{"id":8315,"date":"2021-03-23T08:48:36","date_gmt":"2021-03-23T13:48:36","guid":{"rendered":"https:\/\/cf.iisd.net\/itn\/?p=8315"},"modified":"2024-08-09T18:31:39","modified_gmt":"2024-08-09T16:31:39","slug":"eu-and-china-announce-an-in-principle-investment-agreement","status":"publish","type":"post","link":"https:\/\/www.iisd.org\/itn\/2021\/03\/23\/eu-and-china-announce-an-in-principle-investment-agreement\/","title":{"rendered":"EU and China announce an “in principle” investment agreement"},"content":{"rendered":"

On December 30, 2020, after seven years of discussion, Brussels and Beijing announced the conclusion of the negotiations for an \u201cin principle\u201d Comprehensive Agreement on Investment (CAI) between China and the European Union. The deal, the draft<\/a> of which was released on January 22, was celebrated by the European Commission due to the Chinese commitment to granting a higher level of market access to EU<\/span> investors, including opening new markets and ensuring fair treatment for EU companies operating in the country. Overall, according to some observers, the CAI is expected to create a better balance in EU-China trade, addressing asymmetries regarding European market openness, although there is room for improvement<\/a> regarding its labour and environmental provisions.<\/p>\n

According to the President of the European Commission<\/a>, the CAI is \u201can important landmark in our relationship with China and for our values-based trade agenda. It will provide unprecedented access to the Chinese market for European investors, enabling our businesses to grow and create jobs.\u201d Ursula von der Leyen added that the deal \u201cwill also commit China to ambitious principles on sustainability, transparency, and non-discrimination. The Agreement will rebalance our economic relationship with China.\u201d<\/p>\n

The Europeans praised the CAI for the broader access of EU investments to the Chinese market, enabling competition on a more level playing field in China, including the country\u2019s commitment to disciplining state-owned enterprises, transparency of subsidies, and rules against the forced transfer of technology. Key sectors of the European economy are expected to benefit from the agreement, such as manufacturing, including the production of electric cars, chemicals, telecoms, and health equipment. The Chinese government also committed to EU investment in numerous services sectors, such as cloud services, financial services, private health care, environmental services, and international maritime and air transportation.<\/p>\n

As IISD<\/span> has observed<\/a>, the EU\u2019s high expectations are due in part to the \u201cnegative list\u201d approach, which means that all sectors come under the purview of the agreement, except those specifically listed. Thus, experts have argued<\/a> that the \u201cnegative list\u201d demonstrates the Chinese \u201cdetermination to promote a wider, broader, and deeper opening-up to the outside world.\u201d<\/p>\n

Nevertheless, as schedules and annexes to the agreement have not been released, it may be <\/a>that China\u2019s commitments do not go beyond domestic reforms such as the Foreign Investment Law<\/a>, which came into effect last year.<\/p>\n

Sustainability and labour<\/h3>\n

Within CAI\u2019s framework, Brussels and Beijing also agreed on sustainable development, environmental, and climate commitments, including the full implementation of the Paris Agreement and the prohibition of lowering environmental protection standards to attract investment. According to the European Commission, sustainable development issues will be subject to a strict enforcement mechanism by an independent panel of experts.<\/p>\n

In addition, the agreement establishes that both parties should adopt corporate social responsibility (CSR<\/span>) and responsible business practices, as well as the ratification of ILO<\/span> fundamental conventions, especially commitments on the ratification of the two conventions on forced labour<\/a>.<\/p>\n

The implementation of all commitments outlined in the CAI will be monitored by the EU Executive Vice-President and the Chinese Vice-Premier. The text is now being translated and reviewed by both sides before being submitted to the respective parliaments. The EU and China are committed to finishing up the negotiations on investment protection and investor\u2013state dispute settlement within two years after CAI\u2019s signing.<\/p>\n