The European Union finally closed an investment agreement with China on Wednesday that was long-awaited and controversial. After seven months of negotiations, Brussels has managed to get Beijing to agree to stop prohibiting European companies from accessing its market or to introduce discriminatory practices to exclude them. The pact, however, does not only raise suspicions in Washington. The president of the European Parliament delegation for relations with China, Reinhard Bütikofer (Greens), has called the agreement a “strategic mistake” by the EU.
There were no great acts. Not even a press conference by videoconference, as times of pandemic impose. The investment pact between the EU and China was closed at noon, following a video conference between President Xi Jinping and the European side. The heads of the European Council, Charles Michel, and the Commission, Ursula von der Leyen, and the German Chancellor Angela Merkel – the current president of the EU – were added by the French President, Emmanuel Macron, one of the most critical and demanding voices with the pact.
The agreement has three main legs: greater transparency in the subsidy system set by Beijing for its companies, greater level playing field between Chinese and European firms, and slowing down technology transfer. “We have to be realistic: this agreement will not solve all of the China-related challenges we face. That there are many. However, it links China with significant commitments that go in the right direction, ”said the Vice President of the European Commission, Valdis Dombrovskis.
Brussels especially highlights the opening of new markets that the agreement implies, especially in the manufacturing field, which accounts for more than half of the EU’s investments in China. According to the Commission, Beijing is committed to giving European firms access – on an equal footing with the rest and without bad practices – in sectors that until now it had considered its preserve: cloud services, finance, private health, environment and transport. “The agreement will provide unprecedented access to the Chinese market for European investors, allowing our companies to grow and create jobs,” said Von der Leyen.
Dombrovskis has explained that the agreement also eliminates the obligation to create alliances or companies with mixed capital – European and Chinese – to gain access to some sectors. The same will also be done, albeit progressively, in the automotive sector, which accounts for 28% of all EU investment in the Asian giant. In fact, the agreement was of special interest to Berlin, which had placed it among the priorities of its current EU presidency.
Brussels also highlighted the concessions it had taken from China in the environmental and labor rights field. According to the Commission, Beijing is committed to gradually adopting all the conventions of the International Labor Organization, including the one prohibiting forced labor. If it did, it would be a breakthrough, especially given the concern generated by complaints by activists about the labor exploitation of the minority Uyghur in Xinjiang, which China denies.
The EU has said that it will take stock of relations with China under the French presidency of 2022. In any case, it has again stated in the post-meeting statement its “serious concern” about the human rights situation, also in Hong Kong. The agreement must be approved by the Council and the European Parliament, where the procedure seems complicated. At the moment, the president of the delegation that deals with China, Reinhard Bütikofer (Greens), has attacked through his Twitter account against the pact and has described it as a “strategic error”.