Angela Merkel did not want to leave the presidency of the European Union without concluding, in extremis, a political agreement committing China to better treat European companies on its territory. Frustrated at not having been able to bring together a large gathering of heads of state and government in Leipzig in the presence of Xi Jinping, in September, the chancellor tears off a text which, on paper, rebalances trade relations between the EU and the China.
Ursula von der Leyen and Charles Michel, joined by Angela Merkel and Emmanuel Macron, therefore had this final video exchange with the Chinese president. But the game is not fully played: the protagonists give themselves two years after the signing to complete the negotiations on the protection of investments and the settlement of disputes concerning investments in line with the work of the Multilateral Court of investment by UNCITRAL (United Nations Commission on International Trade Law).
Mistrust
Not everyone is delighted with this forced march, the result of negotiations started in 2014. And taking their word for Chinese commitments would be unbounded naivety. In the European Parliament, Manfred Weber (CSU), the leader of the Christian Democrats, if he welcomes this agreement which does not leave Europe on the wayside, reminds that in the name of European trade, we cannot not completely turning a blind eye to the Chinese regime’s abuses. “This is why modern trade policy today must be linked to our principles, to our program, which is shaped by our values,” he stresses. And this specifically means that the issue of forced labor and the issue of labor standards are part of modern commercial contracts.
China is said to have pledged to “effectively implement” the ILO conventions it has ratified and to work for “the ratification of fundamental ILO conventions, including on forced labor.” It claims that it will not attempt to lower the standards of protection in order to attract investment and will promote responsible business conduct of its companies. The agreement creates a specific working group to monitor the implementation of issues related to sustainable development, including labor and climate. But there is still a long way to go…
More transparency on subsidies
How to trade fairly with China when it massively subsidizes its companies and requires foreign companies established on its territory to transfer technology? Not even to mention the role of the Chinese Communist Party present in all major companies … According to the investment agreement concluded, China is not giving up subsidies, but would accept more transparency in this area. It would renounce forced technology transfers. Finally, Beijing has made commitments to open up its manufacturing sector, including the production of electric cars, chemicals, telecommunications equipment and health equipment. European companies could acquire Chinese companies or found new ones. Beijing would also open up the sector of “cloud” services, financial services, private health care, environmental services, international shipping and air transport-related services. In the sectors thus opened, it undertakes to put an end to discriminatory practices.
A control mechanism by independent experts
At present, Europeans invest in China mainly in the automotive sector (28%), in basic materials, including chemicals (22%), in financial services (9%), in agriculture and food (8%), in consumer products (7%), in energy (5%), machinery and equipment (5%), in health (5%) and biotechnologies (5% ).
Since promises cannot be kept, the agreement would be based on “a strong enforcement and monitoring mechanism” by a group of independent experts. It will be up to the European Commission to ensure the implementation of the commitments of the agreement on the EU side. When France presides over the European Union, in the first half of 2022, a progress report will be made, because at that point the investment agreement will be supposed to be implemented. The EU press release does not mention the access of European companies to Chinese public markets.
A peak in physical presence in 2021
Europe is also pleased that China has set itself the goal of achieving carbon neutrality by 2060 (10 years after the EU). A possible field of cooperation? It is not certain. The EU is due to put in place a carbon border tax within a few years, which will mainly target Chinese imports. Not sure Beijing is thrilled.
President Michel recalled the invitation to President Xi to join an EU-China leaders’ meeting with the participation of heads of state and government of EU member states to be held in Brussels in 2021. Si the fight against the pandemic allows it …
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