European Union Structure and FTA Ratification

The European Union (EU) is a group of 27 European countries that have joined together to work as one single market. Inside it, goods, services, money and people move freely, almost as if the EU were one country. Because all members charge the same import tax on goods coming from outside, no single member can sign its own trade deal. The EU signs trade deals for all 27 together, and every deal must pass through a fixed chain of approvals before it starts working.

Why does the EU sign trade deals as one?

The EU is a customs union. This means all 27 members charge the same tariff on goods entering from outside, called the common external tariff. Think of a housing society that has one main gate and one security rule for all visitors. No single flat can make its own gate rule. In the same way, France or Germany alone cannot cut tariffs for Indian goods.

Under Article 3 of the Treaty on the Functioning of the European Union (TFEU), the common commercial policy (trade policy with the outside world) is an exclusive competence of the EU. That means only the EU, not its members, can act in this area.

Where did the EU come from?

• 1951: Six countries (Belgium, France, West Germany, Italy, Luxembourg and the Netherlands) set up the European Coal and Steel Community.
• 1957: The Treaty of Rome created the European Economic Community (EEC), which led to a customs union by 1968.
• 1992: The Maastricht Treaty created the European Union. It came into force on 1 November 1993.
• 2009: The Lisbon Treaty came into force on 1 December 2009. It widened EU trade powers to cover services, intellectual property and foreign direct investment, and gave the European Parliament a veto over trade deals.
• 2020: The United Kingdom left the EU on 31 January 2020 (Brexit). Membership fell from 28 to 27.

The main EU institutions you must know

• European Commission: The EU's executive arm, based in Brussels. It has one Commissioner from each member state (27). It proposes laws and negotiates trade deals for the EU. The Trade Commissioner leads trade talks.
• Council of the European Union (also called the Council of Ministers): Ministers from each of the 27 national governments. It gives the Commission the mandate (permission and instructions) to negotiate, and later approves signing and conclusion.
• European Parliament: Directly elected by EU citizens every five years. After the June 2024 elections it has 720 members (MEPs). It must give consent before a trade deal can be concluded.
• European Council: The heads of state or government of the 27 members, plus its own President and the Commission President. It sets the big political direction but does not pass laws. Do not confuse it with the Council of the EU.
• Court of Justice of the European Union (CJEU): The EU's top court. It can give opinions on whether a planned agreement fits the EU treaties.

How does an EU trade deal get approved, step by step?

The rules are mainly in Articles 207 and 218 of the TFEU.

1. Mandate: The Council authorises the Commission to open talks and gives it negotiating directives (instructions).
2. Negotiation: The Commission negotiates with the partner country and keeps the Council and Parliament informed.
3. Legal scrubbing and translation: Lawyers check every line of the final text. It is then translated into the EU's official languages. This alone can take several months.
4. Proposal: The Commission sends the Council its proposals for signature and conclusion.
5. Signature: The Council adopts a decision allowing signature, and both sides sign.
6. Consent: The European Parliament votes on the deal. A simple majority of votes cast is enough.
7. Conclusion: The Council adopts the final decision to conclude the agreement. Both sides tell each other their approval is complete, and the deal enters into force on the agreed date.

How does the Council vote?

For most trade matters, the Council uses qualified majority voting (QMV). A decision passes if it gets 55% of member states (at least 15 of the 27) that together hold at least 65% of the EU's population. Some areas need unanimity (all members agree), for example certain deals on cultural and audiovisual services, or on social, education and health services. A simple example: if 16 small countries vote yes but together they hold only 30% of the EU's people, the decision fails.

EU-only deals vs mixed deals

This is the most important idea for timing.

• EU-only agreement: Covers only areas where the EU alone has power, like tariffs and most trade rules. It needs only the Council and the European Parliament. No national parliament votes. This is faster.
• Mixed agreement: Also covers areas where the EU shares power with its members. It must then be ratified by every member state, through its own national parliament (and in some countries, regional parliaments too). This can take years.

In 2017, the CJEU gave Opinion 2/15 (16 May 2017) on the EU-Singapore FTA. It said two parts did not belong only to the EU: portfolio investment (buying shares without control) and investor-state dispute settlement (where a foreign company can sue a government before an international tribunal). After this, the EU began splitting deals into two parts: a trade agreement (EU-only, faster) and a separate investment protection agreement (mixed, slower). The EU-Singapore FTA, split this way, entered into force on 21 November 2019.

Indian and global examples

• India-EU: Negotiations on three tracks were relaunched in June 2022: the FTA, an Investment Protection Agreement and an agreement on Geographical Indications (GIs). The FTA was concluded first, in January 2026, so it can follow the faster EU-only route. The investment pact is still under negotiation.
• EU-Canada CETA: A mixed agreement. In 2016 the regional parliament of Wallonia (in Belgium) briefly blocked its signing. Most of it has been provisionally applied since 21 September 2017, but it is still waiting for some national ratifications.
• India's own process: In India, signing and ratifying a treaty is an executive power of the Union government. The Union Cabinet approves it, and Parliament does not need to vote. Parliament gets involved only if a new law is needed to put the treaty into effect, under Article 253 of the Constitution.

Commonly confused concepts

• Council of the EU vs European Council vs Council of Europe: The Council of the EU is national ministers who make EU laws and approve trade deals. The European Council is heads of government who set direction. The Council of Europe is not an EU body at all; it is a separate human-rights organisation of 46 countries, based in Strasbourg.
• Signing vs ratification vs entry into force: Signing shows that both sides accept the final text. Ratification is each side's formal internal approval. Entry into force is the date when the rules actually start applying.
• Concluding negotiations vs concluding the agreement: "Negotiations concluded" (January 2026) means talks are over. "Conclusion of the agreement" in EU law is the final legal act by the Council after Parliament's consent.
• Customs union vs FTA: In an FTA, each member keeps its own tariffs for outsiders. In a customs union, members share one common external tariff. The EU is a customs union; an India-EU deal is an FTA.

Issues, criticism and the way forward

• Slow process: Even an EU-only deal needs legal scrubbing, translation into 24 languages, a Council decision and a Parliament vote. Mixed deals can be stuck for years, as CETA shows.
• Political risk in Brussels: The European Parliament can reject a deal. In 2012 it rejected ACTA (Anti-Counterfeiting Trade Agreement), showing its veto is real. Farm groups and some member states often raise worries about trade deals.
• Unfinished parts: Investment protection, a key concern for European companies, sits in a separate agreement that is still under negotiation.
• Way forward: Experts suggest keeping trade deals EU-only where possible, using provisional application where allowed, and finishing the investment pact quickly so that investors get full certainty.

Concepts to Know

• Customs union: A group of countries that remove tariffs among themselves and charge one common tariff on imports from outside.
• Exclusive competence: An area where only the EU, not its member states, can make laws and sign deals.
• Legal scrubbing: A careful line-by-line legal check of an agreed text to remove errors and confusing wording before signing.
• Provisional application: Using parts of an agreement for the time being, before every approval is complete.
• Investor-state dispute settlement (ISDS): A system that lets a foreign investor take a host government to an international tribunal if it feels its investment was treated unfairly.
• Geographical Indication (GI): A tag for a product linked to a place, like Darjeeling tea or Champagne, which only producers from that place can use.