The EU closes an investment agreement with China

The pact aims to improve the access of European investors to the Chinese market

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After almost seven years of negotiations, the European union a controversy closed this Wednesday investment agreement with China which aims to improve European investors’ access to the Chinese market, but which raises suspicions in the Biden administration even before taking office.

An extraordinary summit by video call, on the verge of the end of the year, which brought together the Presidents of the Commission and the European Council, Ursula Von der Leyen y Charles Michel, con Xi Jinpin, además del francés Emmanuel Macron and the chancellor Angela Merkel it has served to give the last push and close the deal. The role of the German, who has made relations with China one of her priorities during the rotating presidency of the Council, has been fundamental.

China is one of the Union’s largest trading partners. According to Eurostat, the EU exported goods worth 198 billion euros in 2019 to the country. In total, the commercial flow between the two exceeds 500 billion euros. The investment treaty will remove barriers to investment in China for European companies in various sectors.

The Commission defends that the agreement achieves important advances in some of the friction points such as the access to the financial market for European companies, the level of transparency regarding the rules that regulate public companies or state aid, in addition to issues related to the intellectual property and the forced transfer of technologies.

“The agreement rebalances business and investment relationships. It includes important provisions regarding sustainable development, climate, environment and labor standards, “argue European sources after the conclusion of the agreement.

US misgivings

Throughout the negotiation, the European Parliament has pushed for respect for the regime’s human rights to be the basis of any agreement with China. The EU has toughened its language on Beijing in recent months, harshly condemning the violence in Hong Kong or the repression against the Uyghur minority in recent months, but when push comes to shove, the agreement falls far short of the expectations of the European Chamber.

The text barely requires the Chinese administration to implement the conventions on labor rights which has already signed in the context of the World Labor Organization and makes “sustained and continuous efforts” to ratify those pending, especially the one relating to the prohibition of forced labor. The EU has included similar clauses in agreements with other countries with much less political and economic power, such as Vietnam, with little success.

For some member states, the accelerator has been stepped on to close an agreement that should have been consulted with the Biden administration, even having awaited the inauguration of the newly elected president of the United States. For others, there are not enough safeguards for the protection of human rights.

Before the announcement of the imminent agreement just a few days ago, Jake Sullivan, Biden’s Security Advisor, said on Twitter that the shadow administration would appreciate consultation with the european partners “on possible shared misgivings about China’s economic practices.” It does not appear to have been the case.

During today’s summit, Brussels and Beijing addressed other issues that are also not important to the United States, such as the reform of the World Trade Organization, the excess capacity in sectors such as aluminum or steel or subsidies to industry, pending issues on the EU-China agenda.

Now the twenty-seven will have to approve the text so that the ratification process can begin, which passes through the favorable vote of the European Parliament -which is unknown- and, potentially, of the national houses of representatives. The implementation of the agreement will be subject to China meeting its commitments, particularly on labor issues, according to European sources.

The leaders of the 27 and China should have met this year during a summit in September in Germany that had to be canceled due to the health situation as a result of the pandemic. That summit remained on videoconference, but it laid the foundations of an agreement that in 2019 the leaders committed to closing this year. This is just the beginning, say European sources who insist that Brussels and Beijing will continue to make progress in trade cooperation.

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