When China joined the WTO in 2001 it agreed to reform and liberalise important parts of its economy. Investment deal talks were going smoothly between China and the European Union, Beijing said on Thursday, dismissing a report they had been … Based on this deal, European companies active in these industries would indeed see new opportunities in China. Given the geopolitical context and current tensions in EU-China relations, the agreement should be seen as a test for the future trajectory of the relationship. Negotiate and conclude a comprehensive EU-China Investment Agreement that covers issues of interest to either side, including investment protection and market access. Between 20 and 24 April 2020 the 28th Round of the EU-China Comprehensive Agreement on Investment (“CAI”) negotiations took place by means of videoconference. China and the EU are currently negotiating a new, far-reaching investment treaty called the EU-China Comprehensive Agreement on Investment (CAI). Can the investment agreement really improve the business environment for foreign companies? Mikko Huotari: The negotiations for the Comprehensive Agreement on Investment (CAI) represent the EU’s most important attempt to rebalance the EU-China economic relationship. And if the agreement stays in the current form (without substantial improvements on effective ILO commitments), Europe will also lose credibility as a normative and principled power – the price for more market access will be giving up on an admittedly limited opportunity to shape human rights developments and labor conditions in China. A comprehensive EU-China investment agreement will benefit both the If confirmed, the deal — known as the Comprehensive Agreement on Investment — has the potential to reshape economic ties between China and the EU even as political divisions remain. Last week, reports surfaced that the 27-nation bloc, currently led … It would require shrewdness and a lot of political capital in Brussels and capitals to credibly pursue this dual-track approach of greater transatlantic coordination and a privileged relationship with China. Subscribe to our “China Briefing” and “China Industries Briefing”. China has also not made substantial commitments regarding labor rights as enshrined in International Labor Organization (ILO) conventions which can be criticized in light of forced labor allegations in China and as a fair competition challenge. Bilateral trade exceeded $650 billion last year, and the new agreement aims to build on that. For example, companies are expected to localize their supply chains and shift R&D and higher value parts of their manufacturing processes to China. In a scoping paper compiled by Jessica Lawrence and commissioned by Heinrich Böll Foundation, we focus on the potential risks for the EU from enshrining rights for Chinese investors in Europe in an inter-national investment treaty. If Europe concludes this agreement, it is likely to lose some trust with like-minded partners including the U.S. who do not necessarily see this deal as a sign of Europe’s “strategic autonomy”. If signed, the CAI represents another major achievement for China in carving out an economic space for … This deadline was agreed at the EU-China Summit in April 2019 and President Xi reminded European of the importance of striking a deal before year-end during the EU-China Virtual Summit in … Despite all the possible shortcomings of the agreement, given the current level of tensions, the EU and China would both benefit from anchoring the relationship in a new contractual arrangement and understanding that both sides are able, in principle, to get to negotiated agreements, including on critical issues. Just a few days ago, the Chinese National Development and Reform Commission (NDRC) issued new regulations for investment scrutiny that are likely to at least partially contradict any future market opening. China is willing to work together with the European Union (EU) for an early conclusion of the negotiations for the China-EU investment agreement, Chinese Premier Li Keqiang said on Wednesday. Eu-China Comprehensive Agreement On Investment (Eu-China Cai) Beyond strictly bilateral relations, their trade and investment behaviour is also influenced by other external factors related to their global role and their relations with other countries and regional alliances. So far, the negotiations for the Comprehensive Agreement on Investment (CAI), which had started in 2013, are proving difficult at best. China scrambles to shore up support for investment agreement with EU 24 Dec 2020 “A good, balanced deal is better than a premature one.” Also on … While the CAI is an advanced version of a bilateral investment treaty (BIT) it cannot solve issues that are not part of the agreement. The European People’s Party (EPP), the largest group of the European Parliament, believes that the progress of the negotiation of a comprehensive investment agreement between China and Europe is encouraging. Cookie Policy We use cookies to find out more about your use of our Site and your preference in order to improve our services to you. Chinese leaders will also appreciate that signaling a possible conclusion of the deal will complicate transatlantic rapprochement on China policy. On many of these issues, European negotiators have achieved progress, which can also benefit other like-minded partners. More broadly, the Communist Party’s efforts to reassert control over the economy have accelerated in 2020. Foreign companies that do not comply with these expectations and do not make these adjustments could put their long-term business prospects at risk. The experts of the Mercator Institute for China Studies are available to comment on current news, as panelists or as op-ed authors. “such an agreement can make it easier for European enterprises to participate in China’s economic growth”. Max J. Zenglein: The market access and level playing field promises of CAI need to be seen in the context of larger ongoing developments in China. The EU-China Investment Agreement will provide for Looking at the scope of the agreement alone, it promises improvements for European actors regarding market access, non-discrimination and operating conditions in China. Nevertheless, concluding – or not concluding – the agreement would have wider political repercussions. Photo: Bloomberg China / Diplomacy China … Last Friday, a tentative document was discussed at a meeting of ambassadors in Brussels, which is expected to be followed by top-level leaders’ discussion in the last days of December. Any further substantive market opening in China will materialize only if it helps Chinese leaders achieve these priorities. It also commits China to increasing purchases of U.S. manufacturing, energy and agricultural goods and services by at least $200 billion over two years. The coming months will show whether, while the CAI details might be put down on paper, relevant European leaders also seek alignment and greater leverage with like-minded partners with the same energy as they are currently pursuing the rapprochement with China. Schumannstraße 8 The EU negotiators will have delivered for European business as the agreement potentially improves on a difficult status quo. Transparency requirements for subsidies and SOE disciplines requiring them to operate on the basis of commercial considerations would represent significant steps forward. The EU wants the Comprehensive Agreement on Investment to open up China’s market and eliminate discriminatory practices, but critics say that … 2. Comprehensive Agreement on Investment between the European Union and its Member States, of the one part, and the People's Republic of China, of the other part. The EU and China are in their seventh year of talks aimed at a comprehensive investment treaty. The CAI is so cover both investment protection Even with a political decision to conclude the deal being taken, important details will still need to be hammered out in coming months and ratified, at least by the European Parliament. Negotiations for the EU-China Comprehensive Agreement on Investment, which would grant European companies greater access to the Chinese market, have gone on for six years. Chinese policy makers, responding to increased geopolitical risk and seeking to reach ambitious industrial upgrading targets, are currently reshaping the market environment for foreign companies in China. The agreement promises improvements when it comes to reciprocity in Europe-China economic relations and market access for European companies in China. Concluding the CAI now will require doubling the efforts to achieve progress on these issues in future. Relevant market opening commitments were made in financial services, telecommunications services, new energy vehicles, air and water transportation services, private hospitals, and research and development, among others. EU and China begin investment talks The first round of negotiations for an EU-China investment agreement will take place in Beijing on 21-23 January 2014. Mikko Huotari: Europe has mostly been the demanding party in this negotiation, and China has made selective concessions that it considers in its own long-term interest. For Beijing, the agreement would provide it with a highly symbolic political win, demonstrating that China is in the business of globalization with major international partners, securing the continued interest of European investors and access to urgently needed technology. The investment agreement cannot provide guardrails against such developments and leaves European companies exposing themselves to increased political influence. However, the (geo)political context and what’s not in the agreement does not make it the deal the European side had hoped for when negotiations started seven years ago. As with many legal commitments, enforceability and the actual grip of the dispute settlement architecture and “level playing field” clauses remain, however, to be tested. The agreement was also never meant to touch on other issues that often lead to unfair competition, including for instance government procurement. The 32nd round of the EU-China Comprehensive Agreement on Investment (CAI) begins today as delegations pursue a final arrangement before the end of this year. © Mercator Institute for China Studies (, Towards a "Principles First Approach" in Europe's China Policy. They argue the EU … At the same time, the agreement provides a rather sober reflection of the limitations of what can actually be achieved. The centrepiece to this highly-anticipated summit was to be the successful conclusion of the negotiations for the EU-China Comprehensive Agreement on Investment (CAI). F +49 (30) 285 34-109 Before the end of the year, European countries will have to decide on an investment agreement with China. All European stakeholders should signal clearly to China that a deal without these commitments will not be put on the table for ratification. The EU-China Comprehensive Agreement on Investment would improve access to the Chinese market for European companies, reduce discrimination and offer more protection for investors. The new agreement is intended to replace 26 existing bilateral investment treaties (BITs) between the EU member states and China and create new treaty obligations for Ireland, harmonise EU investment policy vis-à-vis China, and significantly widen the scope of investment protection. But there are bigger issues at stake. The Comprehensive Agreement on Investment (CAI) was meant to join the ranks of other major economic deals signed in 2020, such as the Regional Comprehensive Economic Partnership, a … We focus in these “defensive” interests, because investment treaties by their very nature restrict the ability of a state to regulate or even restrict foreign investment. Â. MERICS Director Mikko Huotari and MERICS Chief Economist Max J. Zenglein answer questions on the issue. It is possible that member states’ governments have also informally agreed on other issues, including those related to the roll-out of 5G, or investment and R&D cooperation promises in emerging technology sectors. But it is far more ambitious than a mere update of these BITs, as it is going to cover a much more comprehensive ground. T +49 (30) 285 34-0 China and the EU are currently negotiating a new, far-reaching investment treaty called the EU-China Comprehensive Agreement on Investment (CAI). Concluding the EU-China Comprehensive Agreement on Investment would mean cementing a trade relationship on a level playing field between two of the world’s greatest economies. Several prominent European China experts have made the case against rushing into the so-called Comprehensive Agreement on Investment. The CAI negotiations began in 2014 as an effort to expand access and reduce investment barriers in both markets. Sign up for our “MERICS Update” and publication alerts. Discussions on the China-EU investment pact are proceeding “smoothly”, Wang Wenbin, a spokesman at the Chinese foreign ministry, said at a regular briefing. Negotiations have stalled at … An EU-China investment agreement is long overdue. After more than seven years of negotiations, a final agreement between China and the European Union on a Comprehensive Agreement on Investment (CAI) could be reached before the end of 2020. info@boell.de, EU-China Comprehensive Agreement on Investment, International Climate, Energy & Agriculture Policy, Nairobi Office - Kenya, Uganda, Tanzania, Somalia/Somaliland, Cape Town Office - South Africa, Namibia, Zimbabwe, Sarajevo Office - Bosnia and Herzegovina, Albania, North Macedonia, Prague Office - Czech Republic, Slovakia, Hungary, Belgrade Office - Serbia, Montenegro, Kosovo, Washington, DC Office - USA, Canada, Global Dialogue, Santiago de Chile Office - Chile, Argentina, Paraguay, Uruguay, San Salvador Office - El Salvador, Costa Rica, Guatemala, Honduras, Nicaragua, Mexico City Office - Mexico and the Caribbean, Energytransition - The Global Energiewende (EN), Weak Labour, Environmental, and Human Rights Protections, Market Access and Critical Infrastructure, Compliance with mandatory human rights due diligence laws, Free speech and public engagement in the EU. Mikko Huotari: We do not know in detail what China will get out of this negotiation beyond the promise that Europe’s single market will continue to be open. “The EU-China Comprehensive Agreement on Investment (CAI) is a test for the future trajectory of the EU-China relationship” Before the end of the year, European countries will have to decide on an investment agreement with China. Lack of reciprocity in access to the Chinese market and the absence of a level playing field for EU investors in China have posed major challenges for EU-China investment relations in recent years, with the negotiation of a comprehensive agreement on investment (CAI) being considered by the EU a key instrument to remedy this state of play. Hung Tran After seven years of negotiation, the European Union (EU) and China have reportedly reached an agreement in principle on the Comprehensive Agreement on Investment (CAI)—and they’ve pledged to finalize it by the end of the year. © Heinrich-Böll-Stiftung e.V. Comprehensive Agreement on Investment Through the CAI, the EU aims to create new investment opportunities for European companies by opening China’s market and eliminating discriminatory laws and practices that prevent them from competing in the Chinese market on an equal basis with Chinese companies and companies from third countries. EU-China Comprehensive Agreement on Investment – A Scoping Study 4/ 46 Foreword China and the European Union (EU) are currently negotiating a new, far-reaching invest-ment treaty called the EU-China Comprehensive The Chinese premier on Wednesday held phone conversations with Dutch Prime Minister Mark Rutte and Spanish Prime Minister Pedro Sanchez respectively, calling for deepening practical cooperation. This scoping paper focuses on the potential risks for the EU from enshrining rights for Chinese investors in Europe in an international investment treaty. China | Brussels, 19 December 2019 EU to evaluate Chinese offer for European investors This week the EU and China held the 25th round of negotiations for the EU-China Comprehensive Agreement on Investment. BRUSSELS/BEIJING --The European Union and China are stepping up talks on a landmark investment agreement before their year-end target, but U.S. … Mikko Huotari: In the past months, next to additional market access commitments, major hurdles in the negotiation process have included “level playing field” issues, dispute settlement, labor rights and unique commitments on sustainability. It is unlikely that the EU alone, as an open economy, could easily apply greater leverage in these negotiations in order to induce China to offer further concessions. 10117 Berlin What else does the agreement achieve (or not)? While China has made progress, some problems remain: 1. a lack of transparency 2. industrial policies and non-tariff measures that discriminate against foreign companies 3. strong government intervention in the economy, resulting in a dominant position of state-owned firms, unequal access to subsidies and cheap financin… A very challenging year Instead, we have observed a year of extraordinary challenges: Covid-19 has ravaged the globe and political tensions have ratcheted up quicker than anyone could have imagined. The CAI is supposed to replace 26 existing bilateral investment treaties (BITs) between China and most EU member states. The European Parliament's legislative train schedule monitors the progress of legislative files identified in the 10 priorities of the European Commission At this year’s “Central Economic Work Conference”, which was concluded on December 18, the Chinese leadership set clear priorities for a “whole-of-nation” system for developing greater national strategic scientific strength as well as technological autonomy and industrial supply chain resilience. Committee responsible: Rapporteur: International Trade (INTA) Iuliu Winkler (EPP, Romania) EPRS | … China and the EU are currently negotiating a new, far-reaching investment treaty called the EU-China Comprehensive Agreement on Investment (CAI). What price is the EU potentially paying for this agreement? China and the European Union have until the end of the year to reach agreement on a comprehensive investment deal. The CAI is supposed to replace 26 existing bilateral investment treaties (BITs) between China and most EU member states. www.boell.de