepening its regional isolation (particularly from Georgia and Iran).9 Nevertheless, during the parliamentary debates in the election of Prime Minister, Pashinyan, as the candidate, underlined his intent to develop deep, equal and mutually beneficial relations with all international partners of Armenia, including EAEU and Russia.10 At the same time, the dynamics of the initiated reforms created the grounds for cautious optimism concerning the potential deepening of the EU-Armenia relations. Being in harmony with the EU ‘common’ values, these genuinely internal political processes of reforming (in conjunction with the active development of civil society) can, on the one hand, facilitate and, on the other hand, benefit from proper implementation of CEPA. Moreover, the demand for the successful models and best practices for the ‘restart’ legal, political and economic reforms can stimulate further Europeanisation of Armenia even beyond the formal commitments under the Agreement. This chapter offers the legal analysis of CEPA as an instrument framing the EU-Armenia relations and characterises its potential influence on the Armenian legal order. Particularly, it focuses on the Agreement’s potential to stimulate the implementation of the ‘common values’ and transpose the general principles of EU law into the Armenian legal system. To reveal this potential, the chapter discusses CEPA’s objectives and legal basis, the institutional framework of partnership under CEPA, Agreement’s place in Armenian domestic legal order and the potential effect of the decisions adopted by CEPA’s institutions, defines the essential elements and conditionality mechanisms of the Agreement, as well as mechanisms of legislative approximation to the EU acquis.

 See Art. 149(3) of the Constitution of Armenia.  Central Electoral Commission of Armenia (2018, Tab “Summary”). 9  National Assembly of the Republic of Armenia (2014a, b). 10  National Assembly of the Republic of Armenia (2018a). 7 8

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2  CEPA: Objectives and Legal Basis According to Art. 1 of CEPA, the Agreement aims to: enhance the comprehensive political and economic partnership and cooperation between EU and Armenia; strengthen the framework for political dialogue; contribute to the strengthening of democracy and of political, economic and institutional stability in Armenia; to promote, preserve and strengthen peace and stability at both regional and international level, including through joining efforts to eliminate sources of tension, enhancing border security, and promoting cross-border cooperation and good neighbourly relations; enhance cooperation in the area of freedom, security and justice with the aim of reinforcing the rule of law and respect for human rights and fundamental freedoms; enhance mobility and people-to-people contacts; support Armenia’s efforts to develop its economic potential via international cooperation, including through the approximation of its legislation to the EU acquis; establish enhanced trade cooperation allowing for sustained regulatory cooperation in relevant areas and the conditions for increasingly close cooperation in other areas of mutual interest. From the EU’s perspective, these objectives belong to the Common Foreign and Security Policy, the Common Commercial Policy and development cooperation. Consequently, the legal basis of the Agreement was defined as the combination of Article 37 TEU, Article 207 TFEU (agreements related to Common Commercial Policy) and Article 209 TFEU (agreements in the area of development cooperation) read in conjunction with the procedural provisions of Article 218(6)(a) TFEU and the second subparagraph of Article 218(8) TFEU.11 The implementation of the Agreement is to be facilitated through the EU-Armenia Partnership Priorities signed on 21 February 2018.12 This document replaces another ‘soft’ law document—the ENP Action Plan adopted in 2006 and “shape[s] the agenda for regular political dialogue meetings and sectoral dialogues as defined in the new Agreement”.13 Being in line with the priorities set out in the ENP Review14 and coinciding with the focuses of CEPA, the Partnership Priorities include (1) strengthening institutions and good governance; (2) economic development and market opportunities; (3) connectivity, energy efficiency, environment and climate  Joint Proposal of the European Commission and the High Representative of the Union for Foreign Affairs and Security Policy for a Council Decision on the conclusion, on behalf of the European Union, of the Comprehensive and Enhanced Partnership Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and the Republic of Armenia, of the other part of 25 September 2017 JOIN(2017) 37 final, 2017/0238(NLE). 12  European Union External Action Services (2018). 13  EU-Armenia Cooperation Council (20 November 2017) Recommendation No 1/2017 on the EU-Armenia Partnership Priorities [2018/315], O.J. L 60, 2.3.2018, pp.  51–55. http://eur-lex. europa.eu/legal-content/EN/TXT/?qid=1522643453339&uri=CELEX:22018D0315. Accessed 15 March 2018. 14  European Commission (2015). 11

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action; and (4) mobility and people-to-people contacts. Another ‘joint ownership’ document elaborated by Armenia and the EU and aiming to direct the achievement of the Agreement’s objectives is the CEPA Implementation Roadmap elaborated by the Inter-Agency Commission coordinating the implementation of CEPA and EU-Armenia Partnership Priorities15 in May 2019, approved by the Decision of Prime Minister N 666-L and by the Partnership Council in June 2019. Having analysed the context in which CEPA was concluded, one may argue that the Agreement became a result of implementation of the EU’s differentiation and greater flexibility approach within the revised EaP and Armenia’s ‘complementarity’ in its multi-vector foreign policy. The Armenian Constitution neither stipules any restriction on the issues of international or regional cooperation;16 nor shows any specific integration priorities or preferences (however, according to the amendments to the Constitution introduced in 2015, the issues related to the accession to supranational international organisations shall be decided by popular referenda17 The foreign policy principle of ‘complementarity’ and multi-vector regional cooperation introduced in the late 90s is currently supported by the new government as well, although with some elaborations. The Program of Sargsyan’s Government for 2017–2022 highlighted deepening bilateral cooperation, particularly with Russia, USA, European counties, Georgia, Iran, China, India, countries of the Middle East and multilateral cooperation with EAEU, CSTO, EU, CIS, UN, NATO and CoE.18 The same directions of foreign relations are indicated in the Program of Pashinyan’s Government. However, noteworthy is (1) stressing the necessity to increase the effectiveness of the participation in the EAEU, (2) identifying the principles of cooperation with Russia, particularly equality; (3) in relations with the EU, focusing on implementation of CEPA (as a significant factor contributing to the implementation of the reforms initiated by Government) and setting the aim to start the dialogue on visa liberalisation (italics added – A. Kh.).19 Although Armenia is both a member of the Russia-led EAEU and has enhanced relations with the EU, arguably, these two regional integration vectors have significant differences. While the former was forced by Russia’s leverages, is based on pragmatic economic interests and security considerations20 and does not aim at any

 The Inter-Agency Commission was created by the Decision of the Prime Minister of RA N 906-A of 2 July 2018 and is headed by the Deputy Prime Minister. Earlier, the function of coordination of the implementation of CEPA belongs to the inter-agency commission established on 25 December 2017 by the decree of the President of Armenia. 16  Art. 205 of the Constitution of RA. 17  See: Decision of the Constitutional Court DCC-1175 of 14 November 2014. 18  See section 2.1 of the Program of Government of RA for 2017–2022. 19  See section 3.2 of the one-year Program of Government of Armenia for 2018 and section 2.3 of the five-year Program of Government of Armenia of 2019. 20  On Russia’s leverages see: Delcour and Wolczuk (2015), p. 495. 15

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value-based systemic change,21 the latter initially corresponded to the domestic demand for modernisation based on EU templates22 and had significant value-based discourse component. Before April 2018, however, this ‘demand’ was rather of pragmatic nature, aimed mainly at sectoral reforms and—as Delcour L and Wolczuk K point out in relation to the period of 2009–2013—was caused by the necessity to decrease the vulnerability of the incumbent government.23 The result was the technical legislative reforms that did not bring any systemic change (i.e. overcoming corruption, dissolving oligarchic informal monopolies, introducing good governance and improving the democratic institutions, etc.). This formalistic approach of the government was coupled with the lack of rigour of the EU in pursuing the ‘value conditionality.24 In fact, it was one of the cases when, providing the support of ‘low political cost’ and not endangering the ‘survival strategy’ of the authorities, the cooperation with the EU actually prolonged the rule of the authoritarian government.25 Currently, in part of ‘shared values’ discourse, the cooperation with the EU may be viewed as coinciding with the governmental vision of further development of domestic constitutional order aiming to bring systemic legal and political change. Kostanyan and Giragosian observe that the negotiators of CEPA relied on the text of the failed EU-Armenia Association Agreement adjusting it to the new format of the EU-Armenia relations.26 The analysis shows that both ‘political’ and ‘economic’ parts of CEPA differ from the respective parts of the AAs with Georgia, Moldova and Ukraine. Particularly, under Art. 5(1) of CEPA, the Parties “shall intensify their dialogue and cooperation in the area of foreign and security policy, including the common security and defence policy”. This provision does not go that far as Art. 7 (1) of the EU-Ukraine AA promoting ‘gradual policy convergence’ in the listed areas. It recognises “the importance that the Republic of Armenia attaches to its participation in international organisations and cooperation formats and its existing obligations arising therefrom” (particularly from Armenia’s membership in the Russia-led Collective Security Treaty Organization). CEPA’s ‘economic part’, due to the concurring international obligations of Armenia under the Eurasian Economic Union Treaty and in contrast with the AAs, does not foresee the creation of the Deep and Comprehensive Free Trade Area (DCFTA). Arguably, this not only lowers the level of economic integration and narrows the scope of economic cooperation between the parties, but also significantly influences CEPA’s conditionality mechanisms taking away the incentives of gradual integration into the EU Internal Market offered in the AAs.

 See Art. 3 EAEU Treaty that among the basic principles lists the “respect for specific features of the political structures of the Member States”, therefore indicating that EAEU is formally ‘indifferent’ to the value systems of the Member States. 22  Delcour and Wolczuk (2015), p. 499. 23  Delcour and Wolczuk (2015), pp. 498–499. 24  Ghazaryan and Hakobyan (2014), p. 214. 25  Gstöhl (2014), p. 102. 26  Kostanyan and Giragosian (2017), p. 12. 21

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3  I nstitutional Framework and Decision-Making in the Institutions Established Under CEPA The institutional framework of the EU-Armenia relations is regulated by Title VIII of CEPA. It resembles the institutional frameworks under AAs, however, in contrast with the EU-Ukraine AA, it does not include the summit meetings on the highest level.27 The bodies established under CEPA are Partnership Council, Partnership Committee, sub-committees and other bodies assisting the Partnership Committee, Partnership Parliamentary Committee and Civil Society Platform. The Partnership Council supervises and regularly reviews the implementation of the Agreement. It consists of representatives of the parties at ministerial level and meets at regular intervals, at least once a year, and when circumstances require. The Partnership Council is entitled to examine any major issues arising within the framework of the Agreement and any other bilateral or international issues of mutual interest for the purpose of attaining the objectives of CEPA. It is chaired alternately by a representative of the European Union and a representative of the Republic of Armenia.28 Following the beginning of the provisional application of CEPA on 1 June 2018, the first Partnership Council chaired by F. Mogherini took place on 21 June 201829 and the second one, chaired by the Foreign Minister of Armenia Z. Mnatsakanyan, on 13 June 2019.30 Importantly, the Partnership Council has the power to take binding decisions within the scope of the Agreement. It may also make recommendations. It adopts its decisions and recommendations by agreement between the parties, with due respect for the completion of the parties’ respective internal procedures. The Partnership Council has the power to update or amend the Annexes to CEPA, without prejudice to any specific provisions under Title VI. This body also serves as “a forum for the exchange of information on the legislation of the European Union and of the Republic of Armenia, both under preparation and in force, and on implementation, enforcement and compliance measures”.31 It, therefore, plays a significant role in directing and ensuring the effectiveness of the legislative approximation processes. The Partnership Council is assisted by the Partnership Committee.32 It is composed of representatives of the parties, in principle at senior official level and chaired alternately by a representative of the European Union and a representative of the Republic of Armenia and meets at least once a year. The Partnership Council may delegate to the Partnership Committee any of its powers, including the power to take binding decision; additionally, this body adopts binding decisions in cases provided

 Art. 460 (1) EU-Ukraine AA.  Art. 362 CEPA. 29  European Council (2018). 30  Delegation of the European Union to Armenia (2019a). 31  Art. 362 CEPA. 32  Art. 363 CEPA. 27 28

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for in the Agreement. The decisions are to be adopted by agreement between the parties, subject to the completion of the parties’ respective internal procedures. Once a year, the Partnership Committee shall meet in a specific configuration to address all issues related to Title VI (Trade and Trade-Related Matters). The Partnership Committee shall be assisted by subcommittees and other bodies established under this Agreement.33 The latter include, for example, Sub-Committee on Customs (Art. 126) and Sub-Committee on Geographical Indications (Art. 240). The first meeting of the Committee took place on 27 November 2018. The parties discussed, in particular, the draft Roadmap of the implementation of CEPA presented by the Armenian Government.34 EU-Armenia Partnership Committee met for the second time in Brussels on 16 December 2019 and discussed the progress with the implementation of the Agreement.35 The first meeting of the EU-Armenia Sub-Committee on Economic Cooperation and Other Related Sectors under CEPA was held in Yerevan on 12 March 2019. The objective of the meeting was to improve the shared understanding of the fundamentals of each economy. The parties exchanged information on macroeconomic trends, structural reforms, and strategies for economic development.36 The first meeting of the Sub-Committee on Geographical Indications, operating within the framework of CEPA was held in Brussels on 16 October 2019.37 The EU-Armenia Sub-Committee meeting on energy, transport, environment, climate action and civil protection took place on 11–12 March 2020. The parties discussed the EU-Armenia cooperation in the context of the EU “Green Deal” as well as Armenia’s progress in approximation with the EU acquis in relevant sectors.38 Parliamentary Partnership Committee consists of members of the European Parliament, on the one hand, and of members of the National Assembly of the Republic of Armenia, on the other, and is a forum for them to meet and exchange views. The Parliamentary Partnership Committee may make recommendations to the Partnership Council and create parliamentary partnership subcommittees.39 The inaugural meeting of the Parliamentary Partnership Committee took place in Strasbourg on 24 October 2018 and resulted in the adoption of the final statement and recommendations.40 The Agreement underlines the importance of civil societies of the Parties and civil-society dialogue for its implementation. In specific areas, the Agreement explicitly indicates the necessity of involvement of civil-society organisations in the

 Art. 364 CEPA.  Delegation of the European Union to Armenia (2018). 35  Delegation of the European Union to Armenia (2019b). 36  European Union External Action Services (2019). 37  European Commission (2018). 38  European Neighbours (2020). The event took place via a video link between Yerevan and Brussels because of the current coronavirus pandemic. 39  Art. 365 CEPA. 40  National Assembly of Armenia (2018b). 33 34

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policy development and reforms.41 Chapter 21 of Title V is devoted to civil-society cooperation between Armenia and EU and establishes a regular dialogue on these issues.42 A specific institution—Civil Society Platform—is established to enable the involvement of civil societies into the implementation of CEPA.  The Platform is established as a forum for views exchange; it consists “of representatives of civil society on the side of the European Union, including members of the European Economic and Social Committee, and representatives of civil-society organisations, networks and platforms on the side of the Republic of Armenia, including the [EaP] National Platform”.43 The forms of cooperation between the Civil Society Forum and other institutions include exchange of information and views44 and making recommendations by the Platform to the Partnership Council, the Partnership Committee and Parliamentary Partnership Committee.45 Art. 284 CEPA specifically indicates that cooperation and dialogue on sustainable development issues that arise in the context of trade relations between EU and Armenia “shall involve relevant stakeholders, in particular social partners, as well as other civil-society organisations, in particular through the Civil Society Platform established under Article 366”. Apparently, the institutional framework of CEPA is significantly more advanced than one of the PCA and resembles the institutional framework of the association agreements.

4  T  he EU-Armenia CEPA in Armenian Domestic Legal Order 4.1  C  EPA and the Constitution of Armenia: Hierarchy of Legal Norms and the Issue of Constitutional Values Under Art. 116 (2) of the Constitution of Armenia, international treaties shall be ratified through law. Art. 5 of the Constitution establishes the hierarchy of norms in the Armenian legal order and recognises the supremacy of the ratified international treaties over national laws. However, to guarantee the supremacy of the Constitution in domestic legal order, Art. 116 (3) prescribes that international treaties contradicting it may not be ratified. The Constitutional Court, before the ratification of an international treaty, determines the compliance of the commitments enshrined therein with the Constitution.46  See Art. 86 of Chapter 15 “Employment, Social Policy and Equal Opportunities” of Title V.  Art. 104 CEPA. 43  Art. 366 (2) CEPA. 44  Art. 366 (5), 366 (7) CEPA. 45  Art. 366 (6) CEPA. 46  Art. 168 (3) of the Constitution of RA. 41 42

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On 16 March 2018, the Constitutional Court of Armenia reviewed CEPA and held that there was no contradiction between the Constitution and the commitments under the Agreement.47 CEPA was subsequently unanimously ratified by the National Assembly on 11 April 2018.48 The Agreement is not yet in force pending ratification by all Member States,49 but it has been provisionally applied starting from 1 June 2018.50 Interestingly enough, in its Decision on CEPA, the Court did not analyse in detail the issue of values the Agreement is based on, in contrast with its approach in the Decision concerning compliance of the EAEU Treaty with the Armenian Constitution. In the latter Decision, the Court introduced the concept of ‘axiology of the Constitution’ covering the values and fundamental principles of the constitutional order.51 The Court examined (although in a very formalistic way) and confirmed the compliance of ‘axiology’ of the commitments under the Treaty with Armenian constitutional ‘axiology’. It may be argued that this analysis aimed to enhance the legitimacy of joining to the supranational organisation that, on the one hand, can potentially limit the national sovereignty and, on the other hand, is not committed to the strengthening of the fundamental constitutional values of respect to human rights, democracy and the rule of law. Being the organisation of economic cooperation, EAEU merely does not aim at promoting the mentioned values; instead, among the principles of its functioning, the EAEU Treaty lists the respect to the universally recognised principles of international law including the principle of sovereign equality of the Member States and ‘respect to particularities of political order of the Member States’.52 At the same time, although formally the EAEU Member States recognise the ‘European’ (or universal) values in their constitutions,53 the implementation of these values is an extremely problematic issue. All the EAEU Member States are either consolidated authoritarian or semi-authoritarian regimes, not free or partly free.54 In the Decision on CEPA, the analysis of the issue of values is really scarce. The Court merely reproduces the provisions of Art. 2 of the Agreement with focus on the  See: Decision of the Constitutional Court DCC-1407 of 16 March 2017.  Law of RA on Comprehensive and Enhanced Partnership Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and the Republic of Armenia, of the other part of 11 April 2018. 49  Art. 385 (2) CEPA. By the moment of writing, CEPA has been ratified by 21 Member States. 50  The scope of provisional application is defined in Council Decision (EU) 2018/104 of 20 November 2017 on the signing, on behalf of the Union, and provisional application of the Comprehensive and Enhanced Partnership Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and the Republic of Armenia, of the other part, O.J. L 23, 6.1.2018, pp. 1–3. 51  See: Decision of the Constitutional Court DCC-1175 of 14 November 2014. 52  Art. 3 EAEU Treaty. 53  See Art. 1 and Art. 2 of the Constitution of the Republic of Belarus; Art. 1 of the Constitution of the Republic of Kazakhstan; Art. 1 of the Constitution of the Kyrgyz Republic; Art. 1 and Art. 2 of the Constitution of the Russian Federation. 54  Freedom House (2020). 47 48

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‘essential element’ clause55 and underlines that, under the Preamble of the Constitution, Armenia alleges universal values.56 The Court does not link these two statements between themselves and does not highlight the ‘shared’ nature of the axiological core of Armenian constitutional order and the legal values promoted by the EU. This lack of theoretical framing of the Decision on CEPA (in contrast with, for example, the Decisions on the ECHR and ECtHR case law in domestic legal system,57 on the constitutionality of the EAEU Treaty58 and EAEU Customs Code59) can be better explained through the agency approach: such theoretical (or even philosophical) concepts as ‘the spirit of the Constitution’, ‘constitutional axiology’, ‘constitutional culture’, as well as frequent reference to the international standards of fundamental rights in the argumentation patterns can be individually attributed to the then President of the Constitutional Court Dr. G. Harutyunyan. The examination of his scholarly publications allows tracing the influence of his theoretical and argumentative approaches on the Court’s case law. The Decision on CEPA was adopted just after the resignation of Dr. Harutyunyan in March 2018 and before the appointment of the new President of the Court. Consequently, the legal positions of the Court appeared to be rather technical and based on literal comparison of the obligations under the Agreement and the Constitution.60 It is worth underlining that the values of the rule of law, democracy and respect to human rights promoted by CEPA are embodied in the unamendable provisions of Articles 1, 2 and 3 of Armenian Constitution, thus constituting its core, the very basis of its ‘identity’. Arguably, if the Constitutional Court had established this link underlining the commonality of the European and Armenian constitutional values, this would have stimulated and facilitated judicial reference to the EU law for interpretation of such values. Of great potential in this regard would have been the rapidly developing case law and soft law concerning the rule of law principle in the EU (particularly in Central European Countries). It is obvious, however, that, to strengthen the rule of law, democracy and respect to human rights, it is not enough to declare these values as fundamental in the text of the Constitution. Proper implementation in practice is what matters and what is underlined in the text of the CEPA.  As Ginsburg and Versteeg show comparing more than hundred constitutions, the countries that explicitly protect such values as the rule of law in their constitutions tend to have lower level of respect to the rule of law in practice than those that do not include the rule of law guaranties in the constitutional texts.61 Apparently, proper implementation of the fundamental values that

 Para. 7 of the Decision DCC-1407.  Para. 14 of the Decision DCC-1407. 57  Decision DCC-350 of 22 February 2002. 58  Decision DCC-1175 of 14 November 2014. 59  Decision DCC-1381 of 10 October 2017. 60  This conclusion is also supported with the data of the interview with Dr. Samvel Arakelyan, Head of the Legal Advisory Department of the Constitutional Court of Armenia (May 2018). 61  Ginsburg and Versteeg (2017), pp. 507, 517. 55 56

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a particular political community aspires to achieve is possible only when these values are internalised by the society, i.e. the respective constitutional “normative rules and offered meanings are accepted and practiced in the social reality”.62 Without internalisation, the Europeanisation reforms targeting value systems risk to remain of formal, façade character or even lead to the ‘pathologies of Europeanisation’ when the Europeanisation processes get instrumentalised by domestic actors and empower the authoritarian incumbent governments against their political opponents.63 Such situations were typical for Armenia before the transition of power in April-May 2018. The incumbent government takes steps to transform the constitutional declarations of fundamental values into operating legal provisions. The change of approach to the fundamental constitutional values can also be noticed on the level of political discourse. Comparing the Programs of governmental activities, one may notice that the Government under the rule of the Republican Party stressed the necessity of creating “the legal basis ensuring the efficiency of public administration in the parliamentary system, the authorities’ responsibility and accountability to the public, and the rule of law” and focused mainly on legislative and institutional reforms.64 Pashinyan’s Government underlines that in the area of the said constitutional values and principles there is no legislative gap but the problem was with the political will of the authorities to properly implement them.65 What was defined in the scholarship as necessary for the democratic transition in Armenia—“dissolving of the oligarchic economic and political structures” and “reconfiguration of relations” between the state, individuals and civil society66—is currently in the focus of governmental activities.67 The former is achieved through the implementation of anti-corruption measures and investigation of corruption-­ related crimes. The latter—through the strengthening of the rule of law. Of particular importance in this regard is the initiation of investigation of the human rights violations during the Republic Party’s ruling, including the violent suppression of peaceful protests against the electoral fraud in March 2008. In July 2018, criminal charges were filed against the highest officials, including the then President R. Kocharyan who was charged with “overthrowing of the constitutional order in Armenia”.68 However, the judicial proceedings in this case in the courts of all instances, including the Constitutional Court, highlighted the existing institutional problems of Armenian judiciary and the need of a systematic change.

 Vorländer (2002), p. 256.  Börzel and Pamuk (2011a, b). 64  See sections “Vision and goals of the RA Government Program” and 1.3. “Human rights protection, justice and fight against corruption” of the Program of Government of Armenia for 2017–2022. 65  See section 5.1 “Equality before the law, justice and human rights protection” of the Program of the Government of Armenia for 2018. 66  Payaslian (2011), p. 293. 67  See the Programs of the Government of Armenia for 2018 and 2019–2023. 68  Radio Free Europe/Radio Liberty’s Armenian Service (26 July 2018b). 62 63

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In October 2019, in line with the CEPA Implementation Roadmap, Armenian Government approved the Strategy of Judicial and Legal Reform for 2019–2023 and its Action Plan69 and, in December 2019, the National Strategy for the Protection of Human Rights and its Action Plans for 2020–2022.70 The strengthening of the rule of law is in the core of the Strategy of Judicial and Legal Reform. It particularly aims to introduce the mechanism of transitional justice establishing a Fact-Finding Commission to collect the “facts concerning the mass, periodical violations of human rights at least in the following fields: (a) all the electoral processes since September 1991; (b) political persecutions in the post-election processes since September 1991; (c) compulsory alienations of property for the needs of the state or the society in Armenia; (d) other forms of expropriations; (e) servicemen deceased at non-combat conditions”. The Strategy further presupposes conducting the electoral reform and developing the e-justice platform. One of the central issues in the Strategy is the comprehensive constitutional reform aiming at the revision of the Constitution controversially amended in 2015. The draft amendments to the Constitution are to be elaborated by the Expert Constitutional Commission by 1 September 2020.71 In addition to the planned comprehensive constitutional reform, it is planned to introduce the constitutional amendments aiming to resolve the crisis of legitimacy of the Constitutional Court caused by the situational and inconsistent changes introduced to the Constitution in 2015. The relevant draft law amending the Constitution in part of the transitional provisions concerning the formation of the Constitutional Court and the term of office of its President (Art. 213 of the Constitution) had to  be approved by the popular referendum planned for 5 April 2020. However, due to the quarantine measures in response to the COVID-19 threat, the referendum was cancelled. Therefore, at the time of writing, the necessity to reform the body of constitutional justice remains one of the pressing needs. The observation of recent political, legal and social developments in Armenia allows concluding that the process of internalisation of the EU ‘shared’ values is in progress. As Prime Minister Pashinyan has underlined, democracy is viewed by the incumbent authorities as a “firm belief”, and not as a “geopolitical orientation”. He stressed that it is the aim of the government to conduct effective legal and political reforms and—with or without participation of the EU—these reforms will be implemented as essential for the development of the country.72 Taking into consideration the ongoing internal processes of democratisation and attempts to strengthen the rule of law, CEPA’s ‘socialisation’ mechanisms (particularly in a form of ‘dialogues’ and ‘exchange of information’ on various issues between the parties, including the dialogues between their civil societies, as well as educational opportunities) can facilitate the transformative influence of CEPA on Armenian society. The financial  Decision of the Government of Armenia N 1441-L of 10 October 2019 on the approval of the Strategy of Judicial and Legal Reform for 2019-2023 and the Action Plan thereof. 70  Approved by the Decision of Government of 26 December 2019 N 1978 - L. 71  Decision of the Prime Minister of 12 February 2020  N 181-A on Establishing of the Expert Commission on Constitutional Reform. 72  Prime Minister of the Republic of Armenia (12 July 2018). 69

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and expert assistance provided by the EU in the framework of CEPA implementation is another important factor facilitating the conduct of the planned legal and political reforms.

4.2  CEPA and the Constitution of Armenia: Possible Conflicts Notably, the issue of fundamental values may also formally create the obstacles for proper implementation of CEPA. With the reference to the global values of international peace and justice, CEPA states that “[t]he Parties shall aim to enhance cooperation in promoting peace and international justice by ratifying and implementing the Rome Statute of the International Criminal Court and its related instruments, and taking into account their legal and constitutional frameworks.”73 According to the Decision of the Constitutional Court of 13 August 2004,74 the Statute of the ICC contradicts the Constitution of Armenia, limiting its sovereignty and restricting the constitutional rights of individuals. Particularly, its provisions stating that ICC should be complimentary to the national criminal justice system are not in compliance with the constitutional norms defining the domestic judicial system and not presupposing the possibility to compliment it through the international treaties.75 Furthermore, the absence of the right to be pardoned or amnestied restricts the scope of fundamental rights guaranteed by the Constitution.76 The Court underlined that the ratification of the Rome Statute would only be possible in case of introducing relevant provisions to the Constitution. Nevertheless, neither the constitutional amendments of 2005, nor the reform of 2015 enabled the ratification.77 It is possible that the issue will be tackled by the Expert Constitutional Commission established in 2020 to elaborate a concept and a proposal for comprehensive amendments to the Constitution;78 however, at the moment of writing, there is no available data reflecting the content of the future concept of the constitutional reform.

 Art. 6(2) CEPA. Art. 6 has been excluded from the regime of provisional application.  Decision of the Constitutional Court DCC-502. 75  Then Art. 91 and 92 of the Constitution of RA. 76  Then Art. 40 and 81 of the Constitution of RA. 77  Specialized Commission on Constitutional Reforms adjunct to the President of RA, draft of 2 September 2014: para. 2.6.4. 78  The Expert Constitutional Commission is established by Decision of the Prime Minister 181 - A of 12 February 2020 based on the Decision of Government 1441-L “On the Approval of the Strategy of the Judicial and Legal Reforms of the Republic of Armenia for 2019–2023 and the Action Plans Thereof” of 10 October 2019. The first meeting of the Commission took place on 21 February 2020. 73 74

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4.3  CEPA and EAEU Treaty As it has been stated above, one of the particularities of CEPA is that it was concluded in the circumstances of Armenia’s membership in another economic integration project—the Russia-led EAEU.  Although the new Agreement takes “full account of Armenia’s obligations as a member of the Eurasian Economic Union”,79 this, however, does not exclude the possibility of potential conflicts between EAEU norms and provisions of CEPA, specifically in the areas of cooperation covered by both CEPA and EAEU Treaty. One of the reasons of these potential conflicts may be rooted in the immanent weaknesses of the EAEU legal framework. Among such specific features of the EAEU law that potentially can affect the implementation of CEPA Dragneva et al. identify: “the mixture between current and future commitments, the problematic institutional boundaries between the members’ commitments and delegated powers, and the prevalence of power relations within a highly asymmetric hub-and-spoke context”.80 Notably, in the course of negotiations, “to ensure that the values underpinning CEPA remain firm”, the EU rejected a “carve-out clause” proposed by the Armenian side which would allow Armenia “to opt out of the commitments enshrined in CEPA in areas where the Eurasian Economic Union might make new provisions”.81

4.4  T  he Place of Decisions of CEPA’s Institutions in the Armenian Domestic Legal Order Another important issue to be examined is the place of binding decisions of the Partnership Council and Partnership Committee in the Armenian legal order. Arguably, such decisions can be classified into two categories: (1) the decisions of the Council by which the Annexes to CEPA will be updated to consider the development of the EU legislation for legislative approximation;82 and (2) other decisions of CEPA’s institutions. Under the Armenian constitutional law, the implementation of the decisions of the first type presupposes ratification of the amendments to the Annexes in the same manner as the Agreement itself is ratified,83 including the preliminary control of constitutionality by the Constitutional Court. On the second type of decisions, the Constitution of Armenia does not contain any provision specifying the place of the acts of the bodies established under the international treaties in domestic legal order. Arguably, in relation to the decisions adopted by CEPA institutions, the legal positions formulated by the Constitutional  European Commission, European External Action Service, 25 September 2017.  Dragneva et al. (2017, November: 12). 81  Kostanyan and Giragosian (2017), p. 7. 82  Art. 371 CEPA. 83  See the Decision of the Constitutional Court DCC-1407 (para. 11). 79 80

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Court in the case concerning constitutionality of the EAEU Treaty84 may be applicable. Particularly, the Court pointed out the existence of specific constitutional requirements to the acts of international/supranational organisations in the Armenian legal order. In addition to the principles of sovereignty, legal equality of the parties and mutual expediency of international cooperation, the Court (1) highlighted that the restrictions on human rights [possibly resulting from participation in a supranational organisation] should comply with the norms and principles of international law and (2) recognised that operation of the decisions of supranational bodies in Armenia is possible only within the scope of their compliance with the Constitution.85 The Court formulated the legal position of general applicability holding that “any decision adopted by any supranational body with the participation of the Republic of Armenia which is not in conformity with these requirements is not applicable in the Republic of Armenia. If the requirements are met, cooperation of Armenia with any international or regional organization will not raise the issue of constitutionality”.86 In the Decision of 10 October 2017 concerning the conformity of the Agreement on the Customs Code of EAEU with the Constitution of Armenia,87 the Constitutional Court differentiated between legal acts of international and supranational nature. While the acts of the first category, in the Court’s definition, regulate ‘horizontal’ relations between the subjects of international legal relations, the acts of the second category regulate vertical relations between a state and subjects within a state, thus directly affecting individuals. Therefore, the supranational acts during their implementation can potentially violate constitutional rights; […]. However, evaluation [of constitutionality of such acts] is possible only when there is a practice of application of a supranational act.88 In other words, the position of the Court can be interpreted as follows: the recognition of constitutionality of an international agreement within the procedure of the preliminary constitutional control does not mean the automatic recognition of the constitutionality of acts adopted by the supranational institutions on its basis. The constitutionality of the latter can be challenged a posteriori; however, it can be challenged only indirectly—through the acts of domestic implementation and only if the issue of constitutionality of such implementation acts is under the jurisdiction of the Constitutional Court. Reviewing CEPA, the Court did not analyse the content of the Annexes and the compatibility of specific acquis with Armenian Constitution. Presumably, in case of amending the Annexes, the Court will also formally review only the obligation to approximate and leave it to the legislator to resolve the substantive issue of transposition first (with the possibility of constitutional control of approximated national law a posteriori).

 Decision of the Constitutional Court DCC-1175.  Ibid, para. 7. 86  Ibid. 87  Decision of the Constitutional Court DCC-1381. 88  See argumentation in para. 5 of the Decision DCC-1381. 84 85

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On the second type of decisions, currently Armenian legislation does not define their legal status and implementation procedure and does not enable the direct effect of the acts adopted by CEPA’s institutions. Noteworthy, the implementation of the acts of the Eurasian Economic Commission has been recently regulated in a specific provision of the Law “On Legislative Acts”.89 Art. 24 of the said Law prescribes that in case when the Eurasian Economic Commission adopts an act the subject matter of which belongs to the areas requiring regulation by laws adopted by the Parliament of Armenia, the Government should exercise the legislative initiative and introduce a relevant implementing draft law to the Parliament. In all other cases, the Government adopts an act giving effect to the act of the Commission. Before the adoption of the new Law “On International Agreements” in March 2018, the previous Law “On International Agreements” of 2007 contained provisions regulating the implementation of acts adopted by international organisations (which could have been arguably applied by analogy in the case of CEPA). The new Law “On International Agreements”90 and the recently adopted Law “On Legislative Acts” are silent in this regard. Apparently, the results of analysis of regulation of the status CEPA and acts of CEPA’s institutions in domestic legal order indicate the necessity to revise the legislative framework and adapt it to the recent developments in the area of regional integration. To guarantee legal certainty and ensure effectiveness of implementation of the Agreement, it would be appropriate to clearly regulate the procedural issues of operation of such acts in the Armenian legal system as it was done in case of the EAEU acts.

5  T  he Tools of the EU Values Promotion: CEPA’s Essential Elements and Conditionality Mechanisms In the same way as in AAs with Georgia, Moldova and Ukraine, two types of conditionality can be distinguished in CEPA: “common values” conditionality and “market access” conditionality.91 As Kochenov observes, these two types of conditionality serve to export EU values in the former case, and EU acquis (as a set of rules) in the latter case.92 Although this methodological distinction (as well as Kochenov’s conclusion that exporting EU acquis does not mean exporting the EU values) is justified, in the case of CEPA it is not that strict. This is because of the Agreement’s focus not only on formal transposition of the acquis into domestic legal system, but also on proper implementation and enforcement of the

 Law of RA HO-180-N “On Legislative Acts” of 21 March 2018.  Law of RA HO-213-N “On International Agreements” of 23 March 2018. 91  Petrov et al. (2015), pp. 12–13; Petrov (2016). 92  Kochenov (2014), p. 56. 89 90

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approximated legislation, which inevitably requires systematic change and the implementation of the rule of law, good governance standards, anti-corruption measures, etc. According to Poli, there are four main ways for the EU to promote its values through external action: (1) considering them as ‘essential elements’ of legally binding agreements with partner countries and associating non-execution clause in case of breach; (2) encouraging the third countries to ratify and implement the legally binding multilateral agreements based on universal values; (3) making the values a prerequisite for receiving financial assistance from the EU (particularly within European Neighbourhood Instrument) and (4) applying sanctions in case of the failure to respect democracy.93 The analysis of the Agreement allows concluding that, in part of values promotion, CEPA relies on the first three ways identified above. Art. 2 and 9 contain the essential elements establishing the value basis of the Agreement (first way). Art. 6 of CEPA illustrates the second way stressing the values of peace and international justice and requiring ratification and implementation of the Rome Statute of the International Criminal Court and its related instruments. The third way, however, in the context of CEPA should be viewed broader than in the classification provided by Poli. It should be defined as making the implementation of values a prerequisite within the conditionality mechanisms generally. The incentives of such mechanisms obviously cannot be restricted to the receiving of financial assistance only; although the conditionality based on the “financial assistance” incentive can also be found in CEPA (see, for example, Art. 344 stating that the amount of financial assistance provided by EU to Armenia “shall take into account the Republic of Armenia’s needs, sector capacities and progress with reforms, in particular in areas covered by this Agreement” (italics added – A.Kh.). Under Art. 2(1) of CEPA, respect for the democratic principles, the rule of law, human rights and fundamental freedoms constitute an essential element of the Agreement. This provision contains an extensive and open-ended list of international instruments in the field of human rights and fundamental freedoms (of both binding ‘hard’ law and non-binding ‘soft’ law nature) which, according to the Agreement, the parties must adhere to in their domestic and external policies. Noteworthy, the rule of law is further stressed in Art. 12 of CEPA as a basis for cooperation of the parties in the area of freedom, security and justice. Under this article, the consolidation of the rule of law includes “the independence of the judiciary, access to justice, the right to a fair trial as provided for by the European Convention on Human Rights, and procedural safeguards in criminal matters and victims’ rights”. The principles of a free-market economy, sustainable development, regional cooperation and effective multilateralism, good governance and respect to international obligations, etc. listed further in Art. 294 are not included in the

93 94

 Poli (2016), p. 2.  Art. 2 (2)(3)(4) CEPA.

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essential element clause; however, they are fundamental for the relations under the Agreement and can be viewed as the elements of CEPA’s conditionality mechanisms. Another essential element of CEPA is included in Art. 9 devoted to the weapons of mass destruction, non-proliferation and disarmament. This essential element is standard for the EU’s agreements with third countries. As Cremona observes, the WMD clauses have been included to such instruments since 2003.95 Similar “essential elements” can be found, particularly in the AAs with Georgia, Moldova and Ukraine.96 The “essential element” clauses are accompanied with the non-fulfilment clause.97 Additionally, the importance of the commitments under the essential element clauses is stressed in the Preamble. It can be concluded from the provisions analysed above that the essential element clauses in combination with non-fulfilment clause and preambular references to the parties’ commitments constitute one of the mechanisms of value conditionality. It presupposes that all the provisions of CEPA (including the provisions on economic cooperation and trade relations) can effectively operate only if the specific principles and values are respected by the parties. Another specific conditionality mechanism in the ‘political part’ of the Agreement can be found in Art. 15 of CEPA, under which the parties are obliged to fully implement Visa Facilitation and Readmission Agreements. In case of fulfilment of these obligations and provided that conditions for well-managed and secure mobility are in place, the parties shall consider in due course the opening of a visa-liberalisation dialogue. Considering the experience of the EaP associated countries, the visa liberalisation dialogue will focus, in addition to the security benchmarks, on the benchmarks related to fundamental rights;98 thus, the perspectives of visa liberalisation offered in CEPA can also serve as a stimulus for proper implementation of the ‘common’ values in this area. If the political part of CEPA resembles the political part of the failed EU-Armenia AA and is mostly similar (with some exceptions) with the political parts of the AAs with Georgia, Moldova and Ukraine, this is not the case on the economic part of the Agreement and the relevant “market access” conditionality mechanisms. Considering the absence of the DCFTA incentives and narrower scope of economic and trade cooperation, market access conditionality is significantly “weaker” in CEPA’s case. Under Art. 373 (2), “if the Parties agree that necessary measures covered by Title VI99 [including the legislative approximation to the EU acquis] have been implemented and are being enforced, the Partnership Council […] shall decide on further market opening where provided for in Title VI”.

 Cremona (2016), pp. 85–86.  Art. 10 of EU-Georgia AA; Art. 9 of EU-Moldova AA; Art. 11 of EU-Ukraine AA. 97  Art. 379 CEPA. 98  European Commission (2018). 99  Trade and trade-related matters. 95 96

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The examination of the relevant provisions of Title VI reveals the conditionality mechanisms of different level of specification. For example, in case of establishment,100 “with a view to progressively liberalising the establishment conditions, the Partnership Committee, when meeting in trade configuration, shall regularly review the legal framework and the environment for establishment”. Here, although the objective (progressive liberalisation) is defined, the precise benchmarks for evaluation of the implementation of the parties’ commitments are not specified. More precise is Art. 152 related to the cross-border supply of services. Particularly, “with a view to progressively liberalising the cross-border supply of services between the Parties, the Partnership Committee, meeting in trade configuration, shall regularly review the list of commitments referred to in Articles 149 to 151 [market access commitments]. That review shall take into account, inter alia, the process of gradual approximation, referred to in Articles 169, 180 and 192, and its impact on the elimination of remaining obstacles to the cross-border supply of services between the Parties”. The listed articles concern the approximation to the EU acquis regulating postal services, electronic communication networks and transport services respectively. Considering its role in the implementation of the objectives of the Agreement, the issue of legislative approximation deserves specific attention.

6  L  egislative Approximation and Regulatory Convergence Under CEPA 6.1  M  echanisms of Legislative Approximation and Achieving of Regulatory Convergence The mechanisms of legislative approximation employed in CEPA resemble the mechanisms of the AAs, although they are less advanced and ambitious due to CEPA’s more modest objectives. At the same time, in contrast with the EU-Armenia PCA containing only one general and legally non-binding approximation clause,101 CEPA’s approximation mechanisms are significantly more elaborated, diverse and framed with the provisions of binding nature. In CEPA, two categories of legislative approximation provisions can be differentiated: (1) those establishing mechanisms of approximation in the specific sectors of cooperation (transport, energy, environment, employment, social policy and equal opportunities, etc.) and (2) ‘horizontal’ provisions supplementing the sectoral approximation mechanisms.

100 101

 Chapter 5 Trade in services, establishment and electronic commerce of Title VI of CEPA.  Art. 43 of PCA.

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In the first group of provisions, the following types of legislative approximation clauses can be identified: (a) The provisions requiring implementation of the international instruments and compliance with the international standards promoted by the EU. These commitments can be either general (for example, Art. 13 related to personal data protection; Art. 24 related to public internal control and external audit) or specifically defined (for example, the provisions requiring implementation of the specific Conventions in the field of intellectual property). (b) The provisions containing general requirement to approximate Armenian legislation with the EU acquis without specification of the relevant EU acts and the timeframes of approximation. The formulation and binding character of such requirements, as well as expected degree of approximation/convergence vary. Under Arts. 169, 180, and 192 of Title VI “Trade and Trade-Related Matters” which are key elements of the conditionality mechanisms relevant to the liberalisation of cross-border supply of services, “parties recognise the importance of gradual approximation” of Armenian legislation on postal services, electronic commerce and transport services to that of the EU. Under Art. 189, “the Republic of Armenia shall approximate its regulation of financial services, as appropriate, to the legislation of the European Union”. Art. 130 dealing with cooperation in the field of technical barriers to trade states that “the Parties shall endeavour to establish and maintain a process through which gradual approximation of the technical regulations, standards and conformity assessment procedures of the Republic of Armenia to those of the European Union can be achieved”. Under Art. 81 related to the consumer protection, the parties “shall cooperate in order to ensure a high level of consumer protection and to achieve compatibility between their systems of consumer protection” (italics added – A.Kh.). Art. 70 states that the Parties “shall cooperate to promote agricultural and rural development, in particular through progressive convergence of policies and legislation”. There are also a few ‘soft’ provisions employing “taking into account” and “making efforts” formulas (for example, Arts. 30 and 33 of CEPA related to statistics); (c) The provisions containing standard approximation clause with the indication of specific EU acts and the timeframes for their implementation (in the Annexes to the Agreement).102 Such provisions can be found in Title V (Other cooperation policies) and Title VII (Financial Assistance and Anti-Fraud and Control Provisions). They do not lead to the opening of the market but may be the elements of other conditionality mechanisms. Some areas of cooperation (company law, accounting and auditing, and corporate governance, industrial and enterprise policy, cooperation in the areas of  These are: Article 41 with Annex I (transport), Art. 44 with Annex II (energy), Art, 50 with Annex III (environment), Art, 56 with Annex IV (climate), Art. 65 with Annex V (information society), Art. 83 with Annex VI (consumer protection), Art. 90 with Annex VII (employment, social policy and equal opportunities), Art. 361 with Annex XII (anti-fraud regulations).

102

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banking, insurance and other financial services) do not presuppose any form of binding legislative approximation. However, the Armenian legal system may benefit from the improvement of national legislation in these areas through the exchange of information and best practices with the EU. Furthermore, the legislative approximation can be done on a voluntary basis and go beyond the formal requirements of CEPA. The scope of such voluntary approximation will depend on political will of decision-makers to choose EU regulatory approaches as models for domestic reforms, as well as on the level of influence (both formal and informal) of the EAEU in the relevant sectors of regulation. The second group (‘horizontal’ legislative approximation provisions) includes inter alia Art. 370 enshrining the general obligation of Armenia to “carry out gradual approximation of its legislation to EU law as referred to in the Annexes, based on commitments identified in this Agreement, and in accordance with the provisions of those Annexes” while making the exceptions for “specific provisions under Title VI”. Art. 371 states that “in line with the goal of the gradual approximation of the legislation of the Republic of Armenia to EU law, the Partnership Council shall periodically revise and update the Annexes to this Agreement in order, inter alia, to reflect the evolution of EU law and applicable standards set out in international instruments deemed relevant by the Parties, taking into account the completion of the Parties’ respective internal procedures”. The said article is titled “Dynamic approximation”. However, based on comparative analysis of this provision with the relevant clauses in other agreements between the EU and third countries, it may be argued that the established mechanism is in fact rather static than dynamic, since, as Van Der Loo defines, “there is no obligation to automatically adopt every amendment to the EU acquis that could potentially be relevant to the agreement”.103 As it was shown above, the Constitutional Court of Armenia held with reference to its case law that such revision of the Annexes will be considered as amendment of the Agreement and will require ratification in the same manner as the Agreement itself.104 To achieve its goals, legal approximation presupposes the existence of effective institutional mechanisms and methodological frameworks. The institutional mechanism of legal approximation in Armenia at this stage is integrated into the institutional mechanism of CEPA implementation and includes several governmental bodies. The National Assembly (Parliament) as the legislative body is responsible for adopting laws in line with the EU acquis; its Standing Committee on European Integration focuses on the relations with the European Union, issues related to the implementation of CEPA, approximation of laws of Armenia to legal acts of the EU and laws governing these areas. The Government is the main policymaker and a subject of legislative initiative. Within the structure of Government, coordination of the work within the framework of CEPA was defined as a function of Deputy Prime

103 104

 Van Der Loo (2014), p. 78.  Decision DCC-1407 (para. 11).

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Minister’s Office.105 Deputy Prime Minister chairs the Inter-Agency Committee coordinating the measures ensuring the implementation of CEPA.106 By his Decision, Prime Minister approved the EU-Armenia CEPA Implementation Roadmap elaborated by the Inter-Agency Committee107 and entitled the Committee to monitor the implementation of CEPA based on the Roadmap. This document identifies the areas of reforms planned by Armenian Government and the legal basis of relevant commitments (provisions of CEPA and EU acts listed in its Annexes), specifies measures to be taken to implement them, timeframes and governmental bodies that coordinate or are responsible for implementation of the identified measures, indicates the necessity of EU’s support (for example, through TAIEX programme) and outlines expected outcomes. The Ministry of Economy is responsible for the implementation of trade-related provisions of CEPA.108 The Ministry of Justice plays a leading role in the processes of legal approximation and, under the coordination of the Deputy Prime Minister’s Office, is one of the key governmental agencies to shape the public policy in the respective sectors of EU-Armenia political dialogue under CEPA.  The Ministry took the lead in developing the methodological guidelines for the agencies involved in legal approximation. With support of and in cooperation with the EU in the framework of the project “Assistance to the RA Ministry of Justice in Legal Approximation in Line with EU Standards” (2019–2020), the Ministry prepared “Armenia-EU Comprehensive and Enhanced Partnership Agreement Legal Approximation Handbook” (2020) and organised a series of training sessions on methodology of legal approximation for about 80 civil servants.109 This is a significant step on the way to the improvement of quality of legal approximation, as previously there had been no comprehensive toolkit facilitating legislative approximation activities. An effective dialogue between policymakers and academia on the issues of legal approximation is another tool stimulating further development of the Armenian legal system and its Europeanisation. Although there are initiatives aiming to build such dialogue,110 a lot is still to be done to intensify research on the approximation issues (particularly using interdisciplinary synergies allowing comprehensive approach to the required changes) and develop effective communication channels between academic community and practitioners.  See the Decision of the Prime Minister N 671-L of 1 June 2019.  The Committee was set up by the Decision of Prime Minister N 906-A of 2 July 2018. 107  See the Decision of the Prime Minister of Armenia N 666-L of 1 June 2019. 108  See the Decision of the Prime Minister No 658-L of 1 June 2019. 109  Based on the expert interview with Ms. Amalia Hovsepyan, Coordinating Advisor for International Legal Cooperation, Ministry of Justice of the Republic of Armenia, 30 March 2020. The presentation of the Handbook and organisation of further training on its basis have been postponed due to the coronavirus crisis. 110  For example, Legal Approximation Laboratory project implemented by Brusov State University and supported by the EU through the Erasmus+ Programmme (Jean Monnet Module “Laboratory of Approximation of Armenian Legislation with the EU Acquis”). 105 106

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It should be noted that the legislative approximation to the EU acquis is not a new phenomenon for the Armenian legal system. Some efforts of approximation were made under the PCA, ENP Action Plan and during negotiations concerning the failed AA and DCFTA. However, regardless of some achievements,111 this process generally hardly can be defined as successful, as it lacked coherence, systematic approach and common methodological ground. The implementation of the approximated legislation was particularly problematic. For example, Ghazaryan and Hakobyan report on the active and extensive approximation of the Armenian competition law in the framework of the ENP and achieving compliance with the EU dynamic acquis.112 However, the formal compliance of the domestic legislation with the dynamic EU competition acquis in no way touched upon the problem of politically supported artificial oligarchic monopolies that existed before 2018, therefore not affecting in practice the economic environment of the country. In contrast with PCA, alongside the establishment of the advanced approximation mechanisms, CEPA underlines the importance of implementation and enforcement of the approximated legislation and establishes specific mechanisms of monitoring and assessment of approximation.113 In addition to the reporting on the progress made on approximation, the assessment “may include on-the-spot missions, with the participation of institutions of the European Union, bodies and agencies, non-governmental bodies, supervisory authorities, independent experts and others, as necessary”.114 This novelty is similar to the approach of AAs and may be considered a reaction to the shortcomings of the previous approximation attempts.

6.2  T  he Role of Judiciary in the Processes of Legal Approximation 6.2.1  The Role of the Court of Justice of the European Union Arguably, there are two ways the CJEU can contribute to the processes of legal approximation under the Agreement: (1) actively—through the preliminary rulings within the arbitration proceedings of dispute resolution under CEPA; and (2) passively—through the voluntary application of the CJEU case law by the domestic courts. According to CEPA, the legislative approximation mechanisms established by Articles 169, 180, 189 and 192 (although not being supplemented with the lists of the EU acts for approximation) presuppose specific procedure of dispute settlement by the arbitration panel. Particularly “where a dispute raises a question of

 See, for example, Delcour and Wolczuk (2015), pp. 491–507.  Ghazaryan and Hakobyan (2014), p. 201. 113  See, particularly, Preamble and Art. 372 CEPA. 114  Art. 372 CEPA. 111 112

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interpretation of a provision of Union law, the arbitration panel shall request the [CJEU] to give a ruling on the question provided that question is necessary for the decision of the arbitration panel. […] The ruling of the [CJEU] shall be binding on the arbitration panel”.115 Similar mechanisms can be found in the AAs with the EaP countries (however, in contrast with CEPA, these provisions contain the lists of the EU acts to be transposed). As Van Der Loo observes in relation to the EU-Ukraine AA, the established mechanism is a novelty in the EU practice of bilateral relations and is called to ensure the uniform interpretation of the EU acquis in such relations.116 Arguably, it will also stimulate the absorbing of the CJEU case law by the domestic legal order. The possibilities of voluntary application of the CJEU case law by Armenian judiciary are discussed in the following part of the Chapter. 6.2.2  The Role of Domestic Courts Apparently, CEPA’s focus on the implementation and enforcement of the approximated legislation indicates the significant role of the judiciary in the process of Europeanisation of the Armenian legal system. The main mission of the judiciary is, therefore, to properly apply the national legislation adhering to the fundamental principles of administration of justice. In some cases, however, such proper implementation may demand considering EU acquis, including the CJEU case law, for interpretation of national legislation. This is not however formally required by CEPA and, consequently, there is no domestic legislation enabling or requiring such application (in contrast with the case law of ECtHR recognised as an official source of law in Armenia).117 Arguably, the following obstacles will affect such application: (1) the nature of legal approximation commitments under CEPA, the absence of a clear EU-oriented vector of foreign policy and the presence of the concurring EAEU integration project limiting the possibility of judicial pro-European activism. This makes the case of Armenia significantly different from the cases of Central and East European countries where explicit orientation towards EU and related domestic policy choices, clear membership perspective and stricter obligations to harmonise national legislation with the EU acquis created favourable grounds for judicial activism and led to the establishment of practice of ‘EU-friendly’ interpretation of domestic legislation.118 (2) inaccessibility of the CJEU case law because of the linguistic barrier, lack of awareness about the relevant decisions and skills of using the searching tools. With some rare exceptions, the university curricula usually cover only funda Art. 342 (2) CEPA.  Van Der Loo (2014), p. 82. 117  Art. 15 of the Judicial Code of RA. 118  Kühn (2005), pp. 566–568. 115 116

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mentals of EU law and are not oriented towards skill-training. There is also lack of scholarly studies on the issues in question as well as a dialogue between academia and practitioners serving as an informal channel of Europeanisation. (3) the lack of coherent theory and practice of judicial argumentation based on the up-to-date methodological approaches, due to the long-lasting dominance of legal positivism, generally119 and the lack of experience of using EU acquis in argumentation particularly. One of the rare examples of using the EU acquis by the Armenian courts of general jurisdiction is the judgment in I. Avagyan v. “Prometey Bank”120 on the recognition of the arbitration clauses of the loan agreements as invalid. In its argumentation, the Court refers to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) ratified by Armenia and, additionally, states that “recent Directives of the European Union require the Member States to create the alternative dispute resolution mechanisms in a range of areas such as banking and financial services […]. The Republic of Armenia undertook the obligation to establish the alternative dispute resolution procedure in accordance with international law”; then the Court mentions PCA, inclusion of Armenia in ENP in 2004 and states that under the ENP Action Plan, Armenia has also been obliged to create the arbitration procedures in compliance with international standards. The Court notes that the principles of out-of-court dispute resolution were enshrined in the Recommendation of the European Commission 1998/257/EC. In the following parts, the Court refers to the ECtHR case law. Noteworthy, this argumentative passage is literally reproduced from the defendant’s response to the claim reported in the descriptive part of the judgment. In a number of cases—civil (R.  Mantashyan v. “Prometey Bank”,121 “Ardshininvestbank” v. H.  Harutyunyan concerning financial services122) and administrative (J.N. Talavari v. State Migration Service of the Ministry of Territorial Administration and Emergency Situations of the Republic of Armenia,123 related to the issues of migration law and asylum)—the judgments of court of first and appellate instances contain the references to the EU acquis (directives and soft-law) only in the descriptive parts restating the positions of the parties. Although the judges do not refer to these sources themselves in motivation parts, such references can

 This problem is common for many post-communist legal systems. See, for example: Kühn (2005), Meleshevych and Khvorostyankina (2012), pp. 563–564. 120  I. Avagyan v. “Prometey Bank”, Judgment of the court of general jurisdiction of the administrative district Kentron and Norq-Marash, Yerevan of 3 April 2015, case No EKD/1929/02/13. 121  R. Mantashyan v. “Prometey Bank”, judgment of the Civil Appellate Court of the Republic of Armenia of 31 January 2014, case No EKD/2879/02/13. 122  “Ardshininvestbank” v. H. Harutyunyan, judgment of the court of general jurisdiction of Lori, Vanadzor, 19 September 2012 in case No LD/0317/02/12. 123  J.N. Talavari v. State Migration Service of the Ministry of Territorial Administration and Emergency Situations of the Republic of Armenia, Judgment of the Administrative Court of the Republic of Armenia of 9 March 2016, case No VD/7353/05/14. 119

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informally influence further development of judicial argumentation in the future, providing other judges with the samples of argumentative patterns. The Constitutional Court has been reluctant to refer to the EU acquis as well (in contrast with the law of ECHR and other acts of the CoE). The analysis of the relevant judgments shows that there is no coherent practice of referring to such sources. The references to the EU acquis (comprising EU soft law and CJEU case law) occur in the supportive arguments (which by themselves are used only occasionally when the arguments based on national legislation and binding international acts are lacking or not strong enough) and are rather exceptions than a well-established argumentative approach (see cases DCC-991, DCC-1051, DCC-1244). In the preparation of advisory opinions and examination of foreign legal materials, the Legal Advisory Department of the Court has not been usually covering the EU acquis as such, focusing mainly on the constitutional practice of individual European countries.124 Considering the methodological difficulties of applying EU acquis in judicial argumentation, this process could be facilitated through certain legislative drafting techniques. Particularly, the preambular125 references to the relevant EU acts in the approximated domestic legislation could serve as a ground for using both these acts and the case law interpreting them to construct the arguments based on the purposive and ‘legislator’s intent’ approaches. This would be particularly helpful considering the gradual and, in some cases, partial nature of legislative approximation: the indication of the actual scope of approximation by the legislator would determine the legitimacy and relevance of using CJEU case law in domestic judicial argumentation. The technique of preambular references is used, for example, in Moldova.126 In case of both approximation under CEPA and voluntary approximation going beyond the requirements of CEPA, preparatory materials (particularly explanatory notes accompanying the legislative drafts) can contain references to the implemented EU acts, thus facilitating using the judicial interpretation based on the “legislator’s intent” technique. Such references are frequent in the recent legislative drafting practice. For example, Law of RA N HO-134-N of 6 March 2020 amending Civil Code of Armenia of 1998 introduces the institute of repo agreement. In the explanatory note, the drafter referred to Directive 2002/47/EC of the European Parliament and of the Council of 6 June 2002 on financial collateral arrangements (not covered by CEPA) justifying the chosen regulatory approach. Law of RA N HO-183-N of 3 October 2019 amends Art. 95 (fixed-term employment contract) of Labour Code of Armenia. In the explanatory note, the drafter refers to Council Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP (included in the Annex to CEPA) containing a  similar regulatory provision. The explanatory note to the

 Interview with Dr. S. Arakelyan, Head of the Legal Advisory Department of the Constitutional Court of RA, 15 March 2018. 125  Under Art. 13(1) of Law of RA N HO-180-N “On Legislative Acts” of 21 March 2018, preambles “define the objectives and reasons” of adopting a legislative act. 126  Khvorostiankina (2014), p. 168. 124

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recently adopted Law of RA N HO-283-N of 4 December 2019 “On Audit Activity” makes a general reference to the “relevant EU Directives on audit and accounting”. The references to the EU acts had been frequent before the conclusion of CEPA as well. This is particularly relevant in the case of draft laws elaborated during negotiations on EU-Armenia Association Agreement. Interestingly, in the period between Armenia’s U-turn to EAEU in September 2013 and the launching of negotiations on CEPA on 7 December 2015, the references to EU acts in drafter’s explanatory notes can also be found (see, for example, explanatory note to draft Law of RA N HO-49 of 18 May 2015 “On Personal Data Protection” and to draft Law N HO-52 of 18 May 2015 amending Law “On Refugees and Asylum Seekers” referencing to EU legislation on personal data protection). Arguably, to clarify the content of approximated provisions, judges may refer to the preparatory materials and relevant EU acquis including the CJEU case law interpreting the EU legislation. Presumably, the use of the EU acquis in judicial argumentation will become more probable after the EU-Armenia CEPA enters into force. However, undoubtedly, application of the EU acquis will still be challenging for domestic judiciary. Particularly, the application of such source as CJEU case law will require not only specific knowledge and skills, but also the change of legal mentality based on the philosophy of legal positivism inherited from the Soviet period.

6.3  A  bsorbing of General Principles of the EU Law by Armenian Legal Order It is necessary to stress that, in addition to the legislative approximation requirements in specific sectors, other commitments are also directed to the improvement of legislative regulation in Armenia generally. The provisions enshrining such commitments reflect the general principles of the EU law, such as predictability of legal regulation, legal certainty, quality of regulation, good governance, etc. Particularly, under Art. 308, “[r]ecognising the impact which their respective regulatory environment may have on trade and investment between them, the Parties shall provide a predictable regulatory environment and efficient procedures for economic operators, in particular for SMEs” (italics added - A.Kh.). Under Art. 313, the parties shall cooperate in promoting regulatory quality and performance and support the principles of good administrative behaviour. Title VI (Trade and trade-­ related matters) sets out the requirements of legal certainty. Specifically, under Art. 309 (1), each party shall ensure that measures of general application (laws, regulations, decisions, procedures and administrative rulings that may have an impact on any matter covered by CEPA127) adopted after the entry into force of the Agreement:

127

 Art. 307 (a) CEPA.

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(a) are promptly and readily available via an officially designated medium, including electronic means, in such a manner as to enable any person to become acquainted with them; (b) clearly state to the extent possible, the objective of and rationale for such measures; and (c) allow for a sufficient period of time between publication and entry into force of such measures, except in duly justified cases. Undoubtedly, these provisions have the potential to positively influence the development of the Armenian legal system in case of their full and proper implementation. This will require both the improvement of legislatives techniques and establishing and maintaining the high standards of administrative and judicial procedures.

7  Conclusion The newly signed EU-Armenia Comprehensive and Enhanced Agreement is a unique legal instrument regulating the relations between the EU and a country which is a member of another economic integration organisation—Eurasian Economic Union. Armenia’s participation in the EAEU caused the necessity to adjust the text of the failed EU-Armenia Association Agreement to consider the international obligations under EAEU Treaty. Consequently, the new Agreement— CEPA—does not presuppose the creation of the DCFTA, thus lacking one of the most significant incentives the EU can offer to the countries without membership perspectives and aspirations. This, at first sight, weakens to a certain extent the mechanisms of the EU rules and values transfer in comparison with the AAs with Georgia, Moldova and Ukraine. Furthermore, proper implementation of CEPA may be hindered by the potential collisions between the Agreement and EAEU law. However, in the field of the ‘shared values’ promotion, the transformative potential of the Agreement is significantly reinforced with its consistency with the reform agenda of the incumbent post-Revolutionary government. Undoubtedly, the recent peaceful transition of power in Armenia in April-May 2018 created specific environment for CEPA’s implementation. Previously, the ruling elites frequently underlined their commitment to adhere to the European values in both domestic and international discourses; however, the reality of implementing these values in practice significantly differed from what was declared, and the introduced reforms were often a façade change or even ‘Europeanisation pathologies’. The incumbent government, to the contrary, tends to avoid references to the ‘Europeanness’ of the supported constitutional values in political discourse underlining the genuinely domestic character of current political developments. At the same time, the initiated reforms aim to bring the systemic change. If the reforms are coherently implemented and are themselves substantially and procedurally in compliance with the

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fundamental constitutional values, this will undoubtedly create the favourable environment for the implementation of the Agreement. At the same time, the analysis reveals that the proper implementation of the Agreement can be hindered by several factors. Firstly, at the moment, the comprehensive legislative framework for CEPA’s implementation is lacking (the status of the decisions of CEPA’s institutions and institutional and methodological aspects of legislative approximation need clear legislative regulation). Furthermore, the judiciary, which is expected to be the main channel of absorbing the European norms and principles and the guarantor of proper implementation of the approximated legislation, needs to develop new knowledge, skills and methodological approaches. This is caused particularly by the necessity to consider the case law of the CJEU. Although there is no such requirement in CEPA (in contrast with AAs and some other EU external agreements), this may be essential for proper interpretation and implementation of the ‘Europeanised’ legislation. The transformative capacity of the Agreement, consequently, depends on the ability of the Armenian legal order to overcome the said obstacles. Proper implementation of approximated legislation following CEPA’s provisions requiring legal certainty and predictability, regulatory quality, transparency of regulation, good administrative behaviour, etc. will surely contribute to further improvement of the Armenian legal system. Apparently, this may be achieved only under the circumstances of comprehensive and systematic governmental approach to the implementation of the required reforms and further socialisation of domestic actors facilitating the internalisation of the ‘shared’ values.

8  Epilogue On 27 September 2020, the territory of Nagorno-Karabakh was attacked by Azerbaijan with the direct support of Turkey. In Armenia, martial law and general mobilisation were declared. The resulting large-scale war with heavy casualties on both sides marked not only the unfreezing and escalation of the long-lasting Nagorno-Karabakh conflict, but also the dramatic transformation of its nature with the potential to change the geopolitical balance of power in the South Caucasus and beyond. With the significant disparity of military forces, deployment of cutting-edge weapons and mercenaries fighting on Azerbaijan’s side, with references to the Armenian Genocide of 1915 and a demonstration of imperialistic ambitions in the rhetoric of the Turkish government, the war became not a territorial, but an existential issue for Armenians. After six weeks of fighting, the hostilities were finally terminated on 10 November 2020 with the signing of the Russian-brokered Statement by the Prime Minister of the Republic of Armenia, the President of the Republic of Azerbaijan and the President of the Russian Federation of 9 November 2020.128  Statement by the Prime Minister of the Republic of Armenia, the President of the Republic of Azerbaijan and the President of the Russian Federation. https://www.primeminister.am/en/pressrelease/item/2020/11/10/Announcement/. Accessed 18 November 2020.

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According to the Statement, the Parties agreed to establish a complete ceasefire and stop at their current positions. Azerbaijan was permitted to keep the territories of Karabakh captured during the war, as well as surrounding territories which used to be under the Armenian control. The document did not define the status of NagornoKarabakh (Artsakh). This issue remains open and is expected to be resolved in the OSCE Minsk Group format. The escalation of the conflict brought about at least three consequences that are likely to affect EU-Armenia relations and the processes of further Europeanisation in Armenia. Firstly, the deployment of Russian peacekeeping forces to ensure the implementation of the truce has strengthened Russia’s presence in the region. This, arguably, has the potential to advance Russia’s security leverage on domestic politics and international cooperation priorities. Secondly, the role of the EU at this stage of conflict management appeared to be marginal. Lacking the institutional tools of influence, the EU demonstrated a rather weak position in the region in contrast with Russia and Turkey and its inability to effectively “promote, preserve and strengthen peace and stability at both regional and international level” (Art. 1 of CEPA). The EU, however, is eager to contribute to the peacebuilding process as a humanitarian actor. Arguably, if the EU chooses to prioritise recovery and stability over further reforms and lowers conditionality requirements due to geopolitical considerations, the transformative power of the EU will decrease. At the same time the demand for further democratisation and strengthening relations with the EU will also greatly depend on the logic of internal political developments. As a third factor to consider, one should mention unrest within Armenian society and a turbulent political situation provoked by the conditions of the truce. The Statement on ceasefire received diverse internal assessments ranging from full support to absolute rejection as an act of capitulation by Armenia. Political opponents, including political forces connected to the pre-revolutionary government, accused the Prime Minister of the betrayal of national interests and called for the government’s immediate resignation. As the situation is extremely dynamic, it is challenging to draw any final conclusions. It remains to be seen whether or not domestic political processes will evolve in the logical framework of further democratisation, what role external actors will play in the region and how this will affect the Europeanisation process.

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Gstöhl S (2014) Differentiated integration and the NEC.  In: Van Elsuwege P, Petrov R (eds) Legislative approximation and application of EU law in the Eastern neighbourhood of the European Union. Routledge, London Khvorostiankina A (2014) Legislative approximation and application of EU law in Moldova. In: Petrov R, Peter Van Elsuwege (eds) Legislative approximation and application of EU law in the Eastern neighbourhood of the European Union. Towards a common regulatory space? Routledge, London Kochenov D (2014) The issue of values. In: Petrov R, Van Elsuwege P (eds) The application of EU law in the Eastern neighbourhood of the European Union. Routledge, London Kostanyan H, Giragosian R (2017) EU-Armenian Relations: Charting a Fresh Course. CEPS Research Report No. 2017-14, November 2017. SSRN: https://ssrn.com/abstract=3075166. Accessed 30 March 2018 Kühn Z (2005) The application of European law in the new member states: several (early) predictions. Germ Law J 6(3):563–582 Meleshevych A, Khvorostyankina A (2012) Ukraine. In: Hammer L, Emmert F (eds) The European Convention on human rights and fundamental freedoms in Central and Eastern Europe. Eleven International Publishing, The Hague National Assembly of the Republic of Armenia (2014a) Note 23 of the Fifth Session of the National Assembly of 3 December 2014 concerning the issue of ratification of the Treaty of Accession of the Republic of Armenia to Eurasian Economic Union. http://parliament.am/transcript.php ?AgendaID=2739&day=03&month=12&year=2014&lang=arm#03.12.2014 (in Armenian). Accessed 28 March 2018 National Assembly of the Republic of Armenia (2014b) The results of voting on 4 December 2014. http://parliament.am/register.php?do=bulletin&ID=5969 (in Armenian). Accessed 28 March 2018 National Assembly of the Republic of Armenia (2018a) Note 28 of the Third Session of the National Assembly of 8 May 2018, special session convened to discuss the issue of electing Prime Minister of RA. http://parliament.am/transcript.php?AgendaID=3458&day=08&mont h=05&year=2018&lang=arm#08.05.2018 (in Armenian). Accessed 18 May 2018 National Assembly of the Republic of Armenia (2018b) Final Statement Adopted at the Inaugural Meeting of EU-Armenia Parliamentary Partnership Committee. http://www.parliament.am/ news.php?cat_id=2&NewsID=10887&year=2018&month=10&day=27&lang=eng. Accessed 1 June 2019 Payaslian S (2011) The political economy of human rights in Armenia: authoritarianism and democracy in a former soviet republic. I.B. Tauris Petrov R (2016) EU values in integration-oriented agreements with Ukraine, Moldova and Georgia. In: Poli S (ed) The European neighbourhood policy – values and principles. Routledge, London Petrov R, Van der Loo G, Van Elsuwege P (2015) The EU-Ukraine association agreement: a new legal instrument of integration without membership? Kyiv-Mohyla Law Polit J 1:1–19. http://ekmair.ukma.edu.ua/bitstream/handle/123456789/7874/Petrov_The_EU-Ukraine_ Association.pdf?sequence=1&isAllowed=y Poli S (2016) Introduction. In: Poli S (ed) The European neighbourhood policy –values and principles. Routledge, London Prime Minister of the Republic of Armenia (12 July 2018) Official web-site. Video recording of the press-conference (in Armenian). http://www.primeminister.am/hy/videos/item/9MrD1VsF0A/. Accessed 14 July 2018 Radio Free Europe/Radio Liberty’s Armenian Service (29 October 2018a) In Setback for Pashinyan, Armenian Parliament Again Fail to Pass the Election Bill. https://www.rferl.org/a/29570598. html. Accessed 15 June 2019 Radio Free Europe/Radio Liberty’s Armenian Service (26 July 2018b) Kocharian Charged Over 2008 Crackdown. https://www.azatutyun.am/a/29392588.html. Accessed 26 July 2018 Specialized Commission on Constitutional Reforms adjunct to the President of RA (draft of 2 September 2014) The Concept Paper on the Constitutional Reform. http://www.venice.coe. int/webforms/documents/default.aspx?pdffile=CDL-REF(2014)033-e. Accessed 1 June 2018

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Van Der Loo G (2014) The EU-Ukraine DCFTA. In: Van Elsuwege P, Petrov R (eds) Legislative approximation and application of EU law in the Eastern neighbourhood of the European Union. Routledge, London Vorländer H (2002) Gründung und Geltung: Die Konstitution der Ordnung und die Legitimität der Konstitution. In Gert Melville and Hans Vorländer (eds) Geltungsgeschichten: Über die Stabilisierung und Legitimierung institutioneller Ordnungen. Cologne/Weimar/Vienna: Böhlau, as cited In: Hensel S, Bock U, Dircksen K, Thamer H-U (eds) (2012) Constitutional cultures: on the concept and representation of constitutions in the Atlantic World. Cambridge Scholars Publishing, p 5 Anna Khvorostiankina  is an Associate Professor of Law, a Founding Director of the Centre for Interdisciplinary Studies and an academic coordinator of Legal Approximation Laboratory (Jean Monnet Module, 2019–2022) at Brusov State University (Armenia), and a Member of the Management Board of the Association of European Studies for the Caucasus (AESC). Dr. Khvorostiankina has published on the issues of Europeanization of legal systems beyond the EU borders, recent developments in theory and practice of judicial argumentation in post-Soviet countries, constitutional cultures and the Rule of Law in societies in transition.

Part III

Current and Future Contractual Relations with Eurasian Economic Union and its Member States: Shared Values as a Pillar of Remote Integration

Pork, Peace and Principles: The Relations Between the EU and the Eurasian Economic Union Rilka Dragneva

1  Introduction Over the last decade the European Union (EU) faced numerous demands to engage with the Customs Union (CU) between Russia, Belarus and Kazakhstan set up in 2010 and its successor, the Eurasian Economic Union (EAEU), found in 2015. The pursuit of EAEU’s recognition as an equal partner of the EU has been a priority of Russia’s foreign policy since the launch of Vladimir Putin’s third presidency in late 2011. Particularly, Moscow called for establishing a common economic space from the Atlantic to the Pacific by developing relations between the two blocs.1 Nonetheless, despite some discussion on a policy shift, the EU has maintained only low-level, selective technical contacts with the EAEU. For Moscow, EU’s stance amounts to ignoring the EAEU, in denial of Russia’s right to integration.2 Russia has objected to the EU’s imposition of any ‘political conditionality’, such as the implementation of the Minsk peace agreements, for starting a dialogue: in the words of Dmitrii Peskov, President Putin’s speaker, this was ‘hardly relevant or possible’.3 Such statements claim that the EAEU is not Russia’s political tool but an independent international organisation pursuing purely economic objectives in line with modern tendencies of regionalism. Accordingly, it has been argued that ‘[T]he dialogue between the EAEU and the EU needs to start without any preliminary conditions or political context considerations’.4  See MFA (2016), paras. 51, 62 and 82.  Bordachev (2015) and Chizhov (2017). 3  Reported in Gotev (2015). 4  Eurasian Economic Commission (2018). 1 2

R. Dragneva (*) Birmingham Law School, University of Birmingham, Birmingham, UK e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 S. Lorenzmeier et al. (eds.), EU External Relations Law, https://doi.org/10.1007/978-3-030-62859-8_13

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In the EU, the idea for engagement has also enjoyed the support of some academics, policy experts, business lobbies and politicians, albeit with pronounced differences in justification and vision as to its ambition and parameters.5 What many of them share is the view that the current state of affairs is rooted in the political crisis in EU-Russia relations. The persisting assumption is that, should the political clouds clear, EU-EAEU cooperation is ‘a matter of when not if’.6 Others promoted EU-EAEU dialogue as the particular means to clear those clouds by shifting ‘the competition between Russia and the West back onto an economic field rather than a military one’.7 Thus, engagement with the EAEU is seen as an economic confidence-­ building measure with economic connectivity offering the answer to European security.8 Notably, while there is little consensus as to the substantive scope of such engagement—upgraded dialogue, sectoral and regulatory cooperation, or a deep and comprehensive deal with or without free trade—the view is that it should take place on a region-to-region basis through the representative institutions of the two blocs, namely the European Commission and the Eurasian Economic Commission (EEC). Importantly, such assertions tend to assume a functional equivalence between the EU and the EAEU in terms of integration frameworks, or recognise certain differences between them but downplay their significance in favour of the wider benefits of procuring good relations with Russia. This, however, represents a pivotal flaw in the engagement argument. Ignoring or underestimating the specificity of Eurasian integration to secure an instrumental engagement with the EAEU will not only fail to deliver the expected solution, but risks undermining EU’s interests and standing. This is not to say that developing relations with the region is not in the interest of the EU. Economically, for example, the 2006 Global Europe strategy already identified Russia as a desired partner with which to conclude a free trade agreement.9 More recent estimates echo this, noting that European exports can increase by as much as 60% compared to the 2011 status if such an agreement were to be concluded.10 The question is about the extent to which Eurasian integration in its current state is conducive to a region-to-region approach as opposed to developing bilateral relations or formats of engagement short of what some have conceptualised as ‘pure transregionalism’.11 In determining the prospects for a region-to-region deal, it is especially important to scrutinise the nature of the EAEU in relation to some of the key characteristics of EU’s external economic policy in general. Three dimensions are of particular

5  Krastev and Leonard (2014), Meister (2015), Bertelsmann Stiftung (2016), IIASA (2016, 2017), Felbermayr and Gröschl (2017) and Ademmer and Lissovolik (2018). 6  Dreyer (2016). 7  Krastev and Leonard (2014), p. 8. 8  International Peace Institute (2016). 9  European Commission (2006). 10  Felbermayr and Gröschl (2017), p. 57. 11  Aggarwal and Fogarty (2004).

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relevance here. Firstly, in principle, the EU’s trade strategy has entailed a normative preference for negotiating with regions rather than with individual countries. Yet, while many negotiations have started as region-to-region, very few have completed. The extent to which the EU has engaged with a ‘region’ as a negotiating partner has depended on a number of factors, including the ability of EU’s partners to progress towards regional integration and the diversity of preferences and economic development levels within a region.12 Secondly, EU’s approach to concluding trade agreements with third parties is rooted in its overarching support for multilateral trade liberalisation in the framework of the WTO. In embarking on its Global Europe strategy, the EU lifted its stay on preferential trade agreements in favour of combining regionalism with multilateralism. However, EU’s decision to enter into such agreements has been consistently premised on the adherence to WTO rules and principles, including the promotion of a WTO-plus agenda.13 Finally, while commercial considerations have increasingly determined its choice of negotiating partners,14 EU’s external relations are embedded in a set of fundamental values. This is particularly so following the 2009 adoption of the Lisbon Treaty which defines the goals of the EU’s Common Commercial Policy not just in terms of promoting liberalisation (Article 206 TFEU), but also makes them subject to the general principles of EU’s external action (Article 207:1 TFEU). These principles include support of democracy, the rule of law, human rights, peace and the principles of international law (Article 21:2 TEU). In practice, the EU’s approach has not necessarily been consistent in terms of the scope and enforceability of the human rights and other ‘essential element’ clauses used in its external agreements.15 Nonetheless, the value-dimension of the EU’s external dealings has grown in prominence, strengthened further by the greater role granted to the European Parliament in external affairs.16 This chapter assesses Eurasian integration against these dimensions of EU’s external policy. The analysis starts with a discussion of the key features of the developing relations of the EU with the Eurasian region, before proceeding to explore the relevance of the institutional nature and practice of the EAEU for potential future developments. On balance, it arrives at a sceptical conclusion about the prospects for a change in EU’s current approach.

 Aggarwal and Fogarty (2004) and Woolcock (2014).  Woolcock (2012). 14  Woolcock (2014). 15  Bartels (2005). 16  Gstohl and Hanf (2014). 12 13

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2  T  he Background of EU’s Policy Towards Eurasian Integration Following the break-up of the USSR, EU’s relations with its former members developed on a bilateral basis. To a large extent this was in response to the disintegration processes taking place within the post-Soviet region itself. Initially, Russia under Yeltsin was keen to define itself in opposition of the Soviet Union and forge ahead with reform and improve relations with the West, ridding itself from the burden of its former brothers. The other republics were also keen to establish their own sovereignty, engaging in an intensive process of independent state-building. While efforts to re-unite the region followed soon, resulting in the formation of the Commonwealth of Independent States (CIS) in December 1991, the initial impulse behind it was one of a managed divorce. Unsurprisingly, the CIS was set up as a loose cooperation framework with weak common institutions.17 While gradually moving to strengthen the CIS and promote economic integration within it, Moscow remained unwilling to bear the associated costs, preferring to pursue trade relations within the bloc on a bilateral basis.18 Against this background, the EU committed to the conclusion of Partnership and Cooperation Agreements (PCAs) with individual post-Soviet countries with the aim to establish a comprehensive economic and political partnership framework.19 A negotiating mandate was obtained by the Council in 1992 with the first negotiations, with Russia and Ukraine, starting in early 1993. It may be argued that, to start with, the EU conceived of the newly independent states (excluding the Baltic States) as a distinct and homogeneous region. It developed the PCA as a tailor-made agreement in distinction from its agreements with the countries of Central and Eastern Europe.20 Politically, the EU was also keen to foster regional cohesion: the PCA Preambles, for example, noted the desire to encourage ‘the process of regional cooperation … between the countries of the former USSR in order to promote the prosperity and stability in the region’.21 Nonetheless, the PCAs introduced a clear differentiation to individual countries.22 Notably, the agreements with Russia and the Eastern CIS contained an  Dragneva (2004).  Cooper (2009) and Dragneva and de Kort (2007). 19  The EU had signed a Trade and Economic Cooperation Agreement with the USSR in December 1989. Following the break-up of the USSR, this agreement was transformed into a set of bilateral agreements, which were in place until the PCAs. 20  Hillion (1998). 21  Similarly, the EU’s technical assistance programme for the CIS, TACIS, had an important regional component. 22  PCA between the EC and their Member States, of the one part, and the Russian Federation, of the other part (O.J. 1997 L327/1), PCA between the EC and their Member States, of the one part, and Ukraine, of the other part (O.J. 1998 L49/1), PCA between the EC and their Member States, of the one part, and Moldova, of the other part (O.J. 1998 L181/1), PCA between the EC and their Member States, of the one part, and Armenia, of the other part (O.J. 1999 L239/1), PCA between 17 18

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‘evolutionary clause’ allowing for the progression towards a free-trade area. This differentiation deepened in the context of the EU’s Eastern enlargement. In 2003, the EU launched its Eastern Neighbourhood Policy (ENP), but considering Russia’s objections to being defined as one of the Union’s many ‘neighbours’, it elevated it to the role of ‘strategic partner’.23 At the same time, the PCA with Belarus was not ratified and it was excluded from the ENP in response to the political conditions in the country.24 Thus, building on the legal basis of the PCAs, a diversified policy approach to the post-Soviet region was established. With Russia, the EU embarked on a ‘partnership’ agenda aimed at the creation of Common Spaces.25 In 2005, this led to the adoption of four ‘road maps’, among them a road map on the common economic space, which reaffirmed the goal of creating a free-trade area. With the Eastern CIS and the Caucuses, the EU developed various Action Plans under the ENP. Relations evolved within the 2009 Eastern Partnership framework entailing the conclusion of Association Agreements (AAs) with the EU.26 Relations with the Central Asian countries were least ambitious, developing within the broad cooperation framework of the EU’s Central Asia Strategies.27 These policies were not related to Russia’s string of integration initiatives in the 1990s and the early 2000s. This was hardly surprising given their primarily rhetorical nature and weak institutional set-up. The Eurasian Economic Community (EAEC) between Russia, Belarus, Kazakhstan, Kyrgyzstan and Tajikistan established in October 2000 was the first post-Soviet integration organisation with its own international personality and well-defined bodies. Yet, like its predecessors, it failed to lead to any meaningful implementation, feeding the cycle of fatigue with ‘the virtual reality of integration’.28 At the same time, it is notable that despite Russia’s efforts to secure more equal relations with Brussels in line with its growing concern about the EU’s asymmetric normative expansion,29 Moscow did not invoke its own integration efforts.

the EC and their Member States, of the one part, and Azerbaijan, of the other part (O.J. 1999 L246/1), PCA between the EC and their Member States, of the one part, and Georgia, of the other part (O.J. 1999 L205/1), PCA between the EC and their Member States, of the one part, and the Republic of Kazakhstan, of the other part (O.J. 1999 L196/1), PCA between the EC and their Member States, of the one part, and the Kyrgyz Republic, of the other part (O.J. 1999 L196/46), PCA between the EC and their Member States, of the one part, and Uzbekistan, of the other part (O.J. 1999 L229), Proposal for a PCA between the EC and their Member States, of the one part, and Belarus, of the other hand (Com(95)44), Proposal for PCA between the EC and their Member States, of the one part, and Turkmenistan, on the other hand (COM(1997)693). 23  Haukkala (2008). 24  Bosse and Korosteleva (2009). In 1997, the EU suspended the process of ratification of the PCA with Belarus, continuing to deal with it based on the 1989 Trade and Cooperation Agreement. 25  Council of the European Union (2003). 26  Council of the European Union (2009). 27  European Commission (2002) and Council of the European Union (2007). 28  Shishkov (2001), p. 7. 29  Haukkala (2010).

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The context began to change in 2007, when restarting their integration efforts, Russia, Belarus and Kazakhstan committed to setting up a Customs Union.30 The project did not entail the birth of a new regional organisation: it represented an international treaty regime tagged awkwardly onto the EAEC.31 Nonetheless, it gradually accumulated its own legal basis, progressing to the launch of a common external tariff (CET) in January 2010 and a common customs territory based on a Union Customs Code in July 2010. Considering the previous failed efforts to reintegrate the region and the incremental gestation of the Customs Union, EU’s initial reaction to these developments was one of caution. Its subsequent response, it can be argued, was shaped by three main sets of considerations.

2.1  The CU and Russia’s WTO Accession The EU’s initial concern in relation to the launch CU was about its effect on Russia’s WTO accession. Russia had applied for WTO membership in June 1993, but the negotiations proved to be difficult and protracted. The EU completed its bilateral market access negotiations with Moscow in May 2004 and was anticipating Russia’s accession to the WTO to bring significant benefits. Particularly, Brussels was hoping for an impetus to develop its increasingly stagnating bilateral relations and a relief to the build-up of costly trade disputes with Russia.32 However, in May 2009, the then Prime Minister Putin announced a plan for Russia to enter the WTO not individually, but alongside Kazakhstan and Belarus as part of a single customs union bloc. Apart from opening a legal quagmire as to the possibility for such a step, this led to even more uncertainty about the prospects for Russia’s accession to the WTO given that Belarus and Kazakhstan were a lot further behind in the accession process than Russia.33 After much opposition from within the WTO, the plan was abandoned in October 2009 with Russia returning to the table on its own. However, a solution to the coexistence of the CU involving two non-members, Belarus and Kazakhstan, with the multilateral trading system was not found until October 2011, when the Treaty on the Functioning of the Customs Union in the Multilateral System was signed. The Treaty incorporated Russia’s accession commitments within the CU framework, providing for the supremacy of the WTO regime.34 This step cleared the path to the WTO Working Party agreeing on Russia’s accession in November 2011, which became effective in August the following year.

 Dragneva and Wolczuk (2012) and Cooper (2013).  Dragneva (2013). 32  Van Elsuwege (2012) and Van der Loo (2013). 33  Lynn (2009). 34  Connolly (2013). 30 31

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The problems for the EU, however, did not disappear. The CU’s external tariff incorporated the tariff increases adopted by Russia as part of its extensive protection measures introduced in 2009. This also meant that more open countries, such as Kazakhstan, had to raise their tariffs to the level of the CU.  In consequence, the overall costs for the EU as the region’s main trading partner were high.35 These costs were aggravated by the fact that Russia did not formally notify the EU of the introduction of the CET nor did it agree to hold consultations with the EU under Article 16 of the PCA before increasing tariffs.36 In addition, the introduction of the CU was not well prepared in administrative terms, leading to disruption of trade through border delays and legal uncertainty. Finally, several Russian/CU sanitary and phyto-­ sanitary (SPS) measures, including an all-EU import ban on vegetables in November 2011 and on live animals in March 2012, were deemed to be disproportionate and discriminatory. As Russia’s accession had not yet taken effect, the formal legality of these steps under the WTO was not necessarily at stake.37 Yet, against the background of Moscow’s increasingly protectionist stand, they threw further doubt on Russia’s commitment to play by the WTO rules. On balance, the impression was that the CU had de-liberalisation effects and was not WTO-consistent.

2.2  The CU and the New Basic Agreement (NBA) with Russia The launch of the CU also impacted on the course of EU’s bilateral relations with Russia. Entering into force in December 1997, the PCA laid the groundwork for developing political and economic cooperation between its parties. It was concluded for a period of 10 years subject to automatic annual renewal thereafter to ensure its continuation. Yet, there was a recognition that the PCA was increasingly outdated for the ‘strategic partnership’ with Russia.38 Thus, in 2005, as the package of Common Spaces road maps was adopted, a political agreement was reached to conclude a New Basic Agreement to replace the PCA. This agreement was meant to be comprehensive in scope, covering all aspects developed under the road maps, including trade, investment and energy, but also legally binding in nature.39 Yet negotiating the agreement proved to be slow and problematic. The start of the talks was delayed as a result of the blockage imposed by Poland in response to the

 By the end of 2009, for example, Russia was responsible for around 75% of all EU exports facing increased border protection worldwide. See European Commission (2010a, b). 36  Article 16 provides that ‘[u]ntil Russia accedes to the GATT/WTO, the Parties shall hold consultations in the Cooperation Committee on their import tariff policies, including changes in tariff protection. In particular, such consultations shall be offered prior to the increase of tariff protection.’ 37  Van der Loo (2013). 38  Van Elsuwege (2012). 39  President of Russia (2008).

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Russian import ban on Polish meat.40 Political relations were also strained following the 2008 Russia-Georgia war. After temporary optimism fuelled by President Medvedev’s modernisation programme and the adoption in the 2010 Partnership for Modernisation, negotiations ground to a halt. This was not only because of the uncertainties around Russia’s WTO accession, discussed above, which for the EU was a precondition for progressing towards the free trade agreement envisaged under the PCA. Increasingly, deeper differences began to emerge –related to trade and investment preferences, but also to the normative fundamentals of EU-Russia relations with Russia increasingly becoming an ‘unwilling partner’ of the EU.41 It should also be noted that within Russia itself the processes of setting up the Customs Union and negotiating the NBA with the EU were not coordinated. The formation of the Customs Union and its effects on bilateral relations with the EU was not raised as an issue at EU-Russia summits at the time. For example, the Joint Statement following the 1 June 2010 Rostov-on-Don summit which took place as the Customs Union was being launched amidst much domestic publicity, makes no mention of it, continuing to reaffirm the course towards negotiating a NBA. With the return of Vladimir Putin to the Russian Presidency in the spring of 2012, however, things began to change. For Putin, Eurasian integration had a pronounced strategic geopolitical significance.42 Proposing the formation of a Eurasian Union, he viewed it as ‘one of the poles of the modern world’ and an equal partner to the EU.43 In June 2012, at the first EU-Russia summit following the presidential elections, Putin made it clear that Russia will not progress with the NBA negotiations unless the EU formalises relations with the Eurasian bloc, including the establishment of direct dialogue between the European Commission and the Eurasian Economic Commission. As Putin argued, ‘[E]ven if we wanted we cannot anymore discuss with the EU as part of the negotiation process issues which do not any more represent part of our national competences.’44 The EU at the time did not engage with this point, other than to state its own lack of mandate for such negotiations. Instead, speaking at the June 2012 summit, the President of the European Council, Herman Van Rompuy, noted that ‘[T]he idea of the Eurasian Economic Union if based on the WTO-rules could lead to positive contribution to trade, prosperity and cooperation.’45 Yet, the EU’s continued preference for a bilateral agreement was based on the view that this pre-condition was not in place. Moscow’s assertion that even though Belarus and Kazakhstan were not current members of the WTO, they have undertaken to be bound by Russia’s

 Roth (2009). The European Commission had tabled a draft negotiating directive for a new Russia-EU agreement in July 2006. 41  Casier (2018). 42  Dragneva and Wolczuk (2017). 43  Putin (2011). 44  President of Russia (2012). 45  Council of the European Union (2012). 40

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accession obligations and the WTO acquis,46 was not sufficient for the EU to commit to a region-to-region agreement. For example, a working party of the Council of the EU pointed out the problem that non-WTO members will not be bound by its dispute settlement rules.47 Even more importantly, Russia and the CU were not seen as fully complying with WTO rules and commitments. While this view was frequently voiced by representatives of the Commission’s DG Trade,48 it also enjoyed the support of the European Parliament.49 In March 2013, the Commission President Barroso reiterated the position that cooperation depends on the EAEU operating based on an ‘open regionalism instead of regional protectionism’.50 Yet, having joined the organisation, Russia seemed to be ‘doing exactly the opposite of what they are supposed to do […] by seeking to raise obstacles to trade’.51

2.3  The CU and the Eastern Partnership The launch of the CU also had a pronounced effect on EU’s European Neighbourhood Policy.52 This was because one of the defining features of the Eurasian project was the pursuit of its expansion to the common neighbourhood with the EU.  This is consistent with Russia’s geopolitical motivation behind regional integration, but also its particular sensitivity to the EU’s Eastern Partnership, deemed as an encroachment on Moscow’s sphere of influence with important security implications.53 Ukraine particularly was at the forefront of Russia’s efforts to protect its region through securing its membership in the EAEU. In early 2011, Moscow engaged in a comprehensive campaign to divert Ukraine from its course towards concluding an Association Agreement with the EU in favour of joining the Customs Union and its planned successor, the EAEU.54 At the time, Kyiv rejected unequivocally this path. Yet, as in the summer of 2013 the prospect for concluding the AA became realistic, Russia’s campaign intensified adopting an array of costly trade and customs restrictions. The offensive peaked with the approach of the Eastern Partnership summit in Vilnius in November 2013, ultimately securing President Yanukovych’s U-turn and the temporary abandonment of the AA.  This scenario was also deployed in Armenia in early September 2013, where the combination between carrots and sticks succeeded in persuading Yerevan

 President of Russia (2012).  EPRS (2017), p. 11. 48  Euractiv (2012). 49  E.g. European Parliament (2012). 50  European Commission (2013). 51  Crouch (2013). 52  Delcour and Wolczuk (2013). 53  Gretskyi et al. (2014). 54  Dragneva and Wolczuk (2015). 46 47

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to accede to the EAEU.55 Trade and energy penalties were also applied to Moldova and Georgia, yet failed to prevent them from signing the AAs with the EU.56 Notably, while the integration campaign was waged with a view of securing membership in the Eurasian bloc, it was explicitly led by Russia rather than by the Customs Union as a whole. Similarly, the range of promises and threats were made and acted upon by Russia with no other CU member joining in. While the EU was aware of Russia’s position, it was taken aback by the intensity of pressure applied by the Kremlin in the summer and autumn of 2013.57 All this set the view that the CU was Russia’s geopolitical project as opposed to a voluntary regional economic arrangement. This coercive dimension of Eurasian integration became an added factor in resisting engagement with the EAEU. When President Putin renewed calls for a free-trade zone with the EU at the January 2014 Russia-EU summit,58 EU’s official position was that ‘EU trade agreements can interact constructively with the CU as long as WTO rules are applied and free decision-making guaranteed’.59

3  The EAEU and the Aftermath of the Ukraine Crisis Following Russia’s annexation of Crimea and the start of the hybrid war in Eastern Ukraine, the EU found itself in uncharted territory on multiple levels. Condemning the Kremlin’s actions, the EU suspended the bilateral talks on the NBA in March 2014.60 In the following months, the EU introduced a set of individual restrictive measures and economic sanctions, to which Russia retaliated. As the political crisis deepened, the profundity of its consequences for the established European order was in plain view. Against this background, and contrary to the previous misgivings, EU-EAEU cooperation was promoted as ‘not the answer to everything’ but at least ‘a start towards negotiating a new European institutional order to fill the vacuum left by broken institutions that have been rejected by Moscow’.61 To start with, a mega-deal was seen as means of restoring peace. As France and Germany became involved in the Minsk process, the idea of engaging with the EAEU found traction: recognising the bloc and hence the Kremlin’s regional leadership, it was suggested, might induce it to meet its part of the bargain on Eastern Ukraine.62 The European Parliament also recommended that the ‘Commission

 Ter-Matevosyan et al. (2017).  Cenusa et al. (2014). 57  European Parliament (2013). 58  President of Russia (2014). 59  Council of the EU (2014a). 60  Council of the EU (2014b). 61  Krastev and Leonard (2014). 62  Statements reported in Wagstyl and Khalaf (2014). 55 56

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should explore the modalities of EU cooperation with the Eurasian Economic Union’.63 Such a study was undertaken by the EEAS,64 with the process culminating in a letter from Commission President Junker to President Putin in November 2015.65 While the EU identified some areas of potential cooperation, ultimately progress remained conditional on the implementation of the Minsk agreements, something confirmed in the spring of 2016 by EU’s High Representative Mogherini as the basis for improving relations with Russia more generally.66 Similarly, a mega-deal was promoted as the response to the crisis of EU’s European Neighbourhood Policy. By ignoring regional interdependencies and integration developments in Eurasia, it was argued, the EU steamrolled its Association Agreements forcing a choice between the EAEU and integration with the EU on the countries caught in-between.67 As the then German Foreign Minister Steinmeier put it, ‘we should ask ourselves … whether we have overlooked the fact that it is too much for a country to have to choose between Europe and Russia.’68 A mega-deal was seen as the chance to develop ‘inclusive’ rather than ‘divisive’ integration by setting up a framework within which the ‘in-between’ countries can benefit from cooperation with both blocs.69 Some Russian experts went further by insisting that without a deal those countries may not be able to embark on the path of sustainable growth at all.70 Responding to the critique, the EU launched a review of the ENP in November 2015 indicating, among others, ‘a strong interest in developing new ways of working with the neighbours of the neighbours.’71 This proposition, however, was tested in the trilateral talks between EU, Ukraine and Russia on the EU-Ukraine Deep and Comprehensive Free Trade Area (DCFTA), which took place in 2014–2015. In those talks Russia raised a range of concerns related to the launch of the DCFTA.72 While the key issues under consideration, namely market access, customs cooperation, technical standards and SPS measures, fall within the core competences of the EAEU, it was clear that it was Russia rather than the EAEU in forefront. Notably, as during the campaign of 2011–2013, Russia’s partners neither shared those concerns, nor were willing to partake in the sanctions war with Ukraine and the West. At the same time, while the EU focused on pragmatic, technical solutions, Russia’s sensitivities proved to be rooted in deeper geopolitical considerations. As the talks

 European Parliament (2014).  This was an internal study; its key elements were reported by Reuters (2015). 65  Gotev (2015). 66  EEAS (2016a). 67  Sakwa (2014). 68  Federal Foreign Office (2013). 69  Ademmer and Lissovolik (2018). 70  Vinokurov (2017a). 71  EEAS (2015). 72  Dragneva and Wolczuk (2015). 63 64

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collapsed in December 2015, Russia’s interest in trade liberalisation and rule-based solutions was in question even more. Thus, it can be seen that all these proposals ran aground. Nonetheless, despite the experience accumulated in the process, the pressure for engagement with the EAEU has continued. Ironically, it has also remained blind to the developments within the EAEU itself since May 2014 when its founding treaty was signed, including the adverse effect of Russia’s actions in Ukraine on the EAEU itself. The following sections will examine these developments, setting them against the context of EU’s external policy fundamentals more generally.

4  The EAEU as a Unified Regional Actor A key argument for a region-to-region agreement with the EAEU is the need to reflect the legal reality: ‘[S]imilar to the EU, the EAEU concludes trade agreements with third countries and is represented by a Commission’.73 If the EAEU is a unified, institutionalised region, then maintaining relations with the EAEU member states as opposed to with its common bodies, can be deemed misguided. Upon closer inspection, however, the EAEU’s image as an independent actor is deeply problematic. Not only are member states of primary importance in the Union’s decision-­making, but Russia’s dominance within the organisation—especially in its external relations—is pronounced. This is evident both at the level of the EAEU’s institutions and practice.

4.1  The Weakness of Common Institutions According to the EAEU Treaty, the organisation is endowed with its own international legal personality.74 This personality is manifest in its right to engage in international cooperation with states, international organisations, and international integration associations, and independently or jointly with the member states conclude international treaties on any matters within its jurisdiction.75 However, in terms of jurisdiction as well as negotiating process, the EAEU’s role is limited. The EAEU has been endowed with a range of powers, which are exercised by its bodies.76 Yet, the level of delegation to the Eurasian Economic Commission is not as extensive as it may be expected given the declared objectives of the EAEU and the alleged similarity with the European Commission. Among the common powers

 Felbermayr and Gröschl (2017).  Article 1.2 of the Treaty on the Eurasian Economic Union. 75  Article 7.1 of the Treaty on the Eurasian Economic Union. 76  Article 8.2 of the Treaty on the Eurasian Economic Union. 73 74

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of the Union, for example, are matters of tariff and customs regulation, technical regulation and the imposition of trade defence measures. Even in those areas, however, national competences abound: the Common Customs Code, for example, contains numerous references to national legislation and the powers of national customs authorities. Furthermore, any delegation is always reversible. Any decision taken by the EEC can be contested by a disagreeing member states and revoked by the higher bodies of the EAEU (the Supreme Eurasian Economic Council, consisting of Heads of State, and the Intergovernmental Council, consisting of Heads of Government), which decide by consensus. It is notable also that the supranational powers of the Commission were actually reduced with the EAEU Treaty: for example, the EEC is not able any more to bring a member state before the Court of the Eurasian Economic Union in cases of non-implementation.77 Ultimately, the Commission’s activities are embedded in a hierarchical structure which reproduces the chains of political power of its member states. Against this background, the Commission has been found to tread cautiously and conservatively.78 Furthermore, outside the current scope of delegated powers remain many policy areas, such as services, transport and investment, which are subject to various degrees of coordination. This reflects the limited interest of member states in committing to far-reaching integration. While a range of general objectives were agreed, these depend on the future consent and action of member states. In those matters, the Commission’s task is to facilitate cooperation, but direct dealing with the member states remains essential. The prominence of member states is cemented by the institutional process put in place to negotiate with third parties. The EAEU uses a two-track approach. On matters within the common competences of the EAEU, negotiating teams consist of Commission members as well as member state representatives. Thus, the Commission never appears on its own in dealing with third parties. On matters within member states’ competences, such as services and investment, the Commission is excluded altogether: negotiations in such areas have proceeded directly with the member states under the general coordination of Russia.79 Thus, regardless of the formal division of powers, the Commission’s role is one of a facilitator of member states’ dialogue rather than an independent negotiator.

 Dragneva (2018a).  This has attracted domestic criticisms, e.g. by President Putin’s advisor, Sergei Glaz’ev, Politicheskii Kaleidoskop (2017). 79  Vinokurov (2017b). 77 78

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4.2  Russia’s Dominance In this set-up, Russia’s prominence is notable. This is not only a result of its massive structural preponderance within the economy of the EAEU, which translates into a high degree of identification of the EAEU interest with Russia’s interest.80 It is a reflection of the insufficient technical expertise within other member states in dealing with complex trade issues. As noted, ‘[o]nly two employees from Belarus have been involved in FTA talks at the operational level’.81 Most importantly, it also represents the political reality underpinning the EAEU, which is largely based on a bilateral, Russia-centred hub-and-spoke patterns of interactions, where the loyalty of members is procured by the provision of collateral benefits, such as political support, cheap energy or enhanced security.82 Indeed, Russia’s dominance of the external agenda of the EAEU has been in evidence not only relation to its dealing with the EU, discussed above. The EAEU has concluded a FTA with Vietnam in 2015, a partial agreement with Iran and a non-­ preferential agreement with China in 2018. Engaging with those partners, however, was the result of Moscow’s initiative and geopolitical interest. Vietnam, for example, has been Russia’s trusted political ally and strategic partner in the Asia Pacific. The main attraction of entering an FTA was not its trade importance—Vietnam accounts for less than 1% of the EAEU’s total trade, but its significance as the economic dimension of an important geopolitical shift.83 Moscow’s leadership has been notable in relations with China too. The initiative of linking the EAEU with China’s Belt and Road Initiative was a Russian move announced at a high-level bilateral meeting without prior consultation with its EAEU partners. While the project was endorsed at a subsequent EAEU summit, it has not removed the preference of those partners to deal with China on a bilateral basis. Similarly, the EAEU’s current negotiating agenda, including Israel, Singapore, India and Egypt, is defined by their significance for Russia’s global agenda.84 Furthermore, many of the potential economic benefits of the prospective EAEU deals relate to the development of investments, infrastructure and logistics, areas which fall outside the common competences of the EAEU. Yet, Russia has been keen to bring its EAEU partner’s external dealings within the common EAEU framework to boost the bloc’s geopolitical credentials. At the same time, it has supplemented the EAEU framework with its own bilateral arrangements: the FTA with Vietnam, for example, contains a chapter on services and investment, which applies only to Russia. More importantly, Moscow has not hesitated to depart from the common framework, such as when applying sanctions to the West and Ukraine. Notably, it has done this regardless of the harm inflicted upon the economic  Giucci and Mdinaradze (2017).  Valdai Club (2017), p. 32. 82  Dragneva and Wolczuk (2017). 83  Fedorov (2018). 84  Dragneva (2018b). 80 81

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cohesion of the Union or the resulting costs for individual member states.85 Thus, the expectation that the EAEU multilateral framework will constrain Russia, shifting its agenda from the military to the economic sphere has proved to be unfounded.86

4.3  Divergence of Member States’ Interests It is notable that, unlike Russia, the primary interest of its partners has not been the EAEU’s expansion but its consolidation and delivery of economic benefits. Similarly, there has been little commonality of approaches to the international agenda of the EAEU.87 EAEU members have acquiesced to Moscow’s lead as part of a complex regional bargain. At the same time, they have been keen to retain a degree of flexibility within the organisation and autonomy in their external dealings. As already noted, Russia’s partners have abstained from supporting its economic warfare with the West. Instead, Belarus and Kazakhstan have sought to profit by circumventing the sanctions regime. Furthermore, given the continued sensitivity to Russia’s regional dominance, they have sought to balance its power by maintaining and developing bilateral relations with key external partners, such as the China and the EU. Thus, while interest in developing EU-EAEU relations has been shown, the support for a mega-deal has increasingly become a matter of rhetoric. Instead, in December 2015 Kazakhstan completed a bilateral non-preferential agreement with the EU aiming to strengthen political dialogue and promote mutual trade and investments. In November 2017, Armenia signed a Comprehensive Partnership Agreement (CEPA) with the EU. Both agreements exclude matters falling within the core competences of the EAEU, such as tariff regulation. Nonetheless, CEPA contains extensive commitments related to services, investment, and sectoral regulatory approximation, and both frameworks chart an ambitious agenda, which can be developed by the bilateral bodies set up under the respective agreements.

5  The EAEU and Trade Liberalisation As noted, for the EU entering into a trade agreement with a third party is premised on compliance with the WTO system, something found to be problematic in the case of Eurasian integration. Since the launch of the EAEU in 2015, Russia has  Knobel’ (2014). For example, in January 2016 President Putin imposed restrictions on Ukrainian exports prohibiting the transit from Ukraine to Kazakhstan via Russia (later extended to Kyrgyzstan). The alternative longer route via Belarus resulted in higher transaction costs, leading to a 45.5% decrease of Ukrainian imports into Kazakhstan in the first half of 2016, UAWire (2018). 86  Krastev and Leonard (2014). 87  Devyatkov (2017). 85

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been keen to argue that the bloc’s set-up and functioning is consistent with the rules of the WTO.88 This claim, however, has been undermined by Russia’s own WTO record. Following Russia’s first WTO trade policy review conducted in September 2016, for example, the EU commented on Russia’s protectionist import substitution policy, the continued use of disproportionate SPS measures and unilateral, politically motivated imposition of trade and transit restrictions.89 As a result, the EU continues to be embroiled in a number of high profile trade dispute with Moscow, several of which have been brought before the WTO. While Moscow has participated in the WTO dispute resolution process, its compliance with rulings is problematic, such as in the case of live pigs and pork imports from the EU.90 EU’s negative assessment has also been shared by the US in a succession of reports by the US Trade Representative on Russia’s WTO record. They culminate in a blunt and damning statement in the 2017 report: ‘So far, Russia’s actions strongly indicate that it has no intention of complying with many of the promises it made to the United States and other WTO Members. […] It was a mistake to allow Russia to join the WTO if it is not fully prepared to live by WTO rules.’91 Such assessments reflect on the EAEU system as a whole. This is most evident to the extent in which the EAEU is charged with implementing Russia’s WTO commitments, e.g. in relation to tariffs or technical standards. Problems are exhibited, however, also in situations where Russia’s measures represent unilateral departures from the EAEU framework. This only serves to expose the limited nature and weak rules-based constraints of the organisation. Further doubt on the EAEU’s commitment to trade liberalisation is provided by its own record both internally and in concluding agreements with third parties.92 While the free trade agreement with Vietnam covers 88% of trade in goods, it is explicitly protectionist. For example, it exempts key commodities, provides the EAEU with a trigger safeguard mechanism regarding some sensitive goods and fails to remove the possibility to apply quotas and trade protection measures.93 This is partly in line with pressures within Russia itself, but also a way to secure EAEU consensus by limiting the liberalisation effects on members, such as Belarus. The agreement with Iran is very limited in scope and nature of commitments. It covers about 500 commodities, applying primarily a tariff concessions formula to comply with domestic restrictions in Iran, a non-WTO member. The agreement is an interim one, valid for a period of three years, after which a move towards a full trade area will be considered. Nonetheless, its compatibility with the WTO requirements for preferential agreements to cover ‘all or substantially all trade’ in goods is

 See, for example, Ministry of Economic Development of the Russian Federation (2018).  EEAS (2016b). 90  TASS (2018). 91  US Trade Representative (2017). 92  Dragneva and Hartwell (2020). 93  Dragneva (2018b). 88 89

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fundamentally problematic. The latest FTAs concluded with Singapore and Serbia in 2019 have similarly very weak liberalisation credentials: Singapore already operated duty-free access, whereas the agreement with Serbia consolidates the prior regime operated by Russia, Belarus and Kazakhstan with little new trade opportunities created. If anything, the EAEU-Serbia free trade agreement is more a part of Russia-EU rivalry in the Western Balkans rather than an agreement driven by market access ambitions. Finally, the EAEU concluded an agreement with China in May 2018, yet this is a non-preferential accord and there is little interest to reach an FTA in the future. Instead, the agreement aims at improving customs cooperation and facilitating dialogue based on the WTO framework. In a similar vein, there is little evidence that the interest in an EAEU-EU deal entails liberalisation. Experts point to the limited benefit from a free trade component for either Russia or Kazakhstan, which dominate the EAEU’s economy and whose exports to the EU are dominated by energy and raw materials.94 As the EEC Minister Valovaya states, the bloc’s interest is in ‘a non-preferential trade and investment agreement with the EU, but with more in-depth regulation of non-tariff barriers, mutual recognition of technical barriers to trade and sanitary – phytosanitary measures, facilitation of the customs procedures, cooperation in science, research and the digital economy’.95 Therefore, what is on the table relates at best to regulatory or sectoral cooperation. In principle, these are areas which can benefit from some commonality of standards, given that the EAEU has adopted certain EU templates.96 These are the areas, however, where the limits of EAEU’s common competences are exposed, as discussed further above. Furthermore, as EU’s experience in the trilateral talks on Ukraine’s DCFTA showed, Russia has demonstrated little interest in customs facilitation or regulatory cooperation outside the context of its geopolitical agenda.

6  The EAEU and the Question of Values The need for respect for values, such as democracy and the rule of law, human rights and fundamental freedoms, and the observance of international law, has been a fundamental part of EU’s bilateral relations with EAEU members to date. It has featured in the PCAs as well as in subsequent policy frameworks, albeit with questionable robustness. While EU’s concerns about democracy and human rights in Belarus precluded the ratification of the PCA, this was not the case for the Central Asian countries. Neither has the EU moved to activate the PCA ‘essential elements’ clause despite the presence of grounds for it in those countries.97

 IIASA (2016).  Reported by IIASA (2017), p. 12. 96  Emerson (2018). 97  Berdiyev (2003). 94 95

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Nonetheless, for Russia EU’s values conditionality has represented an important dimension of the EU’s normative expansion and has underpinned its insistence on an equal relationship with Brussels.98 More recently, it challenged the extent to which Europe qualifies as a normative power at all as well as developed alternative interpretations of human rights.99 It also challenged Western conceptions of sovereignty and international law, culminating in the annexation of Crimea.100 Thus, the crisis in EU-Russia relations has become a ‘normative war’, where ‘[W]e have completely different visions of what is legitimate, what is desirable, what drives and what should drive policies and politicians’.101 While Western concerns about authoritarian practices and the state of human rights in Russia have risen, so has Moscow’s backlash to the Western order. All this makes it very unlikely that Russia will agree to any values conditionality being part of an EU-EAEU framework. It must be noted that human rights clauses are absent from some EU’s agreements with developed countries.102 Yet, adherence to shared values is invariable affirmed within the broad policy context, as in the recent Comprehensive Economic and Trade Agreement with Canada. Thus, there remains the question to what extent can the EU afford to exclude the explicit reference to values from a cooperation framework with the EAEU or abstain from seeking reassurance about the shared understanding and compliance with international norms and principles. This is also problematic given that the EU has continued to rely on ‘essential element’ clauses in its latest agreements with both Kazakhstan and Armenia.103 As mentioned, Russia has been keen to assert the purely economic nature of the EAEU. The founding treaty of the EAEU does not include references to any political norms or shared values. In fact, it explicitly provides that the integration process should not impinge on the specificity of domestic systems.104 It has no good governance dimension and does not seek to reform domestic institutions. Thus, the EAEU is clear in the extent to which it seeks to perpetuate the existing political order of its member states. The EAEU’s formal set-up reproduces the domestic hierarchies of executive power, dominated by strong and omnipotent presidencies (with some exceptions in Armenia). Similarly, the glue of the EAEU is Kremlin’s ability to cater to the preferences of fellow authoritarian rulers for consolidation of power reducing the need for disruptive reforms. In this sense, the EAEU insulates the EAEU region from external democratising influences.

 Haukkala (2010).  Romanova (2016). 100  Allison (2014) and OSCE (2015). 101  Liik (2018). 102  Bartels (2005). 103  Article 1 of the Enhanced Partnership and Cooperation Agreement with Kazakhstan and Article 2 of the Comprehensive Enhanced Partnership Agreement with Armenia. 104  Article 3 of the Treaty on the Eurasian Economic Union. 98 99

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7  Conclusion In principle, engaging with Eurasian integration could offer important benefits for the EU. However, this remains a highly hypothetical proposition. As argued in this chapter, this is not just because of the political context of EU-Russia relations. While this context seems to be shifting (e.g. in light of the French President Macron’s recent overtures to Russia or the persistent German domestic pressures to improve relations and foster talks with the EAEU), the outcome is far from certain. More importantly, in its current state, the EAEU exhibits a few fundamental problems in relation to both institutions and practice. While in formal terms the EU is asked to deal with the EEC, dealing with member states remains essential. Critically, this masks Russia’s prominence within the organisation as well as its geopolitical motivation. At the same time, despite toying with the idea of a free trade in the past, it is evident that trade liberalisation is not on the agenda for Russia or the EAEU. Indeed, it can be argued that at present the EAEU is lacking a driver as well as an institutional vehicle to achieve this objective.105 In these circumstances, for the EU there remains the question as to whether the sole contribution of a mega-deal will be to secure a political trophy for Moscow, while condoning a form of regionalism which applies a highly selective standard to compliance with the WTO rules. It will further need to consider the extent to which an engagement with the EAEU will amount to legitimising authoritarian integration on its doorstep. It is equally concerning whether, given Russia’s primary motivation and the weak rules-based framework of the EAEU, the EU will have any guarantees that Russia will abide by the rules agreed in a mega-deal. On balance, moving away from a bilateral engagement towards a regional mega deal will entail some important departures from EU’s principles and approach to external trade relations more generally. It is essential for any policy debates on dealing with the EAEU to be cognisant of the extent of these challenges.

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December 2010. http://trade.ec.europa.eu/doclib/docs/2010/december/tradoc_147124.pdf. Accessed 26 November 2018 European Commission (2013) Speech by President Barroso at the Russia-European Union summit  – Potential for Partnership conference, 21 March 2013. http://europa.eu/rapid/pressrelease_SPEECH-13-249_en.htm. Accessed 29 August 2018 European External Action Service (EEAS) (2015) Joint Communication to the European Parliament, the Council, the European Economic and Social Committee and the Committee of Regions, Review of European Neighbourhood Policy. Brussels, 18 November 2015. http:// eeas.europa.eu/archives/docs/enp/documents/2015/151118_joint-communication_review-ofthe-enp_en.pdf. Accessed 28 August 2018 European External Action Service (EEAS) (2016a) Remarks by High Representative/Vice-­ President Federica Mogherini at the press conference following the Foreign Affairs Council, 14 March 2016. https://eeas.europa.eu/headquarters/headquarters-homepage/5490/remarksby-high-representativevice-president-federica-mogherini-at-the-press-conference-followingthe-foreign-affairs-council_en. Accessed 26 November 2018 European External Action Service (EEAS) (2016b) WTO Review: EU calls on Russia to abandon import substitution measures. Press Release, 28 September 2016. https://eeas.europa.eu/ headquarters/headquarters-homepage/10713/wto-review%E2%80%93eu-calls-on-russia-toabandon-import-substitution-measures_en. Accessed 28 November 2018 European Parliament (2012) Resolution of 26 October 2012 on EU-Russia trade relations following Russia’s accession to the WTO (2012/2695(RSP). https://eur-lex.europa.eu/legal-content/ EN/TXT/PDF/?uri=CELEX:52012IP0409&from=EN. Accessed 26 November 2018 European Parliament (2013) Resolution of 12 September 2013 on the pressure exerted by Russia on Eastern Partnership countries (in the context of the upcoming Eastern Partnership Summit in Vilnius. http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+TA+P7TA-2013-0383+0+DOC+PDF+V0//EN. Accessed 20 October 2018 European Parliament (2014) Resolution of 18 September 2014 on the situation in Ukraine and the state of play of EU-Russia relations. http://www.europarl.europa.eu/sides/getDoc. do?type=TA&reference=P8-TA-2014-0025&language=EN. Accessed 28 August 2018 European Parliamentary Research Service (EPRS) (2017) Eurasian Economic Union: The Rocky Road to Integration. Briefing, April 2017. http://www.europarl.europa.eu/RegData/etudes/ BRIE/2017/599432/EPRS_BRI(2017)599432_EN.pdf. Accessed 25 October 2018 Federal Foreign Office (2013) Speech by Dr Frank-Walter Steinmeier, Federal Minister for Foreign Affairs, at the handover ceremony on 17 December 2013. https://www.auswaertiges-amt.de/en/ newsroom/news/131217-bm-antrittsrede/258766. Accessed 28 August 2018 Fedorov N (2018) Soglashenie o zone svobodnoi torgovli mezhdu EAES I Vietnamom kak factor Rossiisko-v’etnamskikh otnoshenii. Sravnitel’naia Politika i geopolitika 9(1):74–90 Felbermayr G, Gröschl J (2017) Free Trade from Lisbon to Vladivostok: Who Gains, Who Loses from a Eurasian Trade Agreement?. CESifo Forum 2/2017 June, Volume 18. https://www. cesifo-group.de/DocDL/CESifo-Forum-2017-2-felbermayr-groeschl-eurasian-free-trade-june. pdf. Accessed 26 October 2018 Giucci R, Mdinaradze A (2017) The Eurasian Economic Union - analysis from a trade policy perspective. Berlin Economics, 11 April 2017. https://berlin-economics.com/wp-content/uploads/ EAEU-11-April-2017_en.pdf. Accessed 26 November 2018 Gotev G (2015) Junker Opens the Door to EU-Eurasian union rapprochement. Euractiv. 20 November 2015. https://www.euractiv.com/section/economy-jobs/news/juncker-opens-thedoor-to-eu-eurasian-union-rapprochement. Accessed 26 November 2018 Gretskyi I, Treshchenko E, Golubev K (2014) Russia’s perceptions and misperceptions of the EU Eastern Partnership. Communist Post-Communist Stud 47(3–4):375–383 Gstohl S, Hanf D (2014) The EU’s Post-Lisbon Free Trade Agreements: commercial interests in a changing constitutional context. Eur Law J 20(6):733–748 Haukkala H (2008) Russian reactions to the European Neighborhood Policy. Probl Post-­ Communism 55(5):40–48

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Haukkala H (2010) The EU-Russia Strategic Partnership: the limits of post-sovereignty in international relations. Routledge, London & New York Hillion C (1998) Partnership and cooperation agreements between the European Union and the new independent states of the Ex-Soviet Union. Eur Foreign Aff Rev 3:399–420 IIASA (2017) Challenges and opportunities of economic integration within a wider European and Eurasian space. Workshop Report. August 2017. http://pure.iiasa.ac.at/id/eprint/14899/1/Highlevel%20meeting%20June_Workshop%20report.pdf. Accessed 26 October 2018 International Institute for Applied Systems Analysis (IIASA) (2016) Challenges and opportunities of economic integration within a wider European and Eurasian space. Synthesis Report. http:// pure.iiasa.ac.at/id/eprint/13982/1/18-01-17%20Final%20Eurasian%20project%20report.pdf. Accessed 26 November 2018 International Peace Institute (IPI) (2016) Economic connectivity: a basis for rebuilding stability and confidence in Europe?. October 2016. https://www.ipinst.org/wp-content/ uploads/2016/10/1610_Economic-Connectivity.pdf. Accessed 26 October 2018 Knobel’ A (2014) Nevozmozhnaia troitsa; kak rossiiskie sanktsii razrushaiut Tamozhennyi soiuz. Forbes.ru, 2 December 2014. http://www.forbes.ru/mneniya-column/gosplan/274627-nevozmozhnaya-troitsa-kak-rossiiskie-sanktsii-razrushayut-tamozhennyi. Accessed 26 October 2018 Krastev I, Leonard M (2014) The New European Disorder. ECFR, 20 November 2014. https:// www.ecfr.eu/page/-/ECFR117_TheNewEuropeanDisorder_ESSAY.pdf. Accessed 26 November 2018 Liik K (2018) Winning the normative war with Russia: an EU-Russia Power Audit. ECFR, 21 May 2018. https://www.ecfr.eu/page/-/EU-RUSSIA_POWER_AUDIT_.pdf. Accessed 26 November 2018 Lynn J (2009) WTO in confusion after Russia customs union plan. Reuters, 18 June 2009. https:// www.reuters.com/article/us-trade-wto-russia-analysis/wto-in-confusion-after-russia-customsunion-plan-idUSTRE55H18920090618. Accessed 26 November 2018 Meister S (2015) Pragmatism, not Politicization. GGAPstadpunkt, Nr.4/ 29 June 2015. https:// dgap.org/en/think-tank/publications/dgapviewpoint/pragmatism-not-politicization. Accessed 25 November 2018 Ministry of Economic Development of the Russian Federation (2018) Press Release following the meeting of the WTO Committee on Regional Trade Agreements, 19 November 2018. http:// economy.gov.ru/minec/about/structure/deptorg/201819118. Accessed 28 November 2018 Ministry of Foreign Affairs (MFA) of the Russia Federation (2016) Foreign Policy Concept of the Russian Federation, 30 November 2016. http://www.mid.ru/en/foreign_policy/official_documents/-/asset_publisher/CptICkB6BZ29/content/id/2542248. Accessed 25 October 2018 OSCE (2015) Back to Diplomacy. Final Report and Recommendations of the Panel of Eminent Persons on European Security as a Common Project. November 2015. https://www.osce.org/ networks/205846?download=true. Accessed 26 November 2018 Politicheskii Kaleidoskop (2017) Glaz’ev o proval’nykh perspektivakh EAES [Glaz’ev on the poor perspectives of the EAEU]. 24 January 2017. http://k-politika.ru/glazev-o-provalnyx-perspektivax-eaes. Accessed 20 October 2018 President of Russia (2008) Joint Statement of the EU/Russia Summit on the Launch of Negotiations for a New EU/Russia Agreement, Khanty-Mansiysk, 27 June 2008. http://en.kremlin.ru/supplement/286. Accessed 28 November 2018 President of Russia (2012) Joint Press Conference, St. Petersburg, 4 June 2012. http://kremlin.ru/ transcripts/15541. Accessed 28 November 2018 President of Russia (2014) Press Statement. http://en.kremlin.ru/events/president/news/20113. Accessed 27 August 2018 Putin V (2011) Novyi integratsionnyi proekt dlia Evrazii – budushchee, kotoroe rozhdaetsia segodnia [New integration project for Eurasia  – a future being born today], Izvestiya, 4 October 2011. https://russiaeu.ru/en/news/article-prime-minister-vladimir-putin-new-integration-project-eurasia-future-making-izvestia-3-. Accessed 27 November 2019

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Reuters (2015) EU foreign policy chief’s paper on EU-Russia relations – text. 15 January 2015. https://www.reuters.com/article/ukraine-crisis-eu-russia/eu-foreign-policy-chiefs-paper-oneu-russia-relations-text-idUSL6N0UU2T820150115. Accessed 26 November 2018 Romanova T (2016) Russian challenge to EU’s normative power: change and continuity. Europe-­ Asia Stud 68(3):371–390 Roth M (2009) Bilateral Disputes between EU Member States and Russia. CEPS Working Document No. 319/August 2009. http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1. 1.523.3873&rep=rep1&type=pdf. Accessed 27 November 2018 Sakwa R (2014) Frontline Ukraine: crisis in the borderlands. IB Taurus, London Shishkov I (2001) Integratsionnye protsessy na poroge XXI veka. Moscow TASS (2018) Russia blocks establishment of conciliation panel in pork dispute with EU. http:// tass.com/economy/1028529DS475. Accessed 28 November 2018 Ter-Matevosyan V, Drnoian A, Mkrtchyan N, Yepremyan T (2017) Armenia in the Eurasian Economic Union: reasons for joining and its consequences. Eurasian Geogr Econ 58(3):340–360 UAWire (2018) Putin extends ban on transit of goods from Ukraine to Kazakhstan and Kyrgyzstan, 3 July 2018. https://uawire.org/putin-extends-ban-of-transit-of-goods-from-ukraine-to-kazakhstan-and-kyrgyzstan. Accessed 27 August 2018 US Trade Representative, 2017 Report on the Implementation and Enforcement of Russia’s WTO Commitments. https://ustr.gov/sites/default/files/files/Press/Reports/Russia%202017%20 WTO%20Report.pdf. Accessed 28 August 2019 Valdai club (2017) Towards the Great Ocean-5: from the turn to the East to Greater Eurasia. Report, August 2017. http://valdaiclub.com/files/15300. Accessed 27 November 2018 Van Der Loo G (2013) EU-Russia trade relations: it takes WTO to Tango? Leg Issues Econ Integr 40(1):7–32 Van Elsuwege P (2012) Towards modernisation of EU-Russia legal relations?. CEURUS EU-Russia paper, June 2012. http://ceurus.ut.ee/wp-content/uploads/2011/06/EU-Russia-Paper-51.pdf. Accessed 27 November 2018 Vinokurov E (2017a) EU-EAEU mega deal amid a relationship crisis. Centre of Eurasian Studies. 14 August 2017. http://greater-europe.org/archives/3209. Accessed 26 October 2018 Vinokurov E (2017b) The Eurasian Economic Union. Eurasian Development Bank, 17 October 2017. http://eabr.org/analytics/integration-research/cii-reports/evraziyskiy-ekonomicheskiysoyuz. Accessed 26 August 2018 Wagstyl S, Khalaf R (2014) Merkel Offers Russia Trade talks Olive Branch. Financial Times, 26 November 2014. https://www.ft.com/content/93e5e066-757a-11e4-b1bf-00144feabdc0. Accessed 26 October 2018 Woolcock S (2012) European Union economic diplomacy: the role of the EU in external economic relations. Ashgate, London Woolcock S (2014) EU policy on preferential trade agreements in the 2000s: a reorientation towards commercial aims. Eur Law J 20(6):718–732 Rilka Dragneva  is a Professor of International Legal Studies at the School of Law, University of Birmingham, UK. Her main research interests focus on regional integration, EU external policy, legal reform, and international diffusion of norms with a special reference to Eastern Europe. Her recent publications focus on Eurasian economic integration, its overlaps with EU’s initiatives in the post-Soviet region, and implications for multilateral trade more widely. Rilka’s work has strong comparative and interdisciplinary elements. Her expertise in the field has enabled her to engage in interactions with policy-makers and leading think-tanks, law reform technical assistance projects, and professional training activities.

The EU and Russia: Old Legal Grounds for New “Selected Engagement” Relations Paul Kalinichenko

1  Introduction In 2019, the EU and Russia celebrated the 25th anniversary of the EU-Russia Partnership and Cooperation Agreement (PCA)1 signed in Corfu (Greece). However, the current situation, even legally, is not as cloudless and as hopeful as it was 25 years ago. The PCA has become obsolete; most of its provisions are out of force. Despite the depletion of the EU-Russia legal basis, the negotiations on a New Basic Agreement have stagnated. In best case scenarios, it has led to the increase of soft law instruments, such as the Roadmap for EU - Russia S&T cooperation of 2018.2 After the Ukrainian crisis of 2014, the EU and Russia have entered a new era. The Russian Ministry of Foreign Affairs stressed in its official Statement regarding the anniversary of the PCA that the strategic nature of the EU-Russia partnership has been placed in doubt.3 This was clearly expressed by the former EU High Representative F.  Mogherini, in 20144 and by the European Parliament in the Resolution of 10 June 2015. The European Parliament stressed that the EU cannot envisage a return to ‘business as usual’ and has no choice but to conduct a critical 1  Agreement on partnership and cooperation establishing a partnership between the European Communities and their Member States, of one part, and the Russian Federation, of the other part 1997, O.J. L 327, 28.11.1997, p. 1. 2  Available at . 3  Statement by the Russian Ministry of Foreign Affairs regarding the anniversary of the signing of the Cooperation and Partnership Agreement between Russia and the EU, 1512-24-06-2014, available at: (accessed 1 May 2020). 4  Rettman (2014).

P. Kalinichenko (*) Kutafin Moscow State Law University, Moscow, Russia e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 S. Lorenzmeier et al. (eds.), EU External Relations Law, https://doi.org/10.1007/978-3-030-62859-8_14

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re-assessment of its relations with Russia. It highlighted that because of its actions in Crimea and in Eastern Ukraine, Russia can no longer be treated or considered as a “strategic partner”.5 Unfortunately, the new era of the EU-Russia relations is an era of confrontations, an era of brinkmanship. It is likely that the present friction might breed even more brinkmanship further down the road. The Ukrainian crisis of 2014 was more likely a question of competition for the parties than a question of conflict. After 20 years of partnership and good neighborliness, it sounds illogical, but it is a reality. This brinkmanship is marked by mutual sanctions between the EU and Russia. The bilateral sanctions between the EU and Russia have led to mutual disbenefits; but they have failed to crush the balanced relations in main sectors of economic interconnections such as energy, investments, and manufactured goods trade. Of course, a new era of the EU-Russia relations will not be smooth or simple. It is down, but not out. This contribution focuses on contemporary legal aspects of the EU-Russia relations in light of recent events and the deterioration of relations between Russia and the EU. In this framework, an account is given of legal heritage of the previous era in EU-Russia relations and of its possible use in the “selective engagement” relations between the EU and Russia. Special attention is paid to the ongoing process of the “Europeanization” of Russian law.

2  A Positive “Legal Luggage” in the EU-Russia Relations The years of the EU-Russia strategic partnership brought a few positive results, especially in creating a comprehensive legal foundation between the parties. Modern EU-Russia relationships are essentially based on three legal layers. The first layer is the EU-Russia PCA and other EU-Russia bilateral agreements. The second layer consists of ‘roadmaps’ for the establishment of four EU-Russia Common Spaces, which should be considered soft law instruments. The third layer covers the Russian legislation and the EU acquis within the EU-Russia sectoral cooperation.6 Unfortunately, because of its diversified nature, this legal framework is not sustainable and has, over time, become significantly depleted. Russia’s WTO accession in 2012 resulted in many provisions of the EU-Russia PCA having become outdated.7 To accommodate this new legal context, the EU and Russia concluded several sectoral trade agreements in 2011 but their effective implementation may face difficulties due to the lack of a new EU-Russia framework agreement.8

5  European Parliament resolution of 10 June 2015 on the state of the EU-Russia relations (2015/2001 /INI)), point 2. 6  Kalinichenko (2014), p. 247. 7  Van Elsuwege (2012). 8  Permanent Mission of the European Union to the World Trade Organisation (2011).

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However, the PCA has not yet lost its legal force and relevance. The Court of Justice of the EU (CJEU) has referred to Article 99 of the PCA to justify the EU restrictive measures against Russia in its Rosneft decision.9 A preliminary ruling before the CJEU was raised in the UK by an oil company, Rosneft, owned in part by the British company BP and in part by the Russian state, which was affected by the sanctions against Russia. The UK Divisional Court questioned the validity of the CFSP decision on restrictive measures against Russia and on the interpretation of the EU Regulation implementing those measures.10 The CJEU judgment of 28 March 201711 acknowledged all the basic conclusions of the Advocate General, Wathelet. Following the Advocate General’s Opinion, the Court confirmed its jurisdiction in this case.12 Although the Advocate General Opinion contained some politically controversial evaluations of the Council motivations and reasons for imposing restrictive measures, in its judgment the CJEU referred to the broad discretion of the Council powers to take political measures in the context of the CFSP. In fact, the CJEU resorted to the political question doctrine13 confining itself to a legal interpretation of the Treaties and related Council acts. In 2006, Russia initiated negotiations on a New Basic Agreement between Russia and the EU to replace the PCA.  This initiative was generally supported by the EU. Negotiations began in 2008.14 Between 2008 and 2011, the parties agreed on several key points of the future agreement, but in December of 2011 negotiations were delayed. In 2014, the Ukrainian crisis pushed the negotiation process for the New Basic Agreement entirely from the EU-Russia agenda.15 During the five first years of Russia’s WTO Membership, the EU and Russia have asked for WTO dispute settlement against each other several times. This shows that the WTO dispute settlement body can be a useful platform for solving different problems in trade matters between the EU and Russia. The three-party urgent economic negotiations (EU-Russia-Ukraine) of 2014 showed that the EU and Russia aspired for additional formal arrangements on rules of origin, mutual recognition in trade of goods, and closer customs cooperation. Despite these negotiations, the idea of a future free trade area between the EU and Russia, a so-called “common market from Atlantic to Pacific,” remains an agenda item, and was still reflected in the Russian concept of foreign policy of 2016.16

9  ECJ, C-72/15, PJSC Rosneft Oil Company v Her Majesty’s Treasury and Others [2017] ECLI:EU:C:2017:236. 10  Council Decision 2014/145/CFSP of 17 March 2014 (n 59). 11  ECJ, C-72/15, PJSC Rosneft Oil Company v Her Majesty’s Treasury and Others [2017] ECLI:EU:C:2017:236. 12  van Elsuwege (2017). 13  On application of this doctrine in courts see: Weinberg (1994), Marosi and Csink (2009). 14  Joint statement of the EU-Russia summit on the launch of negotiations for a new EU-Russia agreement, Khanty-Mansiysk, 27 June 2008, 11214/08 (Presse 192). 15  European Council Conclusions on 21 March 2014, EUCO 7/14. 16  See: Ministry of Foreign Affairs of the Russian Federation (2016) paras 63.

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The outlook for creating links between the EU and Eurasian Economic Union (EAEU) remains grim. The EU has not officially recognized the EAEU as an equal-­ standing partner. These relations are at the lowest level since the foundation of the EAEU in 2014. However, the EAEU legal order has been strongly influenced by EU law. The EAEU Court sporadically refers to the EU law in its judgments. This court is the successor of the Court of the Eurasian Economic Community and was established in accordance with the Treaty on the Eurasian Economic Union 2014.17 Recently, the EAEU Court formulated the direct effect principle for the EAEU law in its case concerning the de minimis rule for vertical agreements within the domestic market of Belarus. In this judgment, the EAEU Court did not mention the renowned CJEU decision Van Gend en Loos18 but implicitly replicated its spirit and wording on the direct effect of the EAEU law over conflicting national laws. Nonetheless, the EU-Russia Research and Development Agreement 200019 was prolonged by the parties three times; most recently in February of 2014. It is interesting to note that this agreement continues to be fully applied by the parties. The Joint Research Committee under this Agreement has been regularly meeting since 2014.

3  The ‘EU-Russia Shared Values’ Concept The EU-Russia PCA continues to set out the basic principles of EU-Russia relations. Article 2 PCA considers respect for human rights and other democratic principles of the Helsinki Act 1975 and the Charter of Paris for a New Europe 1990 as an essential element of the EU-Russia partnership. Although these provisions do not consider the Russian membership in the Council of Europe and the European Convention on the Protection of Human Rights and Fundamental Freedoms 1950, as well as the adoption of the EU Charter of Fundamental Rights in 2000, they constitute an important aspect of the ‘shared values’ between Russia and the EU.  Moreover, Russian courts in practice recognize a direct link between these provisions of the PCA and the provisions of the Constitution of Russia 1993. In the notorious YUKOS case,20 the Federal Arbitration Court of the Moscow District acknowledged that the duty of Russian courts to recognize foreign judicial decisions, which can serve as the legal basis for the execution of judgment of any national court of an EU Member State (Article 98 of the EU–Russia PCA), follows from the general objectives of the EU–Russia PCA governing sincere cooperation between the parties to the Agreement (Article 2 of the EU–Russia PCA). The  Kalinichenko (2017).  ECJ, Case 26/62, Van Gend en Loos [1963] ECR 1. 19  Agreement on cooperation in science and technology between the European Community and the Government of the Russian Federation. O.J. L 299, 28.11.2000, Р. 14. 20   Judgment of the Federal Commercial Court of Moscow District of 2 March 2006 (KG-A40/698-06-P). 17 18

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Federal Arbitration Court stressed the importance of the principles, enshrined in Article 2 EU-Russia PCA, of respect for democratic principles and human rights for partnership between Russia and the EU.  Respect for human rights, fundamental freedoms, and the rule of law, are interpreted by the Court as principles which are in line with the provisions of the Russian Constitution. The Court in this case confirmed that these principles are of legal nature and form the values shared by the EU, its Member States, and Russia. However, this approach was formulated in a politically motived judgment. It has never been confirmed by Russian courts in further cases. The Russian Constitution was adopted by a nationwide referendum on 12 December 1993 as the basic law of Russia. It was inspired by Western constitutional traditions and internationally recognized democratic and human rights values.21 Undoubtedly, this document laid down a firm foundation stone for the Europeanization of contemporary Russian law.22 The Russian Constitution of 1993 cemented three features of the Russian constitutional order. The first feature immunizes some provisions of the Russian Constitution from further amendments. It concerns provisions on the foundations of the constitutional system, on protection of human rights and on constitutional review. If these provisions are to be amended, the Russian Constitution requires the summoning of a Constitutional Assembly or a referendum.23 The second feature integrated international law acts into the Russian legal order and confirmed the priority of duly ratified international agreements above conflicting domestic laws.24 The third feature grants the Russian Constitutional Court exclusive competence to interpret the Russian Constitution. Legal positions of the Russian Constitutional Court are binding25 and are considered as judicial precedents within the contemporary Russian legal system.26 Against the background of academic debate on the Russian resistance to European common values,27 the Russian Constitution of 1993 laid down the basis for a principally new Western-style legal system in post-Soviet Russia. The major breakthrough of the Constitution of 1993 is the decisive departure from the Soviet

 Hesse and Wright (1996), p. 353; Finner et al. (1995), p. 17.  In fact, the adoption of the Russian Constitution coincided with the entry into force of the Treaty on European Union on November 1, 1993 (TEU). 23  Article 135 of the Constitution of Russia, available at: www.constitution.ru/en/10003000-01.htm (accessed 1 May 2020). 24  Article 15(4) of the Constitution of Russia available at: www.constitution.ru/en/10003000-01. htm (accessed 1 May 2020). 25  “The decisions of the Constitutional Court of the Russian Federation shall be obligatory throughout the territory of the Russian Federation for all representative, executive, and judicial bodies of State Power, bodies of local government, enterprises, agencies, organisations, officials, citizens and their associations” (The Article 6 of the Federal Constitutional Law no. 1-FKZ of 21 July 1994 “On the Constitutional Court of the Russian Federation”, SZ RF, 1994, No 13, art. 1447). 26  Zorkin (2004). 27  Leino and Petrov (2009). 21 22

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legal heritage, particularly on the implementation and application of international law within the national legal order.28 At the time of its adoption, the Russian Constitution of 1993 was distinguished by arguably the most liberal approach towards the application of sources of international law within its national legal system among all post-Soviet countries. Consequently, the provisions of the Russian Constitution of 1993 offered greater opportunities for Russian judges to apply and interpret international law in accordance with their constitutional acts than any other judges from the former USSR.29 Moreover, the Russian Constitution of 1993 is the only constitution in the post-­ Soviet area to contain a so-called ‘integration clause’, authorizing the transfer of sovereign powers to supranational, international, or regional organizations.30 Under the Federal Law ‘On International Treaties of Russian Federation’ of 15 July 1995, Russia can join any international organization on the ground of a ratified international agreement.31 The provisions of such an international agreement should be in conformity with the fundamentals of the Russian constitutional order and must respect the protection of human rights. It follows that that Russia as a sovereign country may join any international organization taking into account the limits described in its national legislation and pursuant to the terms and conditions of an international organization. Significantly, the Russian Constitution of 1993 completely changed the perception of sovereignty inherited from the Soviet legal doctrine. Before 1993, the concept of ‘sovereignty’ was used to protect the Soviet system of socialistic government and the supremacy of Soviet law and, particularly, the supremacy of the fundamental principles of the socialist state order (nationalization of property without compensation, wars against colonialism, no protection of private property) over conflicting international rules. Even during perestroika (1985–1991), the formal theory of international law in the USSR stated that no international treaty could automatically take precedence over conflicting provisions of Soviet domestic law. International agreements were considered as self-executing if their provisions either fully corresponded to existing national laws or regulated gaps in national legislation. International human rights conventions were deprived supremacy over national law because of their ‘vagueness and generality’, and, therefore, were not directly applicable. It should be emphasized that the Soviet legal doctrine did not recognize the

 Danilenko (1999).  Petrov and Kalinichenko (2011), p. 336. 30  The first sentence of Article 79 of the Constitution of Russia reads: ‘The Russian Federation may participate in interstate associations and transfer to them part of its powers according to international treaties and agreements, if this does not involve the limitation of the rights and freedoms of man and citizen and does not contradict the principles of the constitutional system of the Russian Federation’, available at: www.constitution.ru/en/10003000-01.htm (accessed 1 May 2020). 31  Federal law No. 101-FZ ‘On International Treaties of Russian Federation’ of 15 July 1995, SZ RF, 1995, No 29, art. 2757. 28 29

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primacy of international law over national law as a matter of principle.32 The Russian Constitution 1993 rejected many elements of the Soviet legal heritage, particularly on the implementation and application of international law within the national legal order.33 it provided that the EU-Russia PCA as well as any other international agreement duly ratified by the Russian Parliament constitutes an inherent part of the Russian legal system and prevails over conflicting Russian legislation. Recently, amendments to the constitution have sparked controversy as perhaps undermining the Russian legal order. It has been argued that the constitutional amendments of 2020 undermine the very foundations of the Russian constitutional order enshrined in the first two chapters of the Constitution of 1993. However, most important amended constitutional provisions have been in place in the original Constitution of 1993. Several examples deserve our attention. The first example, the amended Art. 67bis of the Russian Constitution consolidated the status of Russia as a legal successor of the USSR.34 The second example, the amended Art. 69(1) of the Russian Constitution retained the guarantee of rights of indigenous and minority peoples in accordance with universally recognized principles of international law and international obligations of Russia. The third example, the amended Art. 79bis of the Russian Constitution formalized two fundamental principles of international law within the Russian legal order: the principle of peaceful coexistence and the principle of non-interference. Three other constitutional amendments on the principles of Russian external relations that have been present in the Russian legal order since 1993 are also relevant. The first example, Art. 67(2bis) of the Russian Constitution formalized three grounds for changing Russian state borders (delimitation, demarcation, re-­ demarcation) that had been covered by relevant federal laws before the constitutional amendments of 2020.35 The second example, the amended Art. 69(3) of the Russian Constitution has been strengthened with the obligation of the state to protect the interests of ‘compatriots’ abroad but this provision has been in place in Russian federal law since 1999.36 The third example, the amended Article 79 of the Russian Constitution contains a provision that was already formalized by the Constitutional Court in its decisions.37

 Hazard (1990), pp. 303–305. See also, Feldbrugge (1973). The official Soviet doctrine of the application of international law explicitly stated that the Soviet Constitution of 1977 ‘possessed prior legal power upon the territory of the country and had priority over the international obligations of the country’, in Blatova (1987), p. 64. 33  Danilenko (1999), pp. 51–69. 34  Treaty of Succession in Relation to External Public Debt and Assets of the USSR, signed in Moscow, 04.12.1991 (Current International Law. Vol. 1. M. 1996). 35  Law of the Russian Federation on 01.04.1993 “Оn the Russian Federation State Boarder” (Vedomosti Syezda Narodnikh Deputatov I Verkhovnogo Sovieta Rosiyskoy Federatsii, 1993, No 17, art. 594). 36  Federal Law on 24.05.1999 No 99-FZ “Оn the Russian Federation State Policy in relation of foreign compatriots” (SZ RF, 1999, No 22, art. 2670). 37  Kalinichenko (2018), pp. 181–182. 32

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Furthermore, the constitutional amendments of 2020 reconfirmed the Russian Constitutional Court approach on primacy of the Constitution 1993 over decisions of international institutions. It allows the Russian Constitutional Court (new wording of Art. 125 § 5bis b) to consider the compatibility of binding acts of the bodies of the ECtHR, of the EAEU, of the Union State of Russia and Belarus’ as well as other supranational institutions to which Russia is a party, with the Russian Constitution of 1993. Although the amendments to Art. 79 of the Russian Constitution were criticized by the Venice Commission, it did not find direct violations of Russia’s commitments under the ECHR provisions therein.38 The new wording of Art. 79 of the Russian Constitution does not conflict with Art. 15(4) of the Russian Constitution and does not undermine primacy and direct effect of international law in the Russian legal order. The principles and other provisions of the Helsinki Act 1975 have always impacted on the relations between Russia and the EU and its Member States. Particularly, the good neighborliness principle is manifestly reflected in such common measures as the facilitation of visa treatment, encouraging local cross-border traffic, and supporting cross-border cooperation programs. Russia signed new agreements with Latvia and Estonia on the delimitation of borders. The EU created a special instrument to facilitate the production of transit documents for Russian citizens transiting EU territory from the Kaliningrad region to other parts of Russia and back. The Roadmap on the EU-Russia Common Space on Freedom, Security and Justice 2005 named the adherence to common values, notably to democracy and the rule of law as well as to their transparent and effective application by independent judicial systems, as a main principle of the EU-Russia cooperation in this field. Both parties in the framework of the Common Space on Freedom, Security and Justice have made beneficial practical steps in the field of border migration control and combating cross-border crime. Russia has never been a part of the European Neighborhood Policy, but the parties have historically tried to implement good neighborliness in the practice of their partnership.

4  C  onsequences of Approximation of the Russian Law with the EU Rules and Standard The years of the EU-Russia strategic partnership had multiple positive results, especially in creating a comprehensive legal basis between the parties. Modern EU-Russia relationships are essentially based on three legal layers. The first layer is the EU-Russia PCA and other EU-Russia bilateral agreements. The second layer  Opinion on draft amendments to the Constitution (as signed by the President of the Russian Federation on 14 March 2020) related to the execution in the Russian Federation of decisions by the European Court of Human Rights, adopted by the Venice Commission on 18 June 2020 by a written procedure replacing the 123rd Plenary Session, p. 68 (CDL-AD(2020)009-e).

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consists of different memorandums of understanding and other arrangements, which are considered soft law instruments. The third layer covers the Russian legislation and the EU acquis within the EU-Russia sectoral cooperation.39 Unfortunately, this legal framework is not sustainable because of its diversified nature. The EU-Russia legal background has become significantly depleted. Russia’s WTO accession in 2012 makes many provisions of the EU-Russia PCA outdated.40 To accommodate this new legal context, the EU and Russia concluded a number of sectoral bilateral trade agreements in 2011, but their effective implementation may face difficulties due to the lack of a new EU-Russia framework agreement.41 However, since the Ukrainian crisis in 2014 the EU-Russia relations have been consistently deteriorating. The European Parliament in its Resolution of 10 June 2015 stressed that the EU cannot envisage a return to ‘business as usual’ and had no choice but to conduct a critical re-assessment of its relations with Russia. It highlighted that because of its actions in Crimea and in Eastern Ukraine, Russia can no longer be treated or considered as a “strategic partner”.42 A new period of “frozen” partnership has started for both parties. This has led to mutual sanctions, a minimum of political contacts, and moved a “selective engagement” cooperation to the top of the negotiating agenda. The EU-Russia PCA remains the main legal basis for the approximation of Russian legislation in line with the EU law. The ‘approximation clause’ (Article 55 of the PCA) and other provisions of the EU-Russia PCA identified 18 crucial areas of legislative approximation of the Russian legislation with the EU law. These priority areas were further extended by the roadmap for the EU-Russia Common Economic Space of 2005 and the ‘Partnership for Modernization’ initiative 2010, which introduced the idea of ‘regulatory convergence’ between the parties as a soft version of legislative approximation in the most political sensitive fields of interaction, particularly the energy sector. In addition, one must emphasize the existence of constitutional and legal obstacles for effective legislative approximation in Russia. Some areas of legislative approximation provided for in the EU-Russia PCA are under joint jurisdiction of Russian federal and local authorities (for instance, environmental protection). Another problem is the absence of a special program of legislative approximation in Russia because of the pragmatic approach of the Russian government to the approximation process. As a rule, drafts of Russian laws do not contain any specific references or explanations on approximation with the EU rules. In the best cases, explanatory notes to the drafts contain only general references to ‘the international and European experience’. Consequently, in the most cases it requires deep

 Kalinichenko (2014), p. 247.  Van Elsuwege (2012). 41  Permanent Mission of the EU to the World Trade Organisation (2011). 42  European Parliament resolution of 10 June 2015 on the state of the EU-Russia relations (2015/2001 /INI), point 2. 39 40

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comparative analysis between the texts of a Russian law and an EU legal act to find any evidence of legislative approximation in Russia. Moreover, the legislative approximation in Russia embraces rules and standards developed by various international organizations beyond the EU. It pertains to the approximation of Russian legislation with WTO rules, which Russia joined six years ago, as well as the traditional influence on the domestic legal system of IMO, ICAO, and ILO rules. Lastly, there is the impact of Russia’s regional integration efforts. In 2010, Russia, Belarus, and Kazakhstan established a Custom Union with common customs rules and supranational institutions. Consequently, Russia has transferred its competence in the field of technical regulation and customs matters to the supranational Eurasian Economic Commission which is modeled on the EU.43 Indeed, the Eurasian Economic Commission’s and the Eurasian Court’s (the Eurasian Economic Community Court/the Eurasian Economic Union Court) structure and competence resemble the European Commission and the ECJ.  Moreover, following the Declaration on Eurasian Economic Integration of 2011, the EU is the most desirable partner for cooperation in different fields.44 In this context, the Treaty on Eurasian Economic Union (EAEU) signed in Astana on 28 May 2014 has created new expectations and new challenges for the post-Soviet area. The process of legislative approximation of Russian law with the EU law went beyond the scope of the approximation clause in the EU-Russia PCA. This process was exercised in line with priority areas of legal reform in Russia and thereby reflected the pragmatic approach of the Russian government towards the modernization of the Russian legal system.45 Two approaches of the legislative approximation of Russian legislation to the EU law can be highlighted. The first approach is the adoption of substantive legal transplants originating from the EU Member States. The second approach is the adoption of the EU acquis in line with the priority areas of the approximation clause in the EU-Russia PCA.

 Petrov and Kalinichenko (2016), p. 297. On the Eurasian Economic Union see also the contribution by Dragneva-Lewers in this volume. 44  The Draft of the Treaty of the Eurasian Economic Union (of 3.09.2012), available at: (accessed 1 May 2020). 45  After entering into force of the PCA, the Russian government developed a long-term plan to implement the PCA. The plan contains a description of measures to implement the provisions of the PCA, the responsible government agencies, and the durations. Most of the activities pointed out in this plan were to be implemented at the beginning of the twenty-first century; including the adoption of measures to ‘gradually ensure the compatibility of domestic legislation with EU legislation’. The bodies responsible for the implementation are the Ministry of Justice of Russia with the participation of relevant ministries and agencies, as well as Federal Statistic agency (Goskomstat). The idea is that these structures were supposed to ensure the development of a special program of approximation. See: Decision of the Government of the Russian Federation of 21.07.1998  N 809 “On Approval of Perspective Plan of Action for the implementation of the Agreement on Partnership and Cooperation establishing a partnership between the Russian Federation, on the one hand, and the European Communities and their Member States, on the other hand” (SZ RF, 17.08.1998, N 33, st.4043). 43

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On the first approach, it can be said that during the last 15–20 years, the Russian legal system has been significantly influenced by legal systems of some EU Member States. This influence materialized through Russia’s acceptance of substantive legal transplants originating from some EU Member States. Therefore, Russian company law, competition law,46 law in financial services, as well as legislation on safety at work have been gradually aligned with the EU standards and rules. The most significant application of this approach took place in civil law. The Civil Code of Russia of 1996 has been modeled on civil law traditions of West European countries, particularly on the Dutch Civil Code of 1992. In 2008, the President of Russia issued a Decree “On Improvement of the Civil Code of the Russian Federation”,47 which explicitly provided for “approximation of the provisions of the Civil Code to the rules regulating relations in the relevant EU law” and an “upgrade on the ground of the positive experience of the civil codes of several European countries”. This approach of encouraging the adoption of legal transplants from the EU Member States in the course of legal reform in Russia was supported by the ruling Russian political elite.48 The process of adoption of legal transplants originating from the EU Member States by Russia took place in public law too. Particularly, Russia incorporated German and French standards of Value Added Tax (VAT) into its national legal system.49 On the second approach of the process of legislative approximation in Russia, it can be emphasized that Russian legislation is based on EU sectoral acquis in line with the priority areas defined in the approximation clause of the EU-Russia PCA.  For example, in the field of securities market regulation,50 Russia implemented EU Directive 2003/6/EC of 28 January 2003 on insider dealing and market manipulation (market abuse),51 and the rules adopted by the European Commission under this Directive,52 as well as the best practices of its implementation in Germany and the United Kingdom.  Prosvetov and Shastitko (2005).  Decree of the President of the Russian Federation of 18 July 2008 No 1108 “On Improvement of the Civil Code of the Russian Federation” (SZ RF, 21.07.2008.No 29 (Part I), art.3482). 48  For example, former Russian President Dmitry Medvedev advocated the modernization of the Russian Civil Code provisions based on the norms of EU law and the law of its Member States. See: Medvedev (2007), p. 7. 49  Kozyrin (2009) p. 5. Also, appropriate provisions of the Russian Tax Code 1998–2000 consider the recommendations of the European Commission for tax reform in Russia. See Borzunova (2010), p. 121. 50  Federal Law of 27 July 2010 No 224-FZ “On Countering misuse of insider information and market manipulation and Amendments to Certain Legislative Acts of the Russian Federation” (SZ RF. 02.08.2010, No 31, art. 4193). 51  O.J. 2003 L 96/16. 52  An explanatory note to the act refers to the following acts of the Commission, which provisions were reflected in the above-mentioned Federal Law: Commission Directive 2003/124/EC of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards the definition and public disclosure of inside information and the definition of market manipulation (O.J. 2003L 339/70); Commission Directive 2003/125/EC of 22 December 2003 46 47

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However, it must be admitted that in some areas of legislative approximation (for instance, environment protection) Russia has not managed to achieve considerable progress regardless of technical and financial assistance from the EU.53 Furthermore, the process of legislative approximation in Russia is increasingly influenced by ‘back door’ legislative approximation with the EU acquis originating from the Eurasian integration model.54 The Eurasian integration structures have already indirectly implemented a considerable part of the EU sectoral acquis. For example, the provisions of the Custom Code of the Custom Union 2009 and technical regulations of the Eurasian Economic Commission are very similar to certain provisions of the EU acquis. Although the Eurasian Economic Commission does not pursue a formal legislative approximation with the EU acquis, potentially the process of informal legislative approximation with the EU law may gradually lead to regulatory convergence of the ‘Eurasian integration’ acquis with relevant EU acquis.55 Besides, the implementation of the EU-Russia bilateral agreements in the Russian legal order may also generate certain forms of regulatory convergence which are not based on formal legislative approximation by their nature. For instance, the notion of ‘readmission’ was introduced into the Russian legal order by the Federal Law of 27 July 201056 during the implementation of the EU-Russia agreement on readmission of 2006. Another example is the Facilitated Rail Transit Document for Russian citizens travelling to Kaliningrad through the territory of Lithuania. To enable the functioning of the Facilitated Rail Transit Document on the

implementing Directive 2003/6/EC of the European Parliament and of the Council as regards the fair presentation of investment recommendations and the disclosure of conflicts of interest (O.J. 2003 L 339/73); Commission Directive 2004/72/EC of 29 April 2004 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards accepted market practices, the definition of inside information in relation to derivatives on commodities, the drawing up of lists of insiders, the notification of managers’ transactions and the notification of suspicious transactions (O.J. 2004 L 162/70); Commission Regulation (EC) No 2273/2003 of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards exemptions for buy-back programmes and stabilisation of financial instruments (O.J. 2003  L 336/33). 53  Douma and Krasnova (2004), pp. 24–27. 54  On the notion of ‘back door approximation’ see Karliuk (2014). 55  Another supranational institution of the Custom Union—The Court of the Eurasian Economic Community has not applied the EU acquis yet. Since its establishment in December 2011, the Eurasian Court has considered only two cases. However, in the ONP case (judgment of the Appeals chamber of 21 February 2013) the Court of the Eurasian Economic Community referred to the case law of the European Court on Human Rights in the case of Credit and Industrial Bank v. Czech Republic (Application n°.29010/95, judgment of the European Court of Human Rights of 21 October 2003). It is the first direct evidence of the Europeanization of the Eurasian Economic Community Court practice. 56  Federal Law of 27 July 2010 No 180-FZ “On amendments to certain legislative acts of the Russian Federation in connection with realization of the Treaties of the Russian Federation on readmission” (SZ RF. 26.07.2010, No 30, art. 4011).

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territory of Russia, the Russian Government had to complement relevant EU acquis57 through the adoption of a national legal act.58

5  Application of EU Law by the Russian Judiciary The major incentive for Russian judges to apply the EU acquis stems from the EU– Russia PCA. More than 200 cases applying the EU–Russia PCA and about 1,000 cases with links to the EU law are known in today’s Russian judicial practice. There are approximately 200 cases in which the Russian courts applied the PCA and other EU-Russia agreements (particularly the EU-Russia Research and Technology Cooperation Agreement 2000 and the EU-Russia Visa Facilitation Agreement 2006). Twenty-five of these cases were considered in the practice of the higher courts, and seven cases were considered by the Russian higher courts during the period 2014–2017 (including the cases considered by the Court on intellectual property rights). The Russian judiciary treats the EU–Russia PCA as an international agreement that contains self-executing rules within the Russian legal order. In case of conflict, Russian judges prefer to acknowledge the priority of the EU–Russia PCA over national legislation.59 This makes the EU–Russia PCA an efficient instrument for bilateral cooperation without need for further implementation into the Russian legal system. Russian courts consider the EU-Russia PCA as an international agreement that guarantees the protection of rights and interests of Russian nationals and subjects in their economic relations with the EU.60 Thereto, Russian courts developed considerable experience in applying the provisions of the EU–Russia PCA in their decisions, although these deal mainly with cases related to economic fields (trade, customs, and tax). There is a very limited practice of Russian courts relating to democratic and human rights clauses in the EU–Russia PCA, as it mainly deals with EU-Russia economic relations. In general, the Russian judiciary has acknowledged the importance of the principle of the respect for democratic principles and human rights for the partnership between Russia and the EU as enshrined in Article 2 of the EU–Russia PCA. Respect for human rights, fundamental freedoms, and the rule of law are interpreted by Russian courts as principles corresponding to the provisions

 Council Regulation (EC) No 693/2003 of 14 April 2003 establishing a specific Facilitated Transit Document (FTD), a Facilitated Rail Transit Document (FRTD) and amending the Common Consular Instructions and the Common Manual (O.J. 2003 L 99/8). 58  Ordinance of the Russian Government of 23 June 2003 No 361 “On measures to fulfillment of the obligations taken by the Russian Federation in the Joint Statement of the Russian Federation and the European Union on transit between the Kaliningrad region and the rest part of the Russian Federation” (SZ RF. 30.06.2003, No 26, art. 2658). 59  More than 20 cases applying the PCA and about 100 cases with links to the EU law are known in the Russian judicial practice today. See: Petrov and Kalinichenko (2011), pp. 337–339. 60  Kalinichenko (2012), p. 184. 57

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of the Russian Constitution. Russian courts confirmed that these principles are of a legal nature and form the common values shared by the EU, its Member States, and Russia. For instance, in the British Bank v the Svyatoslav Fyodorov ‘Eye Microsurgery’ clinic case,61 the Russian Supreme Court considered that Article 98 of the PCA could form the legal ground for the execution of a judgment by a British court in Russia. The analysis of the case law of the Russian courts shows that, undoubtedly, the EU–Russia PCA found better reception by Russian courts in economic related fields. For instance, despite not being bound by WTO law before accession, Russian courts recognized the possibility of the application of selected GATT/GATS rules mentioned in the EU–Russia PCA.62 Russian courts applied the EU–Russia PCA in protecting the rights of European investors who exercised the freedom of establishment within the territory of Russia, based on the Most-Favored Nation (MFN) treatment under Articles 28 and 30 of the EU–Russia PCA. In the Volvo Car Corporation v Patent Dispute Chamber and ‘Verit’ v Patent Dispute Chamber cases, the Federal Arbitration Court of Moscow District confirmed that the EU–Russia PCA imposes binding commitments on Russia with regard to the protection of intellectual property rights, and therefore relevant provisions of the EU–Russia PCA have priority over relevant national legislation.63 In the Alternativa case, the Arbitration Court of Ivanovo Region referred to the Protocol to the EU-Russia PCA on the Union’s enlargement of 2004 to protect the interests of a Russian company which imported doors from Estonia and wanted to enjoy the MFN treatment as provided under the agreement.64 Furthermore, in their decisions Russian courts frequently referred to the EU– Russia sectoral agreements in science and technology, the export of certain steel products, and in tax cases. For example, the Arbitration Court of Moscow applied the provisions of the EU-Russia Agreement on cooperation in the field of science and technology (2000)65 and the EU-Russia Agreement on export of certain steel products (1997).66  Judgment of the Supreme Court of Russia of 7 June 2002 (5-G02-64).  For instance, Judgment of the Federal Commercial Court of North-West District of Russia of 8 October 1998, Master Shipping v Tax Office of St.-Petersburg (А56-11044/98), Judgment of the Federal Commercial Court of Moscow District of 7 April 1999 ‘Popelensky and Partners’ v Central Bank of Russia (КА-А40/824-99 BPP), Judgment of the Federal Commercial Court of Far East District of Russia of 24 September 2001 Sakhalinmorneftegas v Office for Monetary Control of Sakhalin Region (F03-А59/01-2/1791). 63  See Judgment of the Federal Commercial Court of Moscow District of 29 June 2005 (КАА40/5565-05) and Judgment of the Federal Commercial Court of Moscow District of 31 August 2005 (КА-А40/8111-05). 64  Judgment of the Commercial Court of Ivanovo Region of 13 October 2004 OOO “Alternativa” v. Ivanovo Custom Office (Case N А17-151А/5-2004). 65  See Judgment of the Commercial Court of Moscow of 2 September 2005 Compania Prikladnye Technologii v. Tax office of Moscow (А40-33242/05-114-247). 66  See Judgment of the Commercial Court of Moscow of 18 December 2006 Gruppa TransLiz v. Tax office of Moscow (А40-65629\06-127-356). 61 62

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In the opinion of some Russian judges, the binding and self-executing character of the EU–Russia PCA provides legal ground for the application of EU primary and secondary legislation in their judgments.67 Of course, Russian courts have never explicitly acknowledged that they should apply EU primary law or the principles of the EU law in their decisions. However, in the Nalchinsky Zavod Poluprovodnikovykh Priborov v Custom Office of Kabardino-Balkaria case, the Federal Arbitration Court of North-Caucasus District of Russia confirmed at appeal level that Russia was not bound by the EC Treaty but, at the same time, did not exclude the possibility of applying provisions of the EC Treaty if it follows from the objectives of the EU– Russia PCA.68 In the Beslan case, the Constitutional Court of Russia referred to the EU Framework Decision of 13 June 2002 on combating terrorism69 as a persuasive source of reference.70 Nevertheless, it would be premature to state that Russian courts consistently and systematically apply EU secondary law in their judgments. EU secondary law has been cited by Russian courts on several sporadic occasions. In some cases, these references were based on Article 55 of the EU–Russia PCA, which contains the soft obligation for Russia to approximate its legislation in a specific field to that of the EU.  This happened only in cases where Russian federal laws give preference to Russia’s international obligations over its national legislation.71 In other cases, references to EU secondary legislation were justified by mutual commitments to ensure equal treatment of Russian and EU nationals provided in the EU-Russia PCA. Furthermore, Russian courts referred to the ECJ case law. Looking at the pattern of application of the EU acquis by Russian courts more widely, we can make several observations. The first observation is that Russian judges do not apply the EU acquis as a separate source of law but consider it as a part of international public law. Russian judges are fully aware that the EU law is not binding in the Russian legal system, and therefore refer to EU legal sources exclusively through the prism of the EU–Russia PCA. However, in some cases, EU primary and secondary laws have found application in judgments of Russian courts not as a binding but as persuasive sources of law.72

 Judgment of the Federal Commercial Court of North Caucasus District of Russia of 2 July 2003 Nalchinsky Zavod Poluprovodnikovykh Priborov v Custom Office of Kabardino-Balkaria (F08-1873/2003-839А). 68  Ibid, paras 16 and 17. 69  O.J. 2002 L 164/3. 70  Order of 19 February 2009 No 137-O-O (not published officially). Available at: (accessed 1 May 2020). 71  Art 4(4) of Federal Law of 18 December 2002 No 184-FZ “On technical regulations” (SZ RF, 30.12.2002, No 52 (1), art.5140). 72  Order of the Constitutional Court of the Russian Federation of 19 February 2009 (137-О-О) (case Beslan mothers); Judgment of the Constitutional Court of the Russian Federation of 22 June 2010 (14-P) (case Malitsky); Order of the High Court of the Russian Federation of 31 July 2008 (КАS08-434) (case NPO “Rezonans”); Judgment of the Federal Commercial Court of Moscow District of 15 April 2009 (А40-31562/08-130-338) (case Natsrybkachestvo). 67

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A new flow of the cases arose because of the EU sanctions against Russia.73 The Russian government’s response was immediate and harsh. In accordance with the Russian President’s Decree of 6 August 2014,74 the Russian Government introduced certain special economic measures aimed to provide security.75 These measures included the banning of importing raw agricultural products and food from countries which had previously introduced sanctions against Russia. Thus, in 2014 Russia blocked European agricultural exports to Russia totaling 11.8 billion euros. However, these countersanctions had an “other side effect”. They have led to inflated prices on food within the Russian domestic market and have arguably cost the Russian people more than the EU sanctions.76 Furthermore, the Russian economic countersanctions were contested in the Supreme Court of Russia. For the first time, it refused to exclude some seafood products from the Russian ban list of imported products in the case of the Murmansk Rybokombinat company in 2014.77 In 2015, the Supreme Court of Russia rejected the claim of the Society for consumer rights protection ‘Public control in action’ to annul President’s and Government’s acts on economic countersanctions.78 Lastly, in March 2017, the Supreme Court considered the action of the Oktoblu company against the Customs body decision grounded on the Government’s act on economic countersanctions. The result was similar; the Supreme Court dismissed the action.79 Although these attempts were unsuccessful, they vividly demonstrate that the sanctions always concern both of the parties.

 Council Decision 2014/512/CFSP of 31 July 2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine, O.J. L 229, 31.07.2014, p.  13; Council Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine O.J. L 229, 31.07.2014, p. 1. 74  Decree of the President of the Russia Federation of 6 August 2014 No 560 “On Application of Certain Special Economic Measures Aimed to Provide Security of the Russian Federation”, Sobranie Zakonodatel’stva Rossiiskoi Federatsii [SZ RF] [Russian Federation Collection of Legislation] 2014, No 32, Item 4470. 75  Ordinance of the Government of the Russian Federation of 7 August 2014 No 778 “On Measures to Implement the Decree of the President of the Russia Federation of 6 August 2014 No 560 “On Application of Certain Special Economic Measures Aimed to Provide Security of the Russian Federation”, Sobranie Zakonodatel’stva Rossiiskoi Federatsii [SZ RF] [Russian Federation Collection of Legislation] 2014, No 32, Item 4543. However, the Russian Government mitigated the sanction later. 76  Kennedy (2014). 77  Judgment of the Supreme Court of the Russian Federation of 11.11.2014 No АКPI14-1124, Bulleten’ Verkhovnogo Suda RF [Bulletin of the Supreme Court of The Russian federation] 2015, No 10. 78  Order of the Supreme Court of the Russian Federation of 11.11.2015 in the case No АКPI15-1007, not officially published yet. 79  Order of the Supreme Court of the Russian Federation of 03.03.2017 No 305-АD17-43 in the case No А40-146689/2015, not officially published yet. 73

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6  Conclusions Since the Ukrainian crisis in 2014, the state of the EU-Russia relations has reached its lowest point. The parties have introduced mutual restrictive measures to each other and ceased close political and security dialogue. The EU has imposed almost all possible types of restrictive measures against Russia because of the Crimean crisis and the situation in the Eastern Ukraine. Russia reacted with counter restrictive measures against the EU and some other countries (USA, Canada, Japan, Australia, and other). Nevertheless, the EU-Russia relations have never deprived us of positive incentives and hopes.80 The EU External Relations Council formulated five short term principles for relations with Russia in March 2016.81 Furthermore, the idea of a common economic area from the Atlantic to the Pacific is still on the agenda of Russian external activity in accordance to its Concept of Foreign Policy 2016.82 The ‘war of sanctions’, which has frozen official contacts and negotiations has not achieved the expected results. This crisis can only be overcome through dialogue. Hopefully, both of the parties will be able to depart from their mutual ‘war of sanctions’. The sanction policy is unreasonable and destructive, especially concerning the Minsk II Arrangements and the beginning of peaceful resolution of the conflict in the Donetsk region and the Lugansk region of Ukraine. From the legal point of view, modern EU-Russian relations have great potential. First, the parties have refrained from the measures to abolish the legal basis of the relations. Although no longer a “strategic partner”, the legal basis of the relationship is the same. Second, the parties have simply frozen development of their legal framework without abolishing the results of prior negotiations. This leaves significant possibilities to return to the negotiating table, to renovate the PCA for the future. Third, the parties still continue following the existing bilateral agreements (e.g. PCA) in their relations. This is true especially in trade matters, in the area of freedom, security and justice, and in R&D activities. Fourth, the Europeanisation of the Russian law and judiciary is, undoubtedly, going on. In summary, it can therefore be said that the constitutional amendments of 2020 do not and should not directly impact the EU-Russia relations. Unfortunately, the current state of these relations is so low that it is difficult to talk about any potential negative impact of the amended provisions of Art. 79 and 79bis of the Russian  Kalinichenko (2016).  The five principles guiding the EU’s policy towards Russia are: (1). Implementation of the Minsk agreement as the key condition for any substantial change in the EU’s stance towards Russia; (2). Strengthened relations with the EU’s eastern partners and other neighbors, including in Central Asia; (3). Strengthening the resilience of the EU (for example, energy security, hybrid threats, or strategic communication); (4). The possibility of selective engagement with Russia on issues of interest to the EU; (5). Need to engage in people-to-people contacts and support Russian civil society. See; Outcome of the Council Meeting, 3457th Council Meeting, Foreign Affairs, Brussels, 14 March 2016, (7042/16, PR CO 16). 82  The Ministry of Foreign Affairs of the Russian Federation (2016) paras 63. 80 81

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Constitution on the future relations between the EU and Russia. It is believed that the scope and character of future EU-Russia relations will be determined by the nature of the EU and EAEU cooperation. Hopefully, initial contacts and negotiations between the European Commission and the Eurasian Economic Commission in July 202083 will bring the first positive steps towards establishing formal and effective relations between the two organizations, and this cooperation might contribute to solving many political, economic, and legal disputes between them.

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Leino P, Petrov R (2009) Between “common values” and competing universals – the promotion of the EU’s common values though the European neighbourhood policy. Eur Law J 5(15):669–670 Marosi I, Csink L (2009) Political questions in the United States and in France. Studia Iuridica Caroliensia 4:113–124 Medvedev D (2007) Civil Code of Russia: its role in the development of market economy and establishing the rule of law. J Civil Law 2:1–7 Permanent Mission of the European Union to the World Trade Organisation (2011) EU and Russia sign bilateral agreements ahead of Russia’s WTO accession ceremony (16/12/2011). Available at: http://eeas.europa.eu/delegations/wto/press_corner/all_news/news/2011/20111216_kdg_ rf_signature.htm. Accessed 1 May 2020 Petrov R, Kalinichenko P (2011) The Europeanization of third country judiciaries through the application of the EU acquis: the cases of Russia and Ukraine. Int Comp Law Q 60:325–353 Petrov R, Kalinichenko P (2016) On similarities and differences of the European Union and Eurasian economic union legal orders: is there the ‘Eurasian Economic Union Acquis?’. Legal Issues Econ Integr 43(3):295–307 Prosvetov V, Shastitko A (2005) Analysis of the currently effective antimonopoly law in the RF and comparison with the contemporary EU law. Possible options for increasing the efficiency of its enforcement in Russia. Analysis of anti-trust legislation and law enforcement in the EU. Russian-European Center for Economic Policy (RECEP) Rettman A (2014) Mogherini backs Western Balkan enlargement. Euobserver. https://euobserver. com/enlargement/125442. Accessed 1 May 2020 The Ministry of Foreign Affairs of the Russian Federation (2016) Concept of the Foreign Policy of the Russian Federation approved by President of the Russian Federation on 30 November 2016. Available at: http://www.mid.ru/en/foreign_policy/official_documents/-/asset_publisher/ CptICkB6BZ29/content/id/2542248. Accessed 1 May 2020 Van Elsuwege P (2012) Towards a modernisation of EU-Russia legal relations?. CEURUS EU-Russia Papers 2(5) Van Elsuwege P (2017) Judicial Review of the EU’s Common Foreign and Security Policy: Lessons from the Rosneft case. VerfBlog, 2017/4/06. Available at: http://verfassungsblog.de/ judicial-review-of-the-eus-common-foreign-and-security-policy-lessons-from-the-rosneftcase. Accessed 1 May 2020 Weinberg L (1994) Political questions and the guarantee clause. Univ Colorado Law Rev 65:849–946 Zorkin V (2004) Precedent character of the decisions of the constitutional court of the Russian Federation. J Russian Law 12:3–9 Paul Kalinichenko  holds a Doctor of Legal Science degree in International and European Law. He is a professor of European Law at Kutafin Moscow State Law University. He is also appointed as a Head of European Law Department of the Diplomatic Academy at the Russian Foreign Ministry and a Professor of the High School of Economics (Moscow). His research activities essentially focus on EU external relations law, EU economic law, the EU–Russia relations. He was engaged as a legal advisor in European law for the Ministry of Education and Science of Russia and for the Eurasian Economic Commission.

The EU and Belarus. Current and Future Contractual Relations Maksim Karliuk

1  Introduction EU-Belarus relations have seen many changes throughout the years, which have influenced the state of the contractual framework between the parties. In the mid-­1990s, the EU saw a deterioration of the political situation in Belarus and tried to exercise its influence to bring legal and political change. The EU sought Belarus to respect its international obligations on democracy, human rights, and the rule of law, and to cooperate fully with the OSCE and more actively engage with the Council of Europe in the domains of their corresponding expertise. The EU applied different approaches to reach these aims, both separately and cumulatively, including conditionality, isolation, and restrictive measures. These approaches coincided with an intensification of relations with the civil society. However, none of the approaches seemingly brought the results desired by the EU at the time.1 Later, following a short period of intensification of contacts, the EU became dissatisfied with the way the presidential elections were conducted in Belarus in 2010, which made doubtful the possibility of a positive change in Belarus. This led the EU to extend considerably its policy of restrictive measures towards certain Belarusian elites.2 Consequently, several cases were brought before the Court of  For a detailed overview see e.g. Van Elsuwege (2010).  See Delegation of the European Union to Belarus (2016). An unprecedented number of people (including governmental officials, judges, and businessmen) were added to the list of admission restrictions and freezing of funds and economic resources. In addition, an embargo on arms and related materials, ban on exports of equipment for internal repression, and ban on provision of certain services were introduced. 1 2

M. Karliuk (*) Higher School of Economics, Moscow, Russian Federation e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 S. Lorenzmeier et al. (eds.), EU External Relations Law, https://doi.org/10.1007/978-3-030-62859-8_15

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Justice of the European Union against the Council of the EU questioning the legality of its decisions against Belarusian individuals and companies.3 However, more recently, the relations started to improve, since, in the view of the EU, Belarus introduced measures that were in line with the EU’s vision.4 Particularly, it manifested itself in the release of political prisoners and in presidential elections that were free from violence in 2015, as well as, quite importantly, a rather neutral and helpful stance over the conflict in Ukraine. Belarus has been more proactive in the Eastern Partnership, and the negotiations on the Mobility Partnership were concluded. Belarus has also initiated the renewal of the annual EU-Belarus Human Rights Dialogue. Eventually, the EU lifted most of its restrictive measures in 2016.5 It has reinforced its financial support through the European Neighbourhood Instrument and has removed textile quotas for exports. It is engaging more into economic cooperation, primarily through such institutions as the European Investment Bank, whose mandate has been extended to include Belarus, and the European Bank of Reconstruction and Development, which has extended its financing activities. Regardless of these developments, the main international agreement between Belarus and the EU is still the one concluded by the Soviet Union.6 Although there are plans on changing the situation and concluding a new international framework agreement with the EU,7 it is clear that Eurasian integration is of primary importance for Belarus, since it has been for many reasons an eager proponent of closer integration with Russia and of Eurasian integration in general, which has led it to become the founding member of the Eurasian Economic Union (EAEU). This country report focuses on the following issues related to the EU-Belarus contractual relations. First, it provides an overview of the legal basis of the EU-Belarus relations. Second, it delves into the effect the international contractual obligations have in the domestic legal order of Belarus. This is necessary to understand how a possible EU-Belarus agreement would work in practice. Third, it looks into the interesting case of the World Trade Organization law being applicable on the territory of Belarus, without the country being a member thereof. This could be 3  See Case T-441/11: Action brought on 12 August 2011  — Peftiev v Council. O.J.  C 290, 01/10/2011 P. 0017 — 0017.; Case T-438/11: Action brought on 12 August 2011 — BelTechExport v Council. O.J. C 290, 01/10/2011 P. 0015 — 0015; Case T-439/11: Action brought on 12 August 2011 — Sport-pari v Council. O.J. C 290, 01/10/2011 P. 0015 — 0016; Case T-440/11: Action brought on 12 August 2011  — BT Telecommunications v Council. O.J.  C 290, 01/10/2011 P. 0016 — 0017. 4  See Council of the European Union (2016). 5  For a regularly updated full list of regulations and decisions introducing restrictive measures taken by the EU, including those against Belarus, see European External Action (2015). 6  Agreement between the European Community and the European Atomic Energy Community and the Union of Soviet Socialist Republics on Trade and Commercial and Economic Cooperation, O.J., 1990, L 68/3. 7  See ‘Makei: Belarus ready for new framework agreement with EU’, available at: http://www. belta.by/politics/view/belarus-hochet-zakljuchit-s-es-novoe-soglashenie-dlja-razvitijaotnoshenij-176293-2016/ (accessed 1 May 2020).

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of importance for the EU even in the absence of formal contractual relations. Fourth, since Belarus is a member of the EAEU, it requires taking this into account when envisaging any kind of agreement between the EU and Belarus. This part explains some competence issues thereof. Fifth, certain issues on the understanding of values are reviewed. Finally, some conclusions are made on the prospects of contractual obligations between the two parties.

2  Legal Framework of EU-Belarus Relations The Constitution of Belarus of 1994 (as amended in 1995, 1996, and 2004) formally recognizes the values common to the EU. The Constitution describes Belarus as a democratic state based on the rule of law where individual rights, freedoms, and guarantees to secure them are recognized as the supreme value and goal of the society and the state.8 An international agreement with the EU could possibly spur and promote these values. However, the legal framework of the EU-Belarus relations is rather limited and starts with the Trade and Cooperation Agreement (TCA) concluded by the then European Economic Community and the Soviet Union in 1989.9 The agreement was endorsed by Belarus after the dissolution of the USSR. The TCA was supposed to cease to exist pursuant to Article 108 of the Partnership and Cooperation Agreement (PCA)10 upon its entry into force. The PCA was indeed signed in 1995 and even ratified by Belarus.11 However, no ratification followed from the EU side because of a political setback in Belarus and, therefore, it is not in force to date. It should however be mentioned that Belarus does not rule out the possibility for this PCA to enter into force, and such prospect is even mentioned in the Concept of National Security of the Republic of Belarus which was adopted in 2010.12 The TCA is not comparable to the PCA as it is a trade agreement and does not provide for other commitments beyond that, particularly legislative approximation. It has rather modest objectives of promoting investment and economic cooperation  The Constitution of the Republic of Belarus, adopted on 15 May 1994, N 2875-XII (as amended by the republican referendums on 24 November 1996, 17 October 2004), Arts. 1 and 2. 9  Agreement between the European Community and the European Atomic Energy Community and the Union of Soviet Socialist Republics on trade and commercial and economic cooperation, O.J., 1990, L 68/3. 10  Proposal for a Council and Commission Decision on the conclusion of the Partnership and Cooperation Agreement between the European Communities and their Member States, of the one part, and Belarus, of the other part, 22 February 1995, COM(95) 44 final. 11  Enactment of the Supreme Council of the Republic of Belarus ‘On ratification of the Partnership and Cooperation Agreement between the European Communities and their Member States of the one part, and Belarus, of the other part’, adopted on 12 April 1995, N 3719-XII. 12  Edict of the President of the Republic of Belarus ‘On adoption of the concept of national security of the Republic of Belarus’, adopted on 9 November 2010, N 575, art. 19(5). 8

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in general, based on the principles of equality, non-discrimination, and reciprocity.13 However, apart from this outdated TCA, there are no substantial bilateral agreements between the EU and Belarus. Only specific agreements are in force.14 In 2011, the Council of the EU however authorized the European Commission to start negotiations on the Visa Facilitation and Readmission Agreements with Belarus,15 which have been signed on 8 January 2020.16 Due to the lack of substantial legal grounds of EU-Belarus relations and, mainly, since the EU has frozen the ratification of the PCA, it can be stated that, on the EU side, the EU-Belarus relations are currently mostly governed by successive conclusions of the EU Foreign Affairs Council. Regardless of the lack of a bilateral contractual framework, there are binding legal acts adopted in Belarus to foster the development of EU-Belarus relations and to encourage the EU to give legal effect to the PCA with Belarus. For example, the Concept of National Security states that Belarus intends to stir up interaction with the EU,17 develop full-scale relations with the EU Member States, maintain active dialogue with the EU on the issues of mutual interest with a prospect of concluding the Partnership and Cooperation Agreement as well as “abolition of discriminative measures against the Belarusian state”.18 Therefore, the Belarusian authorities seem to be interested in concluding the PCA with the EU since this aim forms part of a program document. If the EU-Belarus PCA (or any other international agreement between the parties) enters into legal force, it would constitute an inherent part of the Belarusian legal order as any other international agreement. However, this does not mean that its implementation into the legal system of Belarus would take place without legal challenges.  Petrov (2003).  Agreement between the Republic of Belarus and the Commission of the European Communities on the Establishing Privileges and Immunities of the Delegation of the Commission of the European Communities to the Republic of Belarus of 7 March 2008 (entered into force on 30 January 2009); Framework Agreement between the Commission of the European Communities and the Government of the Republic of Belarus of 18 December 2008; Agreement in the form of an Exchange of Letters between the European Community and the Republic of Belarus amending the Agreement between the European Community and the Republic of Belarus on trade in textile products, O.J., 2007, L 337/114. The last agreement is the renewed 1993 Textile Agreement setting quotas on Belarusian textiles exports. It has been renewed several times but ceased to exist in 2009. 15  Council conclusions on Belarus, 3065th Foreign Affairs Council meeting, Brussels, 31 January 2011; Note from General Secretariat of the Council to Coreper/Council 6354/11, 18 February 2011. Adoption of a Council Decision authorising the Commission to open negotiations for the conclusion of an agreement between the European Union and Belarus on the facilitation of the issuance of short-stay visas; Note from General Secretariat of the Council to Coreper/Council 6424/11, 18 February 2011. Adoption of a Council Decision authorising the Commission to open negotiations for the conclusion of a readmission agreement between the European Union and Belarus. 16  See European Commission (2020). 17  Edict of the President of the Republic of Belarus ‘On adoption of the concept of national security of the Republic of Belarus’, adopted on 9 November 2010, N 575, art. 19(5). 18  Ibid, art. 49(5)(14). 13 14

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3  International Law in Belarus The Constitution of the Republic of Belarus possesses the highest legal force on the territory of Belarus. It is believed that according to Napoleon, constitutions should be court et obscure, and, similarly, according to some of the American founding fathers—‘short and dark’.19 The Belarus’ Constitution is almost twice as long as the American one and it is, arguably, not as ‘dark’ either.20 However, there is an exception. A ‘dark’ spot of the Belarus’ Constitution, which interests us the most for the purposes of this country report, concerns the relation of international law and national law. The Constitution of Belarus is not clear on the effect of international agreements: The Republic of Belarus shall recognise the supremacy of the generally recognised principles of international law and shall ensure the compliance of laws therewith.21

Therefore, the Constitution does not provide for the priority of international agreements and only stipulates that the state shall recognize the supremacy of the universally acknowledged principles of international law and ensure that its laws comply with such principles. It means that the Constitution recognizes the supremacy of the generally recognized principles of international law rather than international agreements and the international law as such within the legal system of Belarus. Some of these principles are listed: In its foreign policy the Republic of Belarus shall proceed from the principles of equality of states, non-use of force or threat of force, inviolability of frontiers, peaceful settlement of disputes, non-interference in internal affairs and other generally recognised principles and norms of international law.22

Former head of the Constitutional Court believes that the universally acknowledged principles of international law are, in fact, higher than the national Constitution, and the latter must be interpreted in light of the former.23 At least as compared to the previous, 1978 Constitution of the Byellorussian Soviet Socialistic Republic, which referred to international treaties only on the competence of concluding and ratifying them, the current Constitution recognizes them as a source of law and refers to them six times in the text.24 One of the provisions precludes conclusion of international agreements that contradict the Constitution.25

 Frankenberg (2006).  Thus, there are no such debatable provisions as “proper and necessary” clause. 21  Art. 8(1) Constitution of Belarus. 22  Art. 18 Constitution of Belarus. 23  Vasilevich (2015), p. 104. 24   Pliakhimovich, Commentary to the Constitution of the Republic of Belarus, Minsk: Amalfeia, p. 209. 25  Art. 8(3) Constitution. 19 20

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Another notion used alongside ‘international treaties’ is ‘international legal acts’. The latter are used in the Constitution in the context of ratification,26 but can be understood as including such acts as international agreements and acts of international organizations, as well as international individual legal acts.27 The status of international agreements (and here we have in mind the possible international agreement with the EU) is not clearly defined in other national legislative acts either. In principle, it depends on the status of national legal acts, by which such agreements are adopted as binding. According to the Law on International Treaties, legal norms of international agreements concluded by Belarus form part of national legislation and are subject to direct applicability, apart from situations where it follows from the agreement itself that a national legal act should be adopted. In this case, international agreements essentially have the force of the ratifying act.28 A similar provision is part of the Law on Normative Legal Acts.29 This means that the legal force of Belarus’ international agreements is equated to that of national legal acts, by which such agreements are adopted as binding. Generally, in case of a collision between legal acts, the act with higher legal force is applicable. However, in case such acts are of equal legal force, the act adopted later takes precedence. Following this rule, as noted by L. Pavlova30 and A. Zybailo,31 the force of norms of an international agreement on the territory of Belarus can be annulled through adoption of a new law, decree, or edict. Similar provisions are part of the Civil Code, Bank Code, and several other legal acts.32 Only the Civil Procedure Code, Criminal Code, and Labour Code as well as a number of other laws give prevalence to international agreements in case of conflict with national legislation.33 Therefore, under these rules, the possible international agreement with the EU, which would have to be ratified by a national law, could in principle become lower in status than a future new act of national legislation. Hence, there is nothing to  Art. 61, Art. 116 (part 4) Constitution of Belarus.  Pliakhimovich, op. cit. 24, p. 248. 28  Zakon Respubliki Belarus’ ‘O mezhdunarodnykh dogovorakh Respubliki Belarus” (Law on international treaties of the Republic of Belarus), adopted on 23 July 2008, No 4213, Natsionalnyi reestr pravovykh aktov Respubliki Belarus’ (4 August 2008) No 184, 2/1518, Art. 33(2). 29  Zakon Respubliki Belarus’ ‘O normativnykh pravovykh aktakh Respubliki Belarus” (Law on normative legal acts of the Republic of Belarus), adopted on 10 January 2000, No 361-Z, Natsionalnyi reestr pravovykh aktov Respubliki Belarus’ (13 January 2000) No 2/136, Art. 20. 30  Pavlova (2011b, 2009). 31  Zybailo (2013). 32  Civil Code of the Republic of Belarus, adopted on 7 December 1998, No 2183, Art. 6; Bank Code of the Republic of Belarus, adopted on 25 October 2000, No 4413, Art. 3; Pavlova (2011a). 33  Code of Civil Procedure, adopted on 11 January 1999, No 2383, Art. 543; Criminal Code, adopted on 9 July 1999, No 2753, Art. 7 (on extradition); Labour Code, adopted on 26 July 1999, No 2963, Art. 8 (on agreements that are ratified and entered into force); Criminal Enforcement Code, adopted on 11 January 2000, No 3653, Art. 3 (prioritises self-executive norms of international agreements). See also the Investment Code, adopted on 22 June 2001, No 373, Art. 6(3); Marriage and Family Code, adopted on 9 July 1999, No 2783, Art. 237; Tax Code, adopted on 19 December 2002, No 1663, Art. 5; Air Code, adopted on 16 May 2006, No 1173, Art. 4; and others. 26 27

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prevent the rule lex posterior derogat legi priori. However, Vasilevich believes that this principle does not apply, but the principle lex specialis derogat legi generali applies instead.34 In this case, international agreements enjoy priority over any kind of laws, while still remaining lower than the Constitution, essentially claiming that the legislative provisions mentioned above are unconstitutional.35 At any rate, it is plausible that international law-friendly interpretation would give prevalence to such an international agreement over national legislation. In terms of direct applicability of international agreements, although the Constitution does not provide for a relevant formulation, Article 116 can be interpreted in such a manner, since the Constitutional Court can recognize laws, decrees, and edicts of the President unconstitutional, if they do not conform to ratified international legal acts.36 In any event, the overview above shows regulatory deficiencies on the status of international agreements in the national law of Belarus.

4  The Issues of the World Trade Organization Law The EU supports Belarus in its bid to become a member of the World Trade Organization (WTO) and helps in it by providing technical assistance through the TAIEX twinning instrument.37 However, interestingly enough, WTO law is already applicable in Belarus, although Belarus is not yet a member. This situation occurs by virtue of Belarus’ membership in the EAEU. Annex 31 to the EAEU Treaty provides for the Protocol on the Functioning of the EAEU within the Multilateral Trading System.38 It refers to the Treaty on the Functioning of the Customs Union within the Multilateral Trading System concluded on 19 May 2011,39 essentially extending its validity and introducing it into the EAEU legal framework. The Treaty on the Functioning of the Customs Union within the Multilateral Trading System (hereinafter ‘Multilateral Trading System Agreement’) was adopted to accommodate accession of the Customs Union member states into the WTO and, primarily, Russia, which acceded first. Eventually, Russia acceded in 2012 and its obligations became part of the EAEU law by virtue of Article 1(1) of the Multilateral Trading System Agreement:  Vasilevich, Constitutional basics of implementation of international treaties of the Republic of Belarus and norms of integration law, op. cit. 23, p. 124. 35  Vasilevich (2012), p. 37; I.I. Pliakhimovich, op. cit. 24, p. 244. 36  Art. 116(5). 37  See Delegation of the European Union to Belarus (2016). 38  Annex 31 to the Treaty on the Eurasian Economic Union. Protocol on the Functioning of the Eurasian Economic Union within the Multilateral Trading System. 39  Treaty on the Functioning of the Customs Union in the framework of the Multilateral Trading System of Mya 19, 2011. 34

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From the date of accession of any of the Parties to the WTO, the provisions of the WTO Agreement as set out in its Protocol of Accession, including the commitments undertaken by this Party as part of the terms of its accession to the WTO, which relate to matters that the Parties have authorized Customs Union Bodies to regulate in the framework of the Customs Union, as well as the legal relationships, regulated by the international treaties, constituting the legal framework of the Customs Union, shall become a part of the legal framework of the Customs Union.40

Thus, the WTO Agreement is part of the law of the Union in part, which is covered by the exclusive competence of the EAEU, on the conditions of the first member state acceding to the WTO, meaning Russia. Further, upon accession of other member states to the WTO, their obligations also become part of Union law. This means that even Belarus, not being part of the WTO, is bound by WTO legal norms. Although, there are caveats. Thus, member states that are not part of the WTO are allowed to deviate from WTO law, to the extent that (1) the EAEU law is required to be adjusted and/or (2) the national legal order autonomously regulates the matter in hand. To take advantage of this exception, Belarus would have to notify the Eurasian Economic Commission of the nature and extent of such deviations. Such exceptions cease to exist upon accession of Belarus to the WTO, unless it is expressly provided for by the terms of accession to the WTO.41 Further, WTO law has priority over EAEU law until the latter is amended to comply with the former.42 The rights and obligations of the member states stemming from WTO law cannot be abrogated or limited by Eurasian Economic Commission decisions, and international agreements within the EAEU or by the EAEU Court.43 Therefore, it is a rather interesting development in the binding legal framework which could be used beneficially by both the EU and Belarus in their trade relations.

5  L  egal Aspects of Belarus-EU Relations in Light of Participation in the EAEU Delving deeper into Belarus’ participation in the EAEU, it must be noted that EAEU is a ‘an international organisation of regional economic integration and shall have international legal personality’.44 The latter means that the EAEU can conclude international agreements. This does not preclude Belarus from concluding

 Art. 1(1) Treaty on the Functioning of the Customs Union in the framework of the Multilateral Trading System. 41  Art. 1(6) Treaty on the Functioning of the Customs Union in the framework of the Multilateral Trading System. 42  Art. 2(1) Treaty on the Functioning of the Customs Union in the framework of the Multilateral Trading System. 43  Art. 2(2) Treaty on the Functioning of the Customs Union in the framework of the Multilateral Trading System. 44  Art. 1(2) Treaty on the Eurasian Economic Union. 40

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international agreements as long as they do not conflict with the aims and principles of the EAEU Treaty: This Treaty shall not preclude the conclusion by the Member States of international treaties that are not inconsistent with the objectives and principles of this Treaty.45

The EU is Belarus’ second main trade partner, and the bilateral trade in goods has been growing. So far the Dialogue on Trade has been established, which serves the purpose of exchanging on regulatory issues and trade concerns.46 The conclusion of any international agreement between the EU and Belarus would require taking into consideration the competence of the EAEU. This is especially true of any agreements that would include trade in goods, since customs union policy is exclusive competence of the EAEU. Indeed, the EAEU Treaty identifies three types of policies: common policy, coordinated policy, and agreed policy. A common policy is the policy implemented by the Member States in certain spheres as specified in this Treaty and envisaging the application of unified legal regulations by the Member States, including on the basis of decisions issued by Bodies of the Union within their powers.47

In its advisory opinion, the EAEU Court has clarified that to ascribe certain sphere to a common policy, two conditions must be met: first, a unified legal framework must be present; second, member states must have conferred competences in this sphere to the bodies of the Union within their supranational powers.48 Thus, the notion of common policy corresponds broadly to that of exclusive competence in the EU.49 The EAEU Court has identified several policy areas that correspond to these criteria, and one of them is indeed the customs union policy as it requires unified legal regime and transfer of competence from the member states to the EAEU.50 Thus, EAEU’s involvement would be needed in several fields, which is complicated since there are no official relations between the EAEU and EU.51 This would not be easy for legal reasons as well, since the EAEU possesses its own complex legal system, a totality of legal rules collected under the notion of the ‘law of the Union’.52 The EAEU has developed its own rules for conclusion of international agreements, and has been active in pursuing external trade and economic cooperation and launched a process for a network of free trade agreements of its own. The

 Art. 114(1) Treaty on the Eurasian Economic Union.  See Delegation of the European Union to Belarus (2016). 47  Art. 2 Treaty on the Eurasian Economic Union. 48  Advisory Opinion N SE-2-1/1-17-BK, 4 April 2017. This view has been confirmed in the future cases, e.g. Advisory Opinion N SE-2-2/2-17-BK, 30 October 2017. 49  Art. 2 Treaty on the Functioning of the European Union. 50  Advisory Opinion N SE-2-2/2-17-BK, 30 October 2017. 51  There have only been some talks on some sort of possibilities. See e.g. A. Sytas, “Exclusive: Eu’s Juncker Dangles Trade Ties with Russia-Led Bloc to Putin,” available at: (accessed 1 May 2020). 52  Art. 6 Treaty on the Eurasian Economic Union. 45 46

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first of such agreement has been concluded with Vietnam in 2015.53 A few others have been concluded since, and the work is underway to negotiate further agreements.54

6  The Issue of Values The EU is strongly based on values, which are embedded in its legal system. Indeed, when discussing the nature of the law established by the EU Treaties, the CJEU stresses in its case law the importance of values. For instance, in one of its most recent cases, Slovakia v Achmea,55 the Court referred to mutual trust between the Member States on a set of common values on which the EU is founded, and that these values will be recognized, and therefore the law of the EU that implements them will be respected. The values are enumerated in Art. 2 TEU: The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail.

The Constitution of Belarus also provides in Art. 2 that “the individual, her rights, freedoms and guarantees for their attainment are the supreme goal and value of society and the States.” Further, although the Constitutional Court of Belarus recognizes the priority of EAEU law in particular fields,56 it has made it clear that priority cannot result in violation of constitutional rights and freedoms. In its essence, the Constitutional Court claimed the right to review EAEU legal acts on human rights grounds. This reasoning was grounded in the supremacy of the Constitution read jointly with the provision of the EAEU Treaty preamble stating unconditional respect for the supremacy of constitutional human rights and freedoms. The history of EU-Belarus relations, as described in the introduction, has shown that understanding of certain values differs drastically. Although the relations have

 Free Trade Agreement between the Eurasian Economic Union and its Member States, of the one part, and the Socialist Republic of Viet Nam, of the other part, 29 May 2015. 54  The EAEU has concluded preferential agreements with Iran, Serbia, and Singapore and a nonpreferential agreement with China. Negotiations are under way with Egypt, India, and Israel. The New Zealand and European Free Trade Association FTA projects were abandoned in 2014 in the aftermath of the fallout with the West. Available at https://bit.ly/2zgsb9e (07 May 2020). 55  Case C-284/16, Achmea, Eu:C:2018:158 (6 March 2018). 56  Decision of the Constitutional Court of the Republic of Belarus on 13 October 2016, No R-1069/2016 ‘On conformity of the Law of the Republic of Belarus ‘On technical requirements conformity assessment and accreditation of conformity assessment bodies’ to the Constitution of the Republic of Belarus), available at: (accessed 1 May 2020). 53

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been improving lately, it does not mean that the understanding has started to align. It is rather the result of several internal and external factors that convinced both parties to pragmatically pursue the improvement regardless of the remaining differences. The EU still has concerns over the situation on human rights and democracy (freedom of assembly and association, labour standards, freedom of speech and the media), particularly Belarus being the only European country to apply death penalty in practice. For these and other reasons, the EU-Belarus Coordination Group was established in 2016 as a forum for senior officials’ policy dialogue. On the same year, Belarus has adopted the ‘National Action Plan on Human Rights’.57 Given the rocky history of EU-Belarus relations, it is hard to predict whether this pragmatism will spill over to the alignment of interpretation of values. What can be said is that it opens the door to the improvement of the outdated legal framework of bilateral relations. Absence thereof does not allow Belarus to take full advantage of the European Neighbourhood Policy and Eastern Partnership, which limits Belarus’ participation in various European programs and dialogue.

7  Conclusion Belarus is not well integrated into the framework of common European values, standards, and legal rules compared to other members of the Eastern Partnership and beyond. Belarus has never voiced European aspirations, preferring instead deeper integration with Russia. It seemed that only in times of conflict with its Eastern neighbor, the Belarusian leadership turned to somewhat more pro-European rhetoric, although without any considerable implications. Recently, some changes in EU-Belarus relations have occurred, and the dialogue is growing. Belarus is trying to position itself as capable of being an equal partner to anyone and to balance its interests between the East and the West. This has not led to an overhaul of the contractual legal framework with the EU yet, which is still based on some outdated agreements and provisions. It seems that there is a growing interest on both sides and changes might follow. Until this happens, there are certain legal assurances for beneficial relations, which surprisingly flow from Belarus’ membership in the EAEU, particularly the applicability of WTO law in Belarus, albeit the country is not a member thereof. Although some new contractual legal framework between Belarus and the EU is imaginable, a comprehensive agreement is hardly possible. It follows primarily from Belarus’ membership in the EAEU and transfer of certain exclusive competences to the supranational level. This means that any comprehensive agreement with the EU would need involvement of the EAEU.

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