A Study by Prof. Dr. Markus Krajewski, University of Erlangen-Nürnberg - 3 September 2011
- The European Commission (EC) recently proposed a new approach towards public services in the on-going negotiations with Canada on an Economic and Trade Agreement (CETA) which would significantly deviate from the standard model used in trade agreements so far. The CETA follows a negative list model of scheduling concessions which makes the wording and structure of reservations and exemption clauses particularly important.
- The EC proposal contains a general exemption clause for “non-economic services of general interest carried out in the exercise of governmental authority” and suggests that the scope of this clause should be determined on the basis of the case law of the European Court of Justice (ECJ). This is an ambiguous and potentially confusing clause which is at best useless if it duplicates the exclusion of these services from the scope of the agreement. If this clause replaces such a general exclusion clause, it substantially reduces the level of protection of these services. The reference to the case law of the ECJ could be part of an agenda setting attempt of the EC aimed at introducing internal market concepts into the debate on public services and trade agreements. This would reduce the autonomy of the Member States to determine what they consider non-economic services. In this context, it is also doubtful whether this clause could be reconciled with the objective of Article 2 of Protocol No. 26 to the Lisbon Treaty on Services of General Interest which maintains that the EU has no competence to regulate non-economic services of general interest.
- The EC’s proposal also contains a reservation for “public services” which is based on the so-called “public utilities clause” used in trade agreements so far. Compared with the standard model, the new approach uses the term “public services” which reflects a broad scope of the exemption better than the term “public utilities” which has been used previously. However, the scope of application of the exemption clause is reduced from “all sectors” to a hybrid sector called “public services”. Furthermore, the new proposal applies a procedural (functional) understanding of the term public services which is limited to services with specific public service obligations whereas the standard model refers to the understanding at the national, regional and local level. Like the standard model the new approach is limited to two types of market access restrictions (monopolies and exclusive service suppliers) and does not cover national treatment or other regulatory disciplines. This significantly reduces its value as a measure aimed at maintaining policy space for the organisation, provision and financing of public services.