[ad_1]
After seven years of negotiations, the European Union and China have reached a historic bilateral investment agreement. The agreement, for now in principle and pending formal ratification, will provide “opportunities for more balanced trade and business,” the president of the European Commission wrote on Twitter. Ursula von der Leyen, stating that the EU, “the world’s largest single market”, is “open for business, but we care about reciprocity, fair competition and our values.” The political agreement was signed during a video conference attended by von der Leyen, President of the European Council Charles Michel and the chinese president Xi Jinping. The German Chancellor then joined Angela Merkel and the french president Emmanuel macron.
Ambitious deal
The text must ensure, as promised by the EU executive, more open markets but also respect for environmental and labor standards, with everything that must be supervised thanks to a monitoring mechanism. The agreement, said a senior EU official, “is the most ambitious China has ever agreed” with another country, according to reports from AdnKronos. In his view, the agreement “will improve access to the Chinese market for European investors in various sectors of the economy”, including “energy, financial services, cloud services and healthcare.” The agreement, the senior official continues, “will improve the level playing field, by including discipline on the behavior of state-owned companies” and “will increase transparency in subsidies, closing a hole”, because “it includes services.” In addition, it establishes “clear rules on forced technology transfers.” CHINA has also committed to ratifying international conventions against forced labor. These are “important results,” says the official, but “we know that these are issues that cannot be resolved solely with this agreement.”
Market opening
In terms of market access for EU companies, China has made significant commitments in manufacturing, the most important sector for European investments in the Asian giant, which accounts for more than half of total EU investments, including 28% of the sector. automotive and 22% for basic materials. This includes the production of electric cars, chemicals, telecommunications equipment, and healthcare equipment, among others. The parties agree to accept investments in various service sectors, such as cloud, financial services, private healthcare, environmental services, international shipping, and services related to air transport. “In the sectors covered, European companies will obtain certainty and predictability for their operations, since China will no longer be able to prohibit access or introduce new discriminatory practices”, argues the Commission. The agreement also includes guarantees that should make it easier for European companies to obtain authorizations and complete administrative procedures. It also guarantees access to Chinese regulatory bodies for European companies.
State enterprises
The deal will help create a level playing field for EU investors by setting very clear rules on Chinese state-owned companies, transparency of subsidies, and a ban on forced technology transfers and other distorting practices.
Environmental and labor standards
The agreement will bind the parties in a value-based investment relationship, backed by the principles of sustainable development. This, the European Commission notes, is the first time that China has accepted such ambitious agreements with a trading partner. Among other things, Beijing is committed in the labor and environmental sectors not to lower protection standards to attract investment, comply with its international obligations, as well as promote responsible business conduct by its companies. China has also agreed to effectively implement the Paris Agreement on Climate Change and the conventions of the International Labor Organization (ILO) that it has ratified.
Follow-up of agreements
Sustainable development issues should be subject to a robust monitoring mechanism by a group of independent experts as in our other trade agreements. “This, for the Commission, means a transparent resolution of disagreements with the participation of civil society.” The implementation of the agreement’s commitments will be monitored at the level of Executive Vice President for the EU and Vice Prime Minister for the Chinese side. The interstate dispute resolution mechanism underlying the agreement meets, Brussels claims, the highest standards found in existing EU trade agreements. The agreement also creates a specific working group to follow up on the implementation of sustainable development issues, including labor and climate.
Ongoing negotiations on investment protection
The package achieved includes a commitment by both parties to seek to complete the investment protection negotiations and the resolution of investment disputes within 2 years after the signing of the global agreement. The common goal is to work towards modernized protection standards and dispute resolution that take into account the work done in the context of UNCITRAL (the United Nations Commission on International Trade Law) in a multilateral investment tribunal. The EU’s objective remains to modernize and replace existing Member States’ bilateral investment treaties with China.
