Update on EU trade and investment agreement negotiations: Indonesia, Mexico, Vietnam, and China

Negotiations for the Indonesia–EU FTA have been ongoing since 2016, with the ninth round taking place on June 15–26, 2020. The agreement covers both trade and investment, and the EC’s proposed investment chapter provides for the establishment of a court to settle any investor–state disputes arising under the agreement, in line with the push to establish an Investment Court System (ICS) in EU bilateral agreements.

According to the EC’s report on this most recent round, discussions on the investment chapter “were constructive following Indonesia’s internal consultations on the concept of the Investment Court System. In-depth discussions on several key policy issues took place, such as transparency, mediation, the Code of Conduct, and the issue of cost allocation (‘loser pays principle’).”

A sustainability impact assessment (SIA) of the agreement was completed in July 2020. Regarding the investment chapter, the SIA report recommends that the final treaty affirms the right to regulate, and in particular, that the treaty not be taken as a commitment that the parties “will not change the legal and regulatory framework, including in a manner that may negatively affect … covered investments or the investor’s expectations of profits,” including the removal of subsidies.

On April 26, 2020, the parties agreed on the final details of the EU–Mexico FTA. While the parties had reached an agreement in principle in April 2018, negotiations on specific chapters have been taking place over the last two years. The last chapters under negotiation concerned public procurement, including for sub-central governments. The agreement will now go through legal revision.

The Vietnam–EU FTA entered into force on August 1, 2020. The EU–Vietnam IPA was approved by the European Parliament in February 2020 but still requires ratification by the EU member states. The agreement with Vietnam, along with those with Canada, Singapore, and Mexico, includes the ICS.

The most recent round of the China–EU Comprehensive Agreement on Investment concluded on July 28, 2020. Recent rounds of negotiation have focused on market access, treatment of state-owned enterprises, state–state dispute settlement, sustainable development, transparency, CSR, and the environment. This latest round focused on level playing field disciplines (state-owned enterprises, transparency rules for subsidies, and rules tackling forced technology transfers).

Negotiations between the EU and New Zealand, Australia, Chile, and Uzbekistan are also ongoing.

The EC publishes a regularly updated overview of its trade negotiations.