Source: http://europeanlawblog.eu/2013/09/06/the-cjeu-s-volte-face-on-trips-in-light-of-treaty-modifications/
Timestamp: 2019-04-22 02:29:30+00:00

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The summer holidays are over and it is time to start with a particularly interesting Grand Chamber ruling by the CJEU from this summer. In Case C-414/11, Daiichi Sankyo Co. Ltd, Sanofi-Aventis Deutschland GmbH v DEMO Anonimos Viomikhaniki kai Emporiki Etairia Farmakon, the CJEU turned its highly contentious Opinion 1/94 on its head in light of a number of Treaty changes to the scope of the common commercial policy. Significantly, the Court seems less concerned with the potential ‘abuse’ of certain legal bases by regulating ‘internally’ through international agreements. The CJEU also clarified its case law on the distinction between the scope of article 114 TFEU (internal market) as opposed to article 207 TFEU (common commercial policy).
The scope of the CCP is probably one of the most hotly debated areas between the Commission on the one hand, and the Council and the Member States on the other hand. The reasons are obvious. The CCP is exclusive EU competence, so the broader it is construed the less Member States can act themselves. Moreover, the CCP concerns an area of foreign policy, a particularly politically sensitive area. In the early days, the CJEU interpreted the CCP relatively broadly (see in particular Opinions 1/75 and 1/78), but this momentum came to a complete stop in Opinion 1/94. In that Opinion the CJEU had to assess the competence of the EU under the CCP to conclude the World Trade Organisation Agreements.
The WTO Agreements are pretty comprehensive in scope, including trade in services (GATS) and harmonizing trade-related aspects of intellectual property rights (TRIPS). The EU’s exclusive competence to conclude the agreements in these matters was fiercely contested by the Council and the Member States, and one of the reasons they brought forward to limit the scope of the CCP was that it would serve as a means to ‘get around’ other legal bases and harmonize laws internally within the EU without having recourse to the proper legal basis for it. Of course, it is notoriously difficult to demarcate between internal and external trade. Internal harmonization can have significant external trade effects and can serve as a means to regulate external trade without formally doing so. In the same way, a measure intended to harmonize trade between the EU and its trading partners can have substantial impacts on the regulation of internal trade as well.
60) If the Community were to be recognized as having exclusive competence to enter into agreements with non-member countries to harmonize the protection of intellectual property and, at the same time, to achieve harmonization at Community level, the Community institutions would be able to escape the internal constraints to which they are subject in relation to procedures and to rules as to voting.
These are classic conferral of powers arguments, noting simultaneously the importance of division of competences and procedure on the one hand, and trying to delimit the scope of the CCP vis-à-vis the internal market legal basis on the other hand. The main argument was that the TRIPS Agreement did not specifically relate to international trade. Apparently, only if an agreement (and TRIPS in particular, note that TRIPS stands for trade related aspects of intellectual property) specifically relates to international trade, it falls within the scope of the CCP, and as such cannot be used to circumvent article 114 TFEU or other legal basis for that matter.
In subsequent Treaty amendments the old article 113 EC has been amended as to include ‘commercial aspects of intellectual property’ as part of the Common Commercial Policy. The question before the Court in this case was thus whether ‘that significant development of primary law’ would make the Court change its views expressed in Opinion 1/94. In fact, it did so quite substantially. The Court first stated that Opinion 1/94 was no longer relevant in this case (para 48) and proceeded with a fresh start on whether the TRIPS agreement fell within exclusive competence.
This is actually not very far off from what the CJEU held in Opinion 1/94. However, it then proceeded to interpret the new addition in article 207 TFEU of ‘commercial aspects of intellectual property’ in light of this case-law. The CJEU thus stated that ‘[i]t follows that, of the rules adopted by the European Union in the field of intellectual property, only those with a specific link to international trade are capable of falling within the concept of ‘commercial aspects of intellectual property’ in Article 207(1) TFEU and hence the field of the common commercial policy.’ (para 52).
Thus, whereas in Opinion 1/94 the CJEU had concluded that most of TRIPS did not specifically relate to international trade, here it stated that there was a specific link with international trade and thus the agreement did fall within the scope of the CCP. The CJEU mentioned the WTO Dispute Settlement Procedures which emphasized the specific link with international trade, adding thereby an argument it had not used in Opinion 1/94. It proceeded with a textual argument by noting that according to article 207 (1) TFEU ‘the ‘commercial aspects of intellectual property’ are now fully part of the common commercial policy; the authors of the FEU Treaty could not have been unaware that the terms thus used in that provision correspond almost literally to the very title of the TRIPs Agreement.’ I find this quite ironic in light of paragraph 57 of Opinion 1/94 where the CJEU ignored the very title of TRIPS to conclude that it dealt with harmonization, not trade regulation.
This is a somewhat logical conclusion in my opinion. Let’s assume hypothetically that the EU has adopted a certain product rule, for example regulating the percentage of carbon allowed in widgets, and this product rule creates significant barriers to trade between the EU and the US which has its own product rule on widgets. It would make sense that an agreement between the EU and the US to set one standard or to agree on mutual recognition would fall within the scope of the CCP, since such an agreement relates specifically to international trade and has a direct and immediate impact on trade between the other countries. In that respect, the EU legislator, when regulating the EU internal market, will need to comply with the international agreement and cannot deviate from it. It is clear then that the CCP can have consequences for the exercise of competences in other fields, but this is the same for instance if a regulation would be adopted under article 207 TFEU. That regulation needs to take into account international agreements concluded by the EU on the basis of other legal bases.
However, the CJEU did not truly address the question of potential abuse of article 207 TFEU, and I will be curious to discover whether the CJEU might invalidate the conclusion of, let’s say, an international agreement between Liechtenstein and the EU which entails substantial harmonization of rules on tobacco products. This would arguably be struck down on the basis that such a rule does not specifically relate to international trade, but I think there is a pretty grey area between the Liechtenstein example and the US example.

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