Beijing, Berlin, Brussels The European Union and China are working flat out to conclude negotiations on an investment agreement. As the Handelsblatt learned, the negotiators of the EU Commission and the government in Beijing are continuing their talks this week. It was said that the remaining points of contention should now be resolved quickly.
There is cautious confidence on both sides that an agreement can be reached. There may be results this week, said an insider in Brussels.
But Brussels and Beijing are working intensively on a political understanding on the essential points of the agreement and have come much closer together on many issues. Should an agreement actually be reached, that would be a highlight of the German EU Council Presidency. Chancellor Angela Merkel (CDU) had always advocated the investment agreement and stuck to the goal of reaching a conclusion by the end of the year.
The last round of negotiations between China and the EU was originally supposed to be concluded last week. But the consultations will be extended this week. In the past 35th round of negotiations, further progress in the areas of sustainability, market access and institutional provisions had been achieved in “intensive discussions”, said Nicolas Chapuis, EU ambassador to China.
In view of the progress that has been made, the EU Commission currently sees a time window in which to come to a conclusion. An understanding between the EU and China would also have great geopolitical implications. Beijing wants to pull the Europeans on its side in the dispute with the USA. An agreement shortly before the new President Joe Biden takes office would be a symbolic triumph for Beijing.
After the Asian RCEP trade agreement, an agreement with the EU would be further proof of China’s importance as a trading partner. In addition, China has to polish up its image in the world again: Beijing recently caused severe irritation in the eyes of many European countries because of its aggressive treatment of Australia.
The Europeans, on the other hand, have always emphasized that they do not want to take sides in the hegemonic conflict between China and the USA. However, Merkel, like Commission President Ursula von der Leyen, is very keen to repair the badly battered relationship with the US government. So you have to weigh up to what extent an understanding with Beijing would put a strain on relations with Joe Biden’s future government.
The future US president has already announced that he will take a tough course with China and that he will not simply withdraw the punitive tariffs imposed on imports from the People’s Republic. In addition, Biden is pushing for a joint China strategy with the Europeans, which could further narrow the EU’s room for negotiation.
For Merkel personally, an early agreement on the investment agreement would be a great success. She had originally wanted to make relations between the EU and China the focus of the German Presidency in the second half of the year. At a historic summit of the 27 EU heads of state and government with the Chinese leadership in September, the relationship was to be raised to a new level and an agreement on the investment agreement was announced. The corona pandemic then thwarted the Chancellor’s plans.
The Chinese leadership is also showing great interest in concluding the negotiations. In political talks in Beijing, the topic is given the highest priority and the will to achieve tangible results by the end of the year is repeatedly emphasized. China is ready to complete the negotiations by the end of this year, said a spokeswoman for the Chinese Foreign Ministry.
Workers’ rights as a point of contention
However, the European negotiators have so far been largely unsatisfied with the progress made in the negotiations. As the European market is already much wider than the Chinese one, the EU expects China to make far-reaching concessions to European companies.
It is true that there have recently been signs that an agreement is possible on the activities of Chinese state-owned companies and the transparency of subsidies. There has also been progress in terms of market access for investors, but the extent to which some high-tech sectors have opened up is still a matter of dispute. The negotiators are also far apart on at least two points: the protection of workers’ rights and the recognition of the European investment protection mechanism by China.
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The EU Commission can hardly deviate from its point of view, especially when it comes to employee rights. An agreement has to be ratified by the member states and the European Parliament. The Strasbourg MEPs attach clear conditions to their approval of a treaty with China: “Without ratifying the core standards of the International Labor Organization (ILO) against forced labor, I don’t see how the European Parliament could approve an investment agreement with China,” says Green MEP Reinhard Bütikofer , Chairman of the China Delegation to Parliament.
It is highly questionable that the EU Commission can persuade Beijing to undertake to renounce forced labor. The demand of the Europeans to give workers the right to form trade unions is also hardly acceptable to the communist leadership.
In China, all civil society associations are suppressed, especially when it comes to demanding rights from citizens. An agreement without binding formulations, however, would have difficulties in gaining the necessary approval in Europe.
EU insists on checking the commitments
The pivotal point in the agreement are the legal mechanisms for reviewing the agreements. In contrast to Europe, there is no functioning legal system in China. If China does not stick to its commitments in the agreement, companies can hardly sue for their rights in court.
For the Chancellor, the conclusion of an investment agreement with China would be the splendid conclusion of the German EU Council Presidency.
(Photo: dpa)
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In Beijing business circles there is therefore a danger that China will only stick to the agreements on paper, but de facto everything will remain the same for companies if there are no tangible control options.
In the European Parliament, skepticism currently prevails. The chairman of the European Parliament’s trade committee, Bernd Lange, doubts the chances of success: “We are in the final phase of the talks, but I still see a lot of aspects where we still have to come together,” said the Social Democrat. “I think the chances are very slim.” An agreement will only have a chance of approval in the EU parliament if it creates market access and equal treatment for companies and takes sustainability aspects into account.
In the European People’s Party (EPP), the largest group in the European Parliament, however, the progress is well received: The clarification of questions of intellectual property and possible majority holdings in the Chinese market “would be a big step,” said Daniel Caspary, chairman of the CDU / CSU -Group. “Such a contract can make participation in the growth in China much easier.”
Economy puts pressure
In the corona crisis, China continued to gain importance as a sales market for international companies. The country was the first major economy in the world to announce positive growth figures, thanks in part to high levels of government investment in infrastructure.
“The investment agreement is very important for the European economy,” said Jörg Wuttke, President of the EU Chamber of Commerce in Beijing, the Handelsblatt. He puts pressure on the fact that results have to be achieved soon: “It’s now or never,” said Wuttke.
Observers assume that an agreement could be a long way off if it is not concluded now. On the one hand, China’s reputation in the world continues to decline because of its actions in Hong Kong and its blatant human rights violations against the Muslim Uyghur minority in the Chinese region of Xinjiang. That makes it more and more difficult for the EU to represent a pact with Beijing at all. If Merkel is no longer Federal Chancellor after the election in Germany next year, an important advocate will also leave the negotiations.
However, the EU Commission had always emphasized that the content of the agreement had to be right: “We have committed ourselves to meeting the deadline by the end of the year, but give priority to substance over speed,” says EU Ambassador Chapuis. “More efforts are needed to get the remaining issues over the finish line.”
Friedolin Strack, Head of the International Markets Department at the Federation of German Industries (BDI), warns against excessive haste: The Commission should carefully consult the member states before the negotiations are declared concluded, says Strack. That is the lesson from the trade agreement with the Mercosur countries, against which there is great resistance in some countries and in the European Parliament.
More: EU relies on hardship against China – investment agreement remains a long way off.
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