11 May 2021

The EU-China Comprehensive Agreement on Investment

An in-depth reading

Weinian Hu

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Striking a different note from most commentators on the EU-China Comprehensive Agreement on Investment (CAI), this paper finds that the Agreement does deliver on the EU’s negotiation mandate. It notes that much criticism of the CAI surfaced before the provisional agreement was actually published.

This text-based analysis considers how the Agreement lifts the barriers to market access that European businesses have been confronted with, advances the EU’s WTO reform agenda on a number of procedural requirements in a WTO-plus manner, and locks in the European Union’s values under international commitments on sustainable development.

It does acknowledge, however, that reducing coal dependency will be a challenging undertaking for China, in view of the country’s economic growth plans. And ratifying the ILO Forced Labour Conventions will be a long process due to the legislative changes involved. Even so, both commitments on ‘non-trade issues’ are legally-binding, which is a victory for the EU since such an approach to trade negotiations was inadmissible to China in the past.

As the Agreement does not solve all the trade issues the EU is facing vis-à-vis China, the EU should work with its allies and continue to engage with China to further address a number of WTO ‘structural’ disciplines. Also, since China’s focus is now on basic research and its domestic market, the EU needs to accelerate its own technological advancement.

At the moment, the prospects of the European Parliament endorsing the Agreement look remote, especially following the sanctions China imposed on certain MEPs in March 2021. Sanctioning parliamentarians violates their parliamentary privilege and legal immunity to speak without fear or favour. China should therefore consider lifting these sanctions as soon as possible, as a first step towards relaunching the EU legislative process to ratify the CAI.

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