The European Court of Justice has ruled that a 2014 trade deal with Singapore has to be approved by the 28 member states, as well as the European Commission and Parliament. That puts the deal in the same bracket as the CETA deal with Canada. That nearly foundered on complaints from a Belgian region, as outlined in Panjiva research of February 16.

There is also an impact on U.K. negotiations to sign a new trade deal upon its exit from the EU (aka “Brexit”). The court ruling found that while goods and services deals are solely in the purview of the European Commission, “mixed” deals need national approval. Mixed deals include broader terms on investment and investor-state disputes among others.

The ruling may have two implications. First, that a comprehensive Brexit deal would become a lot more complicated to implement. Second, that a two-step arrangement may be made with a pure goods-and-services deal separate to broader terms on standards. It seems unlikely that the latter would be acceptable to the EU, whose negotiating terms so far have clearly stressed the need to link all aspects of relations into one deal.

The decision firmly brings national politics into the analysis of how a deal will be constructed and subsequently approved. In that regard the U.K. faces elections – not just its own on June 8 – across 13 member states accounting for 52.8% of its trade in goods with the EU in the 22 months remaining until March 2019 when the exit takes effect. Some of these, such as Germany, are unlikely to involve changes in ruling parties. Others, as has just been seen in France after Presidential elections and before parliamentary elections on June 18, can bring significant change.

Vertical axis denotes total trade with the U.K. for the 12 months to January 31, based on U.K. ONS data. Horizontal axis shows date of next general election. Source: Panjiva

Update (5/17) – Report updated with terms on investment and dispute settlement