This document presents the EU Council legal service’s analysis of whether the Brexit deal requires approval from both the EU and its Member States (a ‘mixed agreement’), or solely from the EU. It concludes that the EU can act alone due to the deal encompassing a blend of exclusive EU competences and competences shared between the EU and its member states. This aligns with Court of Justice of the European Union (CJEU) case law, which allows the EU to enact a treaty encompassing shared competences either independently or jointly with its Member States. (Key takeaways are also condensed in this Twitter thread).

I. Introduction

1. During the Coreper meeting on November 23, 2020, the Council Legal Service (CLS) representative presented their perspective on the legal classification of the developing agreement with the United Kingdom (UK), particularly addressing whether it constituted a mixed agreement or if the EU could act unilaterally using its “potential competence.” Since then, the EU and Euratom, along with the UK, signed the Trade and Cooperation Agreement on December 30, 2020.

2. In response to inquiries from several delegations during the UK Working Party meeting on January 13, 2021, this opinion aims to clarify and elaborate on the CLS’s previously stated position. It primarily delves into the EU’s potential competence – its authority in areas of shared competence not yet bound by common rules as per Article 3(2) TFEU and relevant case law – and its legal ramifications.

3. Given the time constraints surrounding the ongoing conclusion process, this opinion primarily addresses the Trade and Cooperation Agreement. It refrains from an exhaustive examination of all its facets or a comprehensive competence analysis.

II. Factual and Legal BACKGROUND

4. On February 25, 2020, the Council greenlit the initiation of negotiations with the UK for a future agreement[1], with the accompanying negotiating directives annexed[2]. This decision also appointed the Commission as the EU’s negotiator. Simultaneously, the Council and Member State representatives documented a statement[3] in the Council minutes. This statement saw the Member States authorize the Commission to negotiate aspects within their jurisdiction, acknowledging that whether the final agreement would be enacted by the EU alone or jointly with its Member States remained to be determined post-negotiation[4].

5. The negotiations concluded on December 24, 2020, yielding three agreements: The Trade and Cooperation Agreement; The Agreement on Security Procedures for Exchanging and Protecting Classified Information (supplementing the former); and an agreement between the UK and Euratom concerning cooperation on safe and peaceful nuclear energy applications. As stated, this opinion primarily concerns itself with the first agreement.

6. As outlined in its first article, the Trade and Cooperation Agreement “establishes the basis for a broad relationship between the [EU and the UK] within an area of prosperity and good neighbourliness characterised by close and peaceful relations based on cooperation, respectful of the Parties’ autonomy and sovereignty”[5]. When choosing to sign, the Council characterized the Agreement, using wording from Article 217 TFEU on association agreements, as “[establishing] the basis for a broad relationship between the [EU and the UK] involving reciprocal rights and obligations, common actions and special procedures.”[6]

7. The Trade and Cooperation Agreement with the UK outlines procedures for a vast spectrum of areas, including but not limited to trade (goods, services, investments), digital commerce, capital and payment flows, intellectual property, public procurement, energy, aviation and road transport, fisheries, social security collaboration, short-term visa-free travel (Part Two), law enforcement and legal cooperation in criminal matters (Part Three), targeted cooperation (health, cybersecurity) (Part Four), and participation in EU programs (Part Five).

Underpinning these are provisions for a shared institutional structure (Part One), including a dispute resolution framework (Part Six), and ensuring a level playing field between both parties. The agreement encompasses 49 annexes and three protocols: one addressing administrative cooperation and combating fraud in value-added tax, along with mutual assistance in recovering tax-related claims; another on mutual administrative support in customs; and a third on coordinating social security.

Article Two of the Agreement designates future bilateral agreements between the EU and UK as “supplementing agreements” to the primary agreement unless stated otherwise, and integrates them into the overarching framework governing the bilateral relationship[7].

8. On December 29, 2020, the Council ratified Decision No (EU) 2020/2252 concerning the signing (on behalf of the Union) and provisional implementation of both the Trade and Cooperation Agreement and the Security of Information Agreement. This will be referred to as ’the decision on signature’[8].

9. Through this decision, the Council, “in view of the exceptional and unique character of the Trade and Cooperation Agreement, which is a comprehensive agreement with a country that has withdrawn from the Union (…) [decided] to make use of the possibility for the Union to exercise its external competence with regard to the [UK]” (recital 6). The Council thus opted for the Trade and Cooperation Agreement to be enacted as an EU-exclusive agreement, explicitly stated in the decision on signature.

The reasoning behind this is detailed in recital 6, “in view of the_ exceptional and unique character of the [Agreement],” and indirectly in recital 16. The latter cites the UK’s withdrawal from the Union as justification for the agreement’s provisional implementation, placing the UK “in a different and exceptional situation with regard to the Union compared to other third countries.” The cooperation level between the two entities was expected to diminish after the transition period (during which EU regulations still applied to the UK). To mitigate potential disruptions arising from this shift, provisional implementation of the Trade and Cooperation Agreement was deemed necessary.

10. Recital 15 and Article 10 of the decision on signature explicitly outline the consequences and boundaries of this political choice. They stipulate that “the exercise of Union competences through the Trade and Cooperation Agreement shall be without prejudice to the respective competences of the Union and of the Member States in any ongoing or future negotiations for, or signature or conclusion of, international agreements with any other third country, or in relation to any future negotiations for, or signature or conclusion of, any supplementing agreements [to the Trade and Cooperation Agreement]”.

11. On December 25, 2020, the Commission proposed a Council decision regarding the enactment of the Trade and Cooperation Agreement[9], with internal discussions ongoing.

III. Legal Analysis

12. The CLS was asked to provide its perspective on the Trade and Cooperation Agreement’s legal nature, particularly regarding the EU’s potential competence, the agreement’s EU-only nature, and its implications for Member States. As noted in paragraph 3, the CLS will not delve into a title-by-title analysis or perform a granular assessment of each provision’s competence.

A. EU exclusive and shared competences, as interpreted by the Court of Justice

13. As per Article 3(1) TFEU, the EU possesses exclusive competence in specific domains, notably the customs union, setting competition rules for the internal market’s functionality, preserving marine biological resources under shared fisheries policies, and common commercial policy.

14. Article 3(2) TFEU states that the EU “also [has] exclusive competence for the conclusion of an international agreement (…) in so far as its conclusion may affect common rules or alter their scope”. The Court, in its Broadcasting Convention Case judgment[10], clarified that this clause essentially codifies the AETR/ERTA jurisprudence[11].

15. Articles 4(1) and (2) TFEU outline shared competences as follows:

“1. The Union shall share competence with the Member States where the Treaties confer on it a competence which does not relate to the areas referred to in Articles 3 and 6.

2. Shared competence between the Union and the Member States applies in the following principal areas:

(a) internal market; (…)

(e) environment;

(f) consumer protection;

(g) transport; (…)

(i) energy

(j) area of freedom, security and justice

(k) common safety concerns in public health matters (…)”

16. The Court consistently asserts that EU Member States’ commitments risk impacting common EU regulations or altering their scope, justifying exclusive EU external competence under Article 3(2) TFEU when these commitments fall under those pre-existing regulations[12].

17. This potential risk does not necessitate complete overlap between areas covered by international commitments and existing EU regulations. Specifically, common EU regulation can be affected if commitments fall within an area largely governed by such regulations. Additionally, this risk manifests when international commitments, even without direct conflict, influence the interpretation, breadth, and efficacy of existing EU regulations[13].

Evaluating the relationship between an international instrument and pertinent EU regulations necessitates considering the areas each covers, anticipating their future development, and analyzing their nature and content. This determines whether the instrument could potentially hinder the uniform application of EU law and the smooth operation of the system it establishes[14].

B. Consequences of EU exclusive competences on the Member States

18. The EU’s internal exercise of its competences impacts Member States. Should the EU obtain exclusive competence, Member States lose the ability to enter into international agreements outside the framework of EU institutions within areas falling under said exclusive competence[15].

19. Conversely, if the EU hasn’t exercised its shared competences in a specific area, Member States retain the right to exercise their own “to the extent that the Union has not exercised its competences” (Article 2(2) TFEU). This applies externally when analysis of a potential international commitment concludes that the criteria for exclusivity outlined in Article 3(2) TFEU (as interpreted by the Court’s extensive case law on external competences – see paragraphs 16 and 17) are not met. Consequently, Member States can exercise their competences.

20. For instance, the EU has yet to establish universal internal rules concerning air traffic rights for third countries. Therefore, the authority to enact agreements with third countries on such matters has not become an exclusive competence of the EU [16] and can be exercised by either the Member States or the EU [17].

C. Mixity of international agreements: obligatory or facultative

21. As per the principle of conferral (Article 5 TEU), an international agreement is considered “mixed” - requiring signing and enactment by both the EU and its Member States – if it concerns competences belonging to both.

22. Two types of mixity exist: obligatory and facultative.

Obligatory mixity occurs when, in addition to areas under EU jurisdiction, the proposed agreement covers areas outside its purview – where the Treaties haven’t conferred competence to the EU. In these situations, the agreement requires enactment by both the EU and its Member States.

Facultative mixity arises when the proposed agreement covers areas where the EU has potential, yet unexercised, shared competences, or areas lacking common rules that the agreement could impact, as detailed in Article 3(2) and relevant case law. In such cases, the agreement can be enacted by either the EU alone or jointly with its Member States. The Council decides whether to utilize all potential EU competences, determining if the agreement is EU-only or mixed. This political decision rests on relevant Treaty provisions dictating EU competence.

23. In its opinion on the Singapore FTA[18], the Court clarified the division of competence between the EU and its Member States regarding trade and investment. It determined that the Singapore FTA primarily fell under exclusive EU competence, covered by either the Common Commercial Policy (including foreign direct investment, defined in Article 207(1) TFEU) or the Common Transport Policy (Articles 91 and 100(2) TFEU)[19].

24. Within the same opinion, the Court reaffirmed foreign direct investment as an exclusive EU competence. However, for provisions concerning indirect investment (portfolio investment), the competence is “shared between the European Union and the Member States pursuant to Article 4(1) and (2)(a) TFEU”[20]. Regarding exercising such potential shared competence, the Court clarified in its judgment in Weddell that, “(…) the mere fact that international action of the [EU] falls within a competence shared between it and the Member States does not preclude the possibility of the required majority being obtained within the Council for the [EU] to exercise that external competence alone.”[21]

25. In instances of facultative mixity where the EU has competence over the agreement’s covered areas, with at least some falling under its potential competence, Member States can still exercise this potential competence if they choose. However, the Council can decide, for a particular agreement, to exercise potential EU competence based on the relevant Treaty legal basis[22] and its voting rules. Whether to exercise this potential competence when enacting an agreement is a political decision for the Council[23].

26. This differs from obligatory mixity, where the agreement partially covers areas within the EU’s jurisdiction and areas entirely outside it. As stated in paragraph 22, mixity in this case is not optional but a legal obligation[24].

27. It’s important to note that enacting mixed agreements presents procedural and political complexities, evident in the ratification processes of recent mixed agreements. Enacting a mixed agreement necessitates ratification not only by the EU (enactment by the Council, usually with the European Parliament’s consent), but also by each Member State according to their constitutional requirements. Typically, the EU waits for all Member State ratifications before enacting the agreement itself. This can be time-consuming, contingent on each Member State’s individual ratification process. In contrast, an EU-only agreement needs only the EU’s ratification, significantly expediting the process.

D. The particular case of the trade and cooperation agreement with the UK

28. While this analysis doesn’t permit a deep dive into the individual titles and clauses, a cursory review of the Trade and Cooperation Agreement reveals no scenarios requiring obligatory mixity: the EU holds competence in all areas addressed.

29. For instance, the CLS points out that provisions related to trade or fisheries found in Heading One of Part Two (Trade) and Heading Five of Part Two (Fisheries) fall under exclusive EU competence as per Article 3(1) TFEU. Other provisions, such as Title II of Heading Two (Aviation safety) or those in Part Three (Law enforcement and judicial cooperation in criminal matters), cover matters that have become exclusive through enactment or are significantly governed by existing EU regulations that the agreement will or risks impacting[25].

30. Conversely, certain provisions, like those concerning traffic rights in aviation, belong to shared EU competences not yet exercised internally, making them potential EU competences. Regarding these, the Council could opt to exercise these non-exclusive potential competences while adopting the decision on signature, thereby making the Trade and Cooperation Agreement an EU-only agreement.

31. On December 29, 2020, when adopting the decision on signature, the Council made the political choice to exercise EU competence in areas where it held potential competence. This decision carries legal weight, coming into effect the same day and leading to the Trade and Cooperation Agreement’s provisional implementation on January 1, 2021. Consequently, the Agreement must be concluded as an EU-only agreement.

32. As previously established (paragraphs 21-25), the EU can only enact an international agreement if the Treaties grant it the competence to do so, adhering to the relevant legal basis. In this case, the Trade and Cooperation Agreement was signed and provisionally applied under Article 217 TFEU (substantive legal basis) in conjunction with relevant procedural legal bases (Article 218(5) and (8) TFEU).

33. Article 217 TFEU empowers the EU to establish an association agreement with a third country, outlining mutual rights and obligations, shared actions, and specific procedures. The agreement’s scope should remain within the powers bestowed upon the EU by Member States within the Treaties to achieve their objectives[26]. Article 217 TFEU applies when the EU has competence – when the Treaty grants appropriate competence to the EU for the areas addressed in the agreement – even if not fully exercised or only potential. However, Article 217 TFEU is not applicable if there’s no underlying competence; the sectoral competence must pre-exist for Article 217 TFEU to serve as a legal basis.

34. Article 217 TFEU allows the EU to unanimously enact a broad agreement covering areas within its jurisdiction without requiring a detailed breakdown of where its competences are exercised or not. This can include areas requiring unanimity or qualified majority voting based on the sectoral legal basis, as well as areas of potential, unexercised EU competence.

E. Exercise vis-à-vis the UK of the EU shared competence in social security coordination and aviation traffic rights

35. To illustrate, the EU has shared competence in coordinating social security (Articles 48 TFEU) and has enacted several agreements with third countries on this matter. This is typical for association agreements under Article 217 TFEU. Notably, incomplete freedom of movement for individuals does not preclude the EU from enacting an agreement concerning social security coordination [27]. Agreements with third countries covering this area are generally mixed agreements. However, given the EU’s competence in this domain, opting for an EU-only agreement is possible.

36. Similarly, the EU holds shared competence in air transport (Articles 91 and 100(2) TFEU). Once the EU exercises this internally, it gains exclusive external competence concerning matters affecting those internal rules. As the EU hasn’t established internal regulations for air traffic rights for third countries, agreements on this matter are often mixed (facultative mixity), with the Council deciding whether to exercise its external competence.

F. Effect for Member States of the EU exercising its shared (potential) competence

37. The EU exercising the above competences concerning a specific third country doesn’t prevent Member States from exercising their competence on the same matter with other third countries. For example, the EU has had an aviation agreement with Switzerland for over 20 years [28], encompassing traffic rights. This hasn’t prevented Member States from making similar agreements with other nations.

38. Therefore, the Council opting for an EU-only agreement for the Trade and Cooperation Agreement with the UK does not restrict Member States from exercising their national competences concerning other countries within the same area of potential EU competence. The EU exercising its potential competence concerning the UK in these areas doesn’t trigger exclusivity regarding other third countries. Member States remain free to enter international agreements within these areas of shared competence with nations other than the UK, just as they were before the Trade and Cooperation Agreement. As stated in paragraph 10, and explicitly confirmed by recital 15 and Article 10 of the decision on signature, this possibility stands.

G. Provisions on possible so-called “top-ups” by Member States

39. Furthermore, the Trade and Cooperation Agreement allows, or at least doesn’t preclude, Member States from entering bilateral agreements with the UK concerning air transport, customs and VAT administrative cooperation, and social security coordination[29]. Member States can do so provided these agreements align with EU law, don’t hinder the Agreement’s functionality, and meet the criteria outlined in Articles 6-8 of the decision on signature. These articles describe an internal information and cooperation mechanism between Member States and the Commission, culminating in the potential authorization of bilateral arrangements or agreements between individual Member States and the UK in these areas.

40. This mechanism embodies the duty of sincere cooperation expected of Member States (Article 4(3) TEU)[30], which applies universally and isn’t contingent on the nature of the competence in question[31]. Member States are obligated to refrain from actions potentially jeopardizing EU objectives and must ensure such arrangements or agreements are compatible and don’t undermine the Trade and Cooperation Agreement. By framing and regulating the possibility of bilateral agreements (so-called “top-ups”) supplementing the Trade and Cooperation Agreement (as permitted or not prohibited by the agreement itself), this mechanism highlights the Agreement as part of EU law, binding as per Article 216(2) TFEU, and therefore taking precedence.

41. This internal mechanism’s existence is independent of the specific competence. For instance, the Trade and Cooperation Agreement sees the EU exercising its external competence regarding specific traffic rights concerning the UK. The Agreement allows certain bilateral agreements to supplement it, contingent on the terms outlined therein[32], while also explicitly prohibiting further “top-ups” (Article AIRTRAN.23)[33]. The internal authorization process detailed in Article 6 of the decision on signature regulates the approval of permitted “top-ups”. Therefore, regarding “top-up” agreements concerning air traffic rights, the authorization mechanism represents more than just sincere cooperation. It’s necessary because the previously unexercised shared external competence regarding traffic rights concerning the UK is now governed by the Trade and Cooperation Agreement, which takes precedence and falls under exclusive EU competence vis-à-vis the UK. However, as established in paragraphs 37-38, and reaffirmed by recital 15 and Article 10 of the decision on signature, this EU competence isn’t exclusive concerning other nations.

42. Lastly, the CLS reiterates its position, stated at the Coreper on January 22, 2021, that contrary to the Commission’s statement (recorded in the Council minutes on December 29, 2020, concerning the adoption of the decision on signature[34]), it sees no legal barrier to a legal act based on Articles 217 and 218 TFEU (like the decision on signature or the Council’s future decision on enacting the agreements) containing an internal mechanism for authorizing bilateral arrangements or agreements between specific Member States and the UK. Such authorization or empowerment mechanisms can be outlined in a legal act based on the relevant sectoral substantial legal basis (a legislative act) or an act adopted by the Council concerning the signing and conclusion of international agreements[35].

IV. Conclusion

The Council Legal Service maintains its stance: since the Trade and Cooperation Agreement solely covers areas where the EU has competence (exclusive or potential), it can be enacted as an EU-only agreement based on Article 217 TFEU. The Council opted for this when adopting the decision on signature on December 29, 2020.

[1] Council Decision (EU, Euratom) 2020/266 of 25 February 2020 authorising the opening of negotiations with the United Kingdom of Great Britain and Northern Ireland for a new partnership agreement (OJ L 58, 27.2.2020, p. 53).

[2] Doc 5870/20 ADD 1 REV 3, Annex to Council Decision authorising the opening of negotiations with the United Kingdom of Great Britain and Northern Ireland for a new partnership agreement, 25 February 2020.

[3] Annex B of Doc. 6239/20.

[4] “[T]he Member States’ representative authorise the Commission to conduct negotiations in areas (…) that fall within the competences of the Member States (…)” and “the question of whether the (…) agreement will be concluded by the Union or by the Union and its Member States will be determined at the end of the negotiations.” (emphasis added).

[5] See Article COMPROV.1 (Purpose) of the Agreement. This wording is similar to that in Article 8(1) TEU on the EU’s relationships with neighbouring countries.

[6] See recital 5 of Council Decision (EU) 2020/2252 of 29 December 2020 on the signing, on behalf of the Union, and on provisional application of the Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part, and of the Agreement between the European Union and the United Kingdom of Great Britain and Northern Ireland concerning security procedures for exchanging and protecting classified information (OJ L 444, 31.12.2020, p. 2).

[7] See Article COMPROV.2 (supplementing agreements).

[8] See above footnote 7.

[9] COM (2020) 856 final.

[10] Case C‑114/12, Commission v. Council (’Broadcasting Convention’), judgment of the Court (Grand Chamber) of 4 September 2014, EU:C:2014:2151, paragraphs 66 and 67. See also Opinion 1/13 of the Court of Justice (Grand Chamber) of 14 October 2014, Child Abduction Convention, EU:C:2014:2303, paragraphs 69 to 74.

[11] Case 22/70, Commission v Council (‘ERTA’), judgment of 31 March 1971, EU:C:1971:32, paragraphs 17 to 19: “17. 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 may take, the Member States no longer have the right, acting individually or even collectively, to undertake obligations with third countries which affect those rules. 18. As and when such common rules come into being, the Community alone is in a position to assume and carry out contractual obligations towards third countries affecting the whole sphere of application of the Community legal system. 19. With regard to the implementation of the provisions of the Treaty, the system of internal Community measures may not therefore be separated from that of external relations.”

[12] Opinion 2/91 of the Court of Justice of 19 March 1993, ILO, EU:C:1993:106, paragraph 25; Case C-467/98, Commission v Denmark (‘Open Skies’), judgment of the Court of 5 November 2002, EU:C:2002:625, paragraph 82; and Opinion 1/03 of the Court of Justice (Full Court) of 7 February 2006, Lugano Convention, EU:C:2006:81, paragraphs 120 to 126.

[13] See Opinion 2/91 ILO (op. cit. footnote 13), paragraphs 25 and 26; Judgment in ‘Open Skies’ (op. cit. footnote 13), paragraph 82; Opinion 1/03 Lugano Convention (op. cit. footnote 13), paragraphs 120 and 126; Judgment in ‘Broadcasting Convention’ (op. cit. footnote 11), paragraphs 68 to 73; as well as Joined Cases C‑626/15 and C‑659/16, Commission v Council (‘Weddell’) judgment of the Court (Grand Chamber) of 20 November 2018, EU:C:2018:925, paragraphs 113 and 114 and the case-law cited.

[14] See Opinion 3/15 of the Court of Justice (Grand Chamber) of 14 February 2017, Access Rights, EU:C:2017:114, paragraph 108 and the case-law cited.

[15] Opinion 2/91 ILO (op. cit. footnote 13), paragraphs 25 and 26; Judgment in ‘Open Skies’ (opt. cit. footnote 13), paragraph 82.

[16] Judgment in ‘Open Skies’ (opt. cit. footnote 13), paragraphs 90 to 92.

[17] See CLS opinion in 5990/18 on the Regulation on competition in air transport, paragraphs 23 and 24.

[18] Opinion 2/15 of the Court of Justice (Full Court) of 16 May 2017, Singapore FTA, EU:C:2017:376.

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