The EU-China Comprehensive Investment Agreement, a balance between EU economic power and global value
Almost seven years after the launch of the EU-China bilateral negotiations on the “Comprehensive Investment Agreement”, the EU and China reached an agreement in principle on December 30, 2020. Currently, there are 25 bilateral agreements in place. investment between China and EU member states, which will for the first time establish a unified legal framework for investments from both sides. The area covered by the agreement goes well beyond traditional bilateral investment agreements. The agreement also establishes fair competition rules to prevent state aid from weakening competition and establishes sustainable development clauses. In the context of the ongoing transatlantic trade conflict, this is undoubtedly a powerful decision that responds to the needs of the European Union in search of development leadership and a free system.
Bilateral adoption of political ideas
The EU’s approach to great powers like China is shaped by how European policymakers view world politics. Even though European Commission President Ursula von der Leyen has called for a “geopolitical commission”, the “liberal institutionalist” perspective, which argues that managed economic interdependence brings political stability, remains deeply rooted in European political circles. The insistence on an investment deal with “systemic rival” China appears to be in line with the traditionally “liberal” approach to European foreign policy.
In addition, the Commission had internal institutional interests in negotiating the investment agreement with China. The European Commission wants to steer all of the EU’s external relations, and the EU-China Investment Treaty was an opportunity for the Commission to do so. Having only been empowered to negotiate and conclude investment agreements for the EU in 2009 with the Lisbon Treaty, the Commission, and in particular its Directorate-General for Trade, had an institutional interest in proving its relevance and its effectiveness.
Once the agreement is signed, China will open up key sectors to the European Union. The European transport and telecommunications equipment industry, investors in chemical and medical equipment manufacturing, and investors in service industries, including finance and healthcare, stand to benefit. In addition, the agreement aims to establish a level playing field for European investors by prohibiting the forced transfer of technology, increasing subsidies, public enterprises and the transparency of administrative procedures.
At present, the EU’s investment flow to China is well below its potential. As globalization is struck by trade protection and counter-tidal unilateralism, if more regional and multilateral cooperation agreements can be concluded, it will be useful to promote the economy and promote the development of trade. It is very advantageous. According to statistics from the International Monetary Fund’s World Economic Outlook in April 2021, China and the 19 euro area countries accounted for more than 30% of global GDP in 2020. The orderly economic recession and the enormous impact of the The global epidemic on the economy have made this new agreement more valuable, and Europe will see the possibility of regaining opportunities for market opening and economic growth.
The United States is the leader of the existing international system. Former President Trump has been hostile to Europe. The anti-globalization characteristics of foreign policy are evident. The United States has announced new tariffs on EU products, opposing free trade and protectionism prevails. This unilateralist behavior is contrary to the values of free trade and multilateralism of the EU. Therefore, the deal reached by the EU this time around actually sends a signal to the international community that the EU is following “strategic autonomy”. The signing of the agreement gives the EU the opportunity to send a message to the Atlantic that Europe “will not wait for the United States to act”. The agreement allows the EU to seize the initiative to establish new economic fundamentals and bilateral relations.
The global epidemic is overwhelming and the progressive crisis brought on by the illusion of the Cold War
Although EU officials said on the 4th of this month that the diplomatic dispute between the EU and China had put an important investment deal in jeopardy. European Commission Vice-President Valdis Dombrovskis told AFP the deal has been suspended and has yet to be approved. But earlier, according to Reuters, EU officials said EU member state ambassadors in Brussels discussed the deal on December 28 last year, and that no country there. had major objection.
Analysts believe the main reason for this current situation is the global blockade caused by COVID-19 rather than a diplomatic crisis. There is no fundamental problem of conflict of interest and value gap between Europe and China. But the unprecedented global isolation triggered a Cold War mental effect that has never happened in human history. When heads of state do not visit each other, diplomats lack exchanges and exchanges of people are blocked, a chain reaction is set in motion. Before 2020, things won’t be that difficult.
In addition, authoritative analysts believe that this may not be the main reason for obstructing the agreement process. Teresa Fallon, founder and director of the Brussels Center for European and Asian Studies, said in a telephone interview that the China-EU investment agreement had not been completely invalidated. Nabila Massrali, EU spokesperson for foreign affairs and security policy, told VOA that the EU continues to view trade with China as a top priority and believes the deal is “a toolbox to balance our economic relations with Beijing ”. Douglas McWilliams, Founder and Executive Vice President of the British Economic and Business Research Center, said: “I think the EU-China investment deal will be a very important model for other countries. It could also become a long-term investment agreement between the United States and China. It is hoped that this agreement will become an example of an investment agreement between the UK and China. Given the highly political nature of the deal, these EU procedures can take some time. Therefore, both the EU and China must make continuous efforts to ensure that the agreement brings the expected benefits to both sides as soon as possible.
American strategic change and new plan
As of November 2020, the 27 EU countries have in fact invested 117.98 billion US dollars in China and the cumulative number of investment projects has exceeded 38,000. China’s cumulative direct investments in the 27 countries of the EU exceed US $ 80 billion. Huawei, ByteDance and Honeycomb Energy have announced the construction of new factories and data centers in Europe. According to a survey by the European Chamber of Commerce in China, the epidemic has not shaken the confidence of European companies in investing in China. 89% of European companies surveyed are ready to stay in China, and 2/3 of European companies surveyed cite China among the top 3 investment destinations. European companies such as Volkswagen, BASF, BMW, Allianz Insurance continue to increase their investments in China. Localized operation and development of China-funded companies in Europe has also become a trend. The economic scale on both sides is similar, because the level of industrial development is different and the complementarity is also strong. The port of Piraeus in Greece and the Hungary-Serbia railway under construction have become important links for deepening connectivity between China and Europe. The China-Europe Common Investment Fund, the China-Central and Eastern European Investment Cooperation Fund, and the China-Europe International Stock Exchange have expanded financial communication channels between Europe and Asia. Projects such as the Hinkley Point nuclear power plant in the UK and the Pelješac bridge in Croatia have led to new models of trilateral cooperation.
Over the past four years in the United States Across the Ocean, US-Europe relations have suffered a big setback. The European Union believes that the implementation of all US-centric policies by former President Trump in Europe has harmed Europe’s economic, political and security interests. German Foreign Minister Maas warned that there had been structural changes in German-American relations. Although US President Biden and his team have promised that the new foreign policy will unite Western allies, the differences between the United States and Europe were made public before Biden took office. The irony is that while the United States continues to exert pressure, impose sanctions on Chinese companies, and raise tariffs, many American companies continue to increase their investment in China. The first phase of the Sino-U.S. Trade deal in January 2020 further opened up some Chinese industries, including some financial services, to US companies. Faced with competition from the United States, European companies hope to reach a similar deal with China. In fact, over the past decade, European companies have pressured the EU and China to sign a deal in China, hoping that the investment deal will lead to bigger programs to protect people. investors and more market access policies in China.
In 2020, 15 Asia-Pacific countries, including ASEAN, Japan, South Korea, Australia and New Zealand, signed the Comprehensive Regional Economic Partnership Agreement. At present, the free trade area with the world’s largest population, economic and trade scale, and greatest development potential has been officially launched. China-EU investment negotiations were also encouraged. The long-term negotiation of the EU-China Comprehensive Investment Agreement in the context of the current dispute reveals that EU foreign policy is affected by EU liberalism and normative thinking, institutional dynamics and tactical negotiations. The EU must internalize a more historical and strategic geopolitical reflection in order to better coordinate national security and economic issues. The early completion of the EU-China Comprehensive Investment Agreement will not only be reciprocal, but will also encourage the prospect of establishing a deeper trade relationship between Europe and China.
Source: British Association for the Promotion of International Business and the Development of the Humanities