18th January 2021
The European Union has reached an initial agreement with China regarding an economic deal that would grant the Asian manufacturing giant access to investments in European automotive, telecommunications, and healthcare industries among others.
From the EU’s perspective, it stands to gain access to the Chinese market, which would instantly bolster its consumer base by an additional 1.4 Billion potential customers.
Negotiations over this investment deal have been taking place since 2014, but have faced roadblocks along the way, including China’s insistence on its involvement in the EU’s energy sector being one of the terms of the agreement.
This new transcontinental partnership, labelled as the EU-China Comprehensive Agreement on Investment (CAI), was announced following a virtual meeting that took place on December 30, 2020, between the President of the European Council Charles Michel, the President of the European Commission Ursula von der Leyen, and Chinese President Xi Jinping.
“This Agreement is of major economic significance and also binds the parties into a values-based investment relationship grounded in sustainable development principles,” the European Council and European Commission said.
But will the agreement really go into effect and are the economic benefits tied to this deal worth the potential consequences for the EU?
Would the EU not only be betraying its fundamental democratic beliefs that China has been constantly abusing but also risk antagonizing the upcoming Biden administration which has already displayed a strict stance on China?
It might not be wise for the European Union to enter a partnership with a country that not only is guilty of domestic human rights violations against protesters in Hong Kong and the Uighur minority in Xinjiang, but has also engaged in hostile activities towards other nations, whether it pertains to undermining Australia’s trade by imposing tariffs, sending an armada of industrial boats to illegally fish in North Korean waters, or waging territorial conflicts against India, Taiwan, and Japan.
The deal is facing the seemingly insurmountable hurdle of passing the European Parliament.
Despite the risk associated with the new EU-China partnership, certain members of the EU Parliament view it as an overall step in the right direction.
These lawmakers include Iuliu Winkler, an MEP from the European People’s Party serving as vice-chair of the trade committee, who gave the following statement:
“The deal contains some of the most ambitious provisions China has ever agreed to, particularly on market access and level playing field.”
He believes that, rather than outright rejecting the deal, the EU should use the opportunity to influence Beijing’s policies on other matters such as human rights abuses, by adding conditions to the agreements that the Asian powerhouse would need to agree to in writing.
“By having a binding bilateral framework, we will be able, through strong implementation, to keep China to its word on the commitments included in the agreement,” he explained.
The European Commission — The EU’s executive branch– has also expressed its support of the investment agreement, and even advised against the strategy of using it as a bargaining chip to move China away from human rights abuses.
The institution, which took part in the negotiations, does not view the deal as “the appropriate instrument” to pressure Beijing on other policy matters and called on MEPs to ratify it with no strings attached.
This position, which could be perceived as unilateral surrender to Chinese demands by the EU commission, does not represent the predominant view across the different bodies that make up the European Union.
In fact, criticism of China’s human rights abuses has been voiced by the European External Action Service –The EU’s diplomatic agency– which has demanded the release of Zhang Zhan, a Chinese lawyer who has been sentenced to four years in prison after reporting on the Chinese government’s mishandling of COVID-19 during the early days of the pandemic.
In addition, the EU’s official website published, in late December 2020, the following statement condemning China’s undemocratic behaviour towards its own citizens:
“The restrictions on freedom of expression, on access to information, and intimidation and surveillance of journalists, as well as detentions, trials and sentencing of human rights defenders, lawyers, and intellectuals in China.”
However, the biggest challenge facing the new economic partnership is passing the EU Parliament, where a considerable number of lawmakers have expressed reservations and even fierce opposition towards ratifying the agreement, due to Beijing’s blatant disregard for human rights.
These concerns over the ethical nature of the deal are shared by MEPs across the political spectrum, but especially from the left-leaning parties such as the Socialists, Greens, and liberals.
Several members of the legislative body publicly voiced their disapproval on social media, including Belgian MEP Guy Verhofstadt who expressed his firm opposition in this tweet:
“EP [European Parliament] will never ratify the China Comprehensive Agreement on Investment without commitments & proof that the human rights of Hong Kongers, Uyghurs & Tibetans improve.”
Bernd Lange, a member of the Socialists & Democrats alliance who chairs the Parliament’s trade committee, echoed a similar sentiment, tweeting in criticism of China’s actions domestically:
“Trade does not take place in a vacuum – these actions mark a violation of the spirit of the #EU-#China investment deal sustainability commitments.”
Another member of the S&D group, Raphaël Glucksmann, characterized EU leaders who forged the deal as “out of touch with the times” for compromising their principles to secure the Chinese investment while democracy in Hong Kong “dies before our eyes.”
These strong statements may be a hopeful sign that the agreement will not pass the EU Parliament, at least not in its current form.
The deal faces political headwinds from the US government.
The risk of emboldening the Chinese government’s worst tendencies by rewarding it with more global influence is not the only barrier standing in the way of the potential EU-China partnership.
Another significant factor that the European Union must consider before ratifying the investment agreement is how this new alliance would impact its existing trade and diplomatic relations with the United States.
This could end up being a literal deal-breaker, seeing as the US sits above China as the EU’s number one trade partner.
The US and China have engaged in a trade war since 2018, and both sides have suffered economically from the ongoing conflict.
The last thing the EU would want to do is provoke the ire of president-elect Joe Biden and risk souring diplomatic relations with his incoming administration as a result.
Indeed, the former Vice President does not consider China as a potential partner, but rather as a political and economic rival that must abide by international laws and standards or answer to its transgressions.
He gave the following statement in December 2020, shortly after his victory over incumbent President Donald Trump has been confirmed:
“As we compete with China and hold China’s government accountable for its abuses on trade, technology, human rights and other fronts, our position will be much stronger when we build coalitions of like-minded partners and allies.”
Biden believes that establishing new trade blocs and partnerships with other countries would diminish China’s economic power and force it to cooperate with international norms if it wishes to open up its products to new markets.
As for the EU-China investment agreement, the president-elect and his staff have not released an official public statement that addresses it in specific terms.
Nevertheless, Jake Sullivan –Biden’s nominee for national security adviser– indicated through a tweet that the incoming administration “would welcome early consultations with our European partners on our common concerns about China’s economic practices.”
After all, the agreement going into effect would be in direct conflict with their strategy of leveraging trade to reign in China’s domestic and international abuses.
For instance, Jacob F. Kirkegaard, a Brussels-based senior fellow at The Peterson Institute for International Economics and The German Marshall Fund revealed to the “Voice Of America” radio network that the deal would hinder the Biden administration’s ability to use intergovernmental bodies such as The World Trade Organization (WTO) and The United Nations Conference on Trade and Development (UNCTAD) against China’s unlawful economic activities.
All things considered; the investment agreement would not only hurt the EU’s reputation as a champion of human rights but would also put its vital relationship with the US in jeopardy.
Therefore, The European Union must not lose sight of who its true allies are and compromise its core principles, even for a market as big as China’s.
If the deal does, in fact, fail, the rest of the Free World would breathe a sigh of relief knowing that China’s policies in Hong Kong, Taiwan, Xinjiang, and elsewhere, will not go unpunished.
